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TMI Blog2023 (5) TMI 1270X X X X Extracts X X X X X X X X Extracts X X X X ..... ircle-3, Thane in the case of one of the co-owner, that the impugned land was agricultural land despite referring to the actual verification (spot visit ) of the land by the Inspector of the DDIT which also included the photograph of the land showing that the land was barren where no agricultural activity has taken place at any point of time. 3. Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in granting above relief to the assessee without appreciating the fact that the land under consideration is situated on hilly area devoid of any irrigation facilities and where no agricultural operation is possible. 4. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in granting above relief to the assessee without appreciating the fact that the status of the land under consideration has always been padd since beginning which means no agricultural activities have been carried out on the said land 5. The order of the CIT(A) may be vacated and that of the Assessing Officer may be restored. 6. The assessee craves leave to add, amend, alter or delete any ground of appeal." 2. Briefly state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to 2007 sold the same to Mayank Land Pvt. Ltd. and Laxman Vaidya on 22.04.2010 and 25.10.2010 (during the year under assessment) for Rs.5,39,67,045/- and Rs.14,00,000/- respectively. 8. It is also not in dispute that the assessee has claimed the land in question to be an agricultural land being not situated within the specified area as per section 2(40) of the Act, hence not a capital asset. It is also not in dispute that in A.Y. 2010-11 only assessee has shown agricultural income of the land in question to the tune of Rs.60,000/- and prior to it, it was shown as barren (padd-jamin in hill area) land. It is also not in dispute that the assessee filed return of income for the year under consideration claiming agricultural income of Rs.60,000/- only after sale of land vide sale deed dated 22.04.2010. 9. In the backdrop of the aforesaid facts and circumstances of the case the sole question arises for determination in this case is: "As to whether the land in question sold by the assessee for a total consideration of Rs.5,53,67,045/- (5,39,67,045/ + Rs.14,00,000-) during the year under consideration was an agricultural land and does not fall within the ambit of "capita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red aerially,- (I) not being more than two kilometres, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than ten thousand hut not exceeding one lakh; or (II) not being more than six kilometres, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than one lakh but not exceeding ten lakh; or (Ill) not being more than eight kilometres, from the local limits of any municipality or cantonment board referred to in item ( a) and which has a population of more than ten lakh. Explanation. For the purposes of this sub-clause, ''population" means the population according to the last preceding census of which the relevant figures have been published before the first day of the previous year;]" 13. In order to treat any piece of land as an agricultural land, the assessee needs to satisfy the conditions laid down under section 2(14)(iii) of the Act inter alia; that the land must be agricultural land; that it must be situated in an area which is comprised within the jurisdiction of municipalities having populatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oes not contain any recital if Shri Laxman Dattaram Bhoir, has ever cultivated the land, nor it mentioned in the nokamama as to from which crop season he has started cultivating the land and what would be the terms and conditions of making such cultivation 18. It is also one of the contentions of the Assessee that he has received Rs.60,000/- from Shri Laxman Dattaram Bhoir for three years @ Rs.20,000/- per year as rent for cultivating the land. But it is very surprising as to how the receipt relied upon by the assessee available at page 550 & 556 of the paper book can be treated as rent receipt for cultivating the land. Nokamama as well as receipts for receiving Rs.60,000/- by the assessee from Shri Laxman Dattaram Bhoir are vague, ambiguous and undated documents which do not convey if Shri Laxman Dattaram Bhoir has ever cultivated the land in question as a tenant of the assessee. 19. Moreover, it is admitted fact that the assessee has purchased this land and it was under his possession from 1988 to 2007 and has never claimed any agricultural income from the same but all of a sudden in 2010-11, that too after sale of land claimed Rs.60,000/- as agricultural income. Proposition mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... him qua the year under consideration, in the light of the survey report i.e. 7/12 extracts of the land in question, substantive portion of the land in question is recorded as barren. Survey report is prepared by the Revenue Department after every six months on the basis of physical verification by the revenue officials, to which presumption of truth is attached unless rebutted. The assessee has failed to rebut the presumption attached to the survey report 7/12 with the support of nokamama and income tax returns showing agricultural income. Rather survey report is further got corroborated with the physical verification made by inspector of Income Tax finding the land in question as a barren land having no irrigation facilities. 