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TMI Blog2015 (7) TMI 934X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal in the case of the brother of the assessee wherein the Assessing Officer treated the surplus from sale of agricultural land as business income which was held by the CIT(A) as exempt being surplus from sale of agricultural land. Since in the instant case the assessee has sold the agricultural land in the year 2005 which were held by him for more than 7 years except in one case where the same was held for about 4 years, the details of which are extracted at para 11 of the impugned order and since there is also no dispute to the fact that the assessee was deriving regular agricultural income from the same land and further considering the fact that the Assessing Officer in the assessment order for A.Y. 2008-09 passed u/s.143(3) on 27-12-2010 has accepted the claim of the assessee that gain on sale of agricultural land at ₹ 96,61,250/- is not liable to tax and no addition has been made in orders passed u/s.143(3) for A.Yrs. 2001-02 and 2003-04, therefore, we are of the considered opinion that the CIT(A) was not justified in bringing to tax the surplus on sale of agricultural land as business income. - Decided in favour of assessee. Treating agriculture income as undisc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -1(1) Pune (DCIT) has erred in treating sale of agricultural land which is outside the purview of tax, as the said land is situated outside the Municipal limit, as taxable income and the learned Commissioner of Income Tax (Appeals) -I has erred in confirming the same. 5. Without considering the facts and the circumstances of the case, the teamed Deputy Commissioner of Income Tax, Circle-1(1), Pune (DCIT) has erred in holding that assessee is engaged in business activity of purchasing and selling land and assessing the income from sale of agricultural land as taxable income and the learned Commissioner of the income Tax (Appeals) - I has erred in confirming the same. 3. Facts of the case, in brief, are that the assessee is an individual and filed his return of income on 21-10-2005 declaring total income of ₹ 17,24,730/- and agricultural income of ₹ 5,25,630/-. During the course of assessment proceedings, the Assessing Officer noted that the assessee has sold agricultural land for a consideration of ₹ 78,90,000/- and claimed the same to be exempt from tax. On being questioned by the Assessing Officer, it was stated that the land being agricultural one is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pose of purchase of a residential house and an office place, and capital for business with a view to generate resources, the assessee has sold some of his holding of agricultural lands. 7. Your honour, will therefore, appreciate that the assessee has acquired the lands for agriculture. He has carried out agricultural activities. He continues to carry on agricultural activities. For certain needs of resources, the assessee has sold some of the agricultural lands. On sale of agricultural lands no income-tax is attracted. Accordingly, the assessee has compiled his return of income. It is, therefore, correct returning of income taxable and exempt. The same does not require any change. 5. However, the Assessing Officer was not satisfied with the above explanation given by the assessee. He noted that the assessee has not furnished the details of agricultural land sold by him till date and has furnished only details of land held by him during the year and the subsequent sale out of these lands. From the details furnished by the assessee the Assessing Officer further noted that the agricultural land has been sub-divided by the assessee and the same has been sold. From the detai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee, according to the AO, has sold the agricultural land for simple reason that he got the required rate on account of boom in real estate prices. According to him, if the intension of the assessee was to retain the agricultural land for agricultural activity, he would not have sold the land under any circumstances. Therefore, the activity of the assessee according to the AO is nothing but an adventure in nature of trade. He therefore was of the opinion that the profit on account of such act needs to be taxed under the head. He observed that during the year the assessee has sold the following lands : Sr.No. Details of property Purchases cost Sale consideration 1. Part of Gat No. 140, Chandkhed 5,75,686 3,83,791 1,00,000 6,00,000 2. Gat No. 556, Pusane 75,000 3,00,000 3. Gat No. 347, 353 and 361, Pusane 1,58,300 23,90,000 4. Gat No. 351, 352, 350 and 354 1,29, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in different years out of the same. It was also admitted in his statement that he received approximately ₹ 3.10 crore on sale of the above referred lands against the cost of ₹ 80lakhs. It was also admitted in the said statement that the land purchased from 30 to 35 owners were sold to 6 to 8 buyers. AO has also