TaxTMI 
TaxTMI 
2019 (12) TMI 960
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....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 income at Rs. 3,29,54,915/- (para 6 of the a....
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....her 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 in trading in land, without substantiating by any cogent evidence A.O.'s order and or form/by the assessment history of assesse....
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....ge 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 assessee furnished the written submission dated 10.02.2015 opposing the Assessing Officer's proposal. The assessee not only relied on the investment-centric ....
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....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 was acquiring the land in that area in a big way needed for the construction of new International Airport in Panvel area. To save the los, the assessee was comp....
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....me 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 business income. The Assessing Officer has further held that the lands sold by the assessee were not agricultural lands and no agricultural activity was carried out on these lands. For the above reasons the....
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....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 the good appreciation in the value of land. Besides there being good appreciation in the value of the land to encash, the assessee was also prompted to sell the lands in question within a short span of the purchase of the land, by two adverse circumstances. Firstly In....
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....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 the lands were reflected in the Balance-sheet as Fixed Assets. It was held that merely because land was sold for profit it could not be said that income arising from sale of land was taxable as profit from adventure in the nature of trade. In the case of Heenaben Bhadresh Mehta (96 taxmann.com 164) (Gujrat), it was held ....
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....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 Rs. 1,68,32,962/- made by the assessee up to 3009-2012 i.e. the due date for filing of the Return of Income as per separate table submitted by him in respect of the investments. 3. The agricultural income of Rs. 3,61,925/- has been brought to tax by the Assessing Officer as other income, as against the agricultural income of Rs. 4,25,781/- declared by the assessee. The agricultural income of Rs. 4....
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....ee 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. Accordingly, relevant grounds are allowed in favour of the assessee. 24. Justifiable Reasons for sale of many lands - NAINA Project : Further, regarding the large number of transactions of sale, we find that the assessee has the justifiable reason for sale of lands held on investment in the year under consideration. It is the public knowledge that the CIDCO went on acquiring the lands in that area is a big way for NAINA....
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....ihighar 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 Extract on purchase Date of Sale Crop as per 7/12 Extract on Sale Period Holding Capital Gains (RS) Lands with Rice held for 2 crop seasons 1 15/5 08-06-2010 Rice 03-12-2011 Rice 18 months. 08-06-2010 to 03-12-2011 18,50,503 2 91/1 13-11-2009 Rice 03-12-2011 Rice 24 months. 13-11-2009 to 03-12-2011 15,50,349 3 91/2 13-11-2009 Rice 03-12-2011 Rice 24 months. 13-11-2009 to 03-12-2011 16,60,824 4 100/3 11-03-2010 Rice 03-12-2011 Rice 21 months. 11-03-2010 to 03-12-2011 20,84,787 &nbs....
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....ricultural 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 revenue failed to generate any evidence to demonstrate that the details given in the 7/12 extracts are incorrect and unreliable. Therefore, we are of the opinion that the claim of the assessee has to be allowed in principle. Accordingly, we order. 30. B. Agricultural use of land for Two Years immediately preceding to the date of sale: The provisions of section 54B of the Act provides for deduction subjected to fulfilment of specific conditions. One such condition relates to land use for agricultural purposes for two years immediately preceding to the date of sale of the said agricultural land. In this regard, the case of the Revenue is that, the condition relating to "2 years" is not fu....
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.... 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 proceed to analyse the date and the case law in the case of Ramesh Narhari Jakhadi vs. ITO, 41 ITD 368 (Pune - Trib.) and find that the Table No.II above indicated that the growing of Rice in two crop seasons i.e. June 2009 to December 2012, is evident. 36. Further, we proceed to examine the ratio of the decision of the Tribunal in the case of Ramesh Narhari Jakhadi (supra). Further, we proceed to extract the held portion of the Co-ordinate Bench decision in the case of Ramesh Narhari Jakhadi (supra) and the same are extracted hereunder :- "The definition of short-term capital asset refers to capital assets held for not more than 36 months preceding the date of transfer. The word 'held' is significant and compr....