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TMI Blog2016 (7) TMI 185X X X X Extracts X X X X X X X X Extracts X X X X ..... ture use is undisputedly for non- agriculture industrial purpose as the land was sold to the purchaser with the condition for non-agricultural use clearly established that the assessee did not intend to use the land in question for agriculture purpose in the past as well as in future. Thus we have no hesitation to hold that the land in question does not fall under the exclusion clause (iii) of section 2(14) of the income tax act. Accordingly, we set aside the impugned order of the CIT (A) and restore the order of the A.O. - Decided in favour of revenue - I.T. A. No. 708/Bang/2011 - - - Dated:- 30-6-2016 - Shri Vijay Pal Rao, Judicial Member And Shri Inturi Rama Rao, Accountant Member For the Appellant : Dr.P.K. Srihari, Addl. CIT (D.R.) For the Respondent : Shri S. Venkatesan, C.A. ORDER Per Shri Vijay Pal Rao, J. M. This appeal by the revenue is directed against the order dated 22/2/2011 of CIT( appeals) for the assessment year 2007-08. The revenue has raised the following grounds: 1. The order of the CIT (Appeals) is contrary to the facts of the case. 2. The CIT (Appeals) has erred in holding the lands sold as agricultural lands when the lands h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition made by the AO was deleted. 3. Before us the learned DR has submitted that the assessee is in the activity of purchase and sale of immovable properties including agricultural lands. The assessee got converted the land from agricultural to non-agricultural industrial purpose vide office memorandum dated 29/04/2005. Thus, undisputedly prior to sale of the land in question the assessee converted the land from agriculture for non-agriculture use and therefore, on the date of sale the lands in question were non-agricultural lands. The Learned DR has contended that the intention of the assessee was clear to convert the land from agricultural to non-agricultural purpose that it is only for re-sale of the land in question. It was converted to non-agricultural industrial purpose. The Learned departmental representative has submitted that the conversion of land from agriculture to non-agriculture industrial purpose was done as per the specific condition of the agreement dated 1/04/2005 and therefore, the conversion of the land from agricultural to non-agriculture was with the intention to sell the land for non-agricultural use. He has relied upon the order of the assessing offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Pai) Survey No. Acre Malonagathihally 13.5.2005 7 0.30 10.07.2006 80/1 0.25 80/2 0.23 80/3 1.12 80/4 1.34 80/5 0.29 85/2 1.40 120/3 0.20 120/4 0.20 81 11P-10 1.00 81 11P-13 1.00 ₹ 80,00,000 Sale Considertion 3.2.2006 7 1.10 Byranahalli 16.07.1999 (Mr. Pai) Ashok 28.4.2005 29.04.2008 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... years in majority of the cases. We further note that the lands in question were sold in terms of the agreement of sale dated 1/04/2005. There was a condition under clause 3 of the agreement that the buyer would buy the property only if the Seller would convert the property into non-agricultural i.e. industrial. For ready reference we reproduce clause 3 of the agreement as under: 3. The Buyer insisted to buy the property only if the seller get the property converted into non-agriculture i.e. industrial. In case the seller converts the entire agricultural land into industrial land within 24 months from the date of execution of this agreement, the buyer shall pay the entire sale consideration as agreed about. However, if any of the part of agricultural land left without conversion on the date of sale deed, the sale of such agricultural land shall be sold as agricultural land only. The sale of agricultural land shall be with a prior condition that the non-converted portion also will get the converted as industrial by the seller within a period of six months from the date of execution of sale deed. There is no denial of the fact that the lands in question were got converted fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... termined on the facts of each particular case. (e) The fact the land is assessed to land revenue as agricultural land under the State revenue law is certainly a relevant fact but it is not conclusive. In the said case the Hon ble Supreme Court has held that land is assessed to land revenue as an agricultural land, is not a conclusive fact and the question is to be decided by considering various factors including whether the land is used for cultivation and agricultural operations. The actual use and the intended use of land has to be seen for the purpose of exemption. The Hon ble Supreme Court has also considered the decision of Hon ble Bombay High Court in case of CIT versus V.A Trievedi 172 ITR 95 at page no. 6 41 in case of Smt. Sarifabibi Mohmed Ibrahim (supra)as under: The Bench observed that to ascertain the true character and the 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. Examining the facts of the case from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithin the municipal limits-it was situated at a distance of one kilometer from the Surat railway station; the land was not being cultivated from the year 1965-66, until it was sold in 1969; the appellants had entered into an agreement with a housing co- operative society to sell the said land for avowed non-agricultural purposes, namely, construction of house; they had applied in June, 1968, and March, 1968, for permission to sell the said land for non-agricultural purposes under section 63 of the Bombay Tenancy and Agricultural Lands Act and obtained the same on April 22. 1969; soon after obtaining the said permission they executed sale deeds in the following month, i.e., in May, 1969; the land was sold at the rate of ₹ 23 per Sq. yard and the purchaser-society commenced construction operations within three days of the purchase. What is the inference that flows from a cumulative consideration of all the aforesaid contending facts? This question has to be answered keeping in mind the criteria evolved in the Begumpet Palace case (1976) 105 ITR 133 (SC) se5t out herein before. In our opinion, the entering into the agreement to sell the land for housing purposes, the applying an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tests for the determination of the issue. It is well settled that the nature and character of the land may undergo a change depending upon its situation, growth of the locality or zone in which it is situated and its potentiality. According to recent decisions of the Supreme Court, the fact that the land is sold or transferred to a non- agriculturist for a non-agricultural purposes or that it is likely to be used for non-agricultural purposes in the remote past or it continues to be assessed to land revenue on the footing of agricultural land is not decisive. The Hon ble High Court has decided the issue of agricultural land at pages 963 and 964 as under : In our opinion, the principles laid down by the Supreme Court in the case of Smt. Sarifabibi Mohamed Ibrahim V. CIT (1993) 204 ITR 631 and by this court in Trivedi s case (1988) 172 ITR 95 do emphasize the factor of non-user of the land for cultivation for a reasonable span of time prior to the date of transfer as a crucial factor for determination of the issue. Applying the ratio of the Supreme Court judgment in Sarifabibi s Case (1993) 204 ITR 631 to the facts of the case, we hold that the reference lands could not b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agriculture to non-agricultural industrial purpose with the sole purpose and intent to sell the land for industrial purpose. When the land was already converted from agriculture to non-agricultural industrial use then merely it was wrongly shown in the revenue record as agricultural land would not change the actual fact of conversion from agriculture to non-agriculture purpose. Since the assessee has claimed to have some ancestral agricultural land which is not subject matter of the dispute in this case therefore, offering agriculture income and acceptance of the same wouldn t not change the character of the land in question at the time of sale. Considering the fact that the land in question were held by the assessee for a very short period of time and the intended future use is undisputedly for non- agriculture industrial purpose as the land was sold to the purchaser with the condition for non-agricultural use clearly established that the assessee did not intend to use the land in question for agriculture purpose in the past as well as in future. Applying the test as laid down by the various judgements of Hon ble Supreme Court as well as Hon ble High Court as discussed above we h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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