TMI Blog2023 (1) TMI 968X X X X Extracts X X X X X X X X Extracts X X X X ..... Nandlal [ 1975 (3) TMI 2 - SUPREME COURT] , Daulat Ram Rawatmull [ 1972 (9) TMI 9 - SUPREME COURT] ; Omar Salay Mohamed Sait [ 1959 (3) TMI 2 - SUPREME COURT] ; Dhiraj Lal Girdharilal [ 1954 (10) TMI 8 - SUPREME COURT] In view of the foregoing, we, setting aside the impugned order, uphold the assessment of capital gains at rs. 248.17 lacs, disallowing the benefit u/s. 54B. The agriculture income returned by the assessee, quantum of which is not available on record, could be, as afore-stated, in respect of his balance agricultural land of 41.74 acres. There is thus no reason to disallow the same, as done by the AO, treating it as nil, even if, as found by him and with which we wholly agree, no agricultural activity has been carried out by the assessee on the land sold during the relevant year. This disallowance has not been disturbed by the ld. CIT(A) even as he finds to the contrary. In fact, the AO s order is also inchoate inasmuch as the income being admitted, if not agricultural income, as returned, the same is liable to be assessed under any other, including the residuary head, i.e., as income from other sources, or even as income from an unexplained source/s. - I.T. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... विकसित कम उपजाउ है, भूमि के आस पास बस्ती रोड नाली बिजली आदि की सुविधायें नहीं है। In other words, the subject land was a non-irrigated land, on which there were no standing trees, well, etc.; was not fertile, and on which only one crop could be grown. The land is not serviced by any service road, drainage, well, electricity, etc. Further, enquiries with the Tehsildar revealed the description of the subject land in the Revenue record as पड़ती का क्षेत्रफल (Padtikakshetrafal), i.e., land on which no agricultural activities are being done. Certified copies of Form P-II (Panchshala Khasra Nakal) for the relevant year and two preceding years, i.e., fy 2011-12 to 2013-14, were furnished by him on 27/9/2018. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #2381;रमाण पत्र दिया जाना सम्भव नही है । The same clarifies the subject land to be a non-irrigated land and, therefore, it was not possible to certify that sugarcane crop was being cultivated thereon. It was also, in response to Question No.4, clarified by him that the entries in the revenue record are made by the area Patwari on spot inspection of the land/s, i.e., at the relevant time, and which thus forms the basis of the entries in the revenue record. It was, on the basis of the foregoing findings, concluded by the AO that the subject land was not subject to any agricultural operations, and was, accordingly, not an agricultural land. No exemption u/s. 54B, which is only in respect of investment of the transfer proceeds of a land which had been used for agricultural purposes, is thus exigible. The entire capital gain, computed by him at Rs. 2,48,71,420, was accordingly brought by him to tax. The returned agricultural income (unspecified) was also on that basis treated by him as nil (refer paras 4 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is parent, or a Hindu undivided family for agricultural purposes (hereinafter referred to as the original asset), and the assessee has, within a period of two years after that date, purchased any other land for being used for agricultural purposes, then, instead of the capital gain being charged to income-tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the following provisions of this section, that is to say,- (i) if the amount of the capital gain is greater than the cost of the land so purchased (hereinafter referred to as the new asset), the difference between the amount of the capital gain and the cost of the new asset shall be charged under section 45 as the income of the previous year; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase, the cost shall be nil; or (ii) if the amount of the capital gain is equal to or less than the cost of the new asset, the capital gain shall not be charged under section 45; and for the purpose of computing in respect of the new asset any capital gain arising from its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , on the other hand, was that the rejection order dated 27/9/2018, which forms the basis of the AO s finding of the subject land being not an agricultural land, obtains no longer, removing the very basis of his order. It is this that appealed to the ld. CIT(A), whose finding/s thus cannot be faulted with. That the revenue authorities did not give effect to the order of SDM, binding on them, would not detract from its status as a valid legal order, which could only be challenged before a higher appellate forum, though had not been, attaining finality. The same, in any case, cannot operate to prejudice the assessee. The same is in fact binding on the AO, i.e., the authorities under the Act, and therefore rightly taken cognizance of by the ld. CIT(A). 4.3 The matter arising for adjudication before us is principally one of fact; there being no ambiguity, much less dispute, qua what is an agricultural land , a term not defined under the Act. As such, any land subject to agricultural activity is an agricultural land by definition. The only exception is where the same is located within the local limits of a Municipality, or is notified by the Central Government (for years prior to fy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ach case, having regard to the facts and circumstance of that case. There may be factors both for or against a particular point of view. The court has to answer the question on a consideration of all of them a process of evaluation. The inference has to be drawn on a cumulative consideration of all the relevant facts (see p. 637, c). The facts The appellants were co-owners of a plot of land inherited from an ancestor through their father. On March 15, 1967, they agreed to sell the land to a housing co-operative society and, to enable them to complete the transaction, they applied in June, 1968, and March 1969, for permission to transfer the land for a non-agricultural purpose and the permission was granted in April, 1969. A number of sale deeds were executed in May 1969, and the purchasing society applied for conversion of the land to non-agricultural purposes, viz., construction of buildings. The question was whether the profit from the sale of the land was assessable to capital gains tax. The facts in favour of the