Consideration from Sale of Urban Agricultural Land is subject to Capital Gains Tax: ITAT upholds Revision Proceedings u/s 263 of Income Tax Act [Read Order]

The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) upheld revision proceedings under Section 263 of the Income Tax Act, 1961 ruling that consideration from the sale of urban agricultural land was subject to capital gains tax.

The assessee's complaint was that the Principal Commissioner of Income Tax ( Pr. CIT ) made errors in exercising jurisdiction under section 263 of the Income Tax Act ,1961, and additionally erred in determining that the assessment order dated 11.12.2019 was not only erroneous but also prejudicial to the interests of the revenue.

The assessee sold an urban agricultural land, which, according to relevant provisions of the Income Tax Act, 1961, was deemed a capital asset. However, it was treated as agricultural land not subject to capital gains tax.

Exercising the authority granted by the provisions of section 263 of the Income Tax Act, 1961, the Principal Commissioner of Income Tax ( Pr. CIT ) issued a notice to the assessee, requesting them to explain why the challenged assessment order should not be deemed erroneous and prejudicial to the interests of the revenue.

During the proceedings under section 263 of the Income Tax Act, 1961 the assesse acknowledged that the properties in question are indeed considered capital assets under the Income Tax Act, 1961. Based on this concession and the determination that the disputed asset was a capital asset, the assessment was set aside by the Principal Commissioner of Income Tax ( Pr. CIT ).

The two member bench of the tribunal comprising Astha Chandra ( Judicial member ) and N.K.Billaiya ( Accountant member ) concluded that the sale consideration of the disputed land was subject to capital gains tax in accordance with the relevant provisions of the Income Tax Act, 1961.

Consequently, the appeal of the assessee was dismissed

To Read the full text of the Order CLICK HERE

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