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TMI Blog2015 (5) TMI 971X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Income Tax Act, 1961. 2. All the appeals relating to related persons on similar issues were heard together and are being disposed of by this consolidated order for the sake of convenience. The facts in all the appeals are identical. However, we make a reference to the facts in ITA No.699/PN/2013 to adjudicate the issue. 3. The assessee in ITA No.699/PN/2013 has raised the following grounds of appeal:- 1. Without considering facts and circumstances of the case, the learned Assessing Officer, Pune, has erred in assessing total income returned of ₹ 12,46,968/- at a higher amount of ₹ 108,74,396- and the Commissioner of Income tax has erred in confirming the same. 2. in the facts and circumstances of the case and the attendant law, the learned Assessing Officer, Pune has erred in making the addition of ₹ 96,27,428/- in the assessment order passed for A.Y. 2009-10 on account of capital gains and the Commissioner of Income tax has erred in confirming the same. 3. The learned Assessing Officer, Pune has erred is not considering the affording benefit of exemption from tax available under the income tax law to income earned by the assessee from sale of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of land should not be taxed in his hands. In response, the assessee contended that it used to grow wheat/Jawar on this land and hence, the land was agricultural land. The Assessing Officer noted as per the land records i.e. 7/12 extracts, the land was Pad land, the scanned copy of 7/12 extract is placed at pages 4 and 5 of the assessment order. From the perusal of the same, the Assessing Officer noted that the land was Jirayat fallow land and crop grown was grass and it was held that the land was not an agricultural land. The Assessing Officer further observed that as far as taxability of land was concerned, what was relevant was the user of land at the time of sale. The Assessing Officer also noted that the land of around one acre had been sold for a crore and no agriculturist would purchase such land for agricultural purposes at this rate. The Assessing Officer thus, held that the land in question was not an agricultural land and therefore, profit from transfer of such land was not exempt as an agricultural income. Reliance in this regard was placed upon by the Assessing Officer on the following decisions:- 1. Smt. Sarifabibi Mohmed Ibrahim v. CIT [1993] 204 ITR 631 (SC) 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39;ble Gujarat High Court, which in turn were approved by the Supreme Court in Sarifabibi Mohmed Ibrahim (supra). The CIT(A) further noted that one of the significant tests listed were whether the land was actually and ordinarily used for agricultural purpose at or about the relevant time and where the land had not been cultivated for a period of four years prior to its sale, it was held that the assessee had no intention to bring the said land under cultivation. The mere fact that the land revenue was assessed and paid in respect of land does not make it agricultural for the purposes of the Act as held in CWT v. Officer-in-charge (Court of Wards) [1976] 105 ITR 133 (SC). Further, reliance was placed on the ratio laid by Hon'ble Gujarat High Court in Siddharth J. Desai (supra) and Ranchhodbhai Bhaijibhai Patel v. CIT [1971] 81 ITR 446 (Guj), wherein it was held that true test to be applied for the purpose of determining whether a particular land was agricultural land or not is first to ascertain the use to which the land is actually being put. The CIT(A) vide para 6.7 held as under:- 6.7 In the present case, not a shred of evidence has been presented by the appellant either ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ural purposes and though, it was situated on hillock area, it was capable of being used for agricultural operations and cultivation. The learned Authorized Representative for the assessee stressed that as on date of purchase and sale, the status of land under consideration was an agricultural land and was surrounded by agricultural land, addition made in the hands of assessee was not warranted. The learned Authorized Representative for the assessee placed reliance on the ratio laid down by the Hon'ble Delhi High Court in Hindustan Industrial Resources Ltd. v. Asstt. CIT [2011] 335 ITR 77/. The learned Authorized Representative for the assessee has furnished synopsis of arguments which are placed on record. 11. In reply, the learned Departmental Representative for the Revenue submitted written submissions and pointed out as under:- '4. In this context it is submitted that the assessee has not rebutted the findings of fact given by AO based on the inspector's report, 7/12 extracts submitted during the course of assessment proceedings and Talati's report that the land was never used for agricultural purpose in past. No evidences were produced to prove factum of l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce same would not constitute binding precedent. Decision of jurisdictional high court which has followed Supreme Court decision would constitute binding precedent. It is therefore prayed that appeal filed by the assessee be dismissed.' 12. We have heard the rival contentions and perused the record. The issue arising before us is in relation to the assessability of capital gains in the hands of assessee on sale of land. The assessee claims to have sold agricultural land for total consideration of ₹ 1,01,00,000/- during the year under consideration. Though in the return of income the assessee had computed the income from capital gains and claimed deduction under section 54 of the Act, however, during the course of assessment proceedings, the plea of the assessee was that the said land sold by the assessee was an agricultural land and hence outside the purview of being taxed under the head 'income from capital gains' as it fell outside the definition of capital asset under section 2(14) of the Act. 13. Second 2(14) of the Act defines agricultural land as under:- '2. In this Act, unless the context otherwise requires, - (14) capital asset ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing the various cases dealing with the subject, the Apex Court held that agriculture involved basic operations , such as tilling of land, sowing of seeds, planting etc. and subsequent operations , such as weeding, tending, pruning, cutting, harvesting and rendering the produce fit for market. 