TMI Blog2014 (9) TMI 124X X X X Extracts X X X X X X X X Extracts X X X X ..... for from the MRO, Ghatkesar Mandal on 28.1.2013 - no opportunity of cross examination of the authorities who had issued the report was given to the assessee - CIT(A) was constrained in giving a direction to the AO inasmuch as many years have lapsed from the time the transaction taken place which was in the year 2006-07 and also the case was heard by the CIT(A) which was on 4.10.2013 - giving the benefit of doubt to the assessee, the MRO, Ghatkesar had given a report evidencing the correct status of the land wherein he has mentioned that agriculture operations were being carried on the land - the lands sold by the assessee are agricultural lands, and the CIT(A) has rightly allowed the assessee's appeal – Decided against Revenue. - ITA No. 265/Hyd/2014, C.O. No. 22/Hyd/2014 - - - Dated:- 31-7-2014 - Shri B. Ramakotaiah And Smt. Asha Vijayaraghavan,JJ. For the Appellant : Sri R. Mohan Reddy For the Respondent : Sri A. V. Raghu Ram ORDER Per Asha Vijayaraghavan, J. M. The above appeal by the Revenue is directed against the order of the CIT(A)-V, Hyderabad dated 28.10.2013 and the Cross Objection (CO) by the assessee against the appeal of the Revenue. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 2.39 crores from the purchasers. I am herewith enclosing a copy of the Sale Deed. I further submit that I have received a sale consideration of ₹ 65,25,000 only from M/s. Sri Surakshita Homes by way of post dated cheques as under: Dale Chq. No. Bank Amount 10.12.2006 138754 Development Credit Bank 20,25,000 05.01.2007 138755 Development Credit Bank 45,00,000 At this juncture I bring to your kind notice though it has been mentioned in the sale deed that the purchasers have paid the sale consideration no mention has been made therein the mode of payment. To avoid future disputes and misunderstandings we have entered into a Memorandum of Understanding regarding the mode of payment of sale consideration on the same day i.e., 04.11.2006 on which the Sale Deed has been executed. A copy of the same is enclosed. Out of the above two payments Chq. No. 138755 to ₹ 45,00,000 was not honoured by the purchasers. Instead, they made part payment by way of cheque p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the letter which was addressed to MRO, Ghatkesar Mandal vide letter of even no, dated 28.01.2013 requesting to furnish the details of the lands in question along with survey numbers and requested to confirm whether any agricultural activity was being carried out in the said lands during the period 2002 to 2006. In response to this, the Tahsildar, Ghatkesar Mandal vide his letter No. B/84/13 dated Nil.02.2013 furnished the information which is reproduced here as under: I invite your attention to the references cited and it is to inform that the VRO, Aushapur village, Ghatkesar have enquired into the matter and reported the Sy. No. wise details: S. No. Sy. No. Extent (Ac. Gts) Remarks 2. 252 1-21 Covered into plots 3. 257 1-28 Covered into plots and some extent padava. 4. 262 0-21 Covered into plots. 5. 263 0-07 Covered into plots 6. 352 0-10 Padava 7. 353 0-01 Padava and some extent is covered into under By-pass road. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee are located, was not notified as Municipality and even today, the said notification was in force. 12. The AR submitted that the said land originally belonged to Mr. Yadagiri and Mrs Bal Laxmamma, who were declared as pattadars as per a Court decree, in O.S. No. 23 of 1984, dt. 03.09.1997. Subsequently, the said owners took possession of the lands and carried out agricultural operations. As is evident from the orders of the MRO Ghatkesar Mandal, vide proceedings dt. 08.10.1997 giving effect to the Court Decree, though the lands in question were reflected as plots in records, the V.A. of Aushapur conducted a physical inspection of the spot and reported that the land owners had fenced the land and were actually doing agriculture. Thus, the allegation of the AO that the land in question was in the nature of plots is factually incorrect. 13. He further submitted that as is evident from the assessment order itself, the report of the MRO obtained by the AO suggests that it was based on the enquiry conducted in 2013 and as such does not reflect the factual position relevant to 2006 it was pointed out that the Assessee purchased the said land in 2002 from the person, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of tax does not arise. 15. The AR relied on the judgement of Hon'ble High Court of Bombay, in the case of CIT vs. Debbile Alemao (Smt.) (2010) 46 DTR 341 (Born.), that agricultural land which was never sought to be used for non agricultural purpose by the assessee till it was sold has to be treated as agricultural land, even though no agricultural income was shown by the assessee from this land, and therefore, no capital gain was taxable on the sale of the said land. 16. The AR submitted that the land had never been used by the assessee for non-agricultural purpose any time before the date of sale. It was pointed out that nothing has been brought on record by the AO that it was used for non-agricultural purpose and the Assessee did not seek any permission from the relevant authorities to put it to non-agricultural use. The Assessee