TaxTMI 
TaxTMI 
2019 (12) TMI 960
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....s of the assessee. On the sale of said land, the related gains are reflected in the return as the "income from the capital gains". The copies of the I.T. Returns for the assessment year 2009-10 onwards are filed in support of the said claim. Assessments are made by the Assessing Officers u/s 143(3) and 143(1) of the Act, as the case may be, for all these assessment years. The claim of the assessee relating to the said offer of gains under the head 'capital gains', stands accepted by the Department since the assessment year 2009-10 till now and also in the subsequent assessment years. B. During the assessment year 2012-13, assessee filed the return of income declaring the total income of Rs. 11,84,296/-. In the Return of Income, assessee reported sale of various lands and claimed that the entire income of Rs. 3,35,33,192/- as exempt u/s 10 of the Act. Further, it is also the claim of the assessee that the assessee reinvested the said gains as per the law and hence, he is eligible for deduction u/s 54B of the Act in respect of the amount so invested. Rejecting all the claims of the assessee, the Assessing Officer made the assessment u/s 143(3) of the Act determining the total inco....
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.... in law and on the facts & in circumstances of case by denying exemption claim, u/s 54B for purchasing of other agriculture land by investing entire sale consideration of agriculture land within period of 2 years of sale and also ignoring decision of jurisdictional ITAT - PUNE in this respect. 5.2] The Learned CIT-APPEAL erred in law and on the facts & in circumstances of case by not accepting agriculture income shown/returned by assessee in his RETURN, by applying rule of consistency, as same being consistency accepted by department for all the preceding assessment years and subsequent scrutiny assessment A.Y. 1314, except A.Y. 12-13 in appeal. 7] The Learned CIT-APPEAL erred in law and on the facts, as he failed to appreciate that agriculture land possessed by assessee was capital assets as per provision of section - 2(14) and assessee always treated land as fixed assets in his balance sheet and not as stock in trade; Land was sold as a whole and not into plot and no expenses incurred for development etc at any time and no N.A. permission. 8] The learned CIT-APPEAL erred in law and on facts by confirming order of A.O., that assessee was mainly engaged i....
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....e. Assessee provided the details of survey number of the land along with the dates, purchase value, sale value etc. The details are given in para 2.4 at page 8 of the assessment order. As per the table given therein, the cumulative total sale consideration received by the assessee on sale of the said lands is Rs. 3,89,52,000/- and the cost of acquisition of these lands is Rs. 75,43,307/- [(sic) Rs. 76,83,988/-]. The different of Rs. 3,14,08,693/- was eventually reported by the assessee as capital gains and relied on the entries made in the books of account of the assessee. In the books, the properties were shown consistently as fixed assets i.e. investments in land for capital gains over the years. These properties are factually located within the 8 kilometres from the municipal limits and the holding period is less than 2 years. 10. Considering the number of transactions (distance) location of the assets, holding period before sale of the same etc, the Assessing Officer show caused to the assessee to treat the gains as the profit/business income of the assessee and deny the claim of agricultural income status. In response to the show cause notice of the Assessing Officer, the a....
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....al income of Rs. 3,61,925/- over and above Rs. 3,14,08,693/- i.e. on account of sale of agricultural land. This claim of agricultural income of Rs. 3,61,925/- was examined by the Assessing Officer and the visit of the Inspector of Income Tax was ordered. During the visit of ITI, the lands were with only wild grass and there is no activity relating to the agricultural activity in the said land. Further, on commenting on the invoices of paddy sales amounting to Rs. 1,18,875/-, the Assessing Officer held this claim of the assessee is also not to be allowed. Accordingly, the Assessing Officer proceeded to add the said sum of Rs. 3,61,925/- too as non-agricultural income of the assessee. 14. Before the CIT(A): During the First Appellate Proceedings, the assessee made various written submissions mentioning that the gains on sale of land is exempt u/s 2(14) of the Act. He also reiterated the claims about sanctity of the 7/12 extracts and the bonafide on the claim of growing agricultural produce like rice in the said land. Explaining the reasons for sale of the said lands in a big way during the year without continue to holding them for longer period, the assessee argued that the CIDCO ....
