TaxTMI 
TaxTMI 
2019 (1) TMI 1989
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....hri. Mafaz Mohammed and appeal 323/Chny/2017 is an appeal of the assessee Smt. Syed Abdul Kader Aysthath Fasleen Amina. Both these appeals are for the same assessment year 2010- 11, and facts relating thereto lie within very same compass. 3. What can be recapitulated from the assessment orders, is that Smt. Syed Abdul Kader Aysthath Fasleen Amina had purchased 11.37 acres of land at survey Nos. 14/2C, 14/3A and 14/3B2 of Egattur Village, Thiruporur Taluk from one Smt. Saradambal through following documents:- (i) Doc. No.3227 of 1998, dated 15.12.1988 (ii) Doc. No.686 of 1989, dated 20.03.1989 (iii) Doc. No.56 of 1992, dated 30.06.1991 (iv) Doc. No.54 of 1992, dated 02.07.1991 (v) Doc. No.55 of 1992, dated 02.07.1991 (vi) Doc. No.1833 of 1992, dated 30.09.1992 (vii) Doc. No.701 of 1993, dated 27.04.1993 All the above documents were registered with Sub- Registrar, Thiruporur. In addition to the above Smt. Syed Abdul Kader Aysthath Fasleen Amina had also acquired 3 acres and 81 cents of land at survey No.14/3B1 in 1992 through document Nos.114/92 and 115/92. All these land pieces, it seems, were adjacent to eachother and formed a single land parcel. She had ther....
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....ale price came to Rs.20,27,00,000/- per acre against guideline value of Rs.3,00,00,000/- per acre. As per the ld. Assessing Officer, the land was situated in Egattur, which was a suburb of Chennai, in Thiruporur Taluk of Kanchipuram District, lying on the side of Old Mahabalipuram Road. According to the ld. Assessing Officer, Egattur was an upcoming residential area with many flats catering to professionals working in Information Technology companies in and around OMR. Ld. Assessing Officer also noted that Government of Tamil Nadu vide Gazette Notification No.VI(1)/109/2009, dated 09.03.2009 had declared the area of 9.32 acres owned by the assessees alongwith Smt. Aysha, as a multi- storeyed building area for construction of commercial building. Assessees were put on notice. Summary of the reply given by the assessees was as under:- a The land was purchased as agricultural land as per purchase deeds. It is clearly mentioned in the purchase deeds that what was brought was agricultural Punja land and was being cultivated. b Agricultural income was derived from the land which were being offered year after year in the individual income-tax-returns. c Copy of the Chitta, Patta, ....
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....7, executed by the assessee's in favour of M/s. SSDPL. Assessees had entered into the JDA with M/s. SSDPL to develop the land for constructing multi-storied building with mall, residential apartments and for commercial use. Through this JDA, parties agreed for 50:50 share in the undivided land. Asessees alongwith Smt. Aysha were entitled to 50% of the total saleable space. Ld. Assessing Officer also noted that M/s. SSDPL had, in turn, entered into agreements with M/s. IGH and M/s. Accent for sale and construction of hotel on 50% of UDS in the land belonging to M/s. SSDPL. M/s. SSDPL had also received a sum of Rs.22,50,00,000/- from M/s. IGH and M/s. Accent, on 11.04.2008. It seems, the joint development agreement entered between assessees and M/s. SSPDL was cancelled on 04.02.2010 and assessees, sold the 1.85 acres of land directly to M/s. IGH and M/s. Accent. The impugned capital gains arose out of the sale effected by the assessees to M/s. IGH and M/s. Accent. 8. Ld. Assessing Officer after going through the array of transactions came to a conclusion that intention of the assessees were to commercially exploit the land. According to him, such commercial purpose was clear from th....
