TMI Blog2003 (3) TMI 283X X X X Extracts X X X X X X X X Extracts X X X X ..... ed returns showing nil income. The assessments came to be completed under s. 143(3)/148 bringing to tax the compensation on accrual basis as disclosed by the assessee in a "note" given in the statement of income attached with the returns. 3. On appeal to the CIT(A), Jodhpur, the assessments were set aside and the AO was asked to decide as to who was the actual owner of the rental income and further, he was to examine the assessee s stand that the said income was agricultural income and, therefore, not taxable. 4. In order to complete the set aside proceedings, the AO issued statutory notices to the respondent and the case was discussed with reference to the following brief facts: "A land measuring 100 bighas in Khasra No. 632/4 of Jodhpur Tehsil entered into the land revenue records in the name of Smt. Sugan Kanwar w/o late Sh. Rud Singh was requisitioned by the Ministry of Defence through the competent authority,Jodhpur, in the year 1976. Subsequently, on a petition filed vide his order dt.26th April, 1988, the Collector,Jodhpur, allowed recurring compensation at the rate of Rs. 7,200 per annum w.e.f.4th Aug., 1986to3rd Aug., 1989. Subsequently, Smt. Sugan Kanwar referred th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... requisitioned the same was put totally for the non-agricultural use. (iii) The assessee has not brought to notice any evidence whatsoever that the land was actually used by the assessee for agricultural purpose. (iv) Merely for the reason that the land was entered in revenue records as an agricultural land is not sufficient to claim that it was an agricultural land." 9. As according to the AO completing the reassessment, the facts had not changed vis-a-vis the original assessment, he proceeded to complete the assessments on the same income as determined in the original assessments framed under s. 143(3)/148. For the asst. yr. 1990-91, the total income worked out was Rs. 2,90,400 and the corresponding figure came to Rs. 17,87,580. For the third asst. yr. 1994-95, the basic facts remained the same and the only distinguishing feature was that this was the case of a first assessment framed under s. 148 at an income of Rs. 4,48,000. 10. Being aggrieved with the assessment orders so framed, the assessee filed appeals to the CIT(A) and at which stage two main grievances were aired, the first being that the action of the AO to treat the respondent as the real and beneficial owner o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tate Government against the order mentioned at sl. No. 2 above. 4. Copy of the mutation of the land in favour of Sugan Kanwar. 5. Copy of the competent authority dt.26th April, 1988, awarding the compensation to Sugan Kanwar. 6. Copy of the letter from Defence Estate Officer,Rajasthan Circle, Jaipur, dt.10th Jan., 1992. 7. Copy of the letter of Defence Estate Officer dt.8th March, 1993. 8. Copies of the assessment orders in the case of Sugan Kanwar and CIT(A) s order." 13. The submissions on behalf of the respondent with reference to the aforesaid documents were that the ownership and nature of the land being agricultural was decided in favour of Smt. Sugan Kanwar by the judgment of the Hon ble Rajasthan High Court which had been passed in connection with the writ filed by Smt. Sugan Kanwar against the order of the competent authority holding that she was not entitled for any compensation. It was emphasised that the appeal of the Government against the order of the learned Single Judge of the Hon ble High Court before the Division Bench of the same High Court came to be rejected. The further submissions were to the effect that the assessee had succeeded in establishing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns since no transfer was involved and the ownership remained with the assessee. Further, according to her, the receipt was clearly of a revenue nature and the only issue which was to be decided was whether it represented "income from agriculture". 17. The CIT(A) at the outset referred to the judgment of the Hon ble Supreme Court in the case of CIT vs. All India Tea Trading Co. Ltd. highlighting thereafter the principles that emerged from the said judgment and which broadly were as under: "(i) rent or revenue which is directly derived from any land which is used for agricultural purposes will be agricultural in nature. (ii) revenue which is derived must also be directly and not indirectly associated with the land which is used for agricultural purposes before it can be said to be agricultural income. (iii) The effective source of the receipt being from agricultural land is the decisive factor." 