Shri Nikul Jagdishchandra Patel, Ahmedabad V. The DCIT, Circle-2(2), Ahmedabad

CO 188/AHD/2019

AI Insights

The case revolves around the dispute concerning the taxability of profits earned by Shri Nikul Jagdishchandra Patel from the sale of agricultural land during the Assessment Year 2016-17. The Revenue contended that the land, sold to a non-agriculturist entity, should be treated as business income due to the nature of the transaction and the profit motive involved. The Assessee argued that the land was agricultural, and the sale was in the normal course of agricultural activities, thus exempting the profits from tax under Section 2(14)(iii) of the Income Tax Act. The CIT(A) sided with the Assessee, a decision which the Tribunal upheld, dismissing the Revenue's appeal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 114177 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 9 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 24-01-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 03-01-2023
• Assessment Year: 2016-2017
• Appeal Filed On: 15-12-2019
• Other Referred Cases: Ratanlal Soni vs. The State of Rajasthan And Ors., ACIT vs. Mansi Finance Chennai Ltd., Gopal C. Sharma vs. CIT, CIT, Rajkot-1 vs. M. Heenaben Bhadresh Mehta, CIT vs. Manilal Somnath, Banyan & Berry vs. CIT, George Williamson (Assm) Ltd vs. CIT, Union of India vs. Azadi Bachao Andolan, McDowell & Co. Ltd vs. CTO, CIT vs. Durga Prasad More, CIT vs. Siddharth J. Desai, CIT vs. Rajshibhai Meramanbhai Odedra, CIT vs. Premji Copalbhai, CIT vs. Smt. Radha Bai, CIT, Madras vs. Kasturi Estates (P) Ltd., Commissioner of Income-tax, Madras-II vs. MLM. Mahalingam Chettiar, CIT vs. Gopal C. Sharma
• Laws Referred To: Income Tax Act, 1961, Wealth Tax Act, 1957, Gujarat Tenancy and Agricultural Lands Act, 1948
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Gift; Business income; Depreciation; Source of fund; Fair market value; Avoidance of tax; Set aside; Capital Gains
• Section: 63; 143(3); 50C; 2(14); 133(6); 201; 264; 113; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “B” BENCH Before: Shri Waseem Ahmed, Accountant Member And Shri T.R. Senthil Kumar, Judicial Member The DCIT, Circle-2(2), Ahmedabad Shri Nikul Jagdishchandra Patel 4A, Ketan Society Nr. Sardar Patel Colony Navjivan Post, Ahmedabad-380014 PAN No:AHKPP5769Q (Appellant) Vs Vs Shri Nikul Jagdishchandra Patel 4A, Ketan Society Nr. Sardar Patel Colony Navjivan Post, Ahmedabad-380014 PAN No:AHKPP5769Q The DCIT, Circle-2(2), Ahmedabad (Respondent) Assessee Represented: Shri Dhiren Shah, Ms. Nupur Shah & Shri Bhavesh Shah, ARs. Revenue Represented: Shri Jamesh Kurian & Shri Sudhendu Das, CIT-DRs Date of hearing : 04-01-2023 Date of pronouncement : 25 -01-2022 ITA No. 1335/Ahd/2019 & C.O. No. 188/Ahd/2019 Assessment Year 2016-17 I.T.A No. 1335/Ahd/19 & C.O. No. 188/Ahd/19 A.Y. 2016-17 Page No DCIT vs. Shri Nikul Jagdishchandra Patel 2 आदेश/ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:- ITA No. 1335/Ahd/2019 is filed by the Revenue as against the Appellate order dated 10.06.2019 passed by the Ld Commissioner of Income Tax-10, Ahmedabad as against the Assessment Order passed under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Year (A.Y) 2016-17 and C.O. No. 188/Ahd/2019 is filed by the Assessee as against the ITA No. 1335/Ahd/2019. 2. The brief facts of the case is that the assesse is an individual, who earns income from his partnership firms, interest and dividend income, house property income and agricultural income. The assessee is also partner in Bhailalbhai Patel, Avichal Projects LLP and Viral Gruh Nirman LLP which are engaged in the business of construction of canals, dams, townships, markets, residential and commercial buildings, development of real estate and township with all infrastructure. The assessee is also Chairman & Managing Director of Dangee Dums Ltd. and Director in Nirman Infracon Pvt. Ltd. For the Assessment year 2015-16, the assessee declared income from his proprietary civil contract business. 3. The assessee has engaged in sale of several land properties during the year under consideration as follows: I.T.A No. 1335/Ahd/19 & C.O. No. 188/Ahd/19 A.Y. 2016-17 Page No DCIT vs. Shri Nikul Jagdishchandra Patel 3 Survey No. Area (in sq. m.) Assessee's share Date of purchase Purchase value Date of sale Consideration received 214 16188 40% 26.07.2010 1618800 214 12141 40% 26.07.2010 1214100 29.12.2015 9,75,79,440 214 20234 40% 01.09.2010 2023700 171/1 2023 40% 07.11.2014 202300 29.12.2015 177/P 4047 40% 15.10.2014 404700 1,21,96,800 172/6 1416 40% 03.05.2010 141600 173/3 2023 40% 28.05.2010 202300 193/1 15378 20% 17.04.2010 1537800 24.04.2015 10,22,49,840 194/2 23168 20% 27.04.2010 2168000 201/1 P 4452 20% 17.04.2010 445200 201/1P 4451 20% 28.04.2010 445100 195/2P 7588 20% 17.04.2010 758800 29,12.2015 1,52,46,000 Total 13109 22,72,72,080 3.1. The assessee claimed that all the land properties are not capital assets as per definition u/s. 2(14)(iii) of the Act, as they are recorded as agricultural land in revenue records and they are located outside the limits of 8 kms from the nearest municipal limits. Further the assessee declared agricultural income from the above properties and also filed Wealth Tax returns claiming exempt u/s. 2(ea) of the Wealth Tax Act, 1957 being agricultural lands. Thus the assessee claimed sale of some of the agricultural land amounting to Rs. 6,35,88,466/- during this assessment year and claimed the same as exempt u/s. 2(14)(iii) of the Income Tax Act. 3.2. The assessee’s claim is that he purchased the above land properties on various dates during the financial year 2010-11 I.T.A No. 1335/Ahd/19 & C.O. No. 188/Ahd/19 A.Y. 2016-17 Page No DCIT vs. Shri Nikul Jagdishchandra Patel 4 (except 2 land parcels purchased in Financial Year 2014-15) and all these lands have been sold during the assessment year 2016-17 to “Viral Gruh Nirman LLP” after converting the above land into non- agricultural purpose and for development as a residential house. The assessee being a designated Partner of the to Viral Gruh Nirman LLP (hereinafter referred to as the VGN Firm) since the date of incorporation namely 27.06.2011 and currently he holds 28% share in the profit and also major Partner of the firm along with few other family members are also partners of the VGN Firm, the Assessing Officer denied the claim of exemption u/s. 2(14)(iii) of the Act. 3.3. On a notice u/s. 133(6) to the VGN firm, it is submitted that the lands were converted into non-agricultural purpose and is engaged in construction of residential townships. The A.O. gathered from the public news sources that the VGN firm planning to build a major project on 170-acre parcel of land, close to Tata’s and Ford’s car plants, with 7,000 residential units by 2021 for rural and urban workforce in Sanand. This news item appeared in “Economic Times” on 09.01.2013, much before these land properties were purchased by the VGN firm from the assessee and his co-owners. 3.4. On further verification by the A.O. from ITS data and based on information received from Sub-Registrar office, Sanand, that the assessee has engaged in similar transactions in the financial year 2014-15 also, where multiple landed properties purchased in the financial year 2010-11 in the same vicinity were transferred to the I.T.A No. 1335/Ahd/19 & C.O. No. 188/Ahd/19 A.Y. 2016-17 Page No DCIT vs. Shri Nikul Jagdishchandra Patel 5 same VGN firm. Looking at the Survey Nos. of the land parcels purchased and sold by the assessee, it can be observed that they are contiguously located in the same area of Khoda, Sanand (Ahmedabad). On the basis of the facts and circumstances, a show cause notice was issued to the assessee on 14.12.2018 that the assessee purchased more than 10 land properties at Khoda recorded as agricultural land in revenue records in earlier years and the assessee obtained permission from the District Collector to sell the lands to non-agriculturist namely the VGN firm. Thus it is clear that the land was to be used for non-agricultural use by the VGN firm and used for construction of residential township. Thus the assessee has engaged in a systematic activity of trading in landed properties. In view of the above facts, why the profit on sale of the land properties during the financial year 2015-16 should not be taxed as business income for the assessment year 2016-17. 