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....uction of the building, this was not accepted by the ld. Assessing Officer. Ld. Assessing Officer noted that a term loan of Rs.4,65,00,000/- availed by the assessee from M/s. Indian Overseas Bank, Gemini Circle, Chennai was for purpose of private investment in immovable property. According to him, it was clear from a letter from Assistant General Manager, Indian Overseas Bank, Chennai that such term loan was preclosed being the surplus fund available with the assessee. Ld. Assessing Officer also relied on answers given by the assessee during the statement taken in the survey. Claim of interest was also thus disallowed. 10. Aggrieved, both the assessees moved in appeal before ld. Commissioner of Income Tax (Appeals). Whereas assessee Shri. Mafaz Mohammed was successful in his appeal, that of Smt. Syed Abdul Kader Aysthath Fasleen Amina met with a different fate. What was held by the ld. Commissioner of Income Tax (Appeals) in the case of the assessee Shri. Mafaz Mohammed in his order dated 27.05.2016 on the question of nature of the land is reproduced hereunder:- ' 'I have considered the above submission of the assessing officer and also the submissions of the of the assessee car....
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....e Limited, for the purpose of registration of 1.85 Acres of land and surrendered the balance land by cancellation of Joint Development Agreement and accordingly the assessee and other co owners had to register the property in the name of M/s. Interglobe Hotels Private Limited and My s. Accent Hotels Private Limited being the nominee of the developer. The deed of cancellation of Joint Development Agreement clearly narrates the nomination made by the SSPDL, the Developer in favour of M/s. Interglobe Hotels Private Limited and M/ s. Accent Hotels Private Limited. Thus the registration of the land in favour of M/s. Interglobe Hotels Private Limited and My s. Accent Hotels Private Limited on 5.2.2010 is not a new transaction, It is only a consequential act on part of the assessee to register the land as per the requirements of the developers as contained in the Joint Development Agreement cancellation deed dated 4.2.2010. As per sec.2(47)(v) of the IT.Act, transfer in relation to capital asset includes any transaction involving the allowing the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to m Sec.53(A) of the tran....
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....s with that M/s. Interglobe Hotels Private Limited and M/s. Accent Hotels Private Limited for sale of undivided portion of land. When the Joint Development Agreement was cancelled on 4.2.2010 between the assessee and SSPDL, it has become necessary to honour the commitment made to that M/s. Interglobe Hotels Private Limited and M/s. Accent Hotels Private Limited and the assessee and other co owners had to register 1.85 Acres of land to them in pursuance of the agreement entered In consequence to Joint Development Agreement. On 4.2.2010 M/s. SSPDL had nominated M/s. Interglobe Hotels Private Limited and M / s. Accent Hotels Private Limited, as their nominees for the purpose of Registration of 1.85 Acres of land and surrendered the balance land to the assessee and other co owners by cancellation deed of Joint Development Agreement. Thus, the transaction between the assessee and M/s. Interglobe Hotels Private Limited and M/s. Accent Hotels Private Limited is not a new sale transaction but it is only a consequential happening based on the Joint Development Agreement. In the deed of cancellation of Joint Development Agreement in clause No.3, it was mentioned that "It is also repres....
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....the sanction permission obtained. Theland was kept as agricultural land by the SSPDL from the date of entering into JDA till it was cancelled on 4.2.2010. Hence permission obtained was not acted upon. Even in the cancellation deed it was clearly mentioned that only land was handed over back to the assessee and other co-owners without any development. The decision of ITAT Tribunal Chennai in the case of Ravikumar (HUF) Chennai Vs. Department of Income-tax in ITAT No.1076/MDS/2009, squarely applicable to the cause. It held that mere obtaining permission for the layout does not change the character of the lands from agricultural lands and the permission was never implemented nor acted upon. Even after the JDA, the land was continued to be used for agricultural purposes, up to the sale of the land to M/s.IGH and M/s.Accent . This is evident from the VAO Certificate, Patta, Chitta, Adangal issued in favour of the buyers viz., M/s.IGH and M/s. Accent. The land was sold to M.s, IGH and M/s. Accent also as agricultural lands only. Effectively, the ld. Commissioner of Income Tax (Appeals) held that the land sold was agricultural in nature and the transfer was effected in financial y....
