TaxTMI 
TaxTMI 
2020 (2) TMI 776
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....on the above said transaction. The A.O., therefore, reopened the assessment for the year under consideration AY 2008-09. 3. During the reopened assessment proceedings, the A.O. noted that the assessee company had purchased land measuring 131425 Sq. Mtrs in survey No. 87/1A at Varem, Reis Magos, Goa from M/s Reis Magos Estates Pvt. Ltd. on 26.07.2001 vide Regd. Sale deed for a consideration of Rs. 9,76,00,000/- . The assessee company kept this land with it for a period of six years. The company further sold the said land for a consideration of Rs. 60 crores to M/s Delanco Home & Resorts Pvt. Ltd. on 09.04.2007. On being asked to explain by the AO as to why no capital gains were returned in the Income-tax return in respect of the above said transaction, the assessee company explained that the land in question was an agricultural land situated at a distance of more than 8 K.M. from the Municipal limits of Panaji and falls in the revenue jurisdiction of village Reis Magos, having population of less than ten thousands. It was, therefore, contended that the said land did not fall in the definition of capital asset, hence, was exempt from capital gains tax as per the provisions of sect....
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....the income of the assessee. 5. Being aggrieved by the above order of the Assessing Officer, the assessee filed the appeal before the CIT(A) but remained unsuccessful. Hence, the assessee has come in appeal before this Tribunal raising the followings concise grounds of appeal: "1. That the Worthy Commissioner of Income Tax (Appeals) has erred in confirming the action of the Assessing Officer with regard to reopening of the case u/s 148. 2. a). That there was no reason to believe that the income of the assessee had escaped assessment and further, there was no cogent material with the Assessing Officer for forming the belief for the purpose of reopening of the case u/s 148. b). That the reasons in itself as recorded by the Assessing Officer are vague and without any substance for the purpose of taking recourse to section 148 of the Income Tax Act, 1961 3. Notwithstanding above said ground of appeal, the Ld. CIT (A) has erred in confirming the action of the Assessing Officer that the land in question, as sold by the assessee cannot be classified as agricultural land since as per revenue records, it is an agricultural land and agricultural operatio....
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.... Asst Year 2008-09 Reasons: Dated : 08.05.2012 In this case, information was received from the Dy. Commissioner of Income Tax, Central Circle, Panaji that a search was carried out at the residence of Sh. Suresh V. Parulekar on 17.11.2009, wherein a copy of sale deed between M/s Blue Coast Infrastructure Development Ltd. and M/s Delanco Home & Resorts Pvt. Ltd. was found. During search operation, it was stated by Sh. Parulekar that his company M/s Reis Magos Estates Pvt Ltd., had sold land of 131425 Sq. Mtrs. in survey No.87/1-A, Verem, Reis Magos, Gao to M/s Morepen Holiday Resorts Ltd. (now M/s. Blue Coast infrastructure Development Ltd.) on 26.07.2001 for a consideration of Rs. 9,76,00,000/-. which was subsequently sold to M/s. Delanco Home.& Resorts Pvt. Ltd. on 09.04.2007 for a consideration of Rs. 60,00,00 000/-. According to article 4.1(1) of the sale deed, the above said land falls under S2 Zone as per the Master Development Plan of Goa which is approved for residential purposes. On enquiring the status of the land, it was gathered that no agricultural operations had been carried on the said land for the last 20-30 years and the land is situated....
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....was registered in 2002 or there about in their name. This company belongs to the group of M/s Park Hyatt Hotels. Q. No. 4 Please furnish details of the acquisition of the above land by M/s Reis Magos Estates Pvt. Ltd. Ans. M/s Reis Magos Estates Pvt. Ltd has purchased this land in the year 1994. The land in Survey No. 87/1A was about 1,30,000 sq. mtrs was sold to M/s Morepen Holiday Resorts Ltd., which is now renamed as M/s Blue Coast Infrastructure Ltd. Q. No. 5 Please furnish the details of all the agricultural operations curried on by the M/s Reis Magos Estates Pvt. Ltd., prior to its sale to M/s Morepen Holiday Resorts Ltd., which is now renamed as M/s Blue Coast Infrastructure Ltd. Ans. The above land which is sold is sloppy and terrain is hilly. Approximately in the year 1995-96, this land was converted into settlement Zone for the residential purpose. Have not carried out any agricultural operation at any lime on the above land which is sold to M/s Morepen Holiday Resorts Ltd., which is now renamed as M/s Blue Coast Infrastructure Ltd.. We have sold the converted land along with all the conversion approvals to M/s Morepen group. Q....
