Meenu Arya, Ghaziabad V. ITO,Ward-3(4), Hapur

ITA 85/DEL/2023

AI Insights

The case revolves around the appeal by Meenu Arya against the order of the Commissioner of Income Tax (Appeals), which sustained the addition of long term capital gain on the sale of rural agricultural land. The primary contention was whether the land sold was agricultural land, which would exempt it from capital gains tax, or a capital asset, which would attract such tax. The Tribunal examined various documents, including sale deeds and revenue records, to ascertain the nature of the land. The Tribunal concluded that the land was indeed agricultural, supported by evidence of agricultural activities conducted on it, and thus ruled in favor of the assessee.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 131287 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 05-04-2023
• Assessment Year: 2014-2015
• Appeal Filed On: 12-01-2023
• Other Referred Cases: Hindustan Industrial Resources Vs. Asst. ACIT 335 ITR 77 (Delhi)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset
• Section: 54; 54B; 2(14)

Judgement Text

Page | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “SMC”: NEW DELHI BEFORE Shri C.M. Garg, Judicial Member ITA No. 85/Del/2023 (Assessment Year: 2014-15) Meenu Arya, Ch. No. 206-207, Ansal Satyam RDC, Rajnagar, Ghaziabad Vs. ITO, Ward-3(4), Hapur (Appellant) (Respondent) PAN:ABCPA7903P Assessee by : Shri Akhilesh Kumar, Adv Revenue by: Shri Om Parkash, Sr. DR Date of Hearing 06/04/2023 Date of pronouncement 23/06/2023 O R D E R 1. This is an appeal filed by the assessee against the order of the ld CIT(A), National Faceless Appeal Centre (NFAC) dated 24.11.2022 for the Assessment Year 2014-15. 2. Ground No. 1 of the assessee is general in nature, the remaining effective ground reads as follows:- “2. Because learned Commissioner of Income Tax (Appeals) has grossly erred in sustaining the addition of long term capital gain of Rs. 18,03,148/- made by Id. AO on sale of undisputedly rural agricultural land u/s 2(14) of Act supported with Nagar Palika Parishad, revenue records etc., thus taxing an income beyond the purview of section 45 of Act. 3. Because learned Commissioner of Income Tax (Appeals) is inherently wrong in making incorrect remark on receipt of Govt. and further went wrong in doubting the land as barren land with no agricultural operation though khasra itself proved agricultural activity. 4. Because, both the authorities below further misdirected themselves under the law, in differentiating between the rural agricultural land u/s 2(14) and urban agricultural land subjected u/s 548. of Act.” ITA No. 85/Del/2023 Meenu Arya Page | 2 3. The ld counsel submitted that the ld CIT(A) has grossly erred in sustaining the addition of long term capital gain of Rs. 18,03,148/- made by the AO on sale of rural agricultural land u/s 2(14) of the Income Tax Act, 1961 (for short ‘the Act’) supported with Nagar Palika Parishad, revenue record etc and taxation the income beyond the purview of section 54 of the Act. The ld counsel submitted undisputedly the land sold by the assessee was rural agricultural land and therefore, the ld CITA) was wrong in doubting the transaction of sale of barren agricultural land by upholding that there was no agricultural activity or operation though the revenue record/ Khasra entry dates proved agricultural activity thereon by the assessee. The ld counsel also submitted the authorities below have further misdirected themselves under the law in differentiating between rural agricultural land u/s 2(14) of the Act and urban agricultural land subjected u/s 54B of the Act. 4. The ld counsel drawing our attention towards para 4 of assessment order submitted that the AO took an incorrect fact that the land sold by assessee was not barren rural agricultural land and was capital asset within the meaning of section 2(14) of the Act and hence sale consideration received attracts long term capital gain. The ld counsel submitted that the AO himself agreed that as per revenue record land is agricultural land then the contrary observation of the ld CITA) that there was no clarity to the nature of land is incorrect. He further pointed that the copy of sale deed available at page 7 to 15 of the assessee’s paper book clearly reveals that the land was clearly recorded as agricultural and which was situated at National Highway of one side and surrounded by the field of three sides on which agricultural activity was carried out and purchased deed also reflects the same factual position. The ld counsel drawing out attention towards page No. 23 to 30 of assessee’s paper book submitted that certified copy of Khatauni of Khasra No. 758 from 2010 to 2014, which are on record giving details of various ITA No. 85/Del/2023 Meenu Arya Page | 3 agricultural produce like wheat, mustard, potato, chara etc clearly proves beyond doubt that agricultural activity was carried out on the land and it was also submitted to land revenue. The ld counsel submitted therefore, the orders of the authorities below may kindly be set aside and the addition made by the AO on account of long term capital gain may kindly be deleted. 