TMI Blog2017 (6) TMI 1122X X X X Extracts X X X X X X X X Extracts X X X X ..... (Appeals) on this point and restore the order of the Assessing Officer. - Decided in favour of revenue. - ITA No. 2496/Mds/2016, CO No. 172/Mds/2016, And CO No.173/Mds/2016 - - - Dated:- 26-4-2017 - SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER, AND SHRI DUVVURU RL REDDY, JUDICIAL MEMBER For The Appellant : Shri Shiva Srinivas, JCIT, D.R For The Respondent : Shri Samarendra Kumar Behera, FCA ORDER PER CHANDRA POOJARI, ACCOUNTANT MEMBER The appeals filed by the Revenue and the cross objections filed by different assesses are directed against the orders of the Commissioner of Income-tax (Appeals) for the assessment year 2012-13. 2. The only ground in Revenue s appeal is with regard to the finding of the CIT(A) that the land sold by the assessee is an agricultural land, thereby deleting the long term capital gains without giving proper opportunity to the Assessing Officer to counter the argument of the assessee. The Cross objections filed by the assesses are in support of the order of the CIT(Appeals). 3. Since the issue in Revenue s appeal is common, the facts as narrated in ITA 2496/M/16 are reproduced here. The AO noticed that the assessee along with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... note that a mere wild or spontaneous growth of trees, not involving the employment of any human labour or skill for raising them could not be agricultural income. The CIT(Appeals) further observed that in order to come in the category of agricultural land, according to the AO, the land can be said to be either actually used or meant to be used for agricultural purpose. The essential requirement for an agricultural land is that there should be cultivation of land in the sense of feeling the land, sowing the seeds, planting and similar work on the land itself. If there is neither anything in its condition, nor anything in the evidence to indicate that the intention of its owner or possessor so as to connect it with an agricultural purpose, the land could not be agricultural land. The CIT(Appeals) observed that according to the AO the VAO certificate indicates that eucalyptus trees were around 300 standing on the land. And on imagination came to a conclusion that on subsequent period VAO has not certified whether the trees are grown, or available in the said land. The Authorized Representative contended by written submission stating that the agricultural land measuring 8.30 acres com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tified area by the state or central government. The AO has mentioned that from 19.7.2011 the Government of Tamil Nadu has notified municipality administration and extended Chennai city municipal Corporation Limit. The same was further revised by GOMS No.......dated 12.09.2011 and accordingly, the Chennai city municipal Corporation Limit was not extended upto Uthandi Village on ECR Road. The assessee produced before him various government records to support his contention that the land in question is beyond 8 kms from the Chennai city municipal Corporation Limit. The AO disregarded the reports and certificates given by the Government Authority and stepped into the shoes and deputed Inspector to physically measure the distance. The Inspector travelled a motorable road in a car and gave his report that the distance between the Uthandi village boundaries end at the beginning of Kannathur Village which comes immediately after the toll plaza, Uthandi, from this place, the land is located at a distance of 7.2 kms. The assessee contended before the CIT(Appeals) that the Inspector is not the person who can measure the distance correctly because the Inspector will not be familiar with the Ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... situated in Rural area. The above referred land is situated at Kovalam panchayat union office, i.e. block development office Thiruporur there is no municipality office The population in this area is approximate 8500 person The above referred land is situated at a distance of 13 km from the local limits of Thiruporur panchayat union. In view of the above, the CIT(Appeals) treated the agricultural land in question as agricultural land and observed that as per sec.2(14)(iii) of the Act, sale proceeds of agricultural land are exempt under the Income-tax Act. Accordingly, the CIT(Appeals) directed the AO to delete the addition made for ₹ 11,760/- by treating agricultural income as other source. Against this, the Revenue is in appeal before us. 11. We have heard both the parties and perused the material on record. The learned D.R contended that the Assessing Officer has treated the properties as non-agricultural, after conducting extensive enquiries. The Assessing Officer had collected the details from the Tahsildar through enquiries u/s.133(6). The Tahsildar vide his letter in 3/2014 stated that there is no agricultural activities carried out in the said land for p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iled by the Revenue be dismissed. 14. The Revenue has relied on the decision of the Hon ble Supreme Court in the case of Sarifabibi Mohamed Ibrahim vs. CIT (204 ITR 631) to hold that the properties sold by the assessee were not agricultural in nature. He has also relied on the decision of the Income-tax Appellate Tribunal B Bench, Chennai rendered in the case of M/s. Pallava Resorts P. Ltd. in ITA No.794/Mds/2011dated 11.10.2012. 15. The A.R has relied on the following decisions:- a) in the case of Mrs.Sakunthala Vedachalam Others Vs. ACIT in Tax case (Appeal) No.566 and 567 of 2013 of jurisdictional High Court. b) in the case of Byalappa Vs. State (Karnatka)(DB) in 1982 AIR (Karnataka) 99 and also c) in the case of Raja Benoy Kumar Sahas Roy in 32 ITR 466(SC) d) in the case of CIT Vs.K.E.Sundara Mudaliar And Ors. On 02.2.1050 e) in the case of Mrs. Sakunthala Vedachalam Vs. ACIT 6th August 2014- Madras High Court f) in the case of DECIT vs. Late Dr.N.Rangabashyam (rep. by wife Mrs.Chitralekha)- ITAT Chennai B Bench on 10thNovember, 2016. g) in the case of Pavadai Pathan Vs. Ramaswami Chetty AIR 1922 Mad. 351. 16. We heard both sides in detail an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al activities were carried out in that area. The assessee as well as the owners of surrounding properties was not in fact carrying on any agricultural activities. The letter given by the Tahsildar is very important. He has stated the reasons as to why the agricultural activities were not being carried out on those properties. Because of urbanization, the properties being in the peripheral of Chennai Metropolis, real estate development has started taking place in that area as well. A lot of private and commercial buildings are constructed. Because of the boom of the real estate development, the entire contingent of that land has become subject matter of transactions intended for the purpose of real estate development. In that background no agricultural activities were being carried out in that area. The case of the assessee is also not an exception. 19. The letter given by the Tahsildar has categorically established the finding of the Assessing Officer that the lands sold by the assessee in the previous year relevant to the assessment year under appeal were not agricultural land. The past history of the land alone is not the deciding factor. Once upon a time the land might have b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctly applicable to the present case, it shows, if circumstance so permits, the frivolousness of the arguments usually made by the assessees that they have carried on agricultural activities by planting casuarina. 22. In the context of agricultural operations, it is necessary to see that the agricultural operations carried on by the assessee must be activity of economic gain. It must generate meaningful income to the person who is carrying on agricultural activities. If the agricultural activities carried on by the assessee as a hobby or casual or incidental, it is very difficult to hold a view that the land is agricultural in nature. India is pre-dominantly an agricultural economy where agricultural activities are major part of economic activities of our country. Therefore, the activities carried on by the assessee must be meaningful and result-oriented towards generating reasonable income from such operations. As far as the present case is concerned, there was no such economic utilization of the land for earning income by carrying on agricultural operations. 23. It is, in this context that we have to refer the arguments of the assessee that the assessee had reported agricult ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar relevant to the assessment year under appeal for a consideration of ₹ 11,66,00,000/- were not agricultural in nature, but, on the other hand, they are non-agricultural land. Therefore, it definitely comes under the category of capital asset . Accordingly, the gains arising out of transfer of that capital asset is exigible to capital gains tax. 27. 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 and transfer of the same may generate income liable for capital gains taxation. In the facts and circumstances of the case, we set aside the order of the Commissioner of Income-tax(Appeals) on this point and restore the order of the Assessing Officer. 28. Now, we will consider the cross-objections filed by the assessee. The cross-objection No.172/Mds/2016 173/Mds./2016 are filed in support of the order of Ld.CIT(A) and not raised any ground seeking any further relief from Tribunal. In view ..... X X X X Extracts X X X X X X X X Extracts X X X X
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