TMI Blog2018 (9) TMI 1546X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the assessee. In this case, the assessee requested the Assessing Officer to treat the return already filed as one filed in response to the notice under Section 148 of the Act. Therefore, there is a presumption that the Assessing Officer accepted the return already filed since the notice under Section 143(2) of the Act was not served within a period of six months. Therefore, this Tribunal is unable to uphold the orders of the lower authorities. Exemption claimed in respect of sale of agricultural land - Held that:- As decided in assessee's own case [2016 (10) TMI 1231 - ITAT CHENNAI] found that the assessee is not in the business of real estate. Accordingly, orders of both the authorities below are set aside by holding that the land in question is agricultural land and the profit on such sale of land is not liable for taxation by virtue of Section 2(14)(iii) of the Act. Therefore, the addition made by the Assessing Officer is deleted. - Decided in favour of assessee - ITA Nos.256 And 257/Chny/2018, ITA No.812/chny/2018 - - - Dated:- 12-9-2018 - SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER For The Assessee : Sh. T. Banusekar, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reliance on the judgment of Karnataka High Court in Bhoruka Engineering Industries Ltd. v. DCIT (2013) 36 taxmann.com 82 and also on the judgment of Apex Court in Andhra Pradesh State Road Transport Corporation v. ITO (1964) 52 ITR 524. The Ld. representative has also placed his reliance on the judgment of Apex Court in Mrs. Bacha F. Guzdar v. CIT [1955 SCR(1) 876]. Since the shares were held by the assessee for more than 12 months, according to the Ld. representative, the CIT(Appeals) has rightly found that it is only a long term capital gain. 5. We have considered the rival submissions on either side and perused the relevant material available on record. The dates of purchase and sale of shares are not in dispute. In fact, the assessee purchased 750 shares of M/s Ganesar Ginning Mills Ltd. on 23.09.2005 which falls in the financial year 2005-06 and the same were sold by the assessee on 29.11.2006 which falls in financial year 2006-07. Therefore, it is clear that the assessee was holding the shares for more than 12 months. Hence, it has to be treated only as long term capital gains. A similar view was taken by the co-ordinate Bench of this Tribunal in the case of assessee s wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was a search case. Therefore, according to the Ld. D.R., the assessee may not know what are the material found during the course of search operation. In the case before us, the Assessing Officer informed the assessee about the reason for reopening, therefore, the assessee knows will that why the case was taken up for scrutiny even though the notice was not issued within a period of six months. Since the assessee knows fully well that the income has escaped from assessment and the case was reopened only to assess the escaped income, according to the Ld. D.R., the Assessing Officer has rightly reopened the assessment. 9. We have considered the rival submissions on either side and perused the relevant material available on record. Admittedly, the assessee requested the Assessing Officer to treat the return filed already as one filed in response to the notice issued under Section 148 of the Act for reopening. Once the return was treated as one filed in response to the notice issued under Section 148 of the Act, the other formalities contemplated under Section 143 of the Act have to be followed. Therefore, the CIT(Appeals) may not be correct in distinguishing the facts before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certain provisions from the ambit of section 158BC(b) it has done so specifically. Thus, when section 158BC(b) specifically refers to applicability of the proviso thereto it cannot be excluded. We may also notice here itself that the clarification given by the Central Board of Direct Taxes in its Circular No. 717 dated August 14, 1995, has a binding effect on the Department, but not on the court. This circular clarifies the requirement of law in respect of service of notice under sub- section (2) of section 143 of the Act. Accordingly, we conclude that even for the purpose of Chapter XIV-B of the Act, for the determination of undisclosed income for a block period under the provisions of section 158BC, the provisions of section 142 and sub-sections (2) and (3) of section 143 are applicable and no assessment could be made without issuing notice under section 143(2) of the Act. However, it is contended by Sri Shekhar, learned counsel for the Department that in view of the expression so far as may be in section 153BC(b), the issue of notice is not mandatory but optional and are to be applied to the extent practicable. In support of that contention, the learned counsel has relied on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to treat the return already filed as one filed in response to the notice under Section 148 of the Act. Therefore, there is a presumption that the Assessing Officer accepted the return already filed since the notice under Section 143(2) of the Act was not served within a period of six months. Therefore, this Tribunal is unable to uphold the orders of the lower authorities. Accordingly, orders of both the authorities below are set aside. 11. In the result, the appeal filed by the assessee is allowed. 12. Now coming to the assessee s appeal for assessment year 2009-10 in I.T.A. No.257/Chny/2018. 13. Sh. T. Banusekar, the Ld. representative for the assessee submitted that the only issue arises for consideration is exemption claimed by the assessee in respect of sale of agricultural land. The Ld. representative further submitted that the assessee purchased 16 acres of agricultural land on 27.11.2003. The assessee was cultivating the same from the date of purchase. According to the Ld. representative, the assessee has also disclosed agricultural income in the return. Admittedly, the same was situated beyond 8 KMs radius of municipality. According to the Ld. representative, it i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... buyer would not have been offered by an agriculturist. Since the CIT(Appeals) found that the assessee is engaged in the business of purchase and sale of land, according to the Ld. D.R., he has not found that the land in question is an agricultural land. According to the Ld. D.R., the CIT(Appeals) found that the transaction of purchase and sale of land is adventure in the nature of trade and the investment made by the assessee is a stock-in-trade, therefore, the profit on sale of such land has to be assessed as business profit. 