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TMI Blog2016 (8) TMI 1458X X X X Extracts X X X X X X X X Extracts X X X X ..... the order dated 07-04-2014 of CIT(Appeals)-I, Nagpur, the Assessing Officer (AO)has filed the present appeal. Assessee-company, engaged in the business of construction, filed its return of income on 25-03-2013, declaring total income at Rs. Nil. The AO completed the assessment u/s.143(3) of the Act on 31-12-2013, determining its income at Rs. 2.78 crores. 2.First two grounds are about the nature of the plot of land sold by the assessee. During the assessment proceedings the AO found that the assessee had shown other income under the head Sale of land amounting to Rs. 2.78 crores that it had acquired a plot of land having an area of 2.55 hectors situated at village Dongargaon on 28-01-2010 for a consideration of Rs. 1.15 crores. He o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as an agricultural land, that it had not filed any return for the AY.2010-11,that it had not disclosed any income from the agricultural activities or had not claimed any expenditure against such income for the year under appeal,that the assessee did not have much of the independent funds to make investment. He issued a show cause notice on 25-10-2013 asking the assessee to explain as to why the STCG should not be considered as its income for the year under appeal. It filed a detailed reply in that regard. It relied upon the case of Jawahar Development Association(127ITR 431),Gurdial Naraindas & Co.(50 ITR 633), Raja Rameshwar Rao 42 ITR 179) and others. After considering the available material, the AO held that gain on acquisition o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uisition of the land in question the assessee company had not changed the basic agricultural character of the said plot of land, that the disclosure of the agricultural income in assessee's return of income was not a precondition for treating a piece of land as an agricultural land. It also referred to the certain documents issued by the Town Planning Department wherein it was stated that the said land was an agricultural land.It was further that the AO himself was not sure as to whether the gain arising from the capital acquisition was to be taxed under the head Business profession or capital gain, that the AO was under presumption that the assessee was in the business of real estate activities that his presumption was based on incorrect f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /Ind/2012-AY.2008-09) and held that the distance was to be measured through the approach road and not straight-line distance method. Finally he deleted the addition made by the AO. 4.During the course of hearing before us, the Departmental Representative (DR) relied upon the order of the AO and contended that the plot was within the distance of 8 kms. of the Municipal limits that it was not an agricultural land, that the assessee had treated it as stock in trade that the profit arising on account of sale of plot was to be assessed as business income. The Authorised Representative (AR) supported the order of the FAA. He referred to the Circular No. 17 of 2015 dated 06-10-2015, F.No. 279-Misc.-140-2015-ITJ and stated that letters of the Tal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al limits. The Circular No. 7/215 (supra)clearly stipulates that distance between the Municipal limits and agricultural land had to be measured having regard to the shortest road distance. In other words, the aerial distance has not to be considered for determining the distance between the Municipal limits and the plot of land and as per the road distance the plot was outside the limits of Municipal Corporation of Nagpur. We further find that the FAA has held that the transaction in land was an adventure in nature of trade. In our opinion the sale of agricultural land cannot be treated as an advenctur as the land was compulsorily acquired by NHAI. The plot of land, acquired by the assessee was an agricultural land and, therefore, was out of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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