TMI Blog2011 (7) TMI 1016X X X X Extracts X X X X X X X X Extracts X X X X ..... g Officer treating the sale of agricultural land as industrial land ignoring the fact that the assessee received 50 per cent. rebate on stamp duty from the Sub-Registrar when the land was sold holding the same as industrial land." The assessee has shown interest income and appended a note in which it was stated that the profit from sale of agricultural land to the extent of Rs. 29,35,837 is agricultural income. During the course of assessment proceedings, the assessee filed a letter dated November 5, 2009 that profit on sale of land is to be considered as capital receipt and not agricultural income and therefore, such profit should not be considered for rate purposes. The assessee along with other two assessees sold the land measuring 2.20 hectares situated at Village Mandana on 2006 to M/s. Earth Stone Group, New Delhi for a consideration of Rs. 1.01 crores. The nature of land sold has been mentioned as Banjad/Gair Mumkin Khatta. Before the Assessing Officer, the assessee claimed the land is not capital asset as per provisions of section 2(14)(iii) of the Act. The Assessing Officer noticed from the sale deed that PMT registration was granted to the assessee by the District Indus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... land. Hence, via media was adopted to get the electric connection and registration application was filed for getting the electric connection. The registration was obtained for 100 ft. area, 200 ft. area but the actual area used by the assessee was only 50 to 60 sq. ft. for vermi compost cultivation. The compost and worms were then sold by the assessee for Rs. 5,000 and Rs. 3,000 on June 1, 2004 and November 1, 2004. The assessee jointly with his brother and father got constructed two rooms, five labour quarters and one water storage tank. The Assessing Officer also obtained information from Sub-Registrar, Mandana and the Sub-registrar intimated that rebate of 50 per cent. on stamp duty was given on the basis of a letter from the District Industries Centre, Kota. The Assessing Officer deputed the Inspector to make on the spot verification. The inspector recorded the statement of Shri Ram Singh. Shri Ram Singh admitted that he has not cultivated any crop on the land during his tenure of employment. He further stated that he has been employed on monthly salary basis. The inspector reported that the land under reference comes under RIICO Industrial area. The Assessing Officer provided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e consideration was adopted at Rs. 31,12,200 that is also on the basis of the letter received from Sub-Registrar, Mandana. On land, the Assessing Officer computed the long-term capital gain and on building, construction, etc., short-term capital gain was computed. The learned Commissioner of Income-tax (Appeals), after considering the submissions of the assessment order, summarised the observation of the Assessing Officer at pages 4 to 6 of the appellate order. During the course of the appellate proceedings, the Assessing Officer filed a letter dated March 10, 2010. In this letter, the Assessing Officer stated that the land sold was not agricultural land as the inspector, after making spot enquiry, reported that no agricultural activities were performed on this land for the last so many years and the assessee has also not shown any agricultural income. The Assessing Officer further pointed out that Shri Ram Singh has admitted that he was an employee on monthly salary basis and he has not cultivated any crop. The purchaser has paid 50 per cent. on the stamp duty on the registered document. It means that the land was being used for industrial purposes. The assessee has interpreted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is also corroborated from records of the District Industries Centre, Kota. It was submitted that the order of the learned Commissioner of Income-tax (Appeals) is required to be vacated and the order of the Assessing Officer should be confirmed. The learned authorised representative has filed the written submissions containing 24 pages and also filed the paper book containing 75 pages. The learned authorised representative also filed an application for admission of additional evidence. The additional evidence is a letter dated December 23, 2010 issued by the District Industries Centre, Kota to M/s. Earth Stone Group, New Delhi, i.e., purchaser of the land. In this letter, it has been mentioned that land on which stamp duty of 50 per cent. was given has not got converted into non-agricultural land. The application under rule 29 has been signed by the learned authorised representative and not by the respondent. Moreover, it is not the case of the assessee that the income-tax authorities have not provided sufficient opportunity. It is only mentioned that the paper was received after the order was passed by the learned Commissioner of Income-tax (Appeals). According to us, rule 29 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ana. Hence, the report of the inspector in respect of land being part of the industrial area, cannot be accepted. The SDO has clearly stated that the land is agricultural and no application for conversion of land was received. The learned authorised representative has relied upon the following cases. 