M.Karthik, CHENNAI V. ITO, CHENNAI

CO 16/CHNY/2015

• Counselvise Citation: [2016] 123 COUNSELVISE.COM (IT) 2081 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 1 month(s) 11 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 24-03-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 10-03-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 13-02-2015
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH JCITD R
• Assessee Lawyers: K SRIDHARCA
• Keywords: Capital asset; Onus to prove
• Section: 143(3); 63

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI , ! ' #! ' $ . %& ' () BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ./ I.T.A.NO.16 /MDS./2015 ( / ASSESSMENT YEAR :2011-12) & CO NO.16/MDS./2015 INCOME TAX OFFICER, NON-CORPORATE WARD 15(2), CHENNAI 600 034. VS. SHRI M.KARTHIK , 27,ANNAI INDIRA GANDHI STREET, KARAPAKKAM,CHENNAI 600 096. PAN AOEPK 8665 D ( *+ / APPELLANT ) ( ,-*+ / RESPONDENT/ CROSS OBJECTOR ) REVENUE BY : MR.A.V.SREEKANTH,JCIT,D.R ASSESSEE BY : MR.K.SRIDHAR,CA / DATE OF HEARING : 15.03.2016 /DATE OF PRONOUNCEMENT : 24.03.2016 . / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL IS FILED BY THE REVENUE IS DIRECTED AG AINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(A)- V(I/C), CHENNAI DATED 23.09.2014 PERTAINING TO THE ASSESSMENT YEAR 2011-12 . ITA NO.16/MDS/2015 MR.M.KARTHIK 2 2.1 THE REVENUE HAS RAISED THE FOLLOWING GROUNDS I N ITS APPEAL FOR ADJUDICATION. 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX (APP EALS) IS CONTRARY TO THE LAW AND FACTS OF THE CASE. 2.1. THE LEARNED CIT(A) ERRED IN DIRECTING THE AO T O DELETE THE ADDITION MADE ON ACCOUNT OF CAPITAL GAIN WORKED OUT BY ASSESSEE ON ACCOUNT OF SALE OF AGRICULTURAL LAND. 2.2 THE LEARNED CIT(A) ERRED IN, THE LAND SOLD WAS AN AGRICULTURAL LAND AND THE SAME WAS EXEMPTED U/S 2(14), WHEN THER E IS NO AGRICULTURE INCOME WAS OFFERED EVER SINCE THE PURCH ASE OF THE LAND. 2.3 THE LEARNED CIT(A) ERRED IN, THE LAND SOLD WAS AN AGRICULTURAL LAND THOUGH, THE FACT THAT THE LAND WAS PURCHASED B Y A COMPANY ENGAGED IN REAL ESTATE AND CONSTRUCTION BUS INESS AT A PRICE WHICH IS SEVERAL TIMES MORE THAN WHAT IT WAS PURCHASED A FEW YEARS BEFORE CLEARLY SHOWS THAT EVEN THE PURCHA SER HAS NO INTENTION OF CARRYING OUT ANY AGRICULTURAL OPERATIO N THERE ON. 2.4 THE CIT(A) ERRED IN THE LAND SOLD WAS AN AGRICU LTURAL LAND BASED ON THE CLASSIFICATION OF LAND AS AGRICULTURAL LAND IN REVENUE RECORDS ARE NOT GOOD REASON TO TERM OF THE LAND AS AGRICULTURAL LAND, A MERE CLASSIFICATION BY THE REV ENUE ITA NO.16/MDS/2015 MR.M.KARTHIK 3 AUTHORITIES IN GENERAL TERMS THAT THE LANDS ARE AGR ICULTURAL LAND DOES NOT IN ANY WAY EXEMPT THE ASSESSEE FROM FILING EVIDENCE SHOWING THAT AGRICULTURAL OPERATIONS WERE IN FACT C ARRIED OUT DURING HIS TENURE OF OWNERSHIP. 2.5 THE CIT(A) HAS FAILED TO NOTE THAT THE ASSESSI NG OFFICER HAD CLEARLY ESTABLISHED WITH DETAILED REASONING IN THE ASSESSMENT ORDER. 3 THE CIT(A) OUGHT TO HAVE CONSIDERED THE DECISION OF SUPREME COURT IN THE CASE OF SARIFA BIBI MD.IBRAHIM REPORTE D IN 2041TR 631, THE DECISION OF THE JURISDICTIONAL ITAT IN THE CASE OF PALLAVA RESORTS PVT LTD IN ITA NO.794/MDS/2011 DATE D 10.11.2012 AND ITATS ORDER IN ITA NO.808/MDS/2011 DATED 17.10.2012 IN THE CASE OF PALLAVARAM KOTHANDARARNAN IN INSTANT TRANSACTION IS LIABLE OF CAPITAL GAIN. 2.2 THE ASSESSEE HAS FILED CROSS-OBJECTIONS IN SUP PORT OF THE IMPUGNED ORDER. 