The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has deleted the addition holding that the sale of stock of agricultural land could be treated as capital gain and not business receipt.
In this case the assessment was completed under Section 144 of the Income Tax Act whereby addition was made on account of profit on sale of shares; profit on sale of agricultural land; agricultural income; and professional and consultancy against assessee Essjay Enterprises Pvt. Ltd.
The revenue had filed this appeal holding that the Commissioner of Income Tax Appeal (CIT(A)) had erred on facts and circumstances of the case and in law, deleting the addition treating capital gain on sale of stock of agriculture land, whereas AO had rightly treated the
numerous sales of agricultural land as business income. It was also submitted that the sale of produce on agriculture land being stock in trade was also business receipt.
T James Singson, on behalf of the revenue relied on the findings of learned AO and submitted that assessee had not provided relevant information at the time of assessment.
Gaurav Jain, on behalf of the assessee, relied upon the order of the CIT(A).
The two- Member Bench of Narendra Kumar Billaiya, (Accountant Member) and Anubhav Sharma, (Judicial Member) dismissed the appeal filed by the revenue holding that the AO had not doubted the fact that based upon the parameters about situation of the land beyond 8 kms. of the municipal limits of the Municipality Tizara and the population of the villages in which land was situated was less than ten thousand as per last census the, land sold by assessee was agricultural land and the sale proceeds received from the said sale of land was income derived from agricultural land which was exempted.
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