TMI Blog2016 (4) TMI 1157X X X X Extracts X X X X X X X X Extracts X X X X ..... tment has not been able to show that the assessee was engaged in the organized activity of sale and purchase of land or property dealing. Further, there is no document on record to show that the assessee had developed the land or has divided the land into plots. The Department has failed to controvert the assertions of the assessee that there has been no change of land use i.e. conversion from Agricultural to non-Agricultural use. Rather, the assessee has been able to show from records that the land has been sold to an agriculturist in compliance with the provisions of section 63 of the Bombay Tenancy Act. In our considered view the Revenue has failed to discharge its onus to show that the sale of land by the assessee was a business transaction. Thus, the first question raised before us is answered in favour of the assessee. Whether the land is situated within 8 Kms or beyond 8 Kms from the Municipal limits of Talegoan? - Held that:- Since, the certificate has been issued by the Govt. Department reliance can be placed on the same. However, a perusal of the certificate shows that the distance mentioned is between Talegaon and Sate. The certificate does not mention that village Sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e u/s. 143(2) was issued to the assessee on 06-09-2011. During the course of scrutiny assessment, the Assessing Officer observed that the assessee had sold land situated at village Sate to M/s. Kohinoor Development Corporation for a consideration of ₹ 85,00,000/- on 23-05-2008. The assessee had not disclosed the income from said transaction in his return of income. The contention of the assessee is that the land sold is an agricultural land situated more than 8 Kms. away from the nearest Municipal limits of Talegaon. Hence, the land is not assessable to tax and therefore, the income from sale of land was not disclosed in the return of income. The Assessing Officer disregarding the submissions of the assessee made addition of ₹ 66,53,223/- as profit from sale of land by treating the transaction as adventure in the nature of trade. Aggrieved by the assessment order dated 27-12-2011, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) vide impugned order rejected the contentions of the assessee and dismissed the appeal. Now, the assessee is before the Tribunal in second appeal. 3. The assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he documents which were available with him. 4.1 The ld. AR of the assessee further submitted that the assessee had purchased agricultural land in January, 2007 for a consideration of ₹ 15,50,000/- against Visar Pavati . However, a formal agreement for purchase of land was executed on 02-04-2008. The assessee had carried agricultural activities on the said land. The assessee was in possession of the land for about one year. The only crop that could be grown on the land was rice. Since, there was not much income from agricultural operations, the income from agriculture was not shown in the return of income. The ld. AR submitted that the assessee never intended to carry on the business of sale and purchase of the land. The authorities below have erred in coming to the conclusion that the surplus arising from the sale of land in question is the business income of the assessee. The assessee is an agriculturist and has sold the land to M/s. Kohinoor Development Corporation on 23-05-2008 a partnership firm through its partner Shri Rajesh Krishnakumar Goyal who is also an agriculturist. As per the provisions of section 63 of the Bombay Tenancy and Agricultural Lands Act, 1948 (he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay from Municipal limits of Talegaon. The assessee had also placed on record certificate issued by the Talathi which categorically stated that land of assessee at Sate village is at a distance of 10 Kms. from the nearest Municipal limits of Talegaon. Since, the Talathi has given two contradictory certificates, the assessee has obtained a certificate from the office of Public Works Department (PWD) Vadgaon, Maval. The measurement given in the said certificate are based on more scientific method of measuring the distance between Talegaon and Sate. In the said certificate the Dy. Engineer, Public Works Department Sub Division, Vadgaon Maval has certified that the distance between Talegaon to Sate as per PWD road mapping cycle is 10 KM. Thus, the certificate issued by the PWD is more reliable and should be accepted. The ld. AR in order to support the validity of certificate issued by the PWD placed reliance on the order of Co-ordinate Bench in the case of Pooja Rohit Bhandari Vs. ITO in ITA Nos. 762 763/PN/2011 for the assessment years 2005-06 and 2006-07 decided on 31-01-2013. 