appellants were: the land was registered as agricultural land in the revenue records and land revenue had been paid in respect thereof till the year 1968-69; t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting of minds, so that both the seller and buyer are clear and in agreement qua the nature of the land sold, which may in view of the vast price difference between a land being bought for agricultural purposes vis-a-vis for real estate purposes, also be clear from the price and other terms of sale. The matter, as explained by the Hon ble Court, is accordingly to be decided in the conspectus of the case. Reference thereto serves one more purpose: As shall be presently seen, applying the law as clarified therein, the subject land is not an agricultural land at the time of it s sale. What value, then, one may ask, the reliance thereon by the SDM? 4.5 Having thus set out the law impinging on the matter as well as the respective cases of the parties, we proceed to determine the matter with reference to the material on record and the law as clarified. a). It may, to begin with, be noted, even as observed by the Bench during hearing, that there is nothing in law to suggest that the orders by the land revenue authorities or their findings are binding on the Revenue authorities under the Act, much less, the appellate authorities thereunder, even as the matter at hand is essentially on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd vide his application to the Tehsildar (Nazool Kotwali), Jabalpur (PB pg.6)). Further, there is also no mention the names of the crops cultivated on the subject land in the Patwari s report dated 11/9/2018. What value, then, the reliance on the said vouchers by the ld. CIT(A), as indeed his finding of agricultural income being the assessee s only source of income? So much so, he has not even reversed the AO s finding as to nil agricultural income, so that his order, while holding agriculture to be the assessee s only source of income, yet, does not disturb the AO s finding of agricultural income being at nil. Why, the sale deed itself, which has not been disputed, and of which the assessee himself is a signatory, clearly states the subject land being un-irrigated and not serviced by any well, drainage system, electricity, etc. and, accordingly, described as a Padti land in the revenue record. In fact this, coupled with an exorbitant price of Rs. 161.50 lacs per acre, or Rs. 3337 per sq. yard (1 acre = 4840 sq. yards), that is, in relation to or in comparison with the land rate for an agricultural land, and it is clear that the land sold was neither an agricultural land, i.e., sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... names nor land numbers are specified, so that there is no identification whatsoever, much less confirmation. The only name that surfaces, though not in the said report, but the assessee s submissions, is of one, Prahad Singh Banafer, the assessee s uncle, who is stated to be a big farmer, with large tracts of land. His statement (not on record), assuming so, is for that reason suspect. The principal objection thereto, even as stated by the AO, is as to the credence that could be placed on the Patwari s report in view of it being based on a survey, even assuming so, inasmuch as the same is unevidenced; and carried years after the period (2011-12 to 2013-14) over which the subject land is stated to have been subject to agricultural activity, i.e., years after the period to which it relates. There is, as afore-noted, no mention of the crops being cultivated. How could therefore any reliance be placed on such unsubstantiated report, admittedly based on memory, more so where it contradicts the official record, particularly considering that the basis thereof, as is well-known, and as explained by the Tehsildar in his statement u/s. 131(1A), is the regular visits by the concerned official ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . All this makes the said report no more than a humbug. No wonder, the same did not find favour with the Tehsildar, who therefore found no reason to cause the correction, as sought by the assessee, in the official record. His order no doubt has been set aside by the SDM, but, again, i.e., it is without any material, much less credible. No wonder the same has not been given effect to even to date. The application by the assessee to the Tehsildar, it is to be appreciated, was for making correction in the revenue record, and which record remains unchanged to date. Even as claimed before us by Shri Kumar, the same is for the reason that the official record cannot be changed on that basis. The same is not without merit. That is, for the reasons afore-stated and, besides, without a corresponding finding as to where and how the error sought to be corrected, crept in the maintenance of the land record. For example, an entry in respect of one land being made in another. In fact, ground rent is payable on the basis of, and duly noted in the revenue record, none of which obtains in the instant case. There is, equally surprisingly, no whisper of any enquiry in the matter, or issue of any proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... matter, as continually emphasized herein, is essentially factual and, accordingly, stands decided on the basis of the material on record, taking the entirety of the facts and circumstances thereof into account, as indeed the Tribunal is obliged to, and toward which we may refer to some case law, viz. CIT v. Radha Kishan Nandlal [1975] 99 ITR 143 (SC); CIT v. Daulat Ram Rawatmull [1973] 87 ITR 349 (SC); Omar Salay Mohamed Sait v. CIT [1959] 37 ITR 151 (SC); Dhiraj Lal Girdharilal v. CIT [1954] 26 ITR 736 (SC). 4.7 In view of the foregoing, we, setting aside the impugned order, uphold the assessment of capital gains at rs. 248.17 lacs, disallowing the benefit u/s. 54B. 4.8 The agriculture income returned by the assessee, quantum of which is not available on record, could be, as afore-stated, in respect of his balance agricultural land of 41.74 acres. There is thus no reason to disallow the same, as done by the AO, treating it as nil, even if, as found by him and with which we wholly agree, no agricultural activity has been carried out by the assessee on the land sold during the relevant year. This disallowance has not been disturbed by the ld. CIT(A) even as he finds to the c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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