Capital gains resulting from the sale of agricultural land which is not a fixed asset will not be subject to income tax: ITAT

The Income Tax Appeals Tribunal (ITAT) of Ahmedabad has ruled that capital gains resulting from the sale of agricultural land that do not constitute capital property will not be subject to income tax. income.

The appraised, Dashratbhai Gopalbhai Patel, in his tax return for AY 2012-13, notably declared long term capital gains of Rs. 1,33,25,071 / – on the sale of certain plots of land in Adalaj, Gujarat. The appraised claimed a deduction under section 54B of the Act to the extent of the aforementioned long-term capital gain through the purchase of another land in Khoraj for consideration of 2,11,00,000 Rs./-. As a result, the taxable capital gain was nullified in the income tax return. In developing the appraisal under subsection 143 (3) of the Act, the AO ruled that capital gains on the sale of farmland from the appraised fall within the definition of capital property. under subsection 2 (14) (iii) of the Act on the ground that the parcel of land giving rise to capital gains is located in an area which is included within the municipality and that such agricultural land is are located at a distance not exceeding 8 kilometers from the local limits of municipal / content commissions.

The AO therefore considered that capital gains resulting from the sale of agricultural land located within municipal boundaries are not excluded from the definition of “fixed assets” and are therefore taxable. In addition, the exemption claimed by the appraised under section 54B of the Law in the amount of Rs.2.11.00,000 was limited to Rs.20 Lakhs on the basis of the actual payments made by the ‘assessed against the agreed consideration.

The coram of the judicial member, Madhumita Roy and of the accountant member, Pradip Kumar Khedia considered that the case of the assessed for the exclusion of agricultural land from the definition of “fixed assets” placed in an identical factual matrix should therefore be retained for this one motive.

The court ruled that the capital gains resulting from the sale of agricultural land themselves are not liable to claim, the claim for deduction under section 54B becomes unsuccessful and is therefore not adjudicated.

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