TMI Blog2019 (11) TMI 1562X X X X Extracts X X X X X X X X Extracts X X X X ..... espondent : Smt. Ranu Biswas, Addl. CIT, D/R, ORDER Per J. Sudhakar Reddy, AM :- This appeal filed by the assessee is directed against the order of the Learned Commissioner of Income Tax (Appeals) 13, Kolkata, (hereinafter the ld.CIT(A) ), passed u/s. 250 of the Income Tax Act, 1961 (the Act ), dt. 15/01/2018, for the Assessment Year 2011-12. 2. The assessee is an individual. He filed his return for the Assessment Year 2011-12 on 07/02/2019, declaring total income of ₹ 4,72,220/-. The Assessing Officer, during the course of hearing, found that as per the AIR information available with the Additional District Sub-Registrar (ADSR), Haripal, P.O. Khamarchandi, Hooghly, W.B. 712405, the assessee, in his capacity, as the partner of the firm M/s. Shree Annapurna Oil Mills of 56, Kali Krishna Tagore Street, Kolkata, entered into two sale agreements of capital assets being land and building with M/s STP Ltd. of 6, Lyons Range, Kolkata for consideration of ₹ 2,32,55,910/- and ₹ 56,70,924/-. A requisition u/s 133(6) of the Act, was sent to the ADSR and copy of documents/sale deed of the land was obtained. 2.1. The Assessing Officer at para 5 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 19, it is stated as follows:- Total transferred in nine L.R. Dags measuring 425 (Four Hundred twenty five) satak (more or less) which delineated with Red line border in the annexed plan with a building area measuring 5098 Sq.ft. with easement rights of path and passage alongwith with easement right to obtain Electricity line, Water line, Telephone line, Gas Line etc. on path and passages. In reply to a further showcause notice dt. 07/03/2014, the assessee submitted as follows:- a) The agricultural lands were purchased by the partnership firms as investment and this partnership firm had never applied for a Permanent Account No. (PAN). Books of accounts and further documents were produced. b) The said land was used for agricultural purposes by one, Shri Satish Murmu, who was recorded as Burgadar of the aforesaid land. The said, Satish Murmu, carried out agricultural operations in consideration of undertaking that he would look after the lands for and on behalf of the partnership firm. A copy of the certificate dt. 26/08/2010 issued by Pantra Gram Panchayat , was furnished. c) The Assessing Officer concluded that the submissions of the assessee was self-contradi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. Whether the land was classified in the revenue record as agricultural and whether it was subject to the payment of land revenue? 2. Whether the land was actually or ordinarily used for agricultural purposes at or about the relevant time? 3. Whether such user of the land was for a long period or whether it was of a temporary character or by way of a stop-gap arrangement? 4. Whether the income derived from the agricultural operations carried on in the land bore any rational proportion to the investment made in purchasing the land? 5. Whether the permission under section 65 of the Bombay Land Revenue Code was obtained for the non-agricultural use of the land? If so, when and by whom (the vendor or the vendee)? Whether such permission was in respect of the whole or a portion of the land? If the permission was in respect of a portion of the land and if it was obtained in the past, what was the nature of the user of the said portion of the land on the material date? 6. Whether the land, on the relevant date, had ceased to be put to the agricultural use? If so, whether it was put to an alternative use? Whether, such cesser and/or alternative user was of a permanent or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on this ground and held that the capital gain is taxable only in the hands of the partnership firm M/s. Shree Annapurna Oil Mills. He thereafter directed as follows:- Considering the facts narrated above and submission of the appellant and evidences examined during the course of appellate proceedings the additions made in the hands of the partners is here by deleted and the AO is directed to tax the same in the hands of the Firm. Keepin in view of the aforesaid observation made in the foregoing paras, the addition made in the hands of the appellant is hereby directed to be deleted and the AO is directed to re-open the case and tax the same in the hands of the firm. As regards the applicability of section 50C is concern it is held that the AO has rightly applied the provisions as its character was not agriculture land as it is held in the decisions of the Hon ble Rajasthan High Court in the case of Mahaveer Enterprises vs. UOI [2001] 244 ITR 789/[1997] 95 Taxman 220. 