TaxTMI 
TaxTMI 
2017 (7) TMI 1312
X X X X Extracts X X X X
X X X X Extracts X X X X
....Aggrieved by the order of Ld.CIT(A), Revenue is in now appeal before us and has raised the following grounds. "1. The learned Commissioner of Income Tax (Appeals) erred in holding that the land in question was agricultural land and not a capital asset within the meaning of section 2(14) of the Income Tax Act 1961. 2. The learned Commissioner of Income Tax (Appeals) erred in not appreciating that no agricultural income was derived from the land and offered for taxation in any of the prior years and no agricultural operations were carried on the land claimed to be agricultural land. 3. The learned Commissioner of Income Tax (Appeals) erred in not appreciating that the intention of the assessee to hold the said land was to earn capital profits and there was no intention of establishing agricultural practices on the same." 3. All the grounds being inter connected are considered together. 4. A.O noticed that during the year assessee had sold lands at Village Karoshi, Tal. Pen, Dist. Raigad for Rs. 3,08,31,500/-. (the details of lands sold are listed at page 1 of the assessment order.) AO noted that the capital gains earned of Rs. 2,98,80,688/- from sale ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t the land belongs to an agricultural zone, as per the zone certificate from Circle Officer, Hamrapur, Pen and was surrounded by harvested land. It has been stated that a land situated in village area; the nonagricultural use of a land is prohibited by the Government. It is also explained that the entire land sold was cultivated till the time of sale and that there was no intention of earning undue profit by conversion of land for non- agricultural purposes was ever made by the appellant. The said land is also stated to be 10 kms away from the municipal limits and the population of the said village was less than 5000. The appellant submitted the aforesaid documents before the A.O. to prove that the said land was an agricultural land falling within the purview of section 2(14)(iii). The appellant during the appellate proceedings had also cited a number of case laws while explaining the circumstances which could prove the land being agricultural in nature. The A.O. has not disputed the following facts during the course of assessment proceedings: 1. Land being agricultural land situated outside the municipal jurisdiction beyond 8kms and having population of the rural area whe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed that the land being 'agricultural, is outside the purview of the capital asset as contemplated in the provision section 2(14) of the I. T. Act, 1961. The appellant has also contended that the A.O. had failed to establish that the lands were used for the purposes other than agriculture and no evidence to that effect had been brought on record which could indicate that the land had been used for nonagricultural purposes. The appellant is also seen to have not obtained any permission for non-agricultural use of land. 3.11 The issue, as to what constitutes agricultural land for the purposes of wealth-tax or capital gains tax or even for the purposes of determination of the character of income from such land as to whether it is agricultural income or not, is a matter which has a long history but, ultimately it is a question of inference to be drawn from all the facts with none of the tests being conclusive. One such test is classification of the land in the revenue records. Entries in the record of rights would constitute prima facie evidence about agricultural character of the land. So far as the argument put forth by the A.O. regarding the purchase of land by the purchaser....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sequent purchaser intend land in question to be put to use. In the case of CIT Vs Manilal Somnath (supra) also relied upon by the A.O. the Gujarat High Court observed that the potential non-agricultural value of the land for which the purchase might be prepared to pay a large price would not detract from its character as agricultural land at the date of sale. Similarly, profit motive in seeking the land would also not make any difference as decided in Gopal L. Sharma Vs CIT (1994) 209 ITR 946 (Bom). It is in the light of the guidelines available from the decisions that the Hon'ble High Court of Bombay upheld the finding of the Tribunal in respect of the assessee's claim that the land was agricultural so that there is not liability for capital gains tax as held in CIT Vs Minguel Chandra Pais & Others (2006) 282 ITR 618 (Bom). Thus it can be inferred that the price paid is not a decisive factor to decide as to whether the land is agricultural or not and the totality of the circumstances needs to be considered before arriving at any conclusion. 3.12 On taking a broader overview of the entire facts of the case, to decide as to whether a piece of land is agricultural in....