DCIT-CC-2(1), AHMEDABAD, AHMEDABAD V. VEDPRAKASH DEVKINANDAN CHIRIPAL, AHMEDABAD

ITA 617/AHD/2024

AI Insights

The case revolves around the appeal by the Deputy Commissioner of Income Tax against the order of the Commissioner of Income Tax (Appeals) which had deleted the addition of short-term capital gains amounting to Rs.3,54,83,557. The assessee, Vedprakash Devkinandan Chiripal, had sold eight pieces of land, originally purchased as agricultural land, which were later used for industrial purposes by the buyers. The Assessing Officer treated the profits from these sales as short-term capital gains, arguing that the lands were non-agricultural and thus taxable. However, the CIT(A) reversed this decision, leading to the Revenue's appeal to the Tribunal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 396616 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RIGNESH DAS
• Assessee Lawyers: VARTIKCHOKSHI
• Keywords: Set aside; Cost of acquisition; Capital Gains

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, AHMEDABAD BEFORE DR. B.R.R. KUMAR, VICE-PRESIDENT SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER I.T.A. No.617/Ahd/2024 (Assessment Year: 2017-18) The Deputy Commissioner of Income Tax, Central Circle2(1), Ahmedabad. Vs. Vedprakash Devkinandan Chiripal, 283 Chiripal, New Cloth Market, O/S, Raipur Gate. Ahmedabad-380002. [PAN :AAHPC2102 Q] (Appellant) .. (Respondent) Appellant by : Shri Rignesh Das, CIT-DR Respondent by: Shri Vartik Chokshi , AR Date of Hearing 01.05.2025 Date of Pronouncement 29.05.2025 O R D E R PER DR. B.R.R. KUMAR, VICE-PRESIDENT:- Delay condoned This appeal is filed by the Revenue against the appellate order dated 12.12.2023 passed by the Commissioner of Income Tax (Appeals)-12, Ahmedabad, relating to the Assessment Year 2017-18. 2. The Revenue has raised the following grounds of appeals: 1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) is correct in deleing the addition on account of short term capital gain of Rs.3,54,83,557/- without considering the observation of AO that the land is to be used for Industrial purpose and are deemed non-agricultural land. 2. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) is correct in not appreciating that all the eight pieces of land had been purchased in a very short span and sold after short holding period at an almost three time price, and ignoring the contention of the assessee before the CIT(A) that the crops cultivated was not sold, but used for captive consumption by persons looking after the land. ITA No. 617/Ahd/2024 DCIT vs. Vedprakash D Chiripal Asst. Year : 2017-18 - 2– 3. On the facts and in the circumstances of the case and in law, the ld. CIT(A) ought to have upheld the order of the AO. 4. It is therefore, prayed that the order of the Ld. CIT(A) be set aside and that of the AO be restored to the above extent. Addition on account of short-term capital gains of Rs. 3,54,83,557/- 3. Pertinent facts relevant for adjudication of the case are that, The assessee sold 8 pieces of land situated beyond 8 kms of the municipal limits being situated in Dholka, Ahmedabad (6 pieces) and Bidaj. Kheda (2 pieces). The Assessing Officer held that the assessee is a non-agriculturist and he purchased these pieces of land from the original agriculturists at various time within a period of 30 months and then sold to different companies against the fact on record that the assessee is an agriculturist. The details of the same are as under:- 3.1 The purchase of these pieces of land have been accepted by the State as the subsequent sales are duly registered. The Assessing Officer held that the assessee has purchased agricultural lands and sold them for a profit and hence the profit earned from sale of non-agricultural land be treated as short-term capital gains. No. Particular of Land Block No. Area in Hectares Date of Purchase Purchase Cost Date of Sales Sales Consideration Profit Amount