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2015 (4) TMI 669 - ITAT PANAJI

2015 (4) TMI 669 - ITAT PANAJI - TMI - Treatment of Land as Agricultural land - No agriculture operations carried out on land - Dis-allowance of expenses - Held that:- We have heard rival contentions of both the parties. Looking to the facts and circumstances of the case, we find that the Ld. CIT(A) has verified the sale deed, record of rights and the certificate of village Panchayat Batim. The Ld. CIT(A) has held that the land has been purchased and it is sold within three financial year. The l .....

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e Ld. CIT(A) has verified the balance sheet of the assessee and found that the land is recorded as investment. The assessee sought permission from village Panchayat for construciton of farm house. The Ld. CIT(A) has held that this land is agricultural land this is a finding of fac. The Ld. CIT(A) has also relied upon the decision of Hon’ble Supreme Court in the case of Sarifabibi Mohmed Ibrahim [1993 (9) TMI 10 - SUPREME Court]. These tests were considered by Hon’ble Bombay High Court in the cas .....

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ntions of both the parties. The Ld. CIT(A) has verified the vouchers of the assessee and did not find any mistake, therefore he has deleted the addition. During the course of hearing, learned DR did not point out any material against the finding of Ld. CIT(A). Therefore, we confirm the same. - Decided against the revenue. - ITA No. 390/PNJ/2014, ITA Nos. 391/PNJ/2014, C.O. No. 04/PNJ/2015, C.O. No. 05/PNJ/2015 - Dated:- 23-3-2015 - Shri P. K. Bansal And Shri D.T. Garasia JJ. For the Appellant : .....

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r of the learned CIT(A) is opposed to law and facts of the case. 2. The Ld CIT(A) failed to appreciate that the assessee is a builder and developer and he purchased land with a view to selling it later after developing the same, he is carrying on activity resulting in profit and the activity can only be described as a business venture & assessee himself offered the profit on sale of plot of ₹ 2,23,80,000 as business profit in the original return of income filed. Reliance is placed on t .....

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V. CIT(1973) 87 ITR 542 (SC) & Hoshiarpur Electric Supply Co. V. CIT(1961) 41ITR608 (SC) in deleting the addition amounting to ₹ 1,11,90,0007- (being 50% ₹ 2,23,80,000/-). 4. The Ld CIT(A) failed to appreciate that the land purchased by the assessee had potentiality of being developed into building site - No agricultural operations were carried out on land by the assessee amounts to Adventure in the nature of trade. Reliance is placed on the decision in the case of Badrilal Bhola .....

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s CIT (Ker) 185 ITR 318. 6. The CIT(A) erred in not considering report of the inspector of this office merely on the ground that the assessee is not given the opportunity to explain his stand on this report. The inspector of this office who measured the land held that the land sold by the assessee is well within the 8 Kms from Municipal Limits & CIT(A) wrongly relied on the Village Panchayat Certificate brought by the assessee which is self serving. 7. Whether the Ld CIT(A) is right in delet .....

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has filed return of income on 30/09/2011 declaring total income of ₹ 72,28,588/-. During the course of scrutiny, assessee admitted net profit from sale of plot at ₹ 2,23,80,000/-. However, it is to be noted that survey u/s 133A was conducted in the assessee's premises on 22-02-2012. After survey, assessee has filed revised return on 30-09-2012 in which he omitted to disclose the above receipt of profit on sale of land and has not mentioned any note or explanation in the revised .....

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certificate to the effect that the land is more than 9 kms from the Panaji city limits and is in the agricultural zone. Section 2(14) which defines Capital assets excludes from it's purview agricultural land which is more than 8 kms from local limits of any municipality. The Assessing Officer has not accepted for the reason that the assessee is in the business of real estate and builder. The said land was purchased and sold during the previous year relevant to this assessment year itself. In .....

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ssee. In the report of Inspector, it is found that the property owned by Shri. Suraj Morajkar and Smt. Sanjana S. Morajkar which is located at Survey No.119/3-C of Village Batim, Tiswadi Taluka, Goa. As per the report, this property is known as Vacombi, measuring about 15400 sq. mts and situated near Maina and Gancim wards of Batim Village. It is seen that in this property there are no fruit bearing trees and only wild forest trees exists. Mr. Jemajo Braz Rego who sold the land to the assessee w .....