pointed out in the assessment order that during the course of survey it was revealed that assessee was also engaged in the subplotting of the land. However, the same was denied by the assessee during the course of appeal. Finally the Ld.CIT(A) while upholding the action of the AO has observed as under : 4.4. After considering the above referred issue in the facts and circumstances of the case I am of the considered opinion that the ground of appeal under consideration cannot be allowed. It is clear from the facts available on record that the appellant belongs to a group which is actively engaged in different business activities including real estate and land. The appellant has not inherited the agriculture land which has been sold. He has purchased them from 1985 onwards from several persons over a period of time. In the process, huge amount was invested. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... those details are not difficult to be gathered and obtained even if not retained in regular course, as the appellant must be knowing the persons who sold their lands or his agents or the persons or the agents who purchased the lands. These details could also have been obtained by him from revenue records as he was party to those transactions. Furthermore, considering the importance of these documents, these are generally preserved and retained safely by the involved persons. Therefore, on these considerations, it cannot be accepted that the appellant had any difficulty in obtaining and submitting such details. In such a view of the matter, none compliance on these issues has to be considered adversely assuming that the appellant deliberately prevented its submission as he was knowing that its production before the competent authority would nail him with the taxation of the receipts claimed exempt. It is also an established principle of law that the burden of proving that a particular income is wholly or partly exempt under a particular provision lies on the assessee, as he alone in law is considered to be familiar with the facts of the case [Shri Rangnath Enterprises Vs. CIT (1998 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enture of the nature of trade. In the case of Hemchand Hirachand Shah Vs. CIT, Gujarat, 206 ITR 55, it was held that agriculturist purchasing land in a series of transactions and selling them within a reasonable short period would be of the nature of business. In the case of appellant also, it was shown that in many cases lands were jointly purchased. All these judgments also support differently the inference drawn by the Assessing Officer in the available facts of the case. Therefore, Ground No. 1 is treated as dismissed. 9. Aggrieved with such order of the CIT(A) the assessee is in appeal before us. 10. The Ld. Counsel for the assessee strongly challenged the order of the CIT(A). Referring to page 242 of the paper book he drew the attention of the Bench to the details of rural agricultural land purchased and sold by the assessee. He submitted that the main activity of the assessee is agriculture and transportation business. To meet his business requirement the assessee sold some of the agricultural land. Referring to the copy of the partnership deed dated 14-02-2005, a copy of which is placed at pages 33 to 55 of the paper book, he submitted that he has become a partner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 2005-06 2006-07 Sr.No. Village Gat no Date of sale Name of buyer Sale consideration Date of acquisition Cost of acquisition 1 Chandkhed 145 22/09/2000 Sopan Jagannath Bhagwat 225,000 21.01.1994 22,000 2 Pusane 102 19/08/2002 Dhyaneshwar Balwadkar 6,10,000 21.08.1998 3 Chandkhed 140 19/08/2006 Bhagwat 1,65,000 20.04.1998 139,124 4 Chandkhed 135 and 18/10/2006 Dr.Arjun Rao 15,600,000 16.06.2005 450,000 137 11.09.2000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heavily relied on the order of the CIT(A). He submitted that the assessee is regularly engaged in the business of purchase and sale of land. The agricultural income declared by the assessee is incidental to the land holding. Referring to the decision of the Tribunal in the case of Shri Dilip Panraj Sonigara he submitted that the Tribunal in the said decision has held that the profit on sale of agricultural land is business income. He accordingly submitted that the order of the CIT(A) be upheld and the grounds raised by the assessee should be dismissed. 