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TMI Blog2023 (5) TMI 692X X X X Extracts X X X X X X X X Extracts X X X X ..... AO to delete additions made towards computation of capital gains on sale of land. Appeal filed by the assessee is allowed. - ITA No.: 3004/Chny/2018 - - - Dated:- 10-5-2023 - Shri Mahavir Singh, Hon ble Vice President And Shri Manjunatha. G, Hon ble Accountant Member For the Appellant : Shri. R. Viajayaraghavan, Advocate For the Respondent : Shri. P. Sajit Kumar, JCIT ORDER PER MANJUNATHA. G, ACCOUNTANT MEMBER: This appeal filed by the assessee is directed against the order passed by the learned Commissioner of Income Tax (Appeals)-7, Chennai, dated 30.08.2018 and pertains to assessment year 2015-16. 2. The assessee has raised the following grounds of appeal: 1. The order of the Commissioner of Income Tax (Appeals) is contrary to law, facts and in the circumstances of the case. 2. The CIT (Appeals) erred in holding the lands in question were not agricultural lands and thereby confirming the addition of long term capital. 3. The CIT(Appeals) erred in not properly appreciating the evidence showing that the lands sold are agricultural lands. 4. The CIT (Appeals), without considering the reply to the remand report filed by the Appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 40/ 14 dated 21.03.2014 issued by Village Officer, Village Office , Manarcadu village. 11. The Commissioner of Income Tax (Appeals) ought to have appreciated that what is required is the classification of the land as agricultural purpose land in the Government records and as long as the land has been cultivated in any of the earlier years, then the land has to be treated as agricultural land. 12. The CIT (Appeals) ought to have appreciated that once the land 15 classified as agricultural land, it would continue to be an agricultural land, as long as the appellant does not change the use or put the land for some other purpose. 13. The CIT(Appeals) ought to have appreciated that the purchase deed clearly mentions that the assessee bought agricultural land with coconut trees, mango trees, banana trees and rubber trees. The classification of land was not changed at any point of time subsequently till the sale. 14. The CIT(Appeals) ought to have appreciated that the appellant has sold the land as mutated by him upon purchase without any modification. It was agricultural land as certified by the VO that was sold by the Assessee as is where condition. 15. The CIT( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purpose by the assessee till it was sold, has to be treated as agricultural land, even though no agricultural income was shown by the assessee from this land, and therefore, no capital gain was taxable on the sale of the said land. 22. The Appellant craves leave to adduce additional grounds at the time of hearing. 3. The brief facts of the case are that, the assessee has filed his return of income for the assessment year 2015-16 on 26.08.2015, admitting an income of Rs. 4,17,310/-. The case was selected for scrutiny and during the course of assessment proceedings, it was noticed that the assessee has sold a vacant land measuring 5 acres 41 cents to M/s. Rubber Board Employees Co-operative Housing Society for a total consideration of Rs. 6,81,66,000/-. The assessee has originally purchased said land on 14.07.2006. The assessee has computed nill capital gains on sale of land by stating that land sold during the year is an agricultural land which is outside the scope of capital asset as defined u/s. 2(14) of the Income-tax Act, 1961 (hereinafter referred to as the Act ). The Assessing Officer, called upon the assessee to file necessary details including relevant deeds fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed land is indeed agricultural land. Therefore, rejected arguments of the assessee and sustained additions made towards computation of capital gain on sale of land. The relevant findings of the ld. CIT(A) are as under: 7.1 I find that heavy reliance has been placed on the Hon'ble ITAT, Cochin Bench order in the cases of (1) Shri M.J.Thomas vs Deputy Commissioner of Income-tax, Ernakulam (A.Y.2007 08), (2) Shri George Thomas vs Deputy Commissioner of Income-tax, Kochi (A.Y.2007-08), (3) Assistant Commissioner of Income-tax, Kochi vs John A Poonkody (A. Y.2008-09) (4) Deputy Commissioner of Income-tax, Circle 2, Ernakulam vs Anita Zacharias, all of which were disposed off by a consolidated order dated 06.06.2014. The relevant extracts of the case are reproduced for ready reference-: 29. Therefore, as observed earlier, what is required is the connection between the land and the agricultural purpose and if the land is cultivated in any of the earlier years, this Tribunal is of the considered opinion that the land has to be treated as agricultural land. The material evidence produced by the assessees are- () the certified issued by the Village Officer; (i) certified issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... official letterhead. Even the official seal is barely legible. Certificate copy purported to be from the Additional Tahsildar, Kottayam, dated 20.09.2016 stating the type of land viz. dry land or wet land. There is no mention of the same being agricultural land. Reference is also made to the Remand Report dated 03.07.2018 of the Assessing Officer, the Income-tax Officer, Non Corporate Ward 7(2), Chennai, reproduced in para 5 supra. The relevant portion of the said report Whether the land was classified in the revenue records as agricultural and 1) whether it was subject to the payment of land revenue? Ans: From the details furnished before the CIT(A)-7, it could be seen that the payments were made to Kerala Agicultural workers welfare fund board, Trissur. In the receipt, no where it is shown as this is paid for the land revenue or land tax. The receipts produced before the undersigned were in Malayalam and could not be construed by the undersigned whether It is for the land tax or land revenue purpose. In the Revenue record also, the land portion sold were marked as Purayidam (housing) only. 2) Whether the land was classified or ordinarily used for agricultur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e nature of land when it was sold. But, what is important to see is when the land was sold whether it was an agricultural land or not. In this case, evidences filed by the assessee clearly shows that the land was agricultural land when it was sold. Therefore, the Ld. Counsel for the assessee, submitted the ld. CIT(A) is incorrect in holding that the assessee could not file necessary evidences to prove the nature of land. In this regard, he relied upon the decision of Hon'ble Madras High Court in the case of Sakunthala Vedchalam vs Vanitha Manickavasagam [2014] 369 ITR 0558 (Mad). The assessee had also relied upon the decision of ITAT Cochin Bench in the case of M.J. Thomas vs DCIT in ITA No. 224/Coch/2011 dated 06.06.2014. 6. The ld. Senior AR, P. Sajit Kumar, JCIT, submitted that the land has been classified as dry land as per government records. The assessee could not file any evidences to prove that the land was used for agricultural operations in the past. The land is connected by good roads and situated in a developed area. The land has been sold for non-agricultural purposes. The assessee has got huge price which is not commensurate with purchase of agricultural land ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capital asset, the distance of land, nature of land and the place where said land is situated needs to be examined. In the present case, the Assessing Officer never disputed the distance of land from the nearest municipality and the population of said municipality, but the dispute is only with regard to the nature of land. According to the Assessing Officer, land sold by the assessee is not an agricultural land. We do not subscribe to the reasons given by the Assessing Officer for the simple reason that as per revenue records, the land sold by the assessee is situated at Manarcadu Village, Kerala, is an agricultural land and used for agricultural operations. Certificate issued by the Additional Tahsildar and Village Officer at Manarcad Village and copy of receipt issued by the Kerala Government evidencing payment of basic land tax contribution towards Agricultural Workers Welfare Fund Board also clearly shows that said land was agricultural land. Further, as per revenue records, the land has been classified as Puraiyidam land in the revenue records. The word Puraiyidam means a dry land. In some survey numbers, the land has been classified as Nilam land, and Nilam means wet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quent use of land by the purchaser has no connection to decide the nature of land, whether it is an agricultural land. As long as land was agricultural land when it was sold, the assessee can rightly claim the benefit of exemption of capital tax. 9. At this stage, it is necessary to consider various case laws relied upon by the assessee. The assessee has relied upon the decision of Hon'ble Madras High Court in the case of Sakunthala Vedchalam vs Vanitha Manickavasagam [2014] 369 ITR 0558 (Mad), where it was held that assessee cannot be denied exemption from capital gains tax once it has been accepted by revenue authorities, that the land classified as per the revenue records was agricultural land and it satisfies other conditions of section 2(14) of the Act in this regard. The assessee had also relied upon the decision of Hon'ble Madras High Court in the case of CWT vs S.S. Sangaralingam 162 CTR 400, where it was held that revenue records showed land to be agricultural in nature till it was sold and merely because agricultural operations were not done just prior to the sale, it was not be sufficient enough reason to treat the land as non-agricultural. The Hon ble High Co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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