Sale of Agricultural Land is Exempt from Tax though there were No Agricultural Activities: ITAT [Read Order]

AAAR - GST - Agricultural Land - Capital Gain - Taxscan

The Hyderabad Bench of the Income Tax Appellate Tribunal ( ITAT ) in the case of Shri Kallepu Sharath Chander v. Asstt. Commissioner of Income Tax, Hyderabad held that the sale of Agricultural Land is exempt from tax even though no agricultural activities were conducted on the land.

The issue before the Tribunal is an appeal filed by the assessee contending that the Commissioner of Income Tax Appeals (CIT(A)) has erred in upholding that the land sold was not an agricultural land. Further, the profit earned by the assessee does not constitute income from the business.

The facts of the case are that the assessee is an individual. The Assessing Officer (AO) had received information that the assessee had sold properties and received a sales consideration and this consideration, when compared with the information provided by the assessee, showed an escapement of income by him. The AO had held that the assessee has failed to prove that he had carried on agricultural operations and profit therefrom was treated as income from business and brought to tax. The CIT(A) upheld the decision of the AO and hence the present appeal.

The assessee reiterated the submissions made by the assessee before the previous authorities. He showed the complete computation of the income and justified the difference in amounts of consideration for properties.

The revenue, on the other hand, submitted that there was no proof of carrying on of agricultural operations during the relevant A.Y.s to hold it to be agricultural land and prayed the assessment order to be confirmed.

After perusing the contentions of both the parties and the material on record, the Tribunal bench comprising of Judicial Member P. Madhavi Devi went on to find, with regard to the first contention that there was no escapement of income as the same was justified by the assessee. With regard to the issue as to the determination of nature of the lands, the lands were held to be agricultural lands relying upon a number of decisions.

The Tribunal mentioned that as per the revenue records, these lands are agricultural lands but there was no proof that the assessee had carried on any agricultural operations. It held that it is immaterial whether any agricultural income is shown in the return or not, the gains from sale are exempt from taxation.

Hence, rejecting the AO’s view, the Tribunal held the nature of the land to be agricultural.

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