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TMI Blog2016 (1) TMI 894X X X X Extracts X X X X X X X X Extracts X X X X ..... ax (Appeals)-V, Pune dated 02-07-2012 for the assessment year 2007-08. The only issue raised in the appeal by the assessee is; Whether the income arising from sale of agricultural land is exempt or is taxable as capital gains in the facts of the case? 2. The facts of the case as emanating from the records are : The assessee is a cloth merchant. The assessee filed his return of income for the impugned assessment year on 27-06-2008 declaring total income of ₹ 1,64,750/-. The case of the assessee was selected for scrutiny. Accordingly, notice u/s. 143(2) was issued to the assessee on 20-08-2009. During the course of scrutiny assessment, the Assessing Officer observed that the assessee has sold plots of land and has claimed the profit earned from the sale of said plots as exempt from income. As per the contentions of the assessee, the plots sold are part of agricultural land and hence, is not a capital asset within the meaning of section 2(14) of the Income Tax Act, 1961 (hereinafter referred to as the Act ). The Assessing Officer rejected the contentions of the assessee and applied the test as laid down by the Hon'ble Gujarat High Court in the case of CIT Vs. Siddharth J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oining area indicate that the land is not an agricultural land. The second reason for holding the land capital asset by Assessing Officer is that the plot is sold to one Shri Somaji of Akil Somaji group who would not be carrying out any agriculture activities. Therefore, the land is sold for non-agriculture purpose. The assessee has placed on record extracts of 7/12 after sale of plots. The Revenue records still show that the land is under cultivation. The third reason pointed out by the Assessing Officer is that plot of land situated at Kusegaon Gat No. 244 is shown as barren land in the Revenue record. Therefore, no cultivation is possible on the said land and the assessee has not disclosed agriculture income in his return of income. The ld. AR further submitted that the Commissioner of Income Tax (Appeals) has rejected the contentions of the assessee on the ground that no agriculture income was shown in the return of income. Therefore, the land cannot be considered as agricultural land. Further, on account of minor discrepancies in the 7/12 extracts the Commissioner of Income Tax (Appeals) has held the same to be not reliable. The 7/12 extracts was prepared by Revenue authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tated to be agricultural land in the Revenue records, it does not qualify the tests laid down by the Hon'ble Gujarat High Court in the case of CIT Vs. Siddharth J Desai (supra). A perusal of Revenue records show that the land is undisputedly cultivable and under cultivation of Rice and Wheat, except part of plot comprising in Gat No. 244. The Revenue has not disputed that the assessee has never applied for the change of land use or was ever used for non-agriculture purpose. One of the reasons for treating the plots of land as capital asset is that the land is near the developed area and highway. In our considered view if the land is more than 8 km away from the Municipal limits and is in village having less than 10,000 population, development of surrounding area and nearness of the highway cannot be a ground to characterize the land as nonagriculture. 6. The Commissioner of Income Tax (Appeals) has rejected the 7/12 extracts merely on the ground that there are contradictions in two 7/12 extracts for the same year. In one of the 7/12 extracts for the year 2002-03 the crops mentioned are Bhat , Gehu and Vipath , whereas in the second 7/12 extracts for the same year the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he relevant point of time when the land was sold by the assessee. It is also an admitted position that the assessee had not applied for conversion of the land in question into non-agricultural purposes and no such permissions were obtained from the concerned authority. In the Revenue records, the land is classified as agricultural land and has not been changed from agricultural land to non-agricultural land at the time when the land was sold by the assessee. It is also not in dispute that there was no activity undertaken by the assessee of developing the land by plotting and providing roads and other facilities and there was no intention also on the part of the assessee to put the same for non-agricultural purposes. No such finding has been given by the Department. No material or evidence in support of the fact that the assessee has put the land in use for nonagricultural purposes has been brought on record. Merely because the assessee has not given any direct evidence of sale of agricultural produces, which were stated to have been consumed by the assessee for own purposes, is not sufficient to say that the land in question was not agricultural land when it is classified as agricu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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