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2016 (6) TMI 550 - ITAT COCHIN

2016 (6) TMI 550 - ITAT COCHIN - TMI - Addition under the head ‘capital gains’- Nature of land - Agricultural income - Held that:- Agricultural income for the purpose of assessment to agricultural income tax, income derived from any building owned and occupied by the receiver of the rent or revenue of any such land is also regarded as agricultural income under the Act. Such building should be on or in the immediate vicinity of the land and is occupied by the owner by reason of his connection wit .....

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s in Cochin Corporation as per Notification No. SO 10/6.1.1994. The assessing officer himself admits that 1/3rd of the land could be regarded as agricultural land. The existence of well, septic tank, compound wall, cattle shed, pump house, a small house etc., would not make any difference to nature of land being agricultural in nature. The assessee had also declared agriculture income and the same have been accepted in the asst. order. For the aforesaid reasons, we are of the view that the Incom .....

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. The relevant assessment year is 2011-12. 2 The solitary issue that was argued, is whether the CIT(A), is justified in confirming the addition of ₹ 58,76,920/- made by the AO under the head capital gains . 3 The brief facts of the case are as follows: During the previous year relevant to the Assessment Year 2011-12, the assessee received an amount of ₹ 90,61 ,029/- on acquisition of 12.50 Ares (30 cents of land) in Sy.No.30/13, LAC NO.26/09 after deducting the TDS of RS.1 0,37, 128/ .....

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ed as compensation is not liable for capital gain tax. The claim was partially accepted by the Assessing Officer. The Assessing Officer was of the view that the agricultural land was exempt from the definition of Capital Asset u/s 2(14)(iii), but not building and land appurtenant thereto. According to the AO, the 30 cents of land acquired consisted of a residential building with the plinth area of 1200 sq. feet, a cattle shed, a well, a pump house, septic tank, compound wall etc., and it would b .....

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/- as worked out in Paragraph-5 of the Assessment Order was brought to tax as not eligible for exemption under the Act. 4. In the First Appeal, the CIT(A) concurred with the findings of the Assessing Officer. The relevant findings of the CIT(A) read as follows: 5. . I have gone through the assessment order and the submissions of the assessee. .It is seen that this land of the assessee is being acquired by the Corporation of Cochin for the implementation of Brahmapuram Waste Plant Project. That i .....

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and has been certified as agricultural land. But at the same time the certificate of land Acquisition Officer shows that the land is "dry land" and hence no agricultural activities could have been carried out on this land. The Special Tahsildar (LA}, Corporation of Cochln vide Award No. LAC 26/2009 dated 02.08.2010 certified that the land has been classified as dry land having a building, a cattle shed, a wall, a pump house septic tank, compound wall etc. located wit in this land. The .....

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g carried out on this land for last two years. In any case given the area of land on which building etc. are located, AO has treated 1/3rd of the total land as agricultural land which is reasonable. Assessee during the course of appellate proceedings has also relied on the case law of M.J. Thomas vs. DCIT (Group of cases) by ITAT Cochin Bench , to show that the land of the assessee is agricultural land. However, in this case since the classification of the land by the Special Tahsildar for the p .....

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CIT(A). 6 We have heard the rival submissions and perused the material on record. Section 2(14) (iii) excludes agricultural land from the purview of the "Capital Asset". Clause (iii) to sec. 2(14) read as follows: (iii) Agricultural land in India, not being land situate - (a) in any area which is comprised within the jurisdiction of a municipality 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 .....

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gricultural land. 6.1 The existence of residential house, well, septic tank, compound wall, cattle shed, pump house, crops, trees, etc. which were situated in the acquired land would not make any difference in the nature of land and would not convert the agricultural land into a non-agricultural land. The assessee had produced the following documentary evidence before the AO and appellate authorities in support of the claim that impugned land is agricultural land. I. Certificate from the Village .....

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ituated in the aforesaid property which was acquired for the purpose of Cochin Corporation for implementation of Brahmapuram Waste Plant Project (Page No.13in the paper book). It is also stated that in the above land, the assessee has cultivated crops like, banana, coffee, tapioca, arecanut tree, nutmeg, pepper, etc. The land was always agricultural land as per the village record. Certificate is also produced to show that the assessee was contributing for Kerala Agricultural Workers Welfare Fund .....

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issued by the assessing officer along with reply dated 24.1.2014 submitted by the assessee are also produced in the paper book.(Page No.42) 6.2 Sec.2(1A) which defines agricultural income. As per Clause-(c) of Sub Clause-(1A) of Sec.2- (c) any income derived from any building owned and occupied by the receiver of the rent or revenue of any such land, or occupied by the cultivator or the receiver of rent-in-kind, of any land with respect to which, or the produce of which, any process mentioned i .....

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f the Government as such or where the land is not so assessed to land revenue or subject to a local rate, it is not situated- (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 thousand according to the last preceding census of which the relevant figures have been .....

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