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Shri Satyanarayan O. Agrawal Versus. Addl. CIT

2012 (11) TMI 1157 - ITAT NAGPUR

Addition u/s 69C - Held that:- CIT(A) was of the view that the AO had established that the appellant has provided branded seeds and fertilizer to the Bataidars. In the statement recorded of Shri Raju Neware, the Baraidar has accepted that the assessee has borne agricultural expenses for branded seeds and fertilizers. Copy of statement was given to the assessee, however, the assessee did not choose to cross-examine the witness. CIT(A) was of the view that the AO was justified in making an additio .....

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als are being disposed of by this common order for the sake of convenience. There is change of figure in ground No. 2 and 10. The grounds taken in each of the appeal by the respective assessee are reproduced as under: 1. The order passed by CIT(A) is without jurisdiction and illegal in as much as he failed to deal with the various points raised by the assessee and also included the agriculture income which was not liable to tax under the law. 2. The learned CIT(A) erred in treating the surplus r .....

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ng the decision of S.C in 297 ITR 17 in as much as the exempted income u/s 10 cannot form part of the total income u/s 14 of the I.T. Act and consequently it cannot be classified under any head of income. 5. The learned CIT(A) erred in not considering the explanation I to section 2(IA) wherein it is declared that the word revenue‟ includes the excess realized on sale of agricultural land as agricultural income in as much as the explanation incorporates the law declared by the Bombay High C .....

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gricultural lands are trading assets like any other commodity and consequently stock-in-trade. 9. The CIT(A) erred in not following the decisions of the Supreme Court in 78 ITR 58 and 60 ITR 435 wherein it is held that an income producing asset is a capital asset and the surplus realized is capital gain and not the revenue receipt. 10. The learned CIT(A) erred in obtaining the photographs taken as of now of nearby places of the agricultural land which has influenced and entered into the decision .....

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A) erred in treating the surplus realized of ₹ 2,09,58,374/- on sale of agricultural land as an adventure in the nature of trade and consequently as income under the head income from business instead of exempting the income u/s 10(1). 3. The learned CIT(A) erred in not following the under mentioned binding decisions holding that the surplus realized from the sale of agricultural land is agricultural income only. 128 ITR 86, 154 ITR 629, 159 ITR 775, 219 ITR 554(SC), 247 ITR 150(SC). 4. The .....

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he law declared by the Bombay High Court in 128 ITR 86 and other cases to remove any doubt as to the nature of income of surplus. 6. The CIT(A) erred in not following the under mentioned decisions binding on him that the word trade did not include agriculture at all. AIR 1999 SC 1867 AIR 1958 487 (Bom) AIR 1968 SC 554 70 ITR 730, 732 (SC) 7. Without prejudice to the above the CIT(A) erred in holding that in the facts and circumstances of the case the assessee is a dealer in agricultural lands. 8 .....

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n and fertilizer in the cultivation of the land. 11. The learned CIT erred in dismissing the additional ground of charging of interest on the ground that levy of interest is mandatory. 2. Both learned A.R. and learned D. R. agreed that the facts involved in both the appeals are common, therefore, both the appeals be decided on the basis of the facts involved in I.T.A. No. 169/NAG/2012. Both the parties agreed that whatever the view is taken by the Tribunal in I.T.A. No. 169/NAG/2012, the same vi .....

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ee had sold agricultural land situated at Mouza Khairy (Khurd) & Mouza Mangrul on Wardha Road. Based on various reasons, the Assessing Officer treated the profit earned on such land to be the income from business and the transaction of the land to be the adventure in the nature of trade. The detail of the purchase and sale of the land are given as under: Sr.No. Details of land Date of purchase & value Date of sale & consideration Profit 1. Agricultural lands at Khairi (Khurd), Tah. N .....