5. Per contra Smt. Pooja Rastogi representing the Department vehemently supported the findings of Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the land during and after the sale of land by the assessee. In the case of Abhijit Subhash Gaikwad Vs. The Dy. Commissioner of Income Tax (supra) there was admission by the assessee which was not retracted at any stage. Further, the assessee had claimed relief u/s. 54 of the Act. In the case in hand there is no such admission by the assessee. The ld. AR submitted that the matter can be remitted back to Assessing Officer for limited purpose for verification of distance only. The assessee cannot be put in worse situation by remitting the case to Assessing Officer in open remand. Authorities cannot be given second innings where the facts are clearly evident and only certificate, documents are required be verified which are produced before the appellate authority as additional evidence. In support of his submissions the ld. AR placed reliance on the following decisions : i. Zuari Leasing Finance Corporation Ltd. Vs. ITO, 112 ITD 205 (Delhi)(TM); ii. Smt. Neena Syal Vs. Asstt. CIT, 70 ITD 62 (Chandigarh); iii. Asstt. CIT Vs. Anima Investment Ltd., 73 ITD 125 (Delhi)(TM). 7. The ld. DR objected to the submissions made on behalf of the assessee for remanding the matter for l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale of land. The assessee never disclosed any agricultural income in his return of income. The intention of the assessee was not to retain the land for agricultural purpose but to earn quick profit by trading in land. The Assessing Officer held that the land is situated only 6-7 Kms from the Municipal limits of Talegaon. Therefore, it falls within the definition of capital assets. The findings of the Assessing Officer were upheld by the Commissioner of Income Tax (Appeals) hence, the present appeal by the assessee. 10. One of the reasons for treating the sale transaction as adventure in the nature of trade by the Revenue is the short duration between purchase and sale of land. As per the contentions of the assessee the land was purchased by the assessee in 2007 against Visar Pavati for a consideration of ₹ 15,50,000/-. However, the sale deed of the land was executed in March, 2008. The assessee purportedly got possession of land at the time of payment of consideration in January, 2007. These contentions of the assessee have been disbelieved by the authorities below. After perusal of the documents on record we find that there is no document on record to show that the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s regard. In that view of the matter, there being no finding in regard to the carrying on of the business by the assessee of sale and purchase of the land and the land being stock in trade, the contention of the Revenue that the income from sale of land amounted to profits and gains of business cannot be sustained. In view of the aforesaid factual position, it is not necessary to go into an elaborate discussion on the point as to when a transaction will fall within the definition of business as being an adventure in the nature of trade. As in the instant case, there is no evidence at all of any trading activity in the isolated transaction of purchase and sale of land by the assessee, the transaction cannot be treated, without more, to be a venture in the nature of trade. The onus of proving that the land formed part of the business assets of the assessee is on the Department and in the absence of any evidence to that effect the presumption will be that the land was held as a capital asset by the assessee and the income from transfer thereof was not income from business. In view of the foregoing discussion, it is clear that the income in question could not be subjected to tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... khs was payable as follows: ₹ 20 lakhs before execution of the deed of conveyance and the balance ₹ 40 lakhs within two years thereafter without any interest. (iv) The sale deed in favour of the assessee was executed on September 30, 1966, and it was presented for registration on October 12, 1966. (v) The assessee finalised the negotiations for resale of the above property to the Bank of Maharashtra for a sum of ₹ 57.5 lakhs and the sale deed was executed on October 11, 1967, and presented for registration on the same date. (vi) The objects clause in the memorandum and articles of association of the assessee enumerates 47 objects which includes, inter alia, the following : To hold maintain or to alienate, sell, let, mortgage, charge or otherwise deal with or dispose of all or any of such lands, buildings, structures of hereditaments . . . . ; To let or under let all or any of such lands, buildings, structures, hereditaments and premises either upon lease or otherwise ; To purchase for investment or resale and to traffic in land and house or other property of any tenure. . . . ; The above clause clearly goes to show that the object of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant case section 49(1)(iii)(e) will be attracted as the property became the property of the assessee under a transfer referred to in clause (iv) of section 47 of the Act. The cost of acquisition of the asset, therefore, shall be deemed to be the cost for which the previous owner of the property had acquired it. In view of the foregoing discussion, the first question referred to us is answered in the affirmative, that is, in favour of the Revenue and against the assessee. 