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the above facts and the findings of the enquiry, the claim of the assessee that the plot is Agricultural land and hence cannot be considered as Capital asset as per the provisions of section 2(14) cannot be accepted and the claim is untrue and non-genuine for the following reasons:- 1. The land is Non-Agricultural and is only wild forest. 2. No Agriculture activity and Cultivation has been carried out at any time by the previous owner, the assessee and the present owner. 3. No Agricultural Incom .....

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d on the decision of High Court of Bombay in the case of Fazalbhoy Investment Co. P. Ltd. Vs Commissioner of Income-tax, reported in 176 ITR 523 (BOM) which is squarely applicable to the facts of the assessee's case. (In the absence of any evidence to show that the land was put to any agricultural use at any particular point of time even in the past, apart from the sale of some mangoes and grass, it could not be held that he lands could be treated as agricultural lands. The assessee used the .....

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ome and thereby added to the income returned. 4. The matter was carried to the ld. CIT(A) and the ld. CIT(A) has deleted the addition by observing as under:- I have perused the evidences submitted by the appellant and find them in order. Therefore I find that there are factual mistakes in the assessment order as under: i. The land has 'not been purchased and sold within one financial year, but the same has been done in 3 financial years. ii. The land does not have only wild growth, but it ha .....

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e in the assessment order. Apparently, this inquiry was carried out by the A.O. behind the back of the assessee. There is nothing wrong with this. But since the A.O. desired to use it against the assessee as a piece of evidence, he was under obligation to confront the assessee with Inspectors Report. Since the A.O. failed to do so, the Inspectors Report becomes irrelevant. Now, coming back to the intention of the appellant, the A.O. treated the gain arising out of sale of land, as business incom .....

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roving that he actually wanted to continue with agricultural operations there. He did not seek permission to construct apartments or shopping centres. He did not even apply for conversion from Agricultural to N.A. In my opinion, the conduct of the appellant is enough testimony of his intent that he wanted to carry agricultural operations and not do any business of real estate development. Therefore, since the facts of this case are different from that of Fazalbhoy Investment Co. Pvt. Ltd., in my .....

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oaquim Alemao [2011] 331 ITR 59. In all these cases, the decision is that once it is established that land in question is an agricultural land, income from sale of such land will not form part of the Gross Total Income. In view of the facts of this case and the evidences placed before me, I have no doubt, that the land sold in the instant case, is an agricultural land and therefore is covered by the decision of the Jurisdictional High Court. The A.O. is, accordingly, directed to delete the addit .....

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earned AR relied upon the order of the Ld. CIT(A) and submitted that this land is agricultural land consisting of cashew plantation, mango trees and teak wood plantation. Panchayat permission was obtained for building a farm house and compound wall. The said land is agricultural land and in Form I & XIV, it is shown as garden and the distance is 9 km. away from Panaji Municipality, therefore Ld. CIT(A) is justified in his action. 7. We have heard rival contentions of both the parties. Lookin .....

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t the owner of the property. Ld. CIT(A) has also further held that the land is not within 8 km. from the municipal limit. Ld. CIT(A) has held that assessee is a real estate developer, but he has not shown this purchase of land as stock-in-trade in his books of accounts. The Ld. CIT(A) has verified the balance sheet of the assessee and found that the land is recorded as investment. The assessee sought permission from village Panchayat for consutrciton of farm house. The Ld. CIT(A) has held that t .....

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ence, Ld. CIT(A) has allowed the appeal of the assessee. Therefore, we confirm the action of Ld. CIT(A) and appeal of the Department is dismissed. Grounds No.6 & 7: 8. Short facts relating to disallowance of expenses are that during the scrutiny proceedings, the Assessing Officer has found that some of the vouchers/bills for the expenses under the head purchase of materials, payment of contract, site labour charges, commission on sale etc. are not properly vouched for. Further the vouchers d .....

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