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TMI Blog2014 (11) TMI 338X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration of Rs. 13.44 crores and received an advance of Rs. 7.70 crores. However, on 05.05.2007, assessee as 'guarantor' executed irrevocable General Power of Attorney in favour of M/s. Ramky Estates & Farms P. Ltd. Assessee declared capital gains on this transaction at NIL claiming that the land sold is an agricultural land and situated beyond 8 KM from any municipality. The property conveyed through this irrevocable GPA was treated as sale by A.O. and relying on some clauses of irrevocable GPA, held that the land was meant for commercial exploitation on the date of transfer. He accordingly, brought to tax the long term capital gain and allowed deduction under section 54F to the extent assessee invested in House at Banjara hills and taxed an amount of Rs. 2,33,73,151 as long term capital gain. 3. Before the Ld. CIT(A), it was contended that transaction is of sale of agricultural land which is beyond 8 KMs from GHMC. A.O. was of the opinion that the amount of Rs. 14.50 lakhs spent by assessee was towards development of land and conversion from agriculture to non-agriculture. It was contended before the Ld. CIT(A) that this was not development expenditure but towards ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these documentary evidences, it is clear that what the appellant incurred is towards ratification charges for purchase of land and not developmental expenditure as held by the Assessing Officer in the assessment order. The next contention of the Assessing Officer is that the appellant changed the nature of land at the time of sale. This observation of the Assessing Officer is not founded on any material but on the surmise that the appellant is selling the land to a company, which may use the land for commercial purposes. However, the intention of the purchaser has nothing to do with the nature of land so sold by the seller at the time of sale. What the appellant sold during the year to the purchaser is agricultural land and this was evidenced and certified by the revenue records. The decision of the Bombay High Court in the case of ClT v. Debbie Almao and Joaqyam Atrnao reported in 339 ITR 59 (Bombay) squarely applied to the facts of the present case. In this case it was observed by the Assessing Officer that the assessee sold the lands within two years of its purchase to a purchaser for the construction of a Beach report only showed that the assessee has purchased the property wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad filed evidence that lands are situated beyond 8 KMs from GHMC limits and they were put to agricultural use earlier. The only reason the A.O. treated the land as non- agricultural land was that 'agreement of sale' read with 'Irrevocable GPA' does not indicate that land retained the character of agriculture at the time of transfer. This was also the ground raised by Revenue in the appeal that M/s. Ramky Estates and Farms P. Ltd., may put the property to commercial use, therefore, the land was meant for commercial exploitation and did not have the character of agricultural land at the time of his transfer. These observations of A.O. are not based on any evidence on record. There is no dispute that assessee has purchased agricultural land and put to agricultural use as such earlier. This fact was admitted by AO in the order itself Even though A.O. considered that amount spent of Rs. 14,50,000/- towards development of agricultural land, the fact was that the same was spent for ratification deed and not for any development activity on the agricultural land. Therefore, the facts indicate that assessee has sold only agricultural land which was also used and put to agricu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble Delhi High Court in the case of Hindustan Industrial Resources Ltd., vs. ACIT (supra) on similar facts held as under : "The Tribunal's finding of fact is contrary to its own record and, therefore, is in the realm of perversity. This is so because the Tribunal clearly held that at the point of time when the assessee purchased the said land, it was agricultural land. There is no dispute with regard to this. The Tribunal also noted that the award passed by the District Collector (Land Acquisition), was a document which established beyond doubt that the land in question was agricultural land. Thus, on the date of purchase, the land in question was agricultural land and on the date of acquisition, the character of the land continued to be agricultural. When these two clear findings have been returned, it is apparent that in the transitional period, that is, between purchase and acquisition, the nature and character of the land did not change. The fact that the assessee intended to use the land for industrial purposes did not in any way alter the nature and character of the land. The further fact that the assessee did not carry out any agricultural operations did not also result ..... X X X X Extracts X X X X X X X X Extracts X X X X
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