Sale of Agricultural Land Does Not Attract Capital Gain Tax u/s 45 until Official Conversion of Land, Regardless of Purchaser’s Intended Use: ITAT

The ITAT ruled that agricultural land does not attract capital gains tax under Section 45 of the Income Tax Act until the land is officially converted for non-agricultural purposes, regardless of the purchaser's intended use. This case clarifies that the nature of land, not the buyer’s intentions, determines its tax treatment. Taxpayers owning agricultural land are thus safeguarded from premature tax liabilities until formal conversion processes are complete, protecting them from unintended tax consequences.