TaxTMI 
TaxTMI 
2023 (9) TMI 1619
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....56,70,539/-on account of undisclosed capital gain, whereas the sale proceeds of agricultural land duly disclosed in the return of income filed u/s. 139 of the IT. Act and the land in question was not a capital asset within the meaning of section 2(14) of the Act, as such, no such addition is warranted. The same deserves to be deleted. 3. On facts and circumstances of the case and in law, the A.O. has grossly erred in initiating proceedings u/s. 271(l)(c) of the Act, when no such proceeding is attracted in the case of the appellant. 4. On facts and circumstances of the case and in law, the A.O has grossly erred in charging interest of Rs. 82,299/- U/S. 234A and Rs. 67,48,518/- u/s. 2346 of the Act, when the appellant has not committed any such default." 3. Ground no.1 was not pressed for adjudication and the same is therefore dismissed. Ground no.3 raised against initiation of penalty proceedings being premature is not being dealt with by us Ground no.4 against levy of interest under section 234A, B, C being consequential needs no adjudication. 4. The ld.counsel for the assessee submitted that the only effective ground needing adjudication and which is being ....
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.... the authorities below, both the AO and the DRP that, the land sold by the assessee was agricultural land, which fact found mention in the sale deed through which it had been sold to the company; ii) The basis with the AO for treating the land as non- agricultural, that the land had been purchased by the company for "industrial purposes" under section 63AA of Gujarat Tenancy and Agricultural Lands Laws (Amendment) Act, 1997, was irrelevant, since it did not impinge upon the factum of the character of the land in the hands of the assessee till it was sold to the corporate entity being agricultural, and that only subsequently its character was changed to non-agricultural purposes by the purchaser of the land. The ld.DR, however, supported order of the AO. 7. We have heard both the parties. The short issue to be adjudicated is vis-à-vis the character of the land sold by the assessee, whether agricultural land or not, so as to determine its qualification as a "capital asset" in terms of section 2(14)(iii) of the Act, and thus facilitate finding whether capital gain earned thereon is taxable or not in terms of the provisions of law in this regard. The assesse....
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....d that "The Vendor has fully complied with all the applicable local & municipal laws in respect of the Schedule Agricultural Land and that the proposed transfer of the Schedule Land to the Purchaser is not violative of any local, municipal law etc." (vi). The Schedule of Agricultural Land appearing on page-13 of each of the sale deed specifically reads under (subject to variance of block number and area vis-à-vis sale consideration): "All the piece and parcel of agricultural lands in the state of Gujarat, Tejpur Village, Tal. Jotana, District Mehsana, District Sub-Registry Office at Jotana, comprised in Block number 114 bearing village from 8/A A/C. No. 237 measuring an extent of about 21044 sq. mtrs. Along with all amenities, liberties, easements, appurtenances, facilities, trees, water ways, etc. in the pertaining to or in any manner connected with the said Schedule Agricultural Land and bounded as follows..." 10. The AO/DRP treated the land to be non-agricultural noting that it had been bought by a company for industrial purpose and the purchaser company had received permission for usage of the land for industrial purposes, even prior to the date of p....
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....on the impugned parcels of land as if it were non-agricultural land. That is to say, the stamp duty has been paid at a higher rate. This means that the Stamp Authorities are also treating the impugned land as non-agricultural land. 5.7 Moving further, the AO has observed that in Gujarat, the land record 7/12 changes only when the land is converted in to a non-agricultural land. The Collector, Mehsana also has passed an order dt 29-08-16 to this effect. The said order has been scanned and made part of the assessment order too. 5.8 We have carefully considered the entire facts and circumstances of the issue concerned. We find that there are enough, sufficient and good grounds to treat the impugned land as non-agricultural land as on the date of sale. At least, three Government departments, namely, Industry Commissioner, Gujarat, Stamp duty Authorities, Mehsana and the Collector, Mehsana, have already adjudicated that the said land is non-agricultural. We are afraid, there is no more scope for us to disagree from the stand of the fellow Government Departments. The factum of the land being situated around 21 Kms away and the population being around 1400 have become ir....
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.... 1879 require no permission on change of land use, can be sold to non-agriculturist in terms of section 63AA of GT&ALL. 13. Section 63 & 63AA of the Gujarat Tenancy and Agricultural Lands Laws (Amendment) Act, 1997 are reproduced hereunder for clarity: Gujarat Tenancy and Agricultural Lands Act, 1997 "63. Transfers to non-agriculturists barred. - (1) Save as provided in this Act,- (a) no sale (including sales in execution of a decree of Civil Court of for recovery of arrears of land revenue or for sums recoverable as arrears of land revenue), gift, exchange or lease of any land or interest therein, or (b) no mortgage of any land or interest therein, in which the possession of the mortgaged property is delivered to the mortgagee, [or] [(c) no agreement made by an instrument in writing for the sale, gift, exchange, lease or mortgage of any land or interest therein.] shall be valid in favour of a person who is not an agriculturist [or who being an agriculturist cultivates personally land not less than the ceiling area whether as an owner or tenant or partly as owner and partly as tenant or who is not an agricultural labourer]: ....
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....rson to whom the land is proposed to be sold in pursuance of this subsection shall obtain previous permission of the Industries Commissioner, Gujarat State or such other officer, as the State Government may, by an order in writing, authorise in this behalf, (c) the area of the land proposed to be sold shall not exceed four times the area on which construction for a bonafide industrial purpose is proposed to be made by the purchaser: Provided that any additional land, which may be required for pollution control measures or required under any relevant law for the time being in force and certified as such by the relevant authority under that law shall not be taken into account for the purpose of computing four times the area, [Provided further that where the land is sold to a purchaser which is a company as defined by clause (20) of section 2 of the Companies Act, 2013 (18 of 2013), it may offer the equity shares of the company, to the person by whom such land is being sold, in lieu of the sale price of such land and if such person is in agreement for accepting such equity shares, either in full or partly, then it shall be incumbent upon such company to allo....
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....s such order on the appeal as it or he deems fit. (4) (a) The purchaser shall comply with the provisions of any law for the time being in force or any order or direction of the Central Government or State Government or any Corporation owned or controlled by such Government, Government company, local authority or statutory authority in relation to use of land for industrial purpose before the land is put to use for such purpose." 14. As is evident from a perusal of the above the GT & ALL prohibits sale of agricultural land to a non agriculturist, but relaxes this prohibition in case of lands which are designated for bonafide industrial purposes and require no permission on change of land use as per the Bombay Land Revenue code, 1879. Further section 63AA(3) of GT & ALL requires purchasers of such agricultural lands designated for bonafide industrial purposes, to notify the concerned collector of purchase of such land within thirty days. The Collector is required to issue a certificate to the effect that the purchaser shall use the land for bonafide industrial purposes, after making necessary verification in this regard. 15. Coming to the Bombay Land Revenue code, 1879....
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.... application.] Unless the Collector shall in particular instances otherwise direct, no such application shall be recognized except it be made by the [***] occupant. [*] [***] [(2) Notwithstanding anything contained in sub-section (1) but subject to any terms and conditions laid down by the State Government in this behalf, where an occupant has his holding in an area comprising a gram and such area is not within an urban agglomeration or within a radius of five kilometres from the limits of a municipal borough or notified area or industrial estate and such occupant wishes to use his holding or a part thereof only for a residential purpose, it shall not be necessary for him to obtain permission of the Collector under sub-section (1). Explanation. - For the purposes of this section- (i) "gram" means a gram within the meaning of the Gujarat Panchayats Act, 1961 (Gujarat VI of 1962); (ii) "industrial estate" means an industrial estate within the meaning of the Gujarat Industrial Development Act, 1962 (Gujarat XXIII of 1962); (iii) "municipal borough" or "notified area" means respectively, a municipal borough or a notified ar....
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....be lawful for him to use such land for such bonafide industrial purpose without the permission of the Collector subject to the fulfilment of the following conditions, namely:- .......... ............ ........ .......... ............ ........ (b) Where an occupant commences the use of the land for a bonafide industrial purpose under sub-section (1), he shall within thirty days from the date of commencement of the use of land for a bonafide industrial purpose, send a notice of the date of commencement of such use, along with other particulars in such form a may be prescribed by rules made under this Act, to the Collector and endorse a copy thereof to the Mamlatdar. (3) Where, on the receipt of such notice along with other particulars sent by the occupant under clause (b) of sub-section (2), the Collector, after making such inquiry as he deems fit- (a) is satisfied that the occupant of such land has validly commenced the use of the land for a bonafide industrial purpose under sub- section (1), he shall issue a certificate to that effect to the occupant in such form and within such period as may be prescribed by rules made under this Act. ....