TaxTMI 
TaxTMI 
2006 (9) TMI 247
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....individual. For the assessment year under consideration, the original assessment was completed under section 143(3) on 28-3-1996 on a total income of Rs. 6,94,140/-. During the previous year relevant to the assessment year under consideration, the assessee had sold land situated at Gat Nos. 418 to 424 and 426 of Takve Budruk, Tal. Maval, Distt. Pune, wherein the assessee had one-half share. The assessee claimed the said land to be of agricultural land in nature. Since the aforesaid land was claimed as agricultural land by the assessee, long-term capital gains on transfer of these lands were claimed exempted and a note to that effect was appended to the statement of income filed along with the original return of income. During the original assessment proceedings, the relevant documents were also produced by the assessee before the Assessing Officer. On consideration of all the facts and circumstances of the case, the Assessing Officer was satisfied about the claim of the assessee that the long- term capital gains on sale of land were exempt from taxation. However, subsequently, the CIT invoked the jurisdiction under section 263 of the Act and passed the order under that section on 2....
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....e same could not made any difference to the tax liability. AO's comments: The assessee's contention is not acceptable to me. The assessee has filed 7/12 extract for the relevant year. He was asked to file the evidence in respect of agricultural operations carried out and also evidence in respect of sale of agricultural produce. The assessee did not comply with the queries. In view of this fact, the assessee's contention that the lands have been actually put to use for agricultural purpose, is not acceptable. Assessee's submission (ii) The land in question have been purchased on 2-6-1984 and since that the date till the date of sale the lands were used for agricultural purpose only. This long period of more than seven years conclusively proves that the lands were purchased by me for agricultural use and operation and with no other intention. AO's comments: It is true that the assessee has purchased land on 2-6-1984 but it is pertinent to note that for a long period of more than seven years the assessee has not earned any agricultural income and which is not reflected in the Income-tax Return. The assessee has failed to produce the evidence in respec....
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....ion of the assessee is not acceptable to me. Assessee's submission (v) It is to be noted that by an amendment introduced to section 2(14) of the Income-tax Act, 1961, by Finance Act, 1970, agricultural land situated in all the rural areas are not brought within the tax net and do not automatically become capital assets within the meaning of the provisions of section 2(14) of Income-tax Act, 1961. A reference to this effect may please be made to the memorandum explaining the provisions of Finance Act, 1970, issued by CBDT wherein it has been clarified by the CBDT vide para No. 30 as under:- 'Agricultural land situated in rural areas, i.e., areas outside any municipality or cantonment board having a population of not less than ten thousand and also beyond the distance notified by the Central Government from the limits of any such municipality or cantonment board, will continue to be excluded from the capital asset'." After dealing with the assessee's various submissions, the Assessing Officer concluded that the assessee's contention to the effect that the land sold was agricultural land is not acceptable as the land in question was not used for agricultural....
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.... to have been filed before the Assessing Officer is pertaining to financial year 1993-94 and not for financial year 1994-95. The entry in the land records could not be a conclusive evidence of agricultural activity on those lands. Merely because there is certain entry that by itself would not prove that the appellant was conducting agricultural operations on those lands. The appellant has failed to produce even a small evidence to show that he had been conducting agricultural operations on those lands. It is common knowledge that for having agricultural operations on such large tract of land when the appellant himself is not a farmer has to employ manpower and put in other resources for the agricultural operations. There is no evidence to show that the appellant has incurred any expenses for the agricultural operations. There is no evidence to show that the appellant has conducted any agricultural operations on those lands. There is no evidence to show that the appellant had any receipt out of agricultural produce. The appellant has not disclosed any agricultural income in any of the assessment years and despite opportunity given, the appellant has only relied on 7/12 extracts. All....
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....) Whether agricultural operations are carried on; (3) Intention of the owner; (4) Character of adjoining land. if the surrounding lands are agricultural lands, the presumption would be in favour of holding that the land in question was also agricultural land. He further submitted that since the expression 'agricultural land' is not defined either in the Income-tax Act or any other statute, it therefore, must be given the meaning which it ordinarily bears in English language and as it is understood in ordinary parlance. He further submitted that determination of the character of a particular piece of land, according to the purpose for which it is meant or set apart and can be used, is a matter, which ought to be determined on the facts of each particular case. What is really required to be shown is the connection with an agricultural purpose and user, and the entries in the revenue records are, however, good prima facie evidence though they should not be conclusive on the point. He further submitted that as per the definition of capital asset, the land in question did not fall within the definition of capital asset, inasmuch as it was neither situated in any area which ....
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....e further submitted that although the said, circular applies to wealth-tax for granting exemption under section 2(e)(i) of the Wealth-tax Act, the same can be applied with equal force in the relevant circumstances arising under the Income-tax Act. In support of his contentions and submissions, the ld. counsel for the assessee has made a reference to the following decisions: (1) CIT v. Raja Benoy Kumar Sahas Roy [1957] 32 ITR 466 (SC); (2) CWT v. Officer in-charge (Court of Wards) Paigah [1976] 105 ITR 133 (SC); (3) Smt. Sarifabibi Mohmed Ibrahim v. CIT [1993] 204 ITR 631 (SC); (4) Addl. CIT v. Tarachand Jain [1980] 123 ITR 567 (Pat.); 9. The ld. DR, on the other hand, submitted as under: The assessee has failed to give any evidence to show and establish that the land was used for agricultural purposes, and the assessee had derived any agricultural income therefrom. There was no evidence of agricultural activity carried out on the said land by the assessee and no evidence of any expenses having incurred by the assessee for the purpose of carrying out agricultural activity has been furnished. No agricultural income was ever declared by the assessee in the return of income f....
