Case Law Details
Rameshbhai Arvindbhai Patel Vs ITO (ITAT Ahmedabad)
Facts- The assessee sold agricultural lands situated for total consideration of INR 10,30,200/-. The gain on sale of such agricultural lands amounting to INR 6,60,504/- was claimed as not taxable in the ROI under the head “Exempt Income” since the said agricultural lands at the time of sale were situated beyond 8 km from the local limits of Vadodara Municipal Corporation (VMC).
During the course of assessment proceedings, the AO issued a notice as to why provisions of section 50C should not be applied to the sale of such lands, because as per Vododara Urban Development Authorities (VUDA) letter dated 22.12.2014, distance from Vadodara Mahanagar Seva Sadan to Bhavpura and Baniyara are within 8 km and hence the land situated in these 2 villages cannot be treated as agricultural land.
The assessee submitted that the lands are situated beyond the prescribed limit of 8 km and hence are not capital assets within the meaning of section 2(14) of the Act. However, the AO rejected the assessee’s contention and relying on the Town Planner, VUDA’s letter specifying the area and distance, held that the land does not qualify as agricultural land and applied the provisions of section 50C of the Act. Accordingly, the AO made an addition of INR 7,23,742/- as a LTCG and INR 6,88,065/- as STCG in respect of 2 properties applying the provisions of section 50C of the Act.
Ld. CIT(A) confirmed the addition of INR 7,23,742/- as LTCG in respect of land sold in village Bhaniyara on the ground that as per Google Maps, the land was situated within 8 km from VMC limit.
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