4. The assessee replied that he has acquired the agriculture land in the mid of the year 2010 with intention to carry on cultivation of land and started agriculture activity on the lands purchased. However Viral Gruh Nirman LLP has been incorporated in the year June, 2011 only, but the assessee sold the lands to the VGN firm only five years thereafter. Thus the assessee’s intention is very clear to use the agriculture lands for the purpose of agricultural activities only and not to sell to the VGN firm. 4.1. The assessee submitted that the AO’s reliance upon the newspaper is not one of the documents as referred to in Section 78(2) of the Evidence Act for which an allegation of fact can be I.T.A No. 1335/Ahd/19 & C.O. No. 188/Ahd/19 A.Y. 2016-17 Page No DCIT vs. Shri Nikul Jagdishchandra Patel 6 proved. Thus the news item contained in a newspaper is merely hearsay and therefore inadmissible as evidence in the absence of the maker of the statement appearing in court and deposing to have perceived the fact reported as held by the Hon’ble Supreme Court in the case of Ratanlal Soni vs. The State of Rajasthan And Ors. 1988 SCR (3) 706. 4.2. The assessee further submitted referring to Section2(14)(iii) of the Act, the population of the village Khoda is nearly 1929 people and the distance from Ahmedabad Muncipality is 30 Kms and 10 Kms from Sanand in the Rural Area and therefore it fulfill with all the conditions laid down u/s. 2(14)(iii) of the Act. Further the assessee being a farmer, he acquired the lands with a motive of undertaking agricultural activity. The assessee regularly cultivated the land which is evident from the 7/12 extract and the income from sale of such agricultural lands also been duly shown in the Returns of Income and the lands were also classified as agricultural land in the revenue records at the time of sale. 4.3. In support of his contention, the assesse relied upon decision of the Chennai Tribunal in the case of ACIT vs. Mansi Finance Chennai Ltd. [2016] 66 taxmann.com 39 (which has been later approved by the High Court of Madras in 388 ITR 514). The assessee also further relied upon various case laws on these lines. 5. The next contention of the Assessing officer namely the assessee sold the property at sale value which is 20 times that the purchase price within a period of 5 years, therefore it is a business activity I.T.A No. 1335/Ahd/19 & C.O. No. 188/Ahd/19 A.Y. 2016-17 Page No DCIT vs. Shri Nikul Jagdishchandra Patel 7 only. The assessee replied that it is settled position of law that the profit motive of the assessee in selling the land can never be decisive to say that the assessee used the land for non-agricultural purposes. This view has been held by the Jurisdictional High Court in the case of Gopal C. Sharma vs. CIT [1994] 209 ITR 946 wherein it is held the potential non-agricultural value of the land for which a purchaser may be prepared to pay a large price would not detract from the character of the land as agricultural land on the relevant date of sale. 5.1. The assessee further submitted that the question whether the land is agricultural in character or not, can be decided only by the purpose for which the land is put to use and not on the basis of income earned through land. The impugned lands were agricultural lands at the time of purchase and at the time of sale as per the Land Revenue Records, further the assessee is also shown agricultural income from the said agricultural land. The assessee relied on decision of Hon'ble Gujarat High Court in the case of CIT, Rajkot-1 M. Heenaben Bhadresh Mehta [2018] 96 taxmann.com 164(Gujarat). 6. The next contention of the Assessing Officer namely that the landed properties were purchased by the assessee gradually to build a land bank eventually to be transferred to his own LLP, and the use of the land for agriculture was not the primary motive while purchasing the lands. Further the assessee applied and got permission u/s. 63 of the Gujarat Land Revenue Code for transfer I.T.A No. 1335/Ahd/19 & C.O. No. 188/Ahd/19 A.Y. 2016-17 Page No DCIT vs. Shri Nikul Jagdishchandra Patel 8 of lands to a non-agriculturist for constructions of residential/commercial use. 6.1. The assessee replied that the observation of Ld. AO is merely on surmises and conjectures. The Ld. AO has mistaken the stamp value as the market value. The Stamp value or circle rates are the minimum authority-defined price at which a property of sale or transfer can be done between two parties, and also determine the associated stamp duty and registration charges to be paid for such a transaction. This is the 'floor price', and the actual transaction price can be higher than this, resulting in higher stamp duty to be paid out. Market value is a price range arrived at by looking at actual transaction prices in a location, and is a better indicator of what sellers demand and what buyers are willing to pay. These prices are determined by demand and supply, an area with lower supply but higher demand will inevitably command higher prices, when compared to other. Further, as per section 63A(a)(a) of the Gujarat Tenancy and Agricultural Lands Act, 1948 (GTAL Act) any transfer of agricultural land to non-agriculturist, it is expressly provided that the price of land sale or purchase under the provision of the act the calculation of amount of land shall be the amount not being less than twenty times the assessment levied in respect of land, the assessee has complied the provisions of the said GTAL Act in the sale transaction for stamp duty purpose. By this transaction the character of land will not change from agricultural land to non- agricultural land the land will be agricultural land unless it is converted into non-agricultural land. It is evident from copies of the sale deeds in which the lands were classified as agricultural land. I.T.A No. 1335/Ahd/19 & C.O. No. 188/Ahd/19 A.Y. 2016-17 Page No DCIT vs. Shri Nikul Jagdishchandra Patel 9 The Ld. A.O. has made observation without having knowledge of local land and State laws. 6.2. Thus the Ld. AO has failed to appreciate that the assessee is a farmer and the large number of different survey numbers of agricultural lands were acquired by him for easiness of cultivation and get benefit of large area for cultivation. The assessee, being a farmer, had the sole objective of growing agricultural produce and agriculture income from these lands and which can be traced out in 7/12 extracts of the various lands and Income Tax Returns of last five year respectively. 6.3. The assessee further stated that the permission has been obtained under section 63 of the GTAL Act does not mean that the land ceases to be agricultural in character. This has already been established by the Hon'ble Gujarat High Court in the case of CIT vs. Manilal Somnath [1977] 106 ITR 917 (Guj.) 6.4. Further, as per section 63(l)(a) of The Gujarat Tenancy and Agricultural Lands Act, 1948 any transfer of agricultural land to non-agriculturist is barred except securing the permission from District Collector or an officer authorized by State Government to initiate the sale. In the case of assessee, the permission of District Collector is necessary to sell the land to non-agriculturist, but the permission obtained under section 63 of the GTAL Act does not mean that the land ceases to be agricultural land. In this connection, the assessee relied on decision of Hon'ble Gujarat High I.T.A No. 1335/Ahd/19 & C.O. No. 188/Ahd/19 A.Y. 2016-17 Page No DCIT vs. Shri Nikul Jagdishchandra Patel 10 Court in the case of Commissioner of Income-tax v. Rajshibhai Meramanbhai Odedra [2014] 42 taxmann.com 497 (Gujarat). 