TaxTMI 
TaxTMI 
2023 (5) TMI 1270
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....coming to conclusion, by referring the order of the DCIT Circle-3, Thane in the case of one of the co-owner, that the impugned land was agricultural land despite referring to the actual verification (spot visit ) of the land by the Inspector of the DDIT which also included the photograph of the land showing that the land was barren where no agricultural activity has taken place at any point of time. 3. Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in granting above relief to the assessee without appreciating the fact that the land under consideration is situated on hilly area devoid of any irrigation facilities and where no agricultural operation is possible. 4. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in granting above relief to the assessee without appreciating the fact that the status of the land under consideration has always been padd since beginning which means no agricultural activities have been carried out on the said land 5. The order of the CIT(A) may be vacated and that of the Assessing Officer may be restored. 6. The assessee cr....
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....es of the case and law applicable thereto. 7. Undisputedly, the assessee being the owner of the land in question having been purchased at different times from 1988 to 2007 sold the same to Mayank Land Pvt. Ltd. and Laxman Vaidya on 22.04.2010 and 25.10.2010 (during the year under assessment) for Rs.5,39,67,045/- and Rs.14,00,000/- respectively. 8. It is also not in dispute that the assessee has claimed the land in question to be an agricultural land being not situated within the specified area as per section 2(40) of the Act, hence not a capital asset. It is also not in dispute that in A.Y. 2010-11 only assessee has shown agricultural income of the land in question to the tune of Rs.60,000/- and prior to it, it was shown as barren (padd-jamin in hill area) land. It is also not in dispute that the assessee filed return of income for the year under consideration claiming agricultural income of Rs.60,000/- only after sale of land vide sale deed dated 22.04.2010. 9. In the backdrop of the aforesaid facts and circumstances of the case the sole question arises for determination in this case is: "As to whether the land in question sold by the assessee for a ....
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....ommittee, 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; or (b) in any area within the distance, measured aerially,- (I) not being more than two 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 thousand hut not exceeding one lakh; or (II) not being more than six kilometres, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than one lakh but not exceeding ten lakh; or (Ill) 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. Explanation. For the purposes of this sub-clause, ''population" means the population according to the last preceding census of which the relevant figures have been published before the first day of the previous year;]" 13. In order to treat any piece of land as an agricultural land, the assessee n....
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....nd one Shri Lax.man Dattaram Bhoir, available at page 546 to 555, it is proved on record that the same is vague and ambiguous document whereas the physical verification report is factual one. Even the nokamama is a document without consideration and does not contain any recital if Shri Laxman Dattaram Bhoir, has ever cultivated the land, nor it mentioned in the nokamama as to from which crop season he has started cultivating the land and what would be the terms and conditions of making such cultivation 18. It is also one of the contentions of the Assessee that he has received Rs.60,000/- from Shri Laxman Dattaram Bhoir for three years @ Rs.20,000/- per year as rent for cultivating the land. But it is very surprising as to how the receipt relied upon by the assessee available at page 550 & 556 of the paper book can be treated as rent receipt for cultivating the land. Nokamama as well as receipts for receiving Rs.60,000/- by the assessee from Shri Laxman Dattaram Bhoir are vague, ambiguous and undated documents which do not convey if Shri Laxman Dattaram Bhoir has ever cultivated the land in question as a tenant of the assessee. 19. Moreover, it is admitted fact that the assess....
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....assessee are further examined in the light of the revenue record and physical verification report given by inspector of Income Tax it shows a fraction of land under cultivation for the last about 10 years before the year under assessment, the same cannot be treated as "agricultural land" 22. When we further examine the contentions raised by the assessee that the land in question is an agricultural land as per nokamama and income tax returns filed by him qua the year under consideration, in the light of the survey report i.e. 7/12 extracts of the land in question, substantive portion of the land in question is recorded as barren. Survey report is prepared by the Revenue Department after every six months on the basis of physical verification by the revenue officials, to which presumption of truth is attached unless rebutted. The assessee has failed to rebut the presumption attached to the survey report 7/12 with the support of nokamama and income tax returns showing agricultural income. Rather survey report is further got corroborated with the physical verification made by inspector of Income Tax finding the land in question as a barren land having no irrigation facilities. 23.....
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....39;ble Bombay High Court is as under: "15. We may also refer to a Division Bench decision of this court in Wealth-tax Reference No. 5 of 1964, decided on 4th December, 1973, by Vimadalal and Desai JJ., in CWT v. Podar Mills Ltd. One of the questions which fell for consideration before the Division Bench was whether the lands held by the assessee at Ghatkopar were agricultural lands within the meaning of s. 2(e)(1)(i) of the W.T. Act. On the facts of that case, the lands were held to be agricultural lands, What we are concerned with is the proposition which was set out by the Division Bench after reference to the several cases. Th Division Bensch has made the following observations: "In a given case agricultural land may or may not yield agricultural income. It there is land which was once cultivated or put to agricultural use but it now fallow of barren, it would not merely by reason of such fact cease to be agricultural land. Conversely what is patently non-agricultural land may in extraordinary circumstances he use for a purpose to which agricultural land is usually put and may, therefore, yield agricultural income. However, merely by reason of the yield it ....
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....e) comprised in survey No.16/1 (0.09), 16/3 (0.10), 16/4/B (0.48) and 18/1 (0.31) was put to agriculture use out of total land measuring 11.7 acre. So we direct the AO to extend the benefit to the assessee by treating the land measuring 0.98 acre as the agricultural land for the purpose of deductions claimed by the assessee and remaining lands which have never been used as the agricultural land are to be treated as "capital assets". Consequently appeal filed by the Revenue is partly allowed. Order pronounced in the open court on _ _ . _ _.2022. ORDER PER SHAMIM YAHAYA (AM) :- I have gone through the order of my learned brother and have given a very thoughtful consideration. Despite great effort I have not been able to persuade myself to agree to the conclusion drawn in the said order. 2. I note that this is an appeal by the Revenue against the order of learned CIT(A). In the entire order above, the only mention about the order of learned CIT(A) is that "assessee carried the matter before learned CIT(A) by way of filing the appeal who has deleted the addition by allowing the appeal." Learned CIT(A)' order is a very elaborate order and in the said order he ha....
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....ion of not less than ten thousand [according to the last preceding census of which the relevant figures have been published before the first day of the previous year] (b) in any area within such distance, not being more than eight kilometers, 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, urbanization of that area and other relevant considerations, specify in this behalf by notification in the official gazette.'' 4. After noting as above the Assessing Officer observed that now the moot question is whether the land sold by the assessee was agricultural or not. He observed that on perusal of 7/12 extracts of the said land it is seen that the land is shown as barren. After noting that he observed that 'as it is clear from 7/12 extracts that the land is devoid of any irrigation facility'. Thereafter he referred to the Naukarnama produced by the assessee. The Assessing Officer disputed the veracity of Naukarnama by observing that there is no name of farmer to whom land was given for agriculture purpose. That also no details for the person who witnessed the said....
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.... * CIT Vs. Minguel Chandra Pai [2006] 282 ITR 618, Bom (order dated 23.03.2005) * CIT Vs. Smt. Debbie Alemao [2011] 331 ITR 59, Bombay High Court (order dated 09.09.2010) * Shankar Dalai Vs. CIT, Bombay High Court, Tax Appeal No. 1 of 2015 (80taxman.com 41), order dated March 23, 2017) * Ranchhodbhai Bhaijibhai Patel Vs. CIT [1971] 81 ITR 446 (Guj) * CIT Vs. Shri Sumit Shukla ITA No. 23/2015 Madhya Pradesh High Court (order dated 04.01.2016) * CIT Vs. Gopal Narayan Kasat 328 ITR 556 (Bom) (order dated 05.11.2009) * CIT Vs. Abdul Rehiman (49 SOT 267), ITAT Cochin (Order dated 21.10.2011) * G K Properties Vs. ITO 55 SOT 86, ITAT Hyderabad (order dated 31.08.2012) * Abhijeet Subhash Gaiwad Vs. DCIT 60 TAXMAN.COM, ITAT Pune (order dated 27.05.2015) * Mahaveer Enterprises Vs. Union Of India 220, 244 ITR 789, 143 CTR, 252, High Court of Rajasthan (order dated 30.04.1997) * Hemchand Hirachand Shah Vs. CIT Appeal No. ITR-5 [1979] 8. Thereafter he referred to statement recorded of Shri Ashok Wesavkar on oath under section 131 of the Act dated 9.5.2017. Learned CIT(A) observed ....
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..... In these facts learned CIT(A) rejected the Assessing Officer's contention that the assessee has not paid land revenue is incorrect. He further rejected the observation of DDIT/DCIT that the entire land is barren land being hilly also incorrect. He observed that the DDIT has understood the word "Ra Pad" as barren land, whereas the land records have used word "Lagvadi Yogya Shetra" for land which is cultivable and "PotKharab - Lagvadi Ayogya". Even Ra Pad is mentioned for land portion which are cultivable, meaning that Ra Pad land is not barren land but land on which cultivation was not done. The land records also show that there was cultivation of rice. 10. On the basis of above observations, learned CIT(A) held that the land fulfils the criteria that it is classified in the revenue records as agricultural land and land revenue was also duly paid are satisfied. Thereafter learned CIT(A) addressed the proposition that whether the land was actually or ordinarily used for agricultural purposes at or about the relevant time. In this regard he referred to the following case laws :- i. Hon'ble Supreme Court in CWT Vs Officer's-in-charge (court of Wards)(1976)105 ITR ....
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....hatsoever to the Said Property belonging or pertaining to or usually held or enjoyed therewith on reputed to belong or be appurtenant thereto shall be sold to the Purchasers. Vendor shall not reserve any rights with him regarding water, trees, stone, easmentary rights, timber, and the Purchasers shall have all the ownership rights to use the Said Property." 12. He observed that the Assessing Officer has misunderstood the sale agreement which clearly mentions that the trees on the land will be property of the purchaser with the land. That Shri Ashok Wesavkar also stated that there are numerous trees of Jamun, local desi mango, sagwan, bamboo and other trees. Regarding the findings of the AO that assessee has never shown any agricultural income learned CIT(A) referred to the return of income which was also reflected in the bank account wherein agricultural income was offered and accepted by Department. Learned CIT(A) further observed that before the Naukarnama when the assessee was doing agricultural activity himself with the labourers. That there were more expenses than the income and the agricultural produce was used for self consumption by assessee and the labour. He o....
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....ound ITAT Pune held that just because the land is assessed in land revenue records as agricultural land, is not decisive to determine the nature of land being agricultural land. In the case of Shankar Dalai, Bombay High Court followed its decision in Mingule Pai and Debbie Alemo and stated that merely because the assessee could not produce or could not utilize the land fully by employing labours or give the crops statement, should not have been criteria, specifically when the assessee and the owner of the land have been using the products for their personal consumption. Therefore after Sarifabibi case, various factors have to be seen which include not only the status of the land in the revenue record but also whether the land was actually used for agricultural purposes. The ratio of law laid down in Court of Wards by Supreme Court that what is really is required to be shown is the connection with the agricultural purpose and user and not the mere possibility of the user of the land for an agricultural purpose has been explained by various courts on the facts of the case. The crux of the findings is that the land should be used for the purpose of agriculture and if an agricultural o....
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....d there are no frequent transaction of sale and purchase of land. Hence, the circumstances in which the land which was sold, shows that the assessee fulfills the criteria of sale of agricultural land. He also observed that the said land was never used for non-agricultural purpose as permission under section 65 of the Bombay Land Revenue Code is required for nonagricultural use of land. Learned CIT(A) noted that the Assessing Officer has mentioned that in the sale agreement and index II, the land is shown as non-agriculture. However he gave a finding that on going through the agreement it is clearly mentioned that the land is an agricultural land. That further in Maharashtra only the agriculturist can acquire agricultural land and therefore while purchasing the company was required to give a certificate that it was owning agricultural land which is part of the agreement on page 207-209 of the paper book dated 9.5.2015. in this regard learned CIT(A) referred as under :- "On Page No. 209 the Tehsildar in letter dated 15.03.2010 has certified as under: LAND HOLDING CERTIFICATE FOR AGRICULTURAL LAND This is to certify that M/s. Mayank Land Private Limite....
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....ture. Some of the findings of the AO, like non payment of land revenue, no mention of crop on 7/12 extract, no trees on land and there being no name on Naukarnama are not found to be factually correct. The 7/12 extracts is available on public domain and can be viewed by any one by putting survey number at the website of Maharashtra Government, in which all the records are available online. The records show the type of land, location of land, agricultural produce etc,. In other family member's case, in respect of same land, the other DCIT finalised the assessment based on the report of DDIT and the grievance of the assessee is that findings of the enquiry were never confronted to him. The view of the DDIT on definition of capital asset as defined in 2(14)(iii) is not correct, though the AO in the case of the assessee has not taken that view. Further the agriculture land in Maharashtra cannot be sold to non-agricultural company. The purchasing company had to give a certificate that it owns agricultural land and was purchasing agricultural land mainly for the purpose of agricultural and allied activities. Though I agree with the view of the DDIT that agricultural income shown by t....
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.... not into business of land dealing and the land was held by the assessee and his family for more than 20 years. Under such circumstances, it would not be appropriate to treat the land as non-agricultural land and levy capital gains. Therefore the addition made by the AO is deleted." 15. Against this order the Revenue is in appeal before ITAT. 16. Both the parties have been heard and the records perused. Learned Departmental Representative relied upon the order of the Assessing Officer. He submitted that the assessee has shown agricultural income in A.Y. 2010-11 after sale of land for an amount of Rs. 60,000/-. Hence there was no agricultural income. That 90% of the land is devoid of irrigation facility. That Naukarnama cannot be relied upon. 17. Per contra learned Counsel of the assessee relied upon the order of learned CIT(A). Learned counsel made following written submissions :- "Fact of the Case: - 1 Assessee is a professional architect and is a proprietor of M/s. Ashok Wesavkar & Co. The Assessee derives income under the heads business or profession. Capital Gains and Income from other sources. During the year under review the assessee has e-fil....
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....ce, not a capital asset. 5. The AO completed the assessment u/s. 143(3) by adding profit on sale of agricultural land amounting to Rs. 5,33,16,625/- under the head income from capital gains. 6. Written submission before CIT(A) dated; 11.5.2015 [Pg 47-62] 25.2.2016 [Pg 63-65] 15.4.2017 [Pg 66-79] 4.5.2017 [Pg 66-79] 7. CIT(A) recorded statement of assessee on oath on 9/5/2017 (Para 10 Pg. 34 of CIT(A) order) 8. CIT(A) considered the report of DDJT dt. 22/2/2013 which report was considered by A.O. of CO-owner Pallavi Wesavkar (Para 6.2 Pg. 3 of CIT(A) order) 9. CIT(A) allowed the appeal the assessee. Propositions I The impugned land is an agricultural land 1. As per provisions of Section 2(14)(iii), a piece of land should satisfy following conditions in order to remain outside the ambit of definition of capital asset: * The land must be agricultural land * It must be situated in an area which is comprised within the jurisdiction of a municipality and which has a population of less than 10,000 (as per last census) * It must be situated in an area....
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.... 11. Assessee has disclosed agricultural income in A.Y. 2010-11 which is accepted by the department. (Pg. No. 287-311) 12. Assessing officer observation are incorrect ay under :- Assessing Officer's observation Assessee's contention No agricultural activity was undertaken on the said land i) This observation made by the AO is completely erroneous because of the fact that the assessee was cultivating rice on the said land. ii) Also he had duly disclosed agricultural income for previous year relevant to AY 2010-11 in his Return of Income (Refer Paper Book Pg. No. 287-311). iii) He had regularly paid Agricultural tax duly levied by Gram Panchayat on the agricultural produce. (Pg. 331-333) iv) The fact that the said land was given for tilling which is duly corroborated by a valid Naukarnama (Pg. 546-556) proves beyond doubt that agricultural activity was carried on the said land. The assessee had also derived agricultural income as evidenced from Bank Statement of Account No. 501 at the Parsik Janta Sahakari Bank Ltd. 7/12 Extract shows the land as barren The Ld.AO erred in inferring the fact that the land was barren as per 7/12 Extract w....
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....said that the agricultural land had become nonagricultural in nature. Infact the land is shown as cultivable land [Chart on Pg. 37 of CIT(A) order.] 15. To purchase an Agricultural land, the purchaser itself needs to be an Agriculturalist. This requirement is fulfilled, as evidenced from the fact that even the said purchaser, M/s. Mayank Land Private Ltd.. is also an agriculturalist and already in possession of agricultural land in Madhya Pradesh. 16. Purchase deed dated 22.04.2010 (Refer Paper Book Pg. No. 86-182 ), between Assessee and M/s. Mayank Land Pvt. Ltd., the intention of the purchaser of land to utilize it for agricultural purposes, is clearly mentioned on Page 3, Para (b) and further, as per para (c) if the purchaser wishes to utilize the said property for Non-agricultural purpose, then the same is to be done at its own cost and risk by obtaining requisite approvals. 17. A chart showing findings of the investigation report and its rebuttal. (Pg. No. 400 - 402) 18. Thus, from the above factual and legal submissions and documentary evidence, it is amply clear that said Land is agricultural land for the purpose of Section 2(1....
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.... Facts of the above mentioned case: i. The land sold was mentioned in the revenue records as agricultural land; ii. It was argued on behalf of the revenue that the land was not actually used for agriculture in as much as no agricultural income was derived from the land and was not shown in the Income-tax return. In reply, the assessee contended that that there were some coconut-trees in the land, but the agricultural income was just enough to maintain the land and there was no actual surplus. Hence, no agricultural income was shown by the assessee. Held The Hon. Court held that: i. If the agricultural operation does result into generation of surplus that cannot be a ground to say that the land was not used for the agricultural purpose. ii. It is not disputed that the land shown in revenue records to be used for agricultural purposes and no permission was ever obtained for nonagricultural use. Relevant section of Land Revenue Code prescribes that no land used for agriculture shall be used for any non agricultural purpose and no land assessed for one non-agricultural purpose shall be used for any other non-agricultural purpose ex....
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....t in the surrounding area indicating any potentiality for the development of the land. For the period of three years immediately after its purchase, agricultural activity was carried on in the land. At or about the time of its subsequent sale, the land was not actually put to agricultural use. All the while, however, the land continued to be listed in the revenue record and it was assessed to land revenue. On 22-11-1968, the assessee obtained permission of the competent authority under section 63 of the Bombay Tenancy and Agricultural Lands Act, 1948, for the sale of the land to a co-operative housing society. On 1-2-1969, the assessee sold the land to the society, On 5-2-1969, the society obtained the permission for non-agriculture use of the land, under section 65 of the Bombay Land Revenue Code, 1869, from the competent authority. The assessee claimed that the surplus realized by him on the sale of land was not liable to be taxed as capital gains as the land in question was agricultural land. Held by the High Court 1. Several factors are relevant and mi- weighted against each other while determining the true nature and character of the land. The major factors w....
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.... 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; and m. whether the land was sold on yardage or on acreage basis. 2. Having regard to tin' facts and findings recorded by the Tribunal, it was obvious that not only the physical characteristics of land, in the instant case, but the user also was 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 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 reclassification in the revenue records or by the actual alteration of its use. Again, there was no evidence on record to show ....
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.... area and the adjacent lands are also not used for non-agricultural purposes; i. The land is not developed and the user of the land as per revenue records till today remains agricultural; j. No permission u/s 63 of the Bombay Tenancy and Agricultural Lands Act has been obtained as the sale is in favour of an agriculturist company; 1. The subject land is purchased by an agriculturist company and till today the nature of land has been changed u/s 65 of the Bombay land Revenue Code; m. The land is sold on hectare basis. Applicability of the case law The facts in the abovementioned case law and that of the appellant are identical in as much as for both the lands, there is an agricultural activity before the transfer of the said land, even though quantitatively, the yield was not much. The nature of exploitation of the land would indicate not only its physical characteristics but also the user is agricultural. There is no conversion of land into non-agricultural use by the vendor. In fact in the facts of the above mentioned case law, the vendee had obtained permission for non- agricultural use, however in the instant case no such per....
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....992 by the Govt. of Maharashtra. However, the AO has failed to observe the even though the distance between Karjat Municipality and the land is 1 Km, it still does not come within the jurisdiction of Karjat Municipality. 5. In fact, Karjat Municipal Corporation (Karjat Nagar Parishad) vide its letter dated 30.07.2010 (Refer Paper Book Pg. No. 330, 544-545), has categorically mentioned that the said property situated in Vc-ngaon Village does not fall within its jurisdiction. 6. In view of the above, the said agricultural land is not situated within the jurisdiction of municipality as required by the provisions of Section 2(14)(iii) of the Act. 7. Further, assuming without accepting, that the said land is situated within the jurisdiction of Karjat Municipality, still the AO would not succeed in his contention since the Karjat Municipality is not notified by the Central Government in the Notification No. 9447 dated 06.01.1994 in the Official Gazette. As rightly held by the Honb'le Tribunal in case of Srinivas Pandit (HUF) V. ITO (2010) 39 SOT 350 (Hyd.)(Trib.) (Refer Paper Book Pg. No. 448- 451), as under: "12. In this case als....
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....said report in great detail. 19. As regards the issue of payment land revenue is concerned, learned CIT(A) gave finding that the assessee has submitted copies of land revenue paid as per page No. 1 to 3 of letter dated 4.5.2017 showing that the land revenue was regularly paid. This finding of learned CIT(A) has not been rebutted by the revenue. In the said letter the assessee has submitted to the learned CIT(A) receipts of Agricultural Cess (Shet Sara) paid attached as Annexure-1. The said included receipt dated 11.2.2002 for proposition that the assessee was engaged in agricultural activity since then and the latest receipt was for the year 2008. Hence adverse inference of the Assessing Officer that the land revenue was not paid regularly for agricultural land stands rebutted. 20. As regards the observation that the land is barren (Pad-Jamin) on hilly area learned CIT(A) referred to details from land records which shows the area of land which can be used for cultivation (lagvadi yogya shetra) and the land which is not cultivable (lagvadi ayogya shetra). From the reference to the land revenue records the areas which were put under cultivation and the type of agricultura....
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....icer's observation the assessee was not doing any agricultural activities, the same has been negated by learned CIT(A). In this regard learned CIT(A) has referred to the statement of Shri Wesavkar in which he explained the agricultural activities done with the help of labour and subsequently by leasing the land. Moreover, the record itself mentioned 'Bhat' (Rice) as acknowledgment of agricultural activity done. As regards the Assessing Officer's observation that the assessee has never shown any agricultural income it is noted that the learned CIT(A) referred to the return of income which was also reflected in the bank account wherein agricultural income was offered and the said income has been accepted by the Department. Moreover, when the land record itself mentioned about the agriculture produce, adverse inference in this regard is not justified. 23. As regards the adverse inference in Naukarnama that the names were not given learned CIT(A) has given finding that the said aspect noted was factually wrong. That the names are duly mentioned and the said persons have accepted that they were doing labour and agricultural activities. As regards expenses learned CIT(A) noted that as....
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....was barren is clearly negated from the record itself which shows that the 9.08 hectares was cultivable land out of 11.7 hectare. Hence inference that the land was not cultivable and barren is absolutely unsustainable. Moreover inference that no agricultural activity was done also stands rebutted from the land revenue records itself which shows that the crops were produced. Once it is amply clear that the land is agricultural land, land revenue is being paid, crops are being cultivated, no permission for non-agriculture use is there, adverse inference cannot be drawn if the produce is not commensurate with the area of land. This is duly approved by Hon'ble Bombay High Court decisions referred herein below. As reiterated by Hon'ble Bombay High Court in these decisions that lack of commensurate generation of surplus cannot be used as yardstick for the land to be non-agricultural when the land was not used for nonagricultural purposes. 28. The case laws from Hon'ble Jurisdictional High Court in the case of CIT Vs. H. V. Mungale (1984) 145 ITR 208(Bom.)(HC) is duly applicable on the facts of the present case supports the case of the assessee. The exposition from Hon'b....
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.... argued on behalf of the revenue that the land was not actually used for agriculture in as much as no agricultural income was derived from the land and was not shown in the Income-tax return. In reply, the assessee contended that that there were some coconut-trees in the land, but the agricultural income was just enough to maintain the land and there was no actual surplus. Hence, no agricultural income was shown by the assessee. Held The Hon. Court held that: i. If the agricultural operation does result into generation of surplus that cannot be a ground to say that the land was not used for the agricultural purpose. ii. It is not disputed that the land shown in revenue records to be used for agricultural purposes and no permission was ever obtained for nonagricultural use. Relevant section of Land Revenue Code prescribes that no land used for agriculture shall be used for any non agricultural purpose and no land assessed for one non-agricultural purpose shall be used for any other non-agricultural purpose except with the permission of the Collector. Permission for non-agricultural use was first time obtained by the purchaser after it purchased th....
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.... time to file written submission. His request was accepted and his written submissions were taken on record. The ld. AR of the assessee was also given liberty to file reply to the said written submission, which was accordingly filed by him and the same has been taken on record. 3. The sole issue for determination, in this appeal, is as to whether the land sold by the assessee was an 'agricultural land' and hence, not falling within the definition of 'capital asset' as defined u/s 2(14) of the Income Tax Act (hereinafter referred to as the 'Act), thus, the gains earned on the sale of the land are not exigible to capital gains tax. 4. The undisputed facts of the case are that the assessee, during the year sold, his land for a total consideration of Rs.5,53,67,045/- and claimed the said receipt as non-taxable claiming that the land sold by him was an 'agricultural land' and did not fall within the ambit of capital Asset' as defined u/s 2(14)(iii) of the Act and therefore, not liable to capital gain tax. However, the Assessing Officer did not agree with the above contention of the assessee and held that the land sold by the assessee did not quality to be categorized as 'agricultu....
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....ing his own agricultural land, resides in the vicinity and is regularly indulged in agricultural activities. vii) 7/12 extracts of two other agricultural lands held by the assessee proves that he is regularly engaged in agricultural activities. (viii) 'Form 6' in which mutation entries are recorded wherein it is Clearly mentioned that the appellant is an agriculturist. (x) Assessee has disclosed agricultural income in A.Y. 2010-11 which is accepted by the department. 8. However, the ld. Judicial Member did not agree with the contention of the assessee and held that most of the chunk of the land, in question, was a non-agricultural land and did not qualify as an 'agricultural land' and so as to exclude the same from definition and scope of the term 'capital asset' as provided u/s 2(14)(iii) of the Act. He further held that only a small portion of land, where as per the Revenue records, paddy was grown was to be treated as 'agricultural land' and accordingly, directed the Revenue to give the assessee the benefit of 'agricultural land' not falling in the definition of capital asset to the extent of 0.9 acres only out of total land sold of 11.07 ac....
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.... cultivable put he could not cultivate the same who has rather come up with the nokaranama and receipt for taking rent from his tenant for cultivating the entire land in question, which was vague and unambiguous. 9. The ld. Accountant Member, however decided the issue in favour of the assessee on the following points: (a) The land was subjected to land revenue/agricultural cess. The ' assessee has produced the receipts of payment of land revenue and this finding has not been rebutted by the Department. (b) That as per the land revenue records i.e. 7/12 extract, the major part of the land i.e. 9.08 acres out of 11.7 acres was shown as cultivable land (lagvadi yogya shetra) (c) That even the land record also shows that even some of the cultivable lands were not cultivated during the year which are called 'Rapad' land and the other portion where the cultivation was done, 'Bhat', which means rice, was grown. (d) That the ld. CIT(A) has noted that vegetables and other minor millets grown on the land were not mentioned in the revenue record in Raigad District. That the DDIT/Inspector had mis-understood the word 'Ra pad' as barren land, whereas, ....
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....gh Court in the case of "CIT vs. H.V. Mungale" (supra). The ld. Accountant Member thereafter summed up his findings as under : "To recapitulate it is undisputed that land does not fall in the area, where it will be disentitled from the category of agricultural land. The Assessing Officer's adverse inference that though land has been recorded in the land revenue record as 'agricultural land' but the land revenue has not been regularly paid stands rebutted on the basis of receipts in this regard of land revenue payment referred by learned CIT(A). That the land was barren is clearly negated from the record itself which shows that the 9.08 hectares was cultivable land out of 11.7 hectare. Hence inference that the land was not cultivable and barren is absolutely unsustainable. Moreover inference that no agricultural activity was done also stands rebutted from the land revenue records itself which shows that the crops were produced. Once it is amply clear that the land is agricultural land, land revenue is being paid, crops are being cultivated, no permission for non-agriculture use is there, adverse inference cannot be drawn if the produce is not commens....
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.... 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 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? The ld. DR, in his submission, has tried to convince that the land, in question, of the assessee does not satisfy the aforesaid 13 test laid down by the Hon'ble Supreme Court to qualify as 'agricultural land'. Therefore, the same is required to be treated as capital asset liable to be subjected to capital....
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....y has taken place, at any point of time in the land in question." The land in question is situated in the hilly area having no irrigation facilities and as such no agricultural* operation can be carried out in the same." The inspector conducted physical verification of agricultural land twice ie., after three year from date of sale and another after seven year from date of sale. Such inspection was done in the absence of Assessee. Till date the land is agriculture land. The land was sold to Company with objects of Agriculture and holding other Agriculture lands. Thus, the observation that no _ agriculture activity taken place on the said land does not hold true as the decision to undertake agriculture activity on the land now vest in the hands of buyer of the land and assessee has no say in that matter. As regards to irrigation facilities we would like to state that the assessee is depended on monsoon for purpose of agriculture activity. Hence, absence of irrigation doesn't mean that Agricultural activity was not carried out. iv) The nokarnama submitted by the assessee is vague and ambiguous. Further, the same does not even bear a date. It does not contain any recital of S....
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.... very big land and there are several 7/12 extracts. In some "Ra. Pad" is mentioned and in some "Su-Bhat" meaning rice is mentioned. As far as mentioning of "Ra. Pad" is concerned, we wish to state that some part of the land is kept vacant for gaining fertility and only seasonal crops are cultivated depending upon monsoons. However, on 7/12 extracts where it is mentioned "Su-Bhat", rice was grown. Further, the land which has been kept barren is a cultivable land. This is proved from a close look at the 7/12 extracts. On the left hand side of the extract, it can be seen that land piece is divided into two parts viz. i) Lagvadi Yogya Shetra (cultivable land) and Potkharab (Lagvadi Ayogya) (uncultivable land). All the 7/12 extracts states that impugned land is a cultivable land. 12. I have heard the rival contentions and gone through the record. Before proceeding further, it will be relevant to reproduce herein the relevant provisions of section 2(14)(iii) of the Act, which read as under: "(14) "capital asset" means - (iii) agricultural land in India, not being land situate- (a) in any area which is comprised within the jurisdiction of a municipality (whet....
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....2003-04 to 2010-11 1 -2/5 0 0.1 0.1 Ra. Pad 8-9/15.4 2 -2/9 0.05 0.65 0 .7 Ra. Pad 10-11/15.4 3 -2/10 0.13 1.00 1.13 Ra. Pad 13-14/15.4 4 -5/3 1.10 3.22 4.32 Ra. Pad 16-17/15.4 5 -2/11 0.12 1.27 1.39 Ra. Pad 12-13/15.4 6 -16/1 0.03 0.06 0.09 Bhat 18-19/15.4 7 -2/4 0.11 1.29 1.4 Ra. Pad 5-6/15.4 8 -1/5 0.09 0.19 0.28 Ra. Pad 3-4/15.4 9 -16/3 0.01 0.09 0.10 Bhat 20-21/15.4 10 -1/4 0.84 0.56 1.4 Ra. Pad 1-2/15.4 11 -16/4/B 0.06 0.42 0.48 Bhat 24-25/15.4 12 -18/1 0.08 0.23 0.31 Bhat 22-23/15.4 2.62 9.08 11.7 16. After considering the rival contentions, the written submissions and the relevant land revenue record, | am of the view that the case of the land of the assessee satisfies the most of conditions laid down by the Hon'ble Supreme Court, as reproduced above, which can be summarized in following words: 1) The major chunk of land (9.08 acres) in the land revenue rec....
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....al land. 9) The land has not been developed by plotting an providing roads and other facilities. 10) There was no previous sale of land for non-agricultural use. 11) There was no permission obtained u/s 63 of Bombay Tenancy and Agricultural Land Act for intended sale in favour of a non-agriculturist. The land has not been sold on yardage or on acreage basis. 12) The price of the land sold does not show that it was shown at a high price or that price was not proportionate to the price of the agricultural land in the area. 13) The land has been specifically mentioned in the revenue record as cultivable land and there is no mention that the land is a barren land. The vacant or fallow land does not mean that it is a barren land. 14) There is no condition prescribed under the provisions of section 2(14(iii) of the Act that active agricultural activity should be there at the relevant time of sale of the land, rather, the only condition prescribed is that it must be classified as agricultural land. Whereas, such condition of active agricultural activity has been specifically mentioned in the relevant provisions of section 54B of the Ac....