M/s Mutual Trust, Nagpur v. Asst..C.I.T Central Circle-1 (2), Nagpur

ITA 46/NAG/2013 | 2009-2010
Pronouncement Date: 31-07-2015 | Result: Partly Allowed

Appeal Details

RSA Number 4623914 RSA 2013
Assessee PAN AAPFM3810M
Bench Nagpur
Appeal Number ITA 46/NAG/2013
Duration Of Justice 2 year(s) 5 month(s) 25 day(s)
Appellant M/s Mutual Trust, Nagpur
Respondent Asst..C.I.T Central Circle-1 (2), Nagpur
Appeal Type Income Tax Appeal
Pronouncement Date 31-07-2015
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted DB
Tribunal Order Date 31-07-2015
Assessment Year 2009-2010
Appeal Filed On 05-02-2013
Judgment Text
1 ITA NO.46/NAG/2013 IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH NAGPUR BEFORE SHRI MUKUL K. SHRAWAT JUDICIAL MEMBER AND SHRI SHAMIM YAHYA ACCOUNTANT MEMBER. I.T. A. NO. 46/NAG/2013 ASSESSMENT YEAR : 2009 - 10. M/S MUTUAL TRUST ASSTT. COMMISSIONER OF PLOT NO.87A V/S. INCOME - TAX C/O DR. MUKUND J. VAIDYA HOUSE CENTRAL CIRCLE - 1(2) DHANTOLI NAGPUR - 440010. NAGPUR. PANAAPFM 3810M (APPELLANT) RESPONDENT. APPELLANT BY : SHRI K.P. DEWANI. RESPONDENT BY : SHRI NARENDRA KANE. DATE OF HEARING : 07 - 07 - 2015. DATE OF PRONOUNCEMENT : 31 ST JULY 2015. O R D E R PER SHRI SHAMIN YAHYA A.M . THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(APPELS) - I NAGPUR DATED 30 - 11 - 2012 AND PERTAINS TO ASSESSMENT YEAR 2009 - 10. THE GROUNDS OF APPEAL READ AS UNDER : 1. THE LEARNED A.O. ERRED IN HOLDING THAT PROPERTY SOLD BY ASSESSEE IS NOT AGRICULTURAL LAND AND SURPLUS ARISING ON TRANSFER OF SAME IS LIABLE TO BE ASSESSED UNDER THE HEAD CAPITAL GAIN. 2. THE LEARNED CIT(A) ERRED IN HOLDING THAT ASSESSEE IS LIABLE TO BE ASSESSED ON ACCOUNT OF LONG TERM CAPITAL GAIN ON SALE OF AGRICULTURAL LAND. 2 ITA NO.46/NAG/2013 3. THE ADDITION MADE BY A.O. AT ` .9 52 78 686/ - ON ACCOUNT OF LONG TERM CAPITAL GAIN IS UNJUSTIFIED UNWARRANTED AND EXCESSIVE. 4. THE LEARNED A.O. OUGHT TO HAVE ACCEPTED THE CLAIM OF ASSESSEE THAT SURPLUS ARISING IS IN RESPECT TO AGRICULTURAL LAND LOCATED BEYOND 8 KILOMETERS FROM MUNICIPAL LIMITS AND NO INCOME IS EXIGIBLE TO TAX AT THE HANDS OF ASSESSEE. 5. THE NOTICE ISSUED U /S 153C OF I.T. ACT 1961 IS ILLEGAL INVALID AND BAD IN LAW. THUS CONSEQUENT ASSESSMENT FRAMED THEREUPON IS LIABLE TO BE CANCELLED. 6. THE ASSESSEE DENIES LIABILITY TO BE ASSESSED TO INTEREST U/S 234A 234B & 234C OF I.T. ACT. WITHOUT PREJUDICE THE L EVY OF INTEREST U/S 234A 234B AND 234C IS UNJUSTIFIED UNWARRANTED AND EXCESSIVE. 2. AT THE OUTSET LEARNED COUNSEL OF THE ASSESSEE STATED THAT HE SHALL NOT BE PRESSING GROUND NO. 5 WHICH RELATES TO VALIDITY OF NOTICE ISSUED UNDER SECTION 153C OF THE I. T. ACT. ACCORDINGLY WE DISMISS THIS GROUND RAISED AS NOT PRESSED. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE SEARCH AND SEIZURE ACTION UNDER SECTION 132 WAS CARRIED OUT AT THE RESIDENCE AND HOSPITAL OF DR. SHRIKANT V. MUKEWAR WHEREIN DOCUMENTS RELATING TO THE ASSESSEE HAVE BEEN SEIZED. NOTICE UNDER SECTION 153C HAS BEEN ISSUED IN RESPONSE TO WHICH APPELLANT HAS FILED THE RETURN OF INCOME ON 17 - 12 - 2009 DECLARING INCOME OF ` .5 08 450/ - . THE ASSESSING OFFICER OBSERVED DURING THE YEAR THAT APPELLANT ON 21 - 04 - 2 008 HAS SOLD LAND FOR ` .9 80 19 751/ - TO M/S ADIANUBHAV DEVELOPERS P.LTD. IT HAS BEEN CONTENDED BY THE ASSESSEE THAT THE LAND WAS SITUATED BEYOND 8 KM FROM THE LOCAL MUNICIPAL LIMITS AND IT WAS THEREFORE NOT A CAPITAL ASSET UNDER SECTION 2(14)(III). APPELL ANT HAS SUPPORTED ITS CASE WITH THE 7/12 EXTRACT AND STATUS THAT AGRICULTURAL ACTIVITIES WAS CARRIED ON FROM 1990 - 91. THE ASSESSING OFFICER HAS HOWEVER HELD THAT THERE WAS 3 ITA NO.46/NAG/2013 NO CONCRETE EVIDENCE TO SUPPORT THE CLAIM OF AGRICULTURAL ACTIVITIES IN THE NATURE OF EVIDENCE OF SALE OF CROP PURCHASE OF SEED EXPENSES FOR AGRICULTURAL OPERATION. THE ASSESSING OFFICER HAS ALSO STATED THAT THE RETURN OF INCOME WHICH WAS FILED IN CONSEQUENT TO THE SEARCH SHOWED VERY MEAGER AGRICULTURAL INCOME AND CONSIDERED THE FACT THAT THE LAND IN QUESTION WAS MORE THAN 38 ACRES. THE ASSESSING OFFICER HAS FURTHER HELD THAT SALE OF LAND TO A NON AGRICULTURIST WHO IS A LAND DEVELOPER CLEARLY SHOWS THAT THE TRANSACTION WAS ONE THAT RESULTED IN LONG TERM CAPITAL GAIN AND HAS BROUGHT T O TAX AN AMOUNT OF ` .9 57 87 144/ - . 