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....evant Head of Income for taxing the profits/gains earned on sale of lands i.e. i. Agricultural income - as conceded by the assessee. ii. Capital gains as Business Income i.e. Adventure in the nature of trade. B. Capital Gains - The claim of deduction u/s 54B of the Act - as conceded partly to the extent of Rs. 1,84,81,978/- out of Rs. 3,14,08,693/-. 18. In this regard, ld. Counsel for the assessee filed the written submission and the same is extracted hereunder :- "1. As per the computation of income attached with Return of Income filed on 31-03-2014 the assessee has sold urban agriculture lands situated within the Municipal limits of Panvel Town consisting of 16 Survey Nos. by way of 13 sale deeds and has earned Short Term Capital Gains of Rs. 3,13,44,837/-. The assessee has invested a part of the sale consideration of the said urban agriculture lands in purchase of agricultural lands at about a distance of 18 to 20 Kms. from the Panvel Town and in the return of income claimed deduction of Rs. 1,57,88,632/- u/s 54B from the Capital gains. 2. The Assessing Officer has held that the gains from the sale of the lands is to be taxed as bu....
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....y 2 lands for a small amount of Rs. 5,40,000/- and in the A.Y. 2014-15 another 2 lands for Rs. 16,43,200/-. No lands has been sold in A. Y. 2015-16 and A. Y. 2016-17. (Paper Book Page Nos. 88, 89, 93 and 98). It can be seen that assessee has made 32 investments in agricultural lands during 4 years from A. Y. 2013-14 to A. Y. 2016-17. In this period the assessee has sold only 4 lands for a small amount of Rs. 21,00,000/-. During A. Ys. 2015-16 and 2016-17. Prior to the A. Y. under consideration also there are not many sales of land. In A. Y. 2010-11 assessee has sold only two lands. These lands were acquired by assessee in the year 1996, i.e. about 24 years before the sale. (Paper Book Page No. 93). In A. Y. 2011-12 the assessee has not sold any land. (Paper Book Page No. 96). From the frequency of and quantum of investments in lands and the sale of lands, it is very clear that it is not a case of any business or any adventure in the nature of trade in lands but it is the investments activity of the assessee. Assessee has not purchased the lands with the intention of making any profits by trading in lands. The assessee has only encashed t....
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.... No. TPS-1712/475/CR-98/12/UD-12 dated 10- 01-2013, issued by CIDCO. The assessee have also submitted the application for admission of the additional evidence. It is trite law that the assessee is free to have two portfolios i.e. the assessee can be in the business of trading in lands, and at the same time the assessee can also purchase lands for investments purposes. - Viksit Engineering Ltd. 100 taxmann.com 436 (Bombay). - Sri Hemant B. Motadu ITA No. 283/PUN/2014 (Page 7 Para 10 and Page 8 Para 11). After the A. Y. 2012-13 because of the recession, there has not been any appreciation in the value of the lands, therefore the assessee has not sold any lands for next 4-5 years. This also establishes that the assessee is not in the business of trading in lands. In the A. Y. 2010-11 the Assessing Officer has accepted the gains on sale of agricultural lands as Capital Gains. (Page 93 of the Paper Book) In the case of Gautham Constuction Company (39 taxmann.com 181)(Hyderabad), also the lands were sold within a short period of 16 months.The Hon'ble Hyderabad Bench of Tribunal held that it was not adventure in the nature of trade as....
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....om the Capital Gains to the extent of Rs. 1,84,81,978/- that have arisen from the sale of the lands which have been cultivated for two crop seasons, the assessee is eligible for deduction u/s 54B, in respect of reinvestment in the agricultural land. - During the hearing of the appeal, the Authorised Representative has submitted that the assessee is eligible for deduction u/s 54B of the Act only in respect of the Capital Gains arising from sale of the lands which were cultivated for two crop seasons. Such Capital Gains works out to Rs. 1,84,81,978/- as per the chart placed at Page No. 1 of the Paper Book. Accordingly, the Authorised Representative has conceded that the remaining Capital Gains of Rs. 1,28,62,859/- (3,13,44,837/- - 1,84,81,978) is not eligible for deduction u/s. 54B of the Act. The Authorised Representative has further submitted that the fact that crops were raised for two seasons in the lands that have given rise to Capital gains of Rs. 1,84,81,978/- may even be referred to the Assessing Officer for verification. - The Authorised Representative of the assessee has further submitted that the deduction u/s 54B is available only upto the investments of....
