9911796707
TMI Blog2020 (9) TMI 236X X X X Extracts X X X X X X X X Extracts X X X X ..... ge, Alibaug Taluk, Raigad Dist., Maharashtra (hereinafter referred to 'the property' or 'land'). Since capital gain on sale of the property had not been disclosed in the return of income, the AO called upon the assessee to explain why the same was not declared. The assessee took a stand that the property was an agricultural land and therefore was not a capital asset and capital gain on sale of agricultural land was not exigible to tax. The contentions of the assessee in this regard were as follows:- * "Land under contention is situated at Agarsure Village, Alibaug Taluk, Raigad District, Maharashtra. * The subject land is agricultural land both at the time of purchase and sale. * The assessee is an agriculturist. * He sold a parcel of land 0.30 Hectares. * The buyer is another agriculturist. * The population of the place i.e. Agarsure Village is below the threshold limit in terms of Section. 2(14)(iii)(a). * The parcel of land is si tuated nearly 13 kms away from Al ibaug, district headquarters. The land parcel is not a capital asset u/s 2(14) of the Act." 4. It is not in dispute that the property was sold by the assessee to one Mrs. Leena Mascarenhas for a sum of Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, notified area committee, town area committee, town committee, or by any other name) or a cantonment board and which has a population of not less than ten thousand according to the last preceding census of which the relevant figures have been published before the 1st day of the previous year ; or (b) in any area within such distance, not being more than eight kilometres from the local limits of any municipality or cantonment board referred to in item (a), as the Central Government may, having regard to the extent of, and scope for, urbanisation of that area and other relevant considerations, specify in this behalf by notification in the Official Gazette;" 6. The Assessee pointed out that Agricultural land in India is outside the purview of the definition of capital asset u/s.2(14)(iii) of the Act. The Assessee took a stand that Agricultural activities were carried out on the property and was therefore Agricultural land. The AO did not dispute the fact that the property is not situate within the jurisdiction of a municipality or a cantonment board and therefore did not fall within the exclusion clause (a) mentioned above or that it was within 8 kms from the local limits of any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he land at Agarsure with a view to use it for agricultural purposes. In light of the aforementioned facts and circumstances of the case taken together with the decision of the Hon'ble Supreme Court in the case of Sarif Abibi Ibrahim 204 ITR 631 (SC) (1993), the land at Agarsure is treated as non-agricultural. Consequently, the same is brought to tax as long - term capital gains. The Long Term Capital Gains is worked out as under:" Sale Consideration (F.Y.2012-13) Rs. 2,00,00,000 Less: Cost of acquisition (F.Y.1996-97) Rs. 659286 Indexed cost of acquisition 659286 X 852 Rs. 18,41,678 305 Long Term Capital Gains Rs. 1,81,58,332 8. On appeal by the Assessee, the CIT(A) concurred with the view of the AO. Hence this appeal by the Assessee before the Tribunal. 9. The learned counsel for Assessee took us through the reasons assigned by the AO for coming to a conclusion that the property is not Agricultural land. He submitted that none of the factors pointed out by the AO in the order of assessment are sufficient to come to a conclusion that the property is not Agricultural land. He firstly pointed out that the classificatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 lands have been divided into plots for sale would not mean that the lands sold by the assessees were for the purpose of development of plots. Also the reasoning given by the Tribunal "No agriculturists would have purchased the land sold by the assessee for pursuing any agricultural activity" is based on mere conjectures and surmises. 18. The plea of the learned standing counsel appearing for the Revenue that there was no agricultural operations prior to the date of sale is of no avail as the definition under Section 2(14) of the Income Tax Act has the answer to such a plea raised. Further more, it is also on record that the lands are agricultural lands classified as dry lands, for which kist has been paid. 19. The view of the assessee is fortified by the decision reported in (1937) 32 ITR 466 (Commissioner of Income-tax V. Raja Benoy Kumar Sahas Roy), wherein, it is held as follows: "There was authority f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lusion that that the land in question is an agricultural land. 12. Reliance was also placed on the decision of the Hon'ble Supreme Court in CIT v. Venkateshwara Hospital 106 taxmann.com 263 (SC) wherein a view was taken that merely because adjacent lands were divided into plots for sale, it cannot be concluded that the assessee's land was not in the nature of agricultural land. The classification of the revenue records was held to be sufficient to conclude that the land in question was agricultural land. 13. The ld. DR reiterated the stand of revenue as contained in the orders of revenue authorities. 14. We have given a careful consideration to the rival submissions. There is no dispute in this appeal that the property that was sold by the Assessee did not fall within clauses of Sec.2(14)(iii)(a) or (b) of the Act. The mere fact that a land is situate in an area outside the area referred to in clause (a) or (b) of sec.2(14)(iii) of the Act, does not automatically make it an Agricultural land and such land has to be used for agricultural purposes as laid down in several judicial pronouncements. The Hon'ble Supreme Court in Sarifabibi Mohmed Ibrahim vs. CIT 204 ITR 631 (SC) laid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .T.R. 628, relied upon strongly by the learned Counsel for the appellant, reviewed the several earlier decisions of the Gujarat High Court as well as the decision of this Court in Begumpet Palace and has evolved the following 13 factors/indicators applying which the question has to be answered. The 13 factors are the following :- (1) Whether the land was classified in the revenue records as agricultural and whether it was subject to the payment of land revenue? (2) Whether the land was actually or ordinarily used for agricultural purposes at or about the relevant time? (3) Whether such user of the land was for a long period or whether it was of a temporary character or by way of a stop-gap arrangement? (4) Whether the income derived from the agricultural operations carried on in the land bore any rational proportion to the investment made in purchasing the land? (5) Whether, the permission under Section 65 of the Bombay Land Revenue Code was obtained for the non-agricultural use of the land? If so, when and by whom (the vendor or the vendee)? Whether such permission was in respect of the whole or a portion of the land? If the permission was in respect of a portion of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... executed in October 1968. In this assessment proceedings the assessee claimed that the surplus income arising from the sale of land was exempt from tax inasmuch as it was agricultural land at the time of its sale. The matter reached the High Court. The Division Bench referred to several facts established from the record. Some of them supported the assessee's stand while some others militated against his contention. The facts found in favour of the assessee were: (1) at the time of its purchase by the assessee, the Ajni land was agricultural land; (2) it had been under cultivation by the assessee till the date of its sale, (3) it continued to be assessed to land revenue as agricultural land until it was sold, (4) the intention of the assessee, when he purchased it, was to acquire agricultural land for agricultural purposes, (5) the assessee's use of it was the normal use by an agriculturist, (6) it was nor within any Town Planning Scheme, and (7) no materials has been produced to show any development or building activity surrounding it. The facts which militated against the assessee's stand were three in number - namely: (1) the location or the Ajni land within the Corp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow they were dealt utilized. The Revenue also contends that the burden of proof that the property was agricultural land at the time of transfer to claim exemption was on the Assessee. As already observed, the question whether the land was Agricultural land has to be decided on facts of each case and decided cases are only guidelines to be kept in mind. Facts and all the circumstances are to be considered as a whole and an overall view is to be taken in deciding whether the land was an agricultural land. In a given case, large number of circumstances may be indicative of agricultural character, but one circumstance may outweigh all of them and on its basis the land would be held to be a non-agricultural land. 17. We will now apply the tests laid down by the Hon'ble Gujarat High Court in the case of Sarifabibi Mohammed Ibrahim (supra) which was approved by the Hon'ble Supreme Court, to the facts and circumstances of the case:- 18. Factors in favour of the Assessee: (i) The land in question is entered as agricultural land in revenue records and is assessed as such. (ii) The land is not converted to non-agricultural user. (iii) The Assessee as well as the purchaser are Agricult ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