7. The next contention of the Assessing Officer is that the assessee along with other co-owners purchased large areas of land parcels in specific area were from previous owners and has sold these lands at much higher price than market value to his own LLP firm and claimed whole of the profit as exempt income being sale of agricultural land is only colourable device to avoid and evade taxes. 7.1. In this context, the assessee relied upon the decision of the Hon'ble Gujarat High Court in the case of Banyan & Berry v. Commissioner of Income-tax 222 ITR 83, wherein, it has been held as under: - "The two questions that called for probing were : (i) whether the premises aforesaid could reasonably lead to this conclusion in law that the dissolution of the firm was not real but was a device to avoid tax, and (ii) what the true scope of their applicability' of the principle enunciated in McDowell's case was. In McDowell's case, the Court nowhere said that every action or inaction on the part of the taxpayer which results in reduction of the tax liability to which he may be subjected in future, is to be viewed with suspicion and treated as a device for avoidance of tax, irrespective of the legitimacy or genuineness of the act; an inference which, unfortunately, the Tribunal apparently appeared to have drawn from the enunciation made in McDowell's case. The ratio of any decision has to be understood in the context it was made. The facts and circumstances which lead to McDowell's decision left one in no doubt that the principle enunciated in that case has not affected the freedom of the citizen to act in a manner according to his requirements, his wishes in the manner of doing any trade, activity or planning, his affairs with circumspection, within the framework of law, unless the same fall in the category of colourable device which may properly be called a device or a dubious method or a subterfuge clothed with apparent dignity. What has been deprecated as tax planning for avoidance of tax are those acts which have doubtful or questionable character as to their bona fide I.T.A No. 1335/Ahd/19 & C.O. No. 188/Ahd/19 A.Y. 2016-17 Page No DCIT vs. Shri Nikul Jagdishchandra Patel 11 and righteousness. Not all legitimate acts of a taxpayer, which in the ordinary course of conducting his affairs a person does and which under law he is entitled to do, can be branded of questionable character on the anvil of McDowells. One cannot read in the aforesaid decision that any act of an assessee which results in reduction of his tax liability or expectation of lax benefit in future amounts to a colourable device, a dubious method or subterfuge to avoid tax and can be ignored if the acts are unambiguous and bona fide, merely on the ground that treating those as deliberate would result in tax liability in future. While the planning adopted as a device to avoid tax had been deprecated, the principle cannot be read as laying down the law that a person is to arrange his affairs so as to attract the maximum tax liability, and every act which results in tax reduction, exemption of tax or not attracting tax authorized by law is to be treated as a device of tax avoidance". 7.2. The assessee has also relied upon the decision of the Hon'ble Gauhati High Court in the case of Commissioner of Income Tax vs. George Williamson (Assm) Ltd 265 ITR 626, wherein, they have discussed about the effect of Hon'ble Supreme Court decision in the case of Union of India vs. Azadi Bachao Andolan [2003] 263 ITR 706 "held that the Supreme Court has approved the decision of the Madras High Court in M.V. Valliappan v. ITO [1988] 170 ITR 238, where, the Madras High Court had held that the decision in McDowel and Co. Ltd v. CTO [1985] 154 ITR 148 (SC) cannot be read as laying down that every attempt at tax planning is illegitimate and must be ignored, or that every transaction or arrangement which is perfectly permissible under law, which has the effect of reducing the tax burden of the assessee, must be looked upon with disfavour. 7.3. Thus the assessee submitted that in view of the aforesaid legal principles laid down by the Supreme Court, it is clear that the principles laid down by the IRC v. Duke of Westminster [1936] AC 1; [1935] 19 TC 490; [1935] All ER Rep 259 (HL) are still applicable I.T.A No. 1335/Ahd/19 & C.O. No. 188/Ahd/19 A.Y. 2016-17 Page No DCIT vs. Shri Nikul Jagdishchandra Patel 12 in this country and it is open to assessee to arrange their affairs in such a manner that it would not attract the tax liabilities, if it can be managed within the permissible limit of law. Now, in the present case of the assessee, facts are very clear that assessee in the normal course of his agricultural activity as a farmer acquired different survey numbers of agricultural land at Village Khoda in the year 2010 with an intention and object to carry out the agricultural activity on the said different agricultural lands and earned agricultural income, which has been done by the assessee for all the five years. That the incorporation of Viral Gruh Nirman LLP in the year 2011 is a separate legal entity created for the business purpose, wherein the assessee is also a Partner does not have any direct or indirect nexus with different survey numbers of agricultural land acquired by the assessee at Village Khoda in the year 2010 which was acquired with an intention and objective of carrying out agricultural activity by the assessee on the said land. Therefore, even though VGNL was incorporated in 2011, the assessee continued to carry out the agricultural activities on his co- ownership agricultural land at Village Khoda also from 2011 till December, 2015. The assessee being a farmer, acquired the agricultural lands in the normal course of his farming activity and used the lands for agricultural activity and earned the agricultural income and as & when, the assessee deem fit not to continue the agricultural activity on the lands standing in his ownership, disposed off the agricultural lands at a fair market value. When the assessee decided to dispose off the agricultural land along with other co-owners, they sold the land to VGNL in December, 2015 at the prevailing fair market value. That the Ld. AO has made an I.T.A No. 1335/Ahd/19 & C.O. No. 188/Ahd/19 A.Y. 2016-17 Page No DCIT vs. Shri Nikul Jagdishchandra Patel 13 observation these lands have been sold at much higher price than market value to his own LLP is merely on surmises and conjectures without bringing on record any comparative sales instances in support of his allegation. Therefore, no adverse inference can be drawn in respect of the said observation of the Ld. AO in the case of the assessee. 7.4. The assessee further submitted that the said agricultural land owned and belonged to the appellant being far away distance from the Municipal Limit of three towns making it agricultural land being not a capital assets as per section 2(14)(iii) of the Act and therefore, the profit from sale of agricultural land being not subject to tax by section 10 by the statutory provisions of the Income Tax Act, 1961, the assessee is not required to pay any tax in respect of profit on sale of the agricultural land at Village Khoda and it is not a case of transaction to evade tax. Hence, the principle and ratio proposed to be relied upon by the Ld. AO laid down in the case of McDowell & Co. Ltd vs. CTO [1985] 154 ITR 148 (SC) has already been distinguished by the Hon'ble Gujarat High Court in the case of Banyan & Berry v. Commissioner of Income-tax 222 ITR 83. In view of subsequent decision of the Hon'ble Supreme Court in the case of Union of India vs. Azadi Bachao Andolan [2003] 263 ITR 706 and the Hon'ble Gauhati High Court decision in the case of Commissioner of income Tax vs. George Williamson (Assm) (cited supra). Thus under no circumstances, the sale of different survey numbers agricultural land by the assessee along with other co- owners to Viral Gruh Nirman LLP can be treated as a colourful device to avoid and evade tax. I.T.A No. 1335/Ahd/19 & C.O. No. 188/Ahd/19 A.Y. 2016-17 Page No DCIT vs. Shri Nikul Jagdishchandra Patel 14 8. The next contention of the Assessing Officer, the assessee’s whole process of acquiring the said lands is in the nature of organized business activity. Therefore the profit of Rs. 6.35 crores on sale of these land properties is taxable as business income in the hands of the assessee. 