Appeal before Tribunal: Agricultural land: Capital asset: S/s.2(14) and 253: A. Ys. 2008- 09 and 2009-10: AO did not doubt the land being used for agriculture: Tribunal did not consider the ground taken by the Revenue that the land is not agricultural land: Tribunal was right in doing so:

The assessee sold different plots of land, which were claimed to be agricultural land, situated at distance of more than 8 kms. from municipal limits. In support of his contention, the assessee furnished certificate of Tehsildar and letter of District Town Planner stating that the land was situated beyond 8 kms from Municipal Committee. However, the Assessing Officer did not accept the contention of the assessee that it was not a capital asset u/s. 2(14) (iii) of the Income-tax Act, 1961, taking a view that there was possibility of some other shorter distance between the plots of land and the municipal limits, being less than 8 kms. The Commissioner (Appeals) allowed assessee’s claim. The Tribunal upheld the order of Commissioner (Appeals).

In appeal by the Revenue, it contended by the Revenue that the Tribunal did not consider the question raised by the revenue that the lands in question were not agricultural lands at all. The Delhi High Court dismissed the appeal and held as under:

“i) The Tribunal noted that the Assessing Officer had made the disallowance merely on the ground that there was the possibility of a shorter distance, which would be less than 8 kms from the outer limits of the municipal corporation. The Tribunal noted that the Assessing Officer had not doubted the nature of the land being for agriculture. It was in these circumstances that the Tribunal rejected the plea of the revenue that the matter be restored to the file of the Commissioner (Appeals) for verification of the fact as to whether the lands were agricultural in nature or not.

ii) The decision in National Thermal Power Co. Ltd. vs. CIT [1998] 229 ITR 383 (SC) would be of no assistance to the revenue. In the said decision it has been clearly noted that the Tribunal had jurisdiction to examine a question of law which arose from the facts as found by the Income-tax authorities and which had a bearing on the tax liability of the assessee. The point to be noted is that the question of law which could be raised before the Tribunal would have to arise from the facts as found by the Income-tax authorities.

iii) In the present case, the Assessing Officer had not doubted the fact that the lands in question were agricultural in nature. There was no foundational fact that the lands were not agricultural in nature. As such the plea raised by the revenue before the Tribunal could not be gone into by the Tribunal as there was no foundational basis for the same. Clearly, the decision in National Thermal Power Co. Ltd. (supra) would be of no avail to the revenue in the facts of the present case.

iv) In view of the foregoing, no interference is called for with the impugned order of the Tribunal. The appeals are dismissed.”