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....ax authorities. At page 25 of the paper book, there is a copy of the letter dated 04/03/2010 issued by DCIT, Circle Parwanoo, (Assseessing Officer) wherein, it has been mentioned that a survey action under section 133A of the Income-tax act was carried out at the premises of the assessee during the course of which some documents regarding the sale of land by the assessee M/s. Delanco Home Resorts Private limited have been found. The assessing officer, accordingly, through this letter called for information regarding the above aforesaid sale deed asking the assessee to furnish the date of purchase and the name of party from whom the land was purchased, the area of the land, the copy of the sale deed, amount of sale consideration received, whether any capital gains tax has been paid in respect of the aforesaid sale transaction and further the relevant documents like income tax return, P&L account, balance sheet etc. along with other related details and information. The assessee vide letter dated 04/03/2010 replied to the queries raised by Assessing Officer, whereby, it was explained that the land in question being rural agricultural land not falling in the definition of capital asset....
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.... mtrs in survey no. 87/1-A, Verem, Reis Magos, Goa from M/s Reis Magos Estates Pvt. Ltd on 26.f07.2001 by way of registered sale deed for a sale consideration of Rs. 9,7600,000/- and land was subsequently sold by you to M/s Delanco Home & Resorts Pvt. Ltd. on 9.4.2007 by way of registered sale deed for a consideration of Rs. 60,00,00,000. As it is gathered, that you have not paid the tax on capital gain on the sale of the said land. It was claimed by you that it was an agricultural land and the profit on the sale of the above land are exempt. However, you have not been able to substantiate your claim of the sale deed the above land falls. under S2 development zone as per the Master development plan of Goa and the above land is approved for residential purposes. The land is situated with in four kilometres of the Panaji municipality and is in a developed area. The provisions of Section 45 of the Income Tax Act 1961 are attracted in your case since the sale of this land amounts to transfer of capital assets. As per section 2(14) of the Income Tax Act 1961, capital asset has been defined as "Capital asset means property of any kind held by an assessee whether or not connected....
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.... be paid for an agricultural land. The buyer M/s Delanco Home & Resorts Pvt. Ltd. has not purchased the above land for agricultural purposes. h) The land is situated within 4 Kilometres of the Panaji municipality and is in a developed area. i) Neither you nor M/s Delanco Home & Resorts Pvt. Ltd. i.e. neither the seller nor the buyer of the above land are agriculturalists. In view of the above discussion, you are hereby required to showcause why the claim of exemption be not rejected and the capital gains be computed as under for the A.Y. 2008-09. Sale consideration 60,00,0,000 Less indexed cost of the land 10,73,60,000*551/426 13,88,62,347 Long Term Capital Gains 476,11,37,653 Your case is fixed for hearing on 18.10.2010. Sd/- (SHASHI SAKLANI) Dy. Director of Income-tax (Inv.) Shimla" 10. The assessee vide its letter dated 13/10/2010 replied to the enquiries and doubts raised by Deputy Director of Income tax (Inv.), H.P., Shimla. The assessee in support of its claim also furnished copies of the official land revenue records. No document has been brought on the file to show that if any further action was taken i....
