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TMI Blog2024 (6) TMI 1359X X X X Extracts X X X X X X X X Extracts X X X X ..... o date of sale would not convert the land as agricultural land, as held by the VAJULAL CHUNILAL (HUF) [ 1979 (2) TMI 45 - GUJARAT HIGH COURT] Whether the land sold qualifies as agricultural land within the meaning of Section 2(14) of the Act has not been analysed by the Tax Department. AO has made a reference at page 2 of the assessment order that the land sold by the assessee is situated at the distance of 4 km from Deesa and hence the land should be taxed at Jantri value of Rs.3,73, 32,000/-. Therefore, it is not clear from the facts available on record whether land qualified as an agricultural land within the meaning of Section 2(14) of the Act. Accordingly, in the interest of justice, the issue is being set aside to the file of AO with the view to verify whether the conditions of Section 2(14) of the Act are being met in the instant set of facts. The assessee would be at liberty to produce all supporting documents to show that land is situated as per prescribed limits given under Income Tax Act so as to qualify as agriculture land and also file copies of any notification etc. in respect of this land which support the fact that the land is an agriculture land and is situated as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er sellers had sold immovable property for which they received Rs.1,00,00,000/- in cash. Further, the ITO, Mehsana had intimated that the jantri value of land sold was determined at Rs.3,73,32,000/-. The Assessing Officer was at the view that the said land is a capital asset in the hands of the assessee on which capital gains has not been offered to tax by the assessee during the impugned year under consideration. The assessee had not filed return of income and case of the assessee was reopened under Section 147 of the Act. During the course of assessment proceedings, on scrutiny of materials available, the A.O. observed that the assessee and two co-owners had sold the land for a consideration of Rs.1,00,00,000/-. The agricultural land had been converted into nonagricultural land by the assessee on 15.10.2011 and the Jantri value of the land was Rs.3,73,32,000/- and the share of the assessee was one-third of the said property. During the course of assessment on being requisitioned, the assessee submitted that the assessee is an individual and agriculturalist and is carrying on the activities of land cultivation on the said piece of land for many years. The contention of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subject to report of the Departmental Valuation Officer. On receipt of the report of the Departmental Valuation Officer, the order will accordingly be modified and the sale value of the property will be taken as per the value determined by the Departmental Valuation Officer, and the capital gain will accordingly be reworked. (Addition Rs. 1,23,97,837/-)" 4. The assessee filed appeal before Ld. CIT(Appeals) against the aforesaid assessment order. The Ld. CIT(Appeals) party allowed the appeal of the assessee by restricting the addition on the basis of valuation given by the DVO. While passing the order, CIT made the following observation: "4.1 The ground no.2 is relating to addition of Rs. 1,23,97,840/- which is made invoking the provisions u/s.50C of the act. Following facts are noted: a) The return of income was not filed u/s. 139(1) of the Act. b) The return of income declaring total income as NIL was filed on 15.08.2018 in response to notice dated 23.03.2018 u/s.148 of the Act. c) The appellant is one of the three co-owners of property involved. d) The property is not ancestral. e) The property has been converted into non-agricultural land by the order of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partmental Valuation Officer. In view of this fact, the assessment m finalized subject to report of the Departmental Valuation Officer On receipt of the report of the Departmental Valuation Officer, the order will accordingly be modified and the sale value of the property will be taken as per the value determined by Departmental Valuation Officer, and the capita) gain will accordingly be reworked (Addition Rs. 1,23,97,8371-)" As can be seen above, the appellant did raise objections to stamp valuation during assessment proceedings itself and relied on number of case laws The AO correctly referred the issue to DVO for correct valuation but was duty bound to pass assessment order before 31.12.2018. However, this order was issued by the AO subject to valuation by the DVO as can be seen above. Now, the valuation report has come into being wherein the value of asset has been determined at Rs.2,86,21,000/-. Consequently, the AO is directed to replace stamp valuation of Rs.3,72,32,000/- with Rs.2,86,21,000/- as determined by the DVO in report dated 17.01.2019(on record) and determine proportionate share of the capital gains of appellant accordingly. The ground no.2 of appeal is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e municipal limits as prescribed under the Income Tax Act and therefore the land was an agricultural land within the meaning of Section 2(14) of the Income Tax Act. Finally, it was submitted that the assessee is eligible for claim of deduction under Section 54B/54F of the Act, which only requires that the land was being used for agricultural purposes before the date of sale. 6. In response, DR submitted before us that as per revenue records, the land was a non-agricultural land as on the date of sale. Hence, the Assessing Officer had correctly invoked the provisions of Section 50C of the Act. 7. We have heard the rival contentions and perused the material on record. The following material facts are under consideration before us. Firstly, the Department has not disputed/contested the claim of the assessee that the assessee has been carrying on agricultural activities right the date of sale of land. Secondly, we agree with the argument of the assessee that once the assessee is carrying on agricultural activities right up to the date of sale, then the land continues to be agricultural land respective of conversion of such land into non-agriculture land. In the case of CIT v. Vajulal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the land at the time when the sale took place. It was true that permission to sell the land Co-operative Housing Society Ltd. was granted on condition that the land would be used for residential purposes and the application for permission under Section 63 of the Bombay Tenancy and Agricultural Lands Act was applied for on the footing that, after the sale, the land would be used for residential purposes. But that only went to show that, after the date of the sale, this land was to cease to be agricultural land. The permission granted by the City Deputy Collector under Section 63 of the Bombay Tenancy and Agricultural Lands Act clearly went to show that in case the land did not cease to be agricultural land, the permission would be treated as cancelled and, therefore, the sale in favour of Co - operative Housing Society Ltd. would be infructuous and the land would revert back to the assessee. In such an eventuality, the land would still continue to be agricultural land because the permission to sell to a non-agriculturist would be treated as cancelled. That eventuality had not happened and as pointed out it was some time in February, 1969, that the permission for non-agricultural use ..... X X X X Extracts X X X X X X X X Extracts X X X X
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