4. AGAINST THE ABOVE ORDER THE ASSESSEE APPEALED BEFORE THE LEARNED CIT(APPEALS). THE LEARNED CIT(APPEALS) SENT THE ASSESSEES SUBMISSION TO THE ASSESSING OFFICER ON REMAND. LEARNED CIT(APPEALS) OBTAINED THE REMAND REPO RT FROM THE ASSESSING OFFICER AS WELL AS REJOINDER FROM THE ASSESSEE. THEREAFTER LEARNED CIT(APPEALS) UPHELD THE ORDER OF THE ASSESSING OFFICER BY HOLDING AS UNDER : I HAVE CAREFULLY CONSIDERED THE ISSUE BEFORE ME. THE MAJOR FEATURE IS EMERGES THAT WHI LE THE APPELLANT HAS REITERATED THAT THE LAND WAS HELD AS AGRICULTURAL LAND AND AGRICULTURAL ACTIVITIES WAS CARRIED ON. HOWEVER THERE IS NO DOCUMENTARY EVIDENCE OF THE CROP GROWN. THE EXTRACT OF THE LAND IS QUITE CONSIDERABLE BEING 38 ACRES. IF AGRICUL TURAL ACTIVITIES WERE TO BE CARRIED ON IN LAND OF 38 ACRES IT WOULD CERTAINLY REQUIRE THAT SYSTEMATIC AND ORGANIZED ACTIVITIES WOULD BE CARRIED OUT ON A LARGE SCALE. THERE IS NO EVIDENCE OF EMPLOYMENT OF LABOUR OR IRRIGATION FACILITIES. APPELLANT HAS CL AIMED TO HAVE GROWN CHANA JAWAR WHEAT AND VEGETABLE. HOWEVER THERE IS NO EVIDENCE OF THE PURCHASE OF SEEDS FOR THE GROWING THE SAID CROP. AO IN THE REMAND REPORT HAS POINTED OUT THE FOLLOWING DISCREPANCIES. IN ANSWER TO QUESTION NO. 11 RECORDED U/S 131 ON 18 - 04 - 2002 OF SHRI SUKHRAM BHOI (SUKDU BHOI) HAS STATED AS FOLLOWS: - 4 ITA NO.46/NAG/2013 Q.NO.11 WHICH KIND OF CROPS DID YOU CULTIVATED IN YOUR AGRICULTURAL LAND? ANS: CHANA JAWAR WHEAT AND VEGETABLE ETC. WERE CULTIVATED IN THE LAND. HOWEVER THE 7/12 EXTRACT OF THE EARLIER YEARS SHOWS THAT THE SOYABEN WAS THE MAIN PRODUCED. THERE IS NO MENTION OF SOYABEN HAVING BEEN CULTIVATED. IT IS ALSO POINTED OUT THAT EVEN THE INVESTMENT REQUIRED TO CULTIVATE 38 ACRES OF LAND BE SUBSTANTIAL. HOWEVER APPELLANT HAS NOT BEEN ABLE TO PRODUCE ANY EVIDENCE IN REGARD TO THIS. IT IS ALSO RELEVANT TO NOTE THAT THE LAND HAS BEEN INITIALLY SOLD TO A BUILDER M/S JAGDAMBA DEVELOPERS P. LTD. WHO HAS IN TURN ISSU ED A POWER OF ATTORNEY TO M/S ADIANUBHAV DEVELOPERS P. LTD. THUS THE LAND IN QUESTION HAS BEEN TRANSFERRED TO A NON - AGRICULTURIST. IN THIS CONTEXT THE FOLLOWING JUDICIAL PROPOSITION IS RELEVANT. IN THIS REGARD THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF GOPAL SHARMA 209 ITR 946 (BOM.) HAS HELD AS FOLLOWS: - ACTUAL USER OF LAND FOR AGRICULTURAL PURPOSE OR ABSENCE THEREOF AT RELEVANT TIME IS UNDOUBTEDLY ONE OF THE CRUCIAL TESTS FOR DETERMINATION OF THE ISSUE AS TO WHETHER THE LAND IN QUESTION IS LIABLE TO BE CONSIDERED AS AGRICULTURAL LAND FOR THE PURPOSE OF INCOME TAX. IT IS WELL SETTLED THAT THE NATURE AND CHARACTER OF LAND MAY UNDERGO A CHANGE DEPENDING UPON ITS SITUATION GROWTH OF LOCALLY ZONE IN WHICH IT IS SITUATE AND ITS POTENTIALLY. THE FACT THAT THE LAND IS SOLD OR TRANSFERRED TO A NON AGRICULTURAL PURPOSE SOON AFTER ITS PAVEFREE IS ALSO A RELEVANT FACTOR GERMANE TO THE DETERMINATION OF THE ISSUE. MERELY BECAUSE THE LAND WAS USED FOR AGR ICULTURAL PURPOSE IN REMOTE PART OR CONTINUOUS TO BE ASSESSED TO LAND REVENUE ON THE FOOTING OF AGRICULTURAL LAND IS NOT DECISIVE. CONSIDERING THE FACTS IN ENTIRETY AND JUDICIAL PRONOUNCEMENT LAID DOWN THE ACTION OF THE AO IN TREATING THE AMOUN T ON SALE OF LAND AS LONG TERM CAPITAL GAIN IS UPHELD. 