TaxTMI 
TaxTMI 
2016 (3) TMI 491
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....ticed that the assessee sold his property for D6,09,60,0000/- and investment of D1,20,00,000/- in the form of share application money in M/s. Menakur Infrastructure P Ltd was made. Hence, the Assessing Officer reopened the assessment u/s.147 of the Act by issuing a notice u/s.148. The assessee alongwith his mother Smt. Ayishath Jailani owner a piece of land measuring 7 acres at Navaloor Village, Chennai. The assessee and his mother are the joint owners of the land. During the financial year relevant to the assessment year 2005-06, the assessee and his mother sold the said land of 7 acres situated at Navaloor Village, Chennai, in favour of M/s. Manekur Infrastructure P. Ltd and registered the said land by two separate sale deeds registered on 28.10.2005 (both sale deeds). The total consideration received by the assessee and his mother was D6,09,60,000/-. During the course of assessment proceedings, the assessee submitted that, he and his mother sold the land to M/s. Manekur Infrastructure P. Ltd on 28.10.2005 and handed over the possession. The assessee also submitted that since it was an agricultural land, he claimed exemption u/s.2(14) of the Act, as the lands sold were not 'capit....
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....or agricultural activities (growing crops) till the date of transfer and handing over the possession; (iii) The assessee has been offering agricultural income, in his returns of income filed from year to year, including the assessment year 2006-2007 under consideration. (iv) The lands are sold and handed over to the buyer as agricultural lands (with standing crops) only; (v) Even sale deed contains presence of mango trees and coconut trees for which the sub-registrar fixed separate valuation and included for stamp duty purpose. According to Commissioner of Income Tax (Appeals), the land will not constitute ''capital asset' for the purpose of Sec. 2(14) of the Act. The lands under consideration are clearly agricultural lands falling outside the definition of ''capital asset'' u/s.2(14) of the Act and accordingly, he deleted the addition made by the Assessing Officer. Aggrieved by the order of the Commissioner of Income Tax (Appeals), the Revenue is in appeal before us. 05. We have heard both the parties and perused the material on record. The AR submitted that the sale transaction effected by the assessee in respect of the above land constituted only sale of ....
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....no dispute that the assessees acquired agricultural land. There is also no dispute that there was agricultural operation in this land before sale of this land. 5.2 The Departmental Representative submitted that the amount received on sale of this property is nothing but on account of sale of capital asset and the same was brought into income from capital gain. In this case, the Authorised Representative submitted that the land always treated as investment and not at all converted into stock-intrade. The character of the land in the hands of the assessees has not changed. 5.3 Now the question as to whether a land is agricultural land or not is essentially a question of fact. The question has to be answered in each case having regard to the facts and circumstances of that case. There may be factors both for and against a particular point of view. We have to answer the question on a consideration of all of them, a process of evaluation and the inference has to be drawn on a cumulative consideration of all the relevant facts. It may be stated here that not all the factors or tests would be present or absent in any case and that in each case one or more of the factors may make app....
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....nding situation and use of the land in the adjoining area were such as would indicate that the land was agricultural? 9. Whether the land itself was developed by plotting and providing roads and other facilities? 10. Whether there were any previous sales of portions of the land for non-agricultural use? 11. Whether permission under s. 63 of the Bombay Tenancy and Agricultural Land Act, 1948, was obtained because the sale or intended sale was in favour of a non-agriculturist? If so, whether the sale or intended sale to such non-agriculturists was for nonagricultural or agricultural user? 12. Whether the land was sold on yardage or on acreage basis? 13. Whether an agriculturist would purchase the land for agricultural purposes at the price at which the land was sold and whether the owner would have ever sold the land valuing it as a property yielding agricultural produce on the basis of its yield?" 5.6 We will therefore proceed to examine the question as to whether the property can be said to be Agricultural land or not. In the case of CWT vs. Officer-in- Charge (Court of Wards), Paigah 105 ITR 133 (SC) in which question to be decided w....
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.... question was agricultural land. The Supreme Court disapproved the view that that land which is left barren but which is capable of being cultivated can also be agricultural land unless the. said land is actually put to some other nonagricultural purpose like construction of buildings, or an aerodrome runway, etc. thereon which alters the physical character of the land rendering it unfit for immediate cultivation and observed that minimal test of agricultural land was credible evidence of at least appropriation or setting apart of the land for a purpose which could be regarded as agricultural and for which land was used without an alteration of its character. 5.8 The decision of Supreme Court in the case of Officer-in-Charge (Court of Wards ) was analysed by the Gujarat High Court in CIT vs. Sarifabibi Mohammed Ibrahim 136 ITR 621(Guj) and the legal position was summed up as follows:- (i) The fact that land is entered as agricultural land in revenue records and is assessed as such under the Land Revenue Code would be a circumstance in favour of conclusion that it is an agricultural land. However, this would raise only a prima facie presumption and said presumption can b....
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....rds, existence of mango trees for agricultural purpose. The Revenue contends that there is no evidence of the Assessee having carried out actual agricultural activities over the property. The Assessee has not claimed any expenses incurred in carrying out agricultural operations. There is no evidence of the Agricultural produce having been sold. The Hon'ble Kerala High Court in the case of Kalpetta Estates Ltd. 185 ITR 318 (Ker) it has been held by the Hon'ble Kerala High Court that the burden of proof that the land in question was agricultural land at the time of transfer to claim exemption was on the Assessee. As already observed the question whether the land was Agricultural land has to be decided on facts of each case and decided cases are only guidelines to be kept in mind. Facts and all the circumstances are to be considered as a whole and an overall view is to be taken in deciding whether the land was an agricultural land. In a given case large number of circumstances may be indicative of agricultural character but one circumstance may outweigh all of them and on its basis the land would be held to be a non-agricultural land. The case laws cited by the Assessee as wel....
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....ctor inasmuch as agricultural crop can be raised even on building site land (even on desert land as observed by the Supreme Court in said case) and sometimes, a crop is grown in order not to allow the land to remain idle awaiting sale for non-agricultural purposes to a non-agriculturist by way of a stop-gap arrangement or in order to avoid payment of revenue at a higher rate or in order to avoid payment of capital gains tax. (iii) The fact that land is not converted to non-agricultural user would be a circumstance indicating that it is an agricultural land. However this is subject to same rider as is mentioned in(ii) above. (iv) The following facts would indicate that land was not agricultural land: (a) The land is situate in an area in the proximity of building sites. (b) The land is sold to a non-agriculturist for non-agricultural purposes. (c) The land is sold at a price comparable to the price fetched by building sites. (d) The price is such that no bona fide agriculturist would purchase the same for genuine agricultural operations. 5.13 In the present case, the purchaser of the property was a company by name M/s. Menakur....