The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) held that the sale of agricultural land which has been converted into several plots are taxable as Business income.
Assessee sold 6 plots of land during the year and claimed tax exemption by claiming that the said land was agricultural land. These plots of land were held for lease by owner and thereafter sold and profit accruing thereon was claimed as exempt being income from sale of agricultural land. The Assessing Officer held that the intention of the assessee was to earn profit rather than investing in the agricultural land to be used for agricultural purposes. It was also observed that assessee was not at all interested in carrying out any agricultural activity. If it all in case that intention of assessee was to embark on a venture in the nature of trade as distinguished from a capital investment.
The first appellate authority sustained the addition relying upon the decision of the Rajasthan High Court in case of Mahaveer Enterprises and held that assessee alongwith 8 other persons entered into transaction for sale and purchase of land. Intention was not to carry out any agricultural activity as because sale was carried out barely within few months of the acquisition. The CIT(A) also observed that area of land located is being developed for the purpose of Holiday Homes, Farm houses located near to Karjat.
On second appeal, the Tribunal upheld the findings of the lower authorities and held that “the detailed findings so recorded by lower authorities by applying various judicial pronouncements have not been controverted by bringing any positive material on record. Accordingly, we do not find any reason to interfere in the order of lower authorities for treating profit on the sale of a plot of land as business income.”
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