TMI Blog2017 (5) TMI 712X X X X Extracts X X X X X X X X Extracts X X X X ..... th the agricultural income earned by the lease holders. (2) All the shareholders of the land holding companies are the lease holders of the land owned by the companies which is in proportion to the shares held by them. (3) The decision of the company to lease the land is not in the interest of the company which is a distinct legal entity for profit but a modus operandi to pass on the income derived from agricultural operation from the land owned by the companies to the shareholders of the company directly. (4) The entire transaction is aimed to circumvent the provisions of the Act because dividend income is taxable in the hands of the asses see. (5) There is also no cogent evidence to prove that the assessee had cultivated the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 250(6) read with section 143(3) of the Income-tax Act, 1961. 2. The assessee has raised several grounds in her appeal, however, the crux of the issue is that the learned Commissioner of Income-tax (Appeals) has erred in confirming the order of the learned Assessing Officer who had rejected the claim of the assessee for having earned agricultural income of ₹ 10,66,010 by treating it as income from other sources. 3. The brief facts of the case are that the assessee is an individual earning income from business and profession filed her return on income on February 3, 2011 for the relevant assessment year admitting income of ₹ 13,65,979 which comprised of agricultural income ₹ 10,49,510. The case was selected for scrut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng with all 11 other individuals is nothing but diversion of the profit from the land holding companies to the assessee and her associates in order to avoid dividend tax. The learned Assessing Officer also came to the conclusion that the amount received by the assessee along with her associates is nothing but dividend received from the companies and therefore brought the amount of ₹ 10,66,010 to tax under the head Income from other sources . 5. On appeal, the learned Commissioner of Income-tax (Appeals) after examining the issue in detail confirmed the order of the learned Assessing Officer by observing as under : 15. I have considered the remand report furnished by the Assessing Officer and the counter arguments of the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incurred by Mr. E. J. Coelho out of the sale proceeds of agricultural produce which always remained with him. It is interesting to note that the sale proceeds of agriculture produce for the earlier years too have not reached the appellant so far. The agriculture income which the assessee has reflected in her return of income is the notional income only. 16. Hence, keeping in view the above facts and the circumstances of the case and also considering the findings of the Assessing Officer in the assessment order and the remand report, I am of the considered opinion that the appellant is neither the owner of the agricultural land nor did she carry out any agriculture operations directly or directly under her supervision which could have e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perused the material available on record. The transaction of lease of agricultural land between the assessee and the land holding companies cannot be termed as illegal, however it appears to be sham because of the following reasons : (1) The lease rent paid to the land holding companies/HUF by the assessee and the other individuals who had taken the land on lease is only ₹ 500 per acre per annum, which is too low and not in parity with the agricultural income earned by the lease holders. (2) All the shareholders of the land holding companies are the lease holders of the land owned by the companies which is in proportion to the shares held by them. (3) The decision of the company to lease the land is not in the interest ..... X X X X Extracts X X X X X X X X Extracts X X X X
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