2014 (7) TMI 1316

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....  "The assessee-company is engaged in manufacturing of Cattle Feed and production of seeds. For the assessment year under consideration, it had filed the return of income on 29.9.2008, declaring the taxable income at NIL (In fact, a loss of Rs. 1,74,88,295/- was disclosed). This return was processed u/s 143(1) on 19.3.2010 and a refund of Rs. 76,600/- was issued. Meanwhile, this case was selected for scrutiny by issuing notice u/s 143(2) on 18.8.2009. Scrutiny proceedings were concluded by passing an order u/s 143(3) of the Income Tax Act, 1961 on 7.12.2010, wherein, the Assessing Officer has restricted the claimed loss of Rs. 1,74,88,295/- to Rs. 1,50,20,045/- by disallowing Bonus claimed at Rs. 18,64,215/- and Gratuity claimed at....

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....I.T. Act, 1961 dated 7.12.2010 is to be modified for the reasons mentioned above, with a direction to make the assessment afresh after examining all the above issues according to law, after affording reasonable opportunity of being heard, to the assessee." 3. Aggrieved, the assessee is in appeal on the following grounds: 1. "The revisionary orders of the Ld. CIT made u/s 263 of the I.T. Act, 1961 is bad and erroneous both on facts and in law. 2. On the facts and in the circumstances of the case, the Ld. CIT has erred in treating the assessment order as erroneous and prejudicial to the interest of the revenue. The Ld. CIT is not justified in directing revision to the assessment order to include agricultural capital gain ....

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....gricultural land falls within the definition of agricultural income and therefore the same is to be reduced from the profit as per profit and loss account while computing the book profit u/s 115JB of the Act as per the provisions of Explanation 1 to S. 115JB of the Act.  Agricultural income as defined in S.2(1A) of the Act includes any rent or revenue derived from agricultural land. Further, as per explanation 1 to S.2(1A), revenue derived from land shall not include any income arising from the transfer of any land referred to in item (a) or item (b) of S. 2(14)(iii). To put it in other terms, if the land is not one that is referred to in item (a) or item (b) of S. 2(14(iii) then the revenue derived from land will also include....

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.... CIT Vijayawada and under those circumstances, the coordinate bench order in the case of Harrisons Malayalam Ltd. Vs. ACIT (2009) 32 SOT 497 (Coch) has to be followed. 7. After hearing rival submissions, we hold as follows: The undisputed fact in the case of the assessee is that, the land transferred is agricultural land. This is so because the assessing officer has not assessed the income arising out of those lands under the regular provisions of Income-tax Act. In fact, the Ld. CIT Vijayawada has accepted the correctness of computation of total income under the regular provisions of the Act. Consequently, the profit on sale of agricultural land would become agricultural income u/s 2(1A) of the Act and hence not part of total i....

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....greed with the assessee that the said estate land did not fall in either sub-c!. (a) or sub-cl. (b) of cl. (iii) of s. 2(14} and accordingly he had accepted the contention of the assessee that the profit on sale of the said estate was not exigible to capital gains tax. It is the case of the assessee that once the income is held to be agricultural income, the same would not form part of the book profits for the purposes of s. 115JB. 15 The Bombay High Court in the case of Manubhai A. Sheth vs. N.D. Nirgudkar, ITO (1981) 22 CTR (Bom) 41 : (1981) 128 ITR 87 (Bom) has held that the capital gains arising from the sale of land situated in India, which land is used for agricultural purposes, would be revenue derived from such land and, th....

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.... Tea & Trading Co. Ltd. (1996) 132 CTR (SC) 225 : (1996) 219 ITR 544 (SC) has held that the compensation received on requisition of agricultural land amounted to agricultural income. The Supreme Court again in the case of Singhai Rakesh Kumar vs. Union of India & Ors. (2000) 164 CTR (SC) 483 : (2001) 247 ITR 150 (SC) has held that the income arising out of the transfer of such agricultural lands are not exigible to capital gains as they are in the nature of agricultural income. 20. In the present case, the assessee has sold a rubber estate with standing trees and all other paraphernalia known as "Boyce Estate". There is no dispute that the said estate was in a rural area and outside the purview of any municipal limit. Therefore, in....