The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, has held that rural agricultural land acquired by Government for business activity u/s 2 (13) is eligible for Exemption.
The assessee, Shri Jitendra Shanabhai Patel, derives income from salary, capital gain, and income from other sources. The assessee filed a return of income declaring total income at Rs.13,21,950/-. The Assessing Officer reopened the assessment and made an addition in respect of the acquisition of land alleging that the registered deeds of lands in question which contained the valuation made by the State for stamp duty and the valuation made by the Stamp Valuation Authority in the registered sale deed are the market value of the lands in question as per the provisions of Section 50C of the Act.
The AO further observed that the land in question was within the acquisition proceedings and thus this expenditure cannot be treated as a long-period investment and, therefore, a surplus of Rs.5,57,11,120/- was treated as income from profits and gains of business or profession.
The Coram of Mr. P.M. Jagtap, Vice President, and Ms. Suchitra Kamble, Judicial Member has observed that the acquisition of agricultural land owned by the assessee was done by the Government and thus Section 10(37) of the Act is attracted. The evidence such as bills for the sale of agricultural production shows that the agricultural operations carried out through Bhagiya and the same were not disputed by the Revenue authorities.
The Tribunal while dismissing the appeal held that “consideration of the rural agricultural land acquired by Government for business activity under section 2 (13) of the Act, the same cannot be treated as the adventure in trade”. The Tribunal further held that “claim of section 50C of the Act, the sale consideration has been received before 18.04.2011 and the agreement of sale finalized earlier than that date. Thus, the claim is a genuine claim and the CIT(A) has rightly deleted this addition as well”.
Mr. Vijay Kumar Jaiswal appeared on behalf of the revenue and Mr. Rupesh Mehta appeared on behalf of the assessee.
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