TaxTMI 
TaxTMI 
2017 (6) TMI 1117
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...., the facts as narrated in ITA 2496/M/16 are reproduced here. The AO noticed that the assessee along with his four family members have sold a land at Kunnukadu Village on 24.02.2012. They have owned the land by way of inheritance from their father, late V.S.Shah, who has purchased the agricultural lands measuring 8.30 acres of land bearing survey number 26/1A on 5.7.1984. The assessee sold 3.92 acres of land on 24.2.2012 for sale consideration of Rs. 11,66,00,000/-. However, in the return of income, the capital gain was not shown. The AO sought clarification in this regard in the assessment proceedings. The Authorized Representative contended before the AO by giving written submission that the land sold was an agricultural land and it fall beyond 8 kms from the municipal limit of Chennai Municipal Corporation, therefore, on sale of agricultural land there is no capital gain arises and hence, the same was not incorporated in the return of income. The AO did not find the explanation offered by the assessee satisfactory and arrived at a conclusion that there were no agricultural activity carried on and further relying on the Inspector's report that the land sold is at a distance of 7.....
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....nded by written submission stating that the agricultural land measuring 8.30 acres comprised in survey No.26/1A, Kunnukadu Village, Village No.45, Chengalpet Taluk, Chengalpet District was purchased by the late S.V.Shah on 5th day of July, 1984. His legal heirs (wife- Ms.Bharati V. Shah & four sons - Mr. Hitesh V. Shah, Rajesh V Shah, Mr. Ajay V. Shah & Mr. Vijay V Shah) are looking after the said property and developed the said property in different intervals to do the agricultural activities (filling the land, dig well & protect with boundaries). 4.1 The CIT(Appeals) observed that they did agricultural activities in last several years including the financial year 2011- 12 and admitted the agricultural income in the filing the Incometax Return. They have submitted the reports like Chitta, Adangal, Patta, VAO Certificate and SRO Certificate before the AO. At the time of assessment proceedings, the assessee had submitted various documents & reports Chitta, Adangal, Patta, etc. and letters from Government Departments like VAO, Govt. Surveyor, SRO, BDO and also RTI Acts and proved that the concerned land is an agricultural land and also exempted as per Income-tax Act. But voluntari....
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.... measure the distance correctly because the Inspector will not be familiar with the Chennai City Corporation Limit, map, boundaries, boundaries of the last part etc., moreover, he may not be well versed with the technique of measurements of the distance. Therefore, the ld. AR pleaded before the CIT(Appeals) that the issue be decided based on report of government surveyor's, who is the authority on measuring lands and distance. The ld. AR, pinpointed that the Inspector has taken the measurement from the sign board, where it is mentioned Kannathur by the local authority for an identification of that area and the Inspector taking it as a limit point for measuring a distance is not correct. It is difficult for the Income-tax Inspector to find out the last survey number on physical land i.e. identify last survey number or plot physically online. The ld. AR has produced the distance report from government surveyor, who has identified from the government order, new Chennai city Corporation map and RTI Acts, that Uthandi Toll Plaza and Ragass Dental College & Hospital stating the plot is 191 is the last boundary point for Chennai city Corporation Territory limit and has given the diagram o....
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....d that there is no agricultural activities carried out in the said land for past 3 years prior to sales. The evidences collected by the Assessing Officer showed beyond doubt that no agricultural activities were carried on in the properties sold by the assessee. The Assessing Officer found that the entire area has become a semiurban area with a lot of real estate development and educational institutions coming around. The Assessing Officer has established the fact that agricultural activities were not carried out, not only in the properties owned by the assessee, but also in the surrounding areas. Even though the 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 D.R 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....
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.... g) in the case of Pavadai Pathan Vs. Ramaswami Chetty AIR 1922 Mad. 351. 16. We heard both sides in detail and gone through the orders of the lower authorities, the arguments of the parties as well as the various decisions relied on by them. 17. The crux of the arguments advanced by the assessee in the present case is that the lands sold by him were shown as agricultural land in revenue records. The Hon'ble Gujarat High Court in the case of CIT vs. Sarifabibi Mohamed Ibrahim (136 ITR 621) has held that, the fact that the 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 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. ....
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....gricultural 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 Chennai Metropolis 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 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....
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.... 23. It is, in this context that we have to refer the arguments of the assessee that the assessee had reported agricultural income in his returns of income for assessment year at `11,760/-. 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. 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 assessee for few assessment year do not go to change the character of the land. 24. 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 ....