A land couldn’t be treated as agricultural land merely because it categorised as agricultural land in revenue records

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A land couldn’t be treated as agricultural land merely because it categorised as agricultural land in revenue records

GRK Reddy & Sons (HUF)

[2021] 123 taxmann.com 291 (Madras)

Short Overview of the Case:

Section 2(14), read with section 45, of the Income-tax Act, 1961

 Capital asset (Agricultural land)

Assessment year 2008-09

 Issue was whether mere classification of land in revenue record, as agricultural land, will not conclusively prove that nature of land was an agricultural land –

Held, yes

 Assessee filed return claiming exemption on profit arising on sale of agricultural land

 Assessing Officer treated land as non-agricultural land and held that it would come within category of capital asset under section 2(14), chargeable to tax under head capital gains

 Commissioner (Appeals) dismissed asses see’s appeal

  Tribunal reversed order passed by Commissioner(Appeals) only on ground that lands were shown as agricultural lands in revenue record during relevant period and, therefore, would not fall within purview of definition of capital asset under Act

However, it was found that nothing was brought on record by assessee to establish that agricultural operations were carried on prior to his purchase and after purchase

 Further, conduct of assessee in selling property within a short period of one year to non-agriculturists and property being used to develop SEZ had not been taken note of by Tribunal while deciding character of land

 Whether therefore, Tribunal erred in interfering with order passed by Commissioner(Appeals)

 Held, yes

Conclusion: 

Mere classification of land in revenue record, as agricultural land, will not conclusively prove that nature of land was an agricultural land , hence, where no evidence was produced by assessee to establish character of land sold by it as agricultural land, Assessing Officer had rightly held that land was not an agricultural land

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