Case Law Details

Case Name : Dharam Pal Saini Vs PCIT (ITAT Delhi)
Appeal Number : ITA No.1043/Del/2022
Date of Judgement/Order : 07/12/2023
Related Assessment Year : 2012- 13

Dharam Pal Saini Vs PCIT (ITAT Delhi)

Introduction: In a recent decision, the Income Tax Appellate Tribunal (ITAT) Delhi addressed a crucial matter in the case of Dharam Pal Saini vs PCIT. The appeal challenged the order of the CIT(A), Faridabad, dated 20.03.2022, framed under section 263 of the Income Tax Act.

Detailed Analysis: The crux of the matter was the sale of an urban agricultural land during the relevant assessment year. The assessee treated the land as agricultural, not subject to capital gains tax. However, the ITAT Delhi, through revision proceedings under section 263, questioned the assessment order dated 11.12.2019.

The Principal CIT, invoking jurisdiction under section 263, issued a notice to the assessee, questioning the correctness of the assessment order. The assessee conceded during the proceedings that the properties in question qualified as a capital asset under the Income Tax Act. Subsequently, the Principal CIT set aside the assessment, emphasizing that the land was indeed a capital asset.

Upon careful consideration of the orders and after hearing the counsel, the ITAT Delhi affirmed the decision of the Principal CIT. The tribunal concluded that the sale consideration of the urban agricultural land is subject to capital gains tax, aligning with the relevant provisions of the Income Tax Act. As a result, the appeal by the assessee was dismissed.

Conclusion: The ITAT Delhi’s decision reinforces that the sale of urban agricultural land falls within the purview of capital gains tax. Upholding the revision proceedings under section 263, the tribunal emphasized the correct categorization of the land as a capital asset. This judgment holds significance for taxpayers and sets a precedent for the tax treatment of transactions involving urban agricultural land in the context of capital gains tax.


This appeal by the assessee is preferred against the order of the CIT(A), Faridabad dated 20.03.2022 framed u/s. 263 of the Act.

2. The sum and substance of the grievance of the assessee is that the Pr. CIT erred in assuming jurisdiction u/s. 263 of the Act and further erred in holding that the assessment order dated 11.12.2019 is not only erroneous but also pre judicial to the interest of the revenue.

3. Briefly stated the facts of the case are that during the year under consideration the assessee has sold an agricultural land which was an urban agricultural land and a capital asset as per relevant provisions of the Act but the same was treated as agricultural land not exgible to capital gains tax.

4. Assuming jurisdiction conferred upon by the provisions of section 263 of the Act the Pr. CIT issued notice to the assessee asking to show cause why the impugned assessment order should not be treated as erroneous and pre judicial to the interest of the revenue.

Urban Agricultural Land Sales Subject to Capital Gains Tax ITAT Delhi

5. During the course of the proceedings u/s. 263 of the Act the assessee accepted that properties are in question is a capital asset under the IT Act. On such concession and finding that the impugned asset was a capital asset assessment was set aside by the Pr. CIT.

6. We have given a thoughtful consideration to the orders of the Pr. CIT, Faridabad. After hearing the Counsel we are of the considered view that the sale consideration of impugned land is exigible to capital gains tax as per relevant provisions of the Act and, therefore, we do not find any error or infirmity in the order of the CIT dated 20.03.2022 and decline to interfere.

7. In the result, the appeal of the assessee is dismissed.

8. Decision announced in the open court on 07.12.2023.

Download Judgment/Order

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