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luded in 3 above as common sale deed is done Included in 3 above as common sale deed is done 2.1 The assessee has shown this income to be exempt in view of the provisions of section 2 sub section 14 of the I.T. Act. The Assessing Officer observed that the assessee owned substantial agricultural land, about 100 acre mostly situated near Nagpur on Wardha Road. During the year 7.58 Hectors land was sold and 2.42 Hectors land was purchased. The assessee originally held about 1.5 Hectors and 3.2 Hect .....

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icer was of the view that the intention of the assessee was to indulge in trading. The land at Sl. No. 1 & 2 admeasuring 2.01 & 1.2 Hectors and located at Khasra No. 43/3 & 43/4, Ph. No. 68, Khairi (Khurd), Tal. Hingna was purchased on 09/05/2005 when the owner gave the possession. No sale deed is executed. On 08/05/2005, the assessee got the power of attorney along with the agreement to sale. This land was sold to different persons vide sale deed dated 15/04/2006. The land at Sl. No .....

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nsideration of ₹ 12 lakhs even before the land was purchased. Another ₹ 20 lakhs was received within two months. This shows that the intention of the assessee was not to hold the land as investment. The 7/12 extract shows cultivation of Soyabeen, which is the Kharif crop while the land was purchased and sold even before the Kharif season was over. It was also noticed that in the last 3-4 years, the assessee purchased substantial number of agricultural land. He stated that in financia .....

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3,86,375/-. The assessee has not recorded any expenditure in the books of account. It was also noticed that the assessee has purchased the agricultural land in the name of his minor son Master Ankit Kumar and Master Gaurav Kumar. Ankit Kumar became major on 30/10/2005. Part of the land was purchased when he became major. That land was also located near Nagpur. Ankit disposed of four pieces of land during the impugned assessment year. The Assessing Officer has given the detail of the land purcha .....

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sessee was deriving the agricultural income from the accounting year 94-95. For this our attention was drawn to page No. 35 of paper book showing the agricultural income earned year-wise by the assessee. The assessee sold agricultural land during the year for a sale consideration of ₹ 86,90,410/- realizing a surplus of ₹ 59,74,148/-. The detail of the land with the date of purchase and sale are given as under: S. No. Name of place Area of land Purchase Name of seller Purchase value S .....

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easuring 7.16 Hectors was sold by the assessee during 2004-2005. It was stated that the purchaser even cultivated the land. This is the second time when the assessee sold the land since 94-95. After the sale of the land, the assessee purchased the land for a consideration of ₹ 2.29 crore. Thus, it was contended that the entire sale consideration was invested in the purchase of land. The assessee is agriculturist i.e. a person who is cultivating the land personally. During the year, the ass .....

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the land sold by the assessee were situated outside the area mentioned u/s 2 sub section 14(iii) of the Act and, therefore, the surplus arising thereon are agricultural income in view of the decision of Hon'ble Supreme Court in the case of Singhai Rakesh Kumar vs. Union of India [2001] 247 ITR 150 (SC) and, therefore, exempt u/s 10 of the I.T. Act. The agricultural land was held by the assessee as an investment. There is no question of assessing it as income from business as heads of income .....

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as business profit under the I.T. Act under any section. Even a court sale, gift, exchange, lease of a property mortgage is prohibited. Our attention was drawn to section 2 sub section 14 to stretch the submissions that the agricultural land sold by the assessee was not a capital asset and it was also not a stock in trade. It was contended that Hon'ble Supreme Court had occasion to deal with the word trade and the Hon'ble Supreme Court explained it as under in the case of State of Punja .....

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the nature of trade did not include agriculture or its operations. Our attention was drawn towards the decision of this Bench of the Tribunal in the case of ACIT vs. Shagun Infrastructure P. Ltd., I.T.A. No. 209/NAG/09 for the proposition of the law that the transaction entered into by the assessee was not adventure in the nature of trade. There is no dispute that the land sold by the assessee was beyond 8 Km. of the Municipal limit of Nagpur. It was contended that the case of the assessee is d .....

