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2016 (9) TMI 1063 - ITAT CHENNAI

2016 (9) TMI 1063 - ITAT CHENNAI - TMI - Treatment of sale of land as agricultural land - nature of land - Held that:- In the present case, it is an admitted fact that the impugned land property is situated beyond 8 Kms of the Municipal Corporation limit of Chennai. The land is situated in a distance of 15 Kms from the nearest municipality/Panchayat i.e. Sriperumpudur Taluk, Kancheepuram District, Chennai and population of the village is around 3,000 as per the relevant census. The assessee also .....

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ultural purpose. The land retained character of agricultural land only. Being so, in our opinion the above land is to be treated as agricultural land only and sale of said land cannot go rise to any taxable capital gains and it is to be considered as agricultural land in terms of Sec.2(14)(iii)(b) of the Act and Ld.CIT(A) has taken a correct view to hold that the said land is an agricultural land and in our opinion that the judgement relied upon by ld.A.R in the case of Mr.N.Jayamurugan (2016 (6 .....

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of Income-tax (Appeals)-3, Chennai dated 22.01.2016 pertaining to assessment year 2010-11. 2. The grievance of the Revenue is with regard to treatment of sale of land as agricultural land, though assessee did not produce any evidence for carrying agricultural activities in the said land and only ₹ 50,000/- and ₹ 65,000/- have been shown as agricultural income for assessment year 2010-11 for such a huge extent of land. 3. The brief facts of the case are that the assessee e-filed retur .....

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t, notice u/s. 148 dated 21.01.2014 was issued. It is noticed that the assessee has sold lands measuring 7.38 acres located in Kunnam Village, Sriperumpudur Taluk, Kancheepuram District, Chennai on 26.08.2009 in his individual capacity as well as in the capacity of power agent of Smt. Sushila Kuamri. The total sale consideration received by the assessee in respect of above sale proceeds during the relevant previous year is ₹ 5,31,02,160/- and the above sale has taken place vide document No .....

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ot adduced any evidence for carrying agriculture activities in the said land and the agriculture income has been offered only at ₹ 50,000/- and ₹ 65,300/- for such huge extent of land respectively for A. Y. 2010-11. (b) The assessee has purchased the said land on 11.09.2007 for ₹ 1,97,61,000/- and within a short span of less than two years i.e. on 26.08.2009, the same land has been sold for ₹ 5,31,02,160/- This clearly indicates that the intention of the purchaser to by a .....

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Cost of acquisition on 11.09.2007 - ₹ 2,57,55,000 Short term capital gain - ₹ 2,73,47,160 Thus, A.O has brought to tax under the head capital gains an amount ofRs. 2,73,47,160. Aggrieved by the addition assessee had filed appeal before CIT(A). 3.1 On appeal, the CIT(A) observed that the sale of said land is not a capital asset, chargeable for capital gains and it is an agricultural land in term of sec.2(14)(iii) of the Act. Against this, the Revenue is in appeal before us. 4. The De .....

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said property sold for consideration of ₹ 2.14 crores to M/s.Olympia Infra Tech (P) Ltd. According to the assessee, the property is an agricultural land, not liable for tax in view of the order of the Tribunal in the case of ITO Vs. Smt.Lalitha in ITA No.14/Mds./15 & CO No.15/MDS./2015 vide order dated 17thJuly, 2015, the property is not liable for capital gains tax. On the other hand, the ld.D.R relied on the order of the Co-ordinate Bench in the case of ITO Vs. Shri Aboobucker in IT .....

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for a long period and subsequent sale thereof itself cannot be an indicator to hold it as non-agricultural land, the assessee was to carry on business with those assets. (ii) The assessee held land for considerable time. The asset acquired was agriculture land as per the evidence brought on record. Thus, the assessee held the agriculture land for more than 3 years. During that period the assessee carried on regular agricultural operations. In the light of favourable market conditions the assess .....