23. .The contentions raised by the Ld. A.R. for the assessee that "just because land is shown as barren, it cannot be said that agricultural land had become non agricultural in nature" is misconceived for the reasons given in the preceding paras that agriculture record is prepared on the basis of physical verification by the Revenue Authorities and which got July corroborated from the physical verification report prepared by inspector of Income Tax. 24. No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f that case, the lands were held to be agricultural lands, What we are concerned with is the proposition which was set out by the Division Bench after reference to the several cases. Th Division Bensch has made the following observations: "In a given case agricultural land may or may not yield agricultural income. It there is land which was once cultivated or put to agricultural use but it now fallow of barren, it would not merely by reason of such fact cease to be agricultural land. Conversely what is patently non-agricultural land may in extraordinary circumstances he use for a purpose to which agricultural land is usually put and may, therefore, yield agricultural income. However, merely by reason of the yield it cannot be designated as agricultural land". 16. In the same decision it was pointed out by the Division Bench that: " ... where the land is being assessed as agricultural land, then, normally, although it is not being put to actual agricultural use, it may he presumed that it contains to be agricultural land, unless it can be shown that it has been in fact put to some non-agricultural use, or there is some for any other non-agricultural purpose except with the permis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed. Order pronounced in the open court on _ _ . _ _.2022. ORDER PER SHAMIM YAHAYA (AM) :- I have gone through the order of my learned brother and have given a very thoughtful consideration. Despite great effort I have not been able to persuade myself to agree to the conclusion drawn in the said order. 2. I note that this is an appeal by the Revenue against the order of learned CIT(A). In the entire order above, the only mention about the order of learned CIT(A) is that "assessee carried the matter before learned CIT(A) by way of filing the appeal who has deleted the addition by allowing the appeal." Learned CIT(A)' order is a very elaborate order and in the said order he has relied upon several orders of Hon'ble Jurisdictional High Court. Learned Counsel of the assessee has also made elaborate submission and relied upon some germane High Court decisions. These applicable Hon'ble Jurisdictional High Court decisions have not even been referred in the above said order. Hence, I am constrained to pass a separate order as under :- The issue raised in this Revenue's appeal is "whether on the facts and in the circumstances of the case and in law, the learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al gazette.'' 4. After noting as above the Assessing Officer observed that now the moot question is whether the land sold by the assessee was agricultural or not. He observed that on perusal of 7/12 extracts of the said land it is seen that the land is shown as barren. After noting that he observed that 'as it is clear from 7/12 extracts that the land is devoid of any irrigation facility'. Thereafter he referred to the Naukarnama produced by the assessee. The Assessing Officer disputed the veracity of Naukarnama by observing that there is no name of farmer to whom land was given for agriculture purpose. That also no details for the person who witnessed the said Naukarnama. That the assessee failed to substantiate in support of any agricultural activity. He noted that the said land has been sold to two different parties. That from inspection of sale agreement and sale deed it is seen that the land in 'non-agricultural'. Hence, holding that the land was non-agricultural in nature. He computed long term capital gain thereon. 