Agricultural land classified in revenue records is not a capital asset under section 2(14), and buyer's intention is irrelevant.

आदेश/ORDER

PER S. R. RAGHUNATHA, AM :

This appeal by the assessee is filed against the order of the learned Commissioner of Income Tax (Appeal), NFAC, Delhi, (in short Ld.CIT(A)) for the assessment year 2017-18, vide order dated 12.02.2025.

2. The assessee’s only ground of appeal was that the ld.CIT(A), NFAC, Delhi has erred in confirming the addition of Rs.2,89,70,277/- as long term capital gain when the asset sold is agricultural land which is not a capital asset within the meaning of Section 2 (14) of the Income Tax Act, 1961 (in short ‘the Act’) for the A.Y.2017-18. To support the said ground the assessee raised many grounds which are argumentative and hence not required to be reproduced.

3. The brief facts of the case are that the assessee is an individual, filed his return of income on 07.07.2017 for the A.Y. 2017-18 by declaring a total income of Rs.6,19,440/- and an agriculture income of Rs.2,92,92,930/- towards profit on sale of agricultural land. The case was selected for limited scrutiny assessment under CASS for the reason “agriculture income and capital gains / loss on sale of property”. Accordingly, the Assessing Officer (in short ‘AO’) issued statutory notices to the assessee and the assessee submitted the details from time to time.

4. The assessee along with 3 other family members have sold various agricultural lands situate at Mathur Village, Sriperumbudur Taluk during the previous year relevant to the assessment year 2017-18 and the appellant’s share of sale consideration received was Rs.2,92,92,930/-. During the course of assessment proceedings, the assessee was called upon to justify the claim of exemption on sale of agricultural lands. The assessee had submitted that the lands sold are agricultural lands and recorded as such in the Revenue records like chitta and Adangal and in support thereof the assessee had submitted the certificate from the Village Administrative Officer (VAO) and also submitted that the land is located 11.3 km. away from the Sriperumbudur Town and the population of Mathur village was 1,628 as per 2011 census. The assessee therefore submitted that the land sold was a rural agricultural land as per the provisions of the Act and therefore the profit on sale of such agricultural lands is exempt from tax.

5. The AO however did not accept the submissions of the assessee. He has observed that the certificate issued by the VAO dated 03.03.2016 for Fasli No.1425 originally submitted showed that the land was Nanja lands and land revenue was paid but there was no mention about the crop cultivated. However, in the certificate submitted on 16/12/2019, the crop cultivated is shown as :Ner Paiyr (Paddy) and therefore the certificate submitted was fabricated one. He further found that there was no agricultural activities undertaken and no return of income was filed earlier to the assessment year 2017-18. He further observed that the land was sold to M/s.Arun Excello Homes Private Ltd. which is not into agriculture activities. According to AO, no genuine agriculturist would purchase such a land at an exorbitant price. Though the lands are classified as Nanjai Lands, the lands are Banjar lands. The AO had also conducted enquiries through his Inspector who has reported on 12.12.2019 that no agricultural activities were undertaken by the assessee. After citing some case laws, the AO has concluded that the land sold was not an agricultural land and brought to tax the sum of Rs.2,83,50,837/- after allowing indexed cost of the land of Rs.9,42,093/- as against the sale consideration of Rs.2,92,92,930/- as Long term capital gains by passing an order u/s.143(3) of t