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TMI Blog2016 (5) TMI 322X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee had not returned any agricultural income during the last 4 years, prior to the sale of property and also the fact that in the spot enquiry report of the Inspector of Income Tax, it was stated that the land in question was very close to the industrial park. The property sold by the assessee cannot be considered as agricultural property and was, therefore, liable for capital gains arising on its sale. Taking the cost in 1981 to be Rs. 35,000, the Assessing officer calculated the long term capital gain at Rs. 3,36,40,950/-. 3. Aggrieved by the assessment order dated 26.03.2013, the assessee preferred an appeal before the Ld. CIT(A) wherein the appeal of the assessee was allowed by holding that the land sold by the assessee cannot be treated as capital asset within the meaning of section 2(14) of the Act. Therefore, the sale was not liable for capital gains under the Act. 4. Aggrieved by the order of the Ld CIT(A) allowing the appeal of the assessee, the Revenue has preferred this appeal by raising the following grounds of appeal: 1. The order of the learned Commissioner of Income Tax(Appeals) is against facts and circumstances of the case. 2. Whether on the facts and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT 185 ITR 318 (Ker.) to support his submission that the burden is on the assessee to show that the land was an agricultural land on the date of sale and if no agricultural operations were carried on, the land cannot be claimed to be agricultural. He has further relied upon the judgment of the Hon'ble Supreme Court in the case of CWT vs. Officer-in-charge (Court of Wards), Paigah, 105 ITR 133 (SC) wherein it was held that agricultural land must be a land which could be said to be either actually used or ordinarily used or meant to be used for agricultural purposes 7 The Ld. DR has further based his submissions upon the report of the Inspector of the Income Tax stating that the land in question was very near to the industrial park. He has also relied upon the letter dated 20-01-2011 of the Secretary, Grama Panchayat. He also relied upon the order of the Assessing officer to canvass his submissions. 8. The Ld. AR on the other hand has rebutted the aforesaid arguments raised by the Ld. DR and has argued that the land in question is agricultural land. He has placed heavy reliance on the certificate of the Village Officer certifying that the property was used for coconut plantation a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Explanation 1) - For the purposes of this sub-clause, "jewellery" includes - (a) ornaments made of gold, silver, platinum or any other precious metal or any alloy containing one or more of such precious metals, whether or not containing any precious or semi-precious stone, and whether or not worked or sewn into any wearing apparel; (b) precious or semi-precious stones, whether or not set in any furniture, utensil or other article or worked or sewn into any wearing apparel. (Explantion 2 - For the purposes of this clause- (a) the expression "Foreign Institutional Investor" shall have the meaning assigned to it in clause (a) of the Explanation to section 115AD; (b) the expression "securities" shall have the meaning assigned to it in clause (h) of section 2 of the Securities Contracts (Regulation Act, 1956 (42 of 1956). (iii) agricultural land in India, not being land situate - (a) in any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, 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 thous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnection with an agricultural user or purpose and mere potentiality of agricultural use is not enough. In view of the aforesaid judgment it is to be seen whether the land in question was used for agricultural purposes or had any connection with the agricultural purpose. 12. It is the admitted case of both the parties that the State Government had not maintained any records for cultivation of the land. The assessee has submitted that the land was used for the coconut plantation and for the same he has relied upon the certificate of the Village Officer certifying that the subject land was used for coconut plantation and for growing other agricultural crops from 1981 onwards and the assessee was earning agricultural income out of it. In the absence of any record maintained by the State Government, we see no reason to disbelieve the certificate of the Village Officer and the same cannot be rejected solely on the basis that it was issued post the sale of land by the assessee. The certificate is clear and unambiguously states that the said land was used for coconut plantation, which leaves no manner of doubt that the land was used for agricultural purposes. 13. The Cochin Bench of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing officer, after examining the Village Administrative Officer, Additional Tahsildar and Agricultural Officer, found that the Village Administrative Officer and Tahsildar are not maintaining any record for the purpose of cultivation. Even the Agricultural Officer is not maintaining any records for cultivation. The records available with the state government are only the register for collection of contribution towards Kerala Agricultural Workers' Welfare Fund, Basic Tax Register and the classification of land as agricultural land. Apart from these, there is no other material available with the state government. If that is so, it is not known how the food production of the state was estimated so as to ensure sufficient supply of food to the people of the state. The fact remains is that the revenue could not produce any evidence for cultivation of land maintained by Government of Kerala. From the remand report filed by the assessing officer the food production of the state appears to have been estimated on the basis of the farmers, who were registered on the records of paddy field without considering the actual cultivation. Therefore, the state government for the purpose of food pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Smt. Asha George (supra), the question arose for consideration was exemptions u/s 54B and 54F of the Act. One of the pre-conditions for grant of exemptions u/s 54B and 54F is that the land should be used for cultivation immediately two years before the date of transaction. Such a condition is not available for treating the land as capital asset u/s 2(14) of the Act. Therefore, as observed earlier, what is required is the connection between the land and the agricultural purpose and if the land is cultivated in any of the earlier years, this Tribunal is of the considered opinion that the land has to be treated as agricultural land. The material evidence produced by the assessees are - (i) the certificate issued by the Village Officer; (ii) certificate issued by the Agricultural Officer; (iii) classification of land by state government as agricultural land; (iv) receipt for payment of contribution to agricultural workers' welfare fund; and (v) Basic Tax Register. From these materials, it appears that the state government has classified the subject land as agricultural land. The government is collecting tax as agricultural land which is evident from the Basic Tax Register. The assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not agree with the submission of the Ld. DR. One of the basic principles of natural justice is that no evidence collected behind the back of the assessee could be used against the assessee unless an opportunity is given to the assessee to rebut the same. As the Revenue authorities have grossly erred in relying upon the evidences collected behind the back of the assessee, the additions based on such materials deserves to be deleted. We, accordingly reverse the findings of the Ld. CIT(A) and direct the Assessing officer to delete the addition of Rs. 3,79,42,133/- which have been made on the basis of the information collected from various companies behind the back of the assessee. This ground of the assessee is accordingly allowed." 16. The nearness of the land to highway also does not alter the character of the land and appreciation in the price of land cannot be seen in isolation and if agricultural operations were carried out by the assessee, the appreciation in the price of land alone would not lead to the conclusion that the land is not an agricultural land. The objection of the Revenue that coconut plantation could not have been carried out on the soil which was present on the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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