5. AGAINST THE ABOVE ORDER ASSESSEE IS IN APPEAL BEFORE US. 5 ITA NO.46/NAG/2013 6 . WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. LEARNED COUNSEL OF THE ASSESSEE SUMMARIZED HIS SUBMISSIONS AS UNDER : A) THE ASSESSEE FIRM HAS ACQUIRED AGRICULTURAL LANDS IN THE YEAR 1989 AND 1990. THE AFORESAID AGRICULTURAL LANDS WERE HELD BY ASSESSEE FOR A SUBSTANTIAL PERIOD OF 18 TO 19 YEARS TILL IT WAS SOLD ON 21 - 04 - 2008. B) THE REVENUE RECORDS BEING EXTRACTS IN FORM NO. 7/12 WERE SUBMITTED BEFORE A.O. WHICH INDICATE THAT THE AGRICULTURAL LANDS HELD BY ASSESSEE WERE DESCRIBED IN REVENUE RECORDS AS AGRICULTURAL ACTIVITIES WERE CARRIED ON SUCH AGRICULTURAL LANDS. C ) THE ASS ESSEE HAS NEVER APPLIED FOR PERMISSION TO USE AGRICULTURAL LANDS FOR NON - AGRICULTURAL PURPOSE NOR IT WAS CONVERTED FOR NON AGRICULTURAL USE BY ANY AUTHORITY TILL THE DATE OF SALE. THE AFORESAID FACT IS UNDISPUTED FACT ON RECORD. D) THE AGRICULTURAL LA ND WAS USED FOR AGRICULTURAL ACTIVITIES AND THERE IS NO EVIDENCE ON RECORD TO SHOW THAT THE AGRICULTURAL LAND OWNED BY ASSESSEE WAS PUT TO USE FOR THE PURPOSE OTHER THAN AGRICULTURAL ACTIVITY. E) THE EVIDENCE OBTAINED BY A.O. FROM SHRI SUKRU CLEARLY DEM ONSTRATE THAT THE AGRICULTURAL ACTIVITIES WERE BEING CARRIED OUT ON THE P;ROPERTY HELD BY ASSESSEE BEING AGRICULTURAL LAND. F) THE INDEPENDENT ENQUIRY MADE BY A.O. FROM HONBLE JUSTICE SHRI A.B. CHOUDHARY OF BOMBAY HIGH COURT CORROBORATES THE FACT THAT AGRICULTURAL LAND OWNED BY ASSESSEE WAS UNDER CULTIVATION. G) THE PERUSAL OF EVIDENCE ON RECORDS CLEARLY DEMONSTRATES THAT THE PROPERTY PURCHASED AND SOLD IS AGRICULTURAL LAND. THE AGRICULTURAL LAND IS ABOUT 25 KMS. AWAY FROM NAGPUR AND IS ALSO SURROU NDED BY LARGE AGRICULTURAL FIELDS. H) UNDISPUTED FACT ON RECORD IS THAT AGRICULTURAL LAND SOLD BY ASSESSEE IS LOCATED BEYOND 8 KMS. FROM MUNICIPAL LIMIT OF NAGPUR AND SAME IS NOT WITHIN THE RADIUS OF 8 KMS. OF ANY MUNICIPAL CORPORATION. THE AGRICULTUR AL LAND THUS IS NOT CAPITAL ASSET AS DEFINED U/S 2(14) OF I.T. ACT 1961. THE 6 ITA NO.46/NAG/2013 AGRICULTURAL LAND SOLD BYT ASSESSEE BEING NOT A CAPITAL ASSET IN TERMS OF PROVISIONS OF SECTION 2(14) OF I.T. ACT 1961 SURPLUS ARISING ON SALE OF SAME IS NOT EXIGIBLE TO TA X UNDER HEAD LONG TERM CAPITAL GAIN. I) IT IS SETTLED PROPOSITION OF LAW THAT WHEN ON THE DATE OF PURCHASE AND ON THE DATE OF SALE IF THE CHARACTER OF ASSET SOLD IS AGRICULTURAL LAND THE SURPLUS ARISING ON SAME IS NOT EXIGIBLE TO TAX. RELIANCE ON: I) ITAT ORDER IN ITA NO. 112/NAG/2012 IN THE CASE OF SANJAY NAGORAO PAIDELWAR VIDE ORDER DATED 22/03/2013. II) HONBLE BOMBAY HIGH COURT (NAGPUR BENCH) ORDER IN ITA NO. 120 OF 2013 IN THE CASE OF NITISH RAMESH CHANDRA CHORDIA VIDE ORDER DATED 30 - 03 - 2015 . III) DLF UNITED LTD. V/S. CIT (1996) 217 ITR 333 (DEL.) IV) SUPREME COURT JUDGMENT (SLP)(CIVIL) CC 1727 - 1729/98 IN THE CASE DOF CIT V/S. M/S D.L.F. UNITED LTD. V) HINDUSTAN INDUSTRIAL RESOURCES LTD. V/S. ACIT (2011) 335 ITR 77. VI) CIT V/S. SMT. DEBBIE ALEMAO (2011) 331 ITR 59. J) THE DECISION RELIED UPON BY HONBLE CIT(A) IN THE CASE OF SHRI GOPAL SHARMA REPORTED AT 209 ITR 946 (BOM.) IS DISTINGUISHABLE ON FACTS AND IN INAPPLICABLE TO THE FACTS IN THE CASE OF ASSESSEE. I) REFERENCE LAND BEFO RE ACQUISITION BY ASSESSEE WAS UNDER LEASE IN FAVOUR OF LARSEN & TOURBO LTD. AND WHICH IS TRANSFERRED TO SAID COMPANY AS A RESULT OF COMPULSORY ACQUISITION. II) REFERENCE LAND WAS LEASED TO VORA AND WAS UNDER AGREEMENT TO SALE TO VORA BEFORE THE SAME WAS ACQUIRED BY ASSESSEE. 