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....e relies on the Thalati's report on one hand and the contents of 7/12 extract of the Revenue on the other. These 7/12 extracts support the assessee's claim that 'Rice' was cultivated in the relevant assessment years. 23. Capital Gains - Proper Head of Income: On hearing the arguments of the parties on this issue of proper head of income for taxing the earnings, we find that it is an undisputed fact that the assessee consistently recorded the sale and purchase transaction as that of the investment activity relating to fixed assets. It is also born on records that the lands as business assets (stock-in-trade) are earmarked for his partnership firm. The firm has self, daughter and son as the partners. Revenue did not disturb the similar claim of the co-partners of the firm too. Other partners also claimed capital gain in their individual returns and the same were undisturbed. Therefore, considering the Rule of Consistency, we find that the said rule has application to the facts of the present case. Therefore, we are of the opinion, Assessing Officer/CIT(A) are not justified in disturbing the claim of the assessee ignoring the set principles relating to the use of consistency. Accor....
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....11 16,33,500 2 102/2/3 Vihighar 29/04/2010 3,37,428 03/12/2011 18,90,000 3 15/3 & 16/14, Vihighar 01/09/2010 5,43,343 03/12/2011 30,37,500 4 91/1 Vihighar 13/11/2009 2,58,516 03/12/2011 18,09,000 5 91/2 Vihighar 13/11/2009 2,77,776 03/12/2011 19,44,000 6 100/3 Vihighar 11/03/2010 4,53,213 03/12/2011 25,38,000 7 89/6 Vihighar 24/11/2009 2,33,267 03/12/2011 18,63,000 8 15/5 Vihighar 08/06/2010 4,03,997 03/12/2011 22,54,500 9 88/2, 93/3, 100/2, 100/2/4 Vihighar 03/05/2010 27,74,835 29/02/2012 1,56,06,000 10 89/1 Vihighar 30/04/2010 1,72,136 29/02/2012 12,28,500 11 98/2 Chikle 25/10/2010 10,34,227 25/10/2011 33,66,000 12 90/2 Chikle 03/01/2010 7,63,045 23/02/2012 17,82,000 Total 75,43,307 3,89,52,000 [Gains - 3,89,52,000 - 75,43,307 = 3,14,08,693] Table No.II. AGRICULTURE LAND PURCHASE & SALE SUMMARY - CAPITAL GAINS STATEMENT. 1 2 3 4 5 6 7 8 SR. No. Survey No. Date of Purchase Crop as per 7/12 Extra....
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....ach of the issue i.e. (i) agricultural lands or not and (ii) land use for agriculture for two years immediately preceding to date of sale. 29. A. Agricultural lands or not: In this regard, the case of the Revenue is that with no direct evidence in support of growing the rice, sale of agricultural produce, other related direct evidences, the claim of agricultural status cannot be granted to the said lands sold that gave rise to capital gains of Rs. 3,13,44,837/-. Per contra, the case of the assessee is that with the details and the documentary evidences like 7/12 extracts and the contents therein, the Talati certificates and the revenues documents, the lands in question constitutes an agricultural lands as mentioned in the provisions of section 54B of the Act. Referring to the Report of the ITI of Assessing Officer, ld. AR submitted that the said report is relevant to the time of his visit and certainly not to the year under consideration assessment year 2012-13. Ld. AR submitted that the fixed assets with agricultural crops constitutes the agricultural lands and relevant gains earned on sale of the said agricultural lands, are eligible for deduction u/s 54B of the Act. Thus, the....
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....gain being charged to income-tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the following provisions of this section, that is to say,- ............." 33. From the above, it is evident that the land transferred (lands sold) should have been used by the assessee/parent/HUF for agricultural purposes. Two years immediately preceding the transfer date is specified condition in the law. As per the same, to avoid paying capital gains tax, these provisions specify the conditions for reinvestment of the gains in the agricultural lands only in the specified time period. 34. In the present case, there is no dispute about the time-line provided for purchase of eligible lands and the agricultural nature of the same. The dispute is only on the condition of 2 years of land use for agricultural purposes for immediately preceding two years from the transfer date of the lands sold. Thus, while the revenue is in favour of the two calendar years, the assessee argues that the agricultural use of lands for two crop seasons in two years fulfils the specified conditions mentioned in section 54B(1) of the Act. 35. In this regard, we p....