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TMI Blog2014 (7) TMI 519X X X X Extracts X X X X X X X X Extracts X X X X ..... f convenience. 3. We proceed with the facts in the case of Shri Ramesh C. Prajapati. (ITA No. 2657 & 2702/AHD/2010). 4. Assessee is an individual stated to be having income from business, other sources, agriculture income and capital gains. Assessee filed his return of income for A.Y. 07-08 on 31.10.2007 declaring total income at Rs. 19,86,268/-. The case was selected for scrutiny and thereafter the assessment was framed under section 143(3) vide order dated 29.12.2009 and the total income was assessed at Rs. 1,72,16,900/-. Aggrieved by the order of A.O, Assessee carried the matter before CIT(A). CIT(A) vide order dated 24.06.2010 granted partial relief to the Assessee. Aggrieved by the order of CIT(A), the Revenue and Assessee both are now in appeal before us. The grounds raised by Revenue in ITA No. 2657/AHD/2010 reads as under:- 1. On the facts and in the circumstances of the case, the Id. CIT(Appeals) has erred in directing the Assessing Officer to treat the agricultural income at Rs. 12,12,220/- as claimed by the assessee as against restricting the same at Rs. 4,62,220/- without appreciating the fact that the assessee had failed to substantiate his claim with supporting evi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred in law and in facts in holding that the purchase of land of Revenue Survey No. 485 was the property of the partnership firm M/s. Satyanarayan Traders and was reflected in the accounts and balance sheet of the partnership firm. 4. The Id. CIT(A) further erred in law and in facts in holding that by recasting the accounts / balance sheet of M/s. Satyanarayan Traders, the investment in the purchase of land at Revenue Survey No. 485 is transferred to the account of the appellant and, therefore, even though the said land was purchased in the year 1999, was to be treated as a business asset and the profit on its sale amounting to Rs. 21,59,312/- was to be taxed as business income as against capital gains disclosed by the appellant. The taxation of the amount of Rs. 21,59,312/- being the income from sale of a capital asset may please be directed to be assessed as income from sale of capital asset as capital gains instead of business income. 5. The Id. CIT(A) further erred in law and in facts and in contradiction to her own finding of directing the taxation of capital gains of Rs. 32,55,053/- (Rs. 10,95,741/- + Rs. 21,59,312/-) from the sale of land at Survey Nos. 287 and 485 as inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rchaser, their confirmation and receipts from APMC, Karjan. No discrepancy in any document is noted. Hence the Assessing Officer's conclusion of Rs. 7,50,000/- being business income is without any base and is directed to be deleted. 6. Aggrieved by the order of CIT(A), Revenue is now in appeal before us. 7. Before us, the ld. D.R took us through the findings and observation of A.O and reiterated that in the copies of the bills of purchases submitted by the Assessee, there was no address mentioned and as illustration pointed to page 72 to page 84 of the paper book. He further submitted that CIT(A) has granted relief to the Assessee merely on the basis of the fact that in the past, the Department had accepted the Assessee to be having income from agriculture and therefore the claim of the Assessee was considered to be reasonable. He submitted that the conclusion of the ld CIT(A) was without any basis and not supported by material on record. The ld. D.R. further submitted that Assessee has not placed on record his land holding, the area under cultivation, the nature of crops grown etc to substantiate his claim of earning income from agriculture activities. He thus supported the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne the land holding of the Assessee, the nature of crops cultivated on the land, whether the land was irrigated or what were the facilities available for irrigating the land, the yield of the land during the relevant period. We also find that no enquiry with Surpanch or Patwari or any other Revenue Authority was made either by A.O or CIT(A) nor the Revenue records were called for to ascertain yield of crops and the factual position. We find that ld. CIT(A) has considered the claim of Assessee of having agriculture income in view of the agricultural land shown at Rs. 1.25 crore in the Balance Sheet. During the course of hearing, ld. A.R. was asked specific question about the total land holding of the Assessee, type of crops grown and what were the irrigation facilities available to which neither the ld. A.R. or ld. D.R. could furnish any reply. We are therefore of the view that the details like the land holding under agriculture, nature of irrigation facilities on the land, the crops grown on the land in the relevant period, record of crops grown in the Revenue records needs to be verified and therefore the matter is restored to the file of A.O for him to