7 ITA NO.46/NAG/2013 III) AAC HELD THAT ASSESSEE HAD N CHOICE BUT TO COMPLETE THE SALE AND COMPULSORY ACQUISITION AS PER COMMITMENT MADE BY PREDECESSOR IN TITLE OF ASSESSEE. (IV) LANDS WERE USED FOR NON - AGRICULTURAL PURPOSE BY LARSEN & TOUBRO LT D. AND IT HAD APPLIED TO REVENUE AUTHORITIES FOR SANCTION OF USE. V) LANDS WERE NOT USED FOR AGRICULTURAL PURPOSES. VI) LANDS WERE ALREADY UNDER LAND ACQUISITION PROCEEDINGS. VII) LANDS WERE SITUATE IN HEAVY INDUSTRIAL ZONE. K) IT IS RESPECTFULLY SUBMITTED THAT SURPLUS ARISING ON SALE OF AGRICULTURAL LAND IS IN THE NATURE OF AGRICULTURAL INCOME IN TERMS OF PROVISIONS OF SECTION 2(1A) OF I.T. ACT 1961 AND THUS THE SAME IS NOT EXIGIBLE TO TAX. RELIANCE ON: 1) ITAT ORDER IN ITA NO. 362/JU/2010 IN THE CASE OF SMT. SUPRIYA KANWAR VIDE ORDER DATED 13 - 05 - 2014. 2) (2001) 247 ITR 150 (SC) SINGHAI RAKESH KUMAR V/S. UNION OF INDIA & ORS. 3) (1981) 128 ITR 87 (BOM.) MANUBHAI A. SHETH & ORS V/S. N.D. NIRGUDKAR I TO & ANR. L) THE PERSON TO WHOM LAND IS SOLD AND FUTURE USE BY THE PURCHASER IS OF NO RELEVANCE IN DETERMINING THE NATURE AND CHARACTER OF THE LAND SOLD. AT THE RELEVANT POINT OF TIME OF SALE LAND SOLD WAS AGRICULTURAL LAND AND THUS GAIN ARISING ON SALE OF AGRICULTURAL LAND IS NOT CHARGEABLE TO TAX. RELIANCE ON: I) (2011) 331 ITR 59 CIT V/S. SMT. DEBBIE ALEMAO. 8 ITA NO.46/NAG/2013 7 . PER CONTRA LEARNED D.R. RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. HE CLAIMED THAT THERE IS NO EVIDENCE THAT THE CONCER NED LAND WAS USED FOR AGRICULTURAL PURPOSES. HE SUBMITTED THAT THE LAND WAS SOLD TO A NON AGRICULTURIST. ACCORDINGLY LEARNED D.R. SUBMITTED THAT THE SAME HAS RIGHTLY BEEN TREATED BY THE REVENUE AS EXIGIBLE TO TAX UNDER THE HEAD CAPITAL GAIN. 8 . UPON CA REFUL CONSIDERATION WE FIND THAT THE ASSESSEE IN THIS CASE HAS SOLD THE LAND WHICH HAS BEEN CLAIMED TO BE AGRICULTURAL LAND. THE SAID LAND HAD BEEN ACQUIRED IN THE YEAR 1989 AND 1990. THESE LANDS WERE HELD BY THE ASSESSEE FOR A SUBSTANTIAL PERIOD OF 18 TO 19 YEARS TILL IT WAS SOLD ON 21 - 04 - 2008. THE REVENUE RECORDS THE EXTRACT IN FORM NO. 7/12 INDICATE THAT THE AGRICULTURAL LANDS HELD BY THE ASSESSEE WERE DESCRIBED IN REVENUE RECORDS AS AGRICULTURAL LANDS AND AGRICULTURAL ACTIVITIES WERE CARRIED OUT ON SU CH AGRICULTURAL LAND. THE EXTRACTS IN FORM NO. 7/12 ARE ATTACHED IN PAPER BOOK. VOL. I PAGE 6 TO 17. THE ASSESSEE HAS NEVER APPLIED FOR PERMISSION TO USE AGRICULTURAL LAND FOR NON AGRICULTURAL PURPOSE NOR IT WAS CONVERTED FOR NON AGRICULTURAL USE BY ANY A UTHORITY TILL DATE OF SALE. 9 . THE ABOVE FACTS ARE NOT DISPUTED AND ARE THE FACTS OF THE CASE. THE ASSESSING OFFICER HAS DISPUTED THE CLAIM OF AGRICULTURAL ACTIVITY BY HOLDING THAT THERE IS NO EVIDENCE OF SALE OF CROP PURCHASE OF SEED EXPENSES FOR AGRICU LTURAL OPERATION. HOWEVER IT REMAINS UNDISPUTED THAT IN THE RETURN OF INCOME AGRICULTURAL INCOME WAS SHOWN WHICH WAS CONSIDERED MEAGER BY THE ASSESSING OFFICER. THE ASSESSING OFFICER HAS ALSO DRAWN ADVERSE INFERENCE ON THE GROUND THAT THE LAND WAS SOLD T O A NON AGRICULTURIST WHO IS A LAND DEVELOPER. NOW IN THIS REGARD THE ASSESSEE HAD SUBMITTED BEFORE THE ASSESSING OFFICER THAT AGRICULTURAL ACTIVITIES WERE IN FACT PERFORMED ON THE SAID LANDS. IT WAS ALSO SUBMITTED THAT AGRICULTURAL OPERATIONS ON BEHALF OF THE ASSESSEE WERE CARRIED OUT BY SHRI A.B. CHOUDHARI ADVOCATE WHO WAS LATER ELEVATED AS JUDGE OF THE HONBLE BOMBAY HIGH COURT. THE ASSESSING OFFICER 9 ITA NO.46/NAG/2013 HAD ALSO MADE ENQUIRY FROM HONBLE JUSTICE A.B. CHOUDHARI SITTING JUDGE OF HONBLE JURISDICTIONAL HIG H COURT. IN REPLY GIVE N VIDE LETTER DATED 27 - 07 - 2010 ATTACHED IN PAPER BOOK VOL. I IN PAGE NO. 1 HE HAS UNAMBIGUOUSLY STATED THAT AGRICULTURAL ACTIVITIES WERE CARRIED OUT BY HIS HUF ON THE LAND BELONGING TO M/S MUTUAL TRUST DURING THE PERIOD 2005 - 06. RECEIPT FROM AGRICULTURAL PRODUCE SOLD FOR FINANCIAL YEAR 2005 - 06 AND THE SAME HAS BEEN DULY REFLECTED IN THE INCOME TAX RETURN FILED FOR ASSESSMENT YEAR 2006 - 07. THE SAID LETTER DULY SU PPORTS THE CLAIM OF THE ASSESSEE THAT AGRICULTURAL OPERATIONS WERE DONE