9911796707
TMI Blog2012 (11) TMI 1157X X X X Extracts X X X X X X X X Extracts X X X X ..... There is change of figure in ground No. 2 and 10. The grounds taken in each of the appeal by the respective assessee are reproduced as under: 1. The order passed by CIT(A) is without jurisdiction and illegal in as much as he failed to deal with the various points raised by the assessee and also included the agriculture income which was not liable to tax under the law. 2. The learned CIT(A) erred in treating the surplus realized of ₹ 59,74,148/- on sale of agricultural land as an adventure in the nature of trade and consequently as income under the head income from business instead of exempting the income u/s 10(1). 3. The learned CIT(A) erred in not following the under mentioned binding decisions holding that the surplus realized from the sale of agricultural land is agricultural income only. 128 ITR 86, 154 ITR 629, 159 ITR 775, 219 ITR 554(SC), 247 ITR 150(SC). 4. The learned CIT(A) erred in not following the decision of S.C in 297 ITR 17 in as much as the exempted income u/s 10 cannot form part of the total income u/s 14 of the I.T. Act and consequently it cannot be classified under any head of income. 5. The learned CIT(A) erred in not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of S.C in 297 ITR 17 in as much as the exempted income u/s 10 cannot form part of the total income u/s 14 of the I.T. Act and consequently it cannot be classified under any head of income. 5. The learned CIT(A) erred in not considering the explanation I to section 2(IA) wherein it is declared that the word revenue‟ includes the excess realized on sale of agricultural land as agricultural income in as much as the explanation incorporates the law declared by the Bombay High Court in 128 ITR 86 and other cases to remove any doubt as to the nature of income of surplus. 6. The CIT(A) erred in not following the under mentioned decisions binding on him that the word trade did not include agriculture at all. AIR 1999 SC 1867 AIR 1958 487 (Bom) AIR 1968 SC 554 70 ITR 730, 732 (SC) 7. Without prejudice to the above the CIT(A) erred in holding that in the facts and circumstances of the case the assessee is a dealer in agricultural lands. 8. CIT(A) erred in holding that the agricultural lands are trading assets and consequently stock-in-trade 9. The CIT(A) erred in not following the decisions of the Supreme Court in 78 ITR 58 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Agricultural land at Mangrul, Tah. Nagpur 2.43 Hectors Rs.13,68,033/- (22/02/2006) Rs.69,00,000/- Rs.45,06,158/- 4. Agricultural land at Mangrul, Tah. Nagpur 1.94 Hectors Rs.10,25,809/- (11/10/2006) Included in 3 above as common sale deed is done Included in 3 above as common sale deed is done 2.1 The assessee has shown this income to be exempt in view of the provisions of section 2 sub section 14 of the I.T. Act. The Assessing Officer observed that the assessee owned substantial agricultural land, about 100 acre mostly situated near Nagpur on Wardha Road. During the year 7.58 Hectors land was sold and 2.42 Hectors land was purchased. The assessee originally held about 1.5 Hectors and 3.2 Hectors of land in Hingna / Mondha near Hingna, which was purchased in mid 90s. Most of the purchases were made from financial year 2002-2003 and later on there had been land development activities in this area in the last 5-6 years because of the proposed Cargo Hub and MIHAN Project and proposals of other industrial houses like DLF Boeing. It was a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0/2005. Part of the land was purchased when he became major. That land was also located near Nagpur. Ankit disposed of four pieces of land during the impugned assessment year. The Assessing Officer has given the detail of the land purchased in the name of the minor son Gaurav Kumar. The Assessing Officer, on the basis of this information took the view after giving opportunity to the assessee that the assessee has engaged in the adventure of the nature of trade. 3. When the matter went before the CIT(A), the CIT(A) confirmed the order of the Assessing Officer as per his finding given under para 6 to 13.7 of his order. 