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..../ report on the investigation carried out by Deputy Director of income tax ( Inv.), H.P., Shimla, and had to point out as to why he was not satisfied with the reply and explanations furnished by the assessee and the report thereof , if any, of his predecessor (assessing officer) and also with the report of the Deputy Director (supra), if any, on the investigation carried out by him in respect of the matter. However, the assessing officer in the reasons recorded simply picked up the contents of the letter dated 30/09/2010 even without making any reference of the said letter. Under the circumstances, it cannot be said that the assessing officer had reasons to believe that the income of the assessee has escaped assessment. Without meeting with the reply and explanation of the assessee in respect of the matter as well as with the report/opinion of his predecessor as well that of the Deputy Director of Income Tax ( Inv.), H.P., Shimla, the assessing officer simply reopened the assessment, which action in our view, neither can be held to be legally valid nor justified. As per the provisions of section 147 of the Act, the AO is authorized to reopen the assessment proceedings, if he has re....
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.... but also thereafter. The assessee duly explained about the transaction and explained that the land being agricultural and not falling within the definition of capital asset under section 2(14) of the Act, hence, was not exigible to capital gains Tax. The Assessing Officer, without having met with the reply and explanations given by the assessee and even not mentioning a word about reports thereof of the concerned officers, proceeded to reopen the assessment on the same premise. The Assessing Officer, fully knowing that if he will rely upon those proceedings, he will have to meet and discard the reply and explanations of the assessee and also the reports, if any, given by his predecessor and by the concerned investigation authorities and under the circumstances his action of reopening might not pass the test of 'reasons to believe', hence, he skipped the entire episode of earlier proceedings, based his reasons for reopening of the assessment on the alleged information received from DCIT, central circle, Panaji, which even , as discussed above, does not support the reasoning given by the AO. When the very reasons on the basis of which the reopening, allegedly , could not form the ba....
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....o be a series of operations like tilling of land, irrigation, management etc. which all together constitute agriculture activity, but the assessee has failed to prove the carrying of such activity. 13. We have heard the rival contentions of the parties in respect of each of the point and have also minutely gone through the record. Though the contention of the revenue that the assessee company is a construction /development company and that the land in question was not purchased with an intention to carry out agricultural activities seems to be true, however, this fact in itself, in our view, is not sufficient to hold that the land was not an agricultural land. The assessee has proved on the file with sufficient documents in the shape of revenue records that the land till date has been classified as Orchard Zone. Even when the earlier owner in the year 1994 had applied for change of user of land from agriculture to residential, an actual survey at site was carried out by the 'Land Revenue Authorities' who reported that the land in question was a mixed garden. Not an iota of evidence has been pointed out to show that the nature of land in question has ever been changed either by t....
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....harvesting of crop etc. The Assessing officer, in our view, could not differentiate between traditional agriculture and horticulture. The case of the assessee specifically is that it has been developing and maintaining an orchard. 14. The next issue raised by the lower authorities is that the assessee had not shown any positive income from the of aforesaid agricultural / horticulture activity. The assessee duly explained to the lower authorities that the total expenditure incurred by the assessee on the aforesaid activity was almost equal to the income earned from the agricultural activity. The assessee also produced the relevant bills and vouchers to show that it had sold the fruit crops in the local market. In our view, merely because the assessee did not show positive income from the agricultural activity that itself is not enough to hold that the assessee did not carry out any agricultural activity. The assessee has produced evidence on the file that it did not change the nature of the land, continued and developed the orchard, employed two employees for the development and maintenance of the orchard and also produced the evidence of expenditure and income on the said activi....
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....a has been furnished to the effect that the population of the village Reis Magos is less than 10,000. It is pertinent to mention here that during the appellate proceedings, the assessing officer claimed that he himself had visited the spot. However, it has not been mentioned that what route was followed by him?; whether the road was a motorable road?; whether any notice was issued to the assessee?; whether he has taken along any official of the Income tax department at Goa?; whether he had met any government official or other respectable person to prove the veracity and truthfulness of his claim? Even the assessing officer has not denied the claim of the assessee that the land in question till date was an orchard and its nature has not been changed. The assessee has proved beyond doubt not only the nature and classification of the land being an orchard and filing within the definition and scope of an agricultural land and further that it has been situated at a distance of more than 10 km from the Municipal limits of Panaji. The assessing officer in the assessment order has himself mentioned that he has not taken into consideration the motorable or pucca road to measure the distance....