Case Law Details
Naresh Kantilal Thacker Vs ITO (ITAT Rajkot)
ITAT Rajkot held that conversion of agricultural land into non-agricultural land and sale thereof, such sale consideration is received from sale of non-agricultural land and hence the same is taxable under income tax.
Facts-
The assessee purchased a piece of land at Ajapar Village on 06.02.2014 for a consideration of Rs. 1,53,00,000/-. Within six days thereafter i.e. on 12.02.2014, the assessee sold the very same land to M/s. Agarwalla Teak International Pvt. Ltd. (hereinafter referred as ATIL) for a consideration of Rs. 1,86,00,000/-. The assessee had shown the gain on sale of land in his capital account of Rs. 23,96,970/- however not declared in the Return of Income as the same is an agriculture land, exempt from taxation u/s. 2(14)(iii) of the Act. The Assessing Officer issued a show cause notice why not to treat the sale of land as Short Term Capital gain.
AO held that the assessee’s claim is partly true and also misleading. Since immediate after the issuance and service of the show cause notice on 05.12.2016, the assessee filed ROI for the A.Y. 2016-17 on 07.12.2016, accepting STCG. The assessee has not filed the ROI voluntarily u/s. 139 of the Act, but only after issuance of the show cause notice for the A.Y. 2014-15. Thus the claim of the assessee that the gain on the sale of land is to be treated as agriculture income is without basis and merits. Trading in agriculture land cannot be termed as income from agriculture. The intention of the assessee was clear not to do any agriculture activities, but clearly to sell the said land to non-agriculturist from whom he received the entire funds. Therefore AO treated the transaction as STCG and charged to tax for the A.Y. 2014-15 and demanded tax thereon.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
Author Bio