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....nformation technology companies are renting and buying apartments there. 20. Even the government of Tamilnadu has notified the Survey Nos. in the area as Multi Storied Building area for construction of commercial buildings. 21. During the financial year 2007 - 08, the appellant and the two other shareholders had given a Power of Attorney dated 27/06/2007 in respect of the impugned property in favour of M/S SSPDL Infrastructure Developers Private Limited to do various acts, deeds and things like to make and submit necessary applications to the Directorate of Town and Country Planning, CM DA, TNEB, MWSSB, Fire Department, Local Panchayat Union, etc. for obtaining notifications, approvals for demolition of any structure, re - classification of the property, sub - division of the property, re - constitution of the property etc. etc. 22. Based on this POA, M/S SSPDL had applied before the Directorate of Town and Country Planning for notifying the impugned land as 'Multi - Storied Building Area' for construction of commercial buildings and the Directorate of Town and Country Planning by notification declared the impugned land as 'Multi - Storied Building Area' fo....
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....at .she had carried out agricultural operations and had obtained agricultural produce. The appellant was also asked to furnish the details of expenses incurred towards the agricultural activities and also to furnish the details of payment received on account of sale of agricultural produce. However, the appellant failed to produce any such a details. She could furnish only copies of Chitta and Adangal which stated that there were coconut and mango trees planted. 30.After considering the above facts of the case and also keeping in view the observations and the findings of the AO, I am of the considered opinion that the impugned land was a long term capital asset only and the appellant was required to pay the capital gains tax on the sale of this long-term capital asset. The facts of the case as referred to by the appellant in the case of Smt. Aysha Fathima, A.Y.2009-10, ITA NO.1371/Mds/2013 of the Hon'ble jurisdictional ITAT, do not apply to the present case of the appellant. In the referred case, the Tribunal has observed that regarding the nature of land whether it is agricultural land or not, it always depends upon the facts of each case. By this observation of the Hon'....
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.... 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 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 records, 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 63 of the Bombay Tenancy and Agricultural Lands Act, 1948, was obtained because the sale or intended sale was in favour of a non-agriculturist? If so, whether the ....
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....at the appellant had actually earned agriculture income, the same was to the tune of Rs.1,80,0001-only which was disproportionate to the land held by the appellant. Moreover, it is not ascertainable from the submissions of the appellant whether the amount of RS.1 ,80,000/-was the gross amount or the net. IV. Whether, the permission under section 65 of the Bombay Land Revenue Code was obtained for the non-agricultural use of the land? If so, when and by whom (the vendor or the vendee)? 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? In the present case, the appellant's POA holder M/S SSDPL had applied before the Directorate of Town and Country Planning for notifying the impugned land as Multi- Storied building area for construction of commercial properties and vide the notification no. VI (1)/109/2009 dated 09/03/2009 the impugned land was declared as multi-storied building area for construction of commercial buildings v. Whether the land, on the relevant date, ....
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....ts, I am of the considered opinion that the impugned land was a non-agricultural land and fell within the ambit of long term capital asset for the purposes of capital gains tax. Hence, the findings of the AO in this regard are confirmed. 39. The other contention raised by the appellant in the grounds of appeal is with regard to the year of taxability of capital gains. It has been submitted by the appellant that even if the capital gains are taxable, it has to be considered in the assessment year when the JOA was entered in, i.e. in the AY. 2008-09, POA was issued during the AY. 2008-09 and the consideration was a received as per section 2(47)(v) and not in the AY. 2010-11 as assessed by the AO. In order to substantiate her claim, the appellant has also referred to the decision of the Hon'ble jurisdictional ITAT in the case of Smt. Ayisha Fathima ITA No.. 1371/Mds/2013, AY. 2009-10. In the said case, the Tribunal after considering the relevant facts of the case has observed as under:- ''As per above, the possession is given by the assessee vide this JDA dated 09/07/2005 and also authorised the developer to get necessary approvals for the purpose of construction. The assess....