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....he Assessing Officer during the assessment proceedings failed to take a note of the above Notification of the Government and erroneously concluded that the land to be agricultural without verifying the fact." 12. It is thus clear that the CIT has set aside the Assessing Officer's order for the reason that the Assessing Officer had failed to take a note of the above Notification of the Government. One of the question arising in this case would be thus as to whether by reason of the Notification of the Government, putting lands in industrial zone can be sufficient to convert the agricultural land into non-agricultural land. However, the moot question to be decided by us is as to whether the land in question is agricultural land or not. 13. The question as to whether a land is agricultural land or not is essentially a question of fact. The question has to be answered in each case having regard to the facts and circumstances of that case. There may be factors both for and against a particular point of view. The Court has to answer the question on a consideration of all of them a process of evaluation and the inference has to be drawn on a cumulative consideration of all the relev....
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....ltural purposes? 8. Whether the land was situated in a developed area? Whether its physical characteristics, surrounding situation and use of the lands in the adjoining area were such as would indicate that the land was agricultural? 9. Whether the land itself was developed by plotting and providing roads and other facilities? 10. Whether there were any previous sales of portions of the land for non-agricultural use? 11. Whether permission under section 63 of the Bombay Tenancy and Agricultural Lands Act, 1948, was obtained because the sale or intended sale was in favour of a non-agriculturist? If so, whether the sale or intended sale to such non-agriculturists was for non-agricultural or agricultural user? 12. Whether the land was sold on yardage or on acreage basis? 13. Whether an agriculturist would purchase the land for agricultural purposes at the price at which the land was sold and whether the owner would have ever sold the land valuing it as a property yielding agricultural produce on the basis of its yield?" 16. A reference could be made to the case of Officer-in-charge, (Court of Words) Paigah wherein the Constitution Bench of the Hon'ble Supreme Court st....
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....mbay High Court in the case of CWT v. H.V. Mungale [1984] 145 ITR 208 held that the Hon'ble Supreme Court had pointed out that the entries raised only a rebuttable presumption and some evidence would, therefore, have to be led before taxing authorities on the question of intended user of the land under consideration before the presumption could be rebutted. The Court further held that the Supreme Court had clearly pointed out that the burden to rebut the presumption would be on the revenue. The Hon'ble Bombay High Court held that the ratio of the decision of the Supreme Court was that what is to be determined is the character of the land according to the purpose for which it was meant or set apart and can be used. It is, therefore, obvious that the assessee had abundantly proved that the subject land sold by them was agricultural land not only as classified in the revenue records, but also it was subjected to the payment of land revenue and that it was actually and ordinarily used for agricultural purpose at the relevant time. 19. We may also refer to the case of CIT v. Manilal Somnath [1977] 106 ITR 917 (Guj.), wherein the Division Bench of the Hon'ble Gujarat High Co....
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....further appeal to the High Court, the Punjab and Haryana High Court found that the finding that the land had been used for agricultural purposes was based on cogent and relevant material. The revenue record supported the claim. Even the records of the Income-tax Department showed that the assessee had declared agricultural income from this land in her returns for the preceding two years. The land being located in commercial area or the land having been partially utilised for non-agricultural purposes or that the vendees had also purchased it for non-agricultural purposes, were totally irrelevant consideration for the purposes of application of section 54B. 10. It is seen from the aforesaid decision that the agricultural land sold by the assessee with an intent to purchase another land within two years had also been permitted to claim exemption under section 54B of the Income-tax Act, 1961. In the instant case, even though there was no sale as such, the assessee owned agricultural land within the limits of Tirunelveli corporation and he had not put up any construction thereon, the assessee is entitled to claim exemption from the Wealth-tax Act for the assessment of Wealth-tax. Tha....
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....erusal of the details of 7/12 extracts, the following facts are found: (1) That the land was undoubtedly classified in the revenue records as agricultural lands, (2) That the land was subjected to payment of land revenue, (3) That the land was used by the owner himself, (4) That the nature of the agricultural produce produced from the said land are Rice, Jawar and Animal Feed Grass. It is also equally true that the assessee has not given any evidence of incurring any expenditure on agricultural operations carried out on the said land. No direct evidence has been produced by the assessee to show and establish that the agricultural produce in the nature of Rice, Jawar and Animal Feed Grass were produced from the said land. On the other hand, no evidence has also been produced by the revenue to show and establish that the land was used for some other purposes other than agricultural purposes. It is nobody's case that the assessee had used the land for nonagricultural purposes before selling the same. No permission for non-agricultural use has also been obtained by the assessee. No evidence to that effect that the assessee had ever used the land for non-agricultural purpos....