TaxTMI 
TaxTMI 
2011 (6) TMI 766
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....ng to assessment year 2006-07 against the order of CIT(A), Chandigarh dated 14.10.2009 and 25.9.2009 against the order passed u/s 143(3) of the Act. 2. The Revenue has raised the following common grounds of appeal in all the appeals :- 1. On the facts and circumstances of the case, the Ld. CIT(A)-II Ld. has erred in allowing appeal of the assessee without appreciating the facts of the case. 2. On the facts and circumstances of the case and in law the Ld. CIT(A) has erred in treating the sale of land measuring 64 Kanal 15 Marla / 9 kanals situated in village Karoran as agricultural land. 3. The assessee in its cross objections has raised the following grounds:- 1. That the order passed by Ld. CIT(A) Chandigarh dated 5.8.2010/ 17.8.2010 are contrary to law and facts of the case. 2. That in the facts and circumstances of the case, the Ld. CIT(A) Chandigarh even after accepting the fact that the land sold by the assessee is agricultural land rejected the claim of the assessee that the sale of agricultural land by the assessee is not liable to even capital gain tax. 4. Further, the assessee has raised the following common grounds in I.T.A.Nos.1175 & 1176/Chd/2009 :- 1. That the ....
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....e assessee are tabulated under table-1 and the Assessing Officer on perusal of the sale deeds has tabulated the details of purchaser and size of the land sold by the assessee under table-2 which are reproduced at pages 3 to 6 of the assessment order. During the course of assessment proceedings the assessee took a fresh stand vide letter dated 8.5.2008 that the land sold was agricultural in nature and hence not liable to tax on its sale. The assessee furnished the copies of the purchase deeds of the land pointing out that the said agricultural land was situated at distance of more than 12 km from Mohali and there was no other Municipal Committee nearby. The assessee also placed reliance on the notification No.SOI0(E) dated 6.1.1999 as amended by notification No.SOI302 dated 28.12.1999 issued by the Central Board of Direct Taxes and submitted that the land in question was beyond the limit laid down for urbanization and the said gain arising on its sale was not liable to capital gains. The assessee further contended that in the period relevant to the assessment year 2006-07 there were rumours that there was going to be Municipal Committee in Nayagaon and as the land of the assessee wa....
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....18.10.2006 was appended as Annexrure-A to the assessment order. Further enquiries were made from Patwari , the revenue record holder, about the usage and nature of land which are incorporated under para 4.2 of the assessment order. The statement of the Patwari was recorded under section 131 of the Income Tax Act and the copy of the statement is annexed as Annexure-B to the assessment order. The Assessing Officer also sought information from the purchasers of land under section 133(6) of the Income Tax Act in which they confirmed that they had purchased the said plots of land for residential purposes and it was admitted that no plot No./s was marked. The assessee was show caused to explain why the transaction should not be treated as adventure in the nature of trade and the entire profits be assessed as income from unexplained sources. The reply of the assessee dated 12.12.2008 before the Assessing Officer is incorporated under para- 7 at pages 22 to 25 of the assessment order, in which it was reiterated that the assessee had purchased 795 kanals of land jointly in the year 1995-96 alongwith other co-owners and thereafter agricultural operations were carried out on part of the land ....
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....ated 5.8.2010 in the case of S/Shri Harjeet Singh, Sukhwant Singh and Karanbir Singh observed hat the claim of the assessee was that the purchase of land was made for agriculture and part of it was being used as such. Further, the land was part of forest land and only agricultural activities were permissible even after deforestation. The CIT(A) further held that there was no evidence of preparation of site plan and sale of plots for developing colony. In the case of one of the co-owners, Smt.Leena Sandhu the Assessing Officer, Ward-4(3) vide order passed under section 143(3) of the Act treated the land as liable to capital gains. The CIT(A) thus concluded that the Assessing Officer's decision to assess the returned income as business income was not acceptable and at the same time the contention of the assessee that the land being agricultural is not liable to capital gains, is also not acceptable. 12. The Revenue is in appeal against the order of CIT(A) inholding the sale of said land as agricultural land. The assessee has filed Cross Objection raising the issue that after accepting the claim of the land being agricultural land, the CIT(A) has erred in holding that the same is lia....
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....ultural land is non-taxable and hence, no tax was payable by the assessee. The above-said claim of the assessee forwarded vide letter dated 8.5.2006 was rejected by the authorities below in view of the ratio laid down by the Hon'ble Supreme Court in Goetze India Ltd. Vs. CIT (supra). The Assessing Officer had assessed the said gain on sale of land as income from business being adventure in the nature of trade. However, the CIT(A) in the case of the assessees-co-owners had held that the land sold by the assessee was agricultural land and the gain arising on its transfer was assessable as income from long term capital gains. However, in the case of Smt. Seema Dhaliwal and Shri Karnail Singh, the order of the Assessing Officer was upheld by the CIT(A). 18. The first issue raised in the present appeals is the nature of landholdings of the assessee. The second issue which arises for adjudication is whether the gain arising on the sale of the said land is to be assessed as taxable or non-taxable in the hands of the assessee. The Assessing Officer during the course of assessment proceedings had made enquiries regarding the usage of the land and its conversion into urban land. The Ass....
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....irmed that this land falls adjoining to village Khuda Lahora, Khuda Jassa of U.T. village Nada of Punjab. This land also falls within 1 km. of radius of PGI, Sector 12, Chandigarh. This land is specifically referred to as khasra No.232/1/2 and falls within the Notified Area Committee (of Nayagaon). The Patwari further was asked to give details of nature of activities conducted on this land before and after sale. In this regard the statement of Patwari was as under : "With specific reference to the area referred to as Khasra No.232/1/2 it is submitted that vacant land is 120 kanals. In the rest of the area land is used for residential building. About 2 acres of land is covered with chara/chari for animals. The submission is given after reference to register Khasra Girdhawari for the current period." 20. During the course of the assessment, the copies of Girdhawari for the period 2005-06 was also obtained, which reflected that there was no cultivation of crops in the land specified as khasra No.232/1/2. The copy of the Girdhawari is annexed as Annexure-C of the assessment order. The Girdhawari lists the nature of land/assets/activities for the period 2005-06 as under : "Sauni or k....
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.... hold good in cases of agricultural land also. Since the land has been recorded in the official records as agricultural land, if the department wanted to show that the entry was wrong. It should have given concrete facts in that direction. For example, it could have shown that the land lay within the municipal limits of the town of Ranchi or that the assessee had made his entire plot of land into parcels and was selling each one of them for the purpose of constructing a house thereof. The fact that the purchaser has purchased it for the purpose of constructing his house has no relevant, because so far as the seller is concerned, he will be deemed to have parted with the agricultural land in the form of agricultural land, unless it is proved otherwise. The department has not brought up any such material on the record by which it could be said that the criteria adopted by the Tribunal for determining the character of the agricultural land was wrong." [Emphasis supplied] 23. In view thereof we hold that the gain arising on the sale of the aforesaid agricultural land cannot be taxed as income from business. 24. The next controversy which arises in the present appeal is the treatment ....