TaxTMI 
TaxTMI 
2019 (11) TMI 1562
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....lls of 56, Kali Krishna Tagore Street, Kolkata, entered into two sale agreements of capital assets being land and building with M/s STP Ltd. of 6, Lyons Range, Kolkata for consideration of Rs. 2,32,55,910/- and Rs. 56,70,924/-. A requisition u/s 133(6) of the Act, was sent to the ADSR and copy of documents/sale deed of the land was obtained. 2.1. The Assessing Officer at para 5 of his order states as follows:- 2.2. In reply, to a showcause notice dt. 14/02/2014, as to why the income from sale of land should not be added to the total income of the assessee, the ld. Counsel for the assessee, submitted as follows:- a) The partnership firm M/s. Shree Annapurna Oil Mills, was constituted between the assessee's father and his two brothers. b) The assessee contributed to the firm a sum of Rs. 10 Lakhs/- c) The partnership firm had purchased agricultural lands in the year 2005-06, for a consideration of Rs. 20,00,000/-. d) The land was purchased by the firm as an investment and there was no income of the said firm as there was no business undertaken by the firm in any of the year except the purchase and sale of this land. A departmental inspecto....
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....i Satish Murmu, who was recorded as Burgadar of the aforesaid land. The said, Satish Murmu, carried out agricultural operations in consideration of undertaking that he would look after the lands for and on behalf of the partnership firm. A copy of the certificate dt. 26/08/2010 issued by "Pantra Gram Panchayat", was furnished. c) The Assessing Officer concluded that the submissions of the assessee was self-contradictory for the reason that, it was stated that the lands were purchased as investment and on the other hand it was claimed that certain person is carrying out agricultural activities for and on behalf of the partnership firm. Thereafter, the Assessing Officer held that the land in question is not agricultural land, by applying the few tests laid down by the Hon'ble Courts for determining whether a land is agricultural or not. The tests applied are as under:- i. Whether the land was actually or ordinarily used for agricultural purposes at or about the relevant time; ii. Whether the land, though entered in the Revenue records, had never been actually used for agriculture; whether the owner mean or intended to use it for agricultural purposes; ....
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....dee)? Whether such permission was in respect of the whole or a portion of the land? If the permission was in respect of a portion of the land and if it was obtained in the past, what was the nature of the user of the said portion of the land on the material date? 6. Whether the land, on the relevant date, had ceased to be put to the agricultural use? If so, whether it was put to an alternative use? Whether, such cesser and/or alternative user was of a permanent or temporary nature? 7. Whether the land, though entered in revenue record, had never been actually used for agriculture, that is, it had never been ploughed or tilled? Whether the owner meant or intended to use it for agricultural purposes? 8. Whether the land was situate in a developed area? Whether its physical characteristics, surrounding situation and use of the lands in the adjoining area were such as would indicate that the land was agricultural? 9. Whether the land itself was developed by plotting and providing roads and other facilities? 10. Whether there were any previous sales of portions of the land for nonagricultural use? 11. Whether permission under section....
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....e and tax the same in the hands of the firm. As regards the applicability of section 50C is concern it is held that the AO has rightly applied the provisions as its character was not agriculture land as it is held in the decisions of the Hon'ble Rajasthan High Court in the case of Mahaveer Enterprises vs. UOI [2001] 244 ITR 789/[1997] 95 Taxman 220." 5. Aggrieved, the assessee is in appeal before us on the following grounds:- "1. That, on the facts and in the circumstances of the case, the Ld. Commissioner of Income Tax (Appeals) - 13, Kolkata erred in holding that the Capital Gains arising on sale of immoveable property being lands sold by the partnership firm M/s Shree Annapurna Oil Mills vide two documents bearing No. 4482 of 2010 and 4483 of 2010 registered with the Addl. Dist. Sub Registrar, Haripal was not an agricultural land. 2. That, the Learned Commissioner of Income Tax (Appeals) erred in concluding that the provisions of section 50C of the Act are applicable to this case since the land sold by the partnership firm M/s Shree Annapurna Oil Mill was not an agricultural land. 3. That the Learned Commissioner of Income Tax (Appeal....
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....nt Board within 8 Kms. from the said agricultural land. He also certified that the said land was recorded as agricultural land when the same was sold by M/s STP Ltd. He referred to the impugned assessment order wherein the Ld. AO made enquiry through his Inspector who himself visited the office of the Building, Land & Revenue Officer at Haripal, Hooghly on 28.02.2014 to enquire about the nature, location & type of the subject land. The Land & Revenue officer confirmed that the said land was converted into Industrial Land by the purchaser i.e. M/s STP Ltd. to whom the land was sold by the assessee. He relied on this statement of the Land Revenue Officer clearly shows that the land was an agricultural land when the same was sold by the firm and that the buyer had got the same converted into an industrial land only after its purchase from the assessee. Reference was made to the assessment order for the Assessment Year 2011-12 passed by the AO under section 143(3) of the Act in the case of Sri Rajeev Kumar Goyal, the brother of the assessee who was also a partner in the firm M/s Shree Annapurna Oil Mills and who also signed the sale deed. The copy of the Assessment order is placed at p....
