9911796707
TMI Blog2013 (3) TMI 715X X X X Extracts X X X X X X X X Extracts X X X X ..... izure action u/s.132(1) of the Income-tax Act against the assessee and other group concerns. The assessee is Proprietor of M/s. Sancheti Promoters and Builders. In consequence of the notice issued u/s.153A of the Income-tax Act, the assessee filed the return of income. So far as the issue before us is concerned i.e. in respect of sale of 3 lands which particulars are as under: Sl. No. Particulars Year of Sale Year of Purchase Sale consideration amount Long Term Capital Gain declared by the assessee 1 Land at Kartaj 2005-06 1995-96 45,00,000/- 36,54,900 2 Land at Baner 2006- 07 2001-02 49,50,000/- 34,67,500/- 3 Land at Kasar Amboli 2007- 08 2001-02 13,33,334/- 10,89,125/- In respect of the sale consideration on the sale of the above lands the assessee has declared Long Term Capital Gain and also claimed deduction u/s.54EC of the Income-tax Act. 4. The Assessing Officer was of the opinion that the transactions of the sale of the land as mentioned in above chart are to be assessed under the head 'business income' and not under the head 'Capital Gain'. The assessee contended before the Assessing Officer that the assessee had acquired the said lands for the pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prietary concern M/s Sancheti Promoters and Builders. iii) The assessee is also a partner in M/s Jairaj Developers Unit-3 and M/s Gagan Developers which are also engaged in business of development and real estate. iv) Even her husband Shri. Surendra Sancheti, who is looking after the business activities of the Lake Town project as partner, has admitted to be looking after business activities of the assessee. v) There is no element of "pride possession" into it and the assessee has dealt into purchase and sale of these lands in the same manner as a persons engaged in real estate business would do and such transactions would b e in the nature of venture into the nature of trade. vi) Thus it is quite vivid that the intention of the assessee is to earn quick profit. vii) It would be pertinent to note the case laws of Janki Ram Bahadur Ram (1965) 57 ITR 21 (SC), Khan Bahadur Ahmad Alladin & Sons Vs. CIT (1968) 68 ITR 573 (SC). Wherein similar views have been held. I have also gone through the case laws cited by the assessee. Those have been found to be in different factual contexts. 4.5. Further, it would be appropriate to rely upon the Circular No.4/2007 dated 15-6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of agricultural land is the substantive transaction which is an adventure in the nature of trade. (iv) The fourth test given by the circular is as below.- "Ordinarily the purchase and sale of shares with the motive of earning a profit, would result in the transaction being in the nature of trade/adventure in the nature of trade; but where the object of the investment in shares of a company is to derive income by way of dividend, etc., then the profits accruing by change in such investment (by sale of shares) will yield capital gain and not revenue receipt." Here the relevant transaction is sale of agricultural land hence agricultural income should be considered as analogous to dividend. The agricultural income claimed by assessee is as below: Sr. No. A.Y. Agricultural Income 1. 2002-03 ₹ 60,000/- 2. 2003-04 ₹ 65,000/- 3. 2004-05 ₹ 9.250/- 4. 2005-06 45,000/- 5. 2006-07 NIL 6. 2007-08 NIL On this test also, the case of the assessee miserably fails. It is seen from the above table that the assessee has earned meager agricultural income for respective assessment years. This vividly demonstrates that the assessee's real intent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be held, least to say, for a long time but even for sometime because the acquisition proceedings were in succession. Even it cannot be said to be a purchase for aesthetic possession. What is important for our consideration is its distinctive character, total effect of the intention of this appellant at the time of purchase, all the relevant factors as also surrounding circumstances so as to finally determine the true character of the transaction. We have also seen from the above precedents, which have been either applied or been distinctive on facts while discussing ante, that this appellant has not shown any other intention at the time of acquisition of land other than the intention of earning profit by way of compensation. Before we part with, we may like to add that one cannot remain untouched by the plight of the farmers their agricultural land are generally being purchased by interested persons immediately before the acquisition of land at throw away prices with their motive to encash heavy returns in the shape of huge amount of compensation. What the farmers get out of such deal is merely peanuts on sale of their precious land under of fear and apprehension of acquisition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r that the appellant has sold agriculture land in A.Y. 2005-06, 2006-07 and 2007- 08. All the relevant details in respect of sale of these agriculture lands situated at Katraj, Baner and Kasar Amboli are available in the assessment order as well as in the submissions of the appellant which have already been quoted above. The appellant has shown that the lands sold were held by her as investment in agriculture land from 4 to 10 years on the dates of sale. It was also shown that the above referred lands were "Agriculture lands" as per the revenue records and therefore it was not eligible for any other commercial use unless the competent authority had granted permission of its conversion into "Non agricultural land". The appellant has further contended that no action what so ever was made for its conversion to NA land and therefore according to them it should be taken as an evidence for their intention to purchase and hold the land as agricultural investment. The appellant had further shown that agricultural activities were carried out on those lands on regular basis till A.Y. 2005-06 and income from this activity ranging from ₹ 9250/- to ₹ 60,000/- was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above facts it was claimed that the sale of agricultural land cannot be treated as a business activity, The appellant has also relied on numerous judgment which are noted in the assessment order to claim before the Assessing Officer that the claim made by them are legally correct. During appeal also similar arguments were put forth which can be seen from the submission already quoted above. It was further argued that the Assessing Officer erred in drawing the conclusion referred to above. It was claimed that the Assessing Officer has passed the assessment order on presumption and not on hard facts. It was claimed that the construction business carried out by the appellant was separate and only because of this it is wrong to presume that the appellant was also engaged in the business of land trading. Reliance for this was made on the Supreme Court judgment given in the case of Saroj Kumar Majumdar Vs. Commissioner of Income Tax reported in CTR 12 335 PC 54 R 242 (SC). It was further claimed that her husband in individual capacity is not associated with the construction activity, on the contrary it was stated that he was involved in this activity as Karta of the HUF. Therefore it wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... because of which the investment was held as adventure in the nature of trade. The facts of the appellant are much different and therefore the AO can be seen to have erred completely in following this judgment. Considering the entire facts of the case and the law I am of the opinion that the appellant is correct in claiming the relief and therefore the appeal is allowed. Now the revenue is in appeal before us. 6. We have heard the rival submissions of the parties and also anxiously considered the reasons recorded by the Assessing Officer for treating the sale consideration of those 3 lands for assessing the same as a 'business income' as well as the reason given by the Ld.CIT(A) for accepting the contention of the assessee. The assessee is in the business as a Builder and Promoter and which is an admitted fact. So far as the issue in controversy in respect of the head under which the Sale consideration of the 3 lands is to be assessed, it is seen that the assessee has sold those 3 lands in the present 3 assessment years one by one. It is also seen that the holding period of those lands is quite long. So far as land at Katraj is concerned the said land was held for the period of th ..... 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