The ITO, Ward-9(2), Ahmedabad V. Shri Jayantibhai C.Patel,HUF, Ahmedabad

ITA 1124/AHD/2006

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51069 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 7 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-12-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 29-11-2011
• Assessment Year: 2000-2001
• Appeal Filed On: 05-05-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M G PATEL
• Assessee Lawyers: JAMES KUNAIRE
• Keywords: Business income; Opportunity of being heard; Principle of natural justice; Competent authority; Capital receipt
• Section: 63

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, D BENCH, AHMEDABAD BEFORE SHRI D.K.TYAGI, JUDICIAL MEMBER AND SHRI A. K. GARODIA, ACCOUNTANT MEMBER I.T.A. NO. 1001/AHD/2004 (ASSESSMENT YEAR 2000-01) SHRI JAYANTIBHAI C PATEL HUF PROP OF JAY AMBEY FIN. CORPN. CO., DHORIBHAI PARK, B/H BHAGIRATH SOC., NR. BHUMI PARTY PLOT, NARANPURA, AHMEDABAD VS. ITO, WARD 9(2), AHMEDABAD I.T.A.NO. 1123 AND 1124/ AHD/2006 (ASSESSMENT YEAR 1999-2000 & 2000-01 RESPECTIVELY) ITO, WARD 9(2), VS. SHRI JAYANTIBHAI C PATEL HUF AHMEDABAD PROP OF JAY AMBEY FIN. CORPN. CO., DHORIBHAI PARK, B/H BHAGIRATH SOC., NR. BHUMI PARTY PLOT, NARANPURA, AHMEDABAD PAN/GIR NO. : AAAHJ7779P (APPELLANT) .. (RESPONDENT) APPELLANT BY: SHRI M G PATEL, AR RESPONDENT BY: SHRI JAMES KUNAIRE, DR DATE OF HEARING: 29.11.2011 DATE OF PRONOUNCEMENT: 22.12.2011 O R D E R PER SHRI A. K. GARODIA, AM:- OUT OF THIS BUNCH OF THREE APPEALS, ONE APPEAL IS FILED BY THE ASSESSEE IN QUANTUM PROCEEDINGS FOR THE ASSESSMENT YEAR 2000-01 AND THIS APPEAL IS DIRECTED AGAINST THE ORDER OF LD. CI T(A) XII, AHMEDABAD DATED 28.01.2004 AND THE REMAINING TWO APPEALS ARE FILED BY THE REVENUE I.T.A.NO.1001/AHD/2004 & I.T.A.NOS.1123, 1124 /AHD/2006 2 FOR THE ASSESSMENT YEARS 1999-2000 AND 2000-01. TH E APPEAL FOR THE ASSESSMENT YEAR 1999-2000 IS FILED BY THE REVENUE I N QUANTUM PROCEEDINGS AND THE APPEAL OF THE ASSESSMENT YEAR 2 000-01 IS IN THE CASE OF PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. T HESE TWO APPEALS ARE DIRECTED AGAINST TWO SEPARATE ORDERS OF LD. CIT(A) XV, AHMEDABAD BOTH DATED 15.02.2006. SINCE, CONNECTED ISSUES ARE INVO LVED, ALL THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY W AY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRST, WE TAKE UP THE APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2000-01 IN I.T.A.NO. 1001/AHD/2004. THE ASSESSEE H AS RAISED ONE ADDITIONAL GROUND WHICH IS AS UNDER: IN ASSESSMENT ORDER FOR ASSESSMENT YEAR 2000-01 PA SSED IS IN VIOLATION OF RULES OF NATURAL JUSTICE AND, THEREFOR E, BAD AT LAW AS THE COPIES OF DOCUMENTS MARKED ANNEXUREA, ANNEXURE-B, ANNEXURE- C AND ANNEXURE-D STATED TO HAVE BEEN ANNEXED TO THE ASSESSMENT ORDER UNDER REFERENCE WERE NEITHER ANNEXED TO THE A SSESSMENT ORDER NOR THE COPIES THEREOF WERE SUPPLIED TO THE APPELLA NT DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS. 3. IN THE COURSE OF HEARING BEFORE US, THE LD. A.R. DID NOT PRESS THE ADDITIONAL GROUND AND HENCE, THE ADDITIONAL GROUND IS REJECTED AS NOT PRESSED. 