3.1 THE BRIEF FACTS OF THE CASE ARE THAT THE ASSE SSEE IS A CONTRACTOR ENGAGED IN THE BUSINESS OF UNDERTAKING CONSTRUCTION CONTRACTS AT KARAPAKKAM PANHAYAT / MARG LTD. BESIDES HE IS ALSO THE PROP. M/S ITA NO.16/MDS/2015 MR.M.KARTHIK 4 LAKSHMI VINAYAKAR TRANSPORTS WHICH IS ENGAGED IN TH E BUSINESS OF TRANSPORT AGENCY & EARNS INCOME BY WAY OF HIRE CHAR GES. HE ALSO EARNED RENTAL INCOME ON LETTING OUT THE PROPERTIES & OTHER INCOME DURING FINANCIAL YEAR 2010-11. THE ASSESSEE FILED T HE RETURN OF INCOME ON 30.09.2011 ADMITTING TOTAL INCOME OF ` 8,87,100/- FOR ASSESSMENT YEAR 2011-12. IN THE RETURN FILED, THE ASSESSEE ADMITTED CONTRACT RECEIPTS AND RENTAL RECEIPTS ONLY. AS HE H AD SOLD AN IMMOVABLE PROPERTY FOR ` 2.14 CRORES DURING FY 2010-11 FOR WHICH NO LTCG WAS OFFERED TO TAX THIS CASE WAS TAKEN UP FOR SCRUTINY BY CASS BY THE AO TO EXAMINE THE TAXABILITY OF THE SALE OF PROPERTY AS REPORTED IN AIR & NOTICE U/S 143(2). THE ASSESSMENT WAS COMP LETED U/S 143(3) ON 19.02.2014 BY MAKING THE FOLLOWING ADDITI ONS AND RAISED A DEMAND AT ` 23,17,610/-. 1. INTEREST IN THE SB A/C AT ` 1,42,543/- AS THE ASSESSEE HAS NOT DISCLOSED THIS INTEREST INCOME IN THE RETURN FILED 2. INCOME FROM M/S LAKSHMI VINAYAKAR TRANSPORTS AT ` 8,56,000/- AS THE ASSESSEE HAS NOT DISCLOSED HIRE C HARGES AND NET INCOME EARNED ON ACCOUNT GROSS HIRE RECEIPT S TO THE TUNE OF ` 85,60,000/- (AN ESTIMATED 10% OF GROSS TURNOVER ITA NO.16/MDS/2015 MR.M.KARTHIK 5 ADMITTED BY THE ASSESSEE IS TAKEN AS INCOME FROM BU SINESS) 10% OF GROSS TURNOVER I.E. ` 8,56,000I- WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE FOR AY 2011-12 ON ACCOUNT OF INCOME FROM M/S LAKSHMI VINAYAKAR TRANSPORTS AND CAPITAL G AIN ON SALE OF PROPERTY ALSO BROUGHT INTO TAX AS LONG TERM CAPITAL GAINS. 3.2 ON APPEAL, THE LD.CIT(A) OBSERVED THAT THE IMP UGNED LAND PROPERTY IS A AGRICULTURAL LAND, NOT LIABLE FOR CAP ITAL GAINS TAX IN VIEW OF THE PROVISIONS OF THE SECTION 2(14)(III) OF THE ACT . AGAINST THIS, THE REVENUE IS IN APPEAL BEFORE US. 4.1 WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IN HIS CASE THE VACANT LAND SITUATED AT NA VALUR VILLAGE, CHENGALPET TALUK, KANCHIPURAM DISTRICT MEASURING 95 CENTS, THE SAID LAND WAS ACQUIRED BY THE ASSESSEE VIDE SALE DEED DA TED 06.12.2006 FOR A COST OF ` 18,63,900/- AND THE SAID PROPERTY SOLD FOR CONSIDER ATION OF ` 2.14 CRORES TO M/S.OLYMPIA INFRA TECH (P) LTD. ACC ORDING TO THE ASSESSEE, THE PROPERTY IS AN AGRICULTURAL LAND, NOT LIABLE FOR TAX IN VIEW OF THE ORDER OF THE TRIBUNAL IN THE CASE OF ITO VS. SMT.LALITHA IN ITA NO.14/MDS./15 & CO NO.15/MDS./2015 VIDE ORDER DATED 17THJULY, ITA NO.16/MDS/2015 MR.M.KARTHIK 6 2015, THE PROPERTY IS NOT LIABLE FOR CAPITAL GAINS TAX. ON THE OTHER HAND, THE LD.D.R RELIED ON THE ORDER OF THE CO-ORD INATE BENCH IN THE CASE OF ITO VS. SHRI ABOOBUCKER IN ITA NO.1793/MDS. /2013 FOR ASSESSMENT YEAR 2006-07VIDE ORDER DATED 31.12.2015 WHEREIN CONSIDERED THE PROPERTY AT NAVALUR VILLAGE AND DECI DE THE CASE AGAINST THE ASSESSEE. HOWEVER, THE AR SUBMITTED TH AT THE SALE TRANSACTION EFFECTED BY THE ASSESSEE IN RESPECT OF THE ABOVE LAND CONSTITUTED ONLY SALE OF AGRICULTURE LAND, AND BY N O STRETCH OF IMAGINATION IT CAN BE TREATED AS TRANSFER OF CAPIT AL ASSET AND SO AS TO TREAT THE SAME AS CAPITAL GAIN FOR THE FOLLOWING REASONS: (I) PURCHASE AND HOLDING OF LAND FOR A LONG PERIOD AND SUBSEQUENT SALE THEREOF ITSELF CANNOT BE AN INDICAT OR TO HOLD IT AS NON-AGRICULTURAL LAND, THE ASSESSEE WAS TO CARRY ON BUSINESS WITH THOSE ASSETS. (II) THE ASSESSEE HELD LAND FOR CONSIDERABLE TIME. THE A SSET ACQUIRED WAS AGRICULTURE