Shraddha Bagla Vs ITO (ITAT Mumbai)
Conclusion: Assessee was not entitled to claim exemption from capital gains on transfer of rural agricultural land as State Government had notified the said land for establishing industrial park and consequently, the land had become non-agricultural urban land.
Held: Assessee had sold various pieces and parcels of land situated at Village to M/s P Pvt. Ltd. for a consideration and claimed profit arising on the transaction as exempt on the ground that the land under consideration was a rural agricultural land covered by the exceptions carved out in Sec.2(14)(iii). Assessee claimed that as the land was not a capital asset within the meaning of the provisions of Sec. 2(14)(iii), thus the profit on sale of the same could not be brought to tax as capital gain in her hands. In the course of the assessment proceedings, AO observed that the land under consideration was notified by Government of Maharashtra for establishing industrial park. A.O concluded that as the government notification for development of an industrial park had preceded the sale of the land under consideration, thus the same no longer remained an agricultural land and was transferred to M/s P Pvt. Ltd. as a non-agricultural industrial land, therefore, the profit arising on the sale of the land was liable to be brought to tax as the income of assessee under the head capital gain. It was held the land was transferred to the purchaser company as a non-agricultural industrial land, and consequently, the profit arising on the sale of the land was liable to be brought to tax as the income of assessee under the head Capital gains
FULL TEXT OF THE ITAT JUDGEMENT
The present appeal filed by the assessee is directed against the order passed by the CIT(A)-28, Mumbai, which in itself arises from the order passed by the A.O under Sec. 143(3) of the Income tax Act, 1961 (for short ‘Act’), dated 03.02.2014 for A.Y. 2011-12. The assessee has assailed before us the order passed by the CIT(A) on the following grounds of appeal:
“1. The ld. A.O erred in making an addition of Rs. 90,19,000/- as Short term capital gains under Section 45 of the Act by treating the sold land as capital asset.
2. The Ld. A.O. erred in allowing the interest on housing loan of Rs.2,93,656/- part to the extent of Rs. 1,50,000/- ignoring the facts that the said property is let out and lull amount of’ Rs. 2,93,656/- is eligible for deduction u/s 24(b) of Act, 1961.
3. Further ld. A.O. also initiated the penalty provision u/s 271(1) (c) of the Act, the said penalty shall he dropped.
4. The Appellant craves leave to add, amend, alter, substitute and/or modify, withdraw in any manner what so ever all or any of foregoing grounds of appeal at or before the hearing of appeal.”
2. Briefly stated, the assessee had e-filed her return of income for A.Y 2011-12 on 06.02.2012 declaring Nil income. The case of the assessee was thereafter selected for scrutiny assessment under Sec. 143(2) of the Act. The A.O assessed the income of the assessee at Rs. 96,78,070/- after making certain additions/disallowances, as under:
