TMI Blog2015 (3) TMI 146X X X X Extracts X X X X X X X X Extracts X X X X ..... the fact that after the sale the purchaser was going to use the land for non- agricultural purposes and it is in the light of what was going to happen in future that the Tribunal held that the land was non- agricultural in character at the relevant time. It must be borne in mind, as was held by this Court in Chhotalal Prabhudas vs. CIT (1978 (10) TMI 35 - GUJARAT High Court), that if the land is actually used for agricultural purposes as indicated in Manilal Somnath's case (1976 (3) TMI 41 - GUJARAT High Court) or by the Supreme Court in Begumpet Palace's case (1976 (8) TMI 2 - SUPREME Court), at least, prima facie it can be said to be land which is either actually used or ordinarily used or meant to be used for agricultural purposes. If it is actually used at the relevant date for agricultural purposes and there are no special features, as for example, a building site being actually used as a stop-gap arrangement for agricultural purpose, it would be agricultural land. Potential use of the land as nonagricultural land is totally immaterial. Entries in the record of rights are good prima facie evidence regarding land being agricultural and if the presumption raised eith ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case and in law the learned CIT(A) has erred in sustaining the impugned addition, ignoring that the agricultural land was not transferred in the subject year but was transferred in FY 2010-11. 4. Without prejudice to ground of appeal no.1 and without admitting, that on facts and circumstances of the case and in law the learned CIT(A) has erred in totally disregarding that even otherwise the land being agricultural land, capital gain if any arising on the same during AY 2011-12 was exempt u/s.10(37) of the Act. 5. The appellant craves leave to add, amend, alter, substitute, modify any or all of the above grounds of appeal, if necessary, on the basis of submissions to be made at the time of personal hearing. 2. Briefly stated facts are that the case of the assessee was picked up for scrutiny assessment and the assessment u/s.143(3) of the Income Tax Act,1961 (hereinafter referred to as the Act ) was framed vide order dated 29/12/2011, thereby the Assessing Officer (AO in short) made addition/disallowance of ₹ 57,10,250/- in respect of short-term capital gain on account of compulsory acquisition of land. Against this, the assessee filed an appeal before the ld.CIT(A), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... GIDC. The plot of land was acquired by the appellant on 11/03/2008. 3. The appellant was continuously undertaking agricultural activity on the said plot of land beginning from its acquisition date till date of actual acquisition on 27/11/2010. Copy of certificate of Deputy Collector and Land acquisition officer, GIDC, Ankleshwar certifying the actual acquisition of land during FY 2010-11, is already enclosed with appeal memorandum, The English translation of this certificate is enclosed herewith as Annexure-1. 4. Your honour may appreciate that the land is situated at a distance of around 32 kms. from the municipal boundry limit of. Bharuch municipality arid around 30 kms. from the boundry limit of Vaghra Taluka. A certificate issued by Vadadla Gram Panchayat certifying the aforesaid distance in Gujarati language is already enclosed with appeal memorandum. The certificate also certified that the appellant had jointly with the co-owner of the agricultural land, conducted agricultural activity on the said plot of land, since its acquisition in March, 2008 uptil the date of compulsory acquisition by Gujarat Government on 27/11/2010. The certificate also certifies that the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ahej-2/l412, GIDC, Gandhinagar to be designated as notified area for GIDC, the land was considered to be situated in the notified area and hence, it cannot be said to be considered as rural agricultural land and hence, argument of the appellant the subject land is not a capital asset, is not correct. In this regard, we have most humbly submit that section 2(14)(iii)(b) clearly states that the notification should be issued by the Central Government to specify as to which area being not more than eight kilometres, from the local limits of municipality or cantonment board should be treated as capital asset and the notification issued by Gujarat Government cannot decide whether the said land is a capital asset or not and hence, the findings of the learned CIT(A) is absolutely unlawful, illegal, irrelevant and contrary to the provisions and intention of legislation. The relevant extract of section 2(14)(iii)(b) is reproduced herein below for the immediate reference of your honours. (b) in any area within such distance, not being more than eight kilometres, from the local limits of any municipality or cantonment board referred to in item (a), as the Central Government may, having ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 67. The Tribunal has found, firstly, that the lands have been acquired by the family in the thirties. There is some evidence to hold that it was being put to agricultural use; and there is nothing to indicate that it was not so used in any of the intermediate years. Thirdly, the land has also been accepted to be an agricultural land right upto the asst. yr. 1966-67 (Re. wealth-tax assessment) and nothing has happened in this year except sale of land which would indicate that the character of the land was changed. The only adverse circumstance which the Tribunal has noted was that there was some construction activity around the land in question; and that the town planning scheme was applied to this land some years back. It is also found that the assessee had not applied for permission to convert this land into nonagricultural land. The Tribunal also recorded the factum of payment of ₹ 3,000 to the tenant in consideration of his handing over possession to the purchasers, which definitely supported the contention that the land was being put to agricultural use; and there was nothing on record to indicate to the contrary. The Tribunal noted that there was no sub-plotting of la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lkha cannot be treated as capital asset and hence no capital gain is chargeable to tax. d) CIT v. Smt. Jijibai Shinde (1996) 135 CTR (MP) 271 The land used for agricultural purposes does not come within the definition of capital asset under s. 2(14)(iii) and therefore, no capital gain tax was chargeable on the compensation amount paid to the assessee, on acquisition of such land. e) CIT v. Smt. Sanjeeda Begum (2006) 154 Taxman 346 (All) Land sold by the assessee being agricultural land which was located beyond 8 kms. of the municipal limits, it is not included in the definition of 'capital assets' as given in s. 2(14)(iii) and, therefore, no capital gain was exigible to tax. f) DCIT v. Udhava Das Forma Ors. (2009) 124 TTJ (Chennai) 817 The State Government by exercising its powers under s. 3(1) of the 1948 Act can requisition any land for the purpose specified in the said section. As per s. 6(1), if the land requisitioned under s. 3 is not acquired, the same may be released by the State Government from requisition and the possession is also returned to the owner who is entitled for the possession. As per s. 4(2) of the said Act, the period of requisition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d made his entire plot of land into parcels and was selling each one of them for the purpose of constructing a house thereon. The fact that the purchaser has purchased it for the purpose of constructing his house has no relevance, because so far as the seller is concerned, he will be deemed to have parted with the agricultural land in the form of agricultural land, unless it is proved otherwise. The Department has not brought up any such material on the record by which it could be said that the criteria adopted by the Tribunal for determining the character of the agricultural land was wrong. 11. Prayer: We most humbly pray before your honours to delete the impugned addition made by the learned AO which is absolutely unlawful, bad-in-law based on conjuncture, surmises and without appreciating the true and correct facts of the case in a proper manner. Should your honours feel that there are certain judicial pronouncements which are contrary to what we have submitted herein above, we most humbly request to provide us an opportunity to distinguish the facts of the appellant with the facts of those cases and thereby grant one more opportunity of personal hearing. Your honours ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransfer of Property Act has been done and therefore in view of Sec.2(47) it amounts to transfer. Therefore, gains arising from the compulsory acquisition of the land have to be taxed in the year under consideration, i.e. in Y 2009-10. Furthermore, Section 45(4) of the IT Act clearly states that where the capital gain arises from the transfer of a capital asst, being a transfer by way of compulsory acquisition under any law, the capital gain computed with reference to the compensation awarded in the first instance shall be chargeable as income under the head Capital Gains of the previous year in which such compensation or part thereof was first received. The consideration was received for the first time on 23.03.2009 and possession was given on 15.02.2009 which is evident from the letter dated 21.12.2011 received from the Divisional manager, GIDC, Ankleshwar stating that It is to inform that the section-4 Notification under Land Acquisition Act of 6 villages of Taluka, Vaghara Dist. Bharuch was issued on 25.03.2008 in which lands of village Vadadala specifically survey no.62 were included. Further you may please note that survey no.62 admeasuring 08-14-00 H-A-Sq.mtrs. was hand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cated is whether the provisions of section 10(37) of the IT Act was applicable to the appellant s case and whether the appellant had fulfilled conditions stipulated in clause-2 of section 10(37) of the IT Act that land must have been used for agricultural purpose during the period of two years immediately preceding the date of transfer. The appellant had purchased the land on 11.03.2008 and had handed over the possession of the land to GIDC on 15.03.2009 as is evident from the Divisional Manager, GIDC Ankleshwar s letter dated 21.12.2011. This proves that the land was in the possession of the appellant for only one year and hence the income chargeable to tax under the head Capital Gains arising from the transfer of agricultural land situated in the notified area cannot be held to be exempt from taxation u/s.10(37)(ii). Section 10(37) stipulates that the appellant or his parents should have carried on or used the land for agricultural purposes during the period of two years immediately preceding the date of transfer which is certainly not possible in the appellant s case as the land was in possession of the appellant for less than a year before the date of transfer and hence could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the land situated is notified by the appropriate authority as a development area. Both the authorities below have failed to consider the nature of the land prior to acquisition and notification by the appropriate authority. The Hon ble Gujarat High Court rendered in the case of Gordhanbhai Kahandas Dalwadi vs. CIT reported at 127 ITR 664(Guj.) has held as under:- 6. It has been observed by the Supreme Court in CWT vs. Officer- in-Charge (Court of Wards), Paigah 1976 CTR (SC) 404 : (1976) 105 ITR 133 (SC) that if the law has not been correctly appreciated by the Tribunal, its appreciation of facts is bound to be affected by the wrong approach to the evidence. Now, in the instant case, the Tribunal has held against the assessee because permission to sell the land for nonagricultural use was obtained. This Court has pointed out in CIT vs. Manilal Somnath (1977) 106 ITR 917 (Guj) that the permission granted by the Revenue authorities under s. 63 of the Bombay Tenancy and Agricultural Lands Act clearly goes to show that in case the land did not cease to be agricultural land, the permission would be treated as cancelled and, therefore, the sale in favour of the particular purchaser wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... then consider whether that presumption is dislodged by the presence of other factors in the case. 7. In Chhotalal Prabhudas' case (supra), in 1952 non- agricultural use of the land was discontinued and permission was obtained for use of land for purely agricultural purposes and thereafter for some years after 1952 the land was allowed to lie fallow and thereafter agricultural operations were resumed on the land, and in the light of those facts, this Court held that the land was agricultural land. In that case, the land was used for brick-making for nearly two decades before it was returned to agricultural operations in 1952. In the instant case, we have non-agricultural use for brick-making for a period of two years and thereafter the land was allowed to lie fallow and agricultural operations were started and bajri was grown in this land in the Revenue year 1964-65. We may point out that under the Bombay Tenancy and Agricultural Lands Act, 1948, land has been defined in s. 2, sub-s. (8), to mean, inter alia, land which is used for agricultural purposes or which is sometimes used as agricultural land, but is allowed to lie fallow, is agricultural land for the purposes of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ultural land, the approach should have been whether the presumption that this was agricultural land was being rebutted by any evidence about user of the land or about the character of the land having been changed prior to the date of the sale. No such evidence has been pointed out from the records of this case or from the facts found by the Tribunal and considerations of other development in the locality or other locality in the vicinity of the land are not proper considerations to be applied, as was pointed out in Manilal Somnath's case (supra). 4.3. Further, the Hon ble Gujarat High Court rendered in the case of CIT vs. Siddharth J.Desai reported at 139 ITR 628 (Guj.) has laid down certain factors to consider whether the land is agricultural or not. In the said case, the factors as enumerated by the Hon ble Jurisdictional High Court are as under:- 11. On a conspectus of these cases, several factors are discernible which were considered as relevant and which were weighed against each other while determining the true nature and character of the land. It may be useful to extract from those decisions some of the major factors which were considered as having a bearing on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... old and whether the owner would have ever sold the land valuing it as a property yielding agricultural produce on the basis of its yield ? At the risk of repetition, we may mention that not all of these factors would be present or absent in any case and that in each case one or more of those factors may make appearance and that the ultimate decision will have to be reached on a balanced consideration of the totality of circumstances. 12. One more thing before we turn to the facts and circumstances of the present case. While applying the test as to whether an agriculturist would have purchased the land for agricultural purposes at the price realised by the sale and whether the owner would have ever sold the same by valuing it as property yielding agricultural produce on the basis of its yield, it must be remembered that the valuation of an agricultural land is a complex matter. Several factors enter into account in determining the value of an agricultural land such as the nature of the soil and its fertility, the type of crop for which the land is suited or is adaptable, the size of the land and the practicability of the use of mechanised implements in order to procure better yie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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