TaxTMI 
TaxTMI 
2013 (11) TMI 171
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....he assessee and his son arranged the land acre 8.02 guntas and acre 2.12 guntas respectively for the said company. One of the conditions of PEBL was that the land should be leveled, free of all impediments and contiguous. Since the land so arranged was rocky and not leveled, the assessees undertook leveling work. Both the assessees deployed 6 contractors from Chennai-Amar Enterprises, Mr. Rakesh Kumar, Rajsree Distributors, Mano Engg., Western International Devi Impex, Deval Impex and Westwin International to carry out the leveling work. For this purpose, separate agreements were signed with the developers. Another condition of PEBL, was that the land should be transferred and registered by the assessees to ensure a hassel free transaction. Accordingly, in the first stage, the land was transferred by the land owners (N. Srinivasa, N. Anjaiah and N. Raghupati and their children who are also joint owners of land) in the name of the assessees by agreement of sale-cum- irrecoverable power of attorney dt. 18/01/2007. On the same day land was registered by the assessees as the GPA Holder in the name of PEBL. The total consideration received by Shri B. Vijay Kumar was Rs. 21,73,35,000/- a....
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....ed to produce the agreements with Chennai parties on the date of survey operation on 10/09/2009 and the same was produced on 18/09/2009 after survey. ii) The AO observed that the purchase deed was executed on 18/01/2007 and registered on 24/01/2007 within a period of six days and it is not possible to carry out the leveling as claimed by the assessee within such a short span of time. iii) that when the lands were not in possession of the assessee, which was handed over to him in January, 2007 after the sale agreement-cum-GPA was executed, it is not possible to carry leveling work between March 2006 to December 2006. iv) Statement by Shri N. Srinvas, one of the land owners proves that the land was categorized as dry agricultural land as per the Pattadar passbook produced by him and, therefore, the Assessing Officer came to the conclusion that there was no physical barriers of the land. v) Further, Sri N. Srinivas has claimed deduction u/s 54B by investing the proceeds in purchase of agricultural lands. vi) leveling agreements are not registered and, therefore, no evidentiary value can be attached to the document as proof of carrying out the work. vii) The assessee ....
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....ing and other charges, it would indicate that there was a pre-existing arrangement and payments were made pursuant to the contract and nobody would make a wrong recital in an official document. 9. On the observation of the AO that the leveling work was completed within six days reckoned from the date of entering into the registered agreement cum sale and ending with the date of registration, it was submitted that the AO has not correctly appreciated the facts. It was explained that the assessee entered into agreements for the work of leveling with various parties on 20/03/2006, 03/04/2006, 10/04/2006, 18/05/2006, 22/05/2006 and 25/05/2006 vide various agreements with parties. Therefore, it was not correct to hold that the leveling work was executed within six days. The dates 18/01/2007 and 24/01/2007 pertains to date of entering into agreement for sale and date of registration and has no relevance regarding period of work which was carried out prior to these formal documentation. Therefore, handing over possession for meeting the legal requirements and carrying on of work of leveling had no relation. The AR drawn the attention of the CIT(A) to the reply of Sri Srinivas, land own....
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....the meaning of section 2(14)(iii)(a) or 2(14)(iii)(b). 13. The CIT(A) was of the opinion that no revised return was filed before the AO and the assessee is not entitled to exclude capital gain admitted in the return filed earlier. For this proposition he relied on the decision in the case of Goetz (India) Ltd., 284 ITR 323 (SC) wherein the Hon'ble Supreme Court held that the AO has no power to entertain a claim which is made otherwise than by way of a revised return. Further, on the merits of the additional ground raised, the CIT(A) relied upon the decision of the Hon'ble P&H Court in the case of Rockman Cycle Industries Ltd. Vs. CWT & Anr. [2010 - TMI - 207740, in WT Appeal No. 6 to 8 of 2004, dt. 13/01/2010] also supports the view that the change in the land use is indeed the determining factor and the CIT(A) held that the contention of the assessee that the land sold by him during the year could not be considered as a capital asset, is not justified. 14. Aggrieved, the assessee is in appeal before us. 15. The learned counsel for the assessee Shri K.C. Devdas made the following submissions:- i) The Assessing Officer should not have completely ignored the retraction an....
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....on in the case of Srinvais Pandit, (HUF) in ITA No. 56/Hyd/2006 dated 23/04/2010 and submitted that the agricultural land transferred by the assessee does not constitute a capital asset within the meaning of section 2(14) of the IT Act based on the location of the subject land. 18. The learned DR Shri A.K. Satapathy on the other hand relied upon the orders of the lower authorities. As regards the burden of proof, the learned DR relied on the decision of TCI Vs. CIT, 256 ITR 701 and pointed out that the burden is on the assessee to prove the factum of incurring expenditure. 19. We have heard the arguments of both the parties and perused the record. It is relevant to reproduce the conclusions drawn by the AO while disallowing the cost of the improvement for the purpose of computation of capital gains:- a) The incurrence of expenditure of Rs. 16 crores towards development work within six days was not possible. b) Though the assessee contended that the development work was carried out between March, 2006 to December, 2006, the seller stated that negotiations for sale itself started in December, 2006 and the possession was only given after sale in January, 2007. c) The cl....
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....ject land being agricultural does not constitute a transfer of capital asset for being taxed in the head capital gain when the land is not a capital asset either within the meaning of section 2(14)(iii)(a) or 2(14)(iii)(b), we find that similar issue came up for consideration before this Tribunal in the case of Smt. Gousia Begum and others, vide its order dated 16.1.2012 in ITA No. 1024/Hyd/2011 and others, wherein the Bench held as follows: "12. The next effective grievance of the assessee in this appeal relates to computation of capital gains, treating the land sold by the assessee as non- agricultural land. 13. Learned counsel for the assessee, reiterating the contentions urged before the lower authorities submitted that the land sold, being agricultural in nature and falling outside the notified area, does not represent the capital asset of the assessee. In this behalf, he placed reliance on the decision of the Hyderabad Bench of the Tribunal in the case of Shri Srinivas Pandit(HUF) V/s. ITO Ward 7(4), Hyderabad dated 23.4.2010 in ITA No.56/Hyd/2007 for assessment year 2003-04. Further, it is submitted that the land sold is an agricultural land, and the consideration rece....
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....of the Hyderabad Municipal Corporation, and hence, notwithstanding the fact the land in question falls within the Revenue jurisdiction of Rajendranagar Mandal and more than 8 KMs away from the Rajendranagar Municipal limits, it is an urban land since it falls within 8 KMs of Hyderabad Municipal Corporation limits, and as such, it is a capital asset giving rise to capital gains on its sale. He submitted that if the property is within the specified area of 8 KMs of any municipality, not necessarily within the jurisdiction of the Revenue authority, the property assumes the character of urban land. He placed reliance on the unreported decision dated 1.3.2011 of the Hon'ble Punjab and Haryana High Court in the case of CIT V/s. Smt. Anjana Sehgal (Income-tax Appeal No.276 of 2004), duly filing a copy thereof before us, in support of this proposition. He also submitted that mere payment of advances for purchase of lands, would not entitle the assessee to relief under S.54B of the Act, and what is required to be complied with to fulfil the conditions prescribed under S.54B is the actual purchase of the agricultural lands within the time stipulated. He also submitted that the cost of acquis....
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....ing from the transfer of agricultural land situated in municipal or other urban areas or notified adjoining areas will be liable to income-tax. In this view of the matter, and considering the facts and the circumstances of the present case, in our considered view, the lower authorities are justified in determining the land in question, as capital asset liable for income-tax. With regard to determination of cost of acquisition of the land disposed of, we are of the opinion that considering the proximity of the land to the city, it is reasonable to fix the value of as on 1.4.1981 at Rs.30,000 per acre, instead of Rs.10,000 determined by the Assessing Officer, as against Rs.1,40,000 claimed by the assessee. One of the reasons for which the claim of the assessee for relief under S.54B was rejected by the assessing officer was that what was paid by the assessee was only an advance for purchase, and unless it is actual purchase of land, assessee would not be entitled for relief under S.54B. There is some merit in this reasoning of the assessing officer. However, in terms of S.54B of the Act, assessee has to purchase the agricultural land within a period of two years. Hence, though mere p....