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TMI Blog2012 (11) TMI 280X X X X Extracts X X X X X X X X Extracts X X X X ..... even at the time of appellate proceedings, thereby restricted the disallowances of expenses to 30%. Sale of agricultural land - Agricultural incomes chargeable as Income from other sources – Held that:- Assessee has not furnished details such as proof of agricultural operations carried out, details of purchases and expenditure incurred for agricultural operations, details of sale bills etc. just because he hold agricultural land it cannot be assumed that he is earning agricultural income as declared by the assessee - considering the facts of the case, Assessing Officer is directed to disallow only Rs. 5 lakhs out of the agricultural income claimed by the assessee instead of Rs. 10 lakhs disallowed by the Assessing Officer - assessee’s appeal is partly allowed. Disallowance of Expenses – Held that:- Rs. 7,34,654/- being 20% of Rs. 18,36,635/- which has been disallowed by the Assessing Officer on the ground that not even a single voucher in respect of this expenditure was produced before the Assessing Officer. CIT(A) Hyderabad ought to have confirmed the disallowance of Rs. 18,36,635/- grounds raised by the department is not sustainable - In the result, assessee’s appeal is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f capital asset . As per exception 3, agricultural land in India is specifically excluded provided it is not situated i. in any area within the territorial jurisdiction of a municipality or a cantonment board having a population of 10,000 or more, or ii. in any notified area. Hence as per the above explanation the sale of agricultural land by the assessee does not attract the provisions of s. 2(14) and hence not taxable as capital asset. 8. The Assessing Officer has considered the income as income from the business of sale of land and not as agricultural land and has added the amount which has been disallowed under the provisions of business income which is not correct and not justified. 9. We would like to submit that the assessee has only earned commission income while facilitating the sale of above mentioned agricultural lands. The same income has been reflecting in the Profit and Loss account submitted during the proceedings before the Hon ble Commissioner of Income-tax (Appeals) vide paper book No. 1 as additional evidence on 18.1.2011. The said profit and loss account has not been considered at all which is not correct, not justified and bad in law. 10. As ea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bstantial agricultural income. As the certificate was not submitted as it was not traced out at the time of assessment the disallowance has been made. 3. Brief facts of the case are that for A.Y. 2007-08, the assessee filed his return of income admitting a total income of Rs. 37,27,109 and agricultural income of Rs. 14,85,600. Assessment under section 143(3) of the Act was completed determining the total income of the assessee at Rs. 4,21,19,752 and agricultural income of Rs. 4,85,600. 4. Ground Nos. 1 to 10 are not pressed before us by the assessee hence the same are dismissed as not pressed. 5. The other grounds raised are with regard to sustaining disallowance of purchases @ Rs. 3,45,58,029/-, disallowance of development expenditure and other expenditure. 6. We have heard the both parties and perused the materials of record. The issue before us is whether the CIT (A) was right in confirming the addition of Rs. 3,45,58,029/- being disallowances purchases for want of proof. The facts are that the appellant is in the business of purchase and sale of plots and land and real estate business. During the year the assessee claimed purchase and sales of land at Rs. 3,49,65,029/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses are interrelated and without purchases sales cannot be made. It is the well established position that on money payment will always there in real estate transactions and it is the common practice in the trade. The AO only disallowed the purchases not supported by valid sale deed and at the same time failed to do so in case of sales. When the AO not considered the purchases not supported by sale deed he should have ignore the sales not supported by deeds. The AO is not correct in just disallowing the purchases and treated entire sales as assessee income. No business has so much profit as computed by the AO. The assessee has debited all the amounts paid for purchases and credited all the sales too. The Assessing Officer was of the view that purchases are not supported by proper documents. He has considered the purchases as supported by documents and considered the entire sales for determining the income of the assessee. 8. It is the fact that the assessee has not maintained proper books of accounts. It does not mean that all sales is income and the assessee does not have any purchases and expenditure. If the books are not maintained or books are not in verifiable manner, it is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ills etc. just because he hold agricultural land it cannot be assumed that he is earning agricultural income as declared by the assessee. Therefore, considering the facts of the case, we direct the Assessing Officer to disallow only Rs. 5 lakhs out of the agricultural income claimed by the assessee instead of Rs. 10 lakhs disallowed by the Assessing Officer. 12. Accordingly the assessee s appeal is partly allowed. ITA No. 2177/Hyd/11 (Revenue appeal): 13. The department raised the following grounds for our consideration. 1. The learned CIT(A)-V, Hyderabad erred both in law and on facts in allowing partial relief to the assessee. 2. The learned CIT(A)-V, Hyderabad erred in allowing Rs. 7,34,654/- being 20% of Rs. 18,36,635/- which has been disallowed by the Assessing Officer on the ground that not even a single voucher in respect of this expenditure was produced before the Assessing Officer. 3. The learned CIT(A)-V, Hyderabad ought to have confirmed the disallowance of Rs. 18,36,635/- in full. 14. We have heard both the parties and perused the material on record. We have allowed the assessee appeal in this matter on merits, hence the grounds raised by the department is not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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