SH. SATYENDRA VERMA,NEW DELHI vs. ITO, SHAMLI

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ITA 807/DEL/2014Status: DisposedITAT Delhi26 October 2017AY 2009-106 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the land in question was agricultural land and not a capital asset as per Section 2(14) of the Income Tax Act. The lower authorities' findings were reversed.

What were the facts?

The assessee sold agricultural land and claimed it was not a capital asset. The Assessing Officer and CIT(A) treated the sale of plots as a capital gain, making an addition to the assessee's income. The assessee appealed this decision.

What were the issues?

Whether agricultural land situated outside municipal limits, as certified by local authorities, qualifies as a capital asset for capital gains tax purposes.

Which sections of the Income-tax Act were involved?

Section 2(14)

AI-generated summary — verify with the full judgment below

Before: SHRI C.M.GARG, & SHRI PRASHANT

For Appellant: Shri Anil Kr. Jain, Adv

per their record. These lenders situated outside municipal limits and therefore on the 2 Ctl

1.

Page 4 of 12112/20 issued to the tehsildar also confirmed the similar facts. He further submission that I) there is no change in the land use recorded in the revenue records and therefore these are the that in case if the land of 2nd parcel agricultural land. He further stated alternatively is not considered as a capital asset then the expenditure made on its improvement in respective years may also be allowed as deduction. He further vehemently stated that as per section 2 (14) if any land is not been notified then the same cannot be treated as a capital asset and no capital gain shall be chargeable to tax on transfer of those lands. He therefore submitted that the addition made by the Ld. assessing officer is incorrect and further confirmed by the Ld. CIT (Appeal) without considering the material on record.

7.

The Ld. departmental representative vehemently relied upon the orders of the lower authorities and stated that the assessee has sold the developed Plots and not an agricultural land. Therefore the provisions of section 2(14) of the income tax act do not apply to the facts of the case.

8.

We have carefully considered the rival contentions. Admittedly, the 2nd parcel of the land

1557.7 yd.' sold by the assessee admeasuring is a matter of dispute between the assessee and the revenue. According to the claim of the assessee. This is not a capital asset under section 2 (l 4) of the income tax act and therefore the consideration and profit earned out of the sale of that land is not chargeable to tax as capital gains. The claim of the revenue is that assessee has sold the plots of the land and therefore it is not an agricultural land, hence the capital gain chargeable to tax on sale of such land according to the income tax act. The only reason given by the Ld. assessing officer to treat this particular parcel of land is a capital asset is that in aii the sale deeds the residential plot are mentioned and development charges of 2% were paid with stamp duty. He further held that the measurement is adopted in square meters for all the sale deeds. Provisions of section 2 (14) of the act specifics the 'capital assetas under.-

(14) "capital asset" means property of any kind held by an assessee, whether or not connected with his business or profession, out does not include- \. '\\ \\ ------_.- .-- ..

PageSof7 .;

(iii) agricultural land In India, not being land situate- (a) in any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee, or by any other name) or a cantonment board and which has a population of not less than ten thousand or (b) In any area within the distance, measured aerially,- (I) not being more than two kilometres, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than ten thousand but not exceeding one lakh or (II) not being more than six kilometres, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than one lakh but not exceeding ten lakh ; or (III) not being more than eight kilometres, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than ten lakh. Explanation For the purposes of this sub-clause, "population" means the population according to the last preceding census of which the relevant figures have been published before the first day of the previous year; In the present case the assessee has fulfilled all the criteria as laid down of an agricultural land. Further, the same is also certified by the local authorities stating that there is no change in the user of the land which was earlier for agricultural purposes. Merely because in the sale deed the area of land sold is described in square meter and nomenclature is mentioned that the residential plots does not make the capital asset as nonagricultural land prior to its sales.

Further, it is not the case of the revenue that assessee has converted it's an agricultural land by changing its user conditions. In view of this we reverse the finding of the lower authorities nd parcel of the land and direct the Ld. assessing officer to not to treat the 2 as 'capital asset".

In view of this the ground No.2 of the appeal of the assessee is allowed accordingly .

. \ "

\ - Page 6 0" 7 - " :5or the appca: he ground of the assessee Y.i No J ,~. -4 and are gcnerJi 111 nature and in vie",' of our findings for ground 1'\0.2, those grounds are dismissed. 10. In the result appeal of the assessee is partly allowed. Order pronounced in the open court on' /10/2017.

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