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TMI Blog2018 (9) TMI 1546X X X X Extracts X X X X X X X X Extracts X X X X ..... nce claimed by the assessee under Section 10(38) of the Income-tax Act, 1961 (in short 'the Act'). According to the Ld. D.R., the Assessing Officer found that the assessee disclosed Rs. 4,63,21,320/- as long term capital gain, however, the same is short term capital gain. According to the Ld. D.R., the CIT(Appeals) by placing reliance on the order of this Tribunal in the case of the assessee's wife and his daughter, found that the gain is a long term capital gain. According to the Ld. D.R., no appeal was filed against the order of this Tribunal in the case of the assessee's wife and his daughter since the tax effect was very less. Therefore, according to the Ld. D.R., the CIT(Appeals) is not justified in placing reliance on the orders of this Tribunal in the case of assessee's wife and his daughter. 4. On the contrary, Sh. T. Banusekar, the Ld. representative for the assessee, submitted that during the year under consideration, the assessee sold 750 shares of M/s Ganesar Ginning Mills Ltd. and offered Rs. 4,51,43,911/- as long term capital gain. In fact, the shares were sold to M/s DLF Retails. According to the Ld. representative, the shares of M/s Ganesar Ginning Mills Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e period of six months. The Assessing Officer ought to have served the notice on or before 30.09.2014. Referring to Section 143(2) of the Act, the Ld. representative submitted that the Assessing Officer was expected to serve the notice within a period of six months from the end of financial year in which the return was filed. Admittedly, according to the Ld. representative, the notice was not served on the assessee, therefore, it has to be presumed that the Assessing Officer has accepted the return filed by the assessee. Hence, the consequential assessment cannot stand in the eye of law. The Ld. representative placed his reliance on the judgment of Apex Court in ACIT v. Hotel Blue Moon (2010) 321 ITR 362 and submitted that omission on the part of the Assessing Officer to issue notice under Section 143(2) of the Act cannot be a procedural irregularity and it is not curable, therefore, requirement of notice under Section 143(2) of the Act cannot be dispensed with. In view of the judgment of Apex Court in Hotel Blue Moon (supra), according to the Ld. representative, the consequential assessment order cannot stand in the eye of law. 8. On the contrary, Shri Sailendra Mamidi, the Ld. D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary only where it becomes necessary to check the return, so that where block return conforms to the undisclosed income inferred by the authorities, there is no reason, why the authorities should issue notice under section 143(2). However, if an assessment is to be completed under section 143(3) read with section 158BC, notice under section 143(2) should be issued within one year from the date of filing of block return. Omission on the part of the assessing authority to issue notice under section 143(2) cannot be a procedural irregularity and the same is not curable and, therefore, the requirement of notice under section 143(2) cannot be dispensed with. The other important feature that requires to be noticed is that section 158BC(b) specifically refers to some of the provisions of the Act which require to be followed by the Assessing Officer while completing the block assessments under Chapter XIV-B of the Act. This legislation is by incorporation. This section even speaks of sub-sections which are to be followed by the Assessing Officer. Had the intention of the Legislature been to exclude the provisions of Chapter XIV of the Act, the Legislature would have or could have indicated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hile dealing with the scope and import of the expression " as far as practicable" has stated " without anything more the expression ' as far as possible' will mean that the manner provided in the Code for attachment or sale of property in execution of a decree shall be applicable in its entirety except such provision therein which may not be practicable to be applied." 16. The case of the Revenue is that the expression " so far as may be apply" indicates that it is not expected to follow the provisions of section 142, subsections (2) and (3) of section 143 strictly for the purpose of block assessments. We do not agree with the submissions of the learned counsel for the Revenue, since we do not see any reason to restrict the scope and meaning of the expression " so far as may be apply" . In our view, where the Assessing Officer in repudiation of the return filed under section 158BC(a) proceeds to make an enquiry, he has necessarily to follow the provisions of section 142, sub-sections (2) and (3) of section 143." 10. In view of the above judgment of Apex Court, this Tribunal is of the considered opinion that even though the case was reopened and reason for reopening was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... industrial land. It was a Punja land. Merely because the purchase of land was for industrial purpose or other than agricultural purpose, according to the Ld. representative, the sale of land will not lose its character as sale of agricultural land. Placing reliance on the order of this Tribunal in the assessee's own case for assessment year 2011-12 in I.T.A. No.804/Mds/2016 dated 28.10.2016, the Ld. representative submitted that this Tribunal found the assessee is not in the business of real estate. By placing reliance on the judgment of Madras High Court in Mrs. Sakunthala Vedachalam v. Mrs. Vanitha Manickavasagam (2014) 369 ITR 558, the Ld. representative submitted that the High Court found in similar circumstances that the land is agricultural land. Since the assessee cultivated the land and merely because the land was sold to a nonagriculturist, according to the Ld. representative, it cannot be construed as non-agricultural land. Moreover, this Tribunal in the assessee's own case for to assessment year 2011-12 found that the assessee is not in the business of purchase and sale of land. Therefore, according to the Ld. representative, the Assessing Officer is not justifie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owripalayam on which assessee returned long term capital gains Rs. 33,52,365/-. Obviously, the land was more than three years old since its purchase. Second piece of land sold by assessee at Othakalmandapam, claimed by the assessee as agricultural in nature, measured 4.34 acres. It's location was beyond fourteen kilometers from Coimbatore Corporation limits. The said land was sold by the assessee to a Charitable Trust of which assessee was the Managing Trustee, for a price of Rs. 5,26,80,000/-. Apart from these two transactions, there were certain other land transactions