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cultural land by the assessee and realisation of good price would not alter the basic nature and characteristic of the transaction. In the case of the assessee, land was acquired by the assessee and treated as fixed-assets. (v) Whether a transaction in respect of an asset is capital or not depends on the facts and circumstances of the case. The mere fact that the person has purchased a land and subsequently sold it, giving rise to a substantial profit cannot change the character of the transacti .....

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nothing but on account of sale of capital asset and the same was brought into income from capital gain. In this case, the Authorised Representative submitted that the land always treated as investment and not at all converted into stock-in-trade. The character of the land in the hands of the assessees has not changed. 4.3 Now the question as to whether a land is agricultural land or not is essentially a question of fact. The question has to be answered in each case having regard to the facts and .....

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balanced consideration of the totality of the circumstances. 4.4 The expression 'agricultural land' is not defined in the Act, and now, whether it is agricultural land or not has to be determined by using the tests or methods laid down by the Courts from time to time. 4.5 The Supreme Court in the case of Smt. Sarifabibi Mohmed Ibrahim v. CIT [1993] 204 ITR 631/70 Taxman 301 has approved the decision of a Division Bench of the Gujarat High Court in the case of Siddharth J. Desai 139 ITR 6 .....

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her such user of the land was for a long period or whether it was of a temporary character or by any of a stopgap 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 re .....

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ad never been actually used for agriculture, that is, it had never been ploughed or tilled? Whether the owner meant or intended to use it for agricultural purposes? 8. Whether the land was situated in a developed area? Whether its physical characteristics, surrounding situation and use of the land in the adjoining area were such as would indicate that the land was agricultural? 9. Whether the land itself was developed by plotting and providing roads and other facilities? 10. Whether there were a .....

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t the price at which the land was sold and whether the owner would have ever sold the land valuing it as a property yielding agricultural produce on the basis of its yield?" 4.6 We will therefore proceed to examine the question as to whether the property can be said to be Agricultural land or not. In the case of CWT vs. Officer-in- Charge (Court of Wards), Paigah 105 ITR 133 (SC) in which question to be decided was whether acres of vacant land enclosed in compound walls of a palace situated .....

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required to be shown is the connection with an agricultural purpose and user and not the mere possibility of user of the land, by some possible future owner or possessor, for an agricultural purpose. It is not mere potentiality, but its actual condition and intended user which has to be seen. One of the objects for exemption is to encourage cultivation or actual utilisation of land for agricultural purposes and hence if there is neither anything in its condition, nor anything in the evidence to .....

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it for immediate cultivation; and (v) it was classified and assessed to land revenue as "agricultural land" under the relevant revenue enactment. The Supreme Court held that first four circumstances relating to absence of non-agricultural user were neutral circumstances and only fifth circumstance .was good prima facie evidence of land being agricultural land but presumption arising there from could be rebutted by other circumstances. In that case the assessee had not led any evidence .....

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ed can also be agricultural land unless the. said land is actually put to some other non- agricultural purpose like construction of buildings, or an aerodrome runway, etc. thereon which alters the physical character of the land rendering it unfit for immediate cultivation and observed that minimal test of agricultural land was credible evidence of at least appropriation or setting a part of the land for a purpose which could be regarded as agricultural and for which land was used without an alte .....

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facie presumption and said presumption can be destroyed by other circumstances pointing to the contrary conclusion (ii) The fact that agricultural operations were carried on in the past or arc carried on currently is a circumstance in favour of conclusion that land was agricultural land. However, this is not a decisive factor inasmuch as agricultural crop can be raised even on building site land (even on desert land as observed by the Supreme Court in said case) and sometimes, a crop is grown in .....

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land was not agricultural land: (a) The land is situated (even in the year prior to asst. year 1970-71 when amendment came in force) in an urban area in the proximity of building sites. (From Asst. year 1970-71, agricultural lands situate within municipal limits are not outside the ambit of "capital assets"). (b) The land is sold to a non-agriculturist for non- agricultural purpose. (c) The land is sold on a per square yard basis at a comparable to the price fetched by building sites. .....