LAND AS PER THE EVIDENCE B ROUGHT ON RECORD. THUS, THE ASSESSEE HELD THE AGRICULTURE LAN D FOR MORE THAN 3 YEARS. DURING THAT PERIOD THE ASSESSEE CARRI ED ON REGULAR AGRICULTURAL OPERATIONS. IN THE LIGHT OF FA VOURABLE MARKET CONDITIONS THE ASSESSEE THOUGHT IT GOOD TO S ELL THE ASSET TO REALIZE A GOOD AMOUNT. REALIZATION OF BETT ER PRICE IN A BOOMING MARKET CANNOT BE CONSIDERED AS AN ADVENTURE IN TRADE ITA NO.16/MDS/2015 MR.M.KARTHIK 7 (III) REALIZATION OF INVESTMENTS CONSISTING OF PURCHASE O F AGRICULTURAL LAND AND RESALE, THOUGH PROFITABLE ARE CLEARLY OUTSIDE THE DOMAIN OF CAPITAL GAIN. (IV) THE ASSESSEE TREATED THE ASSETS AS INVESTMENT IN AG RICULTURAL LAND. THEREFORE DISPOSAL OF THE SAME WOULD NOT CONV ERT, WHAT WAS A CAPITAL ACCRETION. TO MAKE IT MORE CLEAR, SAL E OF AGRICULTURAL LAND BY THE ASSESSEE AND REALISATION O F GOOD PRICE WOULD NOT ALTER THE BASIC NATURE AND CHARACTERISTIC OF THE TRANSACTION. IN THE CASE OF THE ASSESSEE, LAND WAS ACQUIRED BY THE ASSESSEE AND TREATED AS FIXED-ASSETS. (V) WHETHER A TRANSACTION IN RESPECT OF AN ASSET IS CAP ITAL OR NOT DEPENDS ON THE FACTS AND CIRCUMSTANCES OF THE CASE. THE MERE FACT THAT THE PERSON HAS PURCHASED A LAND AND SUBSEQUENTLY SOLD IT, GIVING RISE TO A SUBSTANTIAL PROFIT CANNOT CHANGE THE CHARACTER OF THE TRANSACTION. IT IS THE GENERAL HUMAN TENDENCY TO EARN PROFIT OUT OF CAPITAL ASSET. NO ONE INVESTS TO INCUR A LOSS. IF THE MARKET CONDITION SU DDENLY GOES UP OR DOWN, IT IS ALWAYS THE TENDENCY OF A PERSON T O TAKE A QUICK DECISION SO THAT THE REALIZATION ON THE INVES TMENT IS MAXIMUM OR THE LOSS IS MINIMUM. HE SUBMITTED THAT IN THE PRESENT CASE THERE IS NO D ISPUTE THAT THE ASSESSEES ACQUIRED AGRICULTURAL LAND. 4.2 THE DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE AMOUNT RECEIVED ON SALE OF THIS PROPERTY IS NOTHING BUT ON ACCOUNT OF SALE OF ITA NO.16/MDS/2015 MR.M.KARTHIK 8 CAPITAL ASSET AND THE SAME WAS BROUGHT INTO INCOME FROM CAPITAL GAIN. IN THIS CASE, THE AUTHORISED REPRESENTATIVE S UBMITTED THAT THE LAND ALWAYS TREATED AS INVESTMENT AND NOT AT ALL CO NVERTED INTO STOCK- IN-TRADE. THE CHARACTER OF THE LAND IN THE HANDS OF THE ASSESSEES HAS NOT CHANGED. 4.3 NOW THE QUESTION AS TO WHETHER A LAND I S AGRICULTURAL LAND OR NOT IS ESSENTIALLY A QUESTION OF FACT. THE QUESTION HAS TO BE ANSWERED IN EACH CASE HAVING REGARD TO THE FACTS AND CIRCUMS TANCES OF THAT CASE. THERE MAY BE FACTORS BOTH FOR AND AGAINST A P ARTICULAR POINT OF VIEW. WE HAVE TO ANSWER THE QUESTION ON A CONSIDERA TION OF ALL OF THEM, A PROCESS OF EVALUATION AND THE INFERENCE HAS TO BE DRAWN ON A CUMULATIVE CONSIDERATION OF ALL THE RELEVANT FACTS. IT MAY BE STATED HERE THAT NOT ALL THE FACTORS OR TESTS WOULD BE PRE SENT OR ABSENT IN ANY CASE AND THAT IN EACH CASE ONE OR MORE OF THE FACTO RS MAY MAKE APPEARANCE AND THAT ULTIMATE DECISION WILL HAVE TO BE REACHED ON A BALANCED CONSIDERATION OF THE TOTALITY OF THE CIRCU MSTANCES. ITA NO.16/MDS/2015 MR.M.KARTHIK 9 4.4 THE EXPRESSION 'AGRICULTURAL LAND' IS NOT DEFINED IN THE ACT, AND NOW, WHETHER IT IS AGRICULTURAL LAND OR NOT HAS TO BE DETERMINED BY USING THE TESTS OR METHODS LAID DOWN BY THE COURTS FROM TIME TO TIME. 4.5 THE SUPREME COURT IN THE CASE OF SMT. SARIF ABIBI MOHMED IBRAHIM V. CIT [1993] 204 ITR 631/70 TAXMAN 301 HAS APPROVED THE DECISION OF A DIVISION BENCH OF THE GUJARAT HIGH C OURT IN THE CASE OF SIDDHARTH J. DESAI 139 ITR 628 AND HAS LAID DOWN 1 3 TESTS OR FACTORS WHICH ARE REQUIRED TO BE CONSIDERED AND UPON CONSID ERATION OF WHICH, THE QUESTION WHETHER THE LAND IS AN AGRICULTURAL LA ND OR NOT HAS TO BE DECIDED OR ANSWERED. WE REPRODUCE THE SAID 13 TESTS AS FOLLOWS: '1. WHETHER THE LAND WAS CLASSIFIED IN THE REVENUE RECO RDS AS AGRICULTURAL AND WHETHER IT WAS SUBJECT TO THE PAYM ENT OF LAND REVENUE? 2. WHETHER THE LAND WAS ACTUALLY OR ORDINARILY USED FO R AGRICULTURAL PURPOSES AT OR ABOUT THE RELEVANT TIME ? 3. WHETHER SUCH USER OF THE LAND WAS FOR A LONG PERIOD OR WHETHER IT WAS OF A TEMPORARY CHARACTER OR BY ANY O F A STOPGAP ARRANGEMENT? ITA NO.16/MDS/2015 MR.M.KARTHIK 10 4. WHETHER THE INCOME DERIVED FROM THE AGRICULTURAL OP ERATIONS CARRIED ON IN THE LAND BORE ANY RATIONAL PROPORTION TO THE INVESTMENT MADE IN PURCHASING THE LAND? 5. WHETHER, THE PERMISSION UNDER S. 65 OF THE BOMBAY L AND REVENUE CODE WAS OBTAINED FOR THE NON-AGRICULTURAL USE OF THE LAND? IF SO, WHEN AND BY WHOM (THE VENDOR OR TH E VENDEE)? WHETHER SUCH PERMISSION WAS IN RESPECT OF THE WHOLE OR A PORTION OF THE LAND? IF THE PERMISSION W AS IN RESPECT OF A PORTION OF THE LAND AND IF IT WAS OBTA INED IN THE PAST, WHAT WAS THE NATURE OF THE USER OF THE SAID P ORTION 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 A N ALTERNATIVE USE? WHETHER SUCH LESSER AND/OR ALTERNATIVE USER WA S 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 LAND IN THE ADJOINING AREA WERE SUCH AS WOULD I NDICATE THAT THE LAND WAS AGRICULTURAL? 9. WHETHER THE LAND ITSELF WAS DEVELOPED BY PLOTTING A ND ITA NO.16/MDS/2015 MR.M.KARTHIK 11 PROVIDING ROADS AND OTHER FACILITIES? 10. WHETHER THERE WERE ANY PREVIOUS SALES OF PORTIONS O F THE LAND FOR NON-AGRICULTURAL USE? 11. WHETHER PERMISSION UNDER S. 63 OF THE BOMBAY TENANC Y AND AGRICULTURAL LAND ACT, 1948, WAS OBTAINED BECAUSE T HE SALE OR INTENDED SALE WAS IN FAVOUR OF A NON-AGRICULTURI ST? IF SO, WHETHER THE SALE OR INTENDED SALE TO SUCH NON-AGRIC ULTURISTS WAS FOR NON-AGRICULTURAL OR AGRICULTURAL USER? 12. WHETHER THE LAND WAS SOLD ON YARDAGE OR ON ACREAGE BASIS? 13. WHETHER AN AGRICULTURIST WOULD PURCHASE THE LAND FO R AGRICULTURAL PURPOSES AT THE PRICE AT WHICH THE LAN D WAS SOLD AND WHETHER THE OWNER WOULD HAVE EVER SOLD THE LAND VALUING IT AS A PROPERTY YIELDING AGRICULTURAL PRODUCE ON T HE BASIS OF ITS YIELD?' 4.6 WE WILL THEREFORE PROCEED TO EXAMINE THE QUESTI ON AS TO WHETHER THE PROPERTY CAN BE SAID TO BE AGRICULTURAL LAND OR NOT. IN THE CASE OF CWT VS. OFFICER-IN- CHARGE (COURT OF WARDS ), PAIGAH 105 ITR 133 (SC) IN WHICH QUESTION TO BE DECIDED WAS WH ETHER ACRES OF VACANT LAND ENCLOSED IN COMPOUND WALLS OF A PALACE SITUATED BY THE SIDE OF A LAKE AND CLASSIFIED AND ASSESSED TO LAND REVENUE, WHICH ITA NO.16/MDS/2015 MR.M.KARTHIK 12 WERE NEITHER CULTIVATE NOR HAD BEEN PUT TO NON-AGRI CULTURAL USE' IN THE PAST COULD BE REGARDED AS 'AGRICULTURAL LAND' WITHI N THE MEANING OF THAT EXPRESSION WHICH OCCURRED IN THE DEFINITION OF 'ASSET' IN SECTION 2(E) OF THE WT ACT, 1957. THE HON'BLE SUPREME COURT HELD THAT MUCH WEIGHT CANNOT BE GIVEN TO MERE 'POTENTIALITY' OF TH E LAND FOR USE FOR AGRICULTURAL PURPOSES AND WHAT IS REALLY REQUIRED T O BE SHOWN IS THE CONNECTION WITH AN AGRICULTURAL PURPOSE AND USER AN D NOT THE MERE POSSIBILITY OF USER OF THE LAND, BY SOME POSSIBLE F UTURE OWNER OR POSSESSOR, FOR AN AGRICULTURAL PURPOSE. IT IS NOT M ERE POTENTIALITY, BUT ITS ACTUAL CONDITION AND INTENDED USER WHICH HAS TO BE SEEN. ONE OF THE OBJECTS FOR EXEMPTION IS TO ENCOURAGE CULTIVATI ON OR ACTUAL UTILISATION OF LAND FOR AGRICULTURAL PURPOSES AND H ENCE IF THERE IS