TaxTMI 
TaxTMI 
2012 (4) TMI 672
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....tuated outside specified area. 4. The appellant carves leave to add, amend or withdraw any grounds of appeal before the final hearing. 3. In the course of present appellate proceedings, both ld. 'AR' and ld. 'DR' were of the view that the issue is squarely covered in assessee's own case by the order of the Tribunal in ITA No. 227 & 228/Chd/2010, A.Y. 2005-06 and 200607, dated 30.03.2012. 4. We have carefully perused the facts of the case, relevant records. On perusing the decision referred to above and stated by the ld. 'AR', we are of the opinion that the issues raised in these two appeals are squarely covered by the order in assessee's own case. For ready reference, the contents of the same are reproduced hereunder : "The captioned two appeals have been filed by the same assessee, against the consolidated order dated 29.01.2010 passed by the ld. CIT(A), Panchkula u/s 250(6) of the Income-tax Act,1961 (in short 'the Act') for the assessment years 2005-06 & 2006-07. As the facts and the issues, including the grounds of appeal, in both the appeals are identical, the same are taken up together, for disposal, for th....
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....issued from the office of the Tehsildar, Nalagarh, Tehsil Nalagarh, District Solan, and addressed to Assistant Commissioner of Income-tax, Panchkula Circle, Panchkula. The relevant part of the said letter is reproduced hereunder, for the purpose of proper appreciation of its texts and nature thereof : "Sr.No. 107-109 Office of Tehsildar Nalagarh,Distt.Solan Issued to Shri Sunil Kumar Sood Under RTI Act Sd/- Nalagarh 7th January,2008 Public Information Officer Cum SDO(C) Nalagarh Distt.Solan (HP) 19/02 To, Asstt. Commissioner of Income Tax Panchkula Circle, Panchkula. On the above cited subject refer your office letter No. ACIT/PKL/Cir/Pkl/07-08/1A/3073 dated 31.10.2007 and in this regard, we have got investigated the information from our field employees and the report is as under: 1. Copy of Jamabandi of land bearing khasra 1341/3, 1341/2-1338-1339-1336-1337-1335-1319-1345/1, 1347/1, in village Bhatoli Kalan is prepared and submitted. 3(a) The above land does not fall under M.C.Corporation, NAC. (b) Nagar Panchayat ....
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....have been prepared and enclosed with the report. 2.(a) The above land does not fall under M.G. Corporation, N.A.C. (b) The distance from Nagar Panchayat Baddi to land in above khasra number is between 8 to 10 KM. (c) The distance of land is more than 8 KM. (d) The census record is not available in Patwarkhana. 3. The above said land as per revenue records is cultivable changer Awal Barani land and the land taxes are paid by the owners to the Government. 4. The sold land had been used for agricultural purpose. 5. On said land the agricultural activity had been carried out since long time. 6. Not applicable and not related to records. 7. Himachali Agriculturist does not require any permission from Government while buying or selling of land but if the purchaser is non-agriculturist then it is a necessity that he has to obtain permission from Government U/s 118 of H.P. Tenancy and Land Reforms Rules 1972. The above said land was agricultural land at the time of purchase and sale. 8. On relevant date the above land was agricultural land and the laser has purchased this land for setting up an Indust....
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.... As noticed by the AO, the land was actually not under cultivation in the assessment year under consideration. The AO, further, observed that the land was not under cultivation, even before the period under consideration, as is clear from the jamabandi of 1998-99, wherein it is shown that no lagan was paid nor any revenue was paid on this land. The assessee has not given these lands on lease for agricultural purpose, as is evident from the fact that assessee had not shown any income from agriculture. The AO, further, observed that on the relevant date of sale, land was not used for agriculture purpose, but was lying vacant, without any agricultural activity carried thereon. Thus, as per AO, there was no agricultural activity, on the said land. The AO, further, pointed out that the land was sold to industrial houses, for non-agriculture purpose, hence it does not satisfy the general tests laid down in the case of Sarifabibi Mohmed Ibrahim & others V CIT (supra). The AO, further, highlighted that these lands were purchased at a very low cost and sold for huge profits, to industrial houses. The AO was of the view that no agriculturist would purchase the land for agricultural purposes,....
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.... of the counsel for the appellant and the observations and findings of the AO in the assessment order. The appellant has earned profit of Rs. 82,01,796/- on sale of land in H.P. The appellant has claimed the profit exempt on the ground that the land is not a capital asset as per section 2(14}(iii) of the Income Tax Act, 1961 for the reason that it was agricultural land and was situated in rural areas. The AO discussed the general principles and tests laid down by various courts to ascertain whether the land sold is agricultural land and falls in the scope of section 2(14)(iii). The AO discussed the principles laid down in the following judicial decisions:- (i) Sarifabibi Mohmed Ibrahim and others versus CIT 204 ITR 631 (SC) (ii) Begumpet Palace case 105 ITR 133 (SC) (iii) CIT v. Siddharth J. Desai 139 ITR 628 (SC) (iv) The Full Bench of Andhra Pradesh High Court 72 ITR 552 (v) CIT v. V. A. Trivedi 172 ITR 95 (Bom.) After discussing the gist of the above decisions and the principles laid down for determining whether the land is agricultural land, the AO observed that the land was actually not under cultivation in the assessment year un....