8.1. The assessee replied that Ld. AO has failed to consider the assessee’s reply dated 20.12.2018 and has made the addition merely on surmises and conjectures. The assessee further submit that intention to acquire the various land were only the motive to cultivate the land and generate agriculture income. The Ld. AO has failed to take cognizance of the judicial principles relied upon by the assessee which are applicable in the case of the appellant. 8.2. In the case of Co-owner of Land, the Ld. AO failed to take cognizance of the judicial principles relied upon by the assessee and also disregarded the assessment order passed by DCIT, Circle 2(1)(2), Ahmedabad in the case of Mr. Chirag Hasmukhbhai Patel (PAN AEHPP8762P), who is a co-owner of the lands in question, for A.Y. 2016-17, wherein, the profit earned from sale of different survey numbers co-ownership lands of Village Khoda was claimed as exempt as exempt u/s. 2(14)(iii) of the Act for an amount of Rs. 2,98,27,333/- and in the assessment order u/s. 143(3) of the Act dated 10.10.2018 the contention of co-owner Mr. Chirag Hasmukhbhai Patel that the profit earned from sale of different survey numbers agricultural land at Village Khoda is accepted as I.T.A No. 1335/Ahd/19 & C.O. No. 188/Ahd/19 A.Y. 2016-17 Page No DCIT vs. Shri Nikul Jagdishchandra Patel 15 exempt as per provisions of section 2(14)(iii) of the Act by the DCIT, Circle 2(1)(2), Ahmedabad. 8.3. Further, the assessee relied on the following judgments: (A) CIT, Madras v. Kasturi Estates (P) Ltd. 62 ITR 578 (Mad,). (B) Commissioner of Income-tax, Madras-II Vs. MLM. Mahalingam Chettiar (Mad), 236 ITR 107. (C) Commissioner of Income-tax vs. Smt. Radha Bai, 264 ITR 272 (Delhi HC). (D) CIT vs. Premji Copalbhai (1978) 113 ITR 785 (Guj). 9. The Ld. Assessing Officer overlooking the submissions made by the assessee based on the facts and detailed discussions concluded that the whole process of the agricultural lands are in the nature of organized business activity by the assessee. Therefore the profit of Rs. 6,35,88,466/- on sale of the land and property is taxable as business income in the hands of the penalty. However, he set off brought forward losses/depreciation of previous years of Rs. 3,48,20,362/- and assessed the total income of the assessee as Rs. 3,17,42,841/- and demanded tax thereon. 10. Aggrieved against the same, the assessee filed an appeal before Ld. Commissioner of Income Tax (Appeals)-10, Ahmedabad. The assessee reiterated detailed submissions with case laws before Ld. CIT(A). After considering the same, the Ld. CIT(A) allowed the assessee’s appeal as follows: I.T.A No. 1335/Ahd/19 & C.O. No. 188/Ahd/19 A.Y. 2016-17 Page No DCIT vs. Shri Nikul Jagdishchandra Patel 16 4.2. On careful consideration of the facts of appellant's case, material evidence) placed on record, appellant's submissions and the assessment order, I am of the view that the appellant along with other co-owner farmers acquired the different survey number agricultural land at Village Khoda in the year 2010 and few survey numbers agricultural land were purchased in the year 2014 which has been put to use for the agricultural activity and the crop has been taken thereon and the appellant has also shown the agricultural income for A.Y. 2012-13 to A.Y. 2016-17 in his return of income with the income Tax department and thereby the appellant and other co-owners for nearly five years carried out the agricultural activity on the said different survey numbers agricultural land at Village Khoda establish the fact about the intention of the appellant and other co-owner farmers was not an adventure in the nature of trade. The intention of the appellant for acquiring the different survey numbers agricultural land at Village Khoda is not for adventure in the nature of trade is also being proved by the fact that the appellant is also holding the agricultural land in other Villages and the appellant being a farmer belonging to farmer family and holding the agricultural land for agricultural activity and the investment in the agricultural land has also been shown in the balance sheet of the appellant under the head investment and not as a stock-in-trade and the appellant is also subject to filing Wealth Tax Return and appellant has already placed on record the Wealth tax return for A.Y. 2014-15 & 2015-16, wherein the agricultural land holding of the appellant at Village Khoda and in other Villages has been taken in the computation of Wealth while claiming exempt u/s. 2(e)(a) of the Wealth tax Act as the agricultural land is exempt from Wealth-tax. All these facts and evidences establishes beyond doubt that the intention of the appellant when acquired the different survey numbers agricultural land at Village Khoda in the year 2010 was not in adventure in the nature of trade. I am also of the view that subsequent event of incorporation of Viral Gruh Nirman LLP on 20.06.2011 wherein appellant is a partner with an object of carrying out the business activity of real estate project development and the appellant being in the business activity as a real estate developer, which is a separate activity and occupation of the appellant as a farmer to carry out the agricultural activity on the agricultural land holding of the appellant is also a separate activity. As per the provisions of the Income Tax Act, every assessee has a right to carry out a different j business activities, occupation and to earn different sources of income by carrying out different activities. Therefore, because the appellant is a partner in Viral Gruh Nirrnan LLP and other partnership firm engaged in the real estate development activity cannot be a basis to form a belief by the AO that when the appellant along with other co-owner farmers acquired different survey numbers agricultural land at Village Khoda was with an intention of adventure in the nature of trade. Respectfully following the judicial pronouncements of the Hon'ble Supreme Court, Hon'ble Gujarat High Court and other Tribunals decision relied upon by the appellant in his submission, I hold that the stand taken by the AO that the purchase of different survey numbers agricultural land at Village I.T.A No. 1335/Ahd/19 & C.O. No. 188/Ahd/19 A.Y. 2016-17 Page No DCIT vs. Shri Nikul Jagdishchandra Patel 17 Khoda by the appellant along with other co-owner farmers as being adventure in the nature of trade is not justified. On perusal of the extract of the news item dated 09.01.2013 appeared in the Economic Times in respect of Virgual Gruh Nirman LLP planning to launch township for tow cost houses at Sanand District, nothing has been found to be mentioned about the purchase of land at Village Khoda by Viral Gruh Nirman LLP or the agricultural land holding of the partners of the LLP. Subsequent to the publication of news item in the Economic Times on 09.01.2013 till passing of period of 2 years, Viral Gruh Nirman LLP has not purchased the different survey numbers agricultural land at Village Khoda as per the details given by the AO in the assessment order on Page 3 about the sale of different survey numbers agricultural land at Village Khoda by appellant and other co-owners farmers to Viral Gruh Nirman LLP is from 24.04.2015 and 29.12.2015 has stated to be the date of sale deed. I agree with the contention of the appellant that such news item of the of the newspaper cannot be relied upon to reach to the conclusion