TMI Blog2022 (4) TMI 674X X X X Extracts X X X X X X X X Extracts X X X X ..... o ambiguity that the land at the time of transfer was not the agricultural land and the same was transferred for the purpose of residential project. Thus there was no use of the impugned land in the future for the purpose of agricultural activities. Therefore, to our mind the assessee is not entitled for claiming the land as agricultural land so as to get out of the purview of the provisions of capital gain. Thus we reject the contention of the learned AR for the assessee. Determining the cost of acquisition of the impugned land which was acquired by way of inheritance - Whether the assessee is entitled for the deduction of cost of acquisition based on the valuation report as on 1 April 1981 for the property acquired by way of inheritance? - Assessee is very much entitled against the full value of consideration from the transfer of capital asset, the deduction for the cost of acquisition of the capital asset. In other words, the same cannot be made nil merely on the reasoning that the assessee has not furnished any detail for the same. Admittedly, the primary onus lies upon the assessee to furnish the necessary details but in the event, the assessee fails to discharge the onus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... piece of agricultural land which was converted into non-agricultural land dated 4 February 2013. Thereafter, the assessee along with the co-owners has sold the same on 1 August 2013 for a consideration of ₹ 47,6000.00 only. It was submitted by the assessee that the impugned land was the agricultural land. The assessee in support of his contention has also filed the letter from the Gram Panchayat to justify that the impugned land was used for agricultural activities before the date of conversion and the same was located beyond the limits of Municipal Corporation. Thus, as per the assessee, the question of charging any capital gain on the transfer of the impugned land does not arise. 3.1 However, the AO was dissatisfied with the contention of the assessee on the reasoning that as on the date of sale of the impugned land, the status of the land was nonagricultural. Furthermore, the land was sold to the party who was coming up with the residential project on the land. Thus, there was no intention for using the impugned land for the purpose of agricultural activities. 3.2 The AO also observed that the assessee has not shown any income by way of agricultural activities from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gricultural land which was transferred by the assessee. Therefore, the impugned land cannot be treated as agricultural land and the fact whether the impugned land was situated beyond the limits of Municipal Corporation becomes irrelevant. 6. Being aggrieved by the order of the learned CIT-A the assessee is in appeal before us. 7. The learned AR before us has filed a paper book running from pages 1 to 262 and contended that the land in dispute was the agricultural land and therefore the same is not subject to capital gain. 7.1 The learned AR, without prejudice to the above, also contended that the revenue has calculated the capital gain without allowing the deduction for the cost of acquisition. As per the learned AR, impugned land was acquired by the assessee by way of inheritance before 1981. Therefore, the assessee has filed the valuation report from the registered valuer as on 1 April 1981 which should be allowed as deduction from the value of consideration for determining the capital gain. 8. On the other hand the learned DR before us vehemently supported the order of the authorities below. 9. We have heard the rival contentions of both the parties and perused th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cultivation is pre requisite for classifying land as agricultural land in nature. As such, the actual and the intended use of the agricultural land has to be seen for the purpose of exemption under section 2(14) of the Act. 9.5 Similarly, the criteria laid down by the Hon'ble Bombay High Court in case of CIT v. V.A Trivedi [1988] 172 ITR 95/38 Taxman 102 is to find out true character and nature of the land is to ascertain whether the land has been used for the reasonable span of time for the agricultural operations and further it was intended use such land for agricultural operations for the reasonable span of time in the future. 9.6 From the above it can be concluded that merely showing the land as agricultural land in the revenue records and furthermore the use of the land in the remote past is not decision factor to hold the land as agricultural land after considering the future use of the land which is for non-agricultural operations. As such the future use of the land will change the character of the land from agricultural to nonagricultural at the time of sale. In fact purpose of providing exemption to the agricultural land from the capital gain was to encourage cul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the assessee in support of the cost of acquisition has furnished the valuation report as on 1 April 1981 amounting to ₹ 3,96,560.00 but no defect of whatsoever was pointed out by the authorities below. In the case of CIT v. Manjula J. Shah [2011] 16 taxmann.com 42, the Bombay High Court, after analyising the facts of the case and position, in law, laid down an important legal proposition that while computing capital gains arising on transfer of a capital asset acquired by an assessee under an inheritance, indexed cost of acquisition has to be computed with reference to year in which previous owner first held the asset, and not from the year in which the assessee became owner of that asset. On the same reasoning, the assessee should also be entitled to adopt the value of the property, in a situation when the asset became the property of the previous owner before April 1, 1981, in terms of section 55(2)(b)(ii) of the Act. As such the assessee has the option to take actual cost or the fair market value of the asset (other than a depreciable asset), as on April 1, 1981 as the cost of acquisition. In such a situation, the period of holding shall be determined under section 2(4 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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