Sudarsanam Vs ITO (ITAT Chennai)
Buyer’s intention irrelevant – ITAT upholds Agricultural nature of land; Fabrication doubt can’t override revenue records: Relief to Land Seller
The issue before the Chennai ITAT was whether the profit from sale of agricultural land amounting to ₹2.92 crore is taxable as long-term capital gain or not a capital asset.
Assessee filed his return of income by declaring a total income of Rs.6,19,440/- & an agriculture income of Rs.2,92,92,930/- towards profit on sale of agricultural land. During scrutiny, Assessee submitted that the lands sold are agricultural lands & recorded as such in the Revenue records like chitta & Adangal & in support thereof the assessee had submitted the certificate from the Village Administrative Officer (VAO) & also submitted that the land is located 11.3 km. away from the Sriperumbudur Town & the population of Mathur village was 1,628 as per 2011 census. Assessee therefore submitted that the land sold was a rural agricultural land as per the provisions of the Act & therefore the profit on sale of such agricultural lands is exempt from tax.
AO observed that the certificate issued by the VAO originally submitted on 3.3.2016 showed that the land was Nanja lands & land revenue was paid but there was no mention about the crop cultivated. However, in the certificate submitted on 16.12.2019, the crop cultivated is shown as Paddy & therefore the certificate submitted was fabricated one. There was no agricultural activities undertaken & no return of income was filed earlier to AY 2017-18. The land was sold to M/s.Arun Excello Homes Private Ltd. which is not into agriculture activities. AO held that no genuine agriculturist would purchase such a land at an exorbitant price. Though the lands are classified as Nanjai Lands, the lands are Banjar lands. AO had also conducted enquiries through his Inspector who has reported on 12.12.2019 that no agricultural activities were undertaken by Assessee. AO concluded that the land sold was not an agricultural land and brought to tax the sum of Rs.2,.83 crore after allowing indexed cost of the land, as capital gains. CIT(A) confirmed AO’s order.