about the intention of the appellant and other co-owner farmers about their intention when they purchased different survey numbers agricultural land at Village Khoda in the year 2010. In the present case of the appellant, when the different survey numbers agricultural land at Village Khoda were purchased by the appellant and other co-owners in the year 2010 and few survey numbers land purchased in the year 2014 were agricultural land and the same were put to use by the appellant and other co-owner farmers for the agricultural activity and the crop has been taken thereon for which necessary evidences of land revenue records were already placed on record giving the details of the Crop Dangar (Rice) and the said agricultural activity was carried on by the appellant on the different survey numbers agricultural land at Village Khoda till the date of sale of said land in the year 201 5 to Viral Gruh Nirman LLP. As per the sale deeds produced by the appellant in the assessment proceedings before the AO, which has been compiled in the paper book and from verification of the sale deed, it is evident that appellant along with other co-owners have sold the agricultural land to Viral Gruh Nirman LLP and as the land owners were selling the land to non-agriculturist, they followed the procedures laid down as per the Land Revenue Laws as per Section 63 of obtaining the permission of the Collector for sale of the agriculture land to non- agriculturist, it does not change the character of the agricultural land. Following the judicial pronouncements of the Hon'ble jurisdictional Gujarat High Court in the case of PCIT, Rajkot-1 V. Heenaben Bhadresh Mehta [2018] 96 taxmann.com 164(Gujarat), decision of Hon'ble jurisdictional Gujarat High Court in the case of CIT v. Manilal Somnath [1977] 106 ITR 917 (Guj)., and the decision of Commissioner of Income-tax v. Rajshibhai Meramanbhai Odedra [2014] 42 taxmann.com 497 (Gujarat), as the same are applicable to the facts of appellant's case, I hold that the sale of different survey numbers agricultural land by the appellant along with other co-owners to non-agriculturist Viral Gruh Nirman LLP is a sale of agricultural land by appellant and other co-owners. The AO has not disputed the fact that the location of different survey numbers agricultural I.T.A No. 1335/Ahd/19 & C.O. No. 188/Ahd/19 A.Y. 2016-17 Page No DCIT vs. Shri Nikul Jagdishchandra Patel 18 land at Village Khoda is far away distance of more than 8 Kms as per the certificate of the land revenue authority of Khoda Gram Panchyat, TalukaSanand, certifying that the agricultural land at Khoda village is situated at a distance of 30 Kms from Ahmedabad, 10 Kms from Sanand and 30 Kms from Viramgam and the population of Village Khoda is less than Ten Thousand. In view of the facts and evidences available on record, I hold that the different survey numbers agricultural land at Village Khoda is not a capital asset as per provisions of section 2(14)(iii) of the Act. In the present case of the appellant, the purchase of different survey numbers agricultural land at Village Khoda by appellant and other co-owner farmers in the year 2010 and subsequent to the acquisition of the said different survey numbers agricultural land at Village Khoda being put to use by the appellant for the agricultural activities thereon and taken the crop and earned the agricultural income which has been shown in the return of income filed for A.Y. 2012-13 to A.Y. 2016-17 and the sale of different survey numbers agricultural land at Village Khoda by the appellant and other co-owner farmers when they deem fit not to carry on the agricultural activity on the said different survey numbers agricultural land at Village Khoda in the year 2015 to Viral Gruh Nirman LL nearly after Five years at a fair market value and Claiming the share of gain of the appellant from sale of different survey numbers agricultural land at Village Khoda amounting to Rs. 6,35,88,466/- as exempt u/s. 2(14)(iii) of the Income tax Act, 1961 cannot be viewed as a colourable device to avoid and evade tax. Considering the judicial pronouncements of the Hon'ble Gujarat High Court in the case of Banyan & Berry v. Commissioner of Income-tax 222 ITR 83and the decision of the Hon'ble Gauhati High Court in the case of Commissioner of Income Tax vs. George Williamson (Assm) Ltd 265 ITR 626, wherein, it has been discussed about the effect of Hon'ble Supreme Court decision in the case of Union of India vs. Azadi Bachao Andolan [2003] 263 ITR 706, I am of the view that from the facts of the appellant's transaction about purchase of different survey numbers agricultural land at Village Khoda along with other co-owner farmers and sale of said agricultural land at Village Khoda in the year 2015 to Viral Gruh Nirman LLP are the sale of agriculture land used for agriculture activity within the four corners of law, there is no violation of provisions of law in the same. Therefore, the appellant's case is squarely covered by the above judicial precedents and there is no colourable device being adopted by the appellant to avoid and evade taxes. I take into account the same to conclude that the case law quoted by the AO of Hon'ble Supreme Court in the case of Me Dowell &Co. Ltd vs. CTO (cited supra) and the decision of Hon'ble Supreme Court in the case of CIT vs. Durga Prasad More (cites supra) is without any merit as the appellant's above transactions are genuine one in the normal course of his agricultural activities as a farmer purchase the agriculture land at Village Khoda, used for agriculture activity and sold after 5 years to Viral Gruh Nirman LLP, which are within the four corners of law. I am of the considered view that after careful consideration of the facts of the appellant's case in totality, evidences available on record of appellant's case and following the judicial pronouncements discussed herein above, the stand taken by the AO that I.T.A No. 1335/Ahd/19 & C.O. No. 188/Ahd/19 A.Y. 2016-17 Page No DCIT vs. Shri Nikul Jagdishchandra Patel 19 the purchase of different survey numbers agricultural land by the appellant along with other co-owners is the business activity is not justified and as the different survey numbers agricultural land at Village Khoda is situated beyond 8 Kms from Municipal limit and the population of Village Khoda is less than Ten Thousand, fulfilling all the conditions of section 2(14)(iii) of the Income Tax Act being not a capital asset, I hold that appellant's share of the profit of Rs. 6,35,88,466/- on sale of different survey numbers agricultural land at Village Khoda is exempt as per provisions of section 2(14)(iii) of the Act and the addition made by the AO under the head business income of Rs. 6,35,88,466/- is hereby deleted. This Ground of appeal is allowed. 