ON THE SAID LAND. THE ASSESSING OFFICER HAS NOWHERE DRAWN ANY ADVERSE INFERENCE OF THE ABOVE ENQUIRY CONDUCTED WITH HONBLE JUSTICE A.B. CHOUDHARI. THE ASSESSING OFFICER HAD ALSO EXAM INED THE PERSON SUKHRAM BHOI WHO WAS LATERON PERFORMING AGRICULTURAL OPERATIONS ON THE SAID LAND ON BEHALF OF THE ASSESSEE. THE SAID PERSON HAS ALSO ACCEPTED BEFORE THE ASSESSING OFFICER THAT CROPS WERE BEING CULTIVATED ON THE SAID AGRICULTURAL LAND. 10 . THE ASSESSEE HAS ALSO SUBMITTED BEFORE THE AUTHORITIES BELOW THAT THE BALANCE SHEET OF THE ASSESSEE FIRM AS ON 31 - 03 - 2006 SHOWS THAT THE FIRM WAS OWNING PAIR OF BULLOCK BULLOCK CART PUMPS WERE INSTALLED FOR IRRIGATION PERMANENT PLANTATION AND FARM D EVELOPMENT EXPENSES WERE INCURRED SERVANT QUARTERS AND GODOWN FOR STORING AGRICULTURAL PRODUCE WERE CONSTRUCTED. ALL THESE ACTIVITIES ARE INCIDENTAL AND NECESSARY FOR AGRICULTURAL OPERATION. THE LAND WAS ASSESSED TO LAND REVENUE FROM 1989 - 90 TILL ITS SAL E IN 2008. THE ABOVE SUBMISSIONS OF THE ASSESSEE HAD NOT AT ALL BEEN REBUTTED BY THE AUTHORITIES BELOW. THE AGRICULTURAL LAND IS ALSO ABOUT 25 KMS. AWAY FROM NAGPUR. HENCE THE LAND CLEARLY IS LOCATED BEYOND 8 KMS. FROM MUNICIPAL LIMIT OF NAGPUR AND THE SAM E DOES FALL UNDER THE CATEGORY OF AGRICULTURAL LAND AND NOT CAPITAL ASSET AS DEFINED UNDER SECTION 2(14) OF THE I.T. ACT. WHEN THE AGRICULTURAL LAND SOLD BY THE ASSESSEE ARE NOT CAPITAL ASSET IN TERMS 10 ITA NO.46/NAG/2013 OF PROVISIONS OF SECTION 2(14) OF THE I.T. ACT SURPLU S ARISING ON SALE OF THE SAME IS NOT EXIGIBLE TO TAX UNDER THE HEAD LONG TERM CAPITAL GAINS. 1 1 . IN THIS REGARD WE MAY GAINFULLY REFER TO HONBLE BOMBAY HIGH COURT NAGPUR BENCH ORDER IN INCOME TAX APPEAL NO. 120 OF 2013 IN THE CASE OF NITISH RAMESHCHANDR A CHORDIA VIDE ORDER DATED 30 - 03 - 2015 IN A BATCH OF APPEALS RELATING TO SALE OF LAND. IN THIS CASE HONBLE BOMBAY HIGH COURT HAD ALSO REFERRED TO HONBLE DELHI HIGH COURT DECISION IN THE CASE OF DLF UNITED LTD. V/S. CIT AND NOTE D THAT HONBLE APEX COURT HA D ALSO DISMISSED THE SLP BY THE DEPARTMENT AGAINST THE HONBLE DELHI HIGH COURT ORDER. WE MAY REFER TO PARA NO. 12 TO 14 OF THE ABOVE REFERRED ORDER OF THE HONBLE JURISDICTIONAL HIGH COURT AS UNDER : 12. WE HAVE CAREFULLY CONSIDERED AND APPLIED OUR MIN D TO THE RIVAL SUBMISSIONS AND THE RULINGS CITED AT THE BAR. WE AGREE WITH THE SUBMISSION THAT THE AMENDMENTS IN THE TAXING STATUTE UNLESS A DIFFERENT LEGISLATIVE INTENTION IS CLEARLY EXPRESSED SHALL OPERATE PROSPECTIVELY. IN OUR VIEW IF THE ASSESSEE HAS EARNED BUSINESS INCOME AND NOT THE AGRICULTURAL INCOME SECTION 11 OF THE GENERAL CLAUSES ACT WILL PREVAIL UNLESS A DIFFERENT INTENTION APPEARS TO THE CONTRARY. THE IMPUGNED ORDER APPEARS WELL REASONED IN THE FACTS AND CIRCUMSTANCES TO CLE ARLY INDICATE THAT ANY CONSIDERATION RECEIVED OUT OF SALE OF THE AGRICULTURAL LAND CANNOT BE TREATED AS BUSINESS INCOME FOR THE PURPOSE OF INCOME TAX. THE DISTANCE BETWEEN THE MUNICIPAL LIMITS AND ASSESSED PROPERTY/ASSET IS TO BE MEASURED HAVING REGARD TO THE SHORTEST ROAD DISTANCE AND NOT AS PER THE CROWS FLIES I.E. A STRAIGHT LINE DISTANCE AS CANVASSED BY THE REVENUE. THE LEARNED COUNSEL FOR THE RESPONDENT HAS CONTENDED IN THIS REGARD THAT THE DECISION HAS BEEN RENDERED BY THE MUMBAI BENCH IN THE CASE OF LAUKIK DEVELOPERS (SUPRA) IN THE CONTEXT OF THE PROVISIONS OF SECTION 80IB(10) AND NOT IN CONNECTION WITH THE ISSUE OF DETERMINING A CAPITAL ASSET WITHIN THE MEANING OF SECTION 2(14). IT IS NOT IN DISPUTE THAT THE VIEW TAKEN IN THE CASE OF LAU KIK DEVELOPERS (SUPRA) WAS NOT CHALLENGED BY THE REVENUE. 