Case Law Details
K.P. Manjunatha Reddy Vs ITO (ITAT Bangalore)
Facts- A.O. made addition of Rs.2.06 crores as LTCG arising from sale of land. The assessee claimed that the said land is situated beyond 10 kms. Away from the nearest Municipal limit and therefore, it is not a capital asset as per section 2(14) of the Income-tax Act,1961.
However, the A.O. held that the land was converted for nonagricultural purposes before execution of sale deed, therefore, it is a capital asset u/s 2(14) of the Act and it cannot be exempted u/s 10(1) of the Act. Accordingly, the same was brought into taxation as capital gain.
Conclusion- In the present case, the main reason for treating the land as non-agricultural is that the land was converted for usage of non-agricultural purposes. However, the assessee filed revenue records wherein it is stated that the land still continued to be agricultural land wherein crops like Ragi & Paddy were cultivated by the assessee. Further, it was brought on record by the assessee that the land revenue was paid as applicable to agricultural land only.
Madras HC, in the case of CIT v. Ashok Kumar Rathi, has held that if the land is recorded as agricultural land in the revenue records, it would only enure in favour of the assessee as agricultural land and assessee is entitled to get exemption from tax.
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