THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “B” BENCH Before Dr. BRR Kumar, Vice President And Ms. Suchitra Kamble, Judicial Member ITA No. 566/Ahd/2025 Assessment Year 2014-15 The ACIT, Deepak Jyotiprasad Central Circle-2(1), Chiripal, 283 Chiripal, Ahmedabad Vs New Cloth Market O/s (Appellant) Raipur Gate Ahmedabad-380002 PAN: AARPA2982Q (Respondent)

Assessee by: Shri Dhrunal Bhatt, A.R.

Revenue by: Shri Abhijit, Sr. D.R.

Date of hearing : 09-07-2025 Date of pronouncement : 03-09-2025 आदेश/ORDER Per Suchitra Kamble, Judicial Member:

This is an appeal filed against the order dated 30-01-

2025 passed by CIT(A)-12, Ahmedabad for assessment year

2014-15.

2. The grounds of appeal are as under:-

“(i) "In the facts and on the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 2,13,85,066/- on account of disallowed exemption claimed u/s. 2(14) (iii) of the Income Tax Act, 1961, without considering the fact of the case that the land sold by the assessee was treated as non-agricultural land as per provisions of Section 63(AA) of the Land Revenue Code."

(ii) "In the facts and on the circumstances of the case and in law, the Ld CIT(A) has erred in ignoring the fact that it has clearly been mentioned in the sale deed that the underlying land is to be used for industrial purposes and the same is being transferred as per provisions of Section 63(AA) of the Land Revenue Code."

(iii) "In the facts and on the circumstances of the case and in law, the Ld. CIT(A) has erred in ignoring the fact that, as per section 63(AA) of the Land Revenue Code, a non-agriculturalist cannot purchase an agricultural land in Gujarat and if the land is purchased by a non-agriculturist for Bonafide industrial purpose then such land would be treated as non-agricultural land."

(iv) "In the facts and on the circumstances of the case and in law, the Ld. CIT(A) has not appreciated that, the underlying land is to be treated as a non-agricultural land transaction due to the provision under section 63(AA) of the Land Revenue Code, hence, the exemption under section 2(14)(iii) of the Income Tax Act, 1961 was not allowed to the assessee and the sale of underlying land should be treated as a capital asset transaction subject to the capital gains tax."

(v) "The Revenue craves leave to add/alter/armed and/or substitute any or all of the grounds of appeal."

3. The assessee filed return of income on 30-09-2014 declaring total income at Rs. 45,36,970/-. The said return was processed u/s. 143(1) of the Income Tax Act. The assessment u/s. 143(3) was completed on 03-11-2016 and return of income was accepted as assessed income. On verification of the assessee’s case, it was found by Revenue that the assessee had sold 4 units of agricultural land situated at village Dhuli to Dholi Integrated Spinning Park Ltd. The Assessing Officer further observed that para 5 of the sale deed clearly stated that the land to be used for industrial purposes and land is transferred as per provisions of section 63(AA) of Land Revenue Code. The Assessing Officer further observed that the assessee claimed exemption of Rs. 2,13,85,066/- u/s. 2(14)(iii) on account of profit of sale of agricultural land. Since the land sold by the assessee is treated as non-agricultural land, the A.O. issued notice u/s. 148 dated 30-03-2021. In response, the assessee filed return of income on 04-02-2012. The assessee also filed reply dated 10-03-2022. Final show cause notice issued on 22-03-2022 along with draft assessment order but the assessee did not file any reply and therefore the A.O. disallowed the exemption u/s. 2(14)(iii) of the Act thereby making addition of Rs. 2,13,85,066/-.

4. Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee.

5. The ld. D.R. submitted that the CIT(A) was not right in deleting the addition of Rs. 2,13,85,066/- on account of disallowed exemption claimed u/s. 2(14)(iii) of the Act