S. 2(14)(iii) : Capital asset-Agricultural land-Sale of agricultural land -Land revenue record shown as “Lagavadi Yogya Sherta“ (Cultivable land)-Vegetables and minor millets grown-Land situated in Raigad District-No condition is prescribed under the provision of section 2(14)(iii) of the Act that active agricultural activity should be there at the time of sale of the land-Only condition that it must be agricultural land-Consideration received is not liable to be taxed as capital gains.[S. 45, 54B , 131]
The Assessee is a professional Architect. The Assessee had purchased agricultural lands from time to time. During the year the Assessee has sold all the agricultural lands to Mayank Land Pvt. Ltd. for a sale consideration of Rs.5,39,67,045/- and claimed that the sale of agricultural land being not a capital asset, hence not liable to capital gains. The Assessing Officer denied the exemption on the ground that the aassessee has not carried on agricultural activities and income was not offered to tax as agricultural income in the income tax return. The Assessing Officer relied on the report of the Inspector who has stated in his report that the land is not capable of using for agricultural activity. On appeal the CIT(A) called for remand report and also examined the Assessee under section. 131 of the Act. After satisfying the contention of the Assessee, the Learned CIT(A), allowed the claim of the Assessee treating the sale consideration is not liable to be taxed as capital gains. On appeal by the Revenue, there was difference of opinion amongst the Honourabe Members of the ITAT. The matter was referred to Third Member. The Honouarble Third Member considering the various case laws on the subject and explaining the law on the subject held that the land sold by the assessee as per the Land revenue record shown as “Lagavadi Yogya Sherta“ (Cultivable land). The Assessee has grown the Vegetables and minor millets in the said land. The Land is situated in Raigad District. The Honourable Third Member held that no condition is prescribed under the provision of section 2(14)(iii) of the Act that, active agricultural activity should be there at the time of sale of the land. Only condition that it must be agricultural land. Accordingly consideration received is not liable to be taxed as capital gains. The Honourable Third Member agreed with the view of the Learned Accountant Member . Appeal of the Revenue was dismissed. (ITA No. 5147/Mum/2017 dt. 21-5-2023) (AY. 2011-12).
ACIT v. Ashok W. Wesavkar (TM)(Mum.)(Trib.) www.itatonline.org
[Coram : Shri Rajpal Yadav, Vice-President]