SUNIL BANSAL Vs. ASSISTANT COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) This is an assessee's appeal under Sec. 260A of the Income Tax Act, 1961 contends that the Income Tax Appellate Tribunal (ITAT) has fallen into error; in its impugned order. It proposes a question of law i.e. whether the properties sold were to be excluded from the meaning of capital asset as they were agricultural land as defined by Sec. 2(14) of the Act of 1961.

(2.) The relevant facts are that the assessee reported, (for the assessment year 2008-2009) certain sale transactions. His return claimed that the transaction in purchase and sale of agricultural land could not be included in taxable income in view of Sec. 2(14)(iii) of the Act of 1961; in support of his contention the assessee relied upon a certificate issued by the concerned Revenue Officer i.e. the Tehsildar to the effect that the land was situated 8 kilometers from any city municipality limits. The AO however, rejected the contention after considering the nature of the transactions. The asessee had contended that the lands initially purchased by him were infact registered and were intended to be maintained by him in their original character as agriculture lands and were in that form transferred to others who later got them converted into purposes other than agriculture, for example toward development etc. It was thus contended that the essential characteristic of the land was agricultural and thus, excluded from the ambit of the Act by virtue of Sec. 2(14). These contentions however, were negatived by the AO.

(3.) Aggrieved, the assessee's appealed successfully to the CIT(A) who accepted his contention and held that having regard to the circumstances, the primary intention was to retain the character of the property as agriculture land. The revenue's appeal was allowed by ITAT.