TaxTMI 
TaxTMI 
2013 (2) TMI 770
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....ed at Padur Village, Chengalpet Taluk, Kancheepuram District. The parcels of land sold by the assessee in the previous year relevant to the assessment year under appeal, were purchased by the assessee over a period of ten years from 1980 to 1991. The extent of area differed from plot to plot, from 8 cents to 1.25 acres, totaling to 4.43 acres. 3. In the return filed by him, the assessee did not offer any income for taxation by way of long-term capital gains on account of sale of lands, as stated above. The claim of the assessee before the Assessing Officer was that the lands sold by him were agricultural land and, therefore, not a capital asset exigible to capital gains taxation. 4. In the course of assessment proceedings, the Assessing Officer sought to verify the claim of the assessee that the lands sold by him were agricultural in nature. The Assessing Officer summoned the Village Administrative Officer at Padur and obtained a sworn statement on 9.12.2011. In his statement given before the Assessing Officer, the Village Administrative Officer made it clear that the lands sold, belonged to the assessee but he did not carry on any agricultural activities at the time of selli....
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....ee were agricultural in nature. Therefore, he cancelled the capital gains assessment. The appeal filed by the assessee was allowed. 9. The Revenue is aggrieved and, therefore, the second appeal before the Tribunal. 10. The grounds raised by the Revenue in the present appeal are extracted below : "2. The Ld. CIT(A) erred in holding that the land sold by the assessee is "agricultural land" and therefore is not a capital asset for the purpose of charging capital gains tax. 2.1 The Ld. CIT(A() ought to have appreciated that the land sold by the assessee was situated near the Old Mahabalipuram Road which is declared as IT Corridor and is an Industrial/commercial area. 2.2 The Ld. CIT(A) failed to appreciate that the area is covered under Corporation Limits of Chennai as Zone XV. It is submitted that though the actual Notification was issued in 2009, the fact that the assessee sold the land in the immediately preceding year is indicative of the extent of development of the area, which the Ld. CIT(A) failed to appreciate. 2.3 The Ld. CIT(A) erred in relying upon the population as per last census of the particular village alone to hold that the lan....
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....properties were agricultural properties in the long past, no agricultural activities were being carried on in that area for so many years in the past because of the urbanization and real estate development. The learned Commissioner explained that agricultural character of the properties had already been lost long ago and, therefore, there is no force in the argument of the assessee that the properties sold by the assessee were agricultural in nature. He, therefore, submitted that the order of the Assessing Officer may be upheld and the order of the Commissioner of Income-tax(Appeals) may be set aside. 12. Shri Anil Nair, the learned Chartered Accountant appearing for the assessee, on the other hand, supported the order passed by the Commissioner of Income-tax(Appeals). The learned Chartered Accountant explained that the properties were acquired by the assessee over a period of ten years since 1980. At the time of purchase of these properties, they were agricultural lands and agricultural activities were also carried on. A lot of development came around the properties sold by the assessee. A number of educational institutions are being set up around the area. Real estate developm....
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....r the Land Revenue Code, would be a circumstance in favour of conclusion that it is a an agricultural land. However, this would raise only a prima facie presumption and the said presumption can be destroyed by other circumstances pointing to the contrary conclusion. This legal proposition highlighted by the Hon'ble Gujarat High Court has been later upheld by the Hon'ble Supreme Court in the case of Sarifabibi Mohamed Ibrahim vs. CIT (204 ITR 631). It is also to be seen that the question, whether a particular land is agricultural or not, is basically a question of fact. As laid down by various High Courts in different judgments, a series of tests are applied to decide, whether a land is agricultural or not. It is also to be understood that all these tests are in the nature of guidelines and have to be applied, depending upon the facts and circumstances of each case. 18. In the present case, as already stated, the core of the arguments of the assessee is on the classification of the land in revenue records. But, that alone does not conclusively prove the nature of the land sold by the assessee, as other evidences are shadowing the said presumption prima facie created by the entry ....
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....tural activities carried on by an assessee also should not go against an assessee. For one or other reason, an assessee may not be carrying on agricultural operations for one or two years, he might be carrying on agricultural operations for all the years in a consistent manner. In such cases, it is not possible to hold that non carrying on agricultural operations for one or two years permanently changes the character of the land. 20. But, here the case is still different. The assessee has not been carrying on agricultural operations for so many years continuously and consistently. It is not a case of intermittent stoppage of agricultural operations. It is a case of permanent stoppage of agricultural operations in the light of real estate development taking place in the particular area. Therefore, by virtue of not carrying on agricultural activities for a quiet long time in the past, the character of the land occupied by the assessee has been naturally converted into a non-agricultural land. 21. In this regard, we have to apply our mind to one more vital question, whether the assessee was carrying out agricultural operations or not. The case of the assessee in the present case....
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....urned by the assessee is not from the land of 4.43 acres sold by the assessee but from the land still owned and occupied by him. When this is considered, it is obvious that the agricultural income returned by the assessee was just for namesake and it was not the result of any agricultural operations carried on by the assessee, in an economic way. There was no economic utilization of land for the purpose of earning agricultural income. In fact, the assessee had started purchasing the land since 1980. He continued to purchase the land till 1991. Since then upto the assessment year 2003-04, the assessee had not returned any agricultural income. The assessee started filing returns for the assessment years 2004-05 to 2008-09. We cannot rule out that this was only a ploy carried out by the assessee to make an impression before the tax authorities that the assessee's land was agricultural in nature, so that the assessee can claim the benefit of agricultural land, when the lands are sold, in view of high demand of land in the area and in view of hectic activities of real estate development. Therefore, we are of the opinion that these small amounts of agricultural income returned by the ass....