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....The counsel for the appellant on the other hand has argued that the appellant is a bonafide agriculturist and purchased the lands for agricultural purposes. A person who is not from H.P. cannot purchase lands for agricultural purposes in H.P. The lands were purchased from the owners who were cultivating these lands for agricultural purposes since many years. The lands were situated in rural backward area of village Bhaioli Kalan (H.P.) which is beyond the municipal limits of any Nagar Panchayat or Cantonment Board. The Sands were purchased for use of agricultural purposes without any intention to sell for which reason Power of Attorney was taken in the name of third person Sh. Harish Aggarwal so that the lands can be registered in the name of assessee as and when required. The lands were permanently used for agricultural purposes at me time of purchase and also during the holding by the assessee and classified as agricultural land being used for agricultural purposes, in the revenue records. The lands were shown as fixed assets in the respective Balance sheets and not as stock in trade, hence the book keeping records also support the intention of the assessee. Sale of some of these....
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....ons, it was explained that maize was produced from the agricultural land which was consumed by the family and was also distributed amongst the relatives and the persons attending to the agricultural operations. The counsel argued that the land was classified as Changar Abal Barani which do not require irrigation and are cultivable Land and do not require any electrical or water connection for cultivation. The counsel argued that the Patwari in his report dated 03.11.2007 has stated that the lagan and revenue taxes had regularly been paid. The counsel argued that the assessee held these agricultural lands for an average period of more than a year. Therefore, the A.O. has erred in her judgment and has ignored a vital fact that the agricultural lands were always classified as fixed assets. The lands were not put to non agricultural use. The assessee did not purchase these lands at a low cost from marginal farmers and consolidated into large chunks to sell them but to consolidate into a bigger piece of land as any agriculturist would have done. The surroundings of the land were such as to indicate that the land was agricultural. 6.2 On careful consideration of facts and submi....
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.... been shown by the appellant from the agricultural land which he was supposed to do even if the produce was used for self consumption. The AO has clearly brought on record the fact the land was purchased at low prices from marginal farmers and sold within a short interval of time co industrial houses for earning huge profits. The lands were therefore not held as agricultural lands by the appellant. There is no doubt that the revenue records show that the lands are agricultural in nature and have been cultivated but this is only an evidence created by the appellant since he is a Chartered Accountant and very well knows the provisions of law. The revenue records have been maintained by the appellant to create a defense that the lands sold are agricultural, in the present case, the facts as they actually exist are different from the arrangement made by the appellant in the form of revenue records and hence it is the substance which has to govern the field and not the form. In the present case, the substance is that the appellant purchased and sold lands for earning profit and not for agricultural purposes though in form he has created evidence in the shape of revenue records to show t....
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....he buyer. This has been admitted by me assessee. This shows that the assessee had no intention to have the ownership of the asset but to dispose it off at the earliest. The AO relied on the decision in the case of Karam Chand Thapar and brothers (P) Ltd vs. CIT (1971) 83 ITR 899 in which it was held by the Supreme Court that the circumstance that the assessee had shown certain assets as investment in its books as well as its balance sheet was by itself not a conclusive circumstance, though It was a relevant circumstance. The AO also relied on decision of the Authority for Advance Rulings (AAK) (288 ITR 641. The AO concluded that the assesses purchased the lands with the intention of making profit on their sale and thus is engaged in a business activity. 7.1 The counsel for the appellant on the other hand firstly argued that the decisions relied upon by the AO in the cases G. Venkataswaniy Naidu & Company v. CIT (35 ITR 594), Karam Chand Thapar and brothers (P) Ltd. V. CIT (1971) 83 ITR 899 and the decision of the Authority for Advance Rulings (AAR) (282 ITR641) are not applicable since the facts are different. Secondly the counsel argued that the agricultural lands purchased dur....
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....d of any merit and is rejected. Passing of entries in the books of account or the balance sheet ear-not determine the intention of the appellant since it is the substance which has to govern the field and not the form. From the facts and circumstances of the case the profit motive and the intention of the appellant to earn profit is clear. The AO has rightly treated the profit on sale of lands as business income. The second ground of appeal is also rejected." 9. The assessee appellant submitted before the CIT(A) that the assessee is a practicing C.A. and bonafide Himachali agriculturist, since 20.12.2002. During the financial year 2003-04, the assessee purchased 82.18 bighas rural agriculture land in Himachal Pradesh beyond municipal limits or cantonment board. The land was purchased with the intention to do agriculture operations and the same was shown as fixed asset, in the audited balance sheet, as on 31.3.2004. During the relevant A.Y. 2005-06 (F.Y. 2004-05), the assessee sold 52.06 bighas of land and purchased 28.17 bighas of land and the land was shown as fixed asset, in the audited balance-sheet as on 31.3.2005. The assessee stated that the purpose of purchasing the land ....