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....e same when the land was sold. The land was situated in an area which is beyond 8 Kilometres from any municipality and/or cantonment Board. Thus the said land was not a capital asset within the meaning of section 2(14) of the Act. The conversion of land from agricultural to industrial subsequently by the buyer of the land will not have any adverse effect on its chargeability or otherwise in the case of the seller of such land. The area was not notified for urbanisation in the latest Notification No. 11186 dated 28.12.1999 issued by the Central Government. Therefore the gain arising on sale of the same cannot be charged to capital gains. He relied on certain caselaw for this proposition, which we would be referring to as and when required. 6.2. On Ground Nos. 5 & 6, the ld. Counsel for the assessee submitted that the assessee has challenged the order of Ld. CIT(A) wherein he held that the provisions of section 50C are applicable since the land sold by the assessee was not an agricultural land. He submitted that the Ld. CIT(A) was not justified in confirming the action of the AO when the assessee sold agricultural land and confirming the application of section 50C of the Act even ....
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....the land in question is not agricultural land. He referred to the report of the inspector deputed, the facts narrated therein, the enquiries made by the Assessing Officer and the recitals in the sale deeds, which was brought out by the Assessing Officer in his assessment order. He argued that the land in question was never used for agricultural purposes, nor was purchased with an intention for being used for agricultural purposes. He pointed out that all the surrounding areas were industrial plots and the assessee's land even had an industrial shed. He took this Bench through the order of the Assessing Officer and the ld. CIT(A) and prayed that he order of the Assessing Officer be upheld. The ld. D/R further submitted that the assessee should not have any grievance in this case, as the ld. CIT(A) has deleted the addition in his hands. On the directions of the ld. CIT(A) given to the Assessing Officer, he submitted that such directions can be given and it is for the Assessing Officer to taken guidance from the same and that these directions of the ld. CIT(A) issued to the Assessing Officer, are not binding. 8. We have heard rival contentions. On careful consideration of the facts....
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....and user by some possible future owner for agricultural objects. We see no merit in the impugned reasoning. The legislature makes it clear that agricultural lands beyond 8 Kms. from the local municipality etc.; as the Central Government may, having regard to the extent/scope for urbanisation and other consideration, specifically in the behalf....." (ii) Naiyer Sultan v. ITO [2019] 106 taxmann.com 191 (Kol ITAT) "7. We have considered the rival submissions on this issue and also perused the relevant material available on record. During the year under consideration, land owned jointly by both the assessees in the present case was sold and the gain arising from the said land was claimed to be exempt on the ground that the said land being an agricultural land was not a capital asset within the meaning of section 2(14). As defined in section 2(14), "capital asset" means property of any kind held by an assessee, whether or not connected with his business or profession, but does not include, inter alia, as per clause (iii) agricultural land in India not being land situated in any area within the distance, measured aerially, not being more than 8 Kms. from the local....
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....he nearest municipality. The Hon'ble Madras High Court held and observed as under: "18. Mr. T.R. Senthil Kumar, emphatically argued that the Assessing Officer arrived at his finding based on the fact that the land in question had been classified in the records of the Sub Registrar Office as revenue land. However, as would appear from the order of the assessment itself, it was classified as agricultural land in the revenue records. Even otherwise, the learned Tribunal had looked into the relevant materials including the revenue records, as also records which indicate that the respondent assessee ran a Nursery. 19. The learned Tribunal was of the view that whether there was agricultural income or not was not relevant. No fault can be found with the reasoning of the learned Tribunal. The fact that there was loss and not income could not have made any difference to the nature and character of the land." The SLP filed by Revenue against the aforesaid judgement of Hon'ble Madras High Court was dismissed by Hon'ble Supreme Court [2019] 102 taxmann.com 223 (SC) (iv) M. Vijaya v. DCIT [2014] 49 taxmann.com 26 (Hyd-ITAT) 37. Further, we make it cl....
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....as it is and where it is basis, in such circumstances, in our opinion, such transfer like the case before us cannot be considered as a transfer of capital asset or the transaction relating to sale of land was not an adventure in the nature of trade so as to tax the income arising out of this transaction as business income." (vi) CIT vs. Siddharth J. Desai[1982] 10 Taxman 1 (Guj) = [1983] 139 ITR 628 (Guj) Held 1. Several factors are relevant and are weighted against each other while determining the true nature and character of the land. The major factors which are considered as having a leaning on the determination of the question are as follows : a. whether, the land was classified in the revenue record as agricultural and whether it was subject to the payment of land revenue, but this factor alone will not be conclusive; b. whether the land was actually or ordinarily used for agricultural purposes at or about the relevant time; c. whether such user of the land was for a long period or whether it was of a temporary character or by way of stop-gap arrangement; d. whether the income derived from the agricultural operatio....
