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2017 (1) TMI 1209 - HC - Income TaxSale of land - Nature of land at the time of transfer - whether till the lands were sold in the financial year 2010-11, they were used for agricultural purpose and not capital assets? - Held that - From the material on record, it could be deduced that the respondent has discharged his burden and proved that the lands were agricultural lands, at the time of transfer. Sufficient evidence has been adduced by the respondent, to prove that the subject lands have been put to agricultural operations before sale. Classification of the lands, in the revenue records, as agricultural lands, is not varied and that is a determinative factor. A substantial question of law does not arise on the findings of fact, unless it is substantiated that there is perversity. In Bhagat Construction Co. (P) Ltd., v. CIT reported in (2000 (12) TMI 54 - DELHI High Court ), the Delhi High Court held that a question of fact, becomes a question of law, if the finding is either without any evidence or material or, if the finding is contrary to the evidence, or is perverse or there is no direct nexus between the conclusion of fact and the primary fact upon which that conclusion is based. But it is not possible to turn a mere question of fact into a question of law by asking whether as a matter of law the authority came to the correct conclusion on a matter of fact. In M.Janardhana Rao v. Joint CIT reported in (2005 (1) TMI 14 - SUPREME Court ), the Hon ble Supreme Court held that in exercise of the powers under Section 260A, findings of fact of the Tribunal cannot be disturbed. Going through the material on record, we are of the considered view that the concurrent findings of fact, rendered by the CIT (Appeals) and the Income Tax Appellate Tribunal, do not call for any interference, as no substantial question of law, is involved.
Issues Involved:
1. Treatment of profit on sale of agricultural land. 2. Classification of agricultural income. 3. Levy of interest under Section 234B. Detailed Analysis: 1. Treatment of profit on sale of agricultural land: The core issue revolves around whether the profit from the sale of agricultural land should be treated as long-term capital gains or exempt from tax. The assessing officer treated the profit as long-term capital gains, citing several reasons: - The sale agreement referred to the land as "Land" and not "Agricultural Land." - The company's Memorandum of Association primarily mentioned money lending, not dealing with agricultural land. - The company was registered as a Non-Banking Finance Company (NBFC) with the RBI, not for agricultural operations. - No substantial evidence of income and expenditure from agricultural operations was provided. - The Tahsildar reported that the land had not been cultivated for the past eight years. - The buyer intended to use the land for constructing an Engineering college. The assessee contended that the land was used for agricultural purposes up until the sale and provided various documents, including the Village Administrative Officer's certificate and lease agreements, to support their claim. The Commissioner of Income Tax (Appeals) accepted the assessee's contention, noting that: - The land was classified as agricultural in revenue records. - The land was leased out for agricultural purposes. - Agricultural income was disclosed in previous assessment years. The appellate authority found no representation from the department to rebut these claims. The Income Tax Appellate Tribunal (ITAT) upheld the appellate authority's decision, emphasizing that the land was held as a capital asset and not as stock-in-trade. The Tribunal noted that the land was used for agricultural operations and was situated beyond 8 km from municipal limits, thus retaining its character as agricultural land. 2. Classification of agricultural income: The assessing officer treated the agricultural income of ?8,03,730/- as "Income from Other Sources." The assessee argued that this income was from agricultural operations and should be treated as such. The Commissioner of Income Tax (Appeals) and the ITAT both agreed with the assessee, noting that: - The land was used for agricultural purposes. - The income was disclosed as agricultural income in previous assessment years. - The land was leased out with the condition that it be used for agricultural purposes. The Tribunal emphasized that the land retained its agricultural character and that the income derived from it should be classified as agricultural income. 3. Levy of interest under Section 234B: The assessing officer levied interest under Section 234B. However, this issue was not extensively discussed in the judgment, as the primary focus was on the classification of the land and the income derived from it. Conclusion: The High Court dismissed the revenue's appeal, upholding the decisions of the Commissioner of Income Tax (Appeals) and the ITAT. The Court found that the lands were agricultural at the time of transfer, and the income derived from them should be treated as agricultural income. The Court emphasized that the classification of land in revenue records as agricultural was a determinative factor and that the burden of proof had been adequately discharged by the assessee. No substantial question of law was found to warrant interference with the concurrent findings of the appellate authorities.
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