18. In dealing with the assessee s case in the light of the principles laid down by the Hon ble Supreme Court, the CIT(A) at the outset referred to the four reasons, which had been recorded by the AO to come to the conclusion that the income in question was non-agricultural and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd, gave a judgment dt.4th Jan., 1985, in favour of the petitioners and upheld their right to receive compensation from the Government. The following observation of the Hon ble Court is relevant: Thus, the various documents submitted by the petitioners go to show that the petitioners at the commencement of the Rajasthan Land Reforms and Acquisition of Land Owners Estate Act, 1963, were in a cultivatory possession of the various portions of the land as tenants of the ex-ruler of the erstwhile State of Jodhpur. Thus, it was established by the appellant in the High Court of Rajasthan that the land in question was cultivated by Sugan Kanwar prior to its requisition. While this judgment has been referred to by the AO in the assessment order, no comments have been made on the findings of the Court. Since this point has been settled by the Court in favour of the appellant, it cannot be disputed that the compensation was directly related to agricultural land which was regularly cultivated by the appellant." 20. Coming to the other reason recorded by the AO and which was to the effect that there was no evidence with the assessee to prove that even after the land was requisitioned the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned counsel has drawn my attention to the order No. 18/85, dt.26th April, 1988, of the District Collector,Jodhpur, awarding recurring compensation for requisition of agricultural land. At p. 4 of this letter, it is clearly stated that while deciding the amount of recurring compensation on the land requisitioned, he had relied on the advice of Agricultural Officer, which is based on the agricultural produce of the land during relevant time. After going through this letter, I am inclined to agree with the appellant that the land was being used for agricultural purposes subsequent to the requisition and this fact was duly considered by the District Collector for determining the quantum of the recurring compensation in 1988. This proves that there were agricultural produce on the land when the matter came up before the arbitrator in 1988 and the recurring compensation was paid in lieu of the use of land by the Government for agricultural purposes. In view of this position, the appellant s contention that the recurring compensation received was in consideration of agricultural income, has substantial merit." 22. As regards the fourth reason recorded by the AO to reject the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Andhra Pradesh High Court relied upon by the AO in the case of Pyadah Suryanarayan Murty vs. CIT (1961) 42 ITR 83 (AP) was not found to be applicable by the CIT(A) on the facts of the case and ultimately it was concluded that the case of the assessee was fully covered by the judgment of the Hon ble Supreme Court in the case of All India Tea and Trading Co. Ltd. and we find it appropriate to reproduce the relevant observations of the CIT(A) which are to the following effect: "Considering all the facts and circumstances of the case, I am of the opinion that the case of the appellant is fully covered by the judgment of the Hon ble Supreme Court in the case of CIT vs. All India Tea Trading Co. Ltd. (1996) 132 CTR (SC) 205 : (1996) 219 ITR 544 (SC). In this case the land was requisitioned by the State of Assam and thereafter it was allotted to refugees who continued to use the land for cultivation. In the circumstances, it was held that since the refugees were put in the possession they became the tenant and for parting with the physical possession of the land, on which agricultural operation was continued to be carried on by the refugees, compensation was paid. Such compensation w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he respondent before the CIT(A) was correct in every aspect. We find it appropriate at this stage to reproduce the said statement of facts and which, in our opinion, would be quite helpful in reaching (to) an opinion in the present appeals as follows: "The appellant is a power of attorney holder of Smt. Sugan Kanwar w/o late Shri Rud Singh. Smt. Sugan Kanwar is an old widow of more than 65 years in age and not largely lettered. She was cultivating an agricultural land measuring 100 bighas in village Pabupura in Tehsil Jodhpur, for more than 20 years in the year 