AI Drafter 
TaxTMI 
TaxTMI 
2020 (9) TMI 236
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....f 0.40.0 hectares (ha) of land at Agarsure Village, Alibaug Taluk, Raigad Dist., Maharashtra (hereinafter referred to 'the property' or 'land'). Since capital gain on sale of the property had not been disclosed in the return of income, the AO called upon the assessee to explain why the same was not declared. The assessee took a stand that the property was an agricultural land and therefore was not a capital asset and capital gain on sale of agricultural land was not exigible to tax. The contentions of the assessee in this regard were as follows:- * "Land under contention is situated at Agarsure Village, Alibaug Taluk, Raigad District, Maharashtra. * The subject land is agricultural land both at the time of purchase and sale. * The assessee is an agriculturist. * He sold a parcel of land 0.30 Hectares. * The buyer is another agriculturist. * The population of the place i.e. Agarsure Village is below the threshold limit in terms of Section. 2(14)(iii)(a). * The parcel of land is si tuated nearly 13 kms away from Al ibaug, district headquarters. The land parcel is not a capital asset u/s 2(14) of the Act." 4. It is not ....
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.... any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee, or by any other name) or a cantonment board and which has a population of not less than ten thousand according to the last preceding census of which the relevant figures have been published before the 1st day of the previous year ; or (b) in any area within such distance, not being more than eight kilometres from the local limits of any municipality or cantonment board referred to in item (a), as the Central Government may, having regard to the extent of, and scope for, urbanisation of that area and other relevant considerations, specify in this behalf by notification in the Official Gazette;" 6. The Assessee pointed out that Agricultural land in India is outside the purview of the definition of capital asset u/s.2(14)(iii) of the Act. The Assessee took a stand that Agricultural activities were carried out on the property and was therefore Agricultural land. The AO did not dispute the fact that the property is not situate within the jurisdiction of a municipality or a cantonment boar....
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....etching a fair return on investment except through commercial exploitation of the land. 7.17. Thus, a constellation of factors as considered above goes on to suggest that the assessee has not purchased the land at Agarsure with a view to use it for agricultural purposes. In light of the aforementioned facts and circumstances of the case taken together with the decision of the Hon'ble Supreme Court in the case of Sarif Abibi Ibrahim 204 ITR 631 (SC) (1993), the land at Agarsure is treated as non-agricultural. Consequently, the same is brought to tax as long - term capital gains. The Long Term Capital Gains is worked out as under:" Sale Consideration (F.Y.2012-13) Rs. 2,00,00,000 Less: Cost of acquisition (F.Y.1996-97) Rs. 659286 Indexed cost of acquisition 659286 X 852 Rs. 18,41,678 305 Long Term Capital Gains Rs. 1,81,58,332 8. On appeal by the Assessee, the CIT(A) concurred with the view of the AO. Hence this appeal by the Assessee before the Tribunal. 9. The learned counsel for Assessee took us through the reasons assigned by the AO for coming to a conclusion that....
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....14) of the Income Tax Act, we are of the view that the Tribunal has misdirected itself as stated above. 17. Yet other reason given by the Tribunal is that the adjacent lands are put to commercial use by way of plots and therefore, the very character of the lands of the assessees is doubted as agricultural in nature. The manner in which the adjacent lands are used by the owner therein is not a ground for the Tribunal to come to a conclusion that the assessees' lands are not agricultural in nature. The reason given by the Tribunal that the adjacent lands have been divided into plots for sale would not mean that the lands sold by the assessees were for the purpose of development of plots. Also the reasoning given by the Tribunal "No agriculturists would have purchased the land sold by the assessee for pursuing any agricultural activity" is based on mere conjectures and surmises. 18. The plea of the learned standing counsel appearing for the Revenue that there was no agricultural operations prior to the date of sale is of no avail as the definition under Section 2(14) of the Income Tax Act has the answer to such a plea raised. Further more, it is also on record th....