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.... transfer of the impugned capital asset took place on 05/02/2010, during the relevant AY. 2010 - 11 under consideration. Hence, this contention of the assessee is dismissed. Thus the two different ld. Commissioner of Income Tax (Appeals)'s took a diametrically opposite view on the nature of the land sold by the assessees. 12. Now before us, ld. Authorised Representative strongly supporting the order of the ld. Commissioner of Income Tax (Appeals) in the case of Shri. Mafaz Mohammed and opposing the order of the ld. Commissioner of Income Tax (Appeals) in the case of Smt. Syed Abdul Kader Aysthath Fasleen Amina, submitted that chitta and adangal records clearly prove the land to be agricultural in nature. According to him, assessees had acquired the land through various settlements and admittedly the land was acquired during a period prior to May, 1993. As per the ld. Authorised Representative, assessees were holding the land for more than a decade. Ld. Authorised Representative listed out the reasons cited by ld. Commissioner of Income Tax (Appeals) in the case of Smt. Syed Abdul Kader Aysthath Fasleen Amina, for differing from the order of the ld. Commissioner of Income Tax (Ap....
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....sment year 2009- 2010) dated 17.08.2016. As per the ld. Authorised Representative, land considered by the Tribunal in this case was in the close neighbourhood of the property sold by the assessees. According to him, in the said decision this Tribunal had held that the land at Egattur Village measuring 6 acres and 21 cents was agricultural in nature. Thus, according to him, sale of the impugned land was not exigible to capital gains. 14. Per contra, ld. Departmental Representative strongly supporting the order of the ld. Commissioner of Income Tax (Appeals) in the case of Smt. Syed Abdul Kader Aysthath Fasleen Amina and opposing the order of the ld. Commissioner of Income Tax (Appeals) in the case of Shri. Mafaz Mohammed submitted that the tests to be applied for determining the nature of a land was laid down by Hon'ble Supreme Court in the case of Smt. Sarifabibi (supra). According to him, if these tests were correctly applied it would clearly show that the land sold by the assessees was not agricultural. As per the ld. Departmental Representative , assessees had first entered into JDA on 25.06.2007 and thereafter cancelled such JDA and sold the land directly to M/s. IGH and M/s. ....
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....ording to him, Hon'ble Jurisdictional High Court in the case of Sakunthala Rangarajan (supra) had clearly observed that cumulative satisfaction of all the thirteen conditions was not required and which out of these were to be satisfied was dependent on facts and circumstances of each case. As for the decisions of Co-ordinate in the cases of Aboobucker (supra) and that of Vijay Shah (supra), ld. Authorised Representative submitted that such decisions were rendered prior to the judgment of Hon'ble Jurisdictional High Court in the case of CIT vs. Venkateswara Hospital in T.C (A) No.761 of 2017, dated 23.01.2018 and therefore no more good law. In any case according to him, the Co-ordinate Bench in the case of Ayisha Fathima (supra) where the question was exigiblity to capital gains on sale of a piece of land in the immediate neighbourhood, had clearly held in favour of the assessee. Thus, according to him, the land sold by the assessee could not be considered as non agricultural. 16. We have considered the rival contentions and perused the orders of the authorities below. As already mentioned by us, two different ld. Commissioner of Income Tax (Appeals), in the space of five months ha....
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....7% builtup p-lint area which should be not less than 1,41,135 sq.ft. and the remaining built-up punt area that is 73% shall be retained by the Developer and in consideration thereof the land owners slaH transfer 73% undivided share over the land described in the- Schedule A hereunder to the Developer or to their Nominiees. If the Developer are able to put up construction more than 2 FSI, the land Owner shall be entitled to get proportionate extra constructed area at 27% for themselves, while the remaining 73% shall be retained by the Developer. 2. The Developer shall allot the Owner's builtup punt area in construction with the Owners and the same will be marked in the plan relating to the project as per the specification prdvided in the Annexure 1 of this agreement and in addition the Developer shall pay refundable deposit of Rs.1,20,00,000/- (One Crore and Twenty Lakhs only) to the Owners in the following manner: a) Rs.60,00,000/- (Rupees Sixty Lakhs only) on signing this agreement. - b) Rs.60,00,000/- (Rupees Sixty Lakhs only) on the plans being approved. 3. The Developer further agrees that out of the 73% builtup area retained by the Developer, the Developer have agr....