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....sion under section 63 of the Bombay Tenancy and Agricultural Lands Act was obtained by the assessee to sell the lands to the society for residential purposes would not, militate against the land continuing to be agricultural on the date of its sale, as the permission was obtained only about two and a half months prior to the sale. Therefore, till the land was held by the assessee its character as agricultural land was not changed either as a result of its reclassification in the revenue records or by the actual alteration of its use. Again, there was no evidence on record to show that there was any development in the surrounding area or that the land itself was developed prior to its sale. The land was located on the outskirts of the village but it was not situate in the municipal limit. The land must, therefore, be taken as having been situate in a rural area and it continued to have an agricultural bias right up to the date of its sale. Further, there was no evidence or material on record to indicate that the price offered for the land by the society, even proceeding on the basis that" the intended user of his part was non-agricultural, would not have been offered by an agricultu....
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....ever been converted from agricultural to non-agricultural use at any point of time before the sale in question. The state government's revenue records strongly support the assessee's case rather that its lands are very much agricultural in nature. The Assessing Officer tried to apply "performance" test that for determination of land in issue what is required to be shown is connection with the agricultural purpose is the use and not the mere possibility of the land user by some possible future owner for agricultural objects. We see no merit in the impugned reasoning. The legislature makes it clear that agricultural lands beyond 8 Kms. from the local municipality etc.; as the Central Government may, having regard to the extent/scope for urbanisation and other consideration, specifically in the behalf. ...." DCIT v. P. Ashok Kumar ITA No.1581/Mds/2010, Judgment dated 20.01.2011 (Chennai Trib.) "6. There are good reasons given by the ld.AR for explaining that the land was not recently used for cultivation. In our considered opinion, the noncultivation of a piece of land does not loose its character of agricultural land unless the user of the land has ....
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....t and these receipts are treated as agricultural receipts by the Revenue. The assessee has also paid agricultural land tax and copies of the same were made available to the authorities. The land in question is situated in the revenue estate of a Village named Iyyappanthangal Panchayat which is situated more than 8 kms away from the limits of Alandur Municipality. We have found that the land has been agricultural land for the past many years and has been classified as such in the records of the revenue Department. The assessee has paid kist of Rs. 400/- each in respect of land on 30.1.2007 regarding fasli years 1413, 1414, 1415 and 1416. It was brought on record that this land was being cultivated by one local person, namely Shri Murugan, but for assessment years 2005-06 and 2006-07, agricultural operations were carried out by him, he could not get food returns and that is why he did not admit any agricultural income in the returns filed. The report of the Tahsildar refers to non-cultivation of the land because an agricultural operation in a large scale was not carried out on this land. Hence, we hold that the land sold by the assessee is only agricultural land and not a capital ass....
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....uestion was agricultural land. Having come to such a conclusion, the Tribunal ought not to have gone into question of intention of the appellant/assessee and definitely not into the question of intention of the land acquiring authority, the latter being a wholly irrelevant consideration." PCIT v. Heenaben Bhadresh Mehta [2018] 96 taxmann.com 164 (Guj) "9. As observed hereinabove, the land was sold as an agricultural land and in fact, what was sold was agriculture land. What was the intention of the purchaser cannot be the determinative factor to treat the profit earned by the assessee on sale of agriculture land as business income. Similarly, merely because for whatever reason, the assessee has earned sufficient huge amount of profit also cannot be a ground to treat the profit earned by the assessee on sale of agriculture land as business income." M. Vijaya v. DCIT [2014] 49 taxmann.com 26 (Hyd-ITAT) 37. Further, we make it clear that when the land which does not fall under the provisions of section 2(14)(iii) of the IT Act and an assessee who is engaged in agricultural operations in such agricultural land and also being specifi....
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.... agricultural. Even though the land was not actually put to agricultural use since about one year prior to the sale, there was no evidence to establish that it was converted to any other use. The fact that permission under section 63 of the Bombay Tenancy and Agricultural Lands Act was obtained by the assessee to sell the lands to the society for residential purposes would not, militate against the land continuing to be agricultural on the date of its sale, as the permission was obtained only about two and a half months prior to the sale. Therefore, till the land was held by the assessee its character as agricultural land was not changed either as a result of its re-classificanon in the revenue records or by the actual alteration of its use. Again, there was no evidence on record to show that there was any development in the surrounding area or that the land itself was developed prior to its sale. The land was located on the outskirts of the village but it was not situate in the municipal limit. The land must, therefore, be taken as having been situate in a rural area and it continued to have an agricultural bias right up to the date of its sale. Further, there was no evidence or m....
