Ashok Somnath Sonawane Vs ITO (ITAT Pune)
Pune Tribunal examined whether land sold to a developer was rural agricultural land exempt from capital gains tax or taxable as a capital asset u/s 2(14).
Assessee had originally been assessed u/s 143(3) in Jan 2016 with exemption u/s 54B allowed on sale of agricultural land. Later, AO reopened assessment u/s 147 citing audit objection that land was sold to non-agriculturist company for non-agricultural purposes, hence 54B deduction was wrongly allowed. AO invoked SC ruling in Sarifabibi Mohamed Ibrahim (204 ITR 631) & adopted stamp duty valuation, making addition of ₹2,74,53,736 u/s 50C. CIT(A)/NFAC confirmed the addition, holding that though land was beyond 8 km from municipal limits, purchaser’s intention was non-agricultural & assessee failed to prove own cultivation for 2 years, hence 54B also denied.
Before Tribunal, Assessee argued that:
- Land at Shirgaon, Shahapur Taluka, Thane was certified as agricultural by Tahsildar in 2016 & situated 9 km from Shahapur municipality.
- Agricultural operations were carried till sale; consideration received was as per agricultural rate.
- Purchaser company was registered as agriculturist & no NA conversion occurred till date.
- In identical case of his wife Smita Ashok Sonawane, Pune ITAT had already held land as agricultural & deleted identical addition.
Tribunal noted consistency principle & followed its earlier order in ITO Vs Smita Ashok Sonawane (ITA 1119/PUN/2023, order dated 31.07.2024) where identical land parcel & transaction was held exempt. It held Revenue cannot take contradictory stands for husband & wife in same sale. Tahsildar’s certificate & 2(14)(iii) definition clearly established land as rural agricultural land, not a capital asset. Accordingly, Tribunal vacated CIT(A)’s order & directed deletion of entire addition of ₹2.74 crore.
