TaxTMI 
TaxTMI 
2015 (4) TMI 220
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.... 2006-07 to 2011-12. In response to the notice, assessee filed return of income admitting taxable income of Rs. 95,920 for A.Y 2007-08 and agricultural income of Rs. 14,000 and claimed surplus on sale of agricultural land of Rs. 97,50,000 as exempt u/s 10. The said surplus has arisen on the sale of the agricultural land to Varun Constructions during the previous year 2006-07 relevant to A.Y 2007-08. The agricultural land is situated in Sy. No.667, Dundigal Village, Quthbullapur Mandal, Ranga Reddy District which was sold to M/s Varun Constructions. 3. During the course of assessment proceedings, the assessee was asked to furnish the details of agricultural land and the same were furnished. Prior to and also during the course of the assessment proceedings, AO gathered information about the land from Town Planning Officer, Asstt. City Planner, GHMC and also from the statements recorded by DDIT from Village Revenue Officer, Quthbullapur Mandal. Assessee also furnished information pertaining to the land. 4. Assessment was completed u/s 143(3) r.w.s. 153C making an addition of Rs. 97,50,000 under the head capital gains to the returned income of Rs. 95,920 thus arriving at an assessed ....
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....ade by the officials of the Department during verification of the Revenue records and as can be seen therefrom, the noting against Sy.No.667 is "no docs with us" and "no details". * The ld Counsel for the assessee further submitted that the AO based his opinion on a vague and ambiguous response received during the inspections/verification of revenue records. Assessee further submits that on verification of revenue records with respect to theland in question "no doc with us" and "no details" are the details found in the records. Assessee also submitted that the AO based his opinion on this not so clear information in determing the nature of the land. The phrase "no doc with us" and "no details" does not in any way reflect the use of land and does not in any way prove that the land is nonagricultural land and more importantly it does not by any streth of imagination show that the landis not put to agricultural use (or in the words of the AO the land is put to non agricultural use). * The ld Counsel for the assessee further submitted that it can be clearly seen from the intimation letter from Asstt. City Planner, Quthbullapur Circle 15 GHMC, furnished by the assessee and also from t....
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.... term capital asset and as such the AO erred in law and on fact in treating it as a capital asset so as to bring to tax the surplus arising on sale of land as short term capital gain. * That the AO is incorrect in stating that the land was ot put to agricultural purposes by the assessee, before sale. One of the grounds/basis in bringing to tax the surplus on sale of land by the AO is that "the land was not put to agril. Purposes, before or after sale, either by the assessee or by the purchaser". * The ld Counsel for the Assessee drew attention of the Commissioner through letters filed by the assessee before the DDIT and also before the AO from which it can be seen that the assessee categorically stated before the DDIT as well as before the AO that the land has actually been put to agricultural use, crops have been grown and agricultural income derived. * That the statement of VRO and photographs relied upon by the AO, do not in any way confirm that the assessee had not carried out any agricultural activity in the said land. * AO bliendly believed the statement of Village Revenue Officer, Bowrampet, Quthbullapur Mandal who stated that as per his knowledge no land were being cult....
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....nd i.e. Rs. 97,50,000 cannot be subjected to tax and the land purchased and sold by the assessee is not a capital asset within the meaning of section 2(14) of the Income Tax Act and therefore, is exempt from tax: i) Income Tax Officer vs. P. Prakasam (2014) 62 SOT 127 Chennai ii) Gouthan Constructions Co. vs. Income Tax Officer (2013) 39 taxmann.com 181 (Hyd.Trib). iii) CIT vs. Rajshibhai Meramanbhai Odedra (2014) 42 taxmann.com 497 (Guj.) iv) Land Acquisition Collector cum ACA, Punjab Urban Planning & Dev. Authority (PUDA) vs. Income Tax Officer, TDS Circle Range III Jalandhar (2011) 12 taxmann.com 446 (P&H) . v) CIT vs. Smt. Debbie Alemao (2011) 196 TAxmann.230 (Bom.) vi) Hindustan Industrial Resources Ltd vs. ACIT (2009) 180 Taxmann 114 (Del.) 221 CTR 270 (335) ITR 77. 8. The ld CIT (A) held that the information on record is carefully considered. The assessee purchased one acre of land on 29.03.2005 and sold it on 12.03.2007 to M/s. Varun Constructions which is in real estate business. Purchase price was Rs. 2.5 lacs and sale price was Rs. 1 crore. The ld CIT (A) observed that according to the AO agricultural operations were never carried on and there is no proof submitte....
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.... the following Municipal limits: (a) Approx. 15.50 km from erstwhile Municipal Corporation of Hyderabad (MCH) limits (b) Approx. 9.30 from erstwhile Kukatpally Municipality limits. " 13. The CIT (A) observed that as per the certificate given by the Director (Planning) HMDA, the land does not fall within the prescribed municipal limits, therefore, cannot be treated as capital asset u/s.2(14)(iii). 14. With respect to the third issue being whether the transaction is an adventure in the nature of trade, the ld CIT (A) observed that the Assessing officer relied on the decision of G.Venkataswamy & Co., Vs. CIT 35 ITR 494 (SC). 15. The CIT (A) opined that the facts of the case of the assessee are totally different. The CIT (A) observed that the assessee is not a trader, he simply invested in land and has received capital accretion out of it, realisation of investment consisting of purchase and sale though profitable are clearly outside the domain of adventure in the nature of trade, the property was sold as it is without any accretion or improvement or addition to the asset to make it more marketable, there were no repetition of such transactions by the assessee, and more importantl....
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....d taken by the investigation wing as per which it clearly indicates that the land is a fallow land not suitable for cultivation". 18. We find that relevant evidence/documents were not produced during the assessment proceedings with respect to carrying out agricultural activities. Also income from sale of agricultural produce (Jowar) was not substantiated by supporting the claim and furnishing bills and vouchers. 19. The photographs which were taken during the post search clearly depicts that the land was not used for cultivating agriculture crops, as it contains boulders and wild grass appears to be grown on the land. Hence as could be seen from the photographs the land seems to be unploughed and unutilized, whereas according to the assessee, the land has been actually put to use for agricultural purpose. 20. In these circumstances, we are of the opinion that the issue of land being agricultural land has not been proved beyond doubt and hence the issue is set aside to the file of the AO who shall verify all the necessary documents as well as the bills and vouchers for the sale of agricultural produce before concluding whether the land is agricultural land. 21. Further for the e....