The Commissioner of Income Tax-24 vs Amrutlal B. Shah

This Appeal under Section 260-A of the Income Tax Act, 1961 (the Act), challenges the order dated 20th February, 2013 passed by the Income Tax Appellate Tribunal (the Tribunal) for the Assessment Year 2007-08.

The Revenue has urges the following questions of law for our consideration:--

"Whether on the facts and circumstance of the case and in law, the Tribunal was justified in upholding the claim of Assessee that long term capital gain earned out of sale proceeds of agricultural land is exempt u/s. 2(14) of the Income Tax Act, 1961?"

The Respondent-Assessee owned agricultural land at Navagam, Taluka Lalpur, District Jamnagar, Gujarat. The agricultural land (the said land) was acquired by the State Government of Gujarat and in consideration, a compensation of Rs. 63.12 lakhs was received by the Respondent-Assessee. In its return of income for the subject Assessment Year, the Respondent-Assessee had claimed that the amount received on acquisition of the said land was not chargeable to tax under the head ''capital gains'' as it was not a capital asset. The Assessing Officer did not accept the same and held that the agricultural land fell within the purview of the capital asset within the meaning of Section 2(14) of the Act. Accordingly, the long term capital gain was determined at Rs. 59.23 lakhs in the Assessment Order dated 23rd December, 2009.

In first appeal, the Commissioner of Income Tax (Appeals) [CIT(A)] came to the conclusion that the said land is situated 19.34 km away from the city of Jamnagar, Gujarat. Accordingly, by order dated 9th March, 2011 held that said land is in town of Navagam which has a population of 1000 persons and is more than 19 km away from the Municipal limits of Jamnagar. Therefore, he holds that the said land does not fall within the definition of capital asset in Section 2(14) of the Act.

On further appeal by the Revenue, the Tribunal by the impugned order recorded the fact that as per the land record, said land is agricultural land. Besides, it placed reliance upon the certificate of the Deputy Collector, Jamnagar, Gujarat which records the fact that the State Government had acquired agricultural land inter alia of the Respondent to establish SEZ. The Talati''s certificate on record of the Tribunal also indicates that the said land is an agricultural land. In view of the above, the Tribunal upheld the finding of the CIT(A) and held that the said land would not fall within the definition of capital asset. Consequently, the sale consideration received would not be chargeable tax under the head ''capital gains''.

We find that the definition of capital asset as provided under Section 2(14) of the Act includes only that agricultural land within the scope of capital asset those specified in sub-section (iii)(a) and (b) of Section 2(14) of the Act. Admittedly/undisputedly, the said land does not fall within the area provided sub-clauses of (a) and (b) of Section 2(14)(iii) of the Act. The Revenue also does not dispute the same before us. Therefore, the said land is not a capital asset as defined under Section 2(14) of the Act.

Both the CIT(A) and the Tribunal have held that the said land is an agricultural land and outside the meaning of the capital asset as defined under Section 2(14) of the Act. This on basis on the evidence of the Talati as well the Deputy Collector.

In the above circumstances, we see no reason to disturb the concurrent finding of the fact as it is not shown to be perverse and/or arbitrary. Therefore, the question as framed does not give rise to any substantial question of law.

Accordingly, Appeal dismissed. No order as to costs.