TaxTMI 
TaxTMI 
2018 (7) TMI 1621
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....ears prior to the date of its transfer? (ii) whether the Tribunal is justified in holding that agricultural operations were carried on in the transferred land relying on the certificate issued by the Village Officer, in view of the decision of the Hon'ble High Court of Kerala in the case of Smt. Asha George vs. Income Tax Officer [(2013) 351 ITR 123]? (iii) Was the Tribunal justified in holding that the transferred asset was an agricultural land in spite of the fact that there were four buildings therein?" 2. The learned Standing Counsel for the Revenue submitted that the assessee is a partner in various firms and has also substantial land holdings. The assessment as carried out for the year 2010-2011 was with respect to sale of a property having an extent of 2.42 acres in Survey No.485 and Re-survey No.146/2 of Chelembra Amsam. The property was sold for a total consideration of Rs. 3,38,63,200/-. The said property was purchased in the year 1981 by the father of the assessee and devolved on the assessee on the death of his father. The property was purchased, from the assesee, by the owners of a newspaper, who have later made constructions thereon wherein the offices and....
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....768 [Commissioner of Income Tax, West Bengal v. Benoy Kumar Sahas Roy] is relied on for the manner in which the fact of agricultural operations being carried on has to be ascertained. 5. At the outset, it has to be stated that the argument of the learned counsel for the assessee that an agricultural land could be deemed to have been included for the purpose of assessment under Capital Gains, only if the land comes within the distance as specified in clauses (a) and (b) of Section 2(14)(iii) of the Act, cannot be countenanced. Sub-section (14) of Section 2 of the Act is the definition of Capital Gains and this does not include those items enumerated under clauses (i) to (vi). Clause (iii) of Section 2(14) reads as under: "2(14) : Capital asset" means property of any kind held by an assessee, whether or not connected with his business or profession; Xxx xxx ....
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....cipality or cantonment board referred to in item (a) and which has a population of more than ten lakh. Explanation.- For the purposes of this subclause, "population" means the population according to the last preceding census of which the relevant figures have been published before the first day of the previous year." 6. Agricultural land in India, except those coming within (a) & (b) of the above provision is excluded from the definition of Capital Asset. As has been rightly noticed by the Tribunal, there is no definition for agricultural land in the subject statute and it has to be understood as in common parlance, for which evidence has to be produced to establish the fact. Since there is no definition of agricultural land in the Act Sarifabibi (supra) observed: " Whether a land is agricultural land or not is essentially a question of fact" (sic para 12). On facts if a property of the assessee is found to be agricultural land, then it cannot be included in the definition of 'capital asset'. Even then, if such property is found to be within the description and distance specified, in sub-clauses (a) and (b) as extracted herein above; it cannot qualify for exclusion fr....
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....n had to be necessarily given a more restricted meaning than the very wide ambit given to it by the Full Bench of the Andhra Pradesh High Court." (b) What is really required to be shown is the connection with an agricultural purpose and user and not the mere possibility of user of land by some possible future owner or possessor, for an agricultural purpose. It is not the mere potentiality but its actual condition and intended user which has to be seen for purposes of exemption. (emphasis added) (c) "The person claiming an exemption of any property of his from the scope of his assets must satisfy the conditions of the exemption." (d) "The determination of the character of land, according to the purpose for which it is meant or set apart and can be used, is a matter which ought to be determined on the facts of each particular case." (e) The fact that the land is assessed to the Land Revenue as agricultural land under the State Revenue Law is certainly a relevant fact but it is not conclusive." 9. Sarifabibi (supra) also referred to a Bench decision of the Bombay High Court, (1988) 172 ITR 95 [C.I.T Vs V.A. Trivedi], with approval, in the following manner: "18. The Bench observed ....
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....unt books and was offered for income-tax. The overall circumstances were found to indicate that the assessee has purchased the property for the purpose of earning agricultural income, held the property for a considerable time with routine agricultural activity being carried on and the subject sale was only to take advantage of the boom in real estate market. The assessing officer called for information from the Tahsildar and based on that report rejected the claim. Reliance placed on such report was faulted since the same was obtained behind the back of the assessee and without offering an opportunity to the assessee to controvert it by cross-examining the author of the report. We do not see any identity on facts. 11. Now we come to the other decisions cited in Mansi Finance Chennai Ltd (supra). (2014) 369 ITR 558 (Mad) [Mrs. Sakunthala Vedachalam Vs. Asst. Commissioner of Income Tax] was a case in which the classification of the land in the revenue records showed it to be agricultural land. Here admittedly the classification was "garden land" which could be used for cultivation like coconut plantation, as claimed by the assessee, or for construction of any type of buildings; resi....
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....t the income derived from the property was not such that a return under the Agricultural Income Tax Act could be filed. We have, in this context, to notice that the property itself was having an extent more than 2.42 acres and the limit of exemption as available under the Agricultural Income Tax Act is for an amount of Rs. 5,000/-. The claim of the assessee was that there was a coconut plantation in the land. The assessee also had a claim that there was an adjacent property having a still larger extent of 4.71 acres, which too was agricultural land having coconut plantation. The devolution of the said lands was; as of the subject land; on the death of the assessee's father, who was the prior owner who purchased it. If the claim is accepted, then necessarily, there would have been a return filed, since the large extent would definitely raise a presumption that the income obtained would be above Rs. 5,000/-. The Inspector who visited the site reported that this adjacent property also did not show a routine agricultural operation and was merely dotted with certain coconut trees. Though the use to which the subject property is put to after sale may not be relevant; the nature of th....
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....re of human skill and labour. A coconut plantation would not require regular tilling of land or sowing of seeds; as is required for paddy or wheat. But the trees are to be tended and the land prepared for better yield. A proper coconut plantation requires the opening of a basin, around the root of the tree, by mere arrangement of earth; for retention of water and application of fertilizer or manure. The trees also have to be regularly pruned at its crown since pest infestation occurs at the top which is the yielding end. Crown cleaning involves removal of dried inflorescent spikes and spathe and application of pesticides; all of which involves human labour and skill. In addition to these plant protection measures like weed management has to be carried out and for this there is always an inter-crop of vegetables or spices like clove, nutmeg etc. These are all routine agricultural operations required for a concerted effort of coconut plantation. Coconut trees yield even otherwise but that is not an agricultural operation intended at consumption or for trade and commerce as has been held in Benoy Kumar Sahas Roy (supra). The specific case of the assessee as seen from his objection as ....