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.... agricultural land and beyond 8 KMs from the municipal limits. Accordingly, we allow this ground of all the appeals." WTO vs. Premier Polymers Pvt. Ltd. WTA No.06/Kol/2012, Judgment dated 31.05.2012 (Kol Trib.) "4. We are unable to share the perception of the ld. D.R. Even though, there is no res judicata in tax proceedings, the principle of consistency must find its place. When the revenue authorities accept the position for one particular assessment year by not challenging relief granted to assessee in appeal, it cannot be open to them to challenge the same relief being granted in favour of the assessee by the CIT(A) in other years, or, for the purpose, in the case of other assessees as well. Hon'ble Supreme Court, in the case of Union of India & Others -vs- Kaumudini Narayan Dalal and Another 249 ITR 219, had an occasion to consider whether it is open to revenue to accept a judgment in the case of one assessee, and appeal, against identical judgment, in the case of another assessee. Their Lordships held that such a differential treatment on the same set of facts was not permissible in law and observed that "it is not open to revenue to accept....
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....ad expired from the date of transfer. He accordingly directed the Assessing Officer to tax the capital gains of Rs. 77,94,104/- in the hands of the assessee for A.Y. 2015-16 by initiating the proceedings under section 147 of the Act. As submitted by the ld. Counsel for the assessee, the said direction given by the ld. CIT(Appeals) for A.Y. 2015-16, which was not in appeal before him while disposing of the appeal of the assessee for A.Y. 2013-14 is beyond his power and jurisdiction. Although the ld. D.R. has sought to justify the direction given by the ld. CIT(Appeals) by relying on sub-section (1) of section 150, we find that the said provisions is not relevant in the context of the powers of the ld. CIT(Appeals), since the said powers are governed by section 251 of the Act, which is relevant. In the case of R.S. Davey -vs. - CIT [140 ITR 1035], a similar issue relating to scope of powers of first appellate authority had arisen for the consideration of Hon'ble Calcutta High Court and it was held by the Hon'ble Calcutta High Court that the ld. CIT(Appeals) was not competent to give to the Assessing Officer the direction in respect of an assessment year which was not in appeal before....
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....e land was under declared (sale has been shown at lesser value as compared to the market sale value determined by State Government for the purposes of charging stamp valuation) by both of the parties by Rs.1,47,55,910/- [Rs.2,32,55,910 - Rs.85,00,000] as per the valuation determined in Certificate of Market Value issued by Mr. Sandip Biswas, Addl Dist. Sub Registrar, Haripal, as per the Rule 21 of West Bengal Registration Rules, 1962 duly stamped under schedule 1A Article No. 23, 4 of Indian Stamp Act, 1899 and also under section 5 of West Bengal Reforms Act, 1955. Further, it is noticed from the document/ sales deed that the land register vide document No 4482/10 containing 5 CS & RS Dag No having nature on record as Sali for proposed used as industrial, the details of land is given below: C.S & R.S Nature of land Proposed to Area of land Dag No. 203 recored as Sali 204 Sali 205 Sali 206 207 Sali Sali be used Industrial Industrial Industrial Industrial Industrial Total area= 92 Satak in Sixteen annas 22 Satak in Sixteen annas 19 Satak in Sixteen annas 30 Satak in Sixteen annas ....
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.... land property, it has been noticed that the land had a total area of 425 Satak with 9 different LR Dag No. were purchased by the alleged firm namely M/s Shree Annapurna Oil Mills from M/s Indian Instruments Pvt Ltd, Kolkata at a cost of Rs.20,00,000/- on 28-03-2006. The details of area of purchased land, nature of land and LR Dag No. thereof as per the purchase deed are given below: Nature of Land S.No LR Dag No. 1. 203 Sali 2. 204 Sali 3. 206 Sali 4. 207 Sali 5. 207/870 Sali 6. 207/871 Sali 7. 207/872 8. 9. 207/873 207/874 Total Area Viti Doba Doba Area of Land 59 (Fifty nine) Satak in Sixteen Annas 18 (Eighteen) Satak in Sixteen Annas 33 (Thirty three) Satak in Sixteen Annas 62 (Sixty two) Satak in Sixteen Annas 56 (Fifty six) Satak in Sixteen Annas 92 (Ninety two) Satak in Sixteen Annas 60 (Sixty) Satak in Sixteen Annas 29 (Twenty nine) Satak in Sixteen Annas 16 (Sixteen) Satak in Sixteen Annas 425 (Four hundred twenty five) Satak Similarly, it is noticed from the sale Deed that the whole area of land has been sold out to M/s STP ....