ASHOK CHAGANLAL THAKKAR Vs. NATIONAL FACELESS ASSESSMENT CENTER

JUDGEMENT

(1.) Rule. Rule made returnable forthwith and heard. As the pleadings are completed, this court, by consent of the parties has taken up the matter for final hearing.

(2.) Petitioner is an individual, who had invested in certain parcels of lands at Ardhe and Aase at Taluka Karjat, District Raigad. During the pervious year, i.e., 2012-13, petitioner sold those parcels of lands. Petitioner filed return of income for A.Y.-2013-14 on 22/4/2014 disclosing income of Rs.6,91,540.00. The return of income was processed under Sec. 143(1) of the Income Tax Act 1961 (the Act). Later, the case was selected for scrutiny under CASS and notice dated 28 th August 2015 under Sec. 143(2) of the Act was issued. Subsequently, a notice dated 15 th January 2016 under Sec. 142(1) of the Act was issued to petitioner calling upon to furnish copy of the agreement for purchase and sale of the agricultural lands. Petitioner was also called upon to furnish details of agricultural produce in the previous years and income offered in the return of income with documentary evidence and show cause as to why the capital gain earned or accrued should not be taxed as per the provisions of the Act. Therefore, by notice dtd. 12/2/2016 petitioner was also called upon to show cause as to why the sale of land should not be brought to tax as no agricultural activity were undertaken on the land under consideration. By another notice dated 7 th March 2016 under Sec. 142(1) of the Act petitioner was asked to explain the applicability of Sec. 50C of the Act in respect of the sale of the land under consideration.

(3.) Petitioner, on its part, vide letter dtd. 24/2/2016, submitted, and which is also the case of petitioner in this petition as well, that the agricultural land sold was a rural agricultural land as per Sec. 2(14)(iii) of the Act and the agricultural land situated in rural area was not covered in the definition of capital asset. Therefore, no capital gain was applicable. It was submitted that provisions of Sec. 2(14)(iii) of the act does not require that agricultural operations should be undertaken on such land at the time of transfer or immediately prior to the transfer. It was also submitted that only in cases where Sec. 10(37) and Sec. 54B of the Act were applicable, for claiming exemption from sale of agricultural land, there was requirement that the land should be used for agricultural purposes during the preceding two years from the date of transfer. Petitioner also relied upon circular dated 13 th April 2011 issued by Government of India, Ministry of Rural Department, New Delhi- F.M.24011/2009-LRD, which provides that there is no tax liability on the transfer of rural agricultural lands.