5. Upon assessee's appeal learned CIT(A) noted that the land in question have other co-owners namely Pallavi Wesavkar, Trupti Wesavkar and Swati Wesavkar, who a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T 267), ITAT Cochin (Order dated 21.10.2011) * G K Properties Vs. ITO 55 SOT 86, ITAT Hyderabad (order dated 31.08.2012) * Abhijeet Subhash Gaiwad Vs. DCIT 60 TAXMAN.COM, ITAT Pune (order dated 27.05.2015) * Mahaveer Enterprises Vs. Union Of India 220, 244 ITR 789, 143 CTR, 252, High Court of Rajasthan (order dated 30.04.1997) * Hemchand Hirachand Shah Vs. CIT Appeal No. ITR-5 [1979] 8. Thereafter he referred to statement recorded of Shri Ashok Wesavkar on oath under section 131 of the Act dated 9.5.2017. Learned CIT(A) observed that the Assessing Officer has mentioned that the land was classified as agricultural land in the revenue records. However there was no proof of regular payment of land revenue. That the DDIT/DCIT, Circle-3 has mentioned that the land is barren (Pad-Jamin) on hilly area. Learned CIT(A) referred to 7/12 extracts and noted that in the said details the land which can be used for cultivation (lagvadi yogay shetra) and the land which is not cultivable (lagvadi ayogay shetra) was mentioned. He duly referred the land revenue records and also gave the details of the areas which were put under cultivation and the type of agricultural produce from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so duly paid are satisfied. Thereafter learned CIT(A) addressed the proposition that whether the land was actually or ordinarily used for agricultural purposes at or about the relevant time. In this regard he referred to the following case laws :- i. Hon'ble Supreme Court in CWT Vs Officer's-in-charge (court of Wards)(1976)105 ITR 133 order dated 06.08.1976 held that 12. --------"What is really required to be shown is the connection with an agricultural purpose and user and not the mere possibility of user of land, by some possible future owner or possessor, for an agricultural purpose. It is not the mere potentiality, which will only affect its valuation as part of 'asset', but its actual condition and intended user which has to be seen for purposes of exemption from wealth-tax... If there is neither anything in its condition, nor anything in evidence to indicate the intention of its owners or possessors to connect it with an agricultural purpose, the land could not be agricultural land for the purposes of earning an exemption under the Act." Entries in revenue records are, however, good prima facie evidence. The Hon'ble Jurisdictional High Court of Mumba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and accepted by Department. Learned CIT(A) further observed that before the Naukarnama when the assessee was doing agricultural activity himself with the labourers. That there were more expenses than the income and the agricultural produce was used for self consumption by assessee and the labour. He observed that the Assessing Officer's finding that in the Naukarnama there was no name of the farmer is factually wrong. He noted that Naukarnama dated 21.4.2007 clearly mentioned the name of Dattarya Laxman Bhoir a farm labourer who also had agricultural land in the neighboring village and the assessee had given the land to him for tilling and crop sharing. He also noted that as the land size was big and there are other Naukarnam's namely with Shir Chandrashekhar Joshi and with Balu Hiru Taule, who are the agriculturists and holding land in the neighboring areas. He noted that even the DDIT has mentioned in his report that an agreement was entered with Shri Joshi by one of the family member. He noted that it was submitted that mainly the rice were grown on the land in rainy seasons and vegetables after that. That the tenant was also taking care of the trees, which were grown there. R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n with the agricultural purpose and user and not the mere possibility of the user of the land for an agricultural purpose has been explained by various courts on the facts of the case. The crux of the findings is that the land should be used for the purpose of agriculture and if an agricultural operation does not result in generation of surplus that cannot be a ground to say that the land was not used for the agricultural purpose. x. Applying the above principles on the facts of the case, regarding the test whether the land was actually or ordinarily used for agricultural purposes at or about the relevant time, it is seen that the assessee has submitted documentary evidence in the form of land revenue records, the copy of Naukarnama, the return of income and the bank statement to show that the land was used for agricultural purposes. In his statement also he explained that on the land, rice was grown in rainy season and minor millets and vegetables were grown after rainy season depending upon the moisture available in soil and the availability of water from the "Gurcharan Well". There were also numerous trees including those of Jamun and local mangoes. In his statement, Sh Wesavk ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 9.5.2015. in this regard learned CIT(A) referred as under :- "On Page No. 209 the Tehsildar in letter dated 15.03.2010 has certified as under: LAND HOLDING CERTIFICATE FOR AGRICULTURAL LAND This is to certify that M/s. Mayank Land Private Limited situated at Navi Mumbai is owning and enjoying 00-40-00 Ha of agricultural land in (Survey No) Khasara No. 20/18 in Village; Devalamphi, Tehsil (Taluka): Khandwa, Dist: East Nimad, State : Madhya Pradesh. This certificate is issued for the purpose of land registration. Place: Khandwa Date: 15.03.2010 Patwari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to give a certificate that it owns agricultural land and was purchasing agricultural land mainly for the purpose of agricultural