entered by the assessee in previous years relevant to assessment years 2006-2007, 2007-08 and 2009-10. In the previous year relevant to assessment year 2006-2007, there was purchase of agricultural land for Rs. 3,67,00,000/-. Though during that year assessee had attempted to make investments in land of M/s. Standard Motors Ltd it had not fructified. This position has not been disputed by the Revenue. During the very same year assessee has sold land for Rs. 74,00,000/-. The next transaction was during the previous year relevant to assessment year 2007-08. Assessee had sold land for Rs. 48.81 lakhs and also given an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gricultural land assessee would not be exigible to capital gains tax, since Section2(14)(iii) of the Act excluded agricultural land from the definition of 'capital assets'. Claim of the assessee was that the said land was classified by Revenue Department as agricultural in revenue records. Ld. Assessing Officer himself has stated that in the assessment order that the land sold was classified in the Revenue records as agricultural and it was subject to payment of land revenue. However, as per Assessing Officer, the land was not actually used for agricultural purpose. In our opinion this conclusion was reached by the Assessing Officer without any material evidence. The land was owned by assessee since 1995 and was purchased at a cost of Rs. 89,915/- Therefore conclusion of the Assessing Officer that income derived from agricultural operation did not bear a rational proportion to the cost is itself incorrect. Assessee had declared agricultural income of Rs. 18,10,750/- during the relevant previous year. Assessing Officer had also come to a conclusion that the land was situated in a developed area, when in reality the land was situated 14 km from the Coimbatore Corporation limit. There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... situated at one kilometre distance from the town panchayat of Mamallapuram (i.e., within the specified distance from the outer limits of the nearest municipality/town panchayat) and the popula tion of the Mamallapuram town panchayat as per the 2001 census was 12,345." 11. The assessee has also produced a copy of the adangal and the letter from the tahsildar, which showed that the lands were agricultural in nature and the Revenue has also accepted that the lands are falling within the restricted zone in terms of section 2(14) of the Income-tax Act. 12. Hence, the only point that has to be considered is that whether the test as laid down in the decision reported in CIT v. Siddharth J. Desai [1983] 139 ITR 628 (Guj) has been satisfied by the assessees. In the said decision, in paragraph 11, it is held as follows (page 638) : "On a conspectus of these cases, several factors are discernible which were considered as relevant and which were weighed against each other while determining the true nature and character of the land. It may be useful to extract from those decisions some of the major factors which were considered as having a bearing on the determination of the question. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hether the owner would have ever sold the land valuing it as a property yielding agricultural produce on the basis of its yield ? At the risk of repetition, we may mention that not all of these factors would be present or absent in any case and that in each case one or more of those factors may make appearance and that the ultimate decision will have to be reached on a balanced consideration of the totality of circumstances." 13. According to the Tribunal, that if the above tests are applied, the assessees could not satisfy any of the conditions except conditions Nos. 1, 5, 11 and 12. The Tribunal held that the assessees could not prove that the lands was actually or ordinarily used for agricultural purposes. This reasoning does not appear to be correct in view of the abovesaid decision of the Gujarat High Court, wherein it was clearly held in clause (1) in paragraph 11 that whether the land was classified in the revenue records as agricultural and whether it was subject to the payment of land revenue has to be considered for grant of exemption. 14. Thus, it is evident from the above, which clearly states that any one of the above factors can be present in a case to qualif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rations, specify in this behalf by notification in the Official Gazette ; (iv) 6½ per cent. Gold Bonds, 1977, or 7 per cent. Gold Bonds, 1980, or National Defence Gold Bonds, 1980, issued by the Central Government ; (v) Special Bearer Bonds, 1991, issued by the Central Government ; (vi) Gold Deposit Bonds issued under the Gold Deposit Scheme, 1999, notified by the Central Government." 16. Once the Tribunal has accepted that the classification of lands as per the revenue records are agricultural lands, which are evidenced by the adangal and the letter of the tahsildar and satisfies other conditions of section 2(14) of the Income-tax Act, we are of the view that the Tribunal has misdirected itself as stated above. 17. Yet other reason given by the Tribunal is that the adjacent lands are put to commercial use by way of plots and, therefore, the very character of the lands of the assessees is doubted as agricultural in nature. The manner in which the adjacent lands are used by the owner therein is not a ground for the Tribunal to come to a conclusion that the assessees' lands are not agricultural in nature. The reason given by the Tribunal that the adjacent la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he law laid down by Hon'ble Jurisdictional High Court in the case of Sakunthala Vedachalam vs. Vanitha Manickavasagam (supra), we are of the opinion that lower authorities fell in error in considering the land measuring 4.34 acres at Othakalmandapam sold by the assessee to M/s. Hindustan Educational and Charitable Trust as non agricultural in nature and exigible to capital gains. The said land could not be considered as capital asset by virtue of Sec. 2(14)(iii) of the Act. Assessee was justified in claiming that surplus arising out of sale of land as not exigible to capital gains tax." 16. In view of the above order of this Tribunal in the assessee's own case for assessment year 2011-12, this Tribunal is unable to uphold the orders of the lower authorities. Moreover, this Tribunal in the assessee's own case for the assessment year 2011-12 in I.T.A. No.802/Mds/2016 dated 28.10.2016 found that the assessee is not in the business of real estate. Accordingly, orders of both the authorities below are set aside by holding that the land in question is agricultural land and the profit on such sale of land is not liable for taxation by virtue of Section 2(14)(iii) of the Act. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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