TaxTMI 
TaxTMI 
2014 (7) TMI 133
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....urvey No. 262 and 263 for consideration of Rs. 2,64,60,000/- at Rs. 72,00,000/- per acre (40 guntas make one acre). The entire consideration was paid by SAPPL between 27.08.2005 to 27.11.2005 though the land was not registered. 3. There were search and seizure proceedings in the case of M/s Splendid Aparna Projects P. Ltd., group on 19.09.2007 and consequent to that assessee's group were also covered by the proceedings. Assessee did file return of income for A.Y. 2006-07 admitting an income of Rs. 1,68,328/- on 26.07.2006 whereas, return for A.Y. 2008-09 was not due by that time. Consequent to the notice issued under section 153A on 20.10.2008 assessee filed return of income declaring the same income for A.Y. 2006-07 and an amount of Rs. 2,42,550/- for A.Y. 2008-09. At the time of filing original return of income for AY 2006-07, assessee made a noting in the computation sheet that assessee has received advance from the said SAPPL of an amount of Rs. 2,64,60,000/-. As agreement of sale with the group SAPPL was found in the search, assessee was asked to explain why capital gains tax liability on the sale of land was not disclosed. It was the contention of the assessee that the sai....
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.... dt.25-1- 1980, along with his brothers, Sri Krishna Kumar D.Shah, Suresh Kumar D.Shah and Late Prabhu Charan Das and the land that was partitioned was also shown as barren land and it cannot be claimed as agricultural land. 3. The Assessing Officer also visited the land and found that the entire land was * surrounded with rocks and mountains and not amenable for cultivation. 4. One of his brothers, Sri Krishna Kumar D.Shah who also got land from his mother in the same Survey number had admitted capital gain on the land acquired by State Government. When all the four brothers derived the land from the common source in the same survey number, how can one piece of land be taxed and the other piece can be exempted. 5. The returns filed in the status of HUF showed no agricultural income offered by , the assessee for Asst.years 2002-03 and 2003-04 and only in the Asst.years 2004-05 & 2005-06, an amount of RS.50,000jwas offered as agricultural income which shows that the assessee wanted to mislead the department to escape the capital gains tax by admitting and introducing such bogus agricultural income just prior to the date of agreement. This intention is even manifested in the....
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.... 8. The Assessing Officer observed that the land in survey no.262 and 263 were distributed among 4 brothers and the other members though contested initially that they were agricultural lands, later on when the enquiries were made with MRO, Rajendranagar, have filed the revised return by offering capital gain on account of the said lands in survey nO.262 & 263 by the State Government for the purpose of ORR project. Even Sri Krishna Kumar Shah, who was having Ac 4-17 Guntas in the same survey number i.e., 262 had admitted capital gain on the date of search itself and paid the taxes. 9. The Assessing Officer has also found an interesting point in the report of the Horticulture Officer i.e., the Horticulture Officer in his report mentioned only the name of Madanmohan Shah against survey nO.262 even though there are three different brothers owned around Ac12-20 guntas in the same survey number. 10. The Assessing Officer has also explained with facts and figures how the assessee could not have harvested any fruits from the trees mentioned. 11. The Assessing Officer has also pointed out that the assesse2 was objecting the 'pahani patras' collected by the Assessing Offic....
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....ever, Ld. CIT(A), did not agree with the assessee's contentions. The relevant orders of the CIT(A) in para 4.8 and 7.0, 8.0 are as under : "04.8 The burden of proving the fact that the land transferred was agricultural lane or not is on the assessee and the onus to prove its claim or of its income as being exempt under the Act is only on the assessee and it may be noted that the appellant has failed to discharge this burden/onus altogether. The land under reference has not been shown as used for agricultural purposes there is nothing to show that the land was being cultivated prior to its sale and he has derived any agricultural income there from. Even though the appellant or the previous owners had owned this land even prior to 1-4-1981, it is only the status of the land at the time of its sale that is relevant and even agricultural activity thereon in the past would be of no avail and the price fetched for the land would tantamount to the price for urban lands rather than for agricultural land and accordingly the land under reference was not an agricultural land but a capital assets exigible to capital gains tax. It may be noted that no prudent person would invest substantial ....
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....ands prior to the sale of the lands has been rebutted with clear finding by the Assessing Officer in the assessment order and I entirely agree with the observation made by the Assessing Officer that the filing of returns showing agricultural income for two assessment years prior to the sale of the lands through development agreement was only to claim exemption ujs.10(37)(ii) of I.T. Act and also the impossibility of cultivation of the land and also cultivation of different types of crops on a piece of ac.3-27 gts. which require its own soil, climate, irrigation requirement, fertilizers, pesticides etc., is also rejected. Accordingly, finding no infirmity in the action of the Assessing Officer, the treatment of profits on sale of impugned lands as resulting in long term capital gains is upheld". 6.1. In para 4.9, Ld. CIT(A) relied on the decision of the ITAT, Pune Bench, Pune in the case of Sunanda Ullas Choudhury vs. ITO ITA.No.1492/PN/2008 dated 03.10.2011 for the proposition that the land which was worthy for earning commercial profits would not be considered as agricultural land. Vide para 6.0, Ld. CIT(A) relied on the Coordinate Bench decision in the case of Krishna Kumar D.....
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....that the land was not taken possession and is in the custody of the assessee. 9.1. The next aspect the Ld. Counsel submitted was that the agreement by other brothers viz., Krishna Kumar D. Shah (HUF), Sandeep Kumar D. Shah (HUF), Brij Gopal Shah and Pramod Shah(HUF) was not an 'agreement of sale' but 'development agreement' wherein they were to receive not only part of consideration in cash but also developed area subsequently. He referred to the order of ITAT extracted by the Ld. CIT(A) in para 6.0, to submit that the terms and conditions between the development agreement entered by the other persons and agreement of sale by the assessee are entirely different. Therefore, the Coordinate Bench decision in the case does not apply. 9.2. Coming to the evidence furnished by the A.O. that assessee did have agricultural land, it was contention that assessee was having agricultural power connection from last 20 years or so and in support thereof, assessee furnished land revenue receipt as well as electricity payment bills in order to substantiate that agricultural operations are being carried out there in the said land. He also referred to the report of the Horticultural Officer at ....
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....bmitted that State Government has acquired the land out of the land agreed for sale and compensation was paid only to the assessee and the assessee was only involved in getting verification by the Horticulture Officer, measurements by MRO and also furnished an affidavit to Govt. agreeing to the conditions of acquisition that assessee will not contest in Court of Law. He referred to the copy of the affidavit filed and the fact that part of the land was acquired by the State Government as agricultural land so as to submit that the agricultural land in question is not only an agricultural land but also possession was not given to the said SAPPL. In fact, it was the contention that even as of now, assessee is cultivating the lands and A.O. can inspect if he so desire. He referred to the submissions made before the Ld. CIT(A) in December, 2012 asking for inspection of the land even at that point of time. It was the contention of the Ld. Counsel that the land in question is agricultural land. 9.4. Further it was submitted that other family members who entered into development agreement might have handed-over the possession for the purpose of development and therefore, they have offere....
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....e. The agreement did not mention the fact that it was an agriculture land." 11.1. Contrast to the above finding, the agreement of sale, placed on record at page 215 of the paper book, dated 27.01.2006 has the following schedule in page 4 of the document: SCHEDULE All that agricultural land, admeasuring ac.3.27 gts. In survey Nos. 262 & 263 situated at Vattinagulapalli village, Rajendranagar Mandal, Ranga Reddy District and bounded as follows : North 20' Road South Part of Sy.No.262 of K. Radhika w/o. Srinivasa Rao East Part of Sy.No.262 of Krishna Kumar Dwaraka Das West Part of Sy.No.263 of Suresh Kumar Dwaraka Das. 11.2. This schedule is part and parcel of agreement and clearly indicates that the land of ac.3.27 gts in survey Nos. 262 and 263 are agricultural lands. Therefore, this particular finding of the A.O. that 'the agreement did not mention the fact that it was an agricultural land' is patently wrong. 11.3. Vide para-2 in page 3, A.O. gives a finding that neither Smt. Lakshmi Devi (mother of the assessee) nor coowners who had purchased the land in 1967 are in agricultural operations on that land. There is no basis for this finding as assessee had ....
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....entioned in page-6 on the reason that Horticulture Officer was not aware of the survey number and name of the land lord when he questioned. The entire tone and tenor of the order seems to be totally biased against the assessee for rejecting the evidences furnished by the assessee. 11.5. Considering the fact that assessee has sold agricultural land which is away from the municipal limits on which there is no doubt and further fact that assessee's land was acquired by the State Government as agricultural land and based on the pahani patrikas and the report of the MRO as well as Horticulture Officer evidencing that these survey numbers are having agricultural operations, we cannot uphold the contentions of the A.O. that this land is not agricultural land. Prima facie evidence indicates that assessee is indeed cultivating the land and the land in question is agricultural land. Sale of agricultural land does not result in capital gains tax as agricultural land is not a capital asset under the definition of 'capital asset' in the Income Tax Act. However, since the A.O. did not give any opportunity while inspecting the land nor he has given any opportunity to examine the MRO certificat....