16. Further, the Hon'ble Gujarat High Court in Siddharth J. Desai (supra) had laid down 13 tests to determine whether a particular land is agricultural land or nor which are as under:- (1) Whether the land was classified in the revenue records as agricultural land whether it was subject to the payment of land revenue? (2) Whether the land was actually or ordinarily used for agricultural purposes at or about the relevant time? (3) Whether such user of the land was for a long period or whether it was of a temporary character or by way of a stopgap arrangement (4) Whether the income derived from the agricultural operations carried on in the land bore any rational proportion to the investment made in purchasing the land? (5) Whether, the permission under s.65 of the Bombay Land Revenue Code was obtained for the non-agricultural use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt 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 or 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. 19. The Bombay High Court in V.A. Trivedi (supra) i.e. the decision relied upon by the Assessing Officer, after considering the facts of the case, it was held that to ascertain the true character and nature of the land, it must be seen whether it has been put to use for agricultural purposes for a reasonable span of time, prior to the relevant date and further whether on the relevant date the land was intended to be put to use for agricultural purposes for a reasonable span of time in the future. 20. Following the judicial proposition laid down by the Supreme Court and various High Courts in order to determine the nature of the agricultural land, the first and foremost test was whether the land was actually and ordinarily used for the purpose o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the land has not been put to use for agricultural purposes for reasonable span of time prior to the date of its transfer, the land in question cannot be held to be agricultural land. The onus was upon the assessee to establish its case of having cultivated the land in recent past and in the absence of assessee having discharged its onus and merely because the land is recorded as agricultural land in the revenue records, does not establish the case of assessee. 23. Now, coming to the facts of the present case, the assessee before the Assessing Officer had furnished the copy of 7/12 extract,according to which the land was a Jirayat fallow land i.e. land being not capable of cultivation. The 7/12 extract furnished by the assessee has been scanned by the Assessing Officer, copy of which is placed at pages 4 and 5 of the assessment order, which reflects no agricultural activity having been carried on by the assessee. The assessee has not declared any agricultural income in its hands nor any evidence has been produced by the assessee in any of the proceedings or even before us to establish that the land in question was actually being used for cultivation at any time or any basic ope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ations did not result in any conversion of the said land into industrial land and the finding that the land was not agricultural land was reversed by the Hon'ble Delhi High Court (supra). However, the finding of the Hon'ble Delhi High Court (supra) is contrary to the finding of jurisdictional High Court in Gopal C. Sharma (supra), which has been referred to by us in the paras hereinabove, which in turn has been relied upon by the Assessing Officer/CIT(A) and also by the learned Departmental Representative for the Revenue. Though the learned Authorized Representative for the assessee had filed compilation of case laws, but during the course of hearing had only relied on the ratio laid down by the Hon'ble Delhi High Court in Hindustan Industrial Resources Ltd. (supra). The learned authorized Representative for the assessee placed reliance on the decision of Hon'ble High Court of Bombay at Goa in CIT v. Smt. Debbie Alemao [2011] 331 ITR 59 and Pune Bench of Tribunal in Haresh V. Milani v. Jt. CIT [2008] 114 ITD 428. The Perusal of facts of both the cases reflect that in both the abovesaid decisions, the land was cultivated by the assessee and even the nature of the cro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sold by the assessee exists. In response to our queries Talathi has visited the land with the inspector of Income Tax. It is reported that the land was not used for agricultural activity for many years. It has also been certified by the Talathi that the land records in his office have been tampered to show crops grown from 2006-07 onwards. This finding was communicated to the above assessee vide this office letter dated 21/12/2012 by RPAD was also physically served on the assessee 24/12/2012 separately. A copy of the letter dated 21/12/2012 along with the Talathis report is enclosed for ready reference. In response the assessees above have not availed the opportunity of joint visit to the land given to them. Their reply is vague without any documentary evidence in support of their claim. Therefore the 'facts' brought out in the assessment order gets substantiated the following factual position is very clear. (1) Land was not at all used for a agricultural activity as being claimed by the above assessees. (2) Land is in fact a barren land as reported in the 7/12 extracts furnished prior to the completion of the assessment. (3) Someone tampered the land record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s pertaining to the land sold by you. Therefore, you are requested to give your say on the matter by 28/12/2012. If nothing is heard from your side, kindly note that I shall presume that you have nothing to say in the matter and a report bringing out all the facts will be sent to the CIT[A] to take note of the facts. Your cooperation is solicited. The above letter of the AO is accompanied by a letter of the Talathi, Donje having jurisdiction over the area where the land is located. It is stated in the Talathi's letter that the land was never used for agricultural activity. 30. The CIT(A) after considering the said evidence observed as under:- The above facts are being incorporated in this order only for the sake of record. I have already reached the conclusion that the land in question was not agricultural land independent of the facts now reported by the AO through the Jt. CIT. 31. The learned Authorized Representative for the assessee has failed to controvert the finding of CIT(A) in this regard and in the absence of the same, we find no merit in the contention of the assessee and the same is dismissed. Hence, the grounds of appeal raised by the assessee are ..... X X X X Extracts X X X X X X X X Extracts X X X X
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