TaxTMI 
TaxTMI 
TaxTMI 
2022 (11) TMI 1030
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....of any other communication from the assessee . 4. The grounds raised in the appeal are as under: "1. The order of the CIT(A) is against law and facts; 2. The ld.CIT(A) erred in treating gain from sale of agriculture land as business income without considering the facts of the case that the agriculture land is not a capital asset within meaning of the section 2(14) of the Income Tax Act, 1961 as it is situated outside the specified limits of 8 kms. 3. The ld.CIT(A) erred in disallowing the payment made to farmers u/s.40A(3) without considering the facts of the case that it is not a business income but gain from the sale of agriculture land" 5. We have gone through the orders of the authorities below duly assisted by the ld.DR and we have noted that the issue before us in appeal relates to the Revenue not accepting the assesses claim of income from sale of land being exempt u/s 10 of the Act , and on the contrary treating the income earned as business income of the assessee, being earned in the course of adventure in the nature of business conducted by the assessee.A consequential issue arising from this stand of the Revenue is the disallowance of payment made in cash for the....
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....90/-, after disallowing all cash payments made to the original land owners over and above documented value under section 40A(3) of the Act. The order of the AO was upheld by the ld.CIT(A). 7. Before us, first ground raised by the assessee in Ground No.2, is that the land sold was not capital asset as they were situated outside the specified limit of 8kms. (as mentioned in the grounds raised before us); meaning thereby that the land were rural agricultural land. In the written submissions filed before us, the thrust of the arguments made before us was with respect to the distance of the land from the municipal limit of Savli being more than 8 Kms, thus, qualifying as rural land. The submissions made before us in this regard are reproduced as under: "My father, Jaydeep Patel and I had jointly sold total six plots of agricultural land situated at Samlaya, Savli, Vadodara bearing block no. 803, 804, 805, 828, 829 and 830 to KEC International Limited vide sale deed dated 18th August, 2010 amounting to Rs. 9,38,40,000/-. Out of the sale consideration, Rs. 2,75,93,000/- were directly paid by the KECL towards premium to the government. Moreover, KECL had paid amounting to Rs. 3,76,22,50....
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....not exceeding ten lakh; or (III) not being more than eight kilometres, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than ten lakh." 8. We have gone through the orders of the ld.CIT(A) and we find that the ld.CIT(A) has categorically held that the land sold by the assessee to be non-agricultural land. His findings in this regard at para-6 to 6.2 are as under: "6.0 Ground No.1 relates to treatment of agricultural land as capital asset current sale as advantage in the nature of trade. The appellant has vehemently opposed profit from sale of land on the ground that the land was outside the Municipal Limit i.e.8km and secondly at the time of sale, the land was agricultural which is evident from the sale deed itself. From the assessment order, the submission made before me and AR's argument, it transpires that the AO has relied upon agreement clause made with him and the purchase company KECI Ltd., Reliance are based on following premises: i) Sale of land was subject to N.A. ii) Stamp duty was paid as per N.A. valuation and the purchaser had no objection in paying higher stamp duty, iii) Purchaser ....
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....iteria of being an agricultural land for not qualifying as a capital asset. 10. In view of the above this ground of appeal no.2 raised by the assessee is dismissed. 11. Next ground, Ground No.3, relates to disallowance of expenditure incurred on the acquisition of the land made in cash u/s 40A(3) of the Act. The relevant findings of the ld.CIT(A) at para- 7 of the order in this regard are as under: "7.0 Ground No.3 relates to invoking Sec.40A(3) of the Act on account of cash payment made to land owner I find AR has no where submitted quantum amount paid in cash. Neither in assessment order, I find quantum of payment made in contravention of Sec.40A(3) of the Act. AR argued that Sec.40A(3) was inapplicable due to capital gain derived from sale of land was Nil. AO on the other hand assessed profit derived from sale of land considering it adventure in the nature of trade. Admittedly, Sec.40A(3) applicable in case of business expenditure. Once I have upheld AO's findings in Ground No.2 above then obviously, I would decline to interfere in invoking Sec.40A(3) of the IT Act. Ground No.3 also fails." 12. Submissions made before us in writing in this regard are as under: "2. Wit....