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TMI Blog2023 (1) TMI 968X X X X Extracts X X X X X X X X Extracts X X X X ..... sponded by filing a return on 02/7/2018 declaring income at Rs. 33,420, which was other than by way of capital gain. The non-returning of capital gain on the said sale was on the basis of the subject land, though a capital asset under the Act, being an agricultural land, gain arising on the transfer of which is exempt u/s. 54B on the investment of the sale proceeds arising thus on the purchase of another agricultural land. The subject land was confirmed by the Assessing Officer (AO) with the Jabalpur Municipal Corporation (JMC) to be falling within the municipal limits of JMC. The land had been described in sale deed (copy on record) as follows: "------ जमीन असिंचित एक फसली कृषि उपयोग की है। इस भूमि पर वृक्ष, कुऑ आदि नहीं है। विक्रेता क्रेता आदि ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evant part reads as under:- 'पटवारी द्वारा प्रतिवेदन पेंश किया गया जो कि, प्रकरण में संलग्न है। प्रकरण का अवलोकन किया गया। जिसमें पाया गया कि, रजिस्ट्री में जमीन असिंचित एक फसली कृषि उपयोग का उल्लेख किया है, जो गन्ने की फसल बोने एव& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 2. Any other ground as may be adduced at the time of hearing.' 3. Before us, the matter was argued at length. Like submissions, i.e., as before the Revenue authorities, were made before us. While Sh. Kumar, the ld. Sr. DR, relied on the assessment order, the assessee would on the impugned order. The assessee was in the course of hearing required to produce P-II (Khasara Nakals) of the subject land fy 2011-12 onwards, which accordingly were, i.e., from fy 2011- 12 to 2022-23, which are placed on record. The same exhibit a status quo, i.e., of no crop/s recorded as cultivated therein for the said 12 years. 4. We have heard the parties, and perused the material on record, giving our careful consideration to the matter. 4.1 Section 54B of the Act, exemption under which is under dispute in the instant case, reads as under: Capital gain on transfer of land used for agricultural purposes not to be charged in certain cases. 54B. (1) Subject to the provisions of sub-section (2), where the capital gain arises from the transfer of a capital asset being land which, in the two years immediately preceding the date on which the transfer took place, was being used by the assessee bei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b-section (1), then,- (i) the amount not so utilised shall be charged under section 45 as the income of the previous year in which the period of two years from the date of the transfer of the original asset expires; and (ii) the assessee shall be entitled to withdraw such amount in accordance with the scheme aforesaid. 4.2 We may begin by delineating the case of either side before us. The Revenue's case was based principally on the revenue record qua the subject land inasmuch as the same, based on spot inspections by the area Patwari, i.e., at the relevant time, is a contemporaneous record, which cannot be regarded lightly, much less altered. This is particularly so in the instant case where the subject land is classified as 'Padti' (barren land). In fact, the charge of it being false and not representing the correct state of affairs, is a very serious charge against the concerned person, the area Patwari, a public servant, which would warrant enquiry and, besides, attract action against the concerned person/s. No change/s in the revenue record followed the order by the SDM, so that legal effect thereto had not been given, and was thus to no avail. The assessee's case, on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cultural land has been, for some reason, not been put to any agricultural use in the recent past, which would oust the claim u/s. 54B. It may, however, having not been subject to conversion, continue to be reflected in the revenue records as an 'agricultural land'. In our clear view, much less the rigor of sec. 54B, the subject land does not satisfy even the broader condition of being an agricultural land. Reference, even as law in the matter is well-settled and, besides, uniform across different Hon'ble High Courts, with in fact case law legion, be made to the decision in Sarifabibi Mohmed Ibrahim & Ors. vs. CIT [1993] 204 ITR 631 (SC), also adverted to by the SDM in his order. We extract the relevant part of the said judgment, deemed relevant both from the standpoint of the law laid down as well as the manner in which the facts of a case are to be regarded, as follows, for a careful consideration: The law Whether a piece of land is agricultural land or not is essentially a question of fact. Several tests have been evolved in decisions of the Supreme Court and the High Courts, but all of them are more in the nature of guidelines. The question has to be answered in each case, hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on The Hon'ble Apex Court, affirming the decision of the High Court, held that the entering into the agreement to sell the land for housing purposes, the applying for and obtaining permission to sell the land for non-agricultural purposes, and its sale soon thereafter and the fact that the land was not cultivated for a period of four years prior to its sale, coupled with its location and the price at which it was sold outweighed the circumstances appearing in favour of the appellants' case and established that the land was not agricultural land when it was sold. The appellants had no intention to bring it under cultivation at any time after 1965-66 and certainly not after they entered into the agreement to sell the land to the housing co-operative society. The High Court was right in holding that the land was not agricultural land at the time of its sale and the profit arising from its sale was liable to capital gains tax (see p. 643 - F). Now, sure, a land hitherto subject to agricultural operations, may, to exploit it's commercial potential, be sold to a builder or a housing society. A contract of sale, as any other, presupposes and arises only on the meeting of minds, so that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hing to show of land revenue being paid in it's respect. Why, as afore-noted, the land had been agreed to be sold a good 19 months prior to it's sale. No doubt, the assessee has furnished bills and vouchers of expenses and receipt (of sale of agricultural produce) before the ld. CIT(A) and, as claimed, before the AO as well. There is, firstly, no material toward the same brought on record of the Tribunal, even as the assessee was specifically, vide order-sheet entry dated 29/9/2022, called upon to place on record any material he wishes to place reliance on. That apart, equally importantly, the assessee, stated to be an agriculturist, admittedly owns 43.35 acres (17.54 hectares) of agricultural land (refer para 3(1) of the impugned order), of which only 1.61 acres (0.65 hectare) stands sold by him. How could it be then said, on the basis of production of vouchers of expense and receipt, as to which land (part of the total land) was subject to agricultural activity? There is no finding by the ld. CIT(A) of the mandi receipts being in respect of sale of sugarcane, which was the crop sought to be entered into by the assessee in it's revenue record qua the subject land vide his applicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd conversion could be a reason for the delay, i.e., where it actually obtains, which is an administrative act, albeit time consuming and, further, considering the fact that the land actually falls within the local limits of JMC, a mere formality. c). We next consider the assessee's main plank of the Patwari's report dated 11/9/2018, since upheld by the SDM, Jabalpur, 'quashing' the order of the Tehsildar dated 27/9/2018, so that the same obtains no longer. We may though clarify that the matter being principally factual, with the revenue record being one of the evidences, the same cannot be regarded as conclusive and shall have to be necessarily considered along with and in conjunction with the surrounding and other obtaining facts and circumstances (also refer para 4.4). As afore-noted, the land, despite being an agricultural land as per the revenue records, was yet regarded as non-agricultural in Sarifabibi Mohmed Ibrahim & Ors. (supra). The Patwari's report is admittedly based on an inspection made by him on 11/9/2018, i.e., years after the sale and, further, based on enquiries with the Chohaddi farmers. There is however no evidence thereof. Neither their names nor land number ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of such incorrect record keeping, which would in that case obtain for other lands in the area as well, has been brought to notice. We say so as it cannot be that the assigned official was not doing his work or not performing his duty only in relation to the assessee's land, while performing his duty qua other lands; it being not a case of a mistaken identity, as where the entry/s of one land number is by mistake posted in another, in which case, as also afore-stated, a corresponding mistake for some other land, would obtain. Further still, even assuming so, again, as afore-noted, there would be a prescribed manner to be adopted for correction. Who, for instance, was the person charged with the duty of making the said inspection and causing entries in the revenue record, and who, as a first step, would require being examined and questioned in the matter? His name, as indeed of the persons in the hierarchy i.e., supervising his work, are conspicuous by their absence. That is, there is nothing to exhibit this fact on record. For all we know, the same person who reports on 11/9/2018, was on duty for the relevant period, again putting a question mark on the report. All this makes the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... secure a 'better' price therefor by it getting tainted as a disputed land. This also explains absence of any entry in the revenue record qua agricultural produce or crops cultivated. All this unmistakenly point to the land being an urban land, being in fact transacted at the price of an urban, vancant, nonagricultural land; in fact, for years prior to it's sale, itself fructifying 1½ years after being agreed to. The complaint, rather than assisting, defeats the assessee's case. 4.6 Whichever way one may therefore look at it, the subject land, a capital asset, had never been used for agricultural purposes, except, perhaps, sometime in the distant past, of which, again, there is nothing on record to suggest, even as it is not relevant inasmuch as the time of such user prior to the transfer stands clearly defined by law. It would, given its nature, not even fetch the price applicable to an agricultural land. And, further, stands sold as an, urban, vacant piece of land, with, rather, no agriculture potential, which normally a piece of land, unless the soil quality is very poor, has. That is, was not an agricultural land in the recent past nor sold as such. The matter, as contin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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