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....oned building plans, approvals, fee to be paid to various authorities and to apply and obtain service connections for use in the building and for engaging architects, construction engineers, contractors, sub contractors, artisans and to meet the cost of pUrchase of all materials used for construction as per the sanctioned plan with permissible deviations and shall be wholly responsible to comply with all provisions of the law with regard to interest of the aforesaid persons. The change in plans will be intimated to the owners. 8. The developer shall be responsible to make payments to all workers, workmen, staffs, employees and contractors and subcontractors, for the purpose of executing the work and development of the schedule A mentioned property. 9. The developer has the right to enter into the necessary agreements and deal with and sell its portion allotted under this agreement as an undivided or divided share of land or as land and building or in any other manner deemed fit by the developer, Subject only to the condition that the developer shall construct and deliver to the owner the 27% share in the built up area. The allotment of exact spaces for the developer and the o....
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....f the Developer and their Nominee conveying to them the Schedule B mentioned property or register a Power of Attorney in favour of the Developer for the same subject to clause 4 above. 37. The Owner and the Developer agrees not to change the common name for the project as may be given by the Developer. The Developer agrees to consider the suggestion of the Owners in this regard. 40. The Owners agree to refund the security deposit of 120 lakh to the Developer within two weeks of the Owner being intimated about completion and that the respective space allotted for the owners is fit for taking possession of the project. 44. The original title deed in respect of the Schedule A property shall be deposited with the common person in faith, known to both the parties till the completion of the construction of the project and after the completion of construction, the said original title deeds in respect of 'A' schedule property shall be delivered to The Owner's Association to be formed after the completion of construction. As per above, the possession is given by the assessee vide this JDA dated 09.07.2005 and also authorized the developer to get necessary approvals for the purpose ....
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.... "immovable property" shall have the same meaning as in clause (d) of section 269UA. Explanation 2. - For the removal of doubts, it is hereby clarified that "transfer" includes and shall be deemed to have always included disposing of or parting with an asset or any interest therein, or creating any interest in any asset in any manner whatsoever, directly or indirectly, absolutely or conditionally, voluntarily or involuntarily, by way of an agreement (whether entered into in India or outside India) or otherwise, notwithstanding that such transfer of rights has been characterised as being effected or dependent upon or flowing from the transfer of a share or shares of a company registered or incorporated outside India ; 6.1 It is an admitted fact that in this case for assessment year 2006-07, assessee disclosed the transactions as a Note in her return of income stating as follows:- 'Note: The assessee has entered into a joint development agreement with Allied Magistic Promoters during the assessment year in respect of Development of agricultural lands at Ekattur Village and handed over the possession of the property. She has also executed a Power of Attorney in favour of the ....
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....the execution of sale of the property by the assessee. He relied on the order of ld. Assessing Officer. On the other hand, ld.A.R relied on the order of Ld.CIT(A). 6.4 We have heard both the parties and perused the material on record. Regarding nature of land whether it is agricultural land or not. It is always depend upon the facts of the case. In the present case, originally the asset was acquired by the trust consisting of assessee and her brother as a beneficiary. Later on revocation of the Trust impugned property was devolved on the assessee and subsequently the assessee entered into JDA on 09.07.2005. Now the question is whether the said property is agricultural land or not is essentially a question of fact. The question has to be answered in each case having regard to the facts and circumstances of that case. There may be factors both for and against a particular point of view. We have to answer the question on a consideration of all of them, a process of evaluation and the inference has to be drawn on a cumulative consideration of all the relevant facts. It may be stated here that not all the factors or tests would be present or absent in any case and that in each case o....
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....racteristics, 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 non-agricultural use? 11. Whether permission under s. 63 of the Bombay Tenancy and Agricultural Lands Act, 1948, was obtained because the sale or intended sale was in favour of a non-agriculturist? If so, whether the sale or intended sale to such non-agriculturists was for nonagricultural or agricultural user? 12. Whether the land was sold on yardage or on acreage basis? 13. Whether an agriculturist would purchase the land for agricultural purposes at the price at which the land was sold and whether the owner would have ever sold the land valuing it as a property yielding agricultural produce on the basis of its yield?" 6.6 A reference could be made to the case of CWT vs. Officer- incharge (Court of Wards) (105 ITR 138) (SC) wherein the Constitution Bench of the Hon'ble Supreme Court stated that the term 'agriculture' and 'agricultural purpose' was not defined in th....
