TaxTMI 
TaxTMI 
2017 (5) TMI 1039
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....trade at Rs. 125/ per sq.ft after considering the prevailing market rate at the time of conversion. 4. For that the order of the Commissioner of Income Tax (Appeals) erred in upholding that the impugned land was not an agricultural land. 5. For that the order of the Commissioner of Income Tax (Appeals) failed to appreciate that capital gains does not arise as per section 45(2) on conversion of agricultural land into stock-in-trade. 6. For that the order of the Commissioner of Income Tax (Appeals) failed to appreciate the evidences and documents furnished by the appellant. 7. For that the order of the Commissioner of Income Tax (Appeals) erred in upholding the disallowance of 10% of various expenditure incurred by the appellant. 8. For that the appellant objects to the levy of interest under sections 234A, 234B and 234C of the Income Tax Act." 3. The facts of the case are that the assessee is an individual and engaged in real estate business. The assessee had received 4.68 acres of land through a power of attorney on 21.11.2006 from Dr. S. Karuppasamy and paid Rs. 14,00,000/- through unregistered sale deed dated 7.11.2006. The said land (extent 5.89 acres) was originally....
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....149/- after accommodating the revalued amount for stock-in-hand and after adjusting the business income already declared by the assessee, made an addition of Rs. 1,18,41,369/-. The AO also disallowed a sum of Rs. 1,96,953/- being 10% of various expenditures for which the assessee could not produce bills and vouchers and added the same to business income of the assessee. Accordingly, the AO completed the assessment for the AY 2010-11, assessing the assessee's total income at Rs. 1,36,50,590/- and raising a demand of Rs. 60,24,575/-. Aggrieved, the assessee went in appeal before the CIT(Appeals). 4. On appeal, the CIT(Appeals) observed that the land is not an agricultural land, as no agricultural activity is carried out in the said land and the land was converted into non-agricultural use and the land was divided into plots. If the valuation of land, on the date of conversion is that it is to be valued at Rs. 53 per sq.ft. as the fair market value of the property as on 1.1.2007. Accordingly, he directed the AO to compute the capital gains and the business income. Against this, the assessee is in appeal before us. 5. We heard both sides in detail and gone through the orders of the ....
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....rried out in that area. The assessee was not in fact carrying on any agricultural activities. The letter given by the Tahsildar is very important. He has stated the reasons as to why the agricultural activities were not being carried out on those properties and land was not suitable for cultivation (Puncture). 8. The letter given by the Tahsildar has categorically established the finding of the Assessing Officer that the lands sold by the assessee in the previous year relevant to the assessment year under appeal were not agricultural land. The past history of the land alone is not the deciding factor. Once upon a time the land might have been used for agricultural operations. In that way of speaking, almost all parts of Chengalpet Region might be agricultural or marshy land in good old past. Therefore, history is not the only test to be applied to decide the character of the land at the time of sale. A temporary stoppage in the agricultural 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 y....
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.... no agricultural operations carried on by the assessee. There was no economic utilization of land for the purpose of earning agricultural income. In the facts and circumstances of the case, we find that the land was not actually or ordinarily used for agricultural operations on or around the relevant time of sale. It is also to be seen that even in any assessment year, the income returned from agricultural operations carried on in the land was just for namesake and does not have any proportion to the efforts usually that would have been made by a true agriculturist. At the time of sale of land also no agricultural activities were carried on by the assessee. 13. In these circumstances, it is our considered view that the Assessing Officer has conclusively established that the lands sold by the assessee in the previous year relevant to the assessment year were not agricultural in nature, but, on the other hand, they are non-agricultural land. Therefore, it definitely comes under the category of "capital asset". Further, the assessee has converted it into stock-in-trade and also the assessee during the financial year 2006-07, obtained NOC from Tahsildar, Sriperumpudur on 18.12.2006 an....