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TMI Blog2023 (9) TMI 1619X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions of Gujarat Tenancy and Agricultural Lands Laws (Amendment) Act, 1997 and the Bombay Land Revenue Code, 1879, is that in case of agricultural lands designated by authorities for bona fide industrial purposes the requirement of seeking prior permission for land use change is done away as per the Bombay Land Revenue Code, 1879. Such agricultural lands can be transferred to non agriculturist as per section 63AA of the GT ALL Act, which Act otherwise prohibits such transfers. Thus Lands purchased u/s 63AA of Gujarat Tenancy and Agricultural Lands Laws (Amendment) Act, 1997, is nothing but agricultural land. Applying this to the facts of the present case where in the land has been sold u/s. 63AA of the GT ALL, undoubtedly the said land is agriculture land. This fact is further evidenced by various covenants of the conveyance deed stating the character of the land sold in clear terms to be agricultural. As per the facts of the present case the purchaser of land, i.e the company, after purchase of the agricultural land from the assessee u/s 63AA of the GT ALL Act, notified the purchase of agricultural land for bonafide industrial use and was issued a certificate in this regard by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uashed and set aside. 2. On facts and circumstances of the case and in law, the A.O. has grossly erred in making addition of Rs. 3,56,70,539/-on account of undisclosed capital gain, whereas the sale proceeds of agricultural land duly disclosed in the return of income filed u/s. 139 of the IT. Act and the land in question was not a capital asset within the meaning of section 2(14) of the Act, as such, no such addition is warranted. The same deserves to be deleted. 3. On facts and circumstances of the case and in law, the A.O. has grossly erred in initiating proceedings u/s. 271(l)(c) of the Act, when no such proceeding is attracted in the case of the appellant. 4. On facts and circumstances of the case and in law, the A.O has grossly erred in charging interest of Rs. 82,299/- U/S. 234A and Rs. 67,48,518/- u/s. 2346 of the Act, when the appellant has not committed any such default. 3. Ground no.1 was not pressed for adjudication and the same is therefore dismissed. Ground no.3 raised against initiation of penalty proceedings being premature is not being dealt with by us Ground no.4 against levy of interest under section 234A, B, C being consequential needs no adjudication. 4. The ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the ld.counsel for the assessee was that i) It had been suitably demonstrated to the authorities below, both the AO and the DRP that, the land sold by the assessee was agricultural land, which fact found mention in the sale deed through which it had been sold to the company; ii) The basis with the AO for treating the land as non- agricultural, that the land had been purchased by the company for industrial purposes under section 63AA of Gujarat Tenancy and Agricultural Lands Laws (Amendment) Act, 1997, was irrelevant, since it did not impinge upon the factum of the character of the land in the hands of the assessee till it was sold to the corporate entity being agricultural, and that only subsequently its character was changed to non-agricultural purposes by the purchaser of the land. The ld.DR, however, supported order of the AO. 7. We have heard both the parties. The short issue to be adjudicated is vis- -vis the character of the land sold by the assessee, whether agricultural land or not, so as to determine its qualification as a capital asset in terms of section 2(14)(iii) of the Act, and thus facilitate finding whether capital gain earned thereon is taxable or not in terms of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Vendor has fully complied with all the applicable local municipal laws in respect of the Schedule Agricultural Land and that the proposed transfer of the Schedule Land to the Purchaser is not violative of any local, municipal law etc. (vi). The Schedule of Agricultural Land appearing on page-13 of each of the sale deed specifically reads under (subject to variance of block number and area vis- -vis sale consideration): All the piece and parcel of agricultural lands in the state of Gujarat, Tejpur Village, Tal. Jotana, District Mehsana, District Sub-Registry Office at Jotana, comprised in Block number 114 bearing village from 8/A A/C. No. 237 measuring an extent of about 21044 sq. mtrs. Along with all amenities, liberties, easements, appurtenances, facilities, trees, water ways, etc. in the pertaining to or in any manner connected with the said Schedule Agricultural Land and bounded as follows... 10. The AO/DRP treated the land to be non-agricultural noting that it had been bought by a company for industrial purpose and the purchaser company had received permission for usage of the land for industrial purposes, even prior to the date of purchase of land, under section 63AA of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stamp duty has been paid at a higher rate. This means that the Stamp Authorities are also treating the impugned land as non-agricultural land. 5.7 Moving further, the AO has observed that in Gujarat, the land record 7/12 changes only when the land is converted in to a non-agricultural land. The Collector, Mehsana also has passed an order dt 29-08-16 to this effect. The said order has been scanned and made part of the assessment order too. 5.8 We have carefully considered the entire facts and circumstances of the issue concerned. We find that there are enough, sufficient and good grounds to treat the impugned land as non-agricultural land as on the date of sale. At least, three Government departments, namely, Industry Commissioner, Gujarat, Stamp duty Authorities, Mehsana and the Collector, Mehsana, have already adjudicated that the said land is non-agricultural. We are afraid, there is no more scope for us to disagree from the stand of the fellow Government Departments. The factum of the land being situated around 21 Kms away and the population being around 1400 have become irrelevant now. Once appropriate Government Authorities have already declared the land to be non-agricultural ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13. Section 63 63AA of the Gujarat Tenancy and Agricultural Lands Laws (Amendment) Act, 1997 are reproduced hereunder for clarity: Gujarat Tenancy and Agricultural Lands Act, 1997 63. Transfers to non-agriculturists barred. - (1) Save as provided in this Act,- (a) no sale (including sales in execution of a decree of Civil Court of for recovery of arrears of land revenue or for sums recoverable as arrears of land revenue), gift, exchange or lease of any land or interest therein, or (b) no mortgage of any land or interest therein, in which the possession of the mortgaged property is delivered to the mortgagee, [or] [(c) no agreement made by an instrument in writing for the sale, gift, exchange, lease or mortgage of any land or interest therein.] shall be valid in favour of a person who is not an agriculturist [or who being an agriculturist cultivates personally land not less than the ceiling area whether as an owner or tenant or partly as owner and partly as tenant or who is not an agricultural labourer]: Provided that the Collector or an officer authorised by the [State] Government in this behalf may grant permission for such sale, gift, exchange, lease or mortgage, [or for such agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not exceed four times the area on which construction for a bonafide industrial purpose is proposed to be made by the purchaser: Provided that any additional land, which may be required for pollution control measures or required under any relevant law for the time being in force and certified as such by the relevant authority under that law shall not be taken into account for the purpose of computing four times the area, [Provided further that where the land is sold to a purchaser which is a company as defined by clause (20) of section 2 of the Companies Act, 2013 (18 of 2013), it may offer the equity shares of the company, to the person by whom such land is being sold, in lieu of the sale price of such land and if such person is in agreement for accepting such equity shares, either in full or partly, then it shall be incumbent upon such company to allot such equity shares of equivalent amount, either in full or partly, to such person,] (d) where the land proposed to be sold is owned by a person belonging to the Scheduled Tribe, the sale shall be subject to the provisions of section 73AA of the Bombay Land Revenue Code, 1879 (Bombay V of 1879). (2) Nothing in section 63A shall appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such purpose. 14. As is evident from a perusal of the above the GT ALL prohibits sale of agricultural land to a non agriculturist, but relaxes this prohibition in case of lands which are designated for bonafide industrial purposes and require no permission on change of land use as per the Bombay Land Revenue code, 1879. Further section 63AA(3) of GT ALL requires purchasers of such agricultural lands designated for bonafide industrial purposes, to notify the concerned collector of purchase of such land within thirty days. The Collector is required to issue a certificate to the effect that the purchaser shall use the land for bonafide industrial purposes, after making necessary verification in this regard. 15. Coming to the Bombay Land Revenue code, 1879, section 65 65A of the said code requires prior permission for conversion of an agricultural land to a non-agricultural land or non-agricultural land to agricultural land respectively, meaning thereby any conversion of land use is to be done after prior permission as per the provisions of Land Revenue Code. But section 65B states that where development authorities or the State designates certain land for industrial purpose, usage of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a municipal borough or notified area or industrial estate and such occupant wishes to use his holding or a part thereof only for a residential purpose, it shall not be necessary for him to obtain permission of the Collector under sub-section (1). Explanation. - For the purposes of this section- (i) gram means a gram within the meaning of the Gujarat Panchayats Act, 1961 (Gujarat VI of 1962); (ii) industrial estate means an industrial estate within the meaning of the Gujarat Industrial Development Act, 1962 (Gujarat XXIII of 1962); (iii) municipal borough or notified area means respectively, a municipal borough or a notified area within the meaning of the Gujarat Municipalities Act, 1963 (Gujarat 34 of 1964); (iv) urban agglomeration means an urban agglomeration within the meaning of the urban Land (Ceiling and Regulation) Act, 1976.] (83 of 1976. [65A. Procedure if occupant wishes to apply his land from one non- agricultural purpose to another non-agricultural purpose. - Where the occupant of any land assessed or held for any non-agricultural purpose wishes to use such land or part thereof for any other non- agricultural purpose, the Collector's permission shall in the first p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rticulars sent by the occupant under clause (b) of sub-section (2), the Collector, after making such inquiry as he deems fit- (a) is satisfied that the occupant of such land has validly commenced the use of the land for a bonafide industrial purpose under sub- section (1), he shall issue a certificate to that effect to the occupant in such form and within such period as may be prescribed by rules made under this Act. (b) is not so satisfied, he shall, after giving the occupant an opportunity of being heard, refuse to issue such certificate: Provided that no such certificate shall be issued under clause (a) unless the conversion tax leviable under section 67A is paid, Thus the Bombay Land Revenue Code allows change of land use from agriculture to non agriculture and vice versa only after seeking necessary permission from the concerned authorities. But in cases of agricultural lands which have been designated for bonafide industrial purposes by the State or other authority specified, seeking such permission on change of land use is done away with and only notice of change of land use is required to be given to the collector, who in turn is required to verify the fact of bonafide user ..... X X X X Extracts X X X X X X X X Extracts X X X X
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