11. Aggrieved against the same, the Revenue is in appeal before us raising the following Grounds of Appeal: 1. The Ld. CIT(A) has erred in law and on facts in treating the impugned land to be covered within the definition of agricultural land within the meaning of Section 2(14)(iii) of the IT Act. 2. The Ld. CIT(A) has erred in law and on facts in treating the impugned land as agricultural land and consequently deleting the addition of Rs 6,35,88,466/- on account of business income earned from the transaction without considering the fact that the land was sold after obtaining permission from the Appropriate Authority (Collector in this case) to sell the same to a non-agriculturalist and hence was not an agriculture land. 2.1. The CIT(A) failed to consider the fact that permission granted by Appropriate authority (Collector in this case) to use the agricultural land for a non-agricultural purpose is a deemed conversion of agricultural land to non-agricultural land. 3. The Ld CIT(A) has erred in law and on facts in not considering the fact that the assessee had paid the required premium of land value for conversion of land from agriculture to non-agriculture land. 11.1. The Grounds of Cross Objection raised by the Assessee are as follows: 1. The Ld. CIT(A) on facts and under law after considering the settled legal position of the Hon'ble jurisdictional Gujarat High Court in the case of PCIT, Rajkot -1 vs. Heenaben Bhadresh Mehta (2018) 96 taxmann.com 164 (Guj.), decision of the Hon'ble jurisdictional Gujarat High Court in the case of CIT vs. Manilal Somnath (1977) 106 ITR 917 (Guj.), decision of CIT vs. Rajshibhai Meramanbhai Odedra (2014) 42 taxmann.com (Guj.) held that the different survey numbers agricultural land at Village Khoda is not a capital asset as per provisions of section 2(14)(iii) of the Act. I.T.A No. 1335/Ahd/19 & C.O. No. 188/Ahd/19 A.Y. 2016-17 Page No DCIT vs. Shri Nikul Jagdishchandra Patel 20 2. The Ld. CIT (A) considering the judicial pronouncements of the Hon'ble Gujarat High Court in the case of Banyan & Berry vs. CIT 222 ITR 83 and the decision of the Hon'ble Gauhati High Court /in the case of CIT vs. George Williamson (Assm.) Ltd. 265 ITR 626, wherein, it has been discussed about the effect of Hon'ble Supreme Court decision in the case of Union of India vs. Azadi Bachao Andolan (2003) 263 ITR 706 has further held that the stand taken by the AO that the purchase of different survey numbers agricultural land by the appellant along with other co-owners is the business activity is not justified and as the different survey numbers agricultural land at Village Khoda is fulfilling all the conditions of section 2(14)(iii) of the IT. Act being not a capital asset and Respondent's share of profit of Rs. 6,35,88,466/- on sale of different survey numbers agricultural land at Village Khoda is exempt as per provisions of section 2(14)(iii) of the Act and the addition made by the AO under the head business income has been correctly deleted the addition of Rs. 6,35,88,466/-. 2.1. The Ld. CIT(A) has correctly after examining the sale deed held that the land sold by the Respondent to Viral Gruh Nirman LLP was agricultural land and even at the time of sale of the land, the said land was standing in the Land Revenue records as agricultural land. 3. The Ld. CIT(A) has not erred in law and on facts as the Respondent has not paid any premium for conversion of the land from agricultural land to Non-Agricultural land in respect of the agricultural land sold by the Respondent. 12. Heard both the parties and perused the materials available on record including six voluminous Paper Books filed by the Assessee. Regarding Ground No. 1 whether the land is covered within the definition of agricultural land within the meaning of Section 2(14)(iii) of the Act. It is undisputed fact that the assessee is a farmer as per the Land Revenue Records of Government of Gujarat. The assessee purchased in co-ownership with other farmers different survey numbers agricultural land at Village Khoda in the year 2010 and two agricultural lands in the year 2014. The Assessing Officer himself has given the details of purchase of the above lands quoting assessee’s share in the above agricultural land in the assessment order. It is seen from Paper Book Page No. 292 I.T.A No. 1335/Ahd/19 & C.O. No. 188/Ahd/19 A.Y. 2016-17 Page No DCIT vs. Shri Nikul Jagdishchandra Patel 21 to 600 from the Sale Deeds, the assessee along with other co-owner farmers purchased different survey number at Village Khoda and placed on record, the proceedings of 7/12 Extract and Form No. 12 of the Land Revenue Records and it has been noticed different crops were cultivated by the assessee. The assesse also offered agricultural income in his Return of Income for the Assessment Years 2012-13 to 2016-17. The assessee has shown investment in different survey numbers of agricultural lands in his books of accounts and balance sheet as investment in agricultural land however not as stock-in-trade. 12.1. Further the assessee has filed Wealth Tax Return for the Assessment Years 2014-15 and 2015-16 wherein claiming the above agricultural lands as exempt from Wealth Tax as per the provisions of Section 2(e)(a) of the Wealth Tax Act. Further the Land Revenue Authority of Khoda Gram Panchyat, Taluka Sanand, certifying that the agricultural land at Khoda Village is situated at a distance of 30 Kms from Ahmedabad, 10 Kms from Sanand and 30 Kms from Viramgam and the population of Khoda Village is less than Ten Thousand. Therefore we do not have any hesitation in confirming that the above lands are well within the definition of section 2(14)(iii) of the Income Tax Act. 13. The second ground of the Revenue, sale of the above land is to be treated as business income since the lands were sold after obtaining Appropriate Authority permission to sell the same as non-agricultural land and third ground namely permission granted by Appropriate Authority for non-agricultural purpose is a deemed I.T.A No. 1335/Ahd/19 & C.O. No. 188/Ahd/19 A.Y. 2016-17 Page No DCIT vs. Shri Nikul Jagdishchandra Patel 22 conversion of agricultural land into non-agricultural land and forth ground namely the assessee paid the required premium of land value for Non-Agricultural Conversion. 13.1. All the three grounds are inter-linked with each other. Therefore the same are disposed of by our following observations. To better understand, the restrictions of sale of agricultural land to other than agriculturists in the State of Gujarat. The provisions of Gujarat Tenancy and Agricultural Lands Act, 1948 (GTAL Act) more particularly, Chapter V therein and Section 63 of the above Act reads as follows: Restrictions on Transfers of Agricultural Lands Section 63- Transfer to non-agriculturists barred. (1) Save as provided in this Act- (a) No sale (including sales in execution of a decree of a Civil Court or 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 mortgage, '[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 3[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 tanant or who is not an agricultural labourer]: Provided that the Collector or an officer authorised by the 4[State] Government in this behalf may grant permission for such sale, gift, exchange, lease or mortgage, [or for such agreement] on such conditions as may be prescribed: I.T.A No. 1335/Ahd/19 & C.O. No. 188/Ahd/19 A.Y. 2016-17 Page No DCIT vs. Shri Nikul Jagdishchandra Patel 23 [Provided further that no such permission shall be granted, where land is being sold to a person who is not an agriculturist for agricultural purpose, if the annual income of such person from other sources exceeds five thousand rupees.] [(1A) The State Government may, by notification in the Official Gazette, exempt from the provisions of sub-section (I), for the transfer of any agricultural land to any public trust established for the charitable purpose and which is non-profitable in nature, for the use of such land in the field of health and education, subject to such conditions as may be specified therein.] (2) Nothing in this section shall be deemed to '[prohibit the sale, gift, exchange or ' lease, or the agreement for the sale, gift, exchange or lease, of] a dwelling house or the site thereof or any land appurtenant to it in favour of an agricultural labourer of an artisan 9[or a person carrying on any allied pursuit]. [(3) Nothing in this section shall apply or be deemed to have applied to a mortgage of any land or interest therein effected in favour of a co- operative society as security for the loan advanced by such society [or any transfer declared to be a mortgage by a court under section 24 of the Bombay Agricultural Debtors’ Relief Act, 1947]] [(4) Nothing in section 63A shall apply to any sale made under sub- section (1).] 