13. Thus, in view of the facts of the present case and the judgments discussed above, we hold that the land sale transaction undertaken by the assessee is not adventure in the nature of trade. The Revenue has not been able to show that the land was held as a trading asset. The authorities below have drawn inference only from the proximity of alleged date of purchase and sale of land to form a presumptive opinion that the transaction was a business transaction. Merely for the reason that land was held by the assessee for short duration, it cannot be said that the land purchased and sold by the assessee is in the adventure in the nature of trade. As has been held in the case of CIT Vs. Dhable, Bobde, Parose, Kale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s per Revenue records the land is cultivable and there is no admission by the assessee to treat the land as capital asset. The Department has not rebutted these contentions of the assessee. Thus, the ratio laid down in the case of Abhijit Subhash Gaikwad Vs. The Dy. Commissioner of Income Tax (supra) would not apply on the facts and circumstances of the present case. 15. The ld. AR of the assessee in order to controvert the findings of the authorities below that the sale of land made by the assessee is not a capital asset but an agricultural land has drawn our attention towards the Bombay Tenancy Act. A perusal of section 63 of the Bombay Tenancy Act would show that the transfer of agricultural land to non-agriculturist is barred in the State of Maharashtra. The term agriculturist as defined u/s. 2(2) of Bombay Tenancy Act means, a person who cultivates land personally . And the term used in section 2(2) to cultivate personally is defined in sub-section (6) to section 2 of the Bombay Tenancy Act which is reproduced here-in-below: (6) to cultivate personally means to cultivate land on one's own account:- (i) by one's own labour, or (ii) by the labour of any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ained as Padatar or idle or is used for agricultural purposes only by way of a stop gap arrangement. So far as the facts of this case are concerned, there is no dispute that the land, till it was sold, was classified as agricultural land in the revenue records. In the village Forms Nos. VII and XII, popularly known as record of rights , it is mentioned that the whole of the land was cultivated till the year 1967- 68. The land was cultivated personally by the assessee. The said land belonged to the family and he got it by way of inheritance and not by way of purchase from some other party. There is no material which discloses that attempt was made by the assessee either to purchase or sell any other land in the past. He had not, at any point of time, applied for permission to use the land for non agricultural purposes. All these factors have been taken into consideration along with the other relevant factors, viz., that the land was sold to a co operative housing society ; that it was sold at ₹ 20 per sq. yard, and that it was situated within the corporation limits of Ahmedabad city. It is, therefore, not possible for us to say that the view taken by the Tribunal is unreasona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Municipal limits of Talegaon. The Assessing Officer during the assessment proceedings has also obtained certificate from village Talathi which shows that the land is situated within 6 to 7 Kms from the Municipal limits of Talegoan. In view of this contradictory certificates issued by the village Talathi, no reliance can be placed on either of the certificates. The assessee has placed on record a certificate from the office of Dy. Engineer Public Works Department Sub Division, Vadgaon Maval as additional evidence. The relevant extract of the certificate is reproduced here-in-under: With reference to above subject the distance between Talegaon to Sate was count by PWD road mapping cycle and the said distance is 10 KM. This certificate has been issued on your request and for your information. Sd/- Dy. Engineer PWD Sub Division Vadgaon Maval. Since, the certificate has been issued by the Govt. Department reliance can be placed on the same. However, a perusal of the certificate shows that the distance mentioned is between Talegaon and Sate. The certificate does not mention that village Sate is 10 KM from the Municipal limits of Talegaon. There is a difference bet ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