1. Lavleen Singhal v. Deputy CIT [2007] 111 TTJ (Delhi) 326 ; and 2. Haresh V. Milan v. Joint CIT [2008] 114 ITD 428 (Pune). The learned authorised representative has submitted that the Assessing Officer has relied upon certain decisions which are distinguishable. The facts of the case on which the Assessing Officer has placed reliance are different from the facts of the instant case which have been relied upon by the Assessing Officer are as under : 1. Smt. Nayantara G. Agrawal v. CIT [1994] 207 ITR 639 (Bom); 2. Workmen v. Associated Rubber Industry Ltd. [1986] 157 ITR 77 (SC) ; 3. CIT v. Gemini Pictures Circuit P. Ltd. [1996] 220 ITR 43 (SC) ; 4. CIT v. Ramakrishna Deo [1959] 35 ITR 312 (SC) ; 5. CIT v. R. Venkataswamy Naidu [1956] 29 ITR 529 (SC) ; and 6. Union of India v. Playworld Electronics P. Ltd. [1990] 184 ITR 308 (SC). We have heard both parties. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been mentioned as Padat. As per certificate given by RIICO, it is mentioned that there is no industrial area at Mandana. The acquisition of land for establishment of SEZ is under consideration of the State Government. The certificate is dated January 18, 2010. It means that land under reference was not part of industrial land. The purchaser was given a certificate that it will be entitled to 50 per cent. of stamp duty and 50 per cent. of the Government portion of conversion charges because the application for the project of mosaic tiles, etc. has been registered and the group has also filed the declaration. This rebate of stamp duty is for the purpose of establishing a unit and it is not necessary that at the time of purchasing the land for the purpose of unit, such land should be industrial land. It is also not disputed that the assessee made an application for PMT registration. Along with application, the assessee attached the photostat copy of certain bills which suggest that the assessee has made certain constructions and also purchased vermi compost khad and also compost and vermi were sold on June 1, 2004 and November 1, 2009. The application for PMT registration was made on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to determine as to whether the land is for agricultural or not. The fact is that the land is sold or transferred to non-agriculturists for non-agricultural purposes or that it is likely to be used for non-agricultural purposes soon after it is transferred is also the relevant factor germane to the determination of the issue. The hon'ble Bombay High Court held that land which is not intended for agricultural purposes in future cannot be considered for not charging capital gain on transfer of land. The hon'ble Gujarat High Court in the case of CIT v. Madhabhai H. Patel [1994] 208 ITR 638 (Guj), held that the order of the Tribunal is neither unreasonable nor erroneous in law when the land which was agricultural before the date of sale and sold to the Co-operative Housing Society is to be treated as agricultural land because the assessee has not taken any part in getting the plot sub-divided into sub-plots or in getting the plans prepared and passed, for non-agricultural use. The hon'ble apex court in the case of Sarifabibi Mohmed Ibrahim v. CIT [1993] 204 ITR 631 (SC) held that inference has to be drawn on a cumulative consideration of the relevant facts. The hon'ble apex court has re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the land which was being used for industrial purposes, i.e., for the project of vermi compost. The assessee has admitted that area of such land is to the extent of 60 sq. ft. though the permission was taken for 100 to 200 sq. ft. We, therefore, hold that 100 sq. ft. land is not to be considered as agricultural. After the transfer of land, the land has not been used for agricultural purposes as per copy of Girdawari available. The use of land has not been converted from agricultural to industrial. The hon'ble jurisdictional High Court in the case of CIT v. Vimal Chand Golecha [1993] 201 ITR 442 (Raj) held that capital gains on land and building should be separately determined. The capital gain is not exempt on building. The capital gain is also not exempt on trees planted on the land. In respect of short-term capital gains, the learned Commissioner of Income-tax (Appeals) has not recorded any findings though the Assessing Officer has computed the long-term capital gain on land and the short-term capital gains on other assets. There- fore, for the issue of deciding the short-term capital gain on building available on the land including swimming pool as well as on trees, the matt ..... 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