4. The learned A. R., before us, reiterated the submissions made before the CIT(A). It was contended that the assessee was deriving the agricultural income from the accounting year 94-95. For this our attention was drawn to page No. 35 of paper book showing the agricultural income earned year-wise by the assessee. The assessee sold agricultural land during the year for a sale consideration of ₹ 86,90,410/- realizing a surplus of ₹ 59,74,148/-. The detail of the land with the date of purchase and sale are given as under: S. No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agricultural land was held by the assessee as an investment. There is no question of assessing it as income from business as heads of income u/s 14 are mutually exclusive. The agricultural land sold by the assessee cannot be treated like any non agricultural land. It can be purchased or sold by an agriculturist. The land is thus treated as capital asset of the person who owns. It can never be stock in trade freely tranferable at will to anybody. If any sale happened the surplus is a realisation of capital and if anybody reinvests it in agricultural land again there can be no question of any adventure in the nature of trade assessable as business profit under the I.T. Act under any section. Even a court sale, gift, exchange, lease of a property mortgage is prohibited. Our attention was drawn to section 2 sub section 14 to stretch the submissions that the agricultural land sold by the assessee was not a capital asset and it was also not a stock in trade. It was contended that Hon'ble Supreme Court had occasion to deal with the word trade and the Hon'ble Supreme Court explained it as under in the case of State of Punjab ad Another vs. Bajaj Electricals Ltd. 70 ITR 730, 732 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ural land as business income is the fact that the assessee is otherwise engaged in business of land development. In the case of agricultural land in question, the facts are that this land was bought by the assessee in the year 2000 and sold during the year under consideration. As per the Assessing Officer on account of reality boom, the land was sold by the assessee and, therefore, the intention was to resell at contention profit, which showed that the transaction was in the nature of business. 8. We are unable to convince ourselves with the proposition advanced by the Assessing Officer. Factually speaking, the CIT(A) in para 4.2 and 4.3 of the order has deduced as under: 4.2 The land sold out by the appellant is definitely agricultural land as the same is situated in village Panjari which is 8 Km. Away from the Municipal limit. The appellant from the said land has shown agriculture income in various years as under: AY 2001-02 ₹ 50,000/- AY 2002-03 ₹ 3,50,000/- AY 2003-04 ₹ 1,50,000/- AY 2004-05 ₹ 1,50,000/- AY 2005-06 ₹ 1,65,000/- AY 2006-07 ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view, there is no material with the AO to infer that the assessee was a trader in agricultural lands so as to treat the profit on sale of impugned agricultural land as business income. The factum of the assessee also being engaged in the business of land development does not distract from the fact that the impugned land does not fall within the definition of capital asset u/s 2(14)(iii) being an agricultural land and further that agricultural operations having been carried out on such land in the earlier years, and therefore qua the impugned land, assessee cannot be treated as a trader. In our view, the CIT(A) made no mistake in holding that addition of ₹ 94,96,455/- made by the AO as business income on account of sale proceeds of agricultural land is liable to be deleted. We hereby affirm the order of the CIT(A) on this aspect. 6.1 In the case before us, the facts are similar. The assessee is an agriculturist. The assessee derived income from agriculture since 94-95. The assessee is not regularly engaged in the purchase and sale of the land. Merely purchasing of the land by the assessee for the purpose of the investment will not take the transaction to be the one adv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee provided branded seeds and fertilizer to him. 8. In appeal before CIT(A), the assessee, on the question of addition of unexplained expenditure of ₹ 1,00,000/- on the use of branded seeds for agriculture, submitted that the assessee has never used any branded seeds for cultivation and that the seeds used for a particular year are from the seeds preserved from the earlier year s crop which is the traditional system and there is a presumption to that extent in the absence of any thing contrary. The expenses on seeds is out of the harvest of the total agricultural produce and the value of which is included in the value of gross agricultural income. In this connection the AO examined the persons to whom the land was given for cultivation on a sharing basis for that year. The statement of two persons, who worked for the assessee for 2006-2007, were recorded after a period of three years when they were not more in service. The statements were from memory and not from any documents. The cross examination was not considered necessary. There is written agreement with them in which it has been maintained that they will be supplied seeds only. All other expenses will be borne ..... X X X X Extracts X X X X X X X X Extracts X X X X
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