16. The Ld. Counsel for the assessee in his rejoinder referred to the copy of the assessment order for A.Y. 2001-02, a copy of which is placed at pages 215 to 217 of the paper book, and submitted that the assessee has incurred loss. He submitted that the assessee therefore had to sell a part of his agricultural property for business purpose. Referring to the copy of the assessment order for A.Y. 2003-04 he submitted that because of the brought forward loss the business income has been determined by the AO at NIL. Referring to page 242 of the paper book he submitted that the holding period of the land is more than 8 years. So far ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elling circumstance to sale the land and therefore, such income has to be taxed as business income. In our opinion, if any income is otherwise exempt from tax as per the statute, the same cannot be brought to tax merely because assessee is a man of means or that the money so obtained has been utilised for some business in an organised manner etc. It is for the assessee to decide his affairs in the way he likes and the Revenue has no business to direct or advise the assessee to manage his affairs. We find an identical issue had come up before the Tribunal in the case of the brother of the assessee wherein the Assessing Officer treated the surplus from sale of agricultural land as business income which was held by the CIT(A) as exempt being surplus from sale of agricultural land. On further appeal filed by the Revenue, the Tribunal dismissed the appeal filed by the Revenue by observing as under : 12. We have carefully considered the rival submissions. The pertinent facts in this case are that in the year 2000-01 assessee purchased certain agricultural land which has been sold during the year under consideration. In the interregnum, assessee declared agricultural income from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so declared agricultural incomes. We are conscious of the fact that intention of the assessee is an important ingredient to examine as to whether the transaction is in the nature of business or not. In the present case, there has been no action on the part of the assessee to develop the land for a good 7 years and in our view, the higher sale value realized by the assessee is on account of appreciation in land values due to efflux of time. Therefore, case of the Assessing Officer that the lands were purchased to earn quick profit cannot be justified having regard to the period of holding and also the manner in which assessee has held the agricultural lands prior to its sale. 14. We may also refer to the decision of the Pune Bench of the Tribunal in the case of Gopal Kasat (supra) relied upon by the Assessing Officer to say that the income by selling of agricultural land was to be assessed as a business transaction. In the case of Gopal Kasat (supra), assessee purchased certain lands which were subject-matter of acquisition proceedings by the Government. The Tribunal, in this background, noted that the assessee was aware, at the time of purchase, that the land could not be hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erent. In that case, the Tribunal following the decision of the Coordinate Bench of the Tribunal in the case of the brother of the assessee has held that the surplus on such sale of land has to be treated as business income. Since the assessee s land was adjacent to the land sold by his brother and the surplus was held by the Tribunal as business income, therefore, the Tribunal following the decision in the case of the brother of the assessee has held that such surplus on sale of land is business income. However, in the instant case the Tribunal in the case of the brother of the assessee has treated the surplus as exempt being sale of agricultural land beyond a distance of 8 kms from the municipal limits. Further, the Assessing Officer in the assessment order passed u/s.143(3) for A.Y. 2008-09 has not disturbed the claim of the assessee that such income is exempt from tax being sale of agricultural land. Therefore, the decision relied on by the Ld. Departmental Representative is not applicable to the facts of the present case. In this view of the matter the order of the CIT(A) is set aside and the grounds raised by the assessee are allowed. 21. Ground of appeal No.6 by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer by observing as under : 5.3. I have carefully considered the facts of the case and law. From the perusal of the assessment order, it is clear that the appellant admitted in his statement recorded on oath by the Assessing Officer during the course of assessment, that the relevant details which can support the claim of agriculture income in terms of receipt and expenses are not completely available. Thereafter however the appellant has tried to cover up the matter by making round about submissions. However, the Assessing Officer after considering the facts and circumstances of the case accepted the agriculture income of ₹ 3,25,000/- and treated the balance income of ₹ 2,00,630/- introduced in the books in the guise of agriculture income as concealed income. The appellant during the course of appeal also has submitted similar details and on the basis of the same it is not possible to find any fault in the finding of the Assessing Officer. Considering the same, Ground No. 6 is treated as dismissed. 24. Aggrieved with such order of the CIT(A) the assessee is in appeal before us. 25. The Ld. Counsel for the assessee submitted that there are no defe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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