TMI Blog2013 (4) TMI 830X X X X Extracts X X X X X X X X Extracts X X X X ..... ome. 2. Assessing Officer, who became aware of sale of the land through Annual Information Report, asked the assessees as to why capital gains arising on the sale thereof should not be taxed. Both the assessees, who were represented by M/s S. Venkatram Co., replied that the land sold was agricultural in nature and the sales were effected during previous year ended 31.3.2008 and 31.3.2009. As per assessees, the amounts received were only advances. They could not effect the conveyance through registered documents and therefore, the amounts, which were only treated as advance, were transferred to capital account only in the year ended 31.3.2009. However, the Assessing Officer was not impressed with the above reply. According to him, the entire piece of land was in adverse possession of one Shri O.P. Nambiyar from 1970 till 13.12.2005, who had not done any agricultural operation in the said land. There was no material produced by the assessees that any agricultural operation was carried on by them on this land. As per the A.O., Revenue authorities had classified such land as dry land. Report of the Inspector of the Department, who was deputed to enquire about the land, specific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within the specified distance from the outer limits of the nearest municipality/town panchayat) and the population of the Mamallapuram Town Panchayat as per 2001 census was 12,345. 5. CIT(Appeals) was of the opinion that most important criteria for considering the classification of land was the revenue record. Assessees had produced copy of adangal and a letter from Tehsildar which showed that the land was agricultural in nature. Further, according to him, subject land was not located in a municipality or cantonment and was not notified by the Central Government for application of sub-clause (b) of clause (iii) to Section 2(14) of the Act. Mahabalipuram was neither a municipality nor in cantonment board, nor was it notified by Central Government in the official gazette for extending the local limits by eight kilometers for reckoning the nature of land for the purpose of capital asset. In this view of the matter, ld. CIT(Appeals) ruled that land held by the assessees were agricultural in nature and the sale proceeds were not exigible to capital gains tax. He deleted the additions made by the A.O. 6. Now before us, learned D.R., strongly assailing the orders of CIT(Appeals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... land which were used for agricultural purposes. Classification in the revenue record as agricultural land was conclusive of the nature of land, unless and until it was effectively rebutted by the Revenue, by cogent evidence. Nothing of this sort was produced by the Revenue. Assessees had not shown agricultural income in their returns since casaurina were not cut and sold. According to him, assessees belonged to an old zamindar family and were basically agriculturists. Land was inherited by Smt. Sakunthala Vedhachalam from her husband, who in turn had inherited it from his father. Smt. Vanitha Manickavasagam, the other assessee was only a housewife. The land was sold by the assessees finding it difficult to manage it. The A.O. had in his remand report confirmed that the land was agricultural in nature. He had also observed that casuarina trees were grown there. The report of the Inspector was never put before the assessees. Therefore, an adverse conclusion drawn by Assessing Officer from such report could not be relied upon. Hence, according to him, CIT(Appeals) was justified in concluding the land to be agricultural in nature. 8. We have perused the orders and heard the riva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cernible which were considered as relevant and which were weighed against each other while determining the true nature and character of the land. It may be useful to extract from those decisions some of the major factors which were considered as having a bearing on the determination of the question. Those factors are: (1) Whether the land was classified in the Revenue records as agricultural and whether it was subject to the payment of land revenue ? (2) Whether the land was actually or ordinarily used for agricultural purposes at or about the relevant time ? (3) Whether such user of the land was for a long period or whether it was of a temporary character or by way of a stop-gap arrangement ? (4) Whether the income derived from the agricultural operations carried on in the land bore any rational proportion to the investment made in 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 the whole or a portion of the land ? If the permission was in respect of a porti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulture. There was no evidence shown and produced to prove that the land was used for agricultural purposes or to show that any agricultural operations were carried on in the land. In our opinion, an entry in the revenue record as agriculture will not be sufficient evidence to hold that the land was agricultural in nature, when actual agricultural use was not proved. Adjacent land, by admission of assessees, had been divided into plots for sale and access road has also been provided by the assessee to the said plots. This, in other words, would mean that the land was situated in a developed area. No agriculturists would have purchased the land sold by the assessee for pursuing any agricultural activity. Considering all these aspects, we are of the opinion that the land could not be classified as agricultural. In our opinion, CIT(Appeals) fell in error when he missed all these relevant aspects. We, therefore, have no hesitation to set aside the order of CIT(Appeals) and reinstate the addition for long term capital gains made by the Assessing Officer. 10. In the result, appeals filed by the Revenue stand allowed. Order was pronounced in the Court on Thursday, the 11th of Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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