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TMI Blog2017 (7) TMI 1312X X X X Extracts X X X X X X X X Extracts X X X X ..... rther noted that the observation of AO regarding non-agricultural operations carried on the said lands was not correct in the light of the evidence 7/12 extract furnished by the assessee. Before us, the Revenue has not placed any material to controvert the findings of CIT(A) nor pointed out any fallacy in the findings of CIT(A). We therefore find no reason to interfere with the order of CIT(A). Thus, the grounds of Revenue are dismissed. - Decided against revenue. X X X X Extracts X X X X X X X X Extracts X X X X ..... ital gains being exempt cannot be accepted. He accordingly, considered the profit on sale of land to be 'short term capital gains' and accordingly taxed it. Aggrieved by the order of AO, assessee carried the matter before Ld.CIT(A), who decided the issue in favour of the assessee by holding as under : "3.7 In the present case the assessee purchased a land in the year 2006 at village Kharoshi, Pen Taluka, Dist. Raigad. The appellant has contended that crops, mango, timber, cashew etc. were grown as is evident from the 7/12 extract and, therefore, land did not remain uncultivated till the date of sale, The "7/12 extract indicates that the land is irrigated and cultivated and also crops, mango, timber, cashew were grown and that grass was also grown which was utilized as animal feed. The appellant has also submitted the sale receipts of mangoes sold in the market and thus has derived income from its produce. The said income was not adequate enough to be more than the expenditure incurred and, therefore, not shown in the I.T.return. The possession of other agricultural lands by the appellant is evidenced by the balance sheet filed by the appellant. It has been contended by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R 133 (SC) and CIT Vs Raja Benoy Kumar Sahas Roy (1957) 32 ITR 466 (SC). The A.O. has also held that the intention of the appellant was not to cultivate the land but to earn profit by holding the land. The AO. has also inferred from the sale transaction that the purchaser has not purchased the land for such a high price of nearly 2.6 crores for the purpose of cultivation and, therefore, the future use of land can be anything but agricultural. 3.10 The appellant on the other hand has contended that by an amendment introduced to section 2(14) of the I,T. Act, 1961 by Finance Act, 1970, agricultural land situated in all the rural areas are not brought within the tax net and do not automatically become capital asset within the meaning of the provision of section 2(14) of the I,T. Act. The appellant has also quoted the circular issued by the CBDT explaining the provisions of the Finance Act, 1970 wherein it has been clarified vide para no. 30 as under: " ………………. .................. Agriculture land situated in rural area i.e. outside any Municipality or Cantonment Board having a population of less than ten thousand also beyond the distan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er considered the various decisions cited in the order and thereafter noted as under : "3.11.6 So far as the observation made by the Assessing Officer that the land was sold apparently to a developer whose intention is to develop the land for non-agricultural purposes as the price paid is enormously high and a prudent man would not purchase such land for cultivation purpose indicates that the future use of land is other than agricultural. The Courts have held that the correct test to be applied is whether on the' date of sale the land was agricultural land or not. In the case of Gordhanbhai Kahandas Dalwadi Vs CIT (1981) 127 ITR 664 (Guj), held that just because after the sale the purchaser was going to put the land to non-agricultural use, does not mean that the land ceased to' be agricultural land on the date of sale. Similar view was also expressed in the case of Chotalal Prabhudas Vs CIT (cited supra), wherein the Gujarat High Court observed that what it had to consider was not what the purchaser did with the land or what the purchaser was supposed to do with the land but what was the character of the land at the time of sale. In the case of M.S. Srinivas Naicker Vs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral land. It has also been seen that the price paid is not decisive for ascertaining the land to be agricultural or not. Thus the facts if taken in totality prove the lands are agricultural land. The case laws relied upon by the A.O. has been considered in several decisions which have been cited and discussed above. The case of Sarifabibi Mohd Ibrahim cited above of the Apex court has considered several decisions including those relied upon by the AO. Similarly, the case of CWT Vs Officer-in-Charge, of the Apex Court and CIT Vs. Bola Ramaiah, 174 ITR 154 (SC) cited by the A.O. has also been considered by the subsequent judicial pronouncement which have been discussed in the preceding paras. 3.13. Therefore, after considering the decision of the jurisdictional Bombay High Court and the Pune ITAT as also the Supreme Court decision as well as the entire facts on record, the addition made by the A.O. is difficult to be sustained and the land in question is held to be not a capital asset within the meaning of section 2(14)(iii) of the I.T. Act, 1961. Therefore, the addition made by the Assessing Officer of ₹ 2,98,80,688/- as short term capital gain is liable to be deleted and g ..... X X X X Extracts X X X X X X X X Extracts X X X X
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