16. We have considered the rival submissions on either side and perused the relevant material available on record. The State Revenue Department admittedly classified the land as Punja land. Punja land can be used for cultivation. In this case, the assessee contends that the land in question was cultivated and agricultural income was disclosed by the assessee in the return of income regularly. This fact was not denied by the Revenue. The only objection of the Ld. D.R. is that the land in question is surrounded by industries and factories. This Tribunal is of the considered opinion that merely because the adjoining land was converted into industrial and fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere obviously was no purchase or sale during the relevant previous year 2008-2009. In our opinion, above transactions which happened over a number of years were so sporadic that it could not be considered as one creating a series which could show an intention to trade in land. None of the land sold by the assessee over the period of five years was developed by the assessee or plotted by the assessee. Assessee had shown the land always as investments in its balance sheet. No doubt it was held that Bombay High Court in the case of Gopal Ramnarayan Kasat(supra) that even an isolated transaction could qualify as an adventure in the nature of trade. But their Lordship also held that a continuity was necessary for reaching a conclusion that assessee was indulging in a trade or business. In our opinion, purchase and sale done by the assessee over a period of five years was not of such frequency that could create a chain or continuity, which can persuade us to believe that assessee had an intention to do a business or trade of purchase and selling a land. Just like any other investor, assessee invested in land over a long period of time at disparate places. It effected sale of land wheneve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l activity in the said land. No doubt Hon ble Apex Court in the case of Smt. Sarifabibi Mohammed Ibrahim (supra) has laid down thirteen tests for declaring whether a piece of land is agricultural or not. However it does not require a cumulative satisfaction of all the thirteen indicators. The question has to be answered, considering the answers to all the thirteen indicators. In the case before us, it is an admitted position that the revenue records classified the land as agricultural in nature. Assessee had held the land for more than fifteen years before he sold it and had also shown agricultural income in his returns. There is nothing on record to show that adjoining areas were used for non agricultural only. There is nothing on record to show that land was sold on square foot basis. On the other hand, copy of sale deed placed at page no.65 to 76 show that land was sold on acreage basis. In the case of Sakunthala Vedachalam vs. Vanitha Manicka Vasagam (supra) the Hon ble Jurisdictional High Court had after considering the judgment of Gujarat High Court in the case Siddartha Desai (supra) held as under:- 9. The issue involved in the above tax case (appeals) lies on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was for a long period or whether it was of a temporary character or by way of a stop-gap arrangement ? ( 4) Whether the income derived from the agricultural operations carried on in the land bore any rational proportion to the investment made in purchasing the land ? ( 5) Whether, the permission under section 65 of the Bombay Land Revenue Code was obtained for the non-agricultural use of the land ? If so, when and, by whom (the vendor or the vendee) ? Whether such permission was in respect of the whole or a portion of the land ? If the permission was in respect of a portion of the land and if it was obtained in the past, what was the nature of the user of the said portion of the land on the material date ? ( 6) Whether the land, on the relevant date, had ceased to be put to agricultural use ? If so, whether it was put to an alternative use ? Whether such cesser and/or alternative user was of a permanent, or temporary nature ? ( 7) Whether the land, though entered in revenue records, had never been actually used for agriculture, that is, it had never been ploughed or tilled ? Whether the owner meant or intended to use it for agricultural purposes ? ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... namely, revenue payment. Therefore, the Tribunal has misconstrued the judgment of the Gujarat High Court (supra) that all conditions laid down in paragraph 11 should be satisfied, which is not a correct interpretation. 15. To get exemption, the assessee has to satisfy the conditions laid down in section 2(14) of the Income-tax Act, which reads as follows : 2. (14) 'capital asset' means property of any kind held by an asses see, whether or not connected with his business or profession, but does not include- ( i) any stock-in-trade, consumable stores or raw materials held for the purposes of his busi ness or profession ; ( ii) personal effects, that is to say, movable property (including wearing apparel and furniture, but excluding jewellery) held for per sonal use by the assessee or any member of his family dependent on him : Explanation .- For the purposes of this sub-clause, 'jewellery' includes- ( a) ornaments made of gold, silver, platinum or any other pre cious metal or any alloy containing one or more of such precious met als, whether or not containing any precious or semi-precious stone, and whether or not w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No agriculturists would have purchased the land sold by the assessee for pursuing any agricultural activity is based on mere conjectures and surmises. 18. The plea of the learned standing counsel appearing for the Revenue that there was no agricultural operations prior to the date of sale is of no avail as the definition under section 2(14) of the Income-tax Act has the answer to such a plea raised. Furthermore, it is also on record that the lands are agricultural lands classified as dry lands, for which kist has been paid. 19. The view of the assessee is fortified by the decision reported in CIT v. Raja Benoy Kumar Sahas Roy [1937] 32 ITR 466 (SC) wherein, it is held as follows (page 476) : There was authority for the proposition that the expression 'agri cultural land' mentioned in entry 21 of List II of the Seventh Schedule to the Government of India Act, 1935, should be interpreted in its wider significance as including lands which are used or are capable of being used for raising any valuable plants or trees or for any other purpose of husbandry (see Sarojinidevi v. Shri Krishna Anjanneya Subrahmanyam ILR [1945] Mad 61 and Megh Raj v. Allah Rakhia ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
