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TMI Blog2015 (12) TMI 1128X X X X Extracts X X X X X X X X Extracts X X X X ..... x months by acquiring a residential property at New Delhi. Therefore, the AO was not justified in making addition treating assessee's agricultural income as business income. The same has rightly been deleted by learned CIT(A) and confimed by ITAT As regards treatment of agricultural income as undisclosed income, the assessee had furnished a copy of Girdawri pertaining to the earlier financial years 2005-06 and 2006-07 that crop of sarson was grown and cultivated in the assessee's land holdings and out of the said sarson crops, some crop was retained to be used as sarson seeds in the next years. Ex Sarpanch of Gram Panchayat of Village Fazilpur Jharsa, Form J No.III dated 15.3.2008 duly verified by Shri Jasmeet Singh on 13.12.2010. As per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was right in not adjudicating the issue regarding assessment of the profit from the sale of land treating as adventure in the nature of trade and assessable as business income under sections 2(13) and 45 (2) of the Income Tax Act, 1961? iii) Whether on the facts and in the circumstances of the case the, Hon'ble ITAT was right in deleting the addition of ₹ 40,000/- made by the Assessing Officer as income from undisclosed sources instead of agricultural income claimed by the assessee since no agricultural activities were carried out by the assessee? 2. A few facts relevant for the decision of the controversy involved as narrated in the appeal may be noticed. The assessee filed its return of income on 31.3.2009 as HUF showing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the nature of the agricultural product being sold. The assessee replied that it was growing sarson (mustard). It also stated that the agricultural produce was sold to M/s Sat Pal Bhagwan Dass and produced J Forms in support thereof. On enquiry, no such firm was found in existence. The Assessing Officer treated the income of ₹ 40,000/- as undisclosed income. Aggrieved by the order, the assessee filed appeal before the Commissioner of Income Tax (Appeals) [CIT(A)] During the proceedings, the assessee furnished additional evidence which was admitted by the CIT(A). Vide order dated 25.5.2011, Annexure A.2, the CIT(A) accepted the version of the assessee by treating the sale of agricultural land in accordance with the provisions of secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. Undisputedly, the respondent-assessee HUF had purchased land measuring 49 kanals 10 marlas on 25.11.2003 and had sold some part of it in the year 2008 for a sum of ₹ 5,26,68,750/. The respondent claimed the said sale consideration to be its agricultural income in its return of income for the assessment year in question. The Assessing Officer vide order dated 31.12.2010 assessed the same as its business income inter alia on the ground that no agricultural activity was being done on the land by the respondent prior to its sale; the land had lost its agricultural character being situated within the radius of 8 kms from the Municipal committee, Gurgaon; the firm to whom the respondent had sold the agricultural produce, on enquiry, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pect of agricultural activity prior to the sale in January 2008. It was also recorded that the Assessing Officer was not justified in rejecting the assessee's alternative claim of exemption under section 54F of the Act as it had made investment worth ₹ 7.18 crores more than the sale consideration within a short period of six months by acquiring a residential property at New Delhi. The relevant findings recorded by the Tribunal read thus:- 9. Therefore, in the facts and circumstances of the case and various decisions relied upon by the assessee before the learned CIT(A) and before us, we concur with the views of the learned CIT(A) that the AO is not justified in treating the assessee's solitary transaction of sale of part o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned CIT(A) who has held that under the provisions of section 2(14)(iii)(a)/ (b), the assessee's land can be held as agricultural land situated beyond 8 kms outside the Gurgaon Municipal limits and that the area population of residents of the village Fazilpur Jharsa being below 10000, the assessee's asset is outside the purview of capital asset. The AO is not justified in rejecting the assessee's alternative claim of exemption under section 54F as it has made investment worth ₹ 7.18 crores more than the sale consideration within a short period of six months by acquiring a residential property at New Delhi. Therefore, the AO was not justified in making addition of ₹ 4,78,02,000/- treating assessee's agricul ..... X X X X Extracts X X X X X X X X Extracts X X X X
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