4. THE GROUNDS RAISED BY THE ASSESSEE IN THE MEMO O F APPEAL ARE AS UNDER: 1) THE LD. CIT(A) XII AHMEDABAD HAS ERRED IN LAW A ND ON FACTS OF THE CASE IN CONFIRMING THE ACTION OF THE A .O. HOLDING THAT INCOME OF RS.69,41,910/- FROM SALE OF AGRICULTURAL LANDS AT SURVEY NO.41, 42/1, 42/2, 43/2 AND 44/3 AT VILLAGE AMIYAPU R DISTT. GANDHINAGAR IS A BUSINESS INCOME AND NOT A LONG TER M CAPITAL GAIN AS CLAIMED BY THE APPELLANT HUF IN HIS RETURN OF IN COME. 2) YOUR APPELLANT THEREFORE, PRAYS THAT INCOME OF RS.69,41,910/- ON SALE OF AGRICULTURAL LAND BE TREA TED AS LONG TERM CAPITAL GAIN. I.T.A.NO.1001/AHD/2004 & I.T.A.NOS.1123, 1124 /AHD/2006 3 5. THE BRIEF FACTS OF THE CASE ARE THAT IT IS NOTED BY THE A.O. IN PARA 2 OF THE ASSESSMENT ORDER THAT ON VERIFICATION, IT IS SEEN THAT OUT OF THE TOTAL INCOME OF RS.72,06,270/-, A SUM OF RS.65,65,589/- I S SHOWN UNDER THE HEAD LONG TERM CAPITAL GAIN. HE FURTHER NOTED TH AT THE CAPITAL GAIN IS CLAIMED TO HAVE BEEN EARNED FROM THE SALE OF LAND A T VILLAGE AMIYAPUR DISTT. GANDHINAGAR. THE A.O. FURTHER NOTED IN PARA 3 OF THE ASSESSMENT ORDER THAT THE AGRICULTURAL LAND IN THE VILLAGE AMI YAPUR WAS PURCHASED BY THE ASSESSEE DURING THE FINANCIAL YEAR 1994-95 & 19 95-96. THE A.O. FURTHER NOTED THAT THEREAFTER, THE ASSESSEE MADE AN APPLICATION BEFORE THE DISTRICT DEVELOPMENT OFFICER (DDO) ON 23.03.1999 FO R CONVERSION OF THE LAND INTO NON AGRICULTURAL LAND (NA). HE FURTHER N OTED THAT ON THE BASIS OF THE ASSESSEES APPLICATION, THE LAND WAS CONVERTED INTO NA BY THE DDO VIDE ORDER DATED 04.06.1999.THE A.O. ALSO NOTED THA T THE ASSESSEE HAD ALSO APPLIED TO AUDA FOR GETTING PERMISSION FOR DEV ELOPMENT AND CONSTRUCTION OF RESIDENTIAL UNITS WHICH WERE 44 IN NUMBER AS PER THE PLAN SUBMITTED TO AUDA BY THE ASSESSEE HIMSELF. HE FURT HER NOTED THAT THE PERMISSION FOR CONSTRUCTION OF RESIDENTIAL UNITS WA S SUBSEQUENTLY GRANTED BY AUDA VIDE ORDER DATED 17.07.1998 AND THE A.O. NO TED THAT THE LAND WAS SOLD TO A SOCIETY NAMELY NAMESHWAR PARK COOP. H OUSING SOCIETY LTD. THE A.O. FURTHER NOTED THAT THE PURCHASE AND SALE OF LAND IS NOT AN ISOLATED TRANSACTION AND THE ASSESSEE HAS SOLD THE LAND IN SIMILAR WAY IN PAST ALSO. UNDER THESE FACTS, THE A.O. ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE VIDE LETTER DATED 08.02.2002 REQUESTING HI M TO SHOW CAUSE AS TO WHY DIFFERENCE BETWEEN THE PURCHASE AND SALE PRICE OF THE LAND SHOULD NOT BE TREATED AS BUSINESS INCOME INSTEAD OF LONG TERM CAPITAL GAIN BY TREATING THE LAND AS STOCK IN TRADE OF THE ASSESSEE. IN REP LY, VARIOUS SUBMISSIONS I.T.A.NO.1001/AHD/2004 & I.T.A.NOS.1123, 1124 /AHD/2006 4 WERE MADE BY THE ASSESSEE BEFORE THE A.O. BUT THE A .O. WAS NOT SATISFIED AND HE HELD THAT THE ASSESSEE IS ENGAGED IN THE BUS INESS OF PURCHASE AND SALE OF LAND AND DEVELOPMENT THEREOF AND HENCE, THE INCOME ON THIS ACCOUNT IS TAXABLE AS BUSINESS INCOME. HE COMPET ED THE ASSESSMENT BY TREATING THE AMOUNT OF RS.69,41,910/- AS BUSINESS I NCOME. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEA L BEFORE LD. CIT(A) BUT WITHOUT SUCCESS AND NOW, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 6. IT WAS SUBMITTED BY THE LD. A.R. BEFORE US THAT THE ASSESSEE HUF IS AN AGRICULTURIST UNDER THE BOMBAY TENANCY ACT (AS A PPLICABLE TO GUJARAT). HE HAS SUBMITTED THAT THE LAND IN QUESTION WAS AGRI CULTURAL LAND PURCHASED BY THE ASSESSEE IN FINANCIAL YEAR 1994-95 . HE ALSO SUBMITTED THAT THE AGRICULTURAL ACTIVITIES WERE CARRIED OUT T ILL FINANCIAL YEAR 1998-99 WHICH IS SUPPORTED BY COPY OF 7/12 RECORD ON PAGES 9-13 OF THE PAPER BOOK, ENGLISH TRANSLATION OF WHICH WAS SUBMITTED SE PARATELY. HE FURTHER SUBMITTED THAT AS PER SECTION 63 OF BOMBAY TENANCY AGRICULTURAL LAND ACT 1948, TRANSFER TO NON AGRICULTURIST IS PROHIBIT ED WITHOUT PERMISSION FROM THE GOVERNMENT AND IN ORDER TO SELL AGRICULTUR AL LAND TO NON AGRICULTURAL ACTIVITIES FOR RESIDENTIAL/COMMERCIAL PURPOSES, PERMISSION UNDER SECTION 65 OF BOMBAY LAND REVENUE COURT HAS T O BE OBTAINED. HE FURTHER SUBMITTED THAT SINCE THE LAND IS SITUATED I N THE PERIPHERY OF 8 KM OF AHMEDABAD CITY, THE PROVISIONS OF URBAN LAND CEI LING ACT (ULCA) REGARDING TREATMENT OF SUCH NA LAND AS VACANT LAND AND ACQUISITION THEREOF IN EXCESS OF CEILING LIMIT OF 15000 SQ. MTR S. BY THE GOVERNMENT ARE APPLICABLE AND HENCE, IN THAT CASE, LAND WAS SU BJECT TO ACQUISITION BY THE GOVERNMENT. IT WAS SUBMITTED THAT NO PERSON WI LL BUY SUCH AGRICULTURAL LAND WITH THE INTENTION TO MAKE PROFIT S THEREFROM BY SALE. HE ALSO SUBMITTED THAT NO DEVELOPMENT OF LAND CAN BE M ADE WITHOUT I.T.A.NO.1001/AHD/2004 & I.T.A.NOS.1123, 1124 /AHD/2006 5 PERMISSION UNDER THE AHMEDABAD URBAN DEVELOPMENT AR EA RULES. HE FURTHER SUBMITTED THAT THE ASSESSEE ENTERED INTO AN AGREEMENT TO SELL THE LAND TO NAMESHWAR PARK COOP. HOUSING SOCIETY LTD. B Y AGREEMENT TO SELL DATED 16.07.1998 AND AS PER CLAUSE 5 OF THE SAID AG REEMENT TO SELL, WHATEVER PERMISSION WAS REQUIRED CONSIDERING THE PR ESENT AND FUTURE LAW OF THE CENTRAL GOVERNMENT, STATE GOVERNMENT AND LOC AL BODIES, WERE TO BE