1975. In 1975, the Collector,Jodhpur, issued a notice to Smt. Sugan Kanwar that she is unauthorisedly occupying the agricultural land and as such should handover the possession within 10 days from the receipt of the notice. Smt. Sugan Kanwar filed a writ petition to the Hon ble Rajasthan High Court challenging the validity of the notice issued by the Collector,Jodhpur. The writ petition filed by Smt. Sugan Kanwar was decided in 1984, holding that she is a Khatedar tenant of the State Government of the said agricultural land. The appeal filed by the State Government in the Division Bench of the Hon ble Rajasthan High Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned AO. The CIT(A) set aside the case with necessary instruction and directions to the learned AO. The learned AO has assessed the amount of recurring compensation receivable in the hands of the appellant on substantive basis (in the hands of Smt. Sugan Kanwar on protective basis). The learned AO has further observed that the amount of recurring compensation shall be taxed on accrual basis in the year under appeal and on protective basis in the year of its receipt. The learned AO following his predecessor s order for the asst. yr. 1990-91, assessed Smt. Sugan Kanwar on protective basis with a finding that it shall be taxed on substantive basis in the hands of the appellant and further the accrued amount of recurring compensation shall be taxed on substantive basis in the year of its receipt. The learned AO has further held that the agriculture land owned by the Government for the non-agriculture purposes, hence the amount of recurring compensation is taxable under the IT Act." 25. As already stated earlier, the learned Departmental Representative raised certain preliminary issues and one of these was that the present appeals be heard along with the appeals of Smt. Sugan Kanw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 50 (SC) 4. CIT vs. M.L. Mahajan (2002) 175 CTR (SC) 298 : (2002) 255 ITR 272 (SC) 5. CIT vs. Smt. Sheggy Abdulla (2000) 158 CTR (Ker) 213 : (2000) 243 ITR 792 (Ker) 6. CIT vs. National Electric Supply Trading Corpn. (P) Ltd. (2000) 164 CTR (Del) 599 : (2001) 248 ITR 794 (Del) 7. Sarifabibi Mohmed Ibrahim Ors. vs. CIT (1993) 114 CTR (SC) 467 : (1993) 204 ITR 631 (SC) 8. CIT vs. Dumraon Cold Storage Refrigeration Service (P) Ltd. (1983) 35 CTR (Pat) 7 : (1983) 141 ITR 700 (Pat) 9. Gordhanbhai Kahandas Dalwadi vs. CIT (1981) 21 CTR (Guj) 177 : (1981) 127 ITR 664 (Guj) 10. CIT vs. S.N. Desai (1989) 75 CTR (Bom) 53 : (1989) 177 ITR 151 (Bom) 11. Senairam Doongarmal vs. CIT (1961) 42 ITR 392 (SC) 12. Pydah Suryanarayana Murty vs. CIT 13. CIT vs. Raja Benoy Kumar Sahas Roy (1959) 32 ITR 466 (SC) 14. CIT vs. AllIndiaTea Trading Co. Ltd. 15. Mrs. Bacha F. Guzdar vs. CIT (1955) 27 ITR 1 (SC) 16. Jayshree Tea Industries Ltd. Anr. Vs.Unionof India Ors. (2002) 174 CTR (Cal) 129 : (2002) 253 ITR 608 (Cal) 17. Commr. of Agrl. IT vs. Narayanan Tratan Namboodiripad (1967) 64 ITR 57 (Ker) and 18. CIT vs. Pandit Dhaneshwardhar Misra (1940) 18 ITR 416 (Pat). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 32. The learned counsel for the respondent further sought to distinguish the various judgments relied upon by the learned Departmental Representative and we would straightaway refer to the note appended at pp. 32 and 39 of the paper book filed on behalf of the respondent. The copies of the various judgments so distinguished were also placed on the paper book and which we have perused minutely. 33. In reply, the learned Departmental Representative, placed on record a written note reiterating that the various sections of the Requisitioning and Acquisition of Immovable Property Act, 1952, had to be read together and the conclusion which ultimately was to be reached was that there had been a complete extinguishment of the right of the assessee in the property in question in 1976 itself. The further submission on the part of the learned Departmental Representative was that once a land had been requisitioned, the assessee could not carry on agricultural operations and it was not the job of the Defence Ministry to carry on any such operations since the land had been acquired for a specific purpose. 