ACIT Vs Ahmed Mahomed Pandor (ITAT Ahmedabad)
The Income Tax Appellate Tribunal (ITAT), Ahmedabad, adjudicated cross-appeals filed by both the Revenue and the assessee against the order of the Commissioner of Income Tax (Appeals) dated 06.06.2025 for Assessment Year 2016–17. The matter arose from reassessment proceedings initiated after the Assessing Officer (AO) received information that the assessee had sold two immovable properties during the relevant year. The assessee initially did not file a return but later filed one in response to notice under Section 148, declaring income from other sources and not offering any capital gains from the sale of land. The assessee contended that the land sold was agricultural land and therefore did not fall within the definition of “capital asset” under Section 2(14) of the Income Tax Act.
The AO rejected this contention and treated the land as a capital asset, making an addition of ₹8.75 crore towards long-term capital gains. The AO also noted that the land was sold to a company for industrial purposes and that tax was deducted at source treating it as a capital asset. On appeal, the CIT(A) deleted the addition, holding that the land was agricultural in nature and located beyond the prescribed municipal limits. The CIT(A) relied on land revenue records and found that the land was situated approximately 2–3 kilometers from the nearest municipality, Ankleshwar INA, which had a population of 24,789 as per the 2011 census. Therefore, it did not qualify as a capital asset under Section 2(14)(iii)(b).
