AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2015 (7) TMI 934
X X X X Extracts X X X X
X X X X Extracts X X X X
..... 67,68,603 to the total income returned by the assessee and the learned Commissioner of Income Tax (Appeals) -I has erred in confirming the same. 3. The learned Deputy Commissioner of Income Tax, Central Circle- 1(1), Pune (DCIT) has erred in treating agriculture income earned from sale of Agricultural lands of Rs. 65,67,973/- as taxable income, without considering provisions of the law and facts of the case and the learned Commissioner of Income Tax (Appeals) - I has erred in confirming the same. 4. Without considering provision of section 2, section 10 and other sections of the Act and the powers of the Central Government, the learned Deputy Commissioner of Income Tax, Central Circle-1(1) Pune (DCIT) has erred in treating sale of agricultural land which is outside the purview of tax, as the said land is situated outside the Municipal limit, as taxable income and the learned Commissioner of Income Tax (Appeals) -I has erred in confirming the same. 5. Without considering the facts and the circumstances of the case, the teamed Deputy Commissioner of Income Tax, Circle-1(1), Pune (DCIT) has erred in holding that assessee is engaged in business activity of purchasing and sel....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eriod of a decade ago. After acquisition of agricultural lands, agriculture activity has been continuously carried on by the assessee for several years past. The assessee is also member of "Sant Tukaram Sahakari Sakhar Karkhana Mayradit". The assessee has been supplying sugarcane to this co-operative sugar factory. 5. The assessee has also taken production of rice, vegetables like tomato, kakadi, onion, leafy vegetables, chilly, cauliflower, etc. depending upon season. Sugar cane is also grown. 6. The assessee had to purchase residential home and an Office and diversify into some business activity. Substantial financial outlay was required for the purpose of purchase of a residential house and an office place, and capital for business with a view to generate resources, the assessee has sold some of his holding of agricultural lands. 7. Your honour, will therefore, appreciate that the assessee has acquired the lands for agriculture. He has carried out agricultural activities. He continues to carry on agricultural activities. For certain needs of resources, the assessee has sold some of the agricultural lands. On sale of agricultural lands no income-tax is attracted. Accordi....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... in the construction activity. For one of his firms, the assessee has done supervision activity for which Rs. 10 lakhs has been received during the year. He further noted that the assessee in his statement recorded on 18-12-2007 has stated that in some of the lands his brothers are co-purchasers but the assessee has not given these details. He therefore called for the details of sales effected till date and details of properties purchased with his brothers. From the details furnished by the assessee, he noted that majority of the lands has been sold as of now. Therefore, the motive of selling the agricultural land is absolutely clear. The assessee, according to the AO, has sold the agricultural land for simple reason that he got the required rate on account of boom in real estate prices. According to him, if the intension of the assessee was to retain the agricultural land for agricultural activity, he would not have sold the land under any circumstances. Therefore, the activity of the assessee according to the AO is nothing but an adventure in nature of trade. He therefore was of the opinion that the profit on account of such act needs to be taxed under the head. He observed that ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ile doing so, he noted that the assessee during the course of survey and even thereafter had admitted that approximately 40 acres of land were acquired by him from various land owners from approximately 1986 onwards and from 1995 onwards approximately 30 to 32 acres of land were sold to different persons in different years out of the same. It was also admitted in his statement that he received approximately Rs. 3.10 crore on sale of the above referred lands against the cost of Rs. 80lakhs. It was also admitted in the said statement that the land purchased from 30 to 35 owners were sold to 6 to 8 buyers. AO has also pointed out in the assessment order that during the course of survey it was revealed that assessee was also engaged in the subplotting of the land. However, the same was denied by the assessee during the course of appeal. Finally the Ld.CIT(A) while upholding the action of the AO has observed as under : "4.4. After considering the above referred issue in the facts and circumstances of the case I am of the considered opinion that the ground of appeal under consideration cannot be allowed. It is clear from the facts available on record that the appellant belongs to a gr....