13. IN THE RULING IN THE CASE OF DLF UNITED LTD. V/S. COMMISSIONER OF INCOME TAX (1995) 129 CTR (DEL) 33 THE HONBLE DELHI HIGH COURT REFERRED TO EXPLANATION 2(1)(A) RELIED UPON BY THE COUNSEL FOR THE REVENUE AND HELD THAT SURPLUS OF THE COMPENSATION AMOUNT ARISING AS A RESULT OF 11 ITA NO.46/NAG/2013 ACQUISITION OF AGRICULTURAL LAND IN QUESTION WAS CAPITAL ASSET AND NOT THE INCOME AT ALL. THE QUESTION OF CHANGE IN THE DEFINITION OF AGRICULTURAL INCOME BECAUSE O F INSERTION OF THE EXPLANATION HAS NO RELEVANCE. THUS IN THE FACTS AND CIRCUMSTANCES OF THE CASE WHEN M/S DLF UNITED LTD. WAS CARRYING ON BUSINESS AS COLONIZERS BY PURCHASE DEVELOPMENT AND SELLING THE PLOTS OF LANDS IN AND AROUND DELHI IN THE COURSE OF ITS BUSINESS AND THE COMPANY HAD ACQUIRED CERTAIN AGRICULTURAL LAND IN CERTAIN VILLAGES AROUND DELHI OUT OF WHICH SOME LAND WAS ACQUIRED BY THE GOVERNMENT THROUGH A NOTIFICATION ISSUED U/S. 4 OF THE LAND ACQUI SITION ACT FOLLOWED BY DECLARATION ISSUED UNDER SECTION 6 OF THE LAND ACQUISITION ACT AND THE COMPANY RECEIVED COMPENSATION FOR THE LAND AFTER ASSESSMENT UNDER THE LAND ACQUISITION ACT THE INCOME TAX OFFICER WHILE ASSESSING THAT THE COMPANY WAS A DEAL ER IN LANDS HAD HELD THAT THE ACQUIRED LAND CONSTITUTED THE COMPANYS STOCK - IN - TRADE AND COMPENSATION RECEIVED BY THE COMPANY WAS LIABLE TO BE TAXED AS AN INCOME IN THREE ASSESSMENT YEARS UNDER CONSIDERATION. THE QUESTION WHICH WAS RAISED WAS ANSWERE D BY THE DELHI HIGH COURT IN PARAGRAPH 9 OF THE RULING UNDER CONSIDERATION WHICH READS THUS: THIS COURT FURTHER HELD THAT IN OTHER WORDS THE AGRICULTURAL LANDS PURCHASED ORIGINALLY BY THE ASSESSEE FOR URBANIZATION OR CONVERSION INTO BUILDING PLOTS REMAINED AGRICULTURAL LAND TILL THE ACQUISITION AND PAYMENT OF COMPENSATION AND IN VIEW OF THE SAID FINDING THIS COURT HELD THAT THE FIRST QUESTION HAS TO BE ANSWERED IN THE NEGATIVE I.E. THE PROFITS WERE NOT BUSINESS PROFITS. WITH REGARD TO THE SECOND QUESTION THIS COURT FOUND THAT AS THE COMPENSATION HAD BEEN PAID FOR THE ACQUISITION OF AGRICULTURAL LAND THE QUESTION REALLY INVOLVED A DETERMINATION AS TO WHETHER THE PRICE PAID FOR THE LAND BY WAY OF COMPENSATION COULD BE INC LUDED WITHIN THE DEFINITION OF AGRICULTURAL INCOME. IT WAS FURTHER HELD THAT AGRICULTURAL LAND WAS EXCLUDED FROM THE DEFINITION OF CAPITAL ASSET OCCURRING IN S. 2(14)(III) AND ACCORDINGLY ANY GAIN RESULTING FROM THE ACQUISITION OF AGRICULTURAL LAND WAS NOT INCOME AND ACCORDINGLY THE ANSWER TO THE SAID QUESTION WAS THAT THE COMPENSATION AMOUNT WAS NOT INCOME. 14. THUS THE INCOME OUT OF TRANSACTIONS OF IMMOVABLE PROPERTY IN THE NATURE OF AGRICULTURAL LAND IS HELD AS CAPITAL GAIN EXEMPTED UNDER THE INCOME TAX AS ARISING FROM THE AGRICULTURAL LAND. WE FIND THE RULING IN THE CASE OF DLF UNITED LTD. WAS CHALLENGED IN S.L.P. (CIVIL) NO. CC 1727 - 1729/98 AND THE HONBLE APEX COURT FOUND THAT THERE WAS NO MERIT IN THE S.L.P. AND IT WAS ACCORDINGLY DISMISSED ON MERITS. THUS CAPITAL GAIN ARISING FROM THE TRANSACTION IN RESPECT OF AGRICULTURAL LAND CANNOT BE CONSIDERED AS BUSINESS 12 ITA NO.46/NAG/2013 INCOME. THE RULING IS SQUARELY APPLICABLE TO THE FACTS AND CIRCUMSTANCES UNDER OUR CONSIDERATION IN THE PRESENT CASE AS WELL. 12. IN THIS REGARD WE MAY ALSO REFER TO HONBLE DELHI HIGH COURT DECISION IN THE CASE OF HINDUSTAN INDUSTRIAL RESOURCES LTD. V/S. ACIT 335 ITR 77 WHEREIN IT WAS HELD AS UNDER : THE TRIBUNALS FINDING OF FACT IS CONTRARY TO ITS OWN RECORD AND THEREFORE IS IN THE REAIM OF PERVERSITY. THIS IS SO BECAUSE THE TRIBUNAL CLEARLY HELD THAT AT THE POINT OF TIME WHEN THE ASSESSEE PURCHASED THE SAID LAND IT WAS AGRICULTURAL LAND. THE RE IS NO DISPUTE WITH REGARD TO THIS. THE TRIBUNAL ALSO NOTED THAT THE AWARD PASSED BY THE DISTRICT COLLECTOR (LAND ACQUISITION) WAS A DOCUMENT WHICH ESTABLISHED BEYOND DOUBT THAT THE LAND IN QUESTION WAS AGRICULTURAL LAND. THUS ON THE DATE OF PURCHAS E THE LAND IN QUESTION WAS AGRICULTURAL LAND AND ON THE DATE OF ACQUISITION THE CHARACTER