examine the aforesaid facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... investor. He therefore considered the assessee's income from land transaction as "business income" and not as "capital gain" as claimed by the Assessee. He accordingly disallowed the claim of "long term capital gain" and considered the profit earned as "business income" and accordingly made addition of Rs. 1,42,97,628/-. Aggrieved by the order of A.O, Assessee carried the matter before CIT(A). CIT(A) after considering the submissions of the Assessee granted partial relief to the Assessee by holding as under:- 3.3. I have considered the submissions of the Authorized Representative and the order of the Assessing Officer. With regard to land appearing at Survey No. 91 the same was acquired in the year 1986 under a will indicating its holding was for a period of 20 years. Various Courts have held that it is not the transaction at the time of sale which has to be considered, rather the intention of the appellant at the time of purchase is to be considered. In the instant case the appellant has not purchased the land but has received it under a will. The Assessing Officer has claimed that the appellant has sought and received clearance from the Local Authority for the purpose of dev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchased, it was purchased for business and reflected in the balance sheet of the partnership firm. The claim of the appellant that profit from the sale of property Survey No. 287 is nothing more than capital gain cannot be accepted. The appellant has shown this amount as an investment in the balance sheet of the firm wherein he is a partner. Relying on the fact that the department has accepted earlier transactions as capital gains does not help the appellant. In fact it was only after recasting of the balance sheet of M/s. Satyanarayan Traders and the partners has the appellant started to sell the properties, thereby indicating that business stock has been divided into individual ownership and then sold. Hence the Assessing Officer's conclusion that the income derived from the sale of this plot of land is income from business is correct and the addition of Rs. 32,55,053/- is confirmed 11. Aggrieved by the order of CIT(A), the Revenue and Assessee are now in appeal before us. 12. Before us, ld. D.R. took us through the findings and observations of the A.O. He further submitted that the Assessee purchases land and converts it into "non agriculture" land by completing the lega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red on 05.06.1997. It is therefore stated by the Assessee that the land was acquired through "will" more than 20 year back and therefore on its sale, the profits arising cannot be considered as capital gain. From the copy of the "Will" placed at page 132 of the paper book, it is seen that the will is only notarized by Notary and is not registered nor it was probated. On a query by the Bench as to whether the Assessee was related to Shri Maganbhai Patel, it was submitted that Shri Maganbhai Patel was not related to the Assessee. It is also a fact that though Assessee has submitted that the land was received by him more than 20 years back, but it is also a fact that the aforesaid land was not disclosed in the balance sheet of the Assessee after its acquisition. Though the ld. A.R. has submitted that in the "Hakk Patrak" ( placed at page 137 of the paper book) which is record of rights, the name of the Assessee has been entered in it. From the copy of the assessment order for A.Y. 05-06 which is placed at page 51 of the paper book, it is seen that the Assessee in that year had got the accounts audited under section 44AB of the Act and had filed the Tax Audit Report along with the Bala ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lance Sheet of Satyanarayan Traders and the partners, the Assessee started to sell the properties thereby indicating that business stock has been divided into individual ownership and then sold. Before us, ld. A.R. has not brought any material to controvert the aforesaid findings of CIT(A). In view of the aforesaid facts, we find no reason to interfere with the order of CIT(A) with respect to treating the profit on sale of land at Revenue Survey No. 287 and 485 as business income as held by A.O and confirmed by CIT(A). Thus the ground of Revenue is allowed and that of Assessee is dismissed. 15. In the result appeal of Revenue is partly allowed for statistical purposes and the appeal of Assessee is dismissed. Now we take up Revenue's appeal in ITA No. 2658/AHD/2010 (Revenue's appeal) & 2704/AHD/2010 (for 2007-08 Shri Hashmukhbhai R. Prajapti ) The grounds raised in Revenue's appeal reads as under:- 1. On the facts and in the circumstances of the case, the Id.CIT(Appeals) has erred in directing the Assessing Officer to treat the agricultural income at Rs. 7,24,132/- as claimed by the assessee as against restricting the same at Rs. 3,74,132/- without appreciating the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said land was purchased in the year 1999, was to be treated as a business asset and the profit on its sale amounting to Rs. 10,95,741/- was to be taxed as business income as against capital gains disclosed by the appellant. The taxation of the amount of Rs. 10,95,741/- being the income from sale of a capital asset may please be directed to be assessed as income from sale of capital asset as capital gains instead of business income. 