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the said restrictions have been imposed in different context and these restrictions are definitely not available for an assessee to obliviate from his legal responsibility, more so when it relates to his claim. Furthermore, the nature of the information related to purchase and sale of land and those details are not difficult to be gathered and obtained even if not retained in regular course, as the appellant must be knowing the persons who sold their lands or his agents or the persons or the agents who purchased the lands. These details could also have been obtained by him from revenue records as he was party to those transactions. Furthermore, considering the importance of these documents, these are generally preserved and retained safely by the involved persons. Therefore, on these considerations, it cannot be accepted that the appellant had any difficulty in obtaining and submitting such details. In such a view of the matter, none compliance on these issues has to be considered adversely assuming that the appellant deliberately prevented its submission as he was knowing that its production before the competent authority would nail him with the taxation of the receipts claimed e....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... acquires land with a view to sale it later, after developing it profit the activity is a business venture. In the case of Smt. Parvatidevi and Others Vs. CIT (AP) 164 ITR 675, it has been held that joint purchase of land by four persons and joint sale thereof of lands fit for housing is an adventure of the nature of trade. In the case of Hemchand Hirachand Shah Vs. CIT, Gujarat, 206 ITR 55, it was held that agriculturist purchasing land in a series of transactions and selling them within a reasonable short period would be of the nature of business. In the case of appellant also, it was shown that in many cases lands were jointly purchased. All these judgments also support differently the inference drawn by the Assessing Officer in the available facts of the case. Therefore, Ground No. 1 is treated as dismissed." 9. Aggrieved with such order of the CIT(A) the assessee is in appeal before us. 10. The Ld. Counsel for the assessee strongly challenged the order of the CIT(A). Referring to page 242 of the paper book he drew the attention of the Bench to the details of rural agricultural land purchased and sold by the assessee. He submitted that the main activity of the assessee is....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Bench to the details of rural agricultural land purchased and sold after year 2000 till 2006 except for land sold in A.Y. 2005-06 and 2006-07, the details of which are as under : Details of Rural Agriculture Land Purchased and Sold after year 2000 till 2006 except for lands sold in A.Y. 2005-06 & 2006-07 Sr.No. Village Gat no Date of sale Name of buyer Sale consideration Date of acquisition Cost of acquisition 1 Chandkhed 145 22/09/2000 Sopan Jagannath Bhagwat 225,000 21.01.1994 22,000 2 Pusane 102 19/08/2002 Dhyaneshwar Balwadkar 6,10,000 21.08.1998 3 Chandkhed 140 19/08/2006 Bhagwat 1,65,000 20.04.1998 139,124 4 Chandkhed 135 and 18/10/2006 Dr.Arjun Rao 15,600,000 16.06.2005 450,000 137 11.09.2000 1,380,000 5 Chandkhed 140 23/08/2006 Mistri Santosh 2,00,000 20.04.1998 95,948 12. Referring to the order of the Tribunal in the case of the brother of the assessee for A.Y. 2007-08 vide ITA Nos. 551 and 554/PN/2012 order dated 30-07-2013 he submitted....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ricultural land is business income. He accordingly submitted that the order of the CIT(A) be upheld and the grounds raised by the assessee should be dismissed. 16. The Ld. Counsel for the assessee in his rejoinder referred to the copy of the assessment order for A.Y. 2001-02, a copy of which is placed at pages 215 to 217 of the paper book, and submitted that the assessee has incurred loss. He submitted that the assessee therefore had to sell a part of his agricultural property for business purpose. Referring to the copy of the assessment order for A.Y. 2003-04 he submitted that because of the brought forward loss the business income has been determined by the AO at NIL. Referring to page 242 of the paper book he submitted that the holding period of the land is more than 8 years. So far as the decision relied on by the Ld. Departmental Representative is concerned he submitted that the facts in that case are distinguishable and are not applicable to the facts of the present case. He submitted that each case has to be decided on its own sets of facts. He accordingly submitted that the order of the CIT(A) be set aside and the income from sale of agricultural land be treated as exemp....
