Agricultural Land Sold 10 km Beyond Municipal Limits: ITAT Orders Verification to Determine Capital Asset Status u/s 2(14)(iii) [Read Order]
ITAT directed verification of evidence to determine if the agricultural land sold 10 km beyond municipal limits qualifies as a capital asset under Section 2(14)(iii) and is subject to LTCG tax
![Agricultural Land Sold 10 km Beyond Municipal Limits: ITAT Orders Verification to Determine Capital Asset Status u/s 2(14)(iii) [Read Order]](https://www.taxscan.in/wp-content/uploads/2025/02/ITAT-Agricultural-Land-Municipal-Limits-Taxscan.jpg "Agricultural Land Sold 10 km Beyond Municipal Limits: ITAT Orders Verification to Determine Capital Asset Status u/s 2(14)(iii) [Read Order]")
The Ahmedabad Bench of the Income Tax Appellate Tribunal ( ITAT ) orders verification of evidence to determine whether the land qualifies as a capital asset under Section 2(14)(iii) of the Income Tax Act, which could exempt it from long-term capital gains ( LTCG ) tax. Kalubhai Chauhan, the assessee, is an agriculturist who sold immovable property for Rs. 82,00,600 during the assessment...
The Ahmedabad Bench of the Income Tax Appellate Tribunal ( ITAT ) orders verification of evidence to determine whether the land qualifies as a capital asset under Section 2(14)(iii) of the Income Tax Act, which could exempt it from long-term capital gains ( LTCG ) tax.
Kalubhai Chauhan, the assessee, is an agriculturist who sold immovable property for Rs. 82,00,600 during the assessment year 2018-19. The assessee had not filed a return so, the Income Tax Officer (ITO) issued a notice under Section 148 to reopen the case.
In response, the assessee filed a return declaring an income of Rs. 34,200 and claimed an exemption on the land sale, arguing that it was agricultural land situated 10 km from the Sanand Municipality and therefore not a capital asset.
Comprehensive Guide of Law and Procedure for Filing of Income Tax Appeals, Click Here
The Assessing Officer (AO) issued multiple notices, but due to the assessee’s failure to respond, an ex-parte order was passed, treating the entire sale consideration as long-term capital gains (LTCG). The assessee appealed before the Commissioner of Income Tax (Appeals) [CIT(A)], but the appeal was rejected based on the measurement of distance from Ahmedabad Municipality instead of Sanand Municipality.
Before the ITAT, the assessee submitted new evidence, including a distance certificate from the Moraiya Gram Panchayat, Google Maps data, and census records to establish that the land was beyond the prescribed municipal limits. The tribunal admitted these documents under Rule 29 of the ITAT Rules, stating that they were crucial to determining the nature of the land.
Comprehensive Guide of Law and Procedure for Filing of Income Tax Appeals, Click Here
The two-member bench comprising T.R. Senthil Kumar (Judicial Member) and Makarand Vasant Mahadeokar (Accountant Member) found merit in the assessee’s claim and ruled that a proper examination of the new evidence was necessary. The tribunal remanded the case to the Assessing Officer for fresh verification, instructing that a fair hearing be given to the assessee.
The tribunal allowed the appeal for statistical purposes.
To Read the full text of the Order CLICK HERE
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