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2015 (5) TMI 971 - ITAT PUNE

2015 (5) TMI 971 - ITAT PUNE - TMI - Assessability of capital gains in the hands of assessee on sale of land - Held that:- In the absence of the assessee having established its case of the land sold by him was agricultural land, we uphold the order of CIT(A) in assessing the income under the head 'income from capital gains' at ₹ 96 lakh. In the absence of assessee having failed to furnish any evidence vis-a-vis its claim of deduction under section 54 of the Act, the same is also rejected. .....

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same assessment year 2009-10 passed under section 143(3) r.w.s. 153A of the Income Tax Act, 1961. 2. All the appeals relating to related persons on similar issues were heard together and are being disposed of by this consolidated order for the sake of convenience. The facts in all the appeals are identical. However, we make a reference to the facts in ITA No.699/PN/2013 to adjudicate the issue. 3. The assessee in ITA No.699/PN/2013 has raised the following grounds of appeal:- 1. Without consider .....

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e Commissioner of Income tax has erred in confirming the same. 3. The learned Assessing Officer, Pune has erred is not considering the affording benefit of exemption from tax available under the income tax law to income earned by the assessee from sale of agricultural land and the Commissioner of Income tax has erred in confirming the same. 4. The assessment order under section 143(3) r.w.s. 153A of the Income Tax Act, 1961, dated 30.12.2011 is passed without following principles of natural just .....

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nally filed return of income on 31.10.2009 and in response to notice under section 153A of the Act, the assessee filed return of income declaring total income of ₹ 12,46,968/-. The Assessing Officer noted that during the year under consideration the assessee had sold land for total consideration of ₹ 1,01,00,000/-. As per the return of income, the assessee had computed the income from capital gains at Nil by claiming deduction under section 54/54B/54D/54EC/54F/54G/54GA of the Act. Si .....

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asked to produce documentary evidence in support of the land being an agricultural land. In response thereto, the assessee produced 7/12 extract, according to which, the land was a Jirayat fallow land (Pad land). The Assessing Officer deputed the Inspector to report about the status of the land, who in turn reported that the land of the assessee was on a hillock and was a barren land. He reported that the land in question was not an agricultural land. He also reported that it was grass land and .....

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erusal of the same, the Assessing Officer noted that the land was Jirayat fallow land and crop grown was grass and it was held that the land was not an agricultural land. The Assessing Officer further observed that as far as taxability of land was concerned, what was relevant was the user of land at the time of sale. The Assessing Officer also noted that the land of around one acre had been sold for a crore and no agriculturist would purchase such land for agricultural purposes at this rate. The .....

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see inthe return of income had himself computed capital gains of ₹ 96,27,428/-, against which he had claimed the deduction under section 54 of the Act. Since the claim of deduction could not be supported by any documentary evidence, the claim of the said deduction was denied to the assessee and income from capital gains at ₹ 96,27,428/- was taxed in the hands of assessee. 6. Before the CIT(A), the assessee made written submissions to its claim that the said land was agricultural land .....

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, the land was agricultural land and therefore, not a capital asset under section 2(14) of the Act. The contention of the assessee before the CIT(A) was that the appropriate authority to declare any land as agricultural land was the Revenue Department of Govt. of Maharashtra and 7/12 extract revealed the nature of land. 7. The CIT(A) making a reference to the provisions of section 2(14) of the Act noted that from the plain reading of the said provisions, it was clear that in order to be excluded .....

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ntal fact whether or not the land in question was agricultural land at the relevant time. The CIT(A) referred to the ratio laid down in CIT v. Siddharth J. Desai [1983] 139 ITR 628 and referred to 13 tests listed by the Hon'ble Gujarat High Court, which in turn were approved by the Supreme Court in Sarifabibi Mohmed Ibrahim (supra). The CIT(A) further noted that one of the significant tests listed were whether the land was actually and ordinarily used for agricultural purpose at or about the .....

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J. Desai (supra) and Ranchhodbhai Bhaijibhai Patel v. CIT [1971] 81 ITR 446 (Guj), wherein it was held that true test to be applied for the purpose of determining whether a particular land was agricultural land or not is first to ascertain the use to which the land is actually being put. The CIT(A) vide para 6.7 held as under:- "6.7 In the present case, not a shred of evidence has been presented by the appellant either before the AO or before me during appellate proceedings to establish tha .....

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mely, use thereof for the purposes of agriculture, was missing in the present case. In the absence of this fundamental fact, the surrounding facts relied upon by the appellant such as the mention of the land as 'agricultural' in the sale deed, the registration thereof as 'agricultural land' in revenue records, the fact of being surrounded by agricultural lands and not being located in or around an urban area, cannot bestow "agricultural" status upon the land. In view of .....

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ecord and held that the same are being incorporated in the order only for the sake of record since he had already reached the conclusion that the land in question was not an agricultural land. 9. The assessee is in appeal against the order of CIT(A). 10. The learned Authorized Representative for the assessee stressed that the said land sold by the assessee is mentioned as agricultural land in the land records and also mentioned in the purchase deed when the assessee had originally purchased it a .....

