Agricultural land tax ruling clarifies buyer protections near cities.

Agricultural land tax ruling clarifies buyer protections near cities. An ITAT tribunal decision has established that stamp duty valuation alone cannot determine whether purchased land retains agricultural status for income tax purposes. The case involved a buyer who purchased agricultural land for Rs 22 lakh, but stamp duty was assessed at Rs 40 lakh based on urban rates, triggering a tax addition of Rs 18 lakh. The tribunal ruled that official revenue records, actual cultivation practices, and lack of formal conversion are the decisive factors, not stamp duty classification. This decision protects property buyers from unexpected tax liabilities based solely on higher urban land stamp duty rates charged by registrars. The ruling establishes that stamp duty assessment is purely for fiscal revenue purposes and cannot override the true legal nature of the property under income tax law.