Gain from Transfer of Agricultural Land cannot be taxed despite absence of agricultural operations on such land

Where the land is shown in revenue record as agricultural land and no permission was taken for conversion of land, it is immaterial whether any agricultural income is shown in the return or not, the gains from sale are exempt from taxation.

Shri Kallepu Sharath Chander Vs ACIT (ITAT Hyderabad)

The assessee, in the revised return filed in response to section 148 of the Act, has claimed the land as agricultural land. The AO has also accepted that as per the revenue records, these lands are agricultural lands but the only reason for not accepting the said contention is that the assessee has not carried on any agricultural operations. The Hon’ble Bombay High Court in the case of CIT vs. Smt. Debbie Alemao and 2.Joaquim Alemao, reported in (2011) 331 ITR 59 (Bom.) has held that where the land is shown in revenue record as agricultural land and no permission was taken for conversion of land, it is immaterial whether any agricultural income is shown in the return or not, the gains from sale are exempt from taxation. Therefore, the reason given by the AO for not accepting the assessee’s contention is not sustainable. In view of the same, I am inclined to accept the contention of the assessee and hold that the land sold by the assessee being agricultural land, no capital gain is taxable on the profit from sale of such land.