The brief facts of the case are that during the year, the assessee sold agricultural lands for total consideration of 10,30,200/-. The gain on sale of such agricultural lands amounting to 6,60,504/- was claimed as not taxable in the return of income under the head “Exempt Income” since the said agricultural lands at the time of sale were situated beyond 8 km from the local limits of Vadodra Municipal Corporation (VMC).
During the course of assessment proceedings, the assessing officer issued a show-cause notice as to why provisions of section 50C should not be applied to the sale of such lands, because as per Vadodara Urban Development Authorities distance from Vadodara Mahanagar Seva Sadan to Bhavpura and Baniyara are within 8 km and hence the land situated in these 2 villages cannot be treated as agricultural land. The assessee submitted that the lands are situated beyond the prescribed limit of 8 km and hence are not capital assets within the meaning of section 2(14) of the Act. However, the AO rejected the assessee’s contention.
The assessee preferred an appeal before the Commissioner of Income Tax (Appeal). In appeal, CIT(A) gave partial relief to the assessee and after taking into consideration the submissions of the assessee with regard to the distance of the 2 properties in question from the municipal limits, he deleted the STCG with respect to land sold in village Bhavpura by holding that this land falls outside the VMC municipal limits, as can be seen from Google Maps. However, CIT(A) confirmed the addition of 7,23,742/- as LTCG in respect of land sold in village Bhaniyara on the ground that as per Google Maps, the land was situated within 8 km from VMC limit.
After hearing the contention of both parties court held that the Assessing Officer will be required to review the documents filed by assessee and provide an opportunity to examine the same. In the matter of the addition of 12% under section 44AD of the Act, the Tribunal viewed the restriction made by CIT on the disallowance of 10%in the absence of corroborative evidence as correct. The appeal was partially allowed for statistical purposes.
Rameshbhai Arvindbhai Patel vs The ITO
ITA Nos. 458 & 459/Ahd/2019
Decision in favour of: Assesse (Partly)THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “SMC” BENCH