2013 (9) TMI 237 - AT - Income Tax

Computation of capital gain - Capital asset or agricultural land - Sale of land - Difference between sale consideration shown in agreement to sell and conveyance deed - Held that - certificates issued by village officer and the revenue authority - those authorities have issued the certificates on the basis of assertion made by the assessees herein, i.e., they did not make any reference to the revenue records or other records maintained by the Government. None of the assessees has declared any agricultural income even in the returns of income filed after the date of search. In the cash flow statements, meagre amount of agricultural income was shown by each of the assessees, but they could not give any credible evidence in support of the same. Even though these assessees have admitted that the possession of land was given in January 2006 itself, still they have shown agricultural income in the years relevant to the assessment years 2007-08 and 2008-09. These facts prove that the agricultural income shown in the cash flow statements do not have any basis. The assessees herein could not bring any credible evidence to prove existance of various trees on the land. Further, the assessees could not bring evidence to show that they carried out agricultural operations on maintenance of those trees, sale proceeds realised on sale of produce etc. The tax authorities have pointed out that the assessees themselves has described the impugned land as Stadium land in the conveyance deed and further in the Form 1B annexed to the conveyance deed, the impugned land was described as Commercial land . - The land in question is not a agriculture land - Decided against the assessee. Taxability of capital gain - Year of transfer - section 2(47) - Held that - the transfer has taken place only on 13/02/2008, thereby the capital gain arising therefrom is assessable in the assessment year 2008-09 Enhancement of sales consideration - Held that - The intention of the owners with regard to the user and sale of land, singularly and cumulatively go to establish that the land in question was never held as an agricultural land wef 2001 and never sold as an agricultural land at the time of sale - The tax authorities have pointed out that the assessees themselves has described the impugned land as Stadium land in the conveyance deed and further in the Form 1B annexed to the conveyance deed, the impugned land was described as Commercial land - assessing officer did not make any enquiries with the buyers - Thus, the AO has reached his conclusions without conducting proper enquiries - Though the Ld CIT(A) has rejected the said story, but the fact remains that the decision was taken by both the tax authorities without examining buyers - issue relating to determination of actual sale consideration needs to be examined afresh at the end of the assessing officer - Decided in partly in favour of assessee

Issues Involved:
1. Nature of the land sold (agricultural or not).
2. Year in which the capital gains are assessable.
3. Validity of enhancing the sale consideration for computing the capital gain.
4. Determination of the market value as on 1.4.1981.

Issue-wise Detailed Analysis:

1. Nature of the Land Sold (Agricultural or Not):
The primary issue was whether the land sold by the assessees was agricultural land and thus exempt from capital gains tax. The assessees relied on certificates from the Agricultural Officer, Village Officer, and Additional Tahasildar, which stated that the land was used for cultivating coconut, cashew, and other crops. However, the tax authorities rejected these certificates, noting that they were based on the assessees' assertions without reference to revenue records. The authorities found that the land was used for non-agricultural purposes, such as football tournaments and commercial activities, since 2001. The land was also described as "Stadium land" and "Commercial land" in official documents. Consequently, the land was not considered agricultural, and the sale was subject to capital gains tax.

2. Year in Which the Capital Gains Are Assessable:
The second issue was the year in which the capital gains from the sale of 222.93 cents of land should be assessed. The assessees argued that the capital gains should be assessed in the year 2006-07 when possession was handed over to the buyer. The tax authorities, however, assessed the capital gains in proportion to the sale consideration received over the years 2006-07 to 2009-10. The Tribunal agreed with the assessees, stating that as per Section 2(47)(v) and (vi) of the Act, the transfer occurred in 2006-07 when possession was handed over and part consideration was received. Therefore, the capital gains should be assessed in the year 2006-07.

3. Validity of Enhancing the Sale Consideration for Computing the Capital Gain:
The third issue was the enhancement of the sale consideration for 32.19 cents of land sold in the assessment year 2009-10. The tax authorities adopted a sale consideration of Rs. 3,27,500 per cent, based on the sale of adjacent land at that rate in 2006. The assessees argued that the actual sale consideration was Rs. 6,50,000 for 32.19 cents, as stated in the registered deed. The Tribunal noted that the tax authorities did not make enquiries with the buyers to verify the actual sale consideration. Therefore, the Tribunal set aside the order and directed the Assessing Officer to re-examine the issue by conducting necessary enquiries.

4. Determination of the Market Value as on 1.4.1981:
The final issue was the determination of the market value of the land as on 1.4.1981. The Assessing Officer had determined the market value at Rs. 100 per cent based on information from the sub-registrar office. The assessees did not provide any contrary evidence. The Tribunal upheld the market value determined by the Assessing Officer, as the assessees failed to submit any material to contradict the findings.

Separate Judgments Delivered:
The judgment was delivered as a common order by the Tribunal for the sake of convenience, as the issues in the appeals arose out of a common set of facts. There were no separate judgments delivered by the judges.

Conclusion:
The appeals were partly allowed for statistical purposes. The Tribunal upheld the tax authorities' decision that the land was not agricultural and thus subject to capital gains tax. However, it directed the Assessing Officer to re-examine the enhancement of the sale consideration for 32.19 cents of land and to delete the assessment of capital gains for the year 2008-09, assessing it instead in the year 2006-07. The market value as on 1.4.1981 was upheld at Rs. 100 per cent.

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