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.... This receipt is dated 2.6.2004. Another factor pointed out by the ld. counsel for the assessee is that the Sale Deed itself mentions that what was sold by the assessee was not just land, but also standing trees and over the land. According to him, all the aforesaid evidence would be sufficient to come to the conclusion that that the land in question is an agricultural land. 12. Reliance was also placed on the decision of the Hon'ble Supreme Court in CIT v. Venkateshwara Hospital 106 taxmann.com 263 (SC) wherein a view was taken that merely because adjacent lands were divided into plots for sale, it cannot be concluded that the assessee's land was not in the nature of agricultural land. The classification of the revenue records was held to be sufficient to conclude that the land in question was agricultural land. 13. The ld. DR reiterated the stand of revenue as contained in the orders of revenue authorities. 14. We have given a careful consideration to the rival submissions. There is no dispute in this appeal that the property that was sold by the Assessee did not fall within clauses of Sec.2(14)(iii)(a) or (b) of the Act. The mere fact that a land is situate in an are....
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....ertainly a relevant fact but if is not conclusive. 15. The Hon'ble Supreme Court in the case of Smt. Sarifabibi Mohamed Ibrahim and others (supra) approved the tests laid down by the Hon'ble Gujarat High Court and Hon'ble Bombay High Court in the following cases as under:- "16. The decision of Gujarat High court in Commissioner of Income Tax, Gujarat-II v. Siddharth J. Desai 139 I.T.R. 628, relied upon strongly by the learned Counsel for the appellant, reviewed the several earlier decisions of the Gujarat High Court as well as the decision of this Court in Begumpet Palace and has evolved the following 13 factors/indicators applying which the question has to be answered. The 13 factors are the following :- (1) Whether the land was classified in the revenue records as agricultural and whether it was subject to the payment of land revenue? (2) Whether the land was actually or ordinarily used for agricultural purposes at or about the relevant time? (3) Whether such user of the land was for a long period or whether it was of a temporary character or by way of a stop-gap arrangement? (4) Whether the income derived from the agricultural oper....
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....5, a Division Bench of the Bombay High Court, of which one of us (S.P. Bharucha, J.) was a member, considered this question again. In this case the assessee had purchased the land of an extent of seven acres in February 1966. The land was covered by the Nagpur Improvement Trust Scheme. In August 1966 he obtained permission to convert the said land to non-agricultural use. In June 1968 he entered into an agreement with a Housing Cooperative Society to sell three acres out of it. The sale-deed was executed in October 1968. In this assessment proceedings the assessee claimed that the surplus income arising from the sale of land was exempt from tax inasmuch as it was agricultural land at the time of its sale. The matter reached the High Court. The Division Bench referred to several facts established from the record. Some of them supported the assessee's stand while some others militated against his contention. The facts found in favour of the assessee were: (1) at the time of its purchase by the assessee, the Ajni land was agricultural land; (2) it had been under cultivation by the assessee till the date of its sale, (3) it continued to be assessed to land revenue as agricultural l....
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.... property in revenue records. The Revenue contends that there is no evidence of the Assessee having carried out agricultural activities over the property. The Assessee has not established as to how agricultural activities were carried out and what expenses were incurred in carrying out agricultural operations over the property. The revenue also contends that the Assessee has not declared any income from Agriculture from the property in question. There is no evidence of availability of Agricultural produce and how they were dealt utilized. The Revenue also contends that the burden of proof that the property was agricultural land at the time of transfer to claim exemption was on the Assessee. As already observed, the question whether the land was Agricultural land has to be decided on facts of each case and decided cases are only guidelines to be kept in mind. Facts and all the circumstances are to be considered as a whole and an overall view is to be taken in deciding whether the land was an agricultural land. In a given case, large number of circumstances may be indicative of agricultural character, but one circumstance may outweigh all of them and on its basis the land would be he....