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TMI Blog2011 (10) TMI 484X X X X Extracts X X X X X X X X Extracts X X X X ..... exhibit that any agricultural activity was carried out by the assessee at any time. Neither the returns of income for the current year or the preceding years nor the cash flow statement submitted bore any agricultural income. In fact, both the manner of the land sale (area, measure, price, transferee) depicts that the land was not sold as an agricultural land; the price fetched itself making it unfeasible for agricultural purpose. In fact, it would not be sufficient if the land/s was once an agricultural land, i.e., being actually cultivated . The land/s under reference was, in our opinion, not an agricultural land, at least at the relevant time, i.e., of its sale, and stands rightly treated by the Revenue as non-agricultural land. We decide accordingly - Decided against the assessee. Interest is rightly applied u/s 234B and 234C since date of filing of the letter conveying that the return filed earlier be treated as a return in response to the notice u/s. 148, has to be treated as the date of compliance of the notice u/s. 148. Also, the delayed filing of the return would not impact the levy of interest u/s. 234B but only u/s. 234A - Decided against the assessee. - IT Appeal N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions for the year, which stood tabulated by the AO as 'Table B' (in the assessment order), as against 'Table A' transactions, disclosed per the return of income. He, accordingly, sought to assess the income arising thereon to tax. 4. The assessee's contention is that having concluded that he was not undertaking any business by way of purchase and sale of land, the AO ought to have dropped the proceedings, and not made any fishing enquiries. Reliance was placed by him on the decision in the case of Travancore Cements Ltd. v. Asstt. CIT [2009] 179 Taxman 117 (Ker.). The AO before whom, the said objection was also raised, rejected the said contention on the ground that the impugned transactions were only connected transactions, and which found further approval by the ld. CIT(A), so that the assessee is in second appeal. 5. A perusal of these transactions, to examine the taxability for which, i.e., under the provisions of the Act, the re-assessment notice stood issued, revealed the assessee to have failed to report three sale instances for an aggregate value of Rs. 43.79 lakhs, with the declared transactions aggregating to Rs. 18.06 lakhs. There was no mention of the same in the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ural attracts capital gain on the ground that the same is non-agricultural." 7. Before us, the main thrust of the assessee's case is with regard to the land/s under reference being not a capital asset u/s. 2(14)(iii) of the Act. Section 2(14) defines the term 'capital asset' for the purpose of the Act, gains on the transfer of land are liable to tax under Chapter IV-E of the Act, i.e., under the head capital gains. S. 2(14)(iii)(a) excludes agricultural land, other than that comprised within the jurisdiction of a municipality (defined therein), which has a population of not less than 10,000 according to the last census carried out prior to the commencement of the relevant previous year. Section 2(14)(iii)(b) further excludes agricultural land situate in any area, not beyond 8 kms. from the local limits of a municipality as specified in clause (a) of s. 2(14)(iii), i.e., as the Central Government may, having regard to the extent of and scope for urbanisation of that area and other relevant considerations, specify in this behalf by Notification in the Official Gazette. Taking us through the relevant Notification dated 06.01.1994 (Annexure IV) of the paper-book (PB), the ld. AR soug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 631/70 Taxman 301 (SC) relied upon by the assessee itself (Annexure V): "Where a land is an agricultural land or not is essentially a question of fact. Several tests have been evolved in the decisions of this court and the High Courts, but all of them are more in the nature of guidelines. The question has to be answered in each case having regard to the facts and circumstances of that case. There may be factors both for and against a particular point of view. The court has to answer the question on a consideration of all of them - a process of evaluation. The inference has to be drawn on a cumulative consideration of all the relevant facts." [pg. 631, 637] Further, the burden of proving the said fact, i.e., of the land transferred being agricultural land, is on the assessee, even as clarified by the hon'ble jurisdictional high court in the case of Kalpetta Estates Ltd. v. CIT [1990] 185 ITR 318/[1992] 61 Taxman 54 (Ker.), also relied upon by the assessee (Annexure III). This is even otherwise in consonance with the fundamental rule that the onus to prove its claims or of its income as being exempt under the Act is only on the assessee. 8.3 However, before we proceed to examin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the first appellate authority, is that of payment of land revenue and of having been granted electricity connection from KSEB for agricultural purposes. Payment of land revenue is by itself no proof of the land being subject to agricultural operations, and is at best only a supportive evidence, which (evidences) in any case are to be considered in their entirety. The electricity bills are for paltry sums, exhibiting no significant consumption of power. In fact, there is nothing to exhibit that any agricultural activity was carried out by the assessee at any time; the land/s under reference having been owned since long, not to speak of during the relevant period. Agricultural activity stands explained by the Apex Court in the case of CIT v. Raja Benoy Kumar Sahas Roy [1957] 32 ITR 466 (SC) (Annexure IIIA/PB) to be - at its bottom - the cultivation of land in the sense of ploughing and tilling of land, sowing of seeds, plantation, etc. The expenditure of human skill and labour is a primary ingredient, which, the assessee being a person of advanced age, would necessarily require to procure from outside. In fact, the entire gamut of the operations would yield a host and variety of evid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the objective of the provision, which is even more so in the case of the Act, as exclusion of gains on agricultural land is to facilitate agriculture and not any trade or industry (even as referred to by the AO as well), as also for the reason that agriculture is a state subject. A reading of the gist of the decision in the case of (at pg. 134), culled mainly from its conclusion at paras 143-144, would dispel any doubt in the matter: "The determination of the character of the land, according to the purpose for which it is meant or set apart and can be used, is a matter which ought to be determined on the facts of each particular case. What is really required to be shown is the connection with an agricultural purpose and user and not the mere possibility of user of land, by some possible future owner or possessor, for an agricultural purpose. It is not the mere potentiality, which will only affect its valuation as part of "assets", but its actual condition and intended user which has to be seen for purposes of exemption from wealth-tax. One of the objects of the exemption is to encourage cultivation or actual utilization of land for agricultural purposes. If there is neither anyth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... land sale (area, measure, price, transferee) depicts that the land was not sold as an agricultural land; the price fetched itself making it unfeasible for agricultural purpose. In fact, it would not be sufficient if the land/s was once an agricultural land, i.e., being actually cultivated [refer T.S.M.O. Mohamed Othuman Sahib v. CIT [1957] 31 ITR 480 (Mad.). The land/s under reference was, in our opinion, not an agricultural land, at least at the relevant time, i.e., of its sale, and stands rightly treated by the Revenue as non-agricultural land. We decide accordingly. 9. The assessee's Ground No. 2 questions the computation of capital gains by contesting the fair market value (FMV) as on 1.4.1981 adopted by the AO, i.e., inasmuch and to the extent the land was purchased prior to that date. The said ground was not agitated before us. Two, as per the admitted facts, the AO, on the basis of the purchase (qua other lands) in December, 1986 at Rs. 403/- per Are, has estimated the FMV as on 1.4.1981at Rs. 350 per Are, i.e., at a discount of 13% for nearly six years. The adopted rate is, clearly, very fair, and we dismiss the assessee's ground as without merit. 10. The third and the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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