OF THE LAND CONTINUED TO BE AGRICULTURAL. WHEN THESE TWO CLEAR FINDINGS HAVE BEEN RETURNED IT IS APPARENT THAT IN THE TRANSACTIONAL PERIOD THAT IS BETWEEN PURCHASE AND ACQUISITION THE NATURE AND CHARACTER OF THE LAND DID NOT CHANGE. THE FACT THAT THE ASSESSEE INTENDED TO USE THE LAND FOR INDUSTRIAL PURPOSES DID NOT IN ANY WAY ALTER THE NATURE AND CHARACTER OF THE LAND. THE FURTHER FACT THAT THE ASSESSEE DID NOT CARRY OUT ANY AGRICULTURAL OPERATIONS DID NOT ALSO RESULT IN ANY CONVERSION OF THE AGRICULTURAL LAND INTO AN INDUSTRIAL LAND. IT IS NOBODYS CASE THAT THE ASSESSEE CARRIED OUT ANY OPERATIONS FOR SETTING UP ANY PLANT OR MACHINERY OR OF THE LIKE N ATURE SO AS TO LEAD TO AN INFERENCE THAT THE NATURE AND CHARACTER OF THE LAND HAD BEEN CHANGED FROM AGRICULTURAL TO INDUSTRIAL. THE MERE FACT THAT THE ASSESSEE DID NOT CARRY OUT ANY AGRICULTURAL OPERATIONS DID NOT ALTER THE NATURE AND CHARACTER OF THE L AND. IN ANY EVENT THIS DISCUSSION IS NOT RELEVANT IN THE BACKDROP OF THE CLEAR FINDING GIVEN BY THE TRIBUNAL THAT ON THE DATE OF THE PURCHASE AND AS ALSO ON THE DATE OF ACQUISITION THE LAND IN QUESTION WAS AGRICULTURAL LAND. HAVING COME TO SUCH A CO NCLUSION THE TRIBUNAL OUGHT NOT TO HAVE GONE INTO QUESTION OF INTENTION OF THE ASSESSEE AND DEFINITELY NOT INTO THE QUESTION OF INTENTION OF THE LAND ACQUIRING AUTHORITY THE LATTER BEING A WHOLLY RELEVANT CONSIDERATION. IN THESE CIRCUMSTANCES TH E LAND ACQUIRED FROM THE OWNERSHIP OF THE ASSESSEE WAS AGRICULTURAL LAND. 13 ITA NO.46/NAG/2013 13. WE MAY ALSO REFER TO THE DECISION OF HONBLE HIGH COURT OF BOMBAY AT GOA IN THE CASE OF CIT V/S. SMT. DEBBIE ALEMAO 331 ITR 59 WHEREIN IT WAS HELD AS UNDER : UNDER S. 260A IT IS NOT OPEN TO THE HIGH COURT TO INTERFERE IN THE FINDING OF THE FACT. THE FINDING OF FACT THAT COULD BE INTERFERED ONLY IF IT WAS ARRIVED AT BY APPLICATION OF WRONG PRINCIPLES OF LAW OR WAS PERVERSE THAT IS TO SAY THAT NO PRUDENT MAN VERSED IN LAW WOULD COME TO THE SAID FINDING. THE FINDING IS NEITHER PERVERSE NOR IS IT ARRIVED AT BY WRONG APPLICATION OF ANY PRINCIPLE OF LAW AND IT IS NOT OPEN FOR THE COURT TO INTERFERE IN THE POSSIBLE FINDING OF FACT IN AN APPEAL UNDER S. 260A. THE AO HAS NOTE D THAT THE LAND WAS ENTERED IN THE REVENUE RECORD AS AN AGRICULTURAL LAND I.E. GARDEN OR ORCHARD. THE TRIBUNAL ALSO HELD THAT THE LAND WAS RECORDED IN THE REVENUE RECORDS AS AN AGRICULTURAL LAND. THIS IS NOT DISPUTED BY THE REVENUE. IT IS HOWEVER CON TENDED THAT THE LAND WAS NOT ACTUALLY USED FOR AGRICULTURE IN AS MUCH AS NO AGRICULTURAL INCOME WAS DERIVED FROM THIS LAND AND WAS NOT SHOWN BY THE RESPONDENTS IN THEIR IT RETURN. THIS WAS EXPLAINED BY THE RESPONDENTS BY SAYING THAT THERE WERE COCONUT T REES IN THE LAND BUT THE AGRICULTURAL INCOME DERIVED BY SALE OF THE COCONUTS WAS JUST ENOUGH TO MAINTAIN THE LAND AND THERE WAS NO ACTUAL SURPLUS. HENCE NO AGRICULTURAL INCOME WAS SHOWN FROM THIS LAND. IF AN AGRICULTURAL OPERATION DOES NOT RESULT IN G ENERATION OF SURPLUS THAT CANNOT BE GROUND TO SAY THAT THE LAND WAS NOT USED FOR THE AGRICULTURAL PURPOSE. IT IS NOT DISPUTED THAT THE LAND WAS SHOWN IN THE REVENUE RECORD TO BE USED FOR AGRICULTURAL PURPOSE AND NO PERMISSION WAS EVER OBTAINED FOR NON - AGRICULTURAL USE BY THE RESPONDENTS. SEC. 30 OF THE GOA DAMAN AND DIU LAND REVENUE CODE 1968 PROVIDES THAT NO LAND USED FOR AGRICULTURE SHALL BE USED FOR ANY NON - AGRICULTURAL PURPOSE EXCEPT WITH THE PERMISSION OF THE COLLECTOR. SEC. 32 OF THE GOA DAM AN AND DIU LAND REVENUE CODE PRESCRIBES THE PROCEDURE FOR CONVERSION OF USE OF LAND FROM ONE PURPOSE TO ANOTHER INCLUDING CONVERSION FROM AGRICULTURAL PURPOSE TO NON - AGRICULTURAL PURPOSE. THE PERMISSION FOR NON - AGRICULTURAL USE WAS OBTAINED FOR THE FIR ST TIME BY THE PURCHASER AFTER IT PURCHASED THE LAND. THUS THE FINDING RECORDED BY THE TWO AUTHORITIES BELOW THAT THE LAND WAS USED FOR THE PURPOSE OF AGRICULTURE IS BASED ON APPRECIATION OF EVIDENCE AND BY APPLICATION OF CORRECT PRINCIPLES OF LAW. C IT V/S. MINGUEL CHANDRA PAIS & ANR. (2006) 200 CTR (BOM) 1523 FOLLOWED. 