TMI Blog2022 (8) TMI 249X X X X Extracts X X X X X X X X Extracts X X X X ..... not be stretched to include the word 'aerial'. As per the Certificate of the Tahasildar produced before the Assessing Officer and PWD Engineer's Certificate produced before the CIT(A), the distance between the lands in question and BBMP is more than 8 kms. Therefore, Shri. Sanmathi's contention with regard to the distance from the Municipal area fails. Conversion of land - as argued admittedly, the lands have been converted and Tribunal was not justified in holding them as agricultural lands - HELD THAT:- As in the case on hand, the Tribunal has recorded that though the land was converted, the assessee had continued agricultural operations which was evident from the fact that the income derived from the agricultural operations declared by the assessee were accepted by the revenue - no evidence was brought on record by the revenue to suggest that the lands in question were used for any other purpose other than cultivation after conversion. The Tribunal has also recorded a finding of fact in para 7.2.5 that the land was inspected by the Tribunal on 10.04.2014 and during the inspection the Tribunal had noticed that the subject property was a part of large tract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we are of the opinion that only following three questions arise for consideration in all these appeals. Accordingly, we have reframed the questions of law as follows: 1. Whether the lands in question fall within the definition of 'Capital Asset' under Section 2(14) of the Act? 2. Whether the Tribunal was justified in law in holding that lands which were converted and lapsed and which have been cultivated and yielding agricultural income can be held to be agricultural lands for the purpose of Section 2(14) of the Act? 3. Whether the Tribunal was justified in holding that BIAPAA does not constitute a municipality for the purposes of Section 2(14) of the Act? 2. Brief facts of the case are, assessees are owners of different pieces of lands. They have entered into several sale transactions, the details of which are as follows: Owner extent date of sale M R Seetha Ram 6 acres 1 guntas 14.02.2007 M R Pattabhi Ram 5 acres 37 guntas 14.02.2007 MR Kodanda Ram ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has preferred these appeals and the same are disposed of by this common judgment. 5. Shri. E.I. Sanmathi for the Revenue, submitted that: Assessees in all these cases are individuals. During 2004, they got their agricultural lands converted for non-agricultural purpose; During 2007, assessees have sold their lands duly converted for non-agricultural purposes, in favour of M/s. ELT Corporate Services Pvt. Ltd., and others. The agreement and the sale deeds disclose that the lands sold are converted lands; the Assessing Officer has rightly held that the lands sold by the assessees are capital assets and the capital gains income is chargeable to tax. The CIT (Appeals) has confirmed the order passed by the Assessing Authority. However, the ITAT, on an erroneous presumption that there was no change in the physical characteristics of the lands and that the assessees have been carrying on agricultural activity even after they got the lands converted for non-agricultural purposes, has allowed the appeals; Assessees lands are within 8 kms. from Devanahalli Municipality and within 8 kms. from BBMP when measured aerially. Therefore, they fall within the definition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Prior to substitution, it read as follows: (iii) agricultural land in India, not being land situate- (a) ..; 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. 13. It was argued by Shri. Sanmathi that the lands in question fall within 8 Kms from the Municipality of Devanahalli and within 8 Kms of aerial distance from the Municipal Corporation of Bengaluru. 14. Shri. Shankar, placing reliance on the Notification No.SO 10(E) [No. 9447 (F.NO.164/3/87-ITA-I)] dated 06.01.1994 issued by the Central Government submitted that agricultural lands, which fall within a distance of 8 kms from Municipal Limits in all directions from Bengaluru only, would fall within the definition of 'Capital Asset'. 15. The Assessing Officer in para 4.3.3 of his order has recorded that assessees had filed a Certificate from the Tahasildar, Devanahalli, stating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal was not justified in holding them as agricultural lands. 20. In CWT Vs. Officer-in-Charge (Court of Wards) (1976) 105 ITR 133 (SC), relied upon by Shri Shankar, it is held as follows: It is true that this case is not a direct authority upon what is agricultural land . Nevertheless, it goes a long way in helping us to decide what could be agricultural land. We think that this must be land which could be said to be either actually used or ordinarily used or meant to be used for agricultural purposes. In other words, agricultural land must have a connection with an agricultural user or purpose. It is on the nature of the user that the very large number of definitions and authorities discussed by this Court, in Raja Benoy Kumar Roy case have a direct bearing . (Emphasis Supplied) 21. In the above case, the Apex Court has also held that it is not the mere potentiality, which will affect its valuation as part of the assets but its actual condition and intended use which has be seen for purposes of exemptions from wealth tax. 22. In Sarifabibi Mohmed Ibrahim Vs. CIT [1993] 204 ITR 631 (SC). 13 factors/indicators recorded by the Gujarat High Court have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evident from the fact that the income derived from the agricultural operations declared by the assessees were accepted by the revenue. Further, no evidence was brought on record by the revenue to suggest that the lands in question were used for any other purpose other than cultivation after conversion. The Tribunal has also recorded a finding of fact in para 7.2.5 that the land was inspected by the Tribunal on 10.04.2014 and during the inspection the Tribunal had noticed that the subject property was a part of large tract of land having agricultural operations. There were fruit yielding trees. The Tribunal has also adverted to the certificate of Senior Assistant Director of Horticulture certifying that there were fruit yielding mangoes, sappota, coco, cashew, jackfruit, rose apple, guava trees aged 25 to 30 years. 26. It is settled that ITAT is the last fact finding authority. It has inspected the lands on 10.04.2014 and recorded a finding that agricultural operations were undertaken by the Assessees and there were trees aged 25-30 years on the land. Further, as per the Notification issued by the Central Government, the lands do not fall within 8 kms. from Municipality of Bangal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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