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d to be weighted and that High Court has reached a correct conclusion. 4.1 The claim of the Assessee that agricultural operations were carried out over the property and the property was actually used for agricultural purpose was sought to be established by relying on the classification of the property as agricultural land in the revenue records, existence of coconut trees for agricultural purpose. The Revenue contends that there is no evidence of the Assessee having carried out actual agricultur .....

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im exemption was on the Assessee. As already observed the question whether the land was Agricultural land has to be decided on facts of each case and decided cases are only guidelines to be kept in mind. Facts and all the circumstances are to be considered as a whole and an overall view is to be taken in deciding whether the land was an agricultural land. In a given case large number of circumstances may be indicative of agricultural character but one circumstance may outweigh all of them and on .....

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ivates. We are making a reference to these circumstances only to weigh the cumulative circumstances to come to a conclusion whether the property can be regarded as Agricultural Land. No evidence of having spent human labour in the sense of preparing the land, filling, sowing seeds, planting on a regular basis has been produced by the Assessee. The property is situated in fast developing area of Chennai. The property is located in developed/ developing area and has access to all modern amenities/ .....

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approved by the Hon'ble Supreme Court, to the facts and circumstances of the case:- . (i) The fact that land is entered as agricultural land in revenue records and is assessed as such under the Land Revenue Code would be a . circumstance in favour of conclusion that it is an agricultural land. However, this would raise only a prima facie presumption and said presumption can be destroyed by other circumstances pointing to the contrary conclusion. (ii) The fact that agricultural operations we .....

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oid payment of revenue at a higher rate or in order to avoid payment of capital gains tax. (iii) The fact that land is not converted to no agricultural user would be a circumstance indicating that it is an agricultural land. However this is subject to same rider as is mentioned in(ii) above. (iv) The following facts would indicate that land was not agricultural land: (a) The land is situated in an area in the proximity of building sites. (b) The land is sold to a non-agriculturist for non-agricu .....

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Tamil Nadu, located south of the city of Chennai, along the Old Mahabalipuram Road. Navalur is located between Sholinganallur and Siruseri and is around 6 kms. from Sholinganallur and comes under Thirporur taluk. The place was once a village but with the advent of Information Technology Companies and the rapid development of the Old Mahabalipuram, it has become a bustling suburban. Navalur is an upcoming residential area with many number of Flats coming up, mostly professionals from Information .....

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roperty has increased manifold which a normal agricultural land will not fetch. The price is in accordance with the development activities and changes happening in the nature of the land from agricultural to that of housing. 4.14 If we consider the above facts and circumstances of the present case as a whole and an overall view is to be taken in deciding whether the land was an agricultural land, we would come to a conclusion that the property cannot be considered as Agricultural land, though th .....

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, Jurisdictional High Court in the case of CIT v. Hi Tech Arai Ltd. reported in [2010] 321 ITR 477(Mad.) wherein held that:- 3. We are not in a position to appreciate either of the contentions of the learned counsel for the petitioner. As far as the first contention is concerned, when the Tribunal by the impugned order has applied section 32(1)(iia) of the Act, to the facts involved in the case of the assessee and has found that the assessee is entitled for the additional depreciation claimed un .....

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decision did not reflect the correct position of the law. As such, we are not in a position to follow the order of the Tribunal in the case of Smt.Lalitha (supra) rather we are inclined to follow the decision of Co-ordinate Bench in the case of ITO Vs. Shri Aboobucker cited supra. Accordingly, this ground raised by the Revenue is allowed. 5. On the other hand, ld.A.R relied on the order of Co-ordinate Bench in the case of Mr.N.Jayamurugan, vide order dated 27.04.2016 in ITA Nos.2356 to 2362/Mds .....

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relevant census. The assessee also declared agricultural income from the said property and the same was assessed as agricultural income more specifically in assessment under consideration also. The AO accepted the agricultural income declared from said property at ₹ 65,300/- for assessment year 2010-11. Further, the land was classified as agricultural land in the Revenue records also. The property was also sold by the assessee as agricultural land only and the impugned land was never conv .....

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