आदेश / O R D E R

PER ABY T. VARKEY, JM:

This is an appeal preferred by the assessee company against the order of the Learned Commissioner of Income Tax (Appeals)/NFAC, (hereinafter referred to as “the Ld.CIT(A)”), Delhi, dated 26.08.2025 for the Assessment Year (hereinafter referred to as "AY”) 2016-17.

The main grievance of the assessee is against the action of the Ld.CIT(A) dismissing the appeal upholding that the land sold by the assessee was not agricultural land and therefore, the surplus arising from sale of it was taxable as Long Term Capital Gains (LTCG).

The brief facts of the case are that the assessee is a Private Limited Company and had e-filed its return of income (RoI) for AY 2016-17 on 16.10.2010 claiming loss of ₹45,409/-. The RoI was selected for scrutiny under CASS for examining assessee’s claim of receiving substantial agricultural income. On perusal of the returned income, the AO noted that the assessee company had shown Long Trem Capital Gain (LTCG) from sale of land being ₹68,07,002/- as exempt, and when asked, to prove the land sold was agricultural land, the assessee filed the details/documents as sought by the AO; and after examining the same, the AO disagreed and instead held it (the land in question) to be non-agricultural land, on the basis that there was no agricultural operations by the company during the relevant assessment year, which fact has been admitted by the assessee [i.e. there was no crop cultivated in the land, no irrigation done and no Electricity Board (EB) Card available for the said land]. Hence AO was of the view that assessee wasn’t able to prove that the land sold was an agricultural land. Further, the AO noted that the ‘Sale-Deed’ doesn’t show about the existence of any crop in the land and instead, the land was described as ‘punja land’ & ‘tharisu land’. The AO, didn’t accept the assessee’s assertion that land-in-question was originally an agricultural land, even though it was mentioned in the Sale-Deed as ‘punja land’. The AO noted from the recital at Page No.3 of the Sale-Deed and averments made therein that the lands in question are ‘punja dry land’, which are not suitable for any agricultural operation. Hence, according to the AO, the lands were held without any agricultural activities, because, it was not suitable for agricultural operations. Thus, the AO was of the view that the land in question was held either for the purpose of business or as investment. Further, he noted that the main object of the assessee company was to develop townships and the lands were held for developing townships only. Thus, he was of the view that intention of the assessee company was not to do any agricultural operations but to maintain the land for developing projects like townships as envisaged in its Memorandum & Articles of Association. The AO also noted that no agricultural income was admitted in the RoI for earlier years by the assessee and that some lands were sold to M/s Deccan Water Treatment Pvt. Ltd., whose Registered Office is situated at Pune, which was also not an agriculturist, which goes on to show that the lands were not sold for agricultural purpose and hence, he issued show cause notice to deny the claim of assessee that sale-consideration received on sale of land is exempt. In its reply, the assessee asserted that only in the year under consideration, the assessee didn’t carry out any agricultural operations because it sought permission for developing township. Hence, in the relevant assessment year, no agricultural activities were carried out by the assessee. Further, it was pointed out that in earlier years agricultural activities were carried out and that it was regularly showing exempt agricultural income for earlier years which fact is captured in the table below: