TaxTMI 
TaxTMI 
2015 (4) TMI 669
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.... and the activity can only be described as a business venture & assessee himself offered the profit on sale of plot of Rs. 2,23,80,000 as business profit in the original return of income filed. Reliance is placed on the decision of Supreme Court in the case of Raja J. Rameswar Vs CIT(SC)42ITR179. 3. CIT(A) failed to appreciate that the accounting entries in the books is not conclusive proof to determine the nature of the transaction/asset viz. whether it is a business asset or capital asset. It is the true nature and the quality of the receipt/asset and not the head under which it is entered in the account books that would prove decisive. Reliance is placed on the decision Chowringhee Sales Bureau (P.) Ltd. V. CIT(1973) 87 ITR 542 (SC) & Hoshiarpur Electric Supply Co. V. CIT(1961) 41ITR608 (SC) in deleting the addition amounting to Rs. 1,11,90,0007- (being 50% Rs. 2,23,80,000/-). 4. The Ld CIT(A) failed to appreciate that the land purchased by the assessee had potentiality of being developed into building site - No agricultural operations were carried out on land by the assessee amounts to Adventure in the nature of trade. Reliance is placed on the decision in the cas....
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....ed as agricultural land and consists of cashew trees, mango trees and teak wood. The local Village Panchayat of Batim has issued a certificate to the effect that the land is more than 9 kms from the Panaji city limits and is in the agricultural zone. Section 2(14) which defines Capital assets excludes from it's purview agricultural land which is more than 8 kms from local limits of any municipality. The Assessing Officer has not accepted for the reason that the assessee is in the business of real estate and builder. The said land was purchased and sold during the previous year relevant to this assessment year itself. In the circumstances, it cannot be claimed that the assessee has purchased the same as Agricultural land. The assesse has also not carried out any agricultural operations or taken any steps in furtherance thereof. Also no agricultural income has been admitted from this plot. It is only a purchase and sale of land in the course of assessee's business. Enquiries have also been caused to be made to verify the nature of land and whether any Agricultural operations have been carried out by the assessee. In the report of Inspector, it is found that the property owned....
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....held that he lands could be treated as agricultural lands. The assessee used the land merely to extract timber, that they did not plant any tree, that it was at all times a private forest and no development was effected therein, that no agricultural operations were carried on in the lands purchased, all will go to forest show\that, at time of transfer of the capital assets, it was forest land exigible to capital gain tax.). Accordingly, the purchase and sale of the above land is treated as business transactions and profit derived therefrom is assessed to tax as Business Income and thereby added to the income returned. 4. The matter was carried to the ld. CIT(A) and the ld. CIT(A) has deleted the addition by observing as under:- "I have perused the evidences submitted by the appellant and find them in order. Therefore I find that there are factual mistakes in the assessment order as under: i. The land has 'not been purchased and sold within one financial year, but the same has been done in 3 financial years. ii. The land does not have only wild growth, but it has cashew, mango and teakwood plantation and a tenant is cultivating the land and pressing for his....
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.....CIT Vs. Ms. Debbie Alemao and Joaquim Alemao [2011] 331 ITR 59. In all these cases, the decision is that once it is established that land in question is an agricultural land, income from sale of such land will not form part of the Gross Total Income. In view of the facts of this case and the evidences placed before me, I have no doubt, that the land sold in the instant case, is an agricultural land and therefore is covered by the decision of the Jurisdictional High Court. The A.O. is, accordingly, directed to delete the addition of Rs. 2,23,80,000/-( Va share Rs. 1,11,90,000/-). These two grounds of appeal of the appellant are allowed." 5. Learned DR submitted that assessee is in real estate business and he has not carried out any agricultural operations or taken any steps in furtherance thereof. Therefore, Inspector was deputed and the Inspector has given report that this land is not agricultural land and it is within 08 km. from municipal limits. Therefore, Assessing Officer is justified in his action. 6. Learned AR relied upon the order of the Ld. CIT(A) and submitted that this land is agricultural land consisting of cashew plantation, mango trees and teak wood plantation. Pa....