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thorized Representative for the assessee stressed that as on date of purchase and sale, the status of land under consideration was an agricultural land and was surrounded by agricultural land, addition made in the hands of assessee was not warranted. The learned Authorized Representative for the assessee placed reliance on the ratio laid down by the Hon'ble Delhi High Court in Hindustan Industrial Resources Ltd. v. Asstt. CIT [2011] 335 ITR 77/. The learned Authorized Representative for the .....

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No evidences were produced to prove factum of land cultivation in recent past. The Supreme Court in the case of Sarifabibi Mohmed Ibrahim (supra) has laid down the principal that it is a question of fact and whether the particular land is to be treated as agricultural land is to be tested on 13 parameters mentioned in the order. The actual cultivation in recent past or intention of using the land for agricultural purpose in near future was most important. Nature shown as agricultural land in rev .....

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defined in the Income Tax Act, 1961. The underlying object of the Act to exempt agricultural income from income tax is to encourage actual cultivation or de facto agricultural operations. Actual use of the land for agricultural purpose or absence thereof at the relevant time is undoubtedly one of the crucial tests for the determination of the issue. It is well-settled that the nature and character of land may undergo a change depending upon its situation, growth of the locality or zone in which .....

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ture of the land it must be seen whether the land had been put to use for agricultural purposes for a reasonable span of time prior to the relevant date and further as to whether on the date of the transfer the land in question was intended to be put to use by the purchaser for agricultural purposes for a reasonable span of time in future" On the other hand Hon'ble Delhi High Court decided the issue without considering decision of Supreme Court hence same would not constitute binding pr .....

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ear under consideration. Though in the return of income the assessee had computed the income from capital gains and claimed deduction under section 54 of the Act, however, during the course of assessment proceedings, the plea of the assessee was that the said land sold by the assessee was an agricultural land and hence outside the purview of being taxed under the head 'income from capital gains' as it fell outside the definition of capital asset under section 2(14) of the Act. 13. Second .....

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notified area committee, town area committee, town committee, or by any other name) or a cantonment board and which has a population of not less than ten thousand according to the last preceding census of which the relevant figures have been published before the first day of the previous year; or (b) in any area within such distance, not being more than eight kilometers, from the local limits of any municipality or cantonment board referred to in item (a), as the Central Government may, having .....

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ons and further it should not be in an area not being more than 8 kilometers from the municipal limits or cantonment board. In the present case, the fulfilment of conditions in clauses (a) and (b) are considered to have been met i.e. the land in question is situated beyond 8 kilometers from the local limits of any municipality or cantonment board and also the area in which the said land is situated does not have population of more than 10,000. The only question which remains to be adjudicated in .....

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he subject, the Apex Court held that agriculture involved "basic operations", such as tilling of land, sowing of seeds, planting etc. and "subsequent operations", such as weeding, tending, pruning, cutting, harvesting and rendering the produce fit for market. 16. Further, the Hon'ble Gujarat High Court in Siddharth J. Desai (supra) had laid down 13 tests to determine whether a particular land is agricultural land or nor which are as under:- "(1) Whether the land was .....

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n purchasing the land? (5) Whether, the permission under s.65 of the Bombay Land Revenue Code was obtained for the non-agricultural use of the land? If so, when and by whom (the vendor or the vendee)? Whether such permission was in respect of a portion of the land and if it was obtained in the past, what was the nature of the user of the said portion of the land on the material date? (6) Whether the land, on the relevant date, had ceased to be put to agricultural use? If so, whether it was put t .....

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ould indicate that the land was agricultural? (9) Whether the land itself was developed by plotting and providing roads and other facilities? (10) Whether there were any previous sales of portions of the land for non-agricultural use? (11) Whether permission under s.63 of the Bombay Tenancy and Agricultural Lands Act, 1948, was obtained because the sale or intended sale was in favour of a non-agriculturist? If so, whether the sale or intended sale to such non-agriculturist was for non- agricultu .....

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sent 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. 18. The Supreme Court in Smt. Sarifabibi Mohmed Ibrahim (supra) had laid down as under:- "Whether a piece of land is agricultural land or not is essentially a question of fact. Several tests have been evolved in decisions of the Supreme Court and the High Courts, but all of them are more i .....

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fter considering the facts of the case, it was held that to ascertain the true character and nature of the land, it must be seen whether it has been put to use for agricultural purposes for a reasonable span of time, prior to the relevant date and further whether on the relevant date the land was intended to be put to use for agricultural purposes for a reasonable span of time in the future. 20. Following the judicial proposition laid down by the Supreme Court and various High Courts in order to .....

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eld to be not the conclusive test to determine that the land was agricultural land. 21. The Bombay High Court in Gopal C. Sharma (supra) had held as under:- 'The expression "agricultural land" is not defined in the Income Tax Act, 1961. The underlying object of the Act to exempt agricultural income from income tax is to encourage actual cultivation or de facto agricultural operations. Actual use of the land for agricultural purpose or absence thereof at the relevant time is undoubt .....