5. Replying to the above the ld Sr. DR supported the orders of the authorities below and submitted that after careful consideration the documentary evidences filed by the assessee the AO rightly reached to the conclusion that though the revenue record of the land was shown as agricultural land but no agricultural activity have been performed by the assessee during the year or during immediately preceding two years. He further pointed out that the agricultural land was situated on the national highway, the land sold by the assessee was undoubtedly a capital asset within the meaning of section 2(14) of the Act read with section 54B of the Act and thus chargeable to long term capital gain. The ld Sr. DR submitted that orders of the authorities below may kindly be uphold. 6. On careful consideration of the above submission first of all from the copy of the relevant pages of the purchase deed dated 11.01.2007 available at page 1 to 6 of PB I note that the seller Irshad Ali had mentioned that he is selling agricultural land Khasra No. 758 to the assessee to the assessee, which is situated at National Highway. Further, from the copy of the relevant pages of the sale deed dated 01.05.2013 available at page 7 to 15 of assessee’s paper book I further note that the assessee sold this land to Md. Gouri and others showing the land as agricultural land situated at Village Sarurour pargana and Tehsil Gar Mukteswar, Distt Ghaziabad. Further, from the certified copies of Khatuni of Khasra No. 758 I further noted that the revenue records reveals that the agricultural activity by obtaining copy of wheat, mustard, potato, chara etc was carried out in one year and in second year i.e. during ITA No. 85/Del/2023 Meenu Arya Page | 4 2013 the crop of wheat and mustard was taken from the land survey 758. Page No. 37 and 38 of assessee’s paper book reveals that population of Nagar Palika as per census 2011 was 46,077 and the land was situated in village Village Sarurour pargana 6 Kms away from Tehsil HQ Garmukteswar. Page 37 reveals that the assessee also obtained no objection certificate form Nagar Palika. 7. Now I turn to consider the proposition rendered by Hon'ble High Court of Delhi in case of Hindustan Industrial Resources Vs. Asst. ACIT 335 ITR 77 (Delhi), as vehemently relied by the ld counsel of the assessee wherein at page 2 their lordship held that where the assessee has throughout maintained that the land in question was land falling within the definition of ‘agricultural land’ given in section 2(4)(iii) of the Act. The fact that the appellant/ assessee intended to use the land for industrial purpose did not in any way alter the nature and character of the land. It was also held by Hon'ble High Court that the further appellant/ assessee did not carry out any agricultural operation did not also result in any conversion of the agricultural land into an industrial land. The case of the assessee is on better footing as the Khasra revenue records clearly reveals that during the year of sale as well as immediately preceding year the crop of wheat, potato, wheat mustard respectively was sown and assessee undertake agricultural activities on the land. It is not the case of the AO that the assessee was carrying out any other activity on the land then the agricultural activity. Therefore, the proposition rendered by the Hon'ble Delhi High Court (supra) supports the case of the assessee. 8. In view of the foregoing discussion I am of the considered view that the AO misdirected himself in applying provision of section 54B of the Act which are applicable on urban agricultural land claiming deduction u/s 54B of the Act and not agricultural activity in showing in agricultural land carried out agricultural land activity thereon obtaining crops therefore, therefrom and thereafter in the same ITA No. 85/Del/2023 Meenu Arya Page | 5 status rural agricultural land she sold land to 3 rd party then such transaction of sale does not fall within the meaning of section 2(14) read with section 54B of the Act attracting levy of tax on account long term capital gain. Therefore, grounds of assessee are allowed and AO is directed to delete the addition. 9. In the result, appeal of the assessee is allowed. Order pronounced in the open court on 23/06/2023. -Sd/- () (C. M. GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 23/06/2023 A K Keot Copy forwarded to 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi