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TMI Blog2021 (5) TMI 320X X X X Extracts X X X X X X X X Extracts X X X X ..... was cultivating the land up to the date of sale. He has not obtained any permission to make use of land for non-agriculture purpose. There is no any non-agriculture activities carried out upon the same land till the date of sale. The Assessing Officer has accepted the fact of selling of rural agricultural land by the assessee vide his order at Para no. 2. The CIT(A) has also accepted the said fact. Thus, it is undisputed fact that assessee has sold agricultural land on which he was carrying out agricultural activities prior to its sales. Thus , we note that assessee is an agriculturist and has been carrying out agricultural operation on the land for many years. In the Revenue records the said land is an agricultural land. Certificate of Hon ble Dy. Collector, Kamrej Circle, Kamrej Dist., Surat clearly explains that till the date of sale the assessee`s land was an agricultural land and said land was being used for agricultural purposes. Thus, it is abundantly clear that till the date of sale, the land was an agricultural land. Besides, the population of village Navagam is less than 10,000, at that point of time, therefore, one of the conditions of section 2(14) has failed an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exclusively used for agriculture purpose prior to its sale. 2. Ld. CIT(A) has erred in law and on facts to upheld AO s disallowance u/s 54B for ₹ 1,73,48,462/- overlooking the fact that the assessee has made actual investment for purchase of another agricultural land which are supported by evidences and there is nothing contrary with the AO/CIT(A) to disbelieve assessee s investment in agriculture land. 4. Facts of the case which can be stated quite shortly are as follows: The assessee, before us, is an individual and he filed his return of income for Assessment Year 2012-13 on 03.03.2014 declaring total income at NIL and agriculture income to the tune of ₹ 1,50,920/- which was processed under section 143(1) of the Income Tax Act. Thereafter, the assessee`s case was selected for scrutiny through CASS and notice u/s 143(2) of the Income Tax Act was issued on 11.09.2014 and served upon the assessee. During the course of assessment proceedings it was noticed by the assessing officer that the assessee has sold an agricultural land during the year under consideration for sale consideration of ₹ 4,41,00,00/- and claimed deduction under section 54F and under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereby section 50C of the Income Tax Act 1961 is attracted in the case of the assessee. In view of the above findings, the assessing officer has issued a detailed show cause notice to the assessee, vide letter dated 13.03.2015, which is reproduced below: Please refer to this office show cause letter dated 19.2.2015 on the above subject. In this connection, you hereby requested to clarify your claim in the light of the following: Sale consideration of land ₹ 4,41,00,000 as per sale deed and being share ₹ 2,20,50,000 You have shown ₹ 2,18,50,000 being your share. Please explain. Sale consideration as per Stamp Duty Valuation ₹ 6,31,87,500 You have shown less value by ₹ 1,90,87,500. Therefore 50-C is attracted in your case at ₹ 95,43,750/-. (being one half share) You have claim deduction u/s.54F 54B as under: Purchase of land Amount claimed by you Actual amount as per deed furnished by you/obtained from Sub-Registrar by this office. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f sugarcane, bore well and electric motor are there in the said land. On eastern side of the said land, coconut and mango trees are grown. Further it has also been stated that there is neither any construction for residential or industrial purpose are found on the said land. State government has declared different jantri rates for different type of land, stamp duty valuation officer has taken rate of lands being NA Land, however, the assessee has sold agriculture land which is subject to permission u/s 63 of the state civil laws. Under these circumstances, sale proceeds of the land is ₹ 4,41,00,000/- and not ₹ 6,31,87,500/-. Therefore, addition u/s 50C is not warranted under the law. In para 3 of your show cause notice you have tabulated figures of assessee's claim u/s 54B for investment in agriculture land. So far as investment for block 688/701, 690/709, 706/705-708 and 704/709, there is no dispute and such claim is duly accepted. So far as investment in purchase of agriculture land bearing Block No.687/101 at village Karjan, Dist. Surat, the cost of investment is ₹ 88,00,786/- as declared in notary registered Satakhat. Further source of investment is also e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined the stamp duty value for non agricultural land (NA) land, however the assessee has sold agriculture land and therefore the stamp duty valuation may not be considered. Here, it is pertinent to mention that the jantri rates are fixed by the State Government area-wise and not land to land-wise as claimed by the assessee. The jantri rate differs area to area. State Government cannot fix the jantri rates for each land separately and it is a fact generally known and jantri rates cannot be exclusively fixed for any land. Therefore, the claim of the assessee that the determination of value of property by stamp duty valuation officer is for non-agricultural land and not for agriculture land does not make any sense. The Jantri rates are already fixed. The same is not fixed at the time of sale or purchase. Regarding sale of agriculture land to a non-agriculturist, the condition is stipulated that permission u/s 63 of State Civil law is a requirement in such situation. This is common for each and every such sale or purchase transactions. The assessing officer also noted that when the assessee himself is getting the non-agriculture land, then of course he will sell the land as Non- A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 on page 3 of assessment order. On appeal, Ld. CIT(A) is agreed with the views of the AO and held at Para 9.2 page 22 of appellate order, as under: I have carefully considered this argument, but do not find it acceptable as it is against the letter and spirit of section 2(14). Further, this stand is even against the view held the assessee themselves as they have computed and offered Capital Gains for tax. Hence the grounds are hereby dismissed. The ld Counsel pointed out that above decision of ld CIT(A) is not acceptable, because the assessee, right from the beginning, is an agriculturalist, his source of income is only agriculture. He is residing at village Navagam of Dist. Surat, the population of the village Navagam is less than 10000, therefore such land can not be a capital asset. He has sold agricultural land located outside SMC limits, during the year under the appeal. Following evidences are available on record with respect to status of the land being agriculture: No. Evidence Page No. of Paper book 1 Purchase Deed dated 27-06-2000 -48- to -64- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot claim the benefit of exemption being an agricultural land. She also pointed out that when the Act clearly says and language of the Act is unambiguous then whatever mentioned in the Act should be followed. Therefore, the main grievance of ld DR for the Revenue is that when the provisions of section 2(14) of the Act clearly says that if the agricultural land is situated in any area within eight kilometers from the local limits of any municipality, in that situation, the said agricultural land would be capital asset and therefore assessee has to pay capital gain tax. This way, Ld. DR prayed the Bench that order passed by the assessing officer may be upheld and ground raised by the assessee may be dismissed. 13. We have heard both the parties and carefully gone through the submissions put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the facts of the case including the findings of the ld. CIT(A) and other material brought on record. We note that assessee and his mother are the co-owners of agricultural Land R. No 12/1, Block no17/A, village Navagam, Tal: Kamrej. Dist Surat. They entered into notarized agreement to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was framed under section 143(3) r.w.s 147 of the Act dated 11.03.2016 wherein the Assessing Officer has treated the said land as an agricultural land and allowed the claim of the assessee observing as follows: In this case, the return of income for A.Y.2012-13 was filed on 03.03.2014 declaring total income of ₹ 4,910/- and agriculture income of ₹ 1,50,920/-. It has come to light that the assessee has sold the immovable property of ₹ 4,41,00,000/- and with the assessee has 1/2 share of the total consideration. The jantri value of above said property as per form No.1 was ₹ 6,31,00,000/-. Evidently, in the case of the assessee, income to the tune of ₹ 95,43,750/- has escaped assessment on account of total consideration received by the assessee. The A.O., therefore, had reason to believe that income chargeable to tax to the extent of ₹ 95,43,750/- has escaped assessment within the meaning of section 147 of the I.T. Act. Hence, after recording the reason for reopening of the case, a notice u/s 148 of the I.T. Act was issued on 07.03.2015 and served upon the assessee for filing the return for A.Y. 2012-13 in response of the notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also stated that the said amount is required to be added in our total income. In this connection, it is submitted that the share of Mrs. Kankuben Patel in the captioned property is 50%. Therefore, addition even if proposed must be restricted to ₹ 95,43,750/-. In this connection, it is further to state that in state of Gujarat, Agricultural land can only be purchased by agriculturist. In the case before your good self, your assessee is a seller and also an agriculturist. However, buyer of the said land was not an agriculturist. 5. Submissions of the assessee are verified. In view of the above, addition of ₹ 95,43,750/- is made to the total income of the assessee u/s.50C of the Act. Penalty proceedings are initiated for furnishing inaccurate particulars of income. 15. Therefore, we note that late Shri Kankuben Dulahbhai Patel, is one of the coowners of the said land (mother of assessee) wherein the Assessing Officer has allowed the deduction under section 54B of the Act treating the said land as an agricultural land. Therefore, the Department in the case of one of co-owners of the said land, who is having one half share of the total land, has treated the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Assessing Officer has allowed partial deduction u/s 54B of the Act, this proves beyond doubt that assessee has sold agricultural land. Thus, it is undisputed fact that assessee has sold agricultural land on which he was carrying out agricultural activities prior to its sales. On similar facts, the Coordinate Bench in the case of Shri Kesavlal Ratanji Patel (in ITA No.1246/AHD/2010 for AY.2006-07) has dealt the said issue in detail. The finding of the Coordinate Bench is reproduced below: 6. We have heard the rival submissions and perused the material available on record. CIT(A) while deleting the addition has given a finding that the land situated in village Segvi is not within the jurisdiction of Municipality. The assessee s submission is that he is deriving agricultural income from the said land, the status of the land is an agricultural land, the assessee had not applied for use of non-agricultural purposes of the land, the land was never used for nonagricultural purposes and the sale of land was fixed at lump sum price and not on the basis of per sq. yard/metre. The aforesaid facts could not be controverted by the Revenue by bringing any contrary material on record. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral use of the said land. There is no material to show that the assessee had taken any part either in getting the plots sub-divided into sub-plots, or in getting the plans prepared and passed for non-agricultural use. All those steps were taken by the purchaser of the land and not by the assessee. Thus, the Tribunal, after considering all the relevant factors and also the decision of the Supreme Court has held that the land in question is an agricultural land. It is, therefore, not possible to accept the contention raised on behalf of the Revenue that the Tribunal committed an error in holding that the land in question was agricultural land. 7. In view of the aforesaid facts and respectfully following on the decision of Hon ble Gujarat High Court, we find no reason to interfere with the order of CIT(A) which is upheld and thus the appeal of the Revenue is hereby dismissed. 18. We note that on similar facts, the Coordinate Bench of Amritsar, in the case of Pankaj Dutta (in ITA No.104/ASR/2011, for AY.2002-03, held as follows: 8. We have heard the rival contentions and perused the facts of the case. We are convinced with the arguments made by the learned counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s less than 10,000, at that point of time, therefore, one of the conditions of section 2(14) has failed and hence such land is not a Capital Asset, consequently capital gains provisions are not attracted. Therefore, based on the above factual position, we are of the view that assessee has sold an agricultural land which is not a capital asset hence we direct the assessing officer to treat the said land as an agricultural land. 20. Now, we shall take ground no.2 raised by the assessee which relates to disallowance of deduction under section 54B of the Act to the tune of ₹ 1,73,48,462/-. 21. We have already held in para 19 of this order that assessee`s land under consideration should be treated as an agricultural land, therefore, deduction under section 54B should be allowed to the assessee. We note that assessing officer has allowed the deduction under section 54B partly. On appeal, Ld. CIT(A) has partly allowed the appeal of the assessee for deduction under section 54B of the Act, observing as follows: 9.4 Ground No. 2 in case of Suresh D Patel Pertains to disallowance of deduction u/s 54B ₹ 1,73,48,462. It can be seen that Ld AO has made disallowance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he right person. If the assessee has wrongly claimed deduction under section 54F of the Act, that does not mean that agricultural land is becoming capital asset. For this, Learned Counsel relied on the judgment of the Supreme Court in the case of Jute Corporation of India Ltd., 187 ITR 688 (SC). The ld Counsel further contended that if the assessee has claimed right deduction in the computation of income and has shown the particulars of income wrongly in the income tax return that does not mean that the assessee s income would be assessable under the wrong head. It is also duty of the Income Tax Officer (in short the ITO ) to guide the assessee about the true nature of the income which he has failed to do so, in assessee`s case. On the other hand, Ld. DR for the Revenue, opposed the plea taken by the assessee and reiterated the stand taken by the assessing officer. 23. We have heard both the parties on this particular issue relating to deduction under section 54B of the Act. Since the assessee has made payment for purchase of another agricultural land and took possession of land therefore he is entitled to take deduction under section 54B of the Act. Hence considering the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X
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