5. Aggrieved, the assessee is in appeal before us on the following grounds:- 1. That, on the facts and in the circumstances of the case, the Ld. Commissioner of Income Tax (Appeals) - 13, Kolkata erred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the subject land was agricultural land and therefore the Capital Gains on sale thereof is not liable to be taxed. The ld. Counsel for the assesee refers to the certificate issued by Gram Pradhan, Pantra Gram Panchayat placed at Page 62 of the Paper Book, wherein the Gram Pradhan has certified that the subject land was agricultural land as per the records of Block Land Revenue Officer (BLRO). He also certified that the said land was being cultivated by one recorded Bargadar Sri Satish Murmu and his son and that there was no municipality or Development and Cantonment Board within 8 Kms. from the said agricultural land. He also certified that the said land was recorded as agricultural land when the same was sold by M/s STP Ltd. He referred to the impugned assessment order wherein the Ld. AO made enquiry through his Inspector who himself visited the office of the Building, Land Revenue Officer at Haripal, Hooghly on 28.02.2014 to enquire about the nature, location type of the subject land. The Land Revenue officer confirmed that the said land was converted into Industrial Land by the purchaser i.e. M/s STP Ltd. to whom the land was sold by the assessee. He relied on this st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cipality as per the Central Government s Notification dated 28.12.1999. Hence, respectfully following the precedent, we hold that the land in question, which was transferred by the assessee, was an agricultural land and it did not fall within the ambit of capital asset under section 2(14) of the Income Tax Act. Accordingly we confirm the order of ld. CIT(Appeals). 6.1. The ld. Counsel of the assessee submitted that the land purchased by the firm was registered as agricultural land in the revenue records at the time of purchase and continued to be same when the land was sold. The land was situated in an area which is beyond 8 Kilometres from any municipality and/or cantonment Board. Thus the said land was not a capital asset within the meaning of section 2(14) of the Act. The conversion of land from agricultural to industrial subsequently by the buyer of the land will not have any adverse effect on its chargeability or otherwise in the case of the seller of such land. The area was not notified for urbanisation in the latest Notification No. 11186 dated 28.12.1999 issued by the Central Government. Therefore the gain arising on sale of the same cannot be charged to capital gains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... germane from the appeal before him. He argued that the Ld. CIT(A) exceeded his jurisdiction by issuing directions to the AO to initiate 147 proceedings in the case of the partnership firm who was not a party before him. He submitted that the action taken by Ld. AO in pursuance to the impugned directions contained in the order passed by Ld. CIT(A) be directed to be illegal and void ab initio. 7. The ld. D/R, controverted the submissions of the assessee and relied on the order of the Assessing Officer as well as the ld. CIT(A) and argued that the land in question is not agricultural land. He referred to the report of the inspector deputed, the facts narrated therein, the enquiries made by the Assessing Officer and the recitals in the sale deeds, which was brought out by the Assessing Officer in his assessment order. He argued that the land in question was never used for agricultural purposes, nor was purchased with an intention for being used for agricultural purposes. He pointed out that all the surrounding areas were industrial plots and the assessee s land even had an industrial shed. He took this Bench through the order of the Assessing Officer and the ld. CIT(A) and prayed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is no rebuttal coming from the department that the land in question has ever been converted from agricultural to non-agricultural use at any point of time before the sale in question. The state government s revenue records strongly support the assessee s case rather that its lands are very much agricultural in nature. The Assessing Officer tried to apply performance test that for determination of land in issue what is required to be shown is connection with the agricultural purpose is the use and not the mere possibility of the land user by some possible future owner for agricultural objects. We see no merit in the impugned reasoning. The legislature makes it clear that agricultural lands beyond 8 Kms. from the local municipality etc.; as the Central Government may, having regard to the extent/scope for urbanisation and other consideration, specifically in the behalf..... (ii) Naiyer Sultan v. ITO [2019] 106 taxmann.com 191 (Kol ITAT) 7. We have considered the rival submissions on this issue and also perused the relevant material available on record. During the year under consideration, land owned jointly by both the assessees in the present case was sold and the gain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer regarding the location of the land being situated at about 3 Kms. from the Chennai Metropolitan area thus was vague and irrelevant to decide the issue relating to the exemption claimed by the assessees in respect of gain from the sale of their land .. (iii) Pr. CIT vs. P. S. Raghupathy [2018] 96 taxmann.com 200 (Mad) In this case the assessee sold a piece of land and claimed that the land was an agricultural land recorded in Revenue records and the same was situated beyond 8 K.M from the nearest municipality. The Hon ble Madras High Court held and observed as under: 18. Mr. T.R. Senthil Kumar, emphatically argued that the Assessing Officer arrived at his finding based on the fact that the land in question had been classified in the records of the Sub Registrar Office as revenue land. However, as would appear from the order of the assessment itself, it was classified as agricultural land in the revenue records. Even otherwise, the learned Tribunal had looked into the relevant materials including the revenue records, as also records which indicate that the respondent assessee ran a Nursery. 