TaxTMI 
TaxTMI 
2014 (9) TMI 3
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....pector to examine the lands, who, in turn, reported that the lands were dry lands and no agricultural activities were undertaken by the assessees. Hence, the Assessing Officer rejected their claim holding that the lands sold were not agricultural lands and brought the entire sale consideration to tax under the head "Long Term Capital Gains". The Assessing Officer also invoked the provisions of Section 50C of the Income Tax Act and adopted the guideline value for such assessment. Aggrieved by the order of the Assessing Officer, the assessees preferred appeals before the Commissioner of Income Tax (Appeals). 2. Before the Commissioner of Income Tax (Appeals), the assessees furnished a copy of the Adangal extract and also claimed that there were casuarina crops grown in those lands as shown in the chitta adangal, which indicates that the lands were agricultural lands. Since there was an additional evidence filed, the same was forwarded to the Assessing Officer for his verification with a request to submit a remand report. The Commissioner of Income Tax (Appeals) found that in the remand report dated 18.5.2012 the Assessing Officer confirmed that the lands were agricultural lands, a....
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....f the case, the Tribunal was right in law in holding that the lands in question were not agricultural lands for the purpose of application under Section 2(14)(iii)(b) of the Income Tax Act, thereby confirming the addition of long term capital gain tax? 2. Whether, on the facts and circumstances of the case, the Tribunal was right in ignoring the Certificate of the Tahsildar and the certified extract of the Adangal Register, according to which these lands were agricultural lands? 3. Whether the Tribunal was right in ignoring the violation of principles of natural justice by Assessing Officer while making the assessment by: (i) not furnishing to the appellant, the report of the Inspector and the report of the Tahsildar to the appellant before the assessment and not giving an opportunity to the appellant to rebut the findings of the Inspector; and (ii) not giving an opportunity to the appellant to refer the matter under Section 50C of the Act?" 6. Heard Mr.C.Ramakrishnan, barrister learned counsel appearing for the appellants/assessees and Mr.J.Narayanasamy, learned standing counsel appearing for the Revenue and perused the materials placed before this Court. 7. Lear....
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....produced a copy of the adangal and the letter from the Tahsildar, which showed that the lands were agricultural in nature and the Revenue has also accepted that the lands are falling within the restricted zone in terms of Section 2(14) of the Income Tax Act. 12. Hence, the only point that has to be considered is that whether the test as laid down in the decision reported in 139 ITR 628 (CIT V. Siddharth J. Desai) has been satisfied by the assessees. In the said decision, in paragraph 11, it is held as follows: "On a conspectus of these cases, several factors are discernible whichwere considered as relevant and which were weighed against eachother while determining the true nature and character of the land. It maybe useful to extract from those decisions some of the major factors which were considered as having a bearing on the determination of the question. Those factors are: (1) Whether the land was classified in the revenue records as agricultural and whether it was subject to the payment of land revenue ? (2) Whether the land was actually or ordinarily used for agriculturalpurposes at or about the relevant time ? (3) Whether such user of the land was for a long pe....
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....ion will have to be reached on a balanced consideration of the totality of circumstances." 13. According to the Tribunal that if the above tests are applied, the assessees could not satisfy any of the conditions except condition Nos.1,5,11 and 12. The Tribunal held that the assessees could not prove that the lands was actually or ordinarily used for agricultural purposes. This reasoning does not appear to be correct in view of the above-said decision of the Gujarat High Court, wherein it was clearly held in Clause (1) in paragraph 11 that whether the land was classified in the revenue records as agricultural and whether it was subject to the payment of land revenue has to be considered for grant of exemption. 14. Thus it is evident from the above, which clearly states that any one of the above factors can be present in a case to qualify for the benefit of classification as agricultural lands. In this case, the assessees have qualified under clause 11(1) since as per the adangal records, these lands were classified as agricultural lands and the assessees have also paid revenue kist, namely, revenue payment. Therefore, the Tribunal has misconstrued the judgment of the Gujarat H....
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....he Central Government " 16. Once the Tribunal has accepted that the classification of lands as per the reveue records are agricultural lands, which are evidenced by the adangal and the letter of the Tahsildar and satisfies other conditions of Section 2(14) of the Income Tax Act, we are of the view that the Tribunal has misdirected itself as stated above. 17. Yet other reason given by the Tribunal is that the adjacent lands are put to commercial use by way of plots and therefore, the very character of the lands of the assssees is doubted as agricultural in nature. The manner in which the adjacent lands are used by the owner therein is not a ground for the Tribunal to come to a conclusion that the assessees' lands are not agricultural in nature. The reason given by the Tribunal that the adjacent lands have been divided into plots for sale would not mean that the lands sold by the assessees were for the purpose of development of plots. Also the reasoning given by the Tribunal "No agriculturists would have purchased the land sold by the assessee for pursuing any agricultural activity" is based on mere conjectures and surmises. 18. The plea of the learned standing counsel a....