submitted that as per the Andhra Pradesh Agricultural Land (Conversion for Non-Agricultural Purposes) Act, 2006, conversion of agricultural lands for any other purpose is prohibited except with specific permission by the authority under that Act. It was further submitted that the Hon'ble High Court of Karnataka, in the case of CIT v. Smt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee were asunder: (i) the subject land was situated in a village and at a distance of about 15 km from the municipal limits. (ii) All documents produced by the Appellants showed that the said land was agricultural. (iii) The Appellants had neither converted nor made any plans nor taken any steps towards the conversion of the said land into non-agriculture. (iv) The subject land had continued to be put to agricultural use and that it was always used for agricultural purpose. The Hon'ble High Court observed that as the appellants had satisfied most of the tests which were laid down by the Hon ble Supreme Court in the case of Sarifabibi, the lands in question were agricultural in nature. (i) The AR further submitted that inflation or escalation in price of the agricultural land would not change the basic character of the land. This view was also upheld by the Hon'ble High Court of Bombay, in the case of CIT v: Minguel Chandra Pais 282 ITR 618 (Born), wherein it was held that the price paid is not decisive to say whether the land is agricultural or not. Further, it was held in the case of CIT v. Smt. Debbie Alemao 331 ITR 59 (supra), that the use to which the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er treating that the lands sold by the assessee are not agricultural lands; (3) The learned CIT(A) ought to have considered that the assessee failed to declare agricultural income either in the Asst. Year under consideration or in earlier years and should have treated that the lands sold by the assessee are nonagricultural lands; (4) The learned CIT(A) ought to have considered that the assessee failed to produce any material evidence to prove that there is agricultural activity (Basic and subsequent operations) in the lands under consideration and should have treated that the lands as non-agricultural lands; (5) The learned CIT(A) ought to have considered that the assessee failed to furnish any proof that she has paid Land Revenue and accordingly treated that the lands as non-agricultural; (6) The learned CIT(A) ought to have appreciated that the lands sold by others adjacent to the lands in question declared the income on sale of the said lands and paid the taxes for the A.Y. 2007-08. Accordingly the learned CIT(A) should have treated the lands in question are also taxable under the head Long Term Capital gains as admitted by other sellers in the same project; (7) T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... carried out agriculture operations, according to the order of the MRO, Ghatkesar Mandal which was passed to give effect to the court decree. From this, the land in question seems to be agricultural land. (c) The report of the MRO obtained by the AO is based on the enquiry conducted in 2013 and not in the year 2006 as observed by the CIT(A). (d) The land happens to be rain fed and the argument of the assessee that there might not be much surplus from agricultural activity and, therefore, non disclosure of market income can be excused. (e) The production of Pattadar passbook as insisted by the Assessing Officer does not serve much purpose since the passbook proves the ownership of land and does not throw much light on agricultural operations. (f) The crops having been grown not being considerable, sale of agriculture produce has been accounted as the same might have sold to the local buyers. (g) That the land was sold in acreage and not in square yards also shows that the registering authority was aware that the same was agriculture land. (h) The assessee has not obtained any permission from the appropriate authorities for nonagriculture use of land or for developme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the time of sale. For coming to the conclusion, it relied upon the decisions of the Delhi High Court in D. L. F. Housing and Construction (P.) Ltd. v. CIT 141 ITR 806 (Delhi), D. L. F. United Limited v. CIT 161 ITR 714 (Delhi) and D. L. F. United Limited v. CIT 217 ITR 333 (Delhi). 28. Further a plethora of decisions support our view some of them are as under: (j) On almost identical facts, the land was held to be. agricultural in the following cases: (a) Surjeet Kaur Vs CIT 74 TTJ 722 (Hyd) (b) Harish V. Milani Vs ]CIT 111 TTJ 310 (Pune) (c) M.S.Srinivasa Naicker Vs ITO 292 ITR 481 (Mad) (d) Tulla Veerender and Vijayender (Hyd ITAT) vide order dt. 04.07.2013 in ITA Nos. 550 and 551/2012. (e) Further, it was held by the Hon'ble High Court of Gujarat, in the case of CIT v. Shashiben 288 ITR 319 (Guj), that the fact of non-agricultural user by the buyer will not alter the character of land in the case of the seller. The relevant portion of the decision is extracted hereunder: If somebody, thinking that the said land can be put to some other purpose, purchases the land for a higher price and thereafter, changes the use, for the first holder, the property w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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