Bhadrabala Dhimantrai Joshi Vs ACIT (ITAT Surat)
The Income Tax Appellate Tribunal, Surat Bench, adjudicated an appeal against the order of the Commissioner of Income Tax (Appeals) confirming addition of ₹1,21,92,898 for Assessment Year 2017–18. The assessee had declared income of ₹26,87,190 and claimed exemption on capital gains arising from sale of land, contending that the land was rural agricultural land not constituting a “capital asset” under Section 2(14)(iii) of the Income Tax Act. The Assessing Officer rejected this claim, holding that the land did not satisfy conditions under Section 2(14)(iii) and further treated the transaction as business income, alleging that the land was stock-in-trade. The addition was confirmed by the CIT(A), who observed that the assessee was not engaged in agricultural activity, the land was within municipal jurisdiction, and exemption conditions were not fulfilled.
Before the Tribunal, the assessee submitted documentary evidence including revenue records, certificates from Mamlatdar and Executive Magistrate, and prior income tax returns reflecting agricultural income. It was contended that the land was agricultural, situated in a rural area with population below 10,000, and located beyond the prescribed distance from municipal limits. It was further argued that no conversion to non-agricultural use, development, or plotting had taken place, and that multiple transactions represented sale of portions of the same land rather than separate trading activity.