19. The learned Tribunal was of the view that whether there was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Madhukumar N. (HUF) (cited supra) 50. Further, we make it clear that when the land which does not fall under the provisions of section 2(14)(iii) of the IT Act and an assessee who is engaged in agricultural operations in such agricultural land and also being specified as agricultural land in Revenue records, the land is not subjected to any conversion as non-agricultural land by the assessee or any other concerned person, transfers such agricultural land as it is and where it is basis, in such circumstances, in our opinion, such transfer like the case before us cannot be considered as a transfer of capital asset or the transaction relating to sale of land was not an adventure in the nature of trade so as to tax the income arising out of this transaction as business income. (vi) CIT vs. Siddharth J. Desai[1982] 10 Taxman 1 (Guj) = [1983] 139 ITR 628 (Guj) Held 1. Several factors are relevant and are weighted against each other while determining the true nature and character of the land. The major factors which are considered as having a leaning on the determination of the question are as follows : a. whether, the land was classified in the revenue record as agric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts and findings recorded by the Tribunal, it was obvious that not only the physical characteristics of land, in the instant case, but the user also was agricultural. Even though the land was not actually put to agricultural use since about one year prior to the sale, there was no evidence to establish that it was converted to any other use. The fact that permission under section 63 of the Bombay Tenancy and Agricultural Lands Act was obtained by the assessee to sell the lands to the society for residential purposes would not, militate against the land continuing to be agricultural on the date of its sale, as the permission was obtained only about two and a half months prior to the sale. Therefore, till the land was held by the assessee its character as agricultural land was not changed either as a result of its reclassification in the revenue records or by the actual alteration of its use. Again, there was no evidence on record to show that there was any development in the surrounding area or that the land itself was developed prior to its sale. The land was located on the outskirts of the village but it was not situate in the municipal limit. The land must, therefore, be taken as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is adjacent to the GHMC limits. And also that is happens to be a hub of major economic activity including aviation sector. We find no merit in the latters stand based on the lower authority's respective findings. We make it clear first of all that there is no rebuttal coming from the department that the land in question has ever been converted from agricultural to non-agricultural use at any point of time before the sale in question. The state government's revenue records strongly support the assessee's case rather that its lands are very much agricultural in nature. The Assessing Officer tried to apply performance test that for determination of land in issue what is required to be shown is connection with the agricultural purpose is the use and not the mere possibility of the land user by some possible future owner for agricultural objects. We see no merit in the impugned reasoning. The legislature makes it clear that agricultural lands beyond 8 Kms. from the local municipality etc.; as the Central Government may, having regard to the extent/scope for urbanisation and other consideration, specifically in the behalf. . DCIT v. P. Ashok Kumar ITA No.1581/Mds/20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as carried out on this land. Even if we accept the contention of the Revenue that no agricultural production was done by the assessee on this land, this mere fact will not take out the land out of the nomenclature of agricultural land . The assessee grows coconut on this land and the same are sold in the market and these receipts are treated as agricultural receipts by the Revenue. The assessee has also paid agricultural land tax and copies of the same were made available to the authorities. The land in question is situated in the revenue estate of a Village named Iyyappanthangal Panchayat which is situated more than 8 kms away from the limits of Alandur Municipality. We have found that the land has been agricultural land for the past many years and has been classified as such in the records of the revenue Department. The assessee has paid kist of ₹ 400/- each in respect of land on 30.1.2007 regarding fasli years 1413, 1414, 1415 and 1416. It was brought