TMI Blog2022 (8) TMI 523X X X X Extracts X X X X X X X X Extracts X X X X ..... 016 - - - Dated:- 3-8-2022 - HON BLE SHRI MAHAVIR SINGH , VICE PRESIDENT AND HON BLE SHRI MANOJ KUMAR AGGARWAL , AM Assessee by : Shri S. Sridhar ( Advocate ) - Ld. AR Revenue by : Shri ARV Sreenivasan ( Addl. CIT ) - Ld. DR ORDER Manoj Kumar Aggarwal ( Accountant Member ) 1. Aforesaid appeal by Revenue for Assessment Year (AY) 2006-07 arises out of the order of learned Commissioner of Income Tax (Appeals)-4, Chennai [CIT(A)] dated 28-12-2015 in the matter of assessment framed by Ld. Assessing Officer [AO] u/s. 143(3) r.w.s. 147 of the Act on 10-03-2014. The grounds raised by the Revenue are as under: 1. The order u/s.250(6) of the Ld. CIT(A) is contrary to law and opposed to the facts of the case. 2. The Learned CIT(A) did not appreciate the facts of the particular case as enforced by the Supreme Court in the case of CWT vs. Officer-in-charge (Court of Wards) [1976] 105 ITR 133 (SC) and merely went by the location and the particulars in the revenue records to grant relief to the assessee. 3. The Ld CIT(A) erred in failing to appreciate the case laws relied upon by the ITAT in the case of Shri Aboo Bucker (s/o the assessee), wherein the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rits to submit that the land was an agricultural land and therefore, the impugned order was to be upheld. The copies of the decisions have been placed on record. In the above factual background, our adjudication would be as under. Assessment Proceedings 4.1 It is undisputed fact that the assessee and her son Shri Aboobucker are the joint owners of the land measuring 7 acres at Navaloor Village, Chennai. During the year, land was sold to M/s. Menakur Infrastructure Pvt. Ltd for sale consideration of Rs.600 Lacs. To tax the same, the assessee s case was reopened and an assessment was framed u/s 143(3) r.w.s. 147 on 10.03.2014.The assessee held 80% share in the land. During assessment proceeding, the assessee submitted that the land is an agricultural land and not a capital asset u/s 2(14) since it is beyond 8 kilometers from the city limit and the population of the area was less than 10000. It was also submitted that the land was used for agricultural purpose till the date of sale and agricultural income was offered to tax. 4.2 However, rejecting the same and noticing that the sale consideration roughly works out to be Rs.86 Lacs per acre and considering the fact tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments consisting of purchase of agricultural land and resale, though profitable are clearly outside the domain of capital gain. (iv) The assessee treated the assets as investment in agricultural land. Therefore disposal of the same would not convert, what was a capital accretion. To make it more clear, sale of agricultural land by the assessee and realisation of good price would not alter the basic nature and characteristic of the transaction. In the case of the assessee, land was acquired by the assessee and treated as fixed- assets. (v) Whether a transaction in respect of an asset is capital or not depends on the facts and circumstances of the case. The mere fact that the person has purchased a land and subsequently sold it, giving rise to a substantial profit cannot change the character of the transaction. It is the general human tendency to earn profit out of capital asset. No one invests to incur a loss. If the market condition suddenly goes up or down, it is always the tendency of a person to take a quick decision so that the realization on the investment is maximum or the loss is minimum. (vi) As already mentioned the assessee carried on regular agricultura ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 any of a stopgap 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 s. 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 agricultural use? If so, whether it was put to an alternative use? Whether such lesser and/or alternative user was of a permanent or temporary nature? 7. Whether the land, though entered in Revenue records, h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ultural purposes and hence if there is neither anything in its condition, nor anything in the evidence to indicate the intention of its owners or possessors so as to connect it with an agricultural purpose, the land could not be agricultural land . 5.7 In the case before the Supreme Court the following circumstances were emphasised viz. (i) area was Very large (108 acres) and was abutting a lake, (ii) there were two wells on it (iii) it was capable of being used (though not actually used) for agricultural purposes, (iv) it had not been put to any use which could change its character by making it unfit for immediate cultivation; and (v) it was classified and assessed to land revenue as agricultural land under the relevant revenue enactment. The Supreme Court held that first four circumstances relating to absence of non-agricultural user were neutral circumstances and only fifth circumstance .was good prima facie evidence of land being agricultural land but presumption arising there from could be rebutted by other circumstances. In that case the assessee had not led any evidence about intended user because assessee was under mistaken impression that it was not necessary to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts would indicate that land was not agricultural land: (a) The land is situated (even in the year prior to asst.year 1970-71 when amendment came in force) in an urban area in the proximity of building sites. (From Asst. year 1970-71, agricultural lands situate within municipal limits are not outside the ambit of capital assets ). (b) The land is sold to a non-agriculturist for non-agricultural purposes (c) The land is sold on a per square yard basis at a price comparable to the price fetched by building sites (d) The price is such that no bona fide agriculturist would purchase the same for genuine agricultural operations (e) When the price is such that no prudent owner would sell it at a price worked out on the capitalisation method taking into account its optimum yield in the most favourable circumstances. 5.9 The above decision of Gujarat High Court has been affirmed in appeal by the Supreme Court in Sarifabibi Mohmed Ibrahim vs. CIT 204 ITR 631 (SC) in which the Supreme Court emphasised that all the circumstances were required to be weighted and that High Court has reached a correct conclusion. 5.10 The claim of the Assessee that ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of preparing the land, filling, sowing seeds, planting on a regular basis has been produced by the Assessee. The property is situated in fast developing area of Chennai. The property is located in developed/ developing area and has access to all modern amenities/living. There was Real estate activity in the area where the property is situated. The sale of the property by the Assessee is to a commercial organisation. The sale consideration paid would show that no bona-fide agriculturist would pay such a huge price of Rs. 6,09,60,000/- for 7.12 acres for acquiring of land which works out Rs. 86,00,000/- per acre. 5.12 We will now apply the tests laid down by the Hon'ble Gujarat High Court in the case of Sarifabibi Mohammed Ibrahim (supra) which was approved by the Hon'ble Supreme Court, to the facts and circumstances of the case:- (i) The fact that land is entered as agricultural land in revenue records and is assessed as such under the Land Revenue Code would be a circumstance in favour of conclusion that it is an agricultural land. However, this would raise only a prima facie presumption and said presumption can be destroyed by other circumstances pointing to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the property sold by the assessee is in the midst of development activities being carried out by builders in promoting housing/ Information Technology corridors, and no agricultural activities were being carried out either by the assessee nor by others in that area, the property is described as a mango grove as per the copy of the sale deed/patta, chitta adangal produced. In view of the same, the sale price received for the property has increased manifold which a normal agricultural land will not fetch. The price is in accordance with the development activities and changes happening in the nature of the land from agricultural to that of housing. 5.14 If we consider the above facts and circumstances of the present case as a whole and an overall view is to be taken in deciding whether the land was an agricultural land, we would come to a conclusion that the property cannot be considered as Agricultural land. Though the circumstance that the land is classified as Agricultural in the revenue records and the Village Panchayat President, Navallur, has certified that the land is away from municipality. In our view the other circumstances pointed out above outweighs all of the cir ..... X X X X Extracts X X X X X X X X Extracts X X X X
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