TMI Blog2018 (5) TMI 2132X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee wanted to start horticulture activities and for which the assessee had approached bank for financial assistance has not been proved to be false. We further find that the assessee s contention of having satisfied of the various parameters spelt out by Hon ble Apex Court in the case Sarifabibi [ 1993 (9) TMI 10 - SUPREME COURT] to hold the land as agricultural land has been met and the contention of the assessee has not been found to be incorrect. We find that in the case of CIT Vs. Dhable, Bobde and others [ 1992 (9) TMI 45 - BOMBAY HIGH COURT] assessee, an association of persons, had purchased agricultural land in October, 1966 and sold in January, 1967 and had claimed it to be exempt. Revenue treated the transaction to be on adventure in the nature of trade and held it as taxable business come. The Hon ble High Court while deciding the issue in favour of assessee has held that the onus of proving that the land formed part of business asset of the assessee was on Revenue and in the absence of evidence to that effect, the presumption was that land was held as capital asset and therefore income on its transfer was not income from business. was held as capital asset and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al agricultural land as a business asset which, in effect, is an investment in capital asset and shown as such by the appellant in the balance sheet as at 3151 March, 2011 and thereby bringing to tax the surplus/ profit on sale of such an asset to tax as adventure in the nature of trade. 3. The appellant further contends that the CIT(A) ought not to have upheld the action of the Assessing Officer in making the impugned addition of Rs.2,41,14,550 alleged to be arising on an adventure in the nature of trade inasmuch as the surplus/ profit arising on sale of rural agricultural land is not chargeable to tax inasmuch as such an asset is not a capital asset within the meaning of section 2(14) of the Act, being specifically excluded from the definition of capital asset. 3. Before us, the Ld AR, at the outset, submitted that the sole controversy in the appeal is of addition of Rs 2.41 crores on sale of agricultural land as income from business. 4. During the course of assessment proceedings and on perusing the details, AO noticed that assessee had sold land at Gat No 167/1, 167/2 and 177 at Dahegaon Tal Gangapur Dist Aurangabad alongwith six co-sellers and assessee had received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per Hector, whereas the appellant had sold lands within short period @ about Rs.77,50,000/- per Hector within short span of time mentioned above. Therefore the transaction claimed by the appellant by claiming exemption of income of Rs.2,41,67,550/- appears to be suspicious. 8.1 The appellant had purchased the impugned lands alongwith other co-owners and sold the same. The details of purchases of land as per deeds submitted by the appellant are as under : Particulars of land Area of land Date of purchase Purchase consideration Remark 1) Agricultural land at Gut No.167/1 (Jiryat i.e, not irrigated) at village Dahegaon Dist. Aurangabad 01 H-97R 16.12.2010 6,88,712 Seven purchasers including appellant and two sellers from Aurangabad and Sikandarabad (AP) 2) Agricultural land at Gat No.167/1 (Jirayat i.e not irrigated) At village Dahegaon Tal. Gangapur Dist. Aurangabad 03 H-72R 16.12.2010 13,00,512 Seven purchasers including appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chasers from Aurangabad 3) Agricultural land at Gat No.177 (Jirayat i.e not irrigated) At village Dahegaon Tal. Gangapur Dist. Aurangabad 01 H-09R 17.12.2011 84,33,973 Seven sellers including appellant and two purchasers from Aurangabad 8.2. From the above facts, it has been noticed that the 7 co-owners including the appellant have purchased agricultural lands at village Dahegaon on 16.12.2010 and 10.05.2011. The above mentioned lands are purchased by the above 7 co-owners with the intention to earn profit by making immediate sale. Once of the lands was purchased on 10.05.2011 and the same was sold within about 7 months. The other lands were sold after 12 months. 