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sue. Merely because the land was used for agricultural purposes in the remote past or its continues to be assessed to land revenue a agricultural land is not decisive. In order to ascertain the true character and nature of the land it must be seen whether the land had been put to use for agricultural purposes for a reasonable span of time prior to the relevant date and further as to whether on the date of the transfer the land in question was intended to be put to use by the purchaser for agricu .....

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the nature of land being agricultural land. Where the land has not been put to use for agricultural purposes for reasonable span of time prior to the date of its transfer, the land in question cannot be held to be agricultural land. The onus was upon the assessee to establish its case of having cultivated the land in recent past and in the absence of assessee having discharged its onus and merely because the land is recorded as agricultural land in the revenue records, does not establish the cas .....

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lared any agricultural income in its hands nor any evidence has been produced by the assessee in any of the proceedings or even before us to establish that the land in question was actually being used for cultivation at any time or any basic operation or subsequent operations were carried out in the land. The report of the Inspector was obtained by the Assessing Officer, which clearly mentioned that the land was not fit for cultivation which has not been challenged by the assessee. In the absenc .....

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27,428 Deduction u/s 54/54B/54D/54EC/54F/54G 54GA 96,27,428 Taxable Capital Gains NIL 24. The assessee in the return of income had not claimed that it sold agricultural land, but on the other hand had claimed deduction under section 54 of the Act, in support of which, assessee failed to furnish any documents and hence that claim of section 54 of the Act was held to be not allowable to the assessee. Only during the course of assessment proceedings, the learned Authorized Representative for the as .....

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he claim of the assessee that the said land sold by the assessee is an agricultural land and sale proceeds of which are exempt from tax. 25. The learned Authorized Representative for the assessee on the other hand placed reliance on the ratio laid down by the Hon'ble Delhi High Court in Hindustan Industrial Resources Ltd. (supra), wherein it was held that the fact that the assessee did not carry out any agricultural operations did not result in any conversion of the said land into industrial .....

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entative for the assessee had filed compilation of case laws, but during the course of hearing had only relied on the ratio laid down by the Hon'ble Delhi High Court in Hindustan Industrial Resources Ltd. (supra). The learned authorized Representative for the assessee placed reliance on the decision of Hon'ble High Court of Bombay at Goa in CIT v. Smt. Debbie Alemao [2011] 331 ITR 59 and Pune Bench of Tribunal in Haresh V. Milani v. Jt. CIT [2008] 114 ITD 428. The Perusal of facts of bot .....

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etion of assessment and the land was not at all used for agricultural activities as being claimed by the assessee. In reply, the case of the assessee is that the land is capable of doing cultivation and agricultural activity. However, the assessee has not filed on record any evidence of having cultivated the land or any agricultural activity was being carried on except for his claim that the status of the land both in the purchase and sale deed and also in the revenue records was an agricultural .....

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assessing the income under the head 'income from capital gains' at ₹ 96 lakh. In the absence of assessee having failed to furnish any evidence vis-a-vis its claim of deduction under section 54 of the Act, the same is also rejected. Upholding the order of CIT(A), we dismiss the grounds of appeal raised by the assessee. 27. Another aspect considered by the CIT(A) was the claim of assessee that it had grown crops from assessment year 2006-07 onwards. 28. The CIT(A) further mentions th .....

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se jurisdiction the land sold by the assessee exists. In response to our queries Talathi has visited the land with the inspector of Income Tax. It is reported that the land was not used for agricultural activity for many years. It has also been certified by the Talathi that the land records in his office have been tampered to show crops grown from 2006-07 onwards. This finding was communicated to the above assessee vide this office letter dated 21/12/2012 by RPAD & was also physically served .....

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a agricultural activity as being claimed by the above assessees. (2) Land is in fact a barren land as reported in the 7/12 extracts furnished prior to the completion of the assessment. (3) Someone tampered the land records of Talathi Donje to show that crops were grown subsequent to 2006-07. (4) All the above factual position is also confirmed by the Talathi Donje in his letter dated 05/12/2012. Submitted for kind consideration of the CIT(A)." 29. The letter furnished by the JCIT was as und .....

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the assessment and the report of the Inspector who visited the land. 3. However on the day of which the assessment was completed, your Authorized Representative filed a 7/12 extract in tapal which indicated that crops were grown on the land sold by you. As the 7/12 extract produced by your CA in tapal on 28/12/2011 was contrary to the earlier 7/12 extract enclosed to the assessment order enquiries were conducted with Talathi's Office. In response to the enquiries conducted by the Inspector o .....

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of the Talathi, an opportunity to give your say was given to your Authorized Representative orally along with a copy of Talati's report. However, even after a lapse of a week, the Authorized representative has not responded. Therefore an opportunity to give your say on this issue is given to you on 28/12/2012. If you so desire a joint visit to the site can be arranged with you the Talathi and my Inspector, even the records of Talahti's Office can be sent to forensic laboratory to know th .....

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