TAKEN BY THE SAID SOCIETY AT ITS OWN COST AND RI SK AND THE ASSESSEE WOULD BE GIVING NECESSARY SIGNATURE IN CORRESPONDIN G APPLICATION DECLARATION AFFIDAVIT ETC. HE ALSO SUBMITTED THAT URBAN LAND (CEILING & REGULATION) ACT, 1976 WAS REPEALED BY THE URBAN LAN D (CEILING AND REGULATION) REPEAL ACT, 1999 W.E.F. 30.03.1999 AND IN VIEW OF THIS, APPLICATION FOR CONVERSION OF LAND INTO NA LAND WAS MADE AT THE INSTANCE OF THE PURCHASER ON 20.03.1999 AND THE NA PERMISSIO N WAS ISSUED BY THE DY. DDO, GANDHINAGAR VIDE ORDER DATED 04.06.1999. HE ALSO SUBMITTED THAT PURCHASE OF LAND HAD BEEN SHOWN IN THE BOOKS O F THE ASSESSEE UNDER THE HEAD FIXED ASSETS IN THE BALANCE SHEET. HE A LSO SUBMITTED THAT IN THE TAX AUDIT REPORT, THE BUSINESS OF THE ASSESSEE HUF HAD BEEN SHOWN AS INVESTMENT AND FINANCE IN CLAUSE 8A OF THE FORM 3CD . HE ALSO SUBMITTED THAT UNDER THESE FACTS, IT IS CLEAR THAT THE ASSESS EE HUF WAS NEVER IN THE BUSINESS OF DEALING IN LAND. HE FURTHER SUBMITTED THAT THE ASSESSEE HUF DID NOT HAVE NOR IT CAN HAVE ANY INTENTION TO DEAL IN THE AFORESAID LAND IN VIEW OF THE PROVISIONS OF LAW AND THE CIRCUMSTANCES PREVAILING AT THE TIME OF PURCHASE. HE FURTHER SUBMITTED THAT THE LAND WA S SOLD ON AS IS WHERE IS BASIS TO A COOPERATIVE HOUSING SOCIETY FOR CONS TRUCTION OF RESIDENTIAL HOUSES AND, THEREFORE, GAIN REALIZED BY THE ASSESSE E ON SALE OF LAND WAS LONG TERM CAPITAL GAIN AND NOT A BUSINESS GAIN. IN SUPPORT OF HIS CONTENTION, RELIANCE WAS PLACED ON THE JUDGMENT OF HONBLE APEX COURT I.T.A.NO.1001/AHD/2004 & I.T.A.NOS.1123, 1124 /AHD/2006 6 RENDERED IN THE CASE OF CIT VS JANKIRAM BAHADUR RAM AS REPORTED IN 57 ITR 21(S.C.). HE ALSO PLACED RELIANCE ON THE JUDGM ENT OF HONBLE GUJARAT HIGH CORRUPT RENDERED IN THE CASE OF CIT VS PREMJI GOPALBHAI AS REPORTED IN 113 ITR 785 (GUJ.). IT WAS SUBMITTED T HAT IN THESE TWO CASES, IT WAS HELD THAT ONUS OF PROVING THAT THE TRANSACTI ON WAS AN ADVENTURE IN THE NATURE OF TRADE WAS ON THE REVENUE AND IN THE P RESENT CASE, REVENUE HAS NOT DISCHARGED THIS ONUS. HE ALSO PLACED RELIA NCE ON A JUDGEMENT OF HONBLE MADRAS HIGH COURT RENDERED IN THE CASE OF C IT VS NSS INVESTMENTS PVT. LTD. AS REPORTED IN 277 ITR 149 (M AD.) WHEREIN, IT WAS HELD THAT THE TREATMENT IN ACCOUNT OF THE ASSETS IS IMPORTANT. RELIANCE WAS ALSO PLACED ON THE FOLLOWING DECISIONS ALSO IN SUPP ORT OF THIS CONTENTION: (A) GOMTI CREDITS (P) LTD. VS DCIT 164 TAXMAN 69 (B) CIT VS ESS JAY ENTERPRISE (P) LTD. 173 TAXMAN 0 1 (C) CIT VS SOHAN KHAN 304 ITR 194 (RAJ.) (D) ITO VS D N KRISHNAPA 21 DTR 11 (BANG.) 7. THE BENCH ASKED THE LD. A.R. TO FILE THE WEALTH TAX RETURN FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 1990-91 TO ASS ESSMENT YEAR 2001-02 AND IN REPLY, IT WAS