ITAT Ahmedabad Dismisses Revenue Appeal on Agricultural Land Sale

Land Beyond Municipal Limits Held Outside Capital Asset Definition

The Ahmedabad “D” Bench of the Income Tax Appellate Tribunal has dismissed the appeal filed by the Revenue in the case of Krupesh Jayantilal Patel for Assessment Year 2013–14, holding that the land sold by the assessee constituted agricultural land and did not fall within the definition of a “capital asset” under Section 2(14) of the Income Tax Act, 1961.The Revenue had challenged the order of the Commissioner of Income Tax (Appeals)-11, Ahmedabad, contending that the land sold by the assessee was liable to capital gains tax. The assessee, in response, relied upon earlier coordinate Bench decisions passed in the cases of joint owners arising from the very same transaction. These decisions had consistently held that the land situated at village Adalaj was agricultural in nature and located beyond the prescribed municipal limits. The Tribunal noted that the land was situated more than five kilometres outside the radius of the Gandhinagar Municipal Corporation. Reliance was placed on official communication from the Gandhinagar Urban Development Authority as well as the relevant State notification, which clarified the extent of municipal limits for the purpose of Section 2(14). Following its earlier rulings, the Bench held that the land could not be treated as a capital asset and therefore dismissed the Revenue’s appeal.

Cross Objection on Reopening Not Pressed

The assessee had also filed a cross objection challenging the validity of reassessment proceedings. However, during the hearing, counsel for the assessee stated that the cross objection was not being pressed. Accordingly, the same was dismissed. In the result, both the Revenue’s appeal and the assessee’s cross objection stood dismissed by order pronounced on 30 January 2026.