NEITHER ANYTHING IN ITS CONDITION, NOR ANYTHING IN THE EVIDENCE TO INDICATE THE INTENTION OF ITS OWNERS OR POSSESSORS SO AS TO CONNECT IT WITH AN AGRICULTURAL PURPOSE, THE LAND COULD NOT B E AGRICULTURAL LAND. 4.7 IN THE CASE BEFORE THE SUPREME COURT THE FOLLOW ING CIRCUMSTANCES WERE EMPHASISED VIZ. (I) AREA WAS VE RY LARGE (108 ACRES) AND WAS ABUTTING A LAKE, (II) THERE WERE TW O WELLS ON IT (III) IT ITA NO.16/MDS/2015 MR.M.KARTHIK 13 WAS CAPABLE OF BEING USED (THOUGH NOT ACTUALLY USED ) FOR AGRICULTURAL PURPOSES, (IV) IT HAD NOT BEEN PUT TO ANY USE WHICH COULD CHANGE ITS CHARACTER BY MAKING IT UNFIT FOR IMMEDIATE CULTIVAT ION; AND (V) IT WAS CLASSIFIED AND ASSESSED TO LAND REVENUE AS 'AGRICUL TURAL LAND' UNDER THE RELEVANT REVENUE ENACTMENT. THE SUPREME COURT H ELD THAT FIRST FOUR CIRCUMSTANCES RELATING TO ABSENCE OF NON-AGRIC ULTURAL USER WERE NEUTRAL CIRCUMSTANCES AND ONLY FIFTH CIRCUMSTANCE . WAS GOOD PRIMA FACIE EVIDENCE OF LAND BEING AGRICULTURAL LAND BUT PRESUMPTION ARISING THERE FROM COULD BE REBUTTED BY OTHER CIRCUMSTANCE S. IN THAT CASE THE ASSESSEE HAD NOT LED ANY EVIDENCE ABOUT INTENDED US ER BECAUSE ASSESSEE WAS UNDER MISTAKEN IMPRESSION THAT IT WAS NOT NECESSARY TO DO SO IN VIEW OF EXISTENCE OF PRIMA FACIE EVIDEN CE IN THE FORM OF ENTRIES IN THE REVENUE RECORD AND THEREFORE THE SUP REME COURT RESTORED THE MATTER TO TRIBUNAL TO RECORD A FINDING ON THE QUESTION OF INTENDED USER AND THEN DECIDE THE POINT WHETHER THE LAND IN QUESTION WAS AGRICULTURAL LAND. THE SUPREME COURT DISAPPROVE D THE VIEW THAT THAT LAND WHICH IS LEFT BARREN BUT WHICH IS CAPABLE OF BEING CULTIVATED CAN ALSO BE AGRICULTURAL LAND UNLESS THE. SAID LAND IS ACTUALLY PUT TO SOME OTHER NON- AGRICULTURAL PURPOSE LIKE CONSTRUCT ION OF BUILDINGS, OR ITA NO.16/MDS/2015 MR.M.KARTHIK 14 AN AERODROME RUNWAY, ETC. THEREON WHICH ALTERS THE PHYSICAL CHARACTER OF THE LAND RENDERING IT UNFIT FOR IMMEDI ATE CULTIVATION AND OBSERVED THAT MINIMAL TEST OF AGRICULTURAL LAND WAS CREDIBLE EVIDENCE OF AT LEAST APPROPRIATION OR SETTING A PART OF THE LAND FOR A PURPOSE WHICH COULD BE REGARDED AS AGRICULTURAL AND FOR WHI CH LAND WAS USED WITHOUT AN ALTERATION OF ITS CHARACTER. 4. 8 THE DECISION OF SUPREME COURT IN THE CASE O F OFFICER-IN- CHARGE (COURT OF WARDS ) WAS ANALYSED BY THE GUJARA T HIGH COURT IN CIT VS. SARIFABIBI MOHAMMED IBRAHIM 136 ITR 621(GUJ ) AND THE LEGAL POSITION WAS SUMMED UP AS FOLLOWS:- (I) THE FACT THAT LAND IS ENTERED AS AGRICULTURAL LAND IN REVENUE RECORDS AND IS ASSESSED AS SUCH UNDER THE LAND REVE NUE CODE WOULD BE A CIRCUMSTANCE IN FAVOUR OF CONCLUSION THAT IT I S AN AGRICULTURAL LAND. HOWEVER, THIS WOULD RAISE ONLY A PRIMA FACIE PRESUMPTION AND SAID PRESUMPTION CAN BE DESTROYED BY OTHER CIRCUMST ANCES POINTING TO THE CONTRARY CONCLUSION (II) THE FACT THAT AGRICULTURAL OPERATIONS WERE CARRIED ON IN THE PAST OR ARC CARRIED ON CURRENTLY IS A CIRCUMSTANCE IN FAVOUR OF CONCLUSION THAT LAND WAS AGRICULTURAL LAND. HOWEVER, THIS IS NOT A DECISIVE FACTOR INASMUCH AS AGRICULTURAL CROP CAN BE RAISED EVEN ON BUILDING SITE LAND (EVEN ON DESERT LAND AS OBSERVED BY THE SUPREME COURT IN SAID CASE) AND SOMETIMES, A CROP IS GROWN IN ORDER NOT TO ALLOW THE LAND TO REMAIN IDLE AWAITING SALE FOR NON-AGRICULTURAL P URPOSES TO A NON- AGRICULTURIST BY WAY OF A STOP-GAP ARRANGEMENT OR I N ORDER TO AVOID ITA NO.16/MDS/2015 MR.M.KARTHIK 15 PAYMENT OF REVENUE AT A HIGHER RATE OR IN ORDER TO AVOID PAYMENT OF CAPITAL GAINS TAX. (III) THE FACT THAT LAND IS NOT CONVERTED TO