SUBMITTED BY THE LD. A.R. THAT THE WEALTH TAX RETURNS ARE NOT AVAILABLE WITH THE ASSESSEE AT PRESENT. IT WAS ALSO SUBMITTED THAT SECTION 21 OF ULCA IS RELEVANT WHEREIN, IT IS SPECI FIED THAT EXCESS VACANT LAND CANNOT BE TREATED AS EXCESS IN CERTAIN CASES. HE SUBMITTED COPY OF THE ENGLISH VERSION OF THIS PROVISION OF SECTION 21 OF ULCA 1976 AND THE SAME IS REPRODUCED BELOW: 21. EXCESS VACANT LAND NOT TO BE TREATED AS EXCESS IN CERTAIN CASES.(1) NOTWITHSTANDING ANYTHING CONTAINED IN AN Y OF THE FOREGOING PROVISIONS OF THIS CHAPTER, WHERE A PERSO N HOLDS ANY VACANT LAND IN EXCESS OF THE CEILING LIMIT AND SUCH PERSON DECLARES WITHIN SUCH TIME, IN SUCH FORM AND IN SUCH MANNER A S MAY BE PRESCRIBED BEFORE THE COMPETENT AUTHORITY THAT SUCH LAND IS TO BE UTILIZED FOR THE CONSTRUCTION OF -DWELLING-UNITS (E ACH SUCH I.T.A.NO.1001/AHD/2004 & I.T.A.NOS.1123, 1124 /AHD/2006 7 DWELLING-UNIT HAVING PLINTH AREA NOT EXCEEDING EIGH TY SQUARE METRES) FOR THE ACCOMMODATION OF THE WEAKER SECTION S OF THE SOCIETY, IN ACCORDANCE WITH ANY SCHEME APPROVED BY SUCH AUTHORITY AS THE STATE GOVERNMENT MAY, BY NOTIFICATION IN THE OFFICIAL GAZETTE, SPECIFY IN THIS BEHALF, THEN, THE COMPETEN T AUTHORITY MAY, AFTER MAKING SUCH' INQUIRY AS IT DEEMS FIT, DECLARE SUCH LAND NOT TO BE EXCESS LAND FOR THE PURPOSES OF THIS CHAPTER AND PERMIT SUCH PERSON TO CONTINUE TO HOLD SUCH TERMS AND CONDITION S AS MAY BE PRESCRIBED, INCLUDING A CONDITION AS TO THE TIME-LI MIT WITHIN WHICH SUCH BUILDINGS ARE TO BE CONSTRUCTED. (2) WHERE ANY PERSON CONTRAVENES ANY OF THE CONDITI ONS SUBJECT I TO WHICH THE PERMISSION HAS BEEN GRANTED UNDER SUBS ECTION (1), THE COMPETENT AUTHORITY SHALL, BY ORDER, AND AFTER GIVI NG SUCH PERSON AN OPPORTUNITY OF BEING HEARD, DECLARE SUCH LAND TO BE EXCESS LAND AND THEREUPON ALL THE PROVISIONS OF THIS CHAPTER SH ALL APPLY ACCORDINGLY. 8. AS AGAINST THIS, LD. D.R. OF THE REVENUE SUPPORT ED THE ORDERS OF AUTHORITIES BELOW. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSE D THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW AND THE JUDGEMENTS CITED BY THE LD. A.R. OF THE ASSESSEE. FIRST OF ALL, WE REPRODUCE THE RELEVANT OBSERVATIONS OF THE LD. CIT( A) AS PER WHICH HE DECIDED THIS ISSUE AGAINST THE ASSESSEE AND THE SAM E IS AS UNDER: I HAVE CONSIDERED THE ORDER OF THE AO, THE FACTS O F THE CASE AND THE DETAILED SUBMISSIONS MADE BY THE APPELLANT. THE APPELLANT ALSO FILED COPY OF BALANCE SHEET FOR A, Y, 1999-2000 AND 2001-02. AT THE OUTSET IT MAY BE MENTIONED THAT THE FACTS OF TH E CASE HAVE BEEN BROUGHT OUT IN DETAIL BY THE AO IN HIS ASSESSMENT O RDER. HE HAS CONSIDERED ALL THE DOCUMENTS RELATING TO THE ACQUIS ITION AND SALE OF LAND. I FIND THAT THE AO HAS CONSIDERED ALL THE