TMI Blog2009 (4) TMI 553X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of Rs. 25,11,031 as unexplained investment in construction of property and lastly on an issue of disallowing inauguration expenses amounting to Rs. 1,41,700 holding it to be capital expenditure was confirmed by the learned CIT(A). 4. We propose to take both these appeals together for disposal in view of common facts which have been reiterated by the authorities below. 5. The assessee filed return of income declaring income of Rs. 24,67,538 and agriculture income of Rs. 4,04,000 which was assessed under section 143(3) by the Assessing Officer when the sale of agriculture land by the assessee was considered by him "Adventure in the nature of trade" as business income on the finding that neither the assessee was holding land for agriculture purposes nor was purchasing land for use as agriculture denying exemption under section 54B. He held that the assessee was not sure about the applicability of section 2( 14 ), therefore, took rigour to alternative stand of claiming deduction under section 54B. The claim of exemption of profits of Rs. 98,15,750 either under section 2(14) or under section 47 or under section 54B was denied. On the scope of earning from agriculture, the As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gher percentage of rebate holding acceptable the estimation of the DVO on the plinth area-rate method, rejecting the accounting method as returned by the assessee, the learned CIT(A), therefore, gave part relief to the assessee. 7. On the issue of denying the inauguration expenses amounting to Rs. 1,41,700, the learned CIT(A) confirmed the view as taken by the.Assessing Officer by holding that the hall was inaugurated was a business asset, therefore, expenses incurred prior to the commencement of business had to be capitalized. 8. On other remaining issues of bringing to tax the agriculture income as income from other sources, the ld. CIT(A) after considering the case of the assessee before him held that the assessee was holding vast agricultural land and consistently declaring agricultural income therefrom justified appropriate 50 per cent of the declared quantum while partly allowing the assessee s agitation relating to estimation of agricultural income therein when denied in the main grounds against which the assessee had also appealed on the above three mentioned issues. 9. The ld. counsel has submitted a paper book which inter alia relates to all the issues agita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the Assessing Officer erred in relying on inspection taken after a lapse of 2 years. The assessee grows twice the yield on an area of various produce depending upon the market feasibility. He could not have kept his lands for 2 years to establish an evidence of an agricultural operation being carried out when the Inspector visited the land. He pointed out that the Inspector visited only the area surrounding the residence of the assessee which carried out agricultural operations, therefore, limited the Assessing Officer and the ld. CIT(A) to hold a view of part accepting the agriculture income therefrom without bringing out any material on record to show that the details of land holding as noted by the ld. CIT(A) as also was available to the Assessing Officer, therefore, could be considered as land other than for agriculture purposes. In spite of all these details, the Assessing Officer misdirected himself in applying provisions of section 45 of the Income-tax Act. The land purchased even to enjoy for some time, to sell at profit thereafter was only to be titled as from capital gains and not from business of dealing in agricultural land. He relied on the Gujarat High Court dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t reasonable in view of the authorities below having no basis to disallow a portion of the said income. 11. On the issue of valuation of convention hall, he pointed out that a mere perusal the Assessing Officer and ld. CIT(A) orders would clearly indicate that the valuation by the DVO was on the estimation applying CPWD rates which are not applicable to a convention hall when the DVO himself certifies that he had adopted plinth area-rate method. He argued that when the nature of construction is simple, the Assessing Officer ought to have adopted the PWD rates which cost would agree with the cost as returned by the assessee in the first place. He prayed that the Assessing Officer be asked to adopt the PWD rates as against CPWD rates. He pointed out that the assessee would agree with the PWD rates so applied to a convention hall as against CPWD rates so estimated by the DVO, which sole exercise was considered by the learned CIT(A) by partly giving relief to the assessee. 12. On the last issue, agitated by the assessee, he pointed out that it is factually accepted that the hall was ready for business on 7-2-2003, when on the basis of the inauguration, bookings were made for le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tinued carrying on agricultural activity for at least two years therefore cannot be considered for exemption under section 54B. No individual production results of agricultural activity having been carried out has been brought out by the assessee. The survey numbers, site numbers therefore required by the Assessing Officer and the ld. CIT(A) whether, was to indicate that the agriculture operations carried on 139 acres of the land so held by the assessee was against land purchased as given in Annexure to the order of the ld. CIT(A) which land records as produced by the ld. counsel for the assessee in the paper book pages 296 to 307 were not available to the Assessing Officer when specifically called for by the ld. Assessing Officer and CIT(A) by way of a remand report. She pointed out that the Assessing Officer required the assessee to produce various inputs for carrying out agriculture activity along with the form of evidence to substantiate its claim for earning such profit, therefore, was rightly considered by the ld. CIT(A) only to be considered as long-term capital gains, denied the claim of exemption under section 54B. On the other issues argued by the ld. counsel, she fully s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erations in the agriculture lands as per the reports of the village accountant. These were not considered by the Assessing Officer who insisted on other inputs such as expenses incurred for earning the said income. List of the land holding which indicate various pattern of soil thereof fully justifies the claim of the assessee as was also pointed out by the ld. Departmental Representative that the lands purchased were barren. It was only a small portion of the land which was barren duly identified by the buyer and seller which may become useful later on and therefore the yield per acre as sought to be returned by the assessee appears to be reasonable when once the details like acreage grown, acres sold and expenditure incurred on estimation basis has been duly certified by the village accountant in the RTCs and Pahanis. The requirement of separate books for carrying out such activity may not be the only criteria for disallowing the assessee s claim along with the fact that the agriculture lands are being sold were rightly considered for sale as long-term capital gains but to the extent invested in agriculture lands appears to have been ignored by the Assessing Officer by only relyi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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