NON-AGRICULT URAL USER WOULD BE A CIRCUMSTANCE INDICATING THAT IT IS AN AGRICULTURAL LAND. HOWEVER THIS IS SUBJECT TO SAME RIDER AS IS MENTIONED IN (II) ABOVE. (IV) THE FOLLOWING FACTS WOULD INDICATE THAT LAND WAS NOT AGRICULTURAL LAND: (A) THE LAND IS SITUATED (EVEN IN THE YEAR PRIOR TO ASS T. YEAR 1970-71 WHEN AMENDMENT CAME IN FORCE) IN AN URBAN AREA IN THE PROXIMITY OF BUILDING SITES. (FROM ASST. YEAR 1970-71, AGRICULTURAL LANDS SITUATE WITHIN MUNICIPAL LIMITS ARE NOT OUTSIDE THE AMBIT OF 'CAPI TAL ASSETS'). (B) THE LAND IS SOLD TO A NON-AGRICULTURIST FOR NON- AGRICULTURAL PURPOSES (C) THE LAND IS SOLD ON A PER SQUARE YARD BASIS AT A PRICE COMPARABLE TO THE PRICE FETCHED BY BUILDING SITE S (D) THE PRICE IS SUCH THAT NO BONA FIDE AGRICUL TURIST WOULD PURCHASE THE SAME FOR GENUINE AGRICULTURAL OPERA TIONS (E) WHEN THE PRICE IS SUCH THAT NO PRUDENT OWNE R WOULD SELL IT AT A PRICE WORKED OUT ON THE CAPITALISATION M ETHOD TAKING INTO ACCOUNT ITS OPTIMUM YIELD IN THE MOS T FAVOURABLE CIRCUMSTANCES. 4.9 THE ABOVE DECISION OF GUJARAT HIGH COURT HAS BEEN AFFIRMED IN APPEAL BY THE SUPREME COURT IN SARIFABIBI MOHMED IBRAHIM VS. CIT 204 ITR 631 (SC) IN WHICH THE SUPREME COURT EMPHASI SED THAT ALL THE CIRCUMSTANCES WERE REQUIRED TO BE WEIGHTED AND THAT HIGH COURT HAS REACHED A CORRECT CONCLUSION. ITA NO.16/MDS/2015 MR.M.KARTHIK 16 4.10 THE CLAIM OF THE ASSESSEE THAT AGRICULTU RAL OPERATIONS WERE CARRIED OUT OVER THE PROPERTY AND THE PROPERTY WAS ACTUALLY USED FOR AGRICULTURAL PURPOSE WAS SOUGHT TO BE ESTA BLISHED BY RELYING ON THE CLASSIFICATION OF THE PROPERTY AS AG RICULTURAL LAND IN THE REVENUE RECORDS, EXISTENCE OF COCONUT TREES FOR AGRICULTURAL PURPOSE. THE REVENUE CONTENDS THAT THERE IS NO EVID ENCE OF THE ASSESSEE HAVING CARRIED OUT ACTUAL AGRICULTURAL ACT IVITIES OVER THE PROPERTY. THE ASSESSEE HAS NOT CLAIMED ANY EXPENSES INCURRED IN CARRYING OUT AGRICULTURAL OPERATIONS OR DECLARED ANY AGRICULTURAL INCOME FROM THIS LANDED PROPERTY. THERE IS NO EVIDE NCE OF THE AGRICULTURAL PRODUCE HAVING BEEN SOLD. THE HON'BLE KERALA HIGH COURT IN THE CASE OF KALPETTA ESTATES LTD. 185 ITR 318 (KER) IT HAS BEEN HELD BY THE HON'BLE KERALA HIGH COURT THAT THE BURDEN OF PROOF THAT THE LAND IN QUESTION WAS AGRICULTURAL LAND AT THE TIME OF TRANSFER TO CLAIM EXEMPTION WAS ON THE ASSESSEE. AS ALREADY OBSERVED THE QUESTION WHETHER THE LAND WAS AGRICULT URAL LAND HAS TO BE DECIDED ON FACTS OF EACH CASE AND DECIDED CAS ES ARE ONLY GUIDELINES TO BE KEPT IN MIND. FACTS AND ALL THE CI RCUMSTANCES ARE TO BE CONSIDERED AS A WHOLE AND AN OVERALL VIEW IS TO BE TAKEN IN ITA NO.16/MDS/2015 MR.M.KARTHIK 17 DECIDING WHETHER THE LAND WAS AN AGRICULTURAL LAND. IN A GIVEN CASE LARGE NUMBER OF CIRCUMSTANCES MAY BE INDICATIV E OF AGRICULTURAL CHARACTER BUT ONE CIRCUMSTANCE MAY OUT WEIGH ALL OF THEM AND ON ITS BASIS THE LAND WOULD BE HELD TO BE A NON- AGRICULTURAL LAND. THE CASE LAWS CITED BY THE ASSE SSEE AS WELL AS THE REVENUE DEAL WITH SITUATIONS WHERE ONE OR TWO FACTORS WAS CONSIDERED AS THE BASIS ON WHICH THE CONCLUSION THA T PROPERTY WAS AGRICULTURAL LAND OR WAS NOT AGRICULTURAL LAND HAD BEEN ARRIVED AT. 4.11 THE ASSESSEE IN THE PRESENT CASE IS NOT AN AGRICULTURIST. HE HAS NO BACKGROUND OF AGRICULTURAL ACTIVITIES. ST RICTLY SPEAKING IT MAY NOT BE NECESSARY TO HAVE BACKGROUND OF AGRIC ULTURAL ACTIVATES. WE ARE MAKING A REFERENCE TO THESE CIRCU MSTANCES ONLY TO WEIGH THE CUMULATIVE CIRCUMSTANCES TO COME TO A CONCLUSION WHETHER THE PROPERTY CAN BE REGARDED AS AGRICULTURAL