3. The Id. CIT(A) further erred in law and in facts and in contradiction to her own finding of directing the taxation of capital gains of Rs. 10,95,741/- from the sale of land at Survey No. 287 as income of the appellant despite holding that the land at Revenue Survey No. 287 was purchased and reflected in the accounts of M/s. Satyanarayan Traders, partnership firm. Even from this count, the taxation of the amount of Rs. 10,95,741/- in the case of the appellant deserves deletion. 18. Before us, both the parties submitted that except ground no. 3 of Revenue's appeal, all the grounds of Revenue's and Assessee's appeal are identical to the grounds raised by Revenue and Assessee in case of Shri Ramesh Prajapati. We therefore for the similar re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such conclusion. He therefore submitted that in the absence of any evidence, A.O has rightly made the addition. The ld. A.R. on the other hand supported the order of CIT(A). 22. We have heard the rival submissions and perused the material on record. We find that CIT(A) while deciding the issue in favour of the Assessee has held that the Assessee would have received the balance amount from Janpriya Trust on sale of land and such amount has been offered to tax. Before us, nothing has been placed on record to demonstrate that the said amount was received by the Assessee and was offered to tax in earlier years or in the year under consideration and therefore provisions of Section 41(1) of the Act was not applicable. Further CIT(A) had decided the issue in a summary manner without passing a speaking order. Further we also find that while deciding the issue in favour of the Assessee, no remand report was called from A.O. We therefore feel that in the interest of justice and fair play, the submission made by the Assessee before CIT(A) needs to be re-examined. We therefore remit the issue to the file of CIT(A) to decide the issue afresh after considering the submissions of the Assessee a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtnership firm M/s. Satyanarayan Traders and was reflected in the accounts and balance sheet of the partnership firm. 2. The Id. CIT(A) further erred in law and in facts in holding that by recasting the accounts / balance sheet of M/s. Satyanarayan Traders, the investment in the purchase of land at Revenue Survey No. 287 is transferred to the account of the appellant and, therefore, even though the said land was purchased in the year 1999, was to be treated as a business asset and the profit on its sale amounting to Rs. 10,95,741/- was to be taxed as business income as against capital gains disclosed by the appellant. The taxation of the amount of Rs. 10,95,741/- being the income from sale of a capital asset may please be directed to be assessed as income from sale of capital asset as capita! gains instead of business income. 3. The Ld. Commissioner of Income Tax (Appeals)-ll, Baroda has erred in law and in facts in holding that the purchase of land of Revenue Survey No. 1280 was the property of the partnership firm M/s. Satyanarayan Traders and was reflected in the accounts and balance sheet of the partnership firm. 4. The Ld. CIT(A) further erred in law and in facts in holding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s business income instead of Long term Capital Gain returned by your appellant. The learned CI.T.(A) failed to appreciate the facts of the case and confirmed the assessment of the income under different head than returned by your appellant and thereby denying legitimate deduction U/S.54EC of Rs. 6250000/- of Investment made by your appellant and as also not granting inflated indexation of cost. Your appellant therefore hereby prays that the A.O. be directed Assess the impugned sum of Rs. 7321354/- as Long term Capital Gain and grant the deduction U/sS.54EC and 48 as may be available as per the provisions of the Act. 28. Before us, both the parties submitted that the grounds raised in the present appeal are identical to grounds raised in Assessee's appeal in the case of Shri Ramesh Prajapati in (ITA No. 2702/AHD/2010). We therefore for the reasons stated hereinabove while deciding the appeal in the case of Shri Ramesh Prajapati (supra) also decide the present grounds and dismiss the appeal of the Assessee. 29. In the result, the appeal of Assessee is dismissed. 30. In the result, the appeals of Revenue are partly allowed for statistical purposes and appeal of Assessee are di ..... X X X X Extracts X X X X X X X X Extracts X X X X
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