13.2. As per GTAL Act, no sale, mortgage, agreement of sale, gift, exchange and lease shall be valid in favour of a person who is not an agriculturist provided that the District Collector may grant permission first for such sale, gift, exchange, lease and mortgage and such other conditions as may be prescribed. Section 63A of GTAL prescribes an amount not being less than 20 times the assessment levied or leviable in respect of the land and not being more than 200 times of such assessment is to be collected for the conversion of land by way of proceedings by the District Collector. Thus the assessee being the co-owner of agricultural land, when he wanted to sell the same to non-agriculturist, he is required to get the necessary permission from the District Collector as per Section I.T.A No. 1335/Ahd/19 & C.O. No. 188/Ahd/19 A.Y. 2016-17 Page No DCIT vs. Shri Nikul Jagdishchandra Patel 24 63(1)(a) of the GTAL Act. This permission obtained by the assessee does not mean that the land ceases to be an agricultural land. For this proposition, we draw reference from the Jurisdictional High Court in the case of CIT vs. Rajshibhai Meramanbhai Odedra [2014] 42 taxmann.com 497 (Gujarat) wherein it is held as follows: Para 3.2. “..... It is mainly argued on behalf of the revenue that as the agricultural land was sold in favour of non-agriculturist and as per the law prevailing in the State, there is a ban to transfer/sell agricultural land in favour of non-agriculturist without prior permission of appropriate authority and without getting the land converted into non-agriculture and therefore, the said land is to be considered as capital asset and therefore, liable to be taxed. It is not in dispute that what was sold by the assessee was an agricultural lands which were situated beyond 8 Kms of local limits of the Municipality. As rightly observed by the tribunal, merely because the land came to be sold during the year under consideration to non-agriculturist, the same will not change the characteristics of the land in the hands of the seller -the assessee. It is not in dispute that at the relevant time, the lands were held/used by the assessee as agricultural land. Merely because the said land came to be sold to a non-agriculturist, may be in breach of law prevailing, in the State, character of the land would not be changed and the land still would continue as an agricultural land. At the most the sale in favour of non-agriculturist can be declared as illegal and/or invalid. There is no provision that if the agricultural land is sold in favour of non- agriculturist in breach of law prevailing in the State, it would lose its character as agricultural land and would be treated as non-agricultural land. 13.3. Further this view is supported by land mark judgment of the Jurisdictional High Court in the case of CIT vs. Siddharth J. Desai reported in 139 ITR 628 wherein it is held as follows: “....13. Against the aforesaid background, let us turn to the question whether, on the facts and in the circumstances of the present case, the land in question was an agricultural land. The land, when jointly purchased by the assessee from an agriculturist about four years prior to its present sale, was admittedly agricultural. It was and it continued to be listed in the Revenue records as agricultural land subject to the assessment of land revenue. For a period of three years immediately after its purchase, agricultural activity was carried on in the land which yielded agricultural produce. For the first two years, the crop of pulse (tuver) was raised and for the third year green grass was grown. Of course, I.T.A No. 1335/Ahd/19 & C.O. No. 188/Ahd/19 A.Y. 2016-17 Page No DCIT vs. Shri Nikul Jagdishchandra Patel 25 quantitatively the yield was not much and there was no sale of the produce resulting in any profit to the assessee. However, the nature of exploitation of the land for the major part of the period during which the assessee held it would indicate that not only its physical characteristics but the user also was agricultural. It is not shown that such user was of a temporary character or as and by way of a stop-gap arrangement. Even though the land was not actually put to agricultural use since about one year prior to the sale, there is no evidence to establish that it was converted to any other use. It is true that permission under s. 63 of the Bombay Tenancy and Agricultural Lands Act, 1948, was obtained by the assessee to sell the land to a co-operative housing society and that the permission was granted subject to the condition that the land should be used for residential purposes. This circumstance does not, however, militate against the land continuing to be agricultural on the date of its sale. The permission, in the instant case, was obtained only about two and a half months prior to the sale. The permission was necessary only because the land was agricultural and because it was governed by the provisions of the Bombay Tenancy and Agricultural Lands Act, 1948. The mere fact that such a permission was obtained does not mean that the land ceased to be agricultural in character since permission for the non-agricultural use of the land under s. 65 of the Bombay Land Revenue Code was still not obtained from the competent authority. Such permission was, in fact, never obtained by the assessee; it was obtained by the vendee after the sale was completed. Till the land was held by the assessee, therefore, its character as agricultural land was not changed either as a result of its reclassification in the Revenue records or by the actual alteration of its use. If, for any reason, the sale transaction had not gone through or the conditions laid down in the permission issued under s. 63 had not been satisfied, the permission would have been treated as cancelled. 13.4. The Hon’ble Gujarat High Court in the case of CIT, Rajkot-1 vs. M. Heenaben Bhadresh Mehta [2018] 96 taxmann.com 164 (Gujarat) wherein it is held as follows: “..... "7. From the order passed by the Assessing Officer, it appears that the Assessing Officer treated the profit of Rs. 68,18,800/- earned by the assessee from sale of agriculture lands as business in come mainly on the grounds that (i) the land was sold to the company, which used the said land for industrial purpose; (ii) that there was a steep rise in the profit and (iii) that the lands were sold within a short span of time. However, it is required to be noted and it is not in dispute that as such, what was sold by the assessee was agriculture land. In the revenue record also, lands were shown as agriculture lands, it is also required to be noted that the agriculture lands in question were sold by the assessee after a period of approximately 15 to 16 months from purchase. Therefore, as such, it cannot be said that the agriculture lands were sold within a short span of I.T.A No. 1335/Ahd/19 & C.O. No. 188/Ahd/19 A.Y. 2016-17 Page No DCIT vs. Shri Nikul Jagdishchandra Patel 26 time. It is also required to be noted that the assessee is an agriculturist and also belongs to family of agriculturists. Therefore, as the assessee sold the agriculture lands and therefore, claimed exemption under section 2(14) of the Act on the profit earned on sale of agriculture lands. 8 Therefore, on plain reading of Section 2(14) of the Act, if the "agriculture land" as mentioned in Section 2(14)(iil) is sold, the assessee shall be entitled to claim exemption on profit earned on sale of agricultural land as per Section 2(14) read with Section 45 of the Act, unless it ,s established and proved that the transaction carried out was "adventure in the nature of trade" and the profit thus required to be taxed as business income. On appreciation of evidence, the learned Tribunal has specifically observed and held that the transaction carried out by the assessee was not "adventure in the nature of trade" and therefore, profit earned was not required to be taxed as business income. The aforesaid is the finding recorded by the learned Tribunal on appreciation of evidence. 