and allied activities. Though I agree with the view of the DDIT that agricultural income shown by the assessee was not commensurate with the size of the land but in numerous decisions discussed above, including the latest decision of Bombay High Court in case of Shankar Dalai, it is held that if the land is used for agriculture and the produce is sufficient for self consumption, it should be treated as agricultural land. If an agricultural operation does not result in generation of surplus that cannot be a ground to say that the land was not used for the agricultural purpose. These decisions have to be respectfully followed while deciding a complex issue like this. Probably while giving these decisions, Courts have the background of the farmers committing suicide and the crisis faced by the agrarian community on one hand and the rampant misuse of showing bogus agricultural income on the other hand. It cannot be denied that due to nontaxability of agricultural income there are large number of cases who without doing real agriculture inflate the agricultu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d is a proprietor of M/s. Ashok Wesavkar & Co. The Assessee derives income under the heads business or profession. Capital Gains and Income from other sources. During the year under review the assessee has e-filed his return of income on 24-09-2011 declaring total income of Rs. 54,59,860/- after claiming Rs. l.00.000/- as deduction under chapter Vl-A. Also the assessee had earned Rs. 5,47,52,045/- as Non-Taxable Income being Profit on sale of Agricultural Land. Computation of Income, Audited Balance Sheet and Tax Audit Report. [Pg 1- 21] Assessee had purchased agricultural property at Vengaon on various dates from: Sr. No. Date Seller Survey No. 1. 17.11.1994 Lax man Wadekar Old Survey No. 57, Hissa No. 4 New Survey No. 1/4 2. 5.1.1989 Parsharam Vaidya Old Survey No. 57. HissaNo. 5 New Survey No. 1/5 3. 15.11.1994 Laxman Wadekar Old Survey No. 44, Hissa No. 4 New Survey No. 2/4 4. 30.11.1988 SudhirV Vaid Old Survey No. 44, Hissa No. 5 New Survey No. 2/5 5. 2.7.1991 Bhagwan Vaidya Old Survey No. 44, Hissa No. 9 New Survey No. 2/9 Old Survey No. 44, H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s beyond 8 Km from the local limits of such municipality as specified in this behalf by the Central Government in the Official Gazette 2. The said property was purchased by Assessee from a set of farmers who regularly undertook the agricultural activities on the said land. 3. "Naukarnama' dated 21.04.2007 between Assessee and Mr. Dattamay L. Bhoir, (Pg. No. 249, 253 & 546-556) 4. As per this arrangement, the owners of agricultural land hire local resident farmers, who in turn carry out the farming activities of growing crops and other ancillary activities on the said land. After selling the resultant agricultural produce in the open market and meeting all the incidental expenditure, the residual income accrued to the farmers is then shared between the owners of the land and the farmers. 5. In the Revenue Records, as per 'Extract 7/12' (Refer Paper Book Pg. No. 314-322), the said land is recorded as Agricultural Land. 6. The Assessee has never applied for converting the land to Non-Agricultural Land. 7. Agricultural Cess (Shet Sara) paid is attached herewith as (Pg. 331-333 & English Transaction 559-562). This receipts include a receipt dated 11.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... od or else it looses its fertility. In the instant case rice was grown on the said land for 3 months every year during monsoon and post harvesting the land was kept barren. The stamp duty levied by the Collector of Stamps for the said land was as per the rates applicable to Non-Agricultural land The Ld.AO without applying his mind and relying purely on a presumption, inferred that the stamp duty paid on such transfer of land was as per rates levied on transfer of non-agricultural land. There was no corroborative evidence for such assumption. The Ld. AO failed to acknowledge the fact that the stamp duty was paid on rates leviable to agricultural land. Sale of land to non-agriculturist company. The Ld.AO wrongly inferred the fact that the purchaser of land was to a non-agriculturist without appreciating the fact that an agricultural land can never be sold to a non-agriculturist. The purchaser is an agriculturist and was holding agricultural land in Madhya Pradesh prior to purchase of said land. (Refer Paper Book Pg. No. 312-313) Also as per MOA, object is to purchase and sell agricultural land. (Pg. 375-399) (Pg. 381 Clause 59) Intention of the seller as well as buyer The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der: "It is well established Hint in a given case agricultural land may or may not yield agricultural income. If there is land which was once cultivated or rut t to agricultural use hit t is now fallow or barren, it would not merely by reason of such fact cease to be agricultural land. Conversely what is potently non-agricultural land may in extraordinary circumstances he used for a purpose to which agricultural land is usually put and may, therefore, yield agricultural