AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2017 (1) TMI 937
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....ners. 3. On the facts and in the circumstances of the case the Ld. CIT(A) erred in observing that the assessee is an agriculturist who was engaged in agricultural activities in the said agricultural lands without appreciating that the land at Kirmiti was used only for grazing purpose and an activity of growing grass would not make the assessee an agriculturist. 4. On the facts and in the circumstances of the case the Ld. CIT(A) erred in observing that the assessee is an agriculturist who was engaged in agricultural activities in the said agricultural lands without appreciating that the land at Tumudi as mentioned in the agreement was given to carry out development activity and to obtain permission from Town Planning for developing a layout of Plots and no proof of any agricultural activity was submitted by the assessee on this land. 5. On the facts and in the circumstances of the case the Ld. CIT(A) erred in not applying the ratio of the decision of Hon'ble Supreme Court given in the case of G. Venkatswami Naidu and Co. vs. CIT reported in 35 ITR 594 to the facts of this case which gain was derived out of the sale of agricultural lands was an adventure in the nature of tra....
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....come. 5. The AO considered the submissions of the assessee but did not agree with the same and added the said amount of Rs. 43,50,000/- to the income of the assessee and held the said activity to be an adventure in the nature of business. Aggrieved by the same the assessee appealed before the learned CIT(Appeals). 6. Upon assessee's appeal Learned CIT(Appeals) elaborately considered the issue. He observed as under : "5. I have considered the facts of the case and submissions of the appellant. I have also perused the remand report and the response of the appellant to the remand report. It is noted that the Ld. AO has added the said amount of Rs. 43,50,000/- to the income of the appellant for the following reasons: (a) That the land situated in Mouza Kirmiti is not agricultural land and has been categorized as "Barren and Charai" as per the 7/12 extracts. (b) That the assessee is not the owner of the lands sold and that he has not executed the sale deed in respect of land in which he has made agreement to sale. It is the case of the Ld. AO that he has only transferred his right to purchase the said agricultural land. (c) That the appellant has held the two lands for ....
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....luded that both the lands in question are agricultural lands situated beyond 8 kms from the municipal limits. 7. With regard to the second issue it is seen that as per section 2{ 14) of the Income Tax Act, "capital asset" means property of any kind held by an assessee, whether or not connected with his business or profession, but does not include ... Thus the definition of the capital asset lays emphasis on the fact that the property in question should be 'held by' the assessee. In the case under consideration the property was clearly held by the appellant In view of the fact that the possession of the said property was handed over against payments or against promise to make payments although the registration of both the properties remained in the name of the transferor. It is important to note that transfer of immovable property can take place for following two methods: where conveyance deed is registered and where conveyance deed is not registered. 7.1 Where the conveyance deed is not registered the transfer would be governed by provisions of section 2(47)(v). It is not disputed hat certain amounts have been paid by the appellant in respect of the said lands. It is ....
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....he case under consideration, the said property is admittedly situated beyond 8 kms. from the municipal limits and would therefore be exempt from capital gain tax. 8. With regard to the third contention of the Id. AO of treating the income as adventure in the nature of trade, the said issue has been a matter of much debate and Is now settled by various case laws. There are various judicial pronouncements wherein it had been held that the sale consideration out of sale of agricultural land is not assessable as business income when such agricultural land Is situated beyond 8 kms. and that it is not Important whether there was any agricultural income or not and that the moot question to decide the Issue Is whether the character of the land is agricultural or not. It has also not been held that any consideration received out of sale of agricultural land cannot be treated as business income." 7. Thereafter learned CIT(Appeals) referred to several case laws. The Learned CIT(Appeals) concluded as under : " Thus the crucial question is to determine whether the character of the land is agricultural or not. If the land is agricultural and beyond 8 kms., sale consideration has to be hel....