Capital gain on transfer of land notified for establishing industrial park was liable to tax as it was non-agricultural land

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:

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