14 ITA NO.46/NAG/2013 1 4 . FROM THE ABOVE IT IS EVIDENT THAT ON SALE OF AGRICULTURAL LAND THE RECEIPT IS NOT EXIGIBLE TO CAPITAL GAINS TAX. THE PURPOSE OF ACQUIRING/SELLING THE LAND IS NOT RELEVANT. WHAT IS RELEVANT IS WHETHER THE CONCERNED LANDS ARE AGRICULTURAL LANDS OR NOT. IN THE FACTS OF THE PRESENT CASE IT IS UNDISPUTED THAT THE SAID LANDS WERE AGRICULTURAL LANDS. IT IS SO REFLECTED IN THE LAND REVENUE RECORDS. UPON ENQUIRY BY THE ASSESSING OFFICER THE CONCERNED PERSONS WHO WERE DOING AGRICULTURAL OPERATIONS HAVE ACCEPTED THAT THEY WERE PERFORMING AGRICULTURAL OPERATIONS ON THE SAID LAND. ONE OF THOSE PERSONS IS AT PRESENT A SITTING HONBLE HIGH COURT JUDGE. THE ADVERSE INFERENCE DRAWN BY THE ASSESSI NG OFFICER THAT THE ASSESSEE HAS SHOWN MEAGER INCOME FROM AGRICULTURE BUT OWNS LARGE TRACT OF LAND IS NOT AT ALL SUSTAINABLE. THERE IS NO PRESUMPTION THAT AGRICULTURAL ACTIVITIES ARE BOUND TO BE HUGELY PROFITABLE. IT IS ALSO UNDISPUTED THAT THE SAID LAN D WAS NOT CONVERTED FOR NON AGRICULTURAL PURPOSES. THE SAID LAND WAS BOUGHT AND HELD FOR A PERIOD OF 18 TO 19 YEARS AS AGRICULTURAL LAND. IN OUR CONSIDERED OPINION ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE R EVENUES PLEA THAT THIS IS NOT A CASE OF SA LE OF AGRICULTURAL LAND IS NOT AT ALL SUSTAINABLE. 1 5 . THE DECISION IN THE CASE OF GOPAL SHARMA 209 ITR 946 (SUPRA) RELIED UPON BY THE LEARNED CIT(APPEALS) HAS CORRECTLY BEEN SHOWN BY THE LEARNED COUNSEL OF THE ASSESSEE TO BE NOT APPLICABLE ON THE FACTS OF THE CASE. FURTHER MORE WE HAVE BEFORE US THE DECISIONS INCLUDING LATER DECISIONS OF HONBLE JURISDICTIONAL HIGH COURT WHICH ARE IN SUPPORT OF THE VIEW THAT AGRICULTURAL LANDS SOLD ARE NOT EXIGIBLE TO INCOME - TAX. IT IS ALSO A SETTLED LAW THAT WHEN TWO VIEWS ARE AVAILABLE TO THE INTERPRETER OF PROVISIONS OF TAXING STATUTE THE INTERPRETATION WHICH IS IN FAVOUR OF THE ASSESSEE OUGHT TO B E PREFERRED. THIS HAS BEEN EXPOU NDED IN NUMBER OF CASES BY THE HONBLE APEX COURT INCLUDING THAT OF CIT V/S. VEGETABLE PRODUCTS LTD. 88 ITR 192. 15 ITA NO.46/NAG/2013 1 6 . LEARNED COUNSEL OF THE ASSESSEE HAS ALSO CANVASSED A PROPOSITION THAT REVENUE FROM LAND WOULD ALSO INCLUDE INCOME FROM SALE OF LAND. THAT I T IS UNDISPUTED THAT THE REVENUE FROM LAND IS NOT EXIGIBLE TO INCOME - TAX. FO R THIS PROPOSITION LEARNED COUNSEL OF THE ASSESSEE HAS PLACED RELIANCE UPON HONBLE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF MANUBHAI A SHETH & ORS. V/S. N.D. NIRGUADKAR ITO 128 ITR 87. HOWEVER WE FIND THAT WE HAVE ALREADY HELD HEREINABOVE THAT THE SALE OF AGRICULTURAL LAND IN THIS CASE BY THE ASSESSEE IS NOT EXIGIBLE TO CAPITAL GAINS TAX. HENCE THE ADJUDICATION ON THIS LIMB OF ARGUMENT OF THE LEARNED COUNSEL OF THE ASSESSEE IS ONLY ACADEMIC IN NATURE AND HENCE WE ARE NOT ENGAGING INTO THE SAME . 1 7 . IN THE BACKGROUND OF ABOVE DISCUSSION AND PRECEDENTS WE SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND HOLD THAT THE SALE OF AGRICULTURAL LANDS IN THIS CASE BY THE ASSESSEE IS NOT EXIGIBLE TO CAPITAL GAINS TAX. 1 8 . IN THE RESULT THIS APPEAL FILED B Y THE ASSESSEE STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 31 ST DAY OF JULY 2015. SD/ - SD/ - (MUKUL K. SHRAWAT) ( SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER. NAGPUR DATED: 31 ST JULY 2015. COPY OF ORDER FORWARDED TO : 1. THE ASSESSEE. 2. REVENUE. 3. THE CIT(A) 16 ITA NO.46/NAG/2013 4. THE CIT NAGPUR. 5. THE D.R. ITAT NAGPUR. 6. GUARD FILE. TRUE COPY. BY ORDER WAKODE ASSISTANT REGISTRAR ITAT NAGPUR