8.3. The appellant had contended that the said lands were purchased by the 7 co-owners with the intention of developing a fruit orchard. In this regard it has been noticed that the 7 co-owners are residing at different places, the 4 co-owners are residing at Aurangabad, 2 co-owners are residing at Jalgaon and 1 co-owners is residing at Nandurbar. All the above 3 places are located far away from each other. Therefore it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld by the appellant with the intention of holding the same for substantial period and also for carrying out agricultural operations. Whereas, the impugned lands were purchased alongwith 6 other co-owners residing in different districts with the intention of selling the same at profit within short period and not for holding the same for long period for carrying out agricultural operations. It is also settled position of law that an assessee can hold some of the properties as stock in trade and some of the properties as investment. From the facts of the case it is evident that the impugned lands purchased at Dahegaon Tal. Gangapur Dist, Aurangabad, alongwith 6 co-owners by the appellant, residing at Jalgaon agricultural operations. Therefore the above contention of the appellant is rejected. 8.6 The appellant has also claimed that in the books of accounts and balance sheet, he had shown the impugned agricultural lands under the head fixed assets . It is settled position of law that the entries made in the books of accounts and balance sheet are not decisive but the actual facts and transactions are to be considered for deciding the issue under Income Tax Act. This proposition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts which are located far away from each other. ii) The contention of the appellant that the lands were purchased for carrying out agricultural activity for longer period was found to be incorrect and false. iii) The contention of the appellant that the lands purchased were with the intention to develop fruit orchard is also found to be incorrect and false. iv) The lands were sold within 7 months and 12 months after purchasing the same. v) The appellant alongwith other co-owners have sold the impugned lands at a price which is 25 times of the purchase price of the said lands. Therefore it is evident that the facts of the case of the appellant are distinguishable from the facts of the cases relied on by the appellant. 8.10. From all the relevant facts and circumstances of the case as discussed above, I am of the considered view that the particular transactions entered into by the appellant in respect of impugned lands at Dahegaon, is adventure in the nature of trade. Aggrieved by the order of Ld.CIT(A), assessee is now in appeal before us. 5. Before us, Ld AR reiterated the submissions made before the lower authorities and further submitted that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period of purchase was held to be exempt. He also relied on the decision in the case of Bhogilal H. Patel Vs. CIT reported in (1969) 74 ITR 692 (Bom) for the proposition that intention at the inception is crucial and that the mere circumstance that a property is purchased in the hope that when sold later on, it would leave a margin of profit will not be sufficient to show that the intention was to trade at inception. He further relied on the decision of Hon ble Bombay High Court in the case of Gopal C. Sharma Vs. CIT reported in (1994) 209 ITR 946 (Bom) for the proposition that the profit motive without anything more by itself can never be decisive for determination of the issue as to whether the transaction amounted to adventure in the nature of trade. He therefore submitted that the order of Ld.CIT(A) upholding the order of AO be set aside. Ld DR on the other hand took us through the findings of AO and Ld.CIT(A) and supported their order. He further submitted that assessee had not produced any evidence to demonstrate of having indulged into any agricultural activity on the land. He thus support the order of Ld.CIT(A). 6. We have heard the rival submissions and perused the mate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icultural land in October, 1966 and sold in January, 1967 and had claimed it to be exempt. Revenue treated the transaction to be on adventure in the nature of trade and held it as taxable business come. The Hon ble High Court while deciding the issue in favour of assessee has held that the onus of proving that the land formed part of business asset of the assessee was on Revenue and in the absence of evidence to that effect, the presumption was that land was held as capital asset and therefore income on its transfer was not income from business. was held as capital asset and therefore income on its transfer was not income from business. Before us, Revenue has not placed any material to prove that the land formed part of business asset of the assessee. Further the contentions of the Ld AR have not been controverted by Revenue. In such a situation, we are of the view that the ratio of the decision in the case of Dhoble, Bobde and others (supra) would be applicable to the present case. We therefore after relying on the various decisions cited by the assessee, are of the view that the AO and Ld.CIT(A) were not justified in treating the profits from sale of land as business income. We t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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