LAND. NO EVIDENCE OF HAVING SPENT HUMAN LABOUR IN THE SENSE OF PREPARING THE LAND, FILLING, SOWING SEEDS, PLANT ING ON A REGULAR BASIS HAS BEEN PRODUCED BY THE ASSESSEE. THE PROPE RTY IS SITUATED IN FAST DEVELOPING AREA OF CHENNAI. THE P ROPERTY IS ITA NO.16/MDS/2015 MR.M.KARTHIK 18 LOCATED IN DEVELOPED/ DEVELOPING AREA AND HAS ACCES S TO ALL MODERN AMENITIES/LIVING. THERE WAS REAL ESTATE ACTI VITY IN THE AREA WHERE THE PROPERTY IS SITUATED. THE SALE OF TH E PROPERTY BY THE ASSESSEE IS TO A COMMERCIAL ORGANISATION. THE S ALE CONSIDERATION PAID WOULD SHOW THAT NO BONA-FIDE AGR ICULTURIST WOULD PAY SUCH A HUGE PRICE OF 2.14 CRORES FOR 95 CENTS FOR ACQUIRING OF LAND WHICH WORKS OUT 2.25 CRORES PER ACRE.. 4.12 WE WILL NOW APPLY THE TESTS LAID DOWN BY THE HON'B LE GUJARAT HIGH COURT IN THE CASE OF SARIFABIBI MOHAMM ED IBRAHIM (SUPRA) WHICH WAS APPROVED BY THE HON'BLE SUPREME C OURT, TO THE FACTS AND CIRCUMSTANCES OF THE CASE:- (I) THE FACT THAT LAND IS ENTERED AS AGRICULTURAL L AND IN REVENUE RECORDS AND IS ASSESSED AS SUCH UNDER THE LAND REVENUE CODE WOULD BE A . CIRCUMSTANCE IN FAVOUR OF CONCLUSION THAT IT IS AN AGRICULTURAL LAND. HOWEVER, THIS WOULD RAISE ONLY A PRIMA FACIE PRESUMPTION AND SAID PRESUMPTION CAN BE DESTROYED BY OTHER CIRCUMSTANCES POINTING TO THE CONTRARY CONCLUSION. (II) THE FACT THAT AGRICULTURAL OPERATIONS WERE CAR RIED ON IN THE PAST OR ARE CARRIED ON CURRENTLY IS A CIRCUMSTANCE IN FAVOUR OF CONCLUSION THAT LAND WAS AGRICULTURAL LAND. HOWEVER, THIS IS NOT A DECISIVE FACTOR INASMUCH AS AGRICULTURAL CROP CAN BE RAISED EVEN ON BUILDING SITE LAND (EVEN ON DESERT LAND AS OBSERVED BY THE SUPREME COURT IN SAID CASE) AND SOMETIMES, A CROP IS GROWN IN ITA NO.16/MDS/2015 MR.M.KARTHIK 19 ORDER NOT TO ALLOW THE LAND TO REMAIN IDLE AWAITING SALE FOR NON-AGRICULTURAL PURPOSES TO A NON- AGRICULTURIST BY WAY OF A STOP-GAP ARRANGEMENT OR IN ORDER TO AVOID PAYMENT OF REVENUE AT A HIGHER RATE OR IN ORDER TO AVOID PAYMENT OF CAPITAL GAINS TAX. (III) THE FACT THAT LAND IS NOT CONVERTED TO NO AGRICULTURAL USER WOULD BE A CIRCUMSTANCE INDICATING THAT IT IS AN AGRICULTURAL LAND. HOWEVER THIS IS SUBJECT TO SAME RIDER AS IS MENTIONED IN(II) ABOVE. (IV) THE FOLLOWING FACTS WOULD INDICATE THAT LAND WAS NOT AGRICULTURAL LAND: (A) THE LAND IS SITUATED IN AN AREA IN THE PROXIMITY OF BUILDING SITES. (B) THE LAND IS SOLD TO A NON-AGRICULTURIST FOR NON-AGRICULTURAL PURPOSES. (C)THE LAND IS SOLD AT A PRICE COMPARABLE TO THE PRICE FETCHED BY BUILDING SITES. (D) THE PRICE IS SUCH THAT NO BONA FIDE AGRICULTURIST WOULD PURCHASE THE SAME FOR GENUINE AGRICULTURAL OPERATIONS. 4.13 IN THE PRESENT CASE, THE PURCHASER OF THE PROP ERTY WAS A COMPANY BY NAME M/S. OLYMPIA INFRA TECH (P) LIMITED WHICH IS A REGISTERED COMPANY UNDER THE COMPANIES ACT, 1956. THE PROPERTY SOLD IS SITUATED IN NAVALUR WHICH IS A SUB URB IN CHENNAI, IT IS SITUATED IN KANCHIPURAM DISTRICTT, TAMIL NADU , LOCATED SOUTH ITA NO.16/MDS/2015 MR.M.KARTHIK 20 OF THE CITY OF CHENNAI, ALONG THE OLD MAHABALIPURAM ROAD. NAVALUR IS LOCATED BETWEEN SHOLINGANALLUR AND SIRUS ERI AND IS AROUND 6 KMS. FROM SHOLINGANALLUR AND COMES UNDER T HIRPORUR TALUK. THE PLACE WAS ONCE A VILLAGE BUT WITH THE AD VENT OF INFORMATION TECHNOLOGY COMPANIES AND THE RAPID DEVE LOPMENT OF THE OLD MAHABALIPURAM, IT HAS BECOME A BUSTLING SUBURBAN. NAVALUR IS AN UPCOMING RESIDENTIAL AREA WITH MANY N UMBER OF FLATS COMING UP, MOSTLY PROFESSIONALS FROM INFORMAT ION TECHNOLOGY COMPANIES RENTING AND BUYING APARTMENTS. AS