TMI Blog2017 (5) TMI 1039X X X X Extracts X X X X X X X X Extracts X X X X ..... is irrelevant. A non-agricultural property, whether inside the municipality or outside the municipality or even in a remote village is a “capital asset” or stock-in-trade and transfer of the same may generate income liable for capital gains taxation or business income as the case may be. Regarding fixing the value as on 01.01.2007 by the CIT(A) at ₹ 53/- per sq. ft., which is based on the sale incidence of the property situated at Novaloor village located next to Nattarasampattu village vide Sale deed June, 2007 for 23,100/- per cent at ₹ 53/- sq. ft. In our opinion, when the assessee sold the property in the A.Y 2010-11 at ₹ 351 sq. ft., it cannot be said that the value of that property as on 01.04.2009 be at ₹ 53/- per sq. ft.. Considering the sale value at ₹ 351 sq. ft., we direct the AO to work out the value of opening stock as on 01.04.2009 by applying the reverse indexation method. Accordingly, this issue is remitted to the file of AO for his fresh consideration on this direction only. Disallowance of 10% value expenditure incurred - Held that:- When the assessee has not produced the bills and vouchers, there is every chance of inflating t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unregistered sale deed dated 7.11.2006. The said land (extent 5.89 acres) was originally purchased by Dr. Karuppasamy for a total consideration of ₹ 6,83,000/- plus registration cost of ₹ 1,70,433/-. This land was converted as housing plots in the name of Subhamathi Nagar . One plot measuring 900 sq.ft. was sold to Shri Suresh for a consideration of ₹ 18,000/-. Subsequently this plot was purchased by Dr. Karuppasamy at same consideration on 12.11.2006. The land measuring 4.68 acres out of 5.89 acres was transferred to the assessee. 3.1 As on 1.1.2007, the assessee claimed to have converted this asset (land) into business asset and valued the stock at the rate of ₹ 125/- per sq.ft. According to the assessee, this is the market value of housing plots at the time of conversion. But the assessee claimed it to be an agricultural land and hence did not offer capital gain u//s.45(2) of the Act. The first transaction of plotted land i.e. to Sri L.S.Suresh occurred in 1.6.2005. 3.2 The no objection certificate (NOC) from the Tahsildar for development of the land into plots was obtained on 18th Dec., 2006, subsequent to the transfer of land to the assessee. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ital gains and the business income. Against this, the assessee is in appeal before us. 5. We heard both sides in detail and gone through the orders of the lower authorities, the arguments of the parties as well as the various decisions relied on by them. 6. The crux of the arguments advanced by the assessee in the present case is that the lands sold by him were shown as agricultural land in revenue records. The Hon ble Gujarat High Court in the case of CIT vs. Sarifabibi Mohamed Ibrahim (136 ITR 621) has held that, the fact that the 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 a an agricultural land. However, this would raise only a prima facie presumption and the said presumption can be destroyed by other circumstances pointing to the contrary conclusion. This legal proposition highlighted by the Hon ble Gujarat High Court has been later upheld by the Hon ble Supreme Court in the case of Sarifabibi Mohamed Ibrahim vs. CIT (204 ITR 631). It is also to be seen that the question, whether a particular land is agricultural or not, is basically a question of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or one or other reason, an assessee may not be carrying on agricultural operations for one or two years, he might be carrying on agricultural operations for all the years in a consistent manner. In such cases, it is not possible to hold that non carrying on agricultural operations for one or two years permanently changes the character of the land. 9. But, here the case is still different. The assessee has not been carrying on agricultural operations for so many years continuously and consistently. It is not a case of intermittent stoppage of agricultural operations. It is a case of permanent stoppage of agricultural operations in the light of real estate development taking place in the particular area. Therefore, by virtue of not carrying on agricultural activities for a quiet long time in the past, the character of the land occupied by the assessee has been naturally converted into a non-agricultural land. 10. In this regard, we have to apply our mind to one more vital question, whether the assessee was carrying out agricultural operations or not. The case of the assessee in the present case is that not even at the time of sale of these parcels of land, the assessee had been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et . Further, the assessee has converted it into stock-in-trade and also the assessee during the financial year 2006-07, obtained NOC from Tahsildar, Sriperumpudur on 18.12.2006 and applied for plot approval from Chengalpet local authorities in the month of January,2007. The assessee received said approval for converting his land into housing plots on 06.02.2007 from Deputy Director of Urban Development and housing plot was developed and sold by assessee. 14. When the basic nature of the land itself found to be nonagricultural, the arguments regarding status of the property, whether within metropolis or outside the limit of the metropolis, is irrelevant. A non-agricultural property, whether inside the municipality or outside the municipality or even in a remote village is a capital asset or stock-in-trade and transfer of the same may generate income liable for capital gains taxation or business income as the case may be. 15. Regarding fixing the value as on 01.01.2007 by the CIT(A) at ₹ 53/- per sq. ft., which is based on the sale incidence of the property situated at Novaloor village located next to Nattarasampattu village vide Sale deed June, 2007 for 23,100/- per c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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