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.... Supreme Court had pointed out that the entries raised only a rebuttable presumption and some evidence would, therefore, have to be led before taxing authorities on the question of intended user of the land under consideration before the presumption could be rebutted. TheCourt further held that the Supreme Court had clearly pointed out that the burden to rebut the presumption would be on the Revenue. The Hon'ble Bombay High Court held that the ratio of the decision of the Supreme Court was that what is to be determined is the character of the land according to the purpose for which it was meant or set apart and can be used. It is, therefore, obvious that the assessee had abundantly proved that the subject land sold by them was agricultural land not only as classified in the Revenue records, but also it was subjected to the payment of land revenue and that it was actually and ordinarily used for agricultural purpose at the relevant time. 6.9 We may also refer to the case of CIT vs. ManilalSomnath (1977) 106 ITR 917 (Guj), wherein the Division Bench of the Hon'ble Gujarat High Court observed that the potential non- agricultural value of the land for which a purchaser may be prepar....
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.... High Court found that the finding that the land had been used for agricultural purposes was based on cogent and relevant material. The Revenue record supported the claim. Even the records of the IT Department showed that the assessee had declared agricultural income from this land in her returns for the preceding two years. The land being located in commercial area or the land having been partially utilised for non-agricultural purposes or that the vendees had also purchased it for nonagricultural purposes, were totally irrelevant consideration for the purposes of application of s. 54B. 10. It is seen from the aforesaid decision that the agricultural land sold by the assessee with an intent to purchase another land within two years had also been permitted to claim exemption under s. 54B of the IT Act, 1961. In the instant case, even though there was no sale as such, the assessee owned agricultural land within the limits of Tirunelveli Corporation and he had not put up any construction thereon, the assessee is entitled to claim exemption from the WT Act for the assessment of wealth-tax.That the land in question is adjacent to the hospital is totally irrelevant." 7.2 Adverting....
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....ecords, the land is classified as agricultural land and has not been changed from agricultural land to non-agricultural land at the relevant point of time when the land was sold by the assessee. It is also not in dispute that there was no activity undertaken by the assessee of developing the land by plotting and providing roads and other facilities and there was no intention also on the part of the assessees herein to put the same for non-agricultural purposes at time of their ownership that land. No such finding has been given by the Department. No material or evidence in support of the fact that the assessees have put the land in use for non- agricultural purposes has been brought on record. The nature of the crop and the person who cultivated the land are duly mentioned in the assessment order shows that at the relevant point of time the land was used for agricultural purposes only and nothing is brought on record to show that the land was put in use for non-agricultural purposes by the assessees. In view of the decision of the Hon'ble High Court in the case of Gopal C. Sharma vs. CIT (209 ITR 946) (Bom), it is also clear that the profit motive of the assessee in selling the lan....
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.... we find the conclusion arrived at by the Tribunal is nevertheless the correct conclusion." 7.7 Further the Kolkata Bench of the Tribunal in the case ofDCIT vs. ArijitMitra (48 SOT 544) (Kol) held as follows: "7. From the above, it is clear that agricultural land situated in areas lying within a distance not exceeding 8 km from the local limits of such Municipalities or Cantonment Boards are covered by the amended definitions of 'capital asset', if such areas are, having regard to the extent of and scope for their urbanization and other relevant considerations, is notified by the Central Government in this behalf. Central Government in exercise of such powers has issued the above notification, as amended latest by Notification No. 11186 dated 28.12.1999 clearly clarifies that agricultural land situation in rural areas, areas outside the Municipality or cantonment board etc., having a population of not less than 10,000 and also beyond the distance notified by Central Government from local limits i.e. the outer limits of any such municipality or cantonment board etc., still continues to be excluded from the definition of 'capital asset'. Accordingly, in view of sub-clause (b) o....
