TaxTMI 
TaxTMI 
2006 (9) TMI 247
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....d may be summarized as under: The assessee is an 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 ....
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.... herewith, the agricultural income was not disclosed as the income was very small and the inclusion of the 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 ....
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....original return of income. Thus, these are the lands not used for agricultural purpose. Therefore, it is held that the lands are not agricultural lands and not in the nature of agriculture. The contention 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 asses....
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....n these lands or had any receipt on sale of agricultural produce. Despite this question raised several times the appellant's representative reiterated that the appellant solely relied upon 7/12 extracts. The copy of the 7/12 extracts filed at the appellate stage which was claimed 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 opera....
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....or the assessee that there are various criteria which may be applied to find out if the land in a particular case is agricultural or not. The criteria, as pointed out by the ld. counsel for the assessee, are as under:- (1) Classification and assessment of the land to land revenue; (2) 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 th....
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....ed that the land which is covered by the Town Planning Scheme may be treated as agricultural land provided the following conditions are satisfied: (1) Land revenue/agricultural cess is paid; (2) Agricultural operations have been carried out from year-to-year; (3) It has not been put to non "agricultural use. He 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....
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....ins tax: "It is to be noted that the land is sold to one of the Public Limited Company Alfa Laval (I) Ltd. Further, as stated in the agreement of sale, the Regional Town Planning Department, Government of Maharashtra, Pune, had issued a map dated 18-8-1992 certifying that the lands are located in industrial zone designated by Government of Maharashtra prior to 25-7-1991. The 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 ....
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.... 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 cesser and/or alternative user was of a permanent or temporary nature? 7. Whether the land, though entered in revenue records, had never been actually used for agriculture, that is, it had never been ploughed or tilled? Whether the owner meant or intended to use it for agricultural 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? ....
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....cter and unless that presumption is rebutted by evidence led by the revenue, it must be held that the land was agricultural in character at the time when it was sold. The Division Bench of the Hon'ble Gujarat High Court further held that there was nothing on record to show that the presumption raised from the long user of the land for agricultural purpose and also the presumption arising from the entries of the revenue records are rebutted. 18. The Hon'ble jurisdictional Bombay 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 ap....
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.... 54B of the Act on the ground that the land sold by her was agricultural land and the sale proceeds were invested in the purchase of agricultural land within two years. The Assessing Officer rejected the claim of the assessee holding that the land sold by the assessee was not agricultural land and this was upheld by the Commissioner (Appeals). On further appeal, the Tribunal accepted the claim of the assessee holding that the transaction in question duly fulfilled the conditions specified for relief. On 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 fr....
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....bsp; From the perusal of the said entries in the Extract of 7/12, it is thus clear that the aforesaid lands were subjected to land revenue and assessment of the land revenue was accordingly entered into the extract of 7/12. It is also seen that the total cultivable land has also been shown therein. The area mentioned in the extract of 7/12 has been classified as cultivable land. In the 7/12 extracts, it is also indicated that the land was cultivated by the owner himself, i.e., Khudd. The nature of crop produced is mentioned as Rice and Animal Feed Grass in Gat Nos. 418, 419, 420, 421 and 422, Rice and Jawar in Gat No. 423, Animal Feed Grass in Gat No. 424 and Rice and Animal Feed Grass in Gat No. 426. On perusal 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 asse....