TaxTMI 
TaxTMI 
2017 (8) TMI 329
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....s were deposited/credited in the account of the assessee much before the date of sale and the assessee failed to explain the source of whole amount." 3. The brief facts of the case are that the AO has made the addition on account of agricultural land amounting to Rs. 11,66616/- and also with regard to the deposits before the date of sale amounting to Rs. 26,81,000/- which were deleted by the learned CIT(A) and the Revenue is in appeal before me. 4. I have heard the rival contentions and perused the facts of the case. I have gone through the entire assessment order and the order of the learned CIT(A) which in fact is reproduced hereinbelow: "I have duly considered the facts and circumstances of the case. There are three issues of dispute in this appeal. The first is relating to the introduction of cash into the bank accounts of the assessee, which the assessee has explained as arising from the sale of agricultural land but the AO has treated to be unexplained as the same was not explained by the sale deeds, which were concluded for a lesser value. The second is the addition on account of capital gain, which the assessee first conceded but has now challenged in appeal ....
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....hmed to Tajbar Singh Bhandari. Even the final registrations have been done at circle rates far below the prices stated in the agreement for sale. Thus, the attempt is to evade stamp duty on the transactions. However, as a result of the same, there is no clear audit trail that could act as proof of the source of deposit in the said bank accounts. Be that as it may, there is circumstantial evidence that would back up the assessee's story. The assessee did enter into an agreement for sale to transfer its lands at a particular rate; the persons with whom he concluded the agreement for sale have confirmed this agreement and paid advance by cheque; the assessee has disclosed the total quantum of such receipts which tally with the agreement for sale; the people through whom he has gotten such receipts has confirmed that they acted as conduits for the payment of this quantum of money to the assessee for the sale of his land. Moreover when an agreement for sale had been concluded at a particular rate, there was no logical reason for there to be a sudden drop in the price of land unless there was a title dispute or distress sale. Since neither was true, the third explanation could only b....
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....Ahmad entered into an agreement with Shri Tajbar Singh Bhandari or no. To my mind that is immaterial to the assessee's case. Once they have confirmed that the paid the money to the assessee on account of the sale of his land, the source of the money is to be investigated in their hands. As far as the assessee is concerned, the source is explained. Therefore it cannot be regarded as unexplained investment and brought to tax as such. Therefore the addition made by the AO on this account is unsustainable. Similarly, the AO has made addition on account of money stated to be received son in law Shri Rakesh Bisht Rs. 300,000/- of such deposit has been confirmed by Shri Rakesh Bisht by way of affidavit. Shri Rakesh Bisht has also filed copies of his income tax returns which have been examined by the AO. In the circumstances there does not seem to be any occasion to hold any part of the deposit made on his account as unexplained or taxable. As regards the repayment loan from Neelarn Adhikari, I have already pointed out in my appeal order for A.Y.2010-11, that as the same is quite clearly a repayment of loan, it is not taxable. It is seen that the bank has certified that it was the husb....
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....that was transferred and that Shivrajpur Patti is more than 8 kms. Outside municipal limits of Kotdwar Municipalities per the certificates issued by the Nayab Tehsildar and the Gram Panchayat. It is also seen that as per the govt. records the land was agriculture land. In the circumstances, there cannot be any capital gain on the sale of this land because it is not a capital asset. The assessee even while surrendering the same, before the A.O. had submitted that he had not offered it earlier because it was agricultural land and he was under the impression that sale of agricultural land was not taxable. Hence the surrender taken by the A. O. was not as per the law. Accordingly, since the land was agricultural land located outside 8 kms. from the municipal limits, no capital gains can be levied on account of the sale of this land even If some plotting was done before its sale. Accordingly, the addition of Rs. 3,09,300/- in this regard is deleted." The view of the Assessing Officer that once the assessee began to do plotting on the land it ceased to be agricultural land was examined by me in great detail in the case of the Assessee's brother Shri Hari Singh Adhikari in ap....
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.... plea of the assessee after he came to the conclusion that the land was not within 8 kms of municipal limits and were agricultural lands. The ITAT upheld the conclusion drawn by the AAC. The matter came before the Hon'ble High Court which held that "on the findings recorded by the Tribunal that the land was agricultural land and stood beyond 8 kms of the municipal limits of Saharanpur, it was not included in the definition of capital assets as given in section 2(14)(iii) of the Act. Thus, there is no infirmity in the order of the Tribunal". Further in the case of Hamiks Park Pvt. Ltd. Vs. Ward-2(2), Hyderabad (2014) 41 Taxman.com 109 (HYD- Tribe), the Hon'ble ITA T, while examining the case of assessee who was engaged in agricultural operation on land classified as agricultural land in revenue records and transferred such land on as is and where is basis to a developer held that since the land was situated In rural area outside the municipal limits, and since agricultural operations were being carried out by the assessee on the said land and since it was classified as agricultural land in revenue records, the said land did not come within the purview of capital asset uls 2(14) ....
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....the purpose of construction, but it was not the assessee who was to raise any building thereon and, therefore, so far as the assessee was concerned, it never ceased to be agricultural land and because the assessee so long as he remained the owner of the land did not use it for non- agricultural purposes, the assessee's lands could not be treated as non agricultural land for the purpose of computing of his net wealth. In the case of M.S. Srinivas Naicker V. ITO (2008) 169 Taxman 255 (Mad.), the Hon'ble High court of Madras observed that the chargeability of tax uls 45 arise only if on the date of sale, the land in question retained it character as a capital asset, which means, an asset which did not answer to the description of capital asset and which is an agricultural land falling within the definition of section 2(14) would automatically be outside of the section 45. What emerges from all these case laws is that once it is established that the land in question was held outside 8 kms from municipal limits or even within 8 kms but no notification had been it then even if the assessee divided the land into small plots and sold it, the the nature of the land did not change as....