2018 (7) TMI 753

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....ear 2007-2008. The income tax return was processed under Section 143(1) of the said Act and the assessment was completed on 29.12.2009. Later, notice under Section 142(1) read with Section 129 of the said Act was issued on 16.2.2015. 3. It appears that during the previous year relevant to assessment year 2007-2008, the respondent assessee had sold agricultural land at Pudupakkam village and Santhankuppam village, Chengalpet Taluk, Kancheepuram District for Rs. 14,90,00,000/- and claimed exemption on the ground that the land being agricultural land, the same did not attract capital gains. 4. After considering submissions of the respondent assessee and/or his representative, the Assessing Officer disallowed the exemption of Rs. 14,38,86,650/- claimed by the respondent assessee on the ground that the agricultural land had not been sold for agricultural purpose. The Assessing Officer took note of the fact that the respondent assessee had not been deriving any income from agricultural operations and incurring only losses. 5. Being aggrieved, the respondent assessee appealed to the Commissioner of Income Tax (Appeals)-15, the appeal being I.T.A.No.173/2015-16/CIT(A)-15, which wa....

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....hows that he has rejected the said Inspector's Report on the ground that the same is unsigned. The signing or un-signing of Inspector's Report is not within the control of the assessee. The fact that such Report was available in the assessment records and the same has also been referred to in the scrutiny assessment proceedings completed on 29.12.2009 clearly shows that the agricultural operations were also carried on the said land and is a valid document. Further, the assessee's case as to whether the running of Nursery was agricultural or not had been considered by the Hon'ble Jurisdictional High Court of Madras and running of the Nursery has been held to be agricultural operation. A perusal of the Assessment Order also shows that the AO has recognized that the assessee was running a Nursery under the name and style of Soundariya Nursery. A perusal of the provisions of Sec.2(1A) as also Sec.2(14)(iii) shows that agricultural land is not liable to be treated as a capital asset subject to the condition that the land is situated in an area where the Municipality has a population of less than 10,000 or at a distance of more than 8 Kms from Municipality or cantonment w....

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.... does not include agricultural land, except for agricultural land exempted under Clauses (a) and (b) of Section 2(14)(iii) of the Income Tax Act. The learned Tribunal, in effect and in substance, held that the land in question did not come within any of the exceptions to the definition of agricultural land enumerated in Section 2(14)(iii) of the Income Tax Act. 10. The short question before us is whether this appeal filed by the Revenue against the order of the learned Tribunal should be entertained? 11. Section 260A of the Act provides as follows: "Section 260A. Appeal to High Court. (1) An appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal before the date of establishment of the National Tax Tribunal, if the High Court is satisfied that the case involves a substantial question of law. (2) The Principal Chief Commissioner or Chief Commissioner or the Principal Commissioner or Commissioner or an Assessee aggrieved by any order passed by the Appellate Tribunal may file an appeal to the High Court and such appeal under this sub-section shall be- (a) filed within one hundred and twenty days from the ....

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....rinciples for deciding when a question of law becomes a substantial question of law. 14. In Hero Vinoth Vs. Seshammal reported in (2006) 5 SCC 545, the Supreme Court followed Sir Chunilal V. Mehta & Sons (supra) and other judgments and summarized the tests to find out whether a given set of questions of law were mere questions of law or substantial questions of law. 15. The relevant paragraphs of the judgment of the Supreme Court in Hero Vinoth (supra) are set out herein below : "21. The phrase substantial question of law , as occurring in the amended Section 100 CPC is not defined in the Code. The word substantial, as qualifying question of law , means of having substance, essential, real, of sound worth, important or considerable. It is to be understood as something in contradistinction with technical, of no substance or consequence, or academic merely. However, it is clear that the legislature has chosen not to qualify the scope of substantial question of law by suffixing the words of general importance as has been done in many other provisions such as Section 109 of the Code or Article 133(1)(a) of the Constitution. The substantial question of law on which a seco....

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....not be a substantial question of law." 22. In Dy. Commr. v. Rama Krishna Narain [1954 SCR 506 : AIR 1953 SC 521] also it was held that a question of law of importance to the parties was a substantial question of law entitling the appellant to a certificate under (the then) Section 100 CPC. 23. To be substantial a question of law must be debatable, not previously settled by law of the land or a binding precedent, and must have a material bearing on the decision of the case, if answered either way, insofar as the rights of the parties before it are concerned. To be a question of law involving in the case there must be first a foundation for it laid in the pleadings and the question should emerge from the sustainable findings of fact arrived at by court of facts and it must be necessary to decide that question of law for a just and proper decision of the case. An entirely new point raised for the first time before the High Court is not a question involved in the case unless it goes to the root of the matter. It will, therefore, depend on the facts and circumstance of each case whether a question of law is a substantial one and involved in the case or not, the paramou....