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r of this Tribunal in the case of ACIT vs. Shagun Infrastructure P. Ltd. in I.T.A. No. 209/NAG/09 on which the learned A. R. has heavily relied. In this decision the facts involved are the same. The assessee was an agriculturist. He sold the land, which was bought earlier. The land was being used for agricultural purposes of the assessee as shown in the earlier year and the agriculture income shown by the assessee was accepted by the Revenue. Under these facts, the Assessing Officer did not acce .....

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otherwise engaged in business of land development. In the case of agricultural land in question, the facts are that this land was bought by the assessee in the year 2000 and sold during the year under consideration. As per the Assessing Officer on account of reality boom, the land was sold by the assessee and, therefore, the intention was to resell at contention profit, which showed that the transaction was in the nature of business. 8. We are unable to convince ourselves with the proposition a .....

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8377; 1,65,000/- AY 2006-07 ₹ 2,50,000/- The same stands accepted by the IT Deptt. There is no reason to deviate from the said approach or stand with regard to the agriculture income already taken by the Deptt. Moreover, as mentioned by the appellant AR, Bombay Tenancy & Agricultural Lands (Vidarbyha Region) Act, 1958, Chapter VIII- Restrictions on Transfers of Agriculture Lands ad Acquisition of Holdings and Lands, certain restrictions are provided and it is clearly spelt out in secti .....

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Pune where again the appellant is recognized as a bonafide agriculturist. The new land thus acquired in Pune is also situated more than 8 Km. Away from Municipal limited. 4.3 Therefore, I agree with the contention of the ld AR that the appellant is a bonafide cultivator as per the relevant law of Maharashtra Govt. vide Bombay Tenancy & Agricultural Lands (Vidarbha Region) Act, 1958 and that, it cannot be held as trader or dealer in agricultural lands. In view of this position, the addition o .....

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of the Act. Therefore, any income from such land including profit arising from sale of such agricultural land is not assessable as income. The factum that agricultural operations have been carried on such land has been brought out by the CIT(A), to which there is no dispute. The CIT(A) has also brought out that the assessee is a bonafide agriculturist qua the impugned land. Considering the aforesaid circumstances, in our view, there is no material with the AO to infer that the assessee was a tra .....

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eated as a trader. In our view, the CIT(A) made no mistake in holding that addition of ₹ 94,96,455/- made by the AO as business income on account of sale proceeds of agricultural land is liable to be deleted. We hereby affirm the order of the CIT(A) on this aspect. 6.1 In the case before us, the facts are similar. The assessee is an agriculturist. The assessee derived income from agriculture since 94-95. The assessee is not regularly engaged in the purchase and sale of the land. Merely pur .....

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ts or learned profession. Permit of a skilled employment with a view to earn profit such an employment not being in the nature of a learned profession or agriculture must be regarded as engaging in trade‟ within the meaning of Art. 276 of the Constitution. A skilled occupation which involves the application of a manufacturing process to a commodity submitted to the person carrying on the occupation must, therefore, be regarded as trade. 6.2 The facts involved in the impugned case before us .....

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inition given u/s 2 sub section 14 of the I.T. Act. The decision of the coordinate Bench is binding on us. We accordingly set aside the order of CIT(A) and delete the addition made by the Assessing Officer in this regard. Thus, ground Nos. 1 to 9 are allowed. 6.3 Since the facts involved in the case of Ankit Kumar Agrawal, as agreed by both the parties, are same, following our aforesaid finding, we set aside the order of CIT(A) on this issue also in the case of Ankit Kumar Agrawal and allow grou .....

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vided branded seeds and fertilizer to him. 8. In appeal before CIT(A), the assessee, on the question of addition of unexplained expenditure of ₹ 1,00,000/- on the use of branded seeds for agriculture, submitted that the assessee has never used any branded seeds for cultivation and that the seeds used for a particular year are from the seeds preserved from the earlier year s crop which is the traditional system and there is a presumption to that extent in the absence of any thing contrary. .....

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