X X X X Extracts X X X X
X X X X Extracts X X X X
....likes and the Revenue has no business to direct or advise the assessee to manage his affairs. We find an identical issue had come up before the Tribunal in the case of the brother of the assessee wherein the Assessing Officer treated the surplus from sale of agricultural land as business income which was held by the CIT(A) as exempt being surplus from sale of agricultural land. On further appeal filed by the Revenue, the Tribunal dismissed the appeal filed by the Revenue by observing as under : "12. We have carefully considered the rival submissions. The pertinent facts in this case are that in the year 2000-01 assessee purchased certain agricultural land which has been sold during the year under consideration. In the interregnum, assessee declared agricultural income from the said land during the assessment years 2002-03, 2003-04 and 2004-05. Ostensibly, there is no dispute to the fact that the land in question was an agricultural land. It is also clear from the orders of the authorities below that at no stage, assessee undertook any development activity on such land, akin to a developer, for instance, there is no construction of compound wall, laying of internal roads, sub-plo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d values due to efflux of time. Therefore, case of the Assessing Officer that the lands were purchased to earn quick profit cannot be justified having regard to the period of holding and also the manner in which assessee has held the agricultural lands prior to its sale. 14. We may also refer to the decision of the Pune Bench of the Tribunal in the case of Gopal Kasat (supra) relied upon by the Assessing Officer to say that the income by selling of agricultural land was to be assessed as a business transaction. In the case of Gopal Kasat (supra), assessee purchased certain lands which were subject-matter of acquisition proceedings by the Government. The Tribunal, in this background, noted that the assessee was aware, at the time of purchase, that the land could not be held as an investment for a long period as the same was under acquisition proceedings. The aforesaid factor prevailed with the Tribunal to hold that surplus on sale of such land was to be treated as 'business income' and not as 'capital gains'. In the present case, the facts stand on an entirely different footing inasmuch as there is no material to show that at the time of purchase assessee had any intention of doi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rother of the assessee has held that such surplus on sale of land is business income. However, in the instant case the Tribunal in the case of the brother of the assessee has treated the surplus as exempt being sale of agricultural land beyond a distance of 8 kms from the municipal limits. Further, the Assessing Officer in the assessment order passed u/s.143(3) for A.Y. 2008-09 has not disturbed the claim of the assessee that such income is exempt from tax being sale of agricultural land. Therefore, the decision relied on by the Ld. Departmental Representative is not applicable to the facts of the present case. In this view of the matter the order of the CIT(A) is set aside and the grounds raised by the assessee are allowed. 21. Ground of appeal No.6 by the assessee reads as under : "6. The learned Deputy Commissioner of Income Tax, Central Circle 1(1), Pune (DCIT) has erred in treating agriculture income of Rs. 2,00,630/- as undisclosed income under section 69A of the Income Tax Act, 1961 without considering provisions of the law and facts of the case and the learned Commissioner of Income Tax (Appeals) - I has erred in confirming the same." 22. Facts of the case, in brie....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ubmissions. However, the Assessing Officer after considering the facts and circumstances of the case accepted the agriculture income of Rs. 3,25,000/- and treated the balance income of Rs. 2,00,630/- introduced in the books in the guise of agriculture income as concealed income. The appellant during the course of appeal also has submitted similar details and on the basis of the same it is not possible to find any fault in the finding of the Assessing Officer. Considering the same, Ground No. 6 is treated as dismissed. " 24. Aggrieved with such order of the CIT(A) the assessee is in appeal before us. 25. The Ld. Counsel for the assessee submitted that there are no defects in the accounts maintained by the assessee who is holding around 40 acres of land. In A.Y. 2004-05, the assessee has declared Rs. 4,50,000/- as agricultural income which was accepted by the Assessing Officer in the summary assessment. He submitted that the disallowance made by the Assessing Officer is not justified and therefore the agricultural income declared by assessee should be accepted. 26. The Ld. Departmental Representative on the other hand heavily relied on the order of the CIT(A). 27. We have....