SUB MISSIONS OF THE APPELLANT BEFORE FINALISING THE ASSESSMENT AND HENC E THE ARGUMENTS OF THE APPELLANT THAT THE AO HAS NOT GRANTED PROPER OPPORTUNITY OF EXPLAINING THE MATERIAL IS NOT SUSTAINABLE. EVEN BE FORE THE UNDERSIGNED ALSO NO FRESH FACTS WAS BROUGHT OUT, WH ICH WERE NOT BEFORE THE AO AND HENCE IT CANNOT BE SAID THAT THE AO HAS NOT GRANTED PROPER OPPORTUNITY TO THE APPELLANT. THE SU BMISSIONS OF THE I.T.A.NO.1001/AHD/2004 & I.T.A.NOS.1123, 1124 /AHD/2006 8 APPELLANT BY LETTER DATED 23.12.2003 ARE DULY CONSI DERED. FROM THE OVERALL FACTS OF THE CASE, IT EMERGES THAT THE APPE LLANT THOUGH NOT PERSONALLY IN THE BUSINESS OF DEVELOPMENT OF LAND F OR CONSTRUCTION OF HOUSES AND SALE, BUT THERE ARE SISTER CONCERNS, WHERE APPELLANT HAS A MAJOR ROLE TO PLAY, WHICH HAVE UNDERTAKEN SUC H BUSINESS. THE INTENTION OF THE APPELLANT WAS VERY CLEAR IN THE YE AR 1994-95, WHEN THE ALLEGED AGRICULTURAL LAND AT AMIYAPUR WAS PURCH ASED WITH THE INTENTION TO DEVELOP, OBTAIN NO OBJECTION CERTIFICA TE FOR CONVERTING THE LAND INTO NON AGRICULTURAL AND THEN BASED ON EN HANCED MARKET PRICE, SELLING THE LAND TO DEVELOPERS. HAD THE INTE NTION BEEN TO HOLD THE LAND AND CARRY OUT AGRICULTURAL ACTIVITIES, THE N THE APPELLANT WOULD NOT HAVE SOLD THE LAND IN A. Y. 1999-2000 AND ALSO DURING THIS ASSESSMENT YEAR AFTER OBTAINING CLEARANCE FROM THE AUDA. A PART OF THE LAND WAS SOLD IN AY 1999-2000 AND ANOTH ER PART OF THE LAND WAS SOLD IN THIS ASSESSMENT YEAR. FROM THE DAT E OF PURCHASE TILL THE DATE OF SALE, NO AGRICULTURAL ACTIVITY WAS CARRIED ON IN THE LAND SO PURCHASED. NO INCOME FROM AGRICULTURAL PROD UCE HAS BEEN DECLARED BY THE APPELLANT IN ANY OF THE ASSESSMENT YEARS, AFTER THE DATE OF PURCHASE OF THE LAND, THUS, THE INTENTION I S VERY CLEAR, I.E TO DEVELOP THE LAND AND SELL IT FOR A PROFIT AT DIFFER ENT TIMES. THIS IS ALSO CLEAR FROM THE FACT THAT IN F.Y. 1994-95, THE LAND WAS PURCHASED FOR SMALL FIGURE OF RS.8,51,637 AND A PAR T OF SAID LAND WAS SOLD FOR RS.22,45,258 IN A.Y. 1999-2000 AND A P ART OF THIS LAND WAS SOLD DURING THIS YEAR FOR TOTAL CONSIDERAT ION OF RS. 77.93,547. IT IS VERY CLEAR THAT THE APPRECIATION D URING A PERIOD OF AROUND 4 YEARS WAS MORE THAN 10% OF THE COST OF PUR CHASE. THIS WAS ONLY POSSIBLE BECAUSE OF LAND COULD BE DEVELOPE D FOR THE PURPOSE OF RESIDENTIAL ACCOMMODATION AND SALE AND T HAT IS WHY THE APPELLANT WAS ABLE TO EXTRACT VERY HANDSOME PROFIT FROM THE TRANSACTIONS AFTER CONVERTING THE SAID LAND INTO NO N AGRICULTURAL LAND FOR THE PURPOSE OF DEVELOPMENT. IT IS BUT NATU RAL THAT APPELLANT HAD AGRICULTURAL BACKGROUND AND HENCE HE COULD APPL Y TO AUDA FOR CONVERSION OF THE LAND FOR THE DEVELOPMENT AND HENCE TO SAY THAT LAND WAS SOLD EARLIER AND THE