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.... the decision, in the case of Begumpet Palace (supra) wherein the land in question was situated within the municipal limits of Hyderabad and had buildings enclosed within the combined walls and was not ploughed or tilled. However, the facts of the present case are entirely different and, hence, distinguishable from the facts of the land, on which the case of Begumpet Palace (supra) was decided by the Hon'ble Supreme Court. The AO also referred to the decision of the Gujrat High Court, in the case of CIT V Sidharath J.Desai (supra)and Bombay High Court, in the case of CIT v. V.A.Trivedi (supra). It is added that these cases were mentioned and explained by the Hon'ble Supreme Court, in the case of Sarifabibi Mohmed Ibrahim & others V CIT (supra). The Hon'ble Supreme Court observed that; "whether a land is agricultural land or not, is essentially a question of fact. Several decisions have been evolved in the decisions of this Court and High Courts, but all of them are more in the nature of guidelines. 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 the particular point of vie....
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....the land, on the date of purchase and sale, which is relevant and not the potential use by the purchaser of the said land, for the purpose of determining whether the land is agricultural one or otherwise. The assessee had distinguished all the case laws relied upon by the AO and stressed that the decision, in the case of CIT V Sidharath J.Desai, relied upon by the AO (supra) wherein certain cases have been mentioned by the Hon'ble Gujrat High Court, help the case of the assessee and not that of the revenue. It was, further, argued by the assessee before the CIT(A) that agricultural land was purchased in bighas and sold in bighas, without there being any attempt to develop the land and cutting it into plots and to sell the same. No amenities were provided for the purpose of developing any colony on such lands. Therefore, general tests or guidelines laid down, in the decision of the Hon'ble Supreme Court, in the case of Sarifabibi Mohmed Ibrahim & others V CIT (supra) clearly demonstrate that the land of the present appellant is agricultural land. The AO, as well as the CIT(A), placed reliance on the decision of the Hon'ble Supreme, Court in the case of Sarifabibi Mohmed ....
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....nce that it is granted almost as a matter of course ). In fact, it is on record that the purchaser society commenced actual construction on June 2, 1969, i.e. within 3 days of the execution of the Sale Deed in its favour by the assessee, in anticipation of the permission. No agricultural operations were carried on since 1964-65 till the sale in 1969. It is in such factual matrix, the Hon'ble Apex Court held that such a piece of land cannot be treated as non-agricultural land. 11. It is significant to record here that in the present case, the Tehsildar, Nalagarh, Distt. Solan (HP) vide letter dated 7.1.2008, addressed to ACIT, Panchkula Circle, Panchkula, furnished certain vital and material details, in respect of lands in question. The AO called for such information u/s 133(1) of the Act, in the case of the assessee appellant, for the purpose of supporting her findings while framing the impugned assessments. However, on receipt of such information, the AO did not discuss such information and no reliance was placed on such information emanating from the office of Tehsildar, while passing the assessment order, for the reasons best known to her. The assessee called for su....
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....x Court whereby the land was situated within the municipal limits of Surat. In the present case, land is situated outside the municipal limit. In the case law relied upon by the revenue, plot was sold on per sq.yd. basis whereas, in the present case, land was purchased and sold on bigha basis. In the present case, agricultural operations were undertaken on the said land, on the date of purchase as well as on the date of sale, as is evident from clear contents of the letter of Tehsildar, reproduced above. However, in the case, relied upon by the revenue, no agricultural operations were carried on, for the last four years. The assessee appellant, in the case relied upon by the revenue, had applied for permission to sell the land for non-agricultural purposes u/s 63 of the Land Revenue Code. In the present case, no such permission was ever applied for by the appellant. It is, further, added that 15 years back, a parcel of 2607 sq.yd. out of this very land, in the case relied upon by the revenue, was converted by the assessee, to non-agricultural use, by constructing a chawl on it, by the owner themselves. There is no such conversion of land in the present case. In view of this, the fa....
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....see, till it was sold, has to be treated as agricultural land, even though no agriculture income was shown by the assessee from this land and therefore, no capital gain was taxable on the sale of the said land. Similarly, Hon'ble Gujrat High Court in the case of Sercon Pvt. Ltd. V CIT 136 ITR 881 held that it is well settled law that the character of the land, namely whether it is agricultural land or whether it has ceased to be agricultural land, has to be judged as on the date of sale. The Hon'ble Gujrat High Court, on the facts of the case, further, held that since the land, at the time of sale was entered in Government revenue records as agricultural land, a presumption arose that it was agricultural land in character and the surplus realized on its sale was not capital gains liable to tax. 14. The revenue has failed to bring material on record to demonstrate that the assessee is a dealer in lands. The assessee has shown the lands in his audited balance sheet as fixed assets and this factum remained unrebutted by the revenue, and is a relevant factor in unfolding the intention of the assessee. Mere frequency of purchase and sale of land is not a conclusive evid....