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Receipt from Sale of Agricultural Land after developing into Plots is Business Income

The Jaipur bench of the Income Tax Appellate Tribunal, in Ramswaroop Saudagar vs ITO held that the sale of agricultural land after developing the same into different plots is subject to tax as ‘Business Income’ under the provisions of the Income Tax Act, 1962. 

The assessee, in the instant case, had developed 23 plots in his agricultural land and sold the same to different people. In the returns, the assessee disclosed the said income as Capital Gains. However, the Assessing Officer, while completing assessment proceedings, invoked section 50C of the Income Tax Act by adopting DLT rate. 

On appeal, the first appellate authority found that the income received by Assessee is chargeable to tax under the head ‘Profit and Gains from Business and Profession’ since the nature of the activity is ‘adventure in the nature of trade’. 

On the second appeal, upholding the order of the CIT(A), the Tribunal noted that the nature of land had gone irreversible change from agricultural to residential plots.

 Article referred: http://www.taxscan.in/receipt-sale-agricultural-land-developing-plots-business-income-itat/18249/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+Taxscan+%28Top+Stories+%E2%80%93+Taxscan+%7C+Simplifying+Tax+Laws%29

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