CERTIFICATE FROM AUDA WAS RECEIVED LATER HAS NO FORCE, BECAUSE THE APPELLANT AS PER THE AGREEMENT WAS REQUIRED TO SIGN VARIOUS PAPERS FOR T HE SAID PURPOSE AND HE WAS UNDER OBLIGATION TO THE BUYER OF THE LAN D TO SIGN THE PAPERS AND OBTAIN NON AGRICULTURAL CERTIFICATE IN R ESPECT OF LAND BELONGING TO HIM. THE ARGUMENTS OF THE APPELLANT TH AT DURING THE LAST YEAR THE LONG-TERM CAPITAL GAIN DECLARED BY TH E APPELLANT WAS ACCEPTED BY THE DEPARTMENT CANNOT BE A BASE FOR CON CLUDING THAT I.T.A.NO.1001/AHD/2004 & I.T.A.NOS.1123, 1124 /AHD/2006 9 THIS YEAR ALSO THE INCOME SHOULD BE TAXED UNDER THE HEAD CAPITAL GAINS. IN THIS REGARD THE DEPARTMENT IS FREE TO TAK E ACTION FOR A. Y. 1999-2000 UNDER THE PROVISIONS OF THE I,T. ACT, IF DEEMED NECESSARY. THE DECISION TAKEN BY THE AO IN A. Y. 19 99-2000 CANNOT BIND THE HANDS OF THE SUCCESSOR IN PROCEEDIN GS FOR A DIFFERENT ASSESSMENT YEAR. IN FACT THE SALE OF LAND AT VARIOUS TIMES STRENGTHENS THE CONCLUSION THAT APPELLANT HAS ENTER ED INTO THE BUSINESS IN THE NATURE OF ADVENTURE. I, THEREFORE, HOLD THAT THE AO HAS CORRECTLY CONCLUDED THAT THE PROFIT FROM THE SA LE OF THE LAND AT AMIYAPUR IS TAXABLE AS INCOME FROM BUSINESS. THE OR DER OF THE AO, ON THIS POINT IS, THEREFORE, CONFIRMED. 3. IN T HE RESULT, THE APPEAL IS DISMISSED. 10. FROM THE ABOVE PARA OF THE ORDER OF LD. CIT(A), WE FIND THAT A CLEAR FINDING IS GIVEN BY THE LD. CIT(A) THAT FROM THE DATE OF PURCHASE TILL THE DATE OF SALE, NO AGRICULTURAL ACTIVITY WAS CARR IED OUT IN THE LAND IN QUESTION AND NO INCOME FROM AGRICULTURAL PRODUCE HA S BEEN DECLARED BY THE ASSESSEE IN ANY OF THE ASSESSMENT YEAR FROM THE DATE OF PURCHASE OF THE LAND IN QUESTION. IN SPITE OF THIS CLEAR FINDI NG OF LD. CIT(A), ALTHOUGH THE CONTENTIONS ARE RAISED BEFORE US ALSO THAT THE AGRICULTURAL OPERATION WAS CARRIED OUT ON THE SAID LAND BUT NO EVIDENCE IN THIS REGARD WAS BROUGHT ON RECORD BEFORE US IN SUPPORT OF THIS CONT ENTION. IT WAS SUBMITTED BY THE ASSESSEE BEFORE US THAT IN SUPPORT OF THIS CONTENTION, COPY OF 7/12 RECORDS ARE AVAILABLE ON PAGES 9-14 OF THE PAPER BOOK. THE ASSESSEE HAS FURNISHED ENGLISH TRANSLATION OF GUJAR ATI RECORD NO.7/12 FOR THE LAND IN QUESTION AND AS PER THESE 7/12 RECORDS FOR THE YEAR 1998-99, IT HAS BEEN STATED THAT IN RESPECT OF SURVEY NO. 41, 4 2/3 AND 44/3, THE CROP IS GRASS. IN RESPECT OF THE REMAINING LAND, IT WAS ST ATED THAT THE CROP IS OF JOWAR AND CASTOR SEED FOR VERY SMALL QUANTITY OF TH E LAND. FOR THE PURPOSE OF DECIDING THE DISPUTE, THIS IS NOT RELEVANT AS TO WHETHER ANY AGRICULTURAL ACTIVITY WAS CARRIED OUT BY THE ASSESSEE DURING THA T PERIOD WHEN THE LAND WAS LYING VACANT. EVEN IF THE LAND IS PURCHASED AS STOCK IN TRADE, FOR THE I.T.A.NO.1001/AHD/2004 & I.T.A.NOS.1123, 1124 /AHD/2006 10 PERIOD WHEN THE SAME IS LYING WITH THE ASSESSEE, SO ME AGRICULTURAL CROP CAN BE GROWN ON SUCH LAND AND MERELY BECAUSE OF THI S REASON, THE CHARACTER OF THE LAND WILL NOT CHANGE. IN THE PRES ENT CASE, IN MAJOR PORTION OF LAND IN QUESTION, ONLY GRASS CROP IS SHO WN IN 7/12 AND ON VERY SMALL PORTION OF LAND, SOME OTHER CROPS ARE SHOWN A ND HENCE, THIS DOES NOT HAVE ANY BEARING ON THE ISSUE IN DISPUTE. MOR EOVER, NO AGRICULTURAL INCOME WAS SHOWN BY THE ASSESSEE IN ANY OF THE YEAR FROM THE DATE OF PURCHASE OF LAND IN QUESTION. COPY OF WEALTH TAX R ETURN OF THE ASSESSEE IS ALSO NOT BROUGHT ON RECORD IN SUPPORT OF THIS CONTE NTION. REGARDING THIS ARGUMENT THAT THE PROVISIONS OF ULCA WERE APPLICABL E, WE FIND THAT THE PROVISIONS OF SECTION 21 OF ULCA AS REPRODUCED ABOV E, ARE NOT APPLICABLE FOR SUCH EXCESS LAND HELD FOR UTILIZING FOR CONSTRUCTION OF RESIDENTIAL UNITS, EACH SUCH DWELLING UNIT HAVING P LINTH AREA NOT EXCEEDING 80 SQ. MTRS. FOR THE ACCOMMODATION OF THE WEAKER SE CTIONS OF THE SOCIETY, AND HENCE, IT IS APPARENT THAT IT IS NOT THE CASE THAT UNDER NO CIRCUMSTANCES, THE EXCESS LAND CAN BE HELD AND SOLD . FROM THE ACTION OF THE ASSESSEE FOR TAKING STEPS TO GET THE LAND CONVE RTED INTO NA LAND AND TO GET PERMISSION OF AUDA FOR CONSTRUCTION OF DWELLING UNITS THEREON, IT IS SEEN THAT THE LAND IN QUESTION WAS NOT HELD BY THE ASSESSEE FOR AGRICULTURAL PURPOSE OR FOR INVESTMENT PURPOSE AND THE SAME WAS FOR THE PROPOSE OF RESALE ONLY. THIS IS ALSO A FINDING GIVEN BY THE A UTHORITIES BELOW THAT THIS IS NOT AN ISOLATED TRANSACTION REGARDING PURCHASE A ND SALE OF LAND. UNDER THESE FACTS, WE FEEL THAT NO INTERFERENCE IS CALLED FOR IN THE ORDER OF LD. CIT(A) ON THIS ISSUE. 11. NOW, WE DISCUSS THE APPLICABILITY OF VARIOUS JU DGEMENTS CITED BY THE LD. A.R. OF THE ASSESSEE. WE ARE DISCUSSING ON LY THOSE JUDGEMENTS ON WHICH OUR SPECIFIC ATTENTION WAS DRAWN IN THE COURS E OF HARING AND WE DO I.T.A.NO.1001/AHD/2004 & I.T.A.NOS.1123, 1124 /AHD/2006 11 NOT DISCUSS OTHER JUDGEMENTS COPY OF WHICH ARE AVAI LABLE IN VARIOUS PAPER BOOKS BUT OUR ATTENTION WAS NOT DRAWN TO THOSE JUDG EMENTS IN THE COURSE OF HEARING. - THE FIRST JUDGMENT ON WHICH OUR ATTENTION WAS DRA WN IS THE JUDGEMENT OF HONBLE APEX COURT RENDERED IN THE CAS E OF JANKIRAM BAHADUR RAM VS CIT (SUPRA). IN OUR CONSIDERED OPIN ION, THIS JUDGMENT IS NOT APPLICABLE IN THE PRESENT CASE BECAUSE THE F ACTS ARE DIFFERENT. IN THAT CASE, THE LAND WAS PURCHASED BY THE ASSESSEE W ITH JUTE PRESS WHEREAS THE PRESS WAS NOT RUN BY THE ASSESSEE AND THE PROPE RTY WAS LATER ON SOLD BY THE ASSESSEE AND UNDER THESE FACTS, IT WAS HELD THAT THE SALE TRANSACTION WAS ADVENTURE IN NATURE OF TRADE IS ALSO MIXