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TMI Blog2005 (9) TMI 514X X X X Extracts X X X X X X X X Extracts X X X X ..... 3(1)( a ). Subsequently notices under section 148 were issued to reopen the assessments. Thereafter the assessments were completed by the Assessing Officer denying the claim of the assessee. 3. On appeal before the learned CIT(A) the assessee submitted that the finding of the Tribunal for the assessment year 1998-99 is required to be followed as the facts were identical. Further all the evidences furnished before the Tribunal were available to the assessing authority and accordingly there could be no deviation from the order of the Tribunal. The learned CIT(A) has sought for a remand report from the assessing authority on the basis of the submissions made by the assessee. The learned CIT(A) after obtaining the remand report held as follows : "4.4 As has been mentioned above the copy of the above remand report was sent to the Appellant for further comments and evidences. But it is seen that in his written response filed on 2.04 the Appellant has repeatedly falling back upon is repeated arguments during the course of the assessment and the appellate proceeding by citing the comparable paragraphs of the decision of the Hon ble ITAT in his case for the assessment year 1998-99. Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prospective buyers was of no consequence as far as the assessee was concerned when the assets were sold and it was an undisputed fact that the assets sold were only agricultural land though in small segments. The assessee had not even converted the land and at the same time, the assessee had not discontinued the agricultural activity. The inspection done by the Inspector of Revenue in 2003 when reassessments were made for the relevant years was of no consequence since the situation as relevant to the assessment year were not available on account of various developments and there was no conclusive evidence in the hands of the revenue to show that the assessee had developed the land by itself with a motive to carry on the activity of business. On the other hand, it was established that the assessee had lands and the assessee had loans which were required to be discharged and in the circumstances the assessee was forced to sell the lands and what was sold was also agricultural land though in small segments in order to augment more funds and this activity could never be held to be a business activity or activity in the nature of business. Further, reliance was placed on the order of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apply to the assessee s case and in all these cases there was a proximity of purchase of land and conversion and sale to evidence the activity of profit. On the other hand, in the assessee s case the compulsion for sale of lands had been established, which was otherwise being used by the assessee for cultivation. The lands purchased were under cultivation by the assessee for several years. The development expenditure incurred were only to make the lands saleable in order to maximize the funds to discharge the commitments as aforesaid which could not be considered to be a commercial activity. Further, the order of the Tribunal in the assessee s own case under similar circumstances would remain the same and the distinction sought to be made by the Revenue was unwarranted. 7. We have heard the rival submissions and perused the records. In fact, it was submitted that the evidence available before the Tribunal at the time of passing the order for the assessment year 1998-99 would show that there was no adventure as alleged by the Revenue. In fact, the other arguments of the Revenue that the land was in the vicinity of industrial belt and was supposed to be developed were of no cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve been considered by the Tribunal in its order for the assessment year 1998-99. The assessee had also contended that it did not discontinue the agricultural activity and even in the later years there were agricultural operations and the income derived therefrom was being declared. Details in this regard had also been furnished. The Revenue, on the other hand, argued that the assessee had made investments in shares, estate club and resorts etc., and thus it was not exclusively an agriculturist. The assessee purchased seven acres of adjoining lands to the lands held by it in the year 1992 only with a view to make plots which would show that there was intention to carry on business activity and the income was to be rightly assessed as income from business. In reply, the assessee had submitted that its main activity was agriculture and incidentally there were some other activity carried on which would not mean that it was not an agriculturist. Further, it was contended that purchase of additional acres in 1992 was only with a view to maximize generation of funds in order to discharge the loan and there was no intention to carry on any activity of business. The details in this regard w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer as profit arising out of the sale of land into business income treating the profit as arising from adventure in the nature of trade. The Tribunal held that mere taking plots and sale cannot be considered as adventure in the nature of trade because the intention of the assessee was to put up a factory and it was not the intention to sell the land by making plots, also supports the case of the assessee. Certainly in the present case, before us the assessee purchased the land from 1977 onwards so we do not agree with the argument of the learned counsel for revenue that the intention of the assessee was to develop the land for plotting etc. Even during argument before us the learned counsel for assessee opined that the land can be inspected even today. As the assessee was incurring huge losses and incurred huge liabilities and to clear such liabilities, the land was made into plantation/plots/smaller plots and was sold because every time the availability of purchaser may not be so easier for bigger plots. The ITAT, Hyderabad Bench in the case of Smt. Sujeet Kaur v. ITO 119 Taxman 33 wherein the assessee received certain amount on sale of land, which the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from 5-2-1991. Therefore, now there is no bar for transfer of agricultural land by sale, by mortgage or gift etc., irrespective of the extent. Because of repeal of the said Act, now the agricultural land can be transferred to even the extent of one gunta or less also. Construction of Farm House in Agricultural land Under section 95(1) of the Karnataka Land Revenue Act of 1964, the occupant and owner of an agriculture land is entitled by himself, his servants, tenants, agents or other legal representatives to erect farm buildings for the better cultivation of the land or its more convenient use for the purpose of agriculture/improvement of the land. For construction of Farm House in agricultural land no sanction or permission is required under the relevant rules and as such no authority is invested with the powers of giving permission for construction of farmhouse on agricultural land. As per the Karnataka Land Reforms Act, 1961, the purchase of agricultural land by the following persons is prohibited under section 80 of the Karnataka Land Reforms Act : (1)One who is not an agriculturist (2)One being an agriculturist holds land exceeding ceiling limits (54 acres - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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