Duration (months) i. Roopgadh 359/2 1-67-14 04/01/2016 17,73,223 12/07/2016 48,16,000 30,42,777 6.25 ii. Roopgadh 358 3-21-05 12/02/2016 32,06,751 12/07/2016 91,50,000 59,43,249 4.96 iii. Roopgadh 352 2-22-58 30/11/2015 23,02,573 21/10/2016 63,45,000 40,42,427 10.72 iv. Roopgadh 357A-7 1-67-95 10/09/2015 17,21,468 21/10/2016 48,50,000 31,28,532 13.38 v. Roopgadh 353 2-83-28 30/11/2015 28,84,628 21/10/2016 80,75,000 51,90,372 10.72 vi Roopgadh 357A-12 5-20-02 21/08/2015 52,76,416 02/12/2016 145,00,000 92,23,584 15.42 vii Bidaj 749 0-10-12 08/01/2025 4,96,570 28/03/2017 12,90,000 7,93,430 26.63 viii Bidaj 764 0-50-59 11/09/2015 23,05,814 28/03/2017 64,25,000 41,19,186 18.54 1,99,67,443 5,54,51,000 3,54,83,557 ITA No. 617/Ahd/2024 DCIT vs. Vedprakash D Chiripal Asst. Year : 2017-18 - 3– The Ld. CIT(A) held that the land sold was agricultural land and hence no capital gains arise. Aggrieved, the Revenue filed appeal before us. 4. Having gone through the entire record and after hearing the arguments of both the parties who relied on the orders of the Ld. CIT(A) and the Assessing Officer to their favour, we find that, • The assessee purchased agricultural lands registered in his name. This proves that the assessee is an agriculturist though he has not earned any agricultural income in earlier years. • The land at the time of purchase was agricultural in nature as per the land records. • The Sale Deeds submitted by the assessee records that the land is agricultural land and the same was subsequently sold for industrial purpose which led to the question whether the agricultural land purchased and sold by the assessee can be treated as non-agricultural in nature and the profits thereof can be taxed or not. • We find that transfer u/s 63(AA) is conditional and has to be converted into non-agricultural land within 90 days and if not converted, the sale deed automatically gets cancelled. • Ld. CIT(A) held that at the point of sale by the assessee of the land, the land remained agricultural in nature and it was the purchaser who has to apply for conversion of the land into non-agricultural land before the State Government. • It also stipulates that failure to convert the land to non-agriculture would lead to cancellation of the sale deed. ITA No. 617/Ahd/2024 DCIT vs. Vedprakash D Chiripal Asst. Year : 2017-18 - 4– • Thus, it can be found that the assessee has purchased agricultural land and sold agricultural land which has been subsequently converted into non- agricultural land by the purchaser which does not ipso facto make the agricultural land sold by the assessee as the non-agricultural land. • Hence, we decline to interfere with the well-reasoned order of the Ld. CIT(A). 5. In the result, the appeal of the Revenue is dismissed. Order is pronounced in the open Court on 29.05.2025 Sd/- Sd/- Sd/- Sd/- (SIDDHARTHA NAUTIYAL) (DR. B.R.R. KUMAR) JUDICIAL MEMBER VICE-PRESIDENT Ahmedabad; Dated 29.05.2025 MV/BT आदेश की \u0007ितिलिप अ ेिषत/Copy of the Order forwarded to : 1. अपीलाथ\u0007 / The Appellant 2. \b थ\u0007 / The Respondent. 3. संबंिधत आयकर आयु\u0015 / Concerned CIT 4. आयकर आयु\u0015(अपील) / The CIT(A)- 5. िवभागीय \bितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड फाईल / Guard file. आदेशानुसार/ BY ORDER, True Copy सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, , , , अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation 01.05.2025 2. Date on which the typed draft is placed before the Dictating Member …26.05.2025.. 3. Other Member…26.05.2025… 4. Date on which the approved draft comes to the Sr.P.S./P.S …28.05.2025………. 5. Date on which the fair order is placed before the Dictating Member for pronouncement.. 29.05.2025 6. Date on which the fair order comes back to the Sr.P.S./P.S ……. 29.05.2025…………. 7. Date on which the file goes to the Bench Clerk ……29.05.2025….…. 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order 10. Date of Dispatch of the Order…………………………………… "