TaxTMI 
TaxTMI 
2015 (10) TMI 1275
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....uilding construction and sale & purchase of property. The assessee had sold land in the year relevant to the assessment year which was purchased in financial year 2006-07. No improvement was made for developing the property for agriculture. No agricultural operation on the land acquired by the assessee was carried out any time during the relevant period, which is evident from the fact that no expenditure and or receipts are shown. According to clause 2 of partnership deed, the partnership shall come into effect from 4th day of November 2006 which leads to the inference that the business of the assessee firm has commenced from the date of execution of the deed. According to clause 3 of partnership deed, the business of the firm shall be that of real estate activities. Any other business or businesses may be carried on by the firm if the partners so decide for their mutual benefit. The word is used 'shall' and not 'may'. Therefore, sale and purchase of property is one of the business activities of the assessee firm. No inference other than this can be drawn from this clause. The assessee has not been debarred from trading of any specific kind of land. The enhancement ....
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....hat enterprises engaged in mining activities, M/s. S. Kantilal, in particular, were acquiring private lands in Sanguem Taluka during the period when 'mining boom' was prevailing from the year 2002 onwards. It is formidable to believe that such businessmen, as the partners of the assessee firm, can form partnership only to acquire land situated in the Western Ghants, in the near vicinity of wild life sanctuary to carry on agricultural activities. It is the intention of the partners to make profit that has inspired trading in lands at such an area. He further observed that if the land in question was purchased by the assessee as the matter of investment, the assessee would have tried either to cultivate the land or to build on it, but it did neither. By name itself, one can make out that the village Cumbari or Kumeri is a hilly tract of primitive kumri (slash and burn) cultivation in the remote past and not a land suitable for regular cultivation. The village comprises more than 90% land under forest cover. The assessee did not carry out any agricultural operation in any portion of the land from the date of purchase till they sold. This conduct of the assessee shows that the ....
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....ltivation or defacto agricultural operations. In the case of Maharajadhiraj of Darbhanga Vs. CIT, AIR 1928 Pat 468, the Hon. Patna High Court laid there tests for any income to quantify as agricultural income: i) The rent or revenue should be derived from land ii) The land should be situated in India, and iii) The land should be used for agricultural purposes. Applying these tests, the A.O. held that income earned by the assessee is not agricultural income. The other contention of the A.O. is that, the land was sold to M/s. S. Kantilal and Co. Pvt. Ltd., which is a mining company, which has nothing to do with agriculture. The company purchased the land to dump its mining waste on the said land. The A.O. placed reliance on the judgement in the case of G. Venkataswarri Naidu & Co. Vs CIT [(1959) 035 ITR 594 (SC)] wherein the Hon'ble apex Court observed as under: ".............the lands were adjacent to Janardhana Mills, the appellant must have purchased them solely with a view to sell them to the said mills with a profit. That is why, though the transaction was in the nature of a solitary transaction, it was held that it had all the elements of a business transaction and ....
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.... also proved by the evidence attached that the previous owners were regularly paying land revenue taxes and were regularly carrying on agricultural operations. Many agricultural farms are also located in the vicinity of the land and the said land is very close to forest area. In fact, nothing else can be carried out at the land, apart from agriculture. The appellant could not continue with agriculture for the fact that they did not get labourers, unable to carry out agricultural operations themselves, they decided to sell- off the land. In support of their contention, they have placed reliance on the decision of jurisdictional High Court of Bombay at Goa in the cases of Debbi Alemao, Minguel Chandra Pais and H.V. Mungale. In its books also, they held it as investment and not as stock-in-trade. Thus, appreciating overall facts of the case and the legal position, in my opinion, the appellant purchased agricultural land, with a purpose to carry on agricultural operations, as nothing else was possible on that land, because the land was classified as 'garden' land and its close proximity to forests and distance from urban centers, construction was not possible only. Thus, in m....
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....d for non-agricultural use by the assessee, the profit on sale of such land is non-taxable agricultural income. He also placed reliance on the decision of the Hon'ble Bombay High Court, Panaji Bench in the case of CIT Vs. Minguel Chandra Pais (2006) 282 ITR 618 (Bom.) which is also to the same effect as the earlier decision of the Hon'ble Bombay High Court. 10. We have heard rival submissions and perused the orders of the lower authorities and material available on record. In the instant case, the assessee purchased an agricultural land during the financial year 2006-07 for Rs. 12,48,645/- and sold the same in the financial year 2008-09 for Rs. 74,31,000/- and the assessee in its return of income claimed income of Rs. 61,81,013/- derived on the above transaction as non-taxable agricultural income. The Assessing Officer treated the above transaction of purchase and sale as business transaction and thereby the resultant income as taxable business income. The reasons for the action of the Assessing Officer was mainly that the assessee did not carry out any activity of cultivation on the said land during the period in which it was held by it. 11. Further, the person to whom t....
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....trade. 20. Further, no material was brought before us to show that the finding of the Commissioner of Income Tax (Appeals) that the land in question was situated in a remote village near the forest and legally could not be put to any use other than agriculture was incorrect. 21. In the above facts, we do not find any good reason to interfere with the findings of the Commissioner of Income Tax (Appeals) that the land was acquired by the assessee as investment and not as stock in trade of business and the transaction of holding the land for above 14 months before sale cannot be treated as business transaction of the assessee. 22. We find that in the similar facts and circumstances the Hon'ble Delhi High Court in the case of Hindustan Industrial Resources Ltd. Vs. ACIT (2011) 335 ITR 77 (Del.) observed that the assessee purchased agricultural land with an intention to use the land for industrial purposes. No agricultural activity was carried on that land by the assessee. The land was acquired by the competent authority under land acquisition Act for planned development of industry. The award passed in the acquisition proceedings also shows that the land was agricultural land. N....