Case Law Details
Ishwar Dewllings Pvt. Ltd. Vs PCIT (ITAT Lucknow)
Facts- The AO vide notice u/s 154 dated 02/05/2018 proposed rectification of the order passed u/s 143(3) by including profit on sale of agricultural land in the computation of book profits u/s 115JB. Thereafter, AO dropped the proceedings initiated u/s 154 vide order dated 14/06/2018.
However, the assessee filed the appeal aggrieved against the order of the Commissioner of Income Tax (CIT). The Counsel for appellant, Shweta Mittal submitted that CIT grossly erred in passing the order under section 263 even though the assessment order under section 143(3) was passed by the Assessing Officer (AO) after extensive enquiry and was neither erroneous nor prejudicial to the interest of the Revenue and that CIT has erred in law and on facts by ignoring the relevant evidence and material on record, e.g. certificate from the Tehsildar in question and copy of Jamabandi of land in question which clearly showed that the owner of land was doing agricultural activities itself on the land and copy of crop inspection report maintained by the head of the village which clearly showed the name of crops grown on the land in last four years.
Conclusion- In the present case there is no denying of the fact that in the Revenue records the land has been classified as agricultural land. The evidence of agricultural activities being carried out on such land was filed with the Assessing Officer. The copy of Jamabandi and Khasra Khatauni was filed with the Assessing Officer. The copy of Khasra/Girdwari and crop inspection book was filed before the Assessing Officer which was again filed before Pr. CIT, where from 2012-13 to 2017-18, Sarson has been mentioned to have been cultivated. The evidence of the land being situated at an ariel distance of 10 Kms., was also filed with the AO vide letter dated nil wherein the details of location, details of land as downloaded from web along with details of population as per census 2011 was submitted. Therefore, keeping in view these documents and evidences the Assessing Officer took a plausible view and held such land to be agricultural land.
There is no dispute that the profit arising on sale of agricultural land, which does not fall in the category of ‘capital asset as defined under section 2(14), does not come under the purview of the Income-tax Act at all. For example, the profit arising on sale of personal effects is not exigible to Income tax Act. In the similar manner, the profit arising on sale of agricultural land, which is not a capital asset, is also not exigible to income tax. Hence, an item of income which does come under the purview of income tax cannot be subjected to tax under any of the provisions of the Act. Accordingly, the profit from sale of agricultural land, which is not a ‘capital asset’, cannot be included for the purpose of computing book profit under section 115JB of the I.T. Act, 1961.
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