TMI Blog2016 (5) TMI 1517X X X X Extracts X X X X X X X X Extracts X X X X ..... aring khasra Nos. 370 situated in village Vimalpura Tehsil Sanganer District Jaipur for converting the said land into farm houses. On perusal of the JDA s order, it is stated therein that in the village area, constructing farm houses is permissible and there is no need for land conversion and accordingly, the appellant s application for surrender of agricultural land was accepted by JDA u/s 90-B(6) whereby the land shall vest with JDA with effect from date of passing of such order. Similarly, there is another order of JDA bearing order no. 21/2007 dated 26.04.2007 in respect of land bearing khasra Nos. 371 situated in village Vimalpura Tehsil Sanganer District Jaipur for converting the said land into farm houses. The ld AR has submitted during the course of hearing that JDA has issued similar orders in respect of other parcels of lands whereby the appellant has applied for conversion of agricultural land into farm houses and it was ordered by JDA that there is no need for land conversion for farm houses. The Revenue has not brought any evidence to controvert the above orders of JDA. Appellant has moved an application for land conversion under section 90-B of land Revenue Act for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder in assuming that the possession of the impugned lands was given on 02.04.2009 when advance payment of approximately 5% of the total sale consideration i.e. ₹ 10 lakhs by cheque No. 90161 was received. (4) The ld. CIT(A) has passed a perverse order in ignoring the fact that the receipt of ₹ 10 lakhs vide cheque No. 90161, as mentioned on page 2 of the stated agreement dated 2.4.2007 was incorrect as the said cheque was encashed only on 2.5.2007 even as per the details furnished by the assessee. (5) The ld. CIT(A) has passed a perverse order in further ignoring the fact, also mentioned in the registered sale deeds, that for purpose of change of land use under sec. 90B the ownership/possession of the land had to vest with the owner(s). (6) The order of the Ld.CIT(A) is perverse in accepting the date of possession as on 2.4.2007 only on the basis of the content of page-2 of the sale agreement dated 6.4.2007, mentioning that the buyer can commence building work immediately. (7) The ld. CIT(A) has passed a perverse order in equating the statement in agreement of the purchaser being enabled to commence construction work, as amountin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t any kind of improvement in the land so as to be able to use the land for non-agricultural purposes or sell the same at a higher price. 2.3 Ld AR further submitted that during the course of assessment proceedings the assessee filed a copy of a letter dated 24.06.2010 of the SDO, Jaipur before the Assessing Officer wherein he has clearly mentioned that the agricultural land sold by the assessee in village Vimalpura, Tehsil Sanganer, District Jaipur was agricultural land and is situated beyond 8 Kms. from the municipal limits. 2.4 Ld AR further submitted that there is no dispute about the fact that the agricultural land in question is lying in an area beyond 8 Kms of the municipal limits as is coming out of the assessment order passed by the AO u/s 143(3) on 30.12.2010. The only controversy is that the AO was of the view that the agricultural land in question was not agricultural land on the date when conveyance deeds were registered with the Sub-Registrar, Sanganer. In other words, the Ld. AO has alleged the transfer of the subject land took place only after conversion of the land use u/s 90-B of Land Revenue Act and therefore, the same is taxable as capital ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... greement is not such as where the owner retains his control and ownership over the land. Till the date of sale the land was categorized as agricultural land in land records. Copies of land records Girdawari and Jamabandi were filed before the Assessing Officer in the course of assessment proceedings. 2.9 Ld AR further submitted that as per terms and conditions set out in the agreement for sale the assessee allowed / handed over complete physical possession and full control over the land to the buyer on 02.04.2007 as owner of the land in his own right and the assessee (seller) stood divested of its proprietary rights on 02.04.2007. Both the parties agreed to it. Further the assessee was required to execute formal conveyance deeds within 4 months of execution of the agreement of sale dated 02.04.2007 and the buyer Shri Ashok Agarwal was given all rights to develop the land or / and start construction over the agricultural land on his own behalf and not for and on behalf of the assessee. He could also continue to use the land for agricultural purposes if he so desired. There being no forfeiture or termination clause, the execution of agreement gave complete control and auton ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rence to the decision of the Amritsar bench of Tribunal in the case of Max Telecom Ventures Ltd. Vs. ACIT (2008) 114 ITD 46 (ASR) held as under: Section 45 provides that any profits or gains arising from the transfer of a capital asset effected in the previous year shall, save as otherwise provided in sections 54, 54B etc., to chargeable to income tax under the head Capital Gains , and shall be deemed to be the income of the previous year in which the transfer took place. The expression transfer used in the said section is transfer in relation to a capital asset and not sale of capital asset. Sale is not the only mode of transfer of a capital asset for the purpose of capital gain under the Act. Section 2(47) defines the expression transfer in relation to a capital asset. A bare reading of the said section would show that expression transfer used in the Act has much wider meaning and connotation and the same is not only confined to sale. It extends and covers many other situations for the purpose of capital gains under the Act. Nowhere, the section says that definition of transfer shall be as per the definition of sale under the Sale of Goods Act, 1930. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee, or by any other name) or a cantonment board and which has a population of not less than ten thousand according to the last preceding census of which the relevant figures have been published before the first day of the previous year ; or (b) in any area within such distance, not being more than eight kilometres, from the local limits of any municipality or cantonment board referred to in item (a), as the Central Government may, having regard to the extent of, and scope for, urbanisation of that area and other relevant considerations, specify in this behalf by notification in the Official Gazette;] 2.17 The capital gain arising on sale of agricultural land was claimed to be exempt as the agricultural land being not a capital asset at all. The following two conditions attracting provisions of section 2(14)(iii) are cumulatively satisfied and were existent in the case of the assessee. (i) The land in question is agricultural and (ii) The land sold by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent from the order of JDA. Thus the character and nature of the land in question was agricultural throughout for decades till the land was held by the assessee. Order u/s 90B has no impact so far as assessee is concerned. It is not a relevant factor that after sale the buyer used the land for non-agricultural purpose. 