on record that this land was being cultivated by one local person, namely Shri Murugan, but for assessment years 2005-06 and 2006-07, agricultural operations were carried out by him, he could not get food returns and that is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /assessee did not carry out any agricultural operation did not alter the nature and character of the land. In any event, this discussion is not relevant in the backdrop of the clear finding given by the Tribunal that on the date of the purchase and as also on the date of acquisition, the land in question was agricultural land. Having come to such a conclusion, the Tribunal ought not to have gone into question of intention of the appellant/assessee and definitely not into the question of intention of the land acquiring authority, the latter being a wholly irrelevant consideration. PCIT v. Heenaben Bhadresh Mehta [2018] 96 taxmann.com 164 (Guj) 9. As observed hereinabove, the land was sold as an agricultural land and in fact, what was sold was agriculture land. What was the intention of the purchaser cannot be the determinative factor to treat the profit earned by the assessee on sale of agriculture land as business income. Similarly, merely because for whatever reason, the assessee has earned sufficient huge amount of profit also cannot be a ground to treat the profit earned by the assessee on sale of agriculture land as business income. M. Vijaya v. DCIT [2014] 49 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... man 1 (Guj) = [1983] 139 ITR 628 (Guj) 2. Having regard to the facts and findings recorded by the Tribunal, it was obvious that not only the physical characteristics of land, in the instant case, but the user also was agricultural. Even though the land was not actually put to agricultural use since about one year prior to the sale, there was no evidence to establish that it was converted to any other use. The fact that permission under section 63 of the Bombay Tenancy and Agricultural Lands Act was obtained by the assessee to sell the lands to the society for residential purposes would not, militate against the land continuing to be agricultural on the date of its sale, as the permission was obtained only about two and a half months prior to the sale. Therefore, till the land was held by the assessee its character as agricultural land was not changed either as a result of its re-classificanon in the revenue records or by the actual alteration of its use. Again, there was no evidence on record to show that there was any development in the surrounding area or that the land itself was developed prior to its sale. The land was located on the outskirts of the village but it was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Vatika Ltd. within a short span of time. The other case laws relied by the assessee is also squarely applicable. Therefore, we hold that the land sold by all the assessees are agricultural land and beyond 8 KMs from the municipal limits. Accordingly, we allow this ground of all the appeals. WTO vs. Premier Polymers Pvt. Ltd. WTA No.06/Kol/2012, Judgment dated 31.05.2012 (Kol Trib.) 4. We are unable to share the perception of the ld. D.R. Even though, there is no res judicata in tax proceedings, the principle of consistency must find its place. When the revenue authorities accept the position for one particular assessment year by not challenging relief granted to assessee in appeal, it cannot be open to them to challenge the same relief being granted in favour of the assessee by the CIT(A) in other years, or, for the purpose, in the case of other assessees as well. Hon'ble Supreme Court, in the case of Union of India Others -vs- Kaumudini Narayan Dalal and Another 249 ITR 219, had an occasion to consider whether it is open to revenue to accept a judgment in the case of one assessee, and appeal, against identical judgment, in the case of another assessee. Their L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period, was of the view that the deduction allowed under section 54F was liable to be withdrawn in assessment year 2015-16 in which three years had expired from the date of transfer. He accordingly directed the Assessing Officer to tax the capital gains of ₹ 77,94,104/- in the hands of the assessee for A.Y. 2015-16 by initiating the proceedings under section 147 of the Act. As submitted by the ld. Counsel for the assessee, the said direction given by the ld. CIT(Appeals) for A.Y. 2015-16, which was not in appeal before him while disposing of the appeal of the assessee for A.Y. 2013-14 is beyond his power and jurisdiction. Although the ld. D.R. has sought to justify the direction given by the ld. CIT(Appeals) by relying on sub-section (1) of section 150, we find that the said provisions is not relevant in the context of the powers of the ld. CIT(Appeals), since the said powers are governed by section 251 of the Act, which is relevant. In the case of R.S. Davey vs. - CIT [140 ITR 1035], a similar issue relating to scope of powers of first appellate authority had arisen for the consideration of Hon ble Calcutta High Court and it was held by the Hon ble Calcutta High Court that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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