TaxTMI 
TaxTMI 
2007 (1) TMI 149
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....it on sale of the lands is assessable as capital gains ?" 3. As regards T. C. No. 139 of 2003, one more question is raised viz., "Whether on the facts and in the circumstances of the case, the Tribunal was right in partly confirming the addition to gross profits ?" 4. These appeals relate to the three different assessments for the assessment year 1993-94. They pertain to the relief from liability on the capital gains in respect of the three different assessees in respect of the same property, wherein, they enjoyed undivided shares. The assessee contended that the property in question, which is the subject-matter of sale, was an agricultural property and hence, it could not be subjected to any liability under the provisions of....
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.... industrial area. 7. With the abovesaid facts in the background, the assessing authority viewed that the lands in question were not possessing the character of agricultural lands. However, he noted the facts in favour of the assessee that the lands were registered as agricultural lands, land revenue was paid; that there was no evidence that the lands in question were not put to any other purposes other than agriculture and that there was, in fact, cultivation till the date of sale. However, the Assessment Officer rejected the claim of the assessee that the lands in question were agricultural only based purely on the intention of the intending purchasers that the assessee was liable to pay tax on the gains on the sale of these lands. In t....
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.... yet, going by the purpose of its transfer, essentially, the land was non-agricultural in character. Consequently, the appellate authority sustained the order of the Assessing Officer and, thus, dismissed the appeal. 9. On further appeal, referring to the provisions contained in section 2(14)(iii), the Tribunal held that applying the provisions of law and on the factual aspects, it was clear that the land in question was not agricultural land. Hence, it confirmed the view of the authorities below. Aggrieved by the same, the assessees have come on appeal before this court. 10. Apart from the common issue in all the appeals, with regard to yet another issue, namely, addition towards gross profits in T. C. No. 139 of 2003, the Tribunal h....
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....52 ITR 565, that the purposes to which the purchase of lands was put subsequent to the sale has no relevance as regards the character of the land at the hands of the vendor as on the date of sale. Consequently, the fact that the purchaser has put it for a totally different purpose from that of the assessee ought not to have weighed with the tax authority in the matter of denying the relief. 13. Learned counsel for the assessee has also placed reliance on the decision of this court in CWT v. E. Udayakumar reported in [2006] 284 ITR 511, at page 514, wherein it is held that the purpose of the purchase by the vendee is totally an irrelevant consideration for the purpose of the application of the provisions relating to capital gains. 14. ....
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....le the assessee had knowledge that the purchaser was going to put the lands in question to use different from what the assessee had been using for ; that it was a clear indication that the land in question was no longer an agricultural land. In the circumstances, he submitted that the Tribunal was justified in its view that the lands in question are no longer retained in their character as agricultural land and hence capital assets attract a heavy tax under the provisions of section 45. 16. We have gone through the orders passed by the authorities below, confirming the assessment on the capital gains, arising out of the sale of the lands. 17. The contention of the appellants herein merits acceptance by this court. It is an admitted fa....
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.... the lands in question but as held in the decisions cited above, with the admitted finding that the lands in question were under agricultural operation on the date of sale for the purpose of considering the meaning of capital assets, it matters very little how the subsequent purchaser intended the land in question to be put to use. 20. In the circumstances, going by the law declared by this court and the Supreme Court on the admitted facts, we do not find any reason to accept the plea of the respondents/Revenue that the asset in question is a capital asset and it attracts levy of capital gains tax, it having shed its character as an agricultural land on the sale effected. 21. In the decision reported in CWT v. E. Udayakumar [2006] 284....