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TMI Blog2016 (5) TMI 1517X X X X Extracts X X X X X X X X Extracts X X X X ..... e. Rs. 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 Rs. 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 amounting to actual handing over of the possession of the impugned lands and of the construction having been commenced with immediate effect, even before the change of land use. (8) The ld. CIT(A) ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 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 asset. 2.5 Ld AR further submitted that the said agricultural land was actually being used for agricultural purposes only by the assessee till the date of transfer which took place on 02.04.2007. The land was surrounded by agricultural land from all sides, where actual agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rther 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 autonomy over the agricultural land to the purchaser. Thus all the privileges of ownership were conferred on the buyer on 02.04.2007 as per terms of agreement / contract dated 02.04.2007. 2.10 Ld AR further submitted that till 31st March, 1987, in the absence of a registered conveyance deed if the owner of an immovable proper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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." The ITAT referred to cases of CIT Vs. Tata Iron and Steel Co. Ltd. (1994) 206 ITR 196 (Bom.) and K.N. Narayanan Vs. ITO (1988) 173 ITR 61 (Ker.). The ratio laid down by the ITAT in the case of Max Telecom Ventures is applicable to the case of the assessee and consequently the transfer took place on 02.04.2007 when the agreement for sale had been entered into. 2.14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 assessee is beyond 8 Kms. of the municipal limits. 2.18 A photocopy of letter dated 29.12.2010 of Shri Ashok Agarwal addressed to the assessee in response to assessee's letter was filed before the ld. AO in the course of assessment proceedings. The contents of the said letter clearly indicate that the assessee sold agricultural land to him and whole of expenditure on conversion and development was made by him. 2.19 It was further submitted that the intention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se 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 Circuit (P) ltd. Vs. CIT (1981) 130 ITR 686 (Mad.) wherein it was held that onus is on the department to prove that land is non agricultural or that it forms part of business assets. Once the assessee proves that the land is agricultural land the burden of proving that it is not agricultural land is on the revenue. In support of its various submissions contentions and pleas the assessee relied on the following judicial decisions. In case of Gordhanbhai Kahandas Dalwadi Vs. CIT [1981] 127 ITR 664 (Guj.), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. iii. Sec. 53A of T.P. Act applies in a case where the transfer of property has been effectuated by transferee, in pursuance of a contract, has taken the possession of the property and part/full payment has been made, in this regard. Under such circumstance, the transfer of such property is deemed to be completed for Income Tax purposes, even if the transfer is not completed in the manner as prescribed in the relevant law, i.e. the non-registration of such sale deed etc. This is an admitted fact that in the present case also the sale of agreement was made on 02.04.2007 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 above in the present case also the agreement for sale was made for an outright sale of the land as such. While applying the same ratio, in the instant case of the date of agreement was 02-04-2007 and in accordance to the same, the transfer of the land was effectuated on 02-04-2007 only. Thus the nature of the transaction has to be decided, based on such factual aspect. Since as on 02-04-2007 the land was purely and agricultural land, therefore, the same was an exempted capital assets u/s. 2(14) of the IT Act. viii. The assessing officer had not considered the issue in its true perspective. The nature and character of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, 1956. 2.28 As per the AO, the registration of the sale deeds of various parcels of land was done on 28.04.2007 and on subsequent dates, after the conversion of the land u/s 90B of the Rajasthan Land Revenue Act, 1956. Accordingly, the AO was of the opinion that since the use of the land has been changed from agricultural land and the registration of the sale deed was executed after such development, therefore, the land ceases to be agricultural land, thus, amounts to capital asset and subjected to the capital gain tax. 2.29 As per ld AR, the stipulations made in the agreement for sale with reference to the facilitation of the conversion of land in sm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ily 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 land. (6) The land so resumed under sub-sections (3) and (5) shall vest in the State free from all encumbrances and shall be deemed to have been placed at the disposal of the concerned local authority under section 102-A of this Act with effect from the date of passing such order. Provided that the land surrendered under sub-section (3) above, shall be made available to the person, who surrenders the land, for its planned development in accordance with the rule, regulation and bye-laws applicable to the local body concerned (for housing, commercial institutional, semi-commercial, industrial, cinema or petrol pump purposes, or for the purpose of multiplex units, infrastructure projects or tourism p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here 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, it is of no consequence from tax point of view whether the date of transfer should be the date of agreement to sell i.e, 02.04.2007 or the registration of the sale deeds of various parcels of land done on 28.04.2007 and on subsequent dates falling within the same financial year, as the agriculture land will fall outside the definition of capital asset under Sec. 2(14)(iii) of the Act and we are not inclined to examine the same and other related grounds raised by the Revenue as the same have become infructious. 2.35 In the entirety of facts and circumstances of the case, we are of the considered view that the impugned agricultural land, not being a capital asset under Sec. 2(14)(iii) of the Act, provisions of section 45 of the Act are not att ..... X X X X Extracts X X X X X X X X Extracts X X X X
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