9 As observed hereinabove, the land was sold as an agricultural land and in fact, what was sold was agriculture land. What was the intention of the purchaser cannot be the determinative factor to treat the profit earned by the assessee on sale of agriculture land as business income. Similarly, merely because for whatever reasons, the assessee has earned sufficient huge amount of profit also cannot be a ground to treat the profit earned by the assessee on sale of agriculture land as business income. 10. Under the circumstances and on the facts and circumstances of the case, the learned Tribunal has not committed any error in directing the Assessing Officer to treat the profit of Rs. 68,18,800/- earned by the assessee on the sale of agriculture land as exempt under Section 2(14) of the Income Tax Act." 13.5. Respectfully following the above ratio of the judgments, we are of the considered view and after considering the totality of the facts of the case, evidences available on record, we hold that the sale of land as agricultural lands within the meaning of Section 2(14)(iii) of the Income Tax Act and above sale cannot be treated as business income as held by the Assessing Officer. We do not find any error in the findings of the Ld. CIT(A) who deleted the additions made by the Assessing Officer under the head “business income”. I.T.A No. 1335/Ahd/19 & C.O. No. 188/Ahd/19 A.Y. 2016-17 Page No DCIT vs. Shri Nikul Jagdishchandra Patel 27 14. It is further noticed that one of the co-owner of the land namely Mr. Chirag Hasmukhbhai Patel on sale of the very same lands at village Khoda was accepted as exempt u/s. 2(14)(iii) of the Act by making an assessment u/s. 143(3) vide order dated 10.10.2018. This order is being placed by the assessee at Page No. 859 & 860 of the Paper Book relating to the very same assessment year 2016-17. There cannot be two different yardsticks for the same set of sale transaction made by various co-owners of the lands. This was considered by the Co-ordinate Bench of this Tribunal in the case of Babubhai Shantilal Solanki in ITA No. 1893/Ahd/2019 vide order dated 03/08/2022 which held as follows: 5. We have given our thoughtful consideration and perused the materials available on record including the Paper Book filed by the assessee. It is seen from the sale deed executed on 30.05.2011, the entire consideration were being made through cheque payments. However, as it can been seen from the other co-owners assessment orders, the Income Tax Department has accepted the returned income filed by the respective assessee and has not adopted section 50C valuation for the other co-owners namely Smt. Hiraben Shantilal and Smt. Indiraben Shantilal as can been seen from the reassessment orders passed u/s. 143(3) r.w.s. 147 dated 30.12.2019. There cannot be two different yardsticks for the same set of sale transaction made by five co-owners. In this connection, we draw support from Rulings of the Hon’ble Madras High Court in the case of Kumarani Smt. Meenakshi Achi (supra) where it has been held as follows: “4.2 That apart, the Tribunal, while passing the order under appeal, had also taken into consideration the order of the Commissioner of Income-tax initiated under section 263 of the Income-tax Act, in and by which, the proposal to revise the assessment in the case of other co-owner was dropped, finding that there was no justification to reject the value adopted by the assessee. The Tribunal, in the light of the decision in Jaswant Rai v. CWT [1977] 107 ITR 477 (Punj. & Har.), held that differential treatment cannot be met out to another co-owner while making the assessment of the same property or while valuing the same property. 4.3 The learned counsel for the revenue is not in a position to satisfy us, as to how the Commissioner of Income-tax dropped the proceedings initiated under section 263 of the Income-tax Act qua the co-owner, who had also adopted the same value for the property as the petitioner herein. I.T.A No. 1335/Ahd/19 & C.O. No. 188/Ahd/19 A.Y. 2016-17 Page No DCIT vs. Shri Nikul Jagdishchandra Patel 28 5. It is trite that if during the same assessment year the same quantity of wealth in possession of one co-sharer is subjected to a lower rate of taxation, it would be highly improper to burden a similarly situated co-sharer with a higher rate of tax. If such an action on the part of the assessing authorities sanctioned, it would militate against the principle of equality of law as enshrined in article 14 of the Constitution, vide Jaswant Rai v. CWT [1977] 107 ITR 477 (Punj. & Har.). 5.1. Similarly, Co-ordinate Bench of this Tribunal in the case of Shri Sangram J. Patel Vs. DCIT (supra) has held as follows: “12.4 It is not also out of place to mention that the assessee was the co-owner in the property along with his brother. The claim of the assessee's brother by the same AO was accepted and the deduction/exemption was allowed for the investment made by the co-owner with M/s Sharnam builders for the purchase of the property. In such a situation, we are of the view that the AO was to maintain the consistency. In simple words, the AO cannot reject the claim of the assessee whereas in the case of the brother of the assessee in the identical facts and circumstances, the same was accepted. Accordingly on this count, we are not convinced with the finding of the authorities below. Hence, we set aside the finding of the learned CIT (A) and direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is partly allowed for the statistical purposes.” 5.2. Another Co-ordinate Bench of the Tribunal in the case of Rajeshkumar Shantilal Patel (supra) held as follows: “14. Considering the aforesaid factual and legal discussion, we accept the contention of ld. AR for the assessee that once, the similar STCG offered by the co-owner has been accepted by the revenue, and the assessee is also entitled for similar relief. We find convincing force in the submissions learned AR for the assessee. Hence, the appeal of the assessee is allowed. So far as the objection of learned DR for the Revenue is that the case of co-owner of Shri Dipakbhai Dalpatbhai Rana, no scrutiny assessment was initiated, is concern, we find that this fact was brought by assessee at the earliest possible action. The Revenue has not taken any action for reopening the case of co-owner and thereby accepted the similar STCG on same transaction, therefore, in our view, the assessee cannot be treated indifferently for similar transaction. Thus, the objection raised by the learned DR for the revenue is not acceptable to us.” 6. Following the above judicial precedents, we have no hesitation in holding that different treatments cannot be given on the same set of facts in respect of different co-owners of a common piece of land which are subjected to capital gains. If such action on the part of Revision Authority is approved, it would militate against the principle of equality of law as enshrined in the Article 14 of the Constitution of India. Further, it is seen that the ld.CIT has not taken any steps for reopening the case of other co- owners viz. Smt. Hiraben Shantilal and Smt. Indiraben Shantilal and thereby accepted similar long term capital gain and on the said I.T.A No. 1335/Ahd/19 & C.O. No. 188/Ahd/19 A.Y. 2016-17 Page No DCIT vs. Shri Nikul Jagdishchandra Patel 29 transaction. Therefore, in our considered view, the assessee cannot be treated differently for similar transaction. 14.1. Respectfully following the above judicial precedents, we have no hesitation in deleting the additions made by the Assessing Officer which is unjustifiable. Thus the grounds raised by the Revenue are devoid of merits and the same are hereby rejected. By answering the above issues, we answer the Grounds of Appeal raised by the assessee, in his Cross Objection are hereby allowed. 15. In the result, the appeals filed by the Revenue are hereby dismissed and the Cross Objections filed by the Assessee are hereby allowed. Order pronounced in the open court on 25-01-2023 Sd/- Sd/- (WASEEM AHMED) (T.R. SENTHIL KUMAR) ACCOUNTANT MEMBER True Copy JUDICIAL MEMBER Ahmedabad : Dated 25/01/2023 आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपीलȣय अͬधकरण, अहमदाबाद