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TMI Blog2012 (10) TMI 1094X X X X Extracts X X X X X X X X Extracts X X X X ..... For the Appellant: S/Shri G.Narayanaswamy G.Sitaraman, CAs For the Respondent: Dr. S.Moharana, IRS, CIT O R D E R PER Dr.O.K.NARAYANAN, VICE PRESIDENT These are cross appeals filed by the assessee and the Revenue. The relevant assessment year is 2008-09. The appeals are directed against the order of the Commissioner of Income-tax(Appeals)-V at Chennai, dated 11-4-2011 and arise out of the assessment completed under section 143(3) of the Income-tax Act, 1961. 2. The assessee had purchased and sold 43.76 acres of land in Mamallapuram Village. As per the sale deed, the sale value was ₹ 40,75,07,918/-. The assessee company computed the capital gains on sale of the land at ₹ 24,45,26,891/-. But, the Assessing Officer found that the guideline value, as per the Registration Department of the State Government, was ₹ 66,74,25,518/-. The Assessing Officer proposed to adopt the said guideline value for computing the capital gains. Meanwhile, the valuation was referred to the Departmental Valuation Officer (DVO) under section 50C of the Act. The DVO has determined the value of the land at ₹ 44,15,21,200/-. The said report of the DVO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perative expenses of ₹ 60,65,732/-. According to the Revenue, this expenditure should not have been allowed by the Commissioner of Income-tax(Appeals) as a deduction. 10. We heard S/Shri G.Narayanaswamy and G.Sitaraman, the learned chartered accountants appearing for the assessee and Dr. S.Moharana, the learned Commissioner of Income-tax appearing for the Revenue. 11. First we will consider the issue of the nature of the property sold by the assessee during the previous year relevant to the assessment year under appeal. The assessee has contended that the property was agricultural land. The assessee has produced before the lower authorities both purchase and sale deeds, wherein recitals are provided that the land purchased and sold was agricultural land. The assessee has further produced a certificate from the Village Administrative Officer certifying that the land was agricultural punja land and that the assessee had planted casuarina trees therein. The assessee has further produced photographs of the land to confirm the cultivation of casuarina trees. The assessee has also pointed out before the lower authorities that the assessee company has shown an income of &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty by the assessee company was purely commercial. There is no evidence on record to show that the assessee was interested in carrying on any agricultural activities in the said property. 18. Therefore, we have to come to a finding of fact that the assessee has not purchased the property for the purpose of generating income by way of agricultural operations. 19. Next to see, the property is not situated in any agricultural area. It is a seaside land. The entire area is developed as a tourism industry corridor. A lot of resorts are situated around the property purchased and sold by the assessee. 20. Therefore, it is not possible to hold a view that the particular property of the assessee alone was an agricultural property situated amidst of throbbing commercial activities. 21. The Hon ble Supreme Court in the case of Sarifabibi Mohmed Ibrahim and Others vs. CIT, 204 ITR 631, has laid down various tests for determining the nature of a land. One of the tests laid down by the Hon ble Supreme Court is whether the land was actually or ordinarily used for agricultural purposes at or about the relevant time. It is very clear that the subject land was not ordinarily ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see had purchased the property with the intention of setting up of a tourist destination, but could not do so within the stipulated time, as the necessary statutory permissions were not obtained from the competent authorities. Therefore, the property was sold by the assessee. The property was held by the assessee only for a short period. That is why the assessing authority has treated the gains as short-term capital gains. 27. When all these facts are taken into consideration as a whole, we find that the property purchased and sold by the assessee was commercial property, non agricultural in nature. The property cannot be considered as an agricultural property only for the reason that there was a casual plantation of casuarina trees. The certificates issues by the concerned Revenue authorities are of no use in the present case. 28. Therefore, we confirm the findings of the lower authorities on this point and hold that the property sold by the assessee was non agricultural property. Short-term capital gains tax has been levied in accordance with law. 29. This issue is accordingly decided against the assessee. 30. Now, regarding the addition of ₹ 5,61,8 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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