Groundnuts Save the Day – Sale of Land Beyond 8 km from Municipality Held Agricultural- ITAT Chennai

Anita Vs ITO (ITAT Chennai)

Assessee, an individual, filed return declaring total income of ₹7.49 lakh and agricultural income of ₹34,200. During scrutiny, AO noticed that Assessee, along with two family members, had sold 2.74 acres of land at Padarvadi Village, Sriperumbudur Taluk, for ₹5.97 crore (assessee’s 1/3rd share: ₹1.78 crore).

Assessee claimed the land was agricultural, exempt u/s 2(14)(iii), & filed Adangal & VAO certificates in support. However, AO treated it as urban land, holding that (a) it was classified as “residential” by Registration Dept. since 2007, (b) no cultivation was proved, & (c) it was purchased from a real-estate developer. He thus computed LTCG of ₹1.66 crore.

CIT(A) upheld the addition.

Before the Tribunal, Assessee submitted that the same land was co-owned with Shri Parasmal Ravindra Kumar, whose identical addition was deleted by ITAT Chennai (order dated 29.05.2025 in ITA No. 2859/Chny/2024), after examining VAO records, patta, & cultivation evidence showing the land lay 16 km beyond municipal limits & was used for groundnut cultivation.

Departmental Representative conceded the facts were identical.

Tribunal noted that the co-owner’s case had already been adjudicated on the same facts, where the Tribunal held the land to be agricultural beyond 8 km from the nearest municipality, supported by VAO certificate, patta, & adangal. Citing Madras HC in P. Ashok Kumar v. CIT (TCA 268/2011) and Sakunthala Vedachalam v. CIT (53 taxmann.com 62), it reiterated that non-cultivation does not change agricultural character if revenue records and classification support it. Following coordinate bench precedent, the ITAT directed deletion of the LTCG addition of ₹ 1.66 crore, holding the land exempt u/s 2(14)(iii)(b).