TaxTMI 
TaxTMI 
2019 (2) TMI 707
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....ion of Rs. 57,39,500/-. The Assessing Officer (AO) noticed that the assessee, along with other two co-owners, entered into a "Development Agreement" with Mr. Dhanraj Malchand Rati for transfer of the land, which was situated within the Municipal Corporation limits of Pune. He held that the land ceased to be an agricultural land. On being called upon to explain as to why the exemption u/s.54B of the Act should not be denied because the property transferred was not an agricultural land, the assessee tendered his explanation which has been reproduced in the assessment order. The crux of the assessee's submission was that the land was classified by the land Revenue authorities as "Jirayat" type of agricultural land and nowhere in the land records it was mentioned as "Non-agricultural land". The assessee further submitted that agricultural income was earned from such land and as per the 7/12 extract, the agricultural land was subjected to cultivation and Jowar crop was grown. It was further submitted that all the rights in the land were transferred to Mr. Dhanraj Malchand Rati and the nomenclature of "Development Agreement" was misleading. Not convinced with the assessee's submission....
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....t to the conditions set out in the provision. The case of the assessee is that he transferred the agricultural land, being, a capital asset and purchased two other agricultural lands for a sum of Rs. 57,39,500/- within two years and hence, he is entitled to exemption u/s.54B of the Act. The AO has not disputed that the lands purchased by the assessee on 21-08-2008 and 22-04-2008 are agricultural lands. Thus, the second part of the exemption provision, being, purchase of new agricultural lands within period of two years, stands satisfied. The dispute is on the first part of the exemption as to whether or not the land transferred by the assessee was an agricultural land? 7. We have noticed above that it is nobody's case that the land transferred by the assessee was not a capital asset. Now the question arises as to whether such capital asset was an agricultural land or not? If the assessee succeeds in proving that the land transferred by him was an agricultural land, his claim to exemption u/s.54B would be justified. 8. In order to decide if the land transferred was an agricultural land, we will first espouse the factors taken note of by the authorities militating against th....
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....t" was assigned by the parties to the agreement, but it was, in fact, a case of outright sale of 81 Are of land by the assessee and other co-owners to Mr. Dhanraj Malchand Rati. The assessee along with other two co-owners received total consideration of Rs. 1.70 crore in full and did not have any further interest in the property to be constructed by the Developer. The land transferred by the assessee was to be utilized by the transferee for construction of flats to be sold by him at a later date, as owner. The sum and substance of the above clauses is that the assessee transferred the land on an outright sale basis and did not intend to develop the land through Mr. Dhanraj Malchand Rati by retaining his ownership rights in it. 10. We have examined the 7/12 extract of the land transferred by the assessee, whose english translation has also been provided. The first thing which emerges from the 7/12 extract is that the assessee transferred "Jirayat land". The authorities below have noted from the 7/12 extract that the land in question was "Jirayat land". The assessee also stated before the AO that the land transferred has been classified as "Jirayat type of agricultural land". The ....
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....xtract that the land Revenue of the said property has been determined at 33 paise. This fact proves that the land was subjected to land revenue. Another factor which weighs in favour of the assessee is that the land was transferred for a consideration of Rs. 1.70 crore determined by 00 Hector 81 Are area, i.e. 8100 sq.mtr and not by rate of square feet or square yard. 12. At this juncture, it would be pertinent to note the landmark judgment rendered by the Hon'ble Supreme Court in Smt. Sarifabibi Mohmed Ibrahim and others Vs. CIT (1993) 204 ITR 637(SC). In that case, the dispute was as to whether the land transferred by the assessee was a capital asset or not? The Hon'ble Supreme court, considering certain other judgments in which some tests for determining the nature of land were set out, came to the conclusion that the land transferred by the assessee was not an agricultural land. The tests so considered and set out in the judgment are reproduced verbatim, as under :- "(1) Whether the land was classified in the revenue records as agricultural and whether it was subject to the payment of land revenue ? (2) Whether the land was actually or ordinarily used fo....
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....Lordships further held that the question as to whether a land is agricultural land or not needs to be tested on the facts and circumstances of each case. There may be factors both for and against a particular point of view and the question needs to be answered on a cumulative consideration of all the relevant facts. 14. When we examine the facts of the instant case on the touchstone of the tests enshrined above, it becomes manifest that the following important factors weigh for and against the assessee: For: - (i) the land was classified in the revenue records as "agricultural land" and was subject to land revenue. (ii) the land was actually used for agricultural purposes at the relevant time. (iii) user of such land was not temporary and was for at least 4 years in a row, as emerged from 7/12 extract. (iv) the land was not sold on yardage basis. Against : - (i) the land was situated in a developed area. (ii) after transfer, it was to be developed by plotting and providing road facilities etc. 15. On a cumulative consideration of all the relevant factors prevailing in the instant case, both for and against the treatm....