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....he purchaser did with the land or the purchaser was supposed to do with the land, but what was the character of the land at the time when the sale took place. The fact that the land was within municipal limits or that it was included within a proposed town planning scheme was not by itself sufficient to rebut the presumption arising from actual use of the land.The land had been used for agricultural purposes for a long time and nothing had happened till the date of the sale to change that character of the land. The potential non-agricultural value of the land for which a purchaser may be prepared to pay a large price would not detract from its character as agricultural land at the date of the sale. The land in question was, therefore, agricultural land. 7.9 Further the word "Capital Asset" is defined in Section 2(14) to mean property of any kind held by an assessee, whether or not connected with his business or profession, but does not include- (iii) agricultural land in India, not being land situated- (a) in any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area comm....
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....plaining the provisions of Finance Act, 1970, whereby s. 2(14) was amended so as to include the agricultural lands located within the jurisdiction of a municipality in the definition of the expression 'Capital Asset'. The relevant portion of the said memorandum is reproduced hereunder: "30. ... The Finance Act, 1970 has, accordingly, amended the relevant provisions of the Income-tax Act so as to bring within the scope of taxation capital gains arising from the transfer of agricultural land situated in certain areas. For this purpose, the definition of the term "capital asset" in section 2(14) has been amended so as to exclude from its scope only agricultural land in India which is not situate in any area comprised within the jurisdiction of a municipality or cantonment board and which has a population of not less than ten thousand persons according to the last preceding census for which the relevant figures have been published before the first day of the previous year. The Central Government has been authorised to notify in the Official Gazette any area outside the limits of any municipality or cantonment board having a population of not less than ten thousand up to a ma....
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....ernment in exercise of such powers has issued the above notification, as amended latest by Notification No. 11186 dated 28.12.1999 clearly clarifies that agricultural land situation in rural areas, areas outside the Municipality or cantonment board etc., having a population of not less than 10,000 and also beyond the distance notified by Central Government from local limits i.e. the outer limits of any such municipality or cantonment board etc., still continues to be excluded from the definition of 'capital asset'. Accordingly, in view of sub-clause (b) of section 2(14)(iii) of the Act even under the amended definition of expression 'capital asset', the agricultural land situated in rural areas continues to be excluded from that definition. And as in the present case, admittedly, the agricultural land of the assessee is outside the Municipal Limits of Chennai and that also 8 km away from the outer limits of this Municipality, assessee's land does not come within the purview of section 2(14)(iii) either under sub clause (a) or (b) of the Act, hence the same cannot be considered as capital asset within the meaning of this section. Hence, no capital gain tax can be....
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....e land in future at that point of time. It was due to certain compelling circumstances came into picture at a later stages, the assessees were forced to sell the land. Merely because of the fact that the land was sold in a short period of holding, it cannot be held that income arising from the sale of land was taxable as profit arising from the adventure in the nature of trade. The period of holding should not suggest that the activity was an adventure in the nature of trade. 8.6 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 specified as agricultural land in Revenue records, the land is not subjected to any conversion as nonagricultural land by the assessee or any other concerned person, transfers such agricultural land 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....
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....ls) in the appeal of Shri. S.A. Mafaz Mohammed that such cancellation was only an act of convenience and the actual transfer had happened on 25.06.2007. 18. Coming to the decision of ld. Commissioner of Income Tax (Appeals) in the appeal of Smt. Syed Abdul Kader Aysthath Fasleen Amina, the ld. Commissioner of Income Tax (Appeals) took a view that assessees could not prove the agricultural income. In our opinion, Revenue, having accepted agricultural income shown by the assessees in atleast some of the earlier years cannot turn back and say that such agricultural income was never proved with receipts for sale of agricultural produce and could not be believed. It will be apposite to have a look at the judgment of Jurisdictional High Court in the case of Sakunthala Vedachalam (supra). Para 12 to 14 of the said judgment are reproduced hereunder:- ''12. Hence, the only point that has to be considered is that whether the test as laid down in the decision reported in CIT v. Siddharth J. Desai [1983] 139 ITR 628 (Guj) has been satisfied by the assessees. In the said decision, in paragraph 11, it is held as follows (page 638) : "On a conspectus of these cases, several factors are disc....
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....r the sale or intended sale to such non-agriculturist was for nonagricultural or agricultural user ? (12) Whether the land was sold on yardage or on acreage basis ? (13) Whether an agriculturist would purchase the land for agricultural purposes at the price at which the land was sold and whether the owner would have ever sold the land valuing it as a property yielding agricultural produce on the basis of its yield ? At the risk of repetition, we may mention that not all of these factors would be present or absent in any case and that in each case one or more of those factors may make appearance and that the ultimate decision will have to be reached on a balanced consideration of the totality of circumstances." 13. According to the Tribunal, that if the above tests are applied, the assessees could not satisfy any of the conditions except conditions Nos. 1, 5, 11 and 12. The Tribunal held that the assessees could not prove that the lands was actually or ordinarily used for agricultural purposes. This reasoning does not appear to be correct in view of the above said decision of the Gujarat High Court, wherein it was clearly held in clause (1) in paragraph 11 that whether t....
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....e of Mansi Finance Limited (supra) which followed the earlier judgments of the very same court. In the circumstances, we are inclined to follow the decision of ld. Commissioner of Income Tax (Appeals) in the case of Shri. S.A. Mafaz Mohammed and uphold the view that the land sold by the assessees, in so far assessment year 2010-2011 is concerned was agricultural and not a capital asset coming within the meaning of Section 2(14) of the Act. The gains on sale thereof was not exigible to tax. 19. In the Department appeal in the case of Shri. S.A. Mafaz Mohammed, for assessment year 2010-2011, there are three others grounds, one assailing deletion of an addition of Rs.75,000/- claimed as agricultural income, second assailing deletion of claim of interest on term loans and third assailing deletion of the disallowance of municipal tax paid. Latter two disallowance were under the head ''income from house property''. 20. On the question of agricultural income, assessee had registered the conveyance deed in favour or M/s. IGH and M/s. Accent on 05.02.2010. However, assessees had about 7.5 acres left with them. Nevertheless, just because claim of agricultural income was accepted in the ear....
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....012-2013 in ITA No.312/CHNY/2017. 25. Assessee is aggrieved on compensation of Rs.76,46,280/- received on acquisition of 666 sq. mtrs land at survey No.14/3A2B, being treated as exigible to capital gains. Ld. Counsel for the assessee submitted that this was part of the property considered by the Tribunal in appeal of the Revenue and assessees in ITA No.2337/CHNY/2016 and ITA No.323/CHNY/2017 for assessment year 2010-2011. According to him, if the land was held as agricultural, the compensation received would not be exigible to tax. No doubt, We have already upheld the view of the ld. Commissioner of Income Tax (Appeals) in the case of Shri. Shri. Mafaz Mohammed for assessment year 2010-11, that the land was agricultural and sale thereof was not exigible to tax. However, nature of the land which was transferred in a subsequent year cannot be considered as agricultural only for a reason that another part of the same land was treated so, in an earlier years. As already mentioned by us, though the intention at the time of purchase of the land initially was crucial, subsequent events, if they show strong indication of a change of such intention, such events need to be considered. Once ....
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....on issued u/s.143(1) (a) of the Act could not be ignored and order passed subsequently u/s.143(3) r.w.s147 of the Act could not be considered as an assessment done for the first time. Accordingly, he held the rectification order under Section 154 of the Act invalid. 29. Now before us, ld. Departmental Representative submitted that there was a clear mistake in the original assessment done u/s.143(3) r.w.s. 147 of the Act, wherein interest was not calculated correctly. According to him, this was exigible to a rectification. 30. Per contra, ld. Authorised Representative strongly supported the order of the ld. Commissioner of Income Tax (Appeals). 31. We have considered the rival contentions and perused the orders of the authorities below. Question here is interpretation of Explanation (3) of Section 234A(1) of the Act. The said Explanation is reproduced hereunder:- ''Explanation 3.- Where, in relation to an assessment year, an assessment is made for the first time 2under section 147 or section 153A, the assessment so made shall be regarded as a regular assessment for the purposes of this section. As per the ld. Assessing Officer intimation u/s.143(1) of the Act could not be con....