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The Commissioner of Income Tax II, Amritsar Versus M/s Ranjit Rattan Mehra, HUF

2015 (12) TMI 1128 - PUNJAB AND HARYANA HIGH COURT

Sale of part of land - business income or agricultural income - Held that:- Under the provisions of section 2(14)(iii)(a)/ (b), the assessee's land can be held as agricultural land situated beyond 8 kms outside the Gurgaon Municipal limits and that the area population of residents of the village Fazilpur Jharsa being below 10000, the assessee's asset is outside the purview of capital asset. The AO is not justified in rejecting the assessee's alternative claim of exemption under section 54F as it .....

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ier financial years 2005-06 and 2006-07 that crop of sarson was grown and cultivated in the assessee's land holdings and out of the said sarson crops, some crop was retained to be used as sarson seeds in the next years. Ex Sarpanch of Gram Panchayat of Village Fazilpur Jharsa, Form J No.III dated 15.3.2008 duly verified by Shri Jasmeet Singh on 13.12.2010. As per these documentary evidences, the assessee had discharged its onus. These evidences cannot be brushed aside by the AO. The assessee had .....

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made by the AO aNd confimed by ITAT. - Deleted against revenue. - ITA No.17 of 2013(O&M) - Dated:- 25-8-2015 - MR. AJAY KUMAR MITTAL AND MR. RAMENDRA JAIN, JJ. For The Appellant : Mr. Denesh Goyal, Advocate For The Respondent : Mr. S.K.Mukhi, Advocate Ramendra Jain,J. 1. This appeal has been filed by the revenue under Section 260A of the Income Tax Act, 1961 (in short, the Act ) against the order dated 18.7.2012, Annexure-A.3 passed by the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar .....

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income under sections 2(13) and 45 (2) of the Income Tax Act, 1961? iii) Whether on the facts and in the circumstances of the case the, Hon'ble ITAT was right in deleting the addition of ₹ 40,000/- made by the Assessing Officer as income from undisclosed sources instead of agricultural income claimed by the assessee since no agricultural activities were carried out by the assessee? 2. A few facts relevant for the decision of the controversy involved as narrated in the appeal may be not .....

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d at Village Fazilpur-Jharsa, Gurgaon for ₹ 5,26,68,750/- on 24.1.2008 and the sale proceeds were clubbed into agricultural income declared by the assessee. The assessee had also shown ₹ 40,000/- income from the sale of agricultural products. Information was sought from the District Town Planner (Planning) Gurgaon regarding Arrow Fly distance of Village Fazilpur Jharsa from the municipal limits of Gurgaon as on 24.1.2008 i.e. on the date of sale of land and whether the said village h .....

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ultural income of ₹ 40,000/-, the respondent was required to explain the nature of the agricultural product being sold. The assessee replied that it was growing sarson (mustard). It also stated that the agricultural produce was sold to M/s Sat Pal Bhagwan Dass and produced J Forms in support thereof. On enquiry, no such firm was found in existence. The Assessing Officer treated the income of ₹ 40,000/- as undisclosed income. Aggrieved by the order, the assessee filed appeal before th .....

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within the short period of six months by acquiring a residential property at Delhi. Not satisfied with the order, the department filed appeal before the Tribunal. Vide order dated 18.7.2012, Annexure A.3, the Tribunal dismissed the appeal. Hence the instant appeal by the revenue. 3. We have heard learned counsel for the parties. 4. Learned counsel for the appellant-revenue submitted that the impugned order passed by the Tribunal confirming the findings recorded by the CIT(A) is based on surmise .....

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assessee had lost its agricultural character being situated within the radius of 8 kms from Municipal Committee, Gurgaon and thus, the CIT(A) as well as the Tribunal had wrongly set aside the assessment order dated 31.12.2010. 5. On the other hand, learned counsel for the respondent supported the impugned order. 6. Undisputedly, the respondent-assessee HUF had purchased land measuring 49 kanals 10 marlas on 25.11.2003 and had sold some part of it in the year 2008 for a sum of ₹ 5,26,68,75 .....

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he respondent had sold the agricultural produce, on enquiry, was found to be not in existence; the respondent could not legally prove Form J qua sale of agricultural produce with the said firm and the assessee had also entered into sale transaction in the subsequent assessment year 2009-10 in the immovable property amounting to ₹ 4,44,40,469/- and thus the land was purchased by the respondent with the motive to earn profit after its sale. On appeal by the assessee, the CIT(A) reversed the .....

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the land of the assessee was situated beyond 8 kms. from the Gurgaon Municipal Committee limits at the time of execution of sale deed on 24/25.1.2008 as it was converted into Municipal Corporation in July 2008. This certificate was based on the actual measurement taken from the land holdings of the assessee to the limits of the Municipal Corporation, Gurgaon. The finding regarding carrying on of agricultural activity was also rightly reversed as the Assessing Officer had based its conclusion on .....

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l read thus:- 9. Therefore, in the facts and circumstances of the case and various decisions relied upon by the assessee before the learned CIT(A) and before us, we concur with the views of the learned CIT(A) that the AO is not justified in treating the assessee's solitary transaction of sale of part of its land holdings on 'as it is and where it is' basis without recording it as its stock in trade as assessee's business income by applying provisions of section 45 (2) of the Act .....

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ch before its conversion into Municipal corporation in July 2008 and even the Urban Development Plans relied upon by the department speak about the facts of post sale i.e. the land being covered as open space area other than commercial sites, residential site or park site by the Land Development authorities. The learned CIT(A) had perused the assessment records and it was found that the AO had not provided copy of information called for under section 133(6) such as reports of Tehsildar and Distr .....

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ipal limits and that the area population of residents of the village Fazilpur Jharsa being below 10000, the assessee's asset is outside the purview of capital asset. The AO is not justified in rejecting the assessee's alternative claim of exemption under section 54F as it has made investment worth ₹ 7.18 crores more than the sale consideration within a short period of six months by acquiring a residential property at New Delhi. Therefore, the AO was not justified in making addition .....

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