DETAILED ABOVE, THE PROPERTY SOLD BY THE ASSESSEE I S IN THE MIDST OF DEVELOPMENT ACTIVITIES BEING CARRIED OUT BY BUIL DERS IN PROMOTING HOUSING/ INFORMATION TECHNOLOGY CORRIDORS , AND NO AGRICULTURAL ACTIVITIES WERE BEING CARRIED OUT EITH ER BY THE ASSESSE NOR BY OTHERS IN THAT AREA, THE PROPERTY IS DESCRIBED AS A MANGO GROVE AS PER THE COPY OF THE SALE DEED/PATTA, CHITTA ADANGAL PRODUCED. IN VIEW OF THE SAME, THE SALE PRI CE RECEIVED FOR THE PROPERTY HAS INCREASED MANIFOLD WHICH A NOR MAL AGRICULTURAL LAND WILL NOT FETCH. THE PRICE IS IN A CCORDANCE WITH THE ITA NO.16/MDS/2015 MR.M.KARTHIK 21 DEVELOPMENT ACTIVITIES AND CHANGES HAPPENING IN THE NATURE OF THE LAND FROM AGRICULTURAL TO THAT OF HOUSING. 4.14 IF WE CONSIDER THE ABOVE FACTS AND CIRCUMSTANC ES OF THE PRESENT CASE AS A WHOLE AND AN OVERALL VIEW IS TO B E TAKEN IN DECIDING WHETHER THE LAND WAS AN AGRICULTURAL LAND, WE WOULD COME TO A CONCLUSION THAT THE PROPERTY CANNOT BE CO NSIDERED AS AGRICULTURAL LAND, THOUGH THE CIRCUMSTANCE THAT THE LAND IS CLASSIFIED AS AGRICULTURAL IN THE REVENUE RECORDS A ND THE VILLAGE PANCHAYAT PRESIDENT, NAVALLUR, HAS CERTIFIED THAT THE LAND IS AWAY FROM MUNICIPALITY. IN OUR VIEW THE OTHER CIRCU MSTANCES POINTED OUT ABOVE OUTWEIGHS ALL OF THE CIRCUMSTANCE S IN FAVOUR OF THE REVENUE AND ON THE BASIS OF THOSE CIRCUMSTANCES , WE ARE INCLINED TO CONCLUDE THAT THE PROPERTY WAS NOT AN A GRICULTURAL LAND AS THERE IS NO PROOF CARRYING ON AGRICULTURAL ACTI VITIES IN THE SAID LAND. ITA NO.16/MDS/2015 MR.M.KARTHIK 22 5.1 FURHTER, JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. HI TECH ARAI LTD. REPORTED IN [2010] 321 ITR 477(MAD.) WHER EIN HELD THAT:- 3. WE ARE NOT IN A POSITION TO APPRECIATE EITHER OF THE CONTENTIONS OF THE LEARNED COUNSEL FOR THE PETITION ER. AS FAR AS THE FIRST CONTENTION IS CONCERNED, WHEN THE TRIBUNA L BY THE IMPUGNED ORDER HAS APPLIED SECTION 32(1)(IIA) OF TH E ACT, TO THE FACTS INVOLVED IN THE CASE OF THE ASSESSEE AND HAS FOUND THAT THE ASSESSEE IS ENTITLED FOR THE ADDITIONAL DEPRECI ATION CLAIMED UNDER THE SAID PROVISION, IT CANNOT BE HELD THAT SI MPLY BECAUSE A CO-ORDINATE BENCH OF THE TRIBUNAL HAD EARLIER TAK EN A DIFFERENT VIEW, THE TRIBUNAL ON THIS OCCASION ALSO OUGHT TO H AVE FOLLOWED THE SAME. WHEN WE FIND THAT THE TRIBUNAL HAS APPLIE D THE LAW CORRECTLY IN THE IMPUGNED ORDER, THERE IS NO GAINSA YING THAT THERE WAS AN EARLIER ORDER BY THE CO-ORDINATE BENCH AND THEREFORE, FOR THAT REASON, THIS TIME ALSO THE TRIB UNAL SHOULD HAVE BLINDLY FOLLOWED ITS OWN EARLIER DECISION EVEN IF SUCH EARLIER DECISION DID NOT REFLECT THE CORRECT POSITI ON OF THE LAW. AS SUCH, WE ARE NOT IN A POSITION TO FOLLOW THE ORD ER OF THE TRIBUNAL IN THE CASE OF SMT.LALITHA (SUPRA) RATHER WE ARE INCLI NED TO FOLLOW THE DECISION OF CO-ORDINATE BENCH IN THE CASE OF ITO V S. SHRI ITA NO.16/MDS/2015 MR.M.KARTHIK 23 ABOOBUCKER CITED SUPRA. ACCORDINGLY, THIS GROUND R AISED BY THE REVENUE IS ALLOWED. 5.2 THE CROSS OBJECTIONS FILED BY THE ASSESSEE IN SUPPORT OF THE ORDER OF THE LD.CIT(A) STANDS DISMISSED. 6. IN THE RESULT, THE APPEAL OF REVENUE IS ALLOWED AND THE CROSS OBJECTIONS FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ONTHURSDAY , THE 24 TH OF MARCH,2016 AT CHENNAI. SD/- SD/- ( . !' ) ( DUVVURU RL REDDY ) ) ( ( $ % & ' ) ) ( CHANDRA POOJARI ) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 24 TH MARCH,2016 . K S SUNDARAM. ) * + ,- . - /COPY TO: 1. /0 /APPELLANT 2. +1/0 /RESPONDENT 3. 2 () /CIT(A) 4. 2 /CIT 5. -34 + 5 /DR 6. 4' 6 /GF