ARCHITA FARMS PVT. LTD.,AHMEDABAD V. THE PCIT, AHMEDABAD-1, AHMEDABAD

ITA 1393/AHD/2024

AI Insights

The case involves Archita Farms Pvt. Ltd., which appealed against the order of the PCIT, Ahmedabad-1, concerning the taxation of income from the sale of land. The PCIT had revised the assessment order under section 263, claiming that the land was not agricultural as no agricultural activity was observed in the year of sale, and thus it should not be exempt from capital gains tax. The Tribunal examined whether the land met the definition of agricultural land under section 2(14) of the Income Tax Act, 1961, despite the absence of agricultural activity in the year of sale. The Tribunal concluded that the historical use and the land revenue record's designation of the land as agricultural were sufficient to classify it as such, thereby exempting the income from capital gains tax.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 312094 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A. P. SINGH
• Keywords: Condonation of delay; Set aside; Capital Gains; Assessment record
• Section: 147; 263; 2(14)

Judgement Text

"THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “C” BENCH Before Shri Sanjay Garg, Judicial Member And Ms. Annapurna Gupta, Accountant Member Archita Farms Pvt. Ltd. 18, Neelkanth Green Opp. Parijat Flats, Sindhubhavan Road, Shilaj, Bopal SO Ambli, Ahmedabad-380058 PAN: AABCA3180F (Appellant) Vs The PCIT, Ahmedabad-1 (Respondent) Assessee by: Ms. Nupur Shah, A.R. Revenue by: Shri A.P. Singh, CIT-D.R. Date of hearing : 05-03-2025 Date of pronouncement : 28-04-2025 आदेश/ORDER Per Sanjay Garg, Judicial Member: The present appeal has been filed by the Assessee against the order passed under section 263 by the Principal Commissioner of Income Tax, Ahmedabad-1 [hereinafter referred to as “PCIT”] dated 04.03.2024 arising from the order passed u/s. 147 of the Income Tax Act, 1961 (here-in-after referred to as “the Act”) relevant to the Assessment Year 2017-18. ITA No. 1393/Ahd/2024 Assessment Year 2017-18 I.T.A No. 1393/Ahd/2024 Archita Farms Pvt. Ltd., A.Y. 2017-18 2 2. The assessee in this appeal has contested the exercise of revision jurisdiction by the ld. PCIT in exercise of his powers u/s. 263 of the Income Tax Act (in short, “the Act”). 3. The appeal is time barred by 77 days. A separate application for condonation of delay has been filed. Considering the averments made in the application, the delay in filing the appeal is hereby condoned. 4. The sole issue involved in this appeal is as to whether income earned by the assessee on sale of land is to be taxed under the head “capital gains” or the same was exempt from taxation, being consideration received from sale of agricultural land, which does not fall under the definition of “capital gain” as defined u/s. 2(14) of the Act. The ld. PCIT observed from the assessment records that the land in question was falling within the municipality limits of Ahmedabad and further the same was not an agricultural land. On being show-caused in this respect, the assessee explained that land was situated about 14.5 kilometers from the municipality limits. The ld. PCIT did not dispute or deliberate upon the issue as to whether the land was situated outside municipality limits, however he held that no agricultural activity was being carried on the land in question. He, referring provisions of section 2(14) of the Act, held that such exemption was applicable to agricultural land only. That since no agricultural activity was carried out on the land, therefore, he held that Assessing Officer had erred in allowing the claim of exemption from taxation on the sale of land in question. He, I.T.A No. 1393/Ahd/2024 Archita Farms Pvt. Ltd., A.Y. 2017-18 3 therefore, set aside the assessment order and referred the matter back to the file of Assessing Officer with a direction to decide the matter afresh. 5. Aggrieved by the said order of the ld. PCIT, the assessee is in appeal before us. 6. We have heard the rival contentions and gone through the records. The sole issue now left for adjudication as to whether the land in question would fall in the definition of agricultural land or not as per the provisions of section 2(14) of the Act. The ld. Departmental Representative has pointed out that as per the reports, during the year under consideration when the sale was of land was made, there was no agricultural activity carried out on the said land, therefore, the ld. PCIT was justified in exercising his revision jurisdiction u/s. 263 of the Income Tax Act by observing that the Assessing Officer has erred in treating the said land as agricultural land. The ld. Authorized Representative of the assessee, on the other hand, has pointed out that in the relevant 7/12 extract, which is a land revenue record, the nature of the land has been mentioned as agricultural land. 7. It has been held time and again that the criteria to determine the nature of the land is not solely based on the fact that in a particular year or in the year of the sale of the land, any agricultural activity was carried upon it or not. It has been time and again held that if, the nature of the land recorded in the I.T.A No. 1393/Ahd/2024 Archita Farms Pvt. Ltd., A.Y. 2017-18 4 land revenue record is mentioned as agricultural land and in the past agricultural activities has been carried out and, if for certain reasons, the agricultural activities could not be done for a year or in the year of sale of land, that could not be the sole criteria to hold that the land is not an agricultural land and exemption cannot be denied for that reason u/s. 2(14) of the Act. Under the circumstances, the exercise of revisional jurisdiction by the ld. PCIT in this is not justified. The impugned order passed by ld. PCIT is hereby quashed and the appeal of the assessee stands allowed. 8. In the result, the appeal of the assessee is hereby allowed. Order pronounced in the open court on 28-04-2025 Sd/- Sd/- (Annapurna Gupta) (Sanjay Garg) Accountant Member Judicial Member Ahmedabad : Dated 28/04/2025 आदेश क\u0006 \u0007\bत ल प अ\u000fे षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपील\u0012य अ\u0013धकरण, अहमदाबाद "