income. However, merely by reason of the yield, it cannot he designated as agricultural land. Again, when' the land is being assessed as agricultural land, then, normally, although it is not being put to actual agricultural use, it may be presumed that it continues to be agricultural land, unless it can be shown that it has been in fact put to some non-agricultural use, or there is some relevant circumstances to indicate that it cannot be properly regarded as agricultural hind. It is also well settled Hint entries in revenue records are good prime facie evidence with regard to the character of the land and the purpose for which it is intended to be used and the burden is on the revenue to rebut this presumptio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... used for the purpose of agriculture are based on appreciation of evidence and application of correct principles of law. Facts of the case at hand i. The land is shown as agricultural land in revenue records; ii. There is a positive agricultural income shown in the Income-tax return; iii. There is a valid naukarnama executed which proves that agricultural activities were carried on the subject land, iv. The purchaser is an agriculturist company and was holding agricultural land prior to purchase of subject land. v. As per the latest 7/12 extract, the subject land is still an agricultural land that means even after a span of more than 4 years, the character of the land has not changed. Comparison and conclusion On comparing the facts of the case law and our case, it is evident that our case is more stronger as there is a positive agricultural income as well as a valid document - Naukarnama being executed for carrying agricultural activities. Further, the subject land in the case at hand has still not converted into non-agricultural land which is evident from the latest 7/12 extracts which also proves that the usage of the land was always agricultural. Further, the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ricultural purposes at or about the relevant time; c. whether such user of the land was for a long period or whether it was of a temporary character or by way of stop-gap arrangement; d. 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; e. whether the permission under section 65 of the Bombay Land Revenue Code, was obtained for the non-agricultural use of the lands: if so, when and by whom; 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 land and if it was obtained in past, what was the nature of the user of the said portion of the land on the material date; f. whether the land, on the relevant date, had ceased to be put to the agricultural use: if so, whether, it was put to an alternative use; whether, such a cess or and or alternative user was of a permanent or temporary nature; g. whether the land, though entered in revenue record, had never been actually used far agriculture; whether the owner meant or intended to use it for agricultural purposes; h. whether the land was situat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the price offered for the land by the society, even proceeding on the basis that" the intended user of his part was non-agricultural, would not have been offered fry an agriculture who wanted to purchase the land for purely agricultural user. There being no evidence on record as regard the nature of the soil, its fertility, its suitability and adaptability for raising cash crops, the irrigation facility and such or similar factors which had a great bearing on the valuation of an agricultural land, it would be hazardous to come to the conclusion that the price offered was such that no agriculturist would have paid the same if he wanted to purchase the land for purely agricultural purposes. 3. Accordingly, the land was an agricultural land and the surplus realised on a sale thereof was not liable to be assessed to capital gains tax. Facts of the case at hand Sir, all the questions framed by the Hon'ble High Court are factually answered as under a. The land was classified as an agricultural land in the revenue records and was subject to payment of land revenue; b. The land was used for cultivating rice at or about the relevant time; c. The user of land was for a long ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it does not fall either in 2(14)(iiia) or (iiib) 1. It is submitted that the impugned land falls under the jurisdiction of Gram Panchayat of Vengaon. The Sarpanch of Group Gram Panchayat, Vengaon has issued a certificate dated 30.07.2010 (Refer Paper Book Pg. No. 323 & 557-558), whereby it has been categorically noted that land is under jurisdiction of Gram Panchayat and population per census 2011 is 2700. As per the Ministry of Home Affairs, Government of India, the census of the year 2011 is provisional in nature, yet to be finalized and published. Therefore, according to the applicable "last preceding census", being the year 2001, the population of Vengaon was 2,590. (Pg.No. 324) Also, the Road Development Map 2001-2021 of Karjat Taluka - the village of Vengaon is depicted as an area having a population of less than 10,000 according to census of 2001. 