34. In response to the aforesaid arguments, the learned counsel for the respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd all that we are required to decide is to what is the nature of the receipt in question i.e., the recurring compensation. The fact that the land is within the municipal jurisdiction of Jodhpur is not in dispute and all that we would like to observe is that agricultural activities carried out on agricultural land within the municipal limits of a town/city and resulting in agricultural income do not change their character and the income remains agricultural. The other argument about the receipts by the assessee being from Smt. Sugan Kanwar and, therefore, not agricultural income in her hands is an argument being raised before us for the first time and we must be categorical in stating that the learned Departmental Representative cannot improve/change the case of the Department before the Tribunal and he has to restrict his arguments with reference to the facts as also the reasoning recorded by the AO and nothing more. 37. Coming to the provisions of the Requisitioning and Acquisition of Immovable Property Act, 1952, we have already referred to some aspects thereof but dealing with the written submissions filed by the learned Departmental Representative on behalf of the Revenue al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the land in question during the relevant point of time. According to the CIT(A), the aforesaid facts further lent credence to the finding that there was agricultural produce on the land even when the matter came up before the arbitrator in 1988. None of the aforesaid facts have been challenged before us by the learned Departmental Representative by referring to any material on record, which would justify a finding to the contrary. The Chandigarh Bench of the Tribunal in the case of Anil Kumar relied upon by the CIT(A) has referred to the relevance/importance of Khasra Girdawari as a piece of evidence for deciding disputes pertaining to those cases where it is the stand of the assessee that agricultural activities were being carried out on a particular piece of land. 39. Coming to some of the decisions relied upon, the CIT(A) has placed reliance on the judgment of the Hon ble Supreme Court in the case of CIT vs. All India Tea Trading Co. Ltd. and a perusal thereof shows that the facts are quite identical as that was the case of an assessee, who had tea estates in Assam and in order to accommodate refugees and other landless persons, the Assam legislature passed the Assam Lan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was directly related to the requisitioned land on which agricultural operations continued to be carried out by the refugees during the year in question and this amount had to be regarded as agricultural income as defined in s. 2(1) of the Act and was not taxable." 40. Coming to the facts of the assessee s case, we have already referred to the Khasra Girdawari placed on record before the tax authorities and which was perused by the CIT(A) to come to the conclusion what she did and we have also adverted to the observations and the consequential findings of fact recorded by the CIT(A) in para 13 of her order. These can only lead to the conclusion that even after requisition in 1976, agricultural operations continued to be carried out on the land in question and compensation received thereof would, therefore, assume the character of agricultural income as has been rightly opined by the CIT(A). The learned Departmental Representative sought to distinguish the aforesaid judgment of the Hon ble Supreme Court but we must mention without success since the facts of the appeals before us are quite identical to those considered by the Hon ble Supreme Court aforesaid. 41. The other judgment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but in the present case no such evidence has been placed on record and, therefore, the present appeals of the respondent (sic appellant) are decided on their own facts and applying thereto the case law. 45. In the final analysis, we uphold the consolidated order passed by the CIT(A) for asst. yrs. 1990-91, 1992-93 and 1994-95 vis-a-vis ITA Nos. 1828, 1829 and 1830/Del/2002. 46. It was an accepted proposition between the parties that if such a view is taken by the Tribunal, then consequentially, the remaining appeals filed by the Revenue wherein the following common ground has been raised would stand rejected: "On the facts and circumstances of the case, the learned CIT(A)-XXVI, New Delhi, erred in deleting the addition in view of the provisions of s. 45(5) holding the same as capital receipts, whereas in the year of receipt, i.e., in the asst. yrs. 1990-91, 1992-93 and 1994-95, the learned CIT(A) has granted relief holding the same as revenue receipt being in the nature of agricultural income." 47. In view of the aforesaid accepted position, the orders of the CIT(A) for the remaining eight appeals would stand confirmed. 48. In the result, all the appeals filed by the Rev ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
