Assessment set aside as lower authorities failed to consider Khasra Girdawari, Sub-Registrar report and municipal certificate while treating land as non-agricultural
Meetu Kumari | Feb 22, 2026 |
ITAT Remands Rs. 1.47 Cr LTCG Addition in Rural Land Case Over Incomplete Evidence Review
The assessee, M.S. Stock Investment Pvt. Ltd., sold land during AY 2015-16 and claimed that the same was rural agricultural land not falling within the definition of “capital asset” under Section 2(14)(iii) of the Income Tax Act, 1961. The Assessing Officer treated the land as non-agricultural and made an addition of Rs. 1,47,50,445 on account of Long-Term Capital Gain. The AO concluded that the assessee failed to establish that the land qualified as agricultural land, relying upon information from the Patwari indicating that a major part of the land was not agricultural.
The CIT(A) on appeal upheld the addition on the ground that the assessee had not established that the land was beyond 8 kilometres from municipal limits as required under Section 2(14)(iii).
Main Issue: Whether the land sold by the assessee qualified as rural agricultural land under Section 2(14)(iii) of the Act, and whether the lower authorities were justified in confirming the addition of Long-Term Capital Gain without properly examining the documentary evidence.
ITAT’s Order: The Income Tax Appellate Tribunal observed that both the Assessing Officer and the CIT(A) had failed to properly consider the documentary evidence placed on record, particularly the remand report, Sub-Registrar’s confirmation regarding municipal limits, and certificate from the Municipal Committee. The Tribunal noted that these documents were relevant to determine whether the land was agricultural and situated beyond the prescribed municipal limits.
The Tribunal also observed that the sale deed had not been produced before it. The Tribunal set aside the impugned order and restored the matter to the file of the Assessing Officer for fresh adjudication. The assessee was granted liberty to furnish additional documents, including the sale deed, and directed to submit necessary information within 60 days. The appeal was thus allowed for statistical purposes.
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