2. As mentioned above, the property falls under the jurisdiction of Group Gram Panchayat. It does not fall under the jurisdiction of any municipality which is notified by the Central Government vide Notification No. [SO 9447] dated 06.01.1994 (Refer Paper Book Pg. No. 325-328). 3. Now, the nearest notifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ited supra, we hold that the land in question cannot be treated as capital asset within the meaning of section 2(14)( iii)(b) of the Income-tax Act. Accordingly, Orders of the lower authorities are set aside." III. Order passed by CIT(A) is based on the facts and considering the statements on oath of the assessee. (CIT(A) Pg. 34-36 Para 10) Department has not contradicted the facts recorded by the CIT(A). In view of the above submissions, it is prayed that appeal of the department may be dismissed." 18. Upon careful consideration I note that the case of the Assessing Officer in this case is that though the land has been classified as 'agricultural land' as per the revenue record but there is no proof of payment of land revenue. Further the Assessing Officer observed that there is no mention of crop on land as mentioned in 7/12 extracts. Further the Assessing Officer observed that there is no evidence of agricultural activities, income expenses etc. That a perusal of 7/12 extracts shows that land is shown as barren. That it is devoid of any irrigation facilities. The Assessing Officer also disputed the veracity of Naukarnama. That from the sale agreement it is seen that the lan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0.10 Bhat 20-21/15.4 10 -1/4 0.84 0,56 1.4 Ra. Pad 1-2/15.4 11 -16/4/B 0,06 0.42 0.48 Bhat 24-25/15.4 12 -18/1 0.08 0.23 0.31 Bhat 22-23/15.4 2.62 9.08 11.7 21. From the above learned CIT(A) has given a finding that out of 11.7 hectares of land, land measuring 9.08 hectares was cultivable land and 2.62 hectares was the land which was not capable for cultivation. The land records also show that even some of the cultivable lands were not cultivated during the year which are called 'Rapad' land and the other portion where the cultivation was done 'Bhat' which means rice was grown. In this regard learned CIT(A) noted that vegetables and other minor millets grown on the land is not mentioned in the revenue record in Raigad district. Hence, learned CIT(A) rejected the DDIT's contention that land is barren. He noted that the DDIT has understood the word 'Ra Pad' as barren land whereas the land records have used word 'Lagvadi Yogya Shetra' for the land which is cultivable and 'Porkhrab - Lagvadi Ayogya' for non-cultivable land. This makes it amply clear that land measuring 9.08 hectares was cultivable land and 2.62 hectares was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Purchasers shall have all the ownership rights to use the Said Property." From the statement of Shri Ashok Wesavkar he has stated that there are numerous trees of Jamun, local desi mango, sagwan, bamboo and other trees. Nothing is on record to rebut these findings. 25. As regards the comments of the DDIT that agricultural income is not commensurate to the large area of the land learned CIT(A) has noted that the caretaker and other laborer who were deployed there used to consume the produce and only the surplus was shared. 26. As regards the adverse inference drawn with regard to visit of Inspector noted by the DDIT, learned CIT(A) has noted that the assessee submitted that he was never informed about the inspector's visit. Moreover, the visit took place much after the sale of land sold. Thus all the inference by the learned DDIT stand rebutted. Moreover there is nothing on record to show that the land has been put to non-agricultural use. This is also not the case that permission from the necessary authority has been obtained for nonagricultural purposes. 27. To recapitulate it is undisputed that land does not fall in the area, where it will be disentitled from the category ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is some relevant circumstances to indicate that it cannot be properly regarded as agricultural hind. It is also well settled Hint entries in revenue records are good prime facie evidence with regard to the character of the land and the purpose for which it is intended to be used and the burden is on the revenue to rebut this presumption. That apart, while determining the character or the nature of the hind, it must necessarily he taken into account that the land which is recorded ns agricultural land in the revenue papers cannot be used for non-agricultural purposes by the owner, unless the land is allowed to be converted to non-agricultural purposes by appropriate authorities. In view of the facts and findings recorded by the Tribunal in the instant case, it was obvious that the land was used for agriculture till 1963 and had been so recorded in the revenue records and was also assessed as agricultural land. Again, no evidence had been led on behalf of the revenue to rebut this presumption. Consequently, merely because the land remained fallow after 1963, it did not cease to be agricultural land." 29. Further in the case of CIT v. Smt. Debbie Alemao (2011) 331 ITR 59 (Bom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xxx xxx xxx xxx Per Rajpal Yadav, Vice President As a Third Member:- Order dated 25-01-2023 This appeal was earlier heard by the Mumbai Division 'A' Bench of the Tribunal on 16.03.2022 and since there was a difference of opinion between the Learned Judicial Member and Learned Accountant Member who heard this appeal, therefore, the following question was referred to the Hon'ble President for third member nomination: "Whether on the facts and in the circumstances of the case and in law, the learned CIT(A) erred in deleting the addition of Rs.5,33,16,625/- made on account of Long Term Capital Gains". 2. Since, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 988 to 1995 who regularly undertook the agricultural activity on the said land. (ii) In the land revenue records, as per 'Extract 7/12', the said land was recorded as agricultural land. (iii) The assessee has never applied for converting the land to Non-Agricultural land. (iv) 'Agricultural Cess (Shet Sara) was paid. This receipts include a Receipt dated 11.02.1992 which proves that the appellant was indulged in agricultural activities since then. The latest receipts were of the year 2008. (v) The assessee entered into a Naukarnama (Deed of Employment) dated 21.04.2007 with one Mr. Dattamay L. Bhoir. As per the arrangement, the assessee/owner of the land hired local resident farmers who in turn carried out the farming activities and other ancillary activities on the said land. The profits from the agricultural activity were shared between the assessee and the said farmers. (vi) The farm labourer with whom 'Naukarnama' was executed holds agricultural land in his personal capacity in a nearby village in the same Taluka Raigad. A perusal of 7/12 extract shows that since many years the farm labourer is cultivating rice. Further, it also proves that the farm labourer r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nable because the nature of the land, as per the copies of the sale deed, has never been recorded as 'agricultural land', rather word 'land' is mentioned in the sale deed. (j) That the decision of the Hon'ble Bombay High Court in the case of "Wealth-Tax vs. H.V. Mungale" reported in 1982(1983) 32 CTR Bom 301 by contending that when the land is agricultural land even if not put to actual agricultural use, it may be presumed that it continues to be agricultural land, was not applicable to the facts and circumstances of the case, because when it is a proved fact on record that the major chunk of land was never put to agricultural use, except small fraction of the same, during the last about 10 years from the assessment year under consideration. The proposition mooted out by the assessee that agricultural land even if not put to agricultural use in a particular year will retain its nature as agricultural land, was not applicable. (k) That the ld. CIT(A) wrongly proceeded on the premise that the Land Revenue Department has held land measuring 0.98 acre out of total land of 11.7 acres as fit for cultivation, when this land was never put to use, it cannot be said that it was cultivabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to be shared. (h) That the ld. CIT(A) has further referred to the portion of the sale deed in which it was mentioned that together with all land, compound wall, constructions, trees, plants, hedges, water, watercourse, lights rights, liberties, privileges, easements and appendages whatsoever attached to the said property, which shows that the land was agricultural land. (i) That further Shri Ashok Wesavkar stated that there were numerous trees of jamun, local desi mango, sagwan, bamboo and other trees on the land and there were nothing on record to rebut this statement. (j) That the ld. CIT(A) has noted that as regards the comments of DDIT that agricultural income was not commensurate to the large area of the land, the caretaker and other labourer who were deployed there, used to consume the produce and only the surplus was shared. (k) That the Ld. CIT(A) has noted that the Inspector made the physical verification much after the sale of land and the assessee was never informed about the visit. Moreover there was nothing on record to show that the land has been put to non-agricultural use. (m) That the facts of the case was duly covered by the decision of the Hon'ble Bom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 land and if it was obtained in the past, what was the nature of the user of the said portion of the land on the material date? 6) Whether the land, on the relevant date, had ceased to be put to agricultural use? If so, whether it was put to an alternative use? Whether such cesser and/or alternative user was of a permanent or temporary nature? 7) Whether the land, though entered in revenue records, had never been actually used for agriculture, that is, it had never been ploughed or tilled? Whether the owner meant or intended to use it for agricultural purposes? 8) Whether the land was situated in a developed area? Whether its physical characteristics, surrounding situation and use of the lands in the adjoining area were such as would indicate that the land was agricultural? 9) W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as asked the farmers to sell the excess produced in the market and cash generated to the same is duly handed over to assessee. Therefore the assessee had shown as agriculture income in the F.Y. 2009-10. Further the assessee had paid an agriculture cess to revenue authority from 1988 to 2007 (Pg. 331-333) which proves that the assessee cultivated the agriculture crops on said land, so it cannot be said that the land is barren land. ii) The assessee has shown agricultural income to the tune of Rs. 60,000/- in AY 2010-11 only. The return of income for AY 2010-11 was filed only after sale of land vide sale deed dated 22.04.2010 which clearly demonstrates that it was merely an afterthought. As reiterated hereinbefore assessee earned a surplus' income' of Rs.60,000/- in F.Y. 2009-10 and the plot of land is sold out in F.Y. 2010-11 so it is merely a co-incidence and cannot be considered as an afterthought. iii) The Department has conducted physical verification twice by sending inspector to the said land. It has been found and submitted by the Inspector that, "no agricultural activity has taken place, at any point of time in the land in question." The land in question is situated in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also states that no irrigation facilities were there on the land but failed to appreciate the fact that the farmers were dependent on monsoon for irrigation. iv) There was nothing brought on record to state that Mr Laxman Bhoir has never cultivated the land and it is just a presumption/surmise. The Ld. DR had alleged that the} assessee as received Rs. 60,000 /- in one go on 29.03.2010 is highly unusual, unlikely, far-fetched and against the principles of probability. The said presumption is totally erroneous as the e wanted to settle the account with tiller's so that they can execute the sale of land. That is the reason the assessee received the amount on 29.03.2010. v) The 7/12 extracts shows that the land is barren and devoid of any irrigation. This is equally a critical piece of evidence which repudiates the claim of the assessee. 7/12 Extract - Reflection of crop cultivated on the land In this report it is stated that the land In 7/12 extract is shown as barren (Pad Jamin: in Marathi). In this regards, we wish to submit that the impugned land is a very big land and there are several 7/12 extracts. In some "Ra. Pad" is mentioned and in some "Su-Bhat" meaning rice is m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tural land ii) It must be situated in an area which is comprised within the jurisdiction of a municipality and which has a population of less than 10,000 (as per last census) iii) It must be situated in an area which is beyond 8 km from the local limits of such municipality as specified in this behalf by the Central Government in the Official Gazette. 14. There is no doubt regarding other conditions as mentioned u/s 2(14)(iii) of the Act that the land is situated in a municipality area which has population of less than 10,000 or it is situated in a area beyond 8 kilometre of local limits of municipality. The only issue in dispute is as to whether the land in question satisfies the condition of being agricultural land or not? 15. At this stage, it will be relevant to reproduce here the relevant land status records as per land revenue records i.e. 7/12 extract : Sr. No. Survey No. (Pot Kharab Lagvadi Ayogya) (Lagvadi Yogya Shetra) Total Area Comments Document From 2003-04 to 2010-11 1 -2/5 0 0.1 0.1 Ra. Pad 8-9/15.4 2 -2/9 0.05 0.65 0 .7 Ra. Pad 10-11/15.4 3 -2/10 0.13 1.00 1.13 Ra. Pad 13-14/15.4 4 -5/3 1.10 3.22 4.32 Ra. Pad 16-17/15. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, itself, in my view, does not change the nature of the land especially when there is no actual or intended use for some non-agricultural purpose. It has also not established that such non-cultivation or non-user of the land for certain period, was a permanent character. In my view, merely because of certain reason, whatever it may be, if an assessee cannot cultivate the land or incapacitated to do so, that will not change the nature of the land from agricultural to non-agricultural especially when there is no change of user of the land. 8) The land is not situated in a developed area. The physical characteristics surrender situations and use of the land in adjoining area as held by the CIT(A), indicate that the land was an agricultural land. 9) The land has not been developed by plotting an providing roads and other facilities. 10) There was no previous sale of land for non-agricultural use. 11) There was no permission obtained u/s 63 of Bombay Tenancy and Agricultural Land Act for intended sale in favour of a non-agriculturist. The land has not been sold on yardage or on acreage basis. 12) The price of the land sold does not show that it was shown at a high price ..... X X X X Extracts X X X X X X X X Extracts X X X X
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