9911796707
TMI Blog2014 (11) TMI 258X X X X Extracts X X X X X X X X Extracts X X X X ..... Appeals) has erred in confirming Assessing Officer's action of assessing Rs. 1,40,40,140.00 as business income against appellant's claim of exemption being surplus on sale of Agricultural Land at Dhamane, which is held by assessee as Investment and is not within def inition of "Capital Asset". Appellant prays for exclusion of the same from Computation of Income. 2. Commissioner of Income Tax (Appeals) has erred in confirming in assessing surplus on Sale of Kondhwa Plot under the business Income against appellants claim of Capital Gain, same being not a business/Trading Asset." 4. In brief, the facts are that assessee is an individual who filed his return of income for the assessment year 2008-09 on 29.09.2008 declaring total income of Rs. 9,63,17,030/- which was revised to Rs. 9,60,50,160/- by filing a revised return. The return filed by the assessee was picked-up for scrutiny assessment wherein the total income has been assessed at Rs. 11,04,92,366/. The difference between the returned and the assessed income was on two aspects. Firstly, the assessee had sold agricultural land at Dhamane village, the surplus whereof was treated as not liable to be taxed as it was not a & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ltural land at village Dhamane was a transaction of business and the profits earned thereon by the assessee were liable to be taxed as business income. The CIT(A) has also affirmed the stand of the Assessing Officer. 7. In the above background, the learned counsel for the assessee has made his submissions. According to him, the assessee has shown the land at village Dhamane as a Personal asset in the Balance-Sheet as distinct from 'Business assets' and therefore the same could not be treated as part of stockin- trade so as to be treated as a business transaction. The learned counsel has referred to the exhaustive submissions made before the CIT(A), and which have been reproduced by him in para 6 of his order, in support of the case of the assessee. Pertinently, it is sought to be made out by the learned counsel that merely because assessee had a business of sale/purchase of plots would by itself not imply that the surplus earned on sale of the agricultural land at village Dhamane was a business transaction. It has been pointed out that even a person carrying on business can have an investment portfolio in the same commodities and the investment portfolio was to be treated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulation of the village in which such land is situated is less than ten thousand and therefore it qualifies to be an 'agricultural land', which is excludible from the expression "capital asset" as defined in clause (iii) of sub-section (14) of section 2 of the Act. It is emerging from the record that in support of above proposition, assessee furnished a communication from Talathi of Dhamane village demonstrating that the land was more than 25 kilometers away from the nearest Municipal limits. A certificate from the office of Tehsildar dated 07.09.2007 was also furnished before the lower authorities to show that the population of village Dhamane as per the last census was 780 which is below ten thousand. It is also an accepted position that the land in question was an agricultural land notified in the land revenue records. In support of the same, a certificate of Dy. Director, Town Planning certifying that the land has been classified as an agricultural land in land revenue record is forming part of the sale-deed, a copy of which has also been placed in the Paper Book filed before us. All the aforesaid features pertaining to the land are not in dispute. However, the stand of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ands have also been made in April 1996, May 1995, November, 1996, etc.. The Tabulation also reveals that the other agricultural lands continue to be held by the assessee and it is only the land at village Dhamane which has been sold during the year under consideration. Prima-facie, the aforesaid Tabulation does not show that assessee was a dealer in purchase and sale of agricultural lands because the period of holding in all cases except the land at village Dhamane is quite substantial. Pertinently, assessee has taken us through the Balance Sheets filed alongwith respective returns of income from the earlier assessment years of 2004-05, 2005-06, 2006-07 as well as 2007-08 to point out that the aforesaid lands have been shown in the Balance Sheet as 'Personal Assets' and not as 'Business Assets'. 11. At this stage, we may deal with one of the observations made by the Assessing Officer, and the same has also been affirmed by the CIT(A), which is to the effect that subsequent to purchase of the land in question assessee has done land consolidation and development activity so as to improve the quality of land. The discussion made by the Assessing Officer in this regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer is that it is based on mere presumptions and not on any material or evidence. In-fact, in the course of hearing, the learned counsel also referred to the fact that the land has been ultimately sold to an agriculturist for agricultural purposes only. It was also asserted that the purchasers are using it for agricultural purposes only. Before the CIT(A), assessee pointed out that the Assessing Officer had issued summons/notices to the purchasers, copies of which have been placed in the Paper Book at pages 371 to 375. The assertions of the appellant are that such persons appeared before the Assessing Officer and confirmed that they were carrying out agricultural operations on such lands. In this context, we find there is no discussion in the assessment order. However, it would not be out of place to mention here that there is no credible material brought on record by the Assessing Officer to negate assessee's plea that the land in question continued to be in the nature of agricultural land even after it sale. 14. In view of the aforesaid discussion, it is quite clear that the land in question has been disclosed by the assessee as 'Investment' and not as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, the sale of such land cannot be treated as sale of stock-in-trade merely because assessee is otherwise engaged in the business of sale/development of lands. In-fact, in our considered opinion, the lower authorities have been overtly influenced by the fact that assessee is in the business of purchase and sale of lands. No doubt, the onus under such circumstances is on the assessee to show that the impugned purchase of agricultural land was an investment activity and not an activity of acquiring stock-in-trade. In our view, in the present case, such onus has been aptly discharged by the assessee. Evidently, the assessee has shown the land in question as a 'Personal Asset' as distinct from 'Business Assets' in the Balance Sheets. The circumstances in which the land has been sold is also not found to be false. Otherwise, the agricultural lands held by the assessee are for a substantial period of time and assessee has been showing such assets as a part of his 'Personal Assets', being 'investments' and not as 'Business Assets' in the Balance Sheet filed alongwith the respective returns of income. At this point, we may also make a reference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e a business transaction and treated a sum of Rs. 40,11,300/- (disregarding the indexation benefit availed by the assessee to compute capital gains) as business income. The CIT(A) has also affirmed the said position. 20. On this aspect, we have heard the rival submissions. The primary stand of the assessee is that the said land was purchased in 1998 and in all the years it has been shown in the Balance Sheet as 'Personal asset', as a part of investments. It is submitted that the lands held as stock-in-trade are separately disclosed in the Balance Sheet as well as in Profit & Loss Account as 'business assets' and that such position has also been accepted in the past years even in scrutiny assessments finalized by the Assessing Officer. It has also been contended that the land has been held for a fairly long period of 9 to 10 years before being sold and therefore it could not be said that the land was held with the objective of a trading activity. 21. On the other hand, the learned Departmental Representative has pointed out that the plea of the assessee that the land at Kondhwa is shown as 'Personal assets' in the books of account does not match with the ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as arisen from an order dated 29.12.2010 passed by the Assessing Officer u/s 143(3) of the Act pertaining to the assessment year 2008-09. 26. In this appeal, the Ground of Appeal raised by the assessee read as under :- "1. Commissioner of Income Tax (Appeals) has erred in confirming Assessing Officer's action of assessing Rs. 1,45,33,815.00 as business income against appellant's claim of exemption being surplus on sale of Agricultural Land at Dhamane and village Sanswadi, which is held by assessee as Investment and is not within definition of "Capital Asset". Appellant prays for exclusion of the same from Computation of Income." 27. The aforesaid Ground of Appeal relates to surplus earned by the assessee on sale of agricultural lands at village Dhamane and village Sanswadi amounting to Rs. 1,45,33,815/-. 28. At the time of hearing, it was a common point between the parties that the facts and circumstances in relation to the sale of land at village Dhamane are identical to those considered by us in the earlier paragraphs by way of Ground of Appeal No.1 in the case of Shri Krishnakumar K. Goyal. The present assessee is one of co-owners of the land which was purchased at v ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