2.22 For the sake of argument it is submitted that even if the agricultural land was sold by the assessee after passing of order u/s 90B then too it does not advance the case of the department. The assessee is agriculturist and is actively engaged in agriculture. Its only source of income is agriculture. A part of the sale consideration was utilized in residential house and major part of the same was spent in purchase of agricultural land. Immediately after receipt of sale consideration the assessee purchased new agricultural land. The conduct of the assessee proves beyond doubt that he never wanted to exploit the land for non-agricultural purposes. 2.23 It was further submitted that the onus is on the department to prove that the land is not agricultural. The AO has not discharged his burden that lay on him. Reliance is placed on Gemini Pictures C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was agricultural till it was held by the assessee. 2.25 The Ld. CIT(A) has deleted the addition so made by the AO and his findings are at Page 9-12 of his order which are reproduced as under- In the light of the above factual and legal position, my observations cum finding in this regard are as under:- i. The undisputed facts of the issue under consideration are that the land was of agricultural land in nature and same was situated beyond 8 KM from the municipal limit. Accordingly prima facie the sale consideration of such land is not subjected to the capital gain aspect, as provided u/s 45 of the IT Act. ii. The contract for sale was effectuated on 02.04.2007 and the land possession was given to the buyer on the same date after receiving the part sale consideration in this regard. Thus, the above conducts on the part of the buyer and seller fall under the category of part performance as described under the T.P. Act and also covered as a transfer of capital assets, as enumerated u/s 2(47)(iii) of the Act. In other words, for all legal and practical purposes the agricultural land was transferred to the buyer as on 02.04.2007 only. i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons, i.e. 2(14), 2(47), 45 of the IT Act and Sec. 53A of T.P. Act, clearly manifest that the relevant and material date of transfer in the present case would be 02.04.2007 only and not the date of registration of the sale deed as such. vi. Here is also pertinent to note, as also pointed out by the Ld. AR that even while converting the land uses by the competent authority of JDA, only the surrender of the land was admitted u/r 90B and not the change of uses of land as the same was to be converted in small farm houses, which was considered as agricultural activity by such authority. In view of the same, the main contention of the AO also falls flat as eventually the land remained the agricultural land only even after the conversion of the same, as discussed above. vii. Regarding the actual date of transfer of capital assets, involving the similar facts, the Hon'ble Kerala High Court in the case of M.D. Joseph (187 ITR 112) held that in a case of outright sale of an assets, the actual date of transfer of a capital assets would be effective from date of agreement only and not the fulfillment of all the relevant terms and condition of such agreement. As stated a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsideration. In our view, the fundamental issue that arises for consideration is what is the nature of land which has been transferred and more particularly, whether there is change of land use from agricultural to non-agricultural by the order of JDA u/s 90B of Rajasthan Land Revenue Act, 1956 and it is not the agricultural land but non-agricultural land which has been transferred. If the answer to the above is in affirmative, the next question that arises is determination of date of actual transfer ie, whether the date of transfer should the date of agreement to sell i.e, 02.04.2007 when the appellant claim that it parted with the possession and control of the agricultural land and the buyer was put in possession with all rights of ownership and control over the agricultural land and thus the same results in a transfer under section 53A of the Transfer of property Act which is a recognised form of transfer under section 2(47)(v) of the Income Act. Alternatively, as claimed by the Revenue, the date of transfer should be the date when the registration of the sale deed was completed on 28.04.2007 and onward, after the conversion of the land u/s 90B of the Rajasthan Land Revenue Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch land, with the intention of developing such land or housing, commercial , institutional, semi -commercial, industrial, cinema or petrol pump purposes or, for the purpose of multiplex units, infrastructure projects or tourism projects, or for such other community facilities or public utility purposes, as may be notified by the State Government, the Collector or the officer authorized by the State Government in this behalf, shall upon being satisfied about the willingness of each person, order for termination of rights and interest of such person in the said land and order for resumption of such land. (4) The proceedings in the matter shall be conducted summarily and shall ordinarily be concluded within a period of six days from the first date of hearing specified in the notice served under sub-section (2). (5) where, after hearing the parties, the Collector or the officer authorised by the State Government in this behalf, is of the opinion that the land is liable to be resumed under sub-section (1), he shall after recording reasons in writing, order for termination of rights and interest of such person in the said land and order for resumption of the said lan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d into farm houses. The ld AR has submitted during the course of hearing that JDA has issued similar orders in respect of other parcels of lands whereby the appellant has applied for conversion of agricultural land into farm houses and it was ordered by JDA that there is no need for land conversion for farm houses. The Revenue has not brought any evidence to controvert the above orders of JDA. 2.33 In light of above, it is clear that the appellant has moved an application for land conversion under section 90-B of land Revenue Act for conversion of agricultural land into farm houses and as per the orders of the JDA, constructing farm houses is permissible on agriculture land and there is no need for land conversion. Given that there is no conversion of agriculture land as confirmed by JDA, being the appropriate authority under land Revenue Act, what has been transferred by the appellant continues to be the agriculture land. 2.34 Undisputedly, the said agricultural land in question is lying in an area beyond 8 Kms. of the municipal limits. Once it is held that the agriculture land has been transferred which is lying in an area beyond 8 Kms. of the municipal limits ..... X X X X Extracts X X X X X X X X Extracts X X X X
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