Burden Is On Assessee To Show Entitlement For Capital Gains Tax Exemption On Sale Of Agricultural Land: Kerala High Court
The Kerala High Court stated that burden of proof is on assessee to prove that he is entitled to capital gains tax exemption on sale of agricultural land.
The Division Bench of Justices A.K. Jayasankaran Nambiar and Easwaran S. observed that “it is significant in this regard to observe that the claim of the assessee, being for exemption from the levy of income tax as applicable to capital gains, the burden of proof was on the assessee to show that he was entitled to exemption by virtue of the land sold by him being in the nature of agricultural land.”
In this case, the assessee/appellant had returned his income for the assessment year 2006-2007 at Rs.63,420/-. A query was raised by the department, to which the assessee explained that he had sold an extent of 5.21 Acres of land for Rs.977.10 Lakhs.
It was the stand of the assessee that inasmuch as this was a sale of agricultural land, it was deemed to be not a 'capital asset' in terms of Section 2(14)(iii) of the Income Tax Act and therefore not liable to tax under the Income Tax Act.
The said explanation of the assessee was not accepted by the assessing authority who proceeded to assess the assessee in the said amount under the head of capital gains.
In an appeal preferred by the assessee before the First Appellate Authority, the First Appellate Authority found in favour of the assessee. Aggrieved by the said finding of the First Appellate Authority, the revenue preferred an appeal before the Income Tax Appellate Tribunal.
The appellate tribunal set aside the order of the First Appellate Authority and remitted the matter to the assessing authority. The revenue had filed a petition before the Kerala High Court challenging the order passed by the Tribunal.
High Court found that inasmuch as the appellate tribunal had itself found that the land in question was situated beyond 8 Kms, they did not have to remit the case for examining issues on which parties were not at variance and ought to have considered the evidence on record to determine the question as to whether the land was agricultural land or otherwise.
The High Court set aside the order of the appellate tribunal and remitted the matter for fresh consideration.
The bench opined that “the assessee did not produce any evidence other than a certificate from the Village Officer that the land in question was agricultural land, which certificate went against the revenue records itself that pointed to the land being in the nature of 'Purayidam' which translates as dry land suitable for construction of houses.”
It is on account of the absence of any cogent evidence adduced by the assessee that the appellate tribunal proceeded to hold, based on the evidence on record, that the assessee had not established that the land sold by him was agricultural in nature, observed the bench.
In view of the above, the bench dismissed the appeal.
Case Title: M J George (Died) v. Deputy Commissioner of Income Tax
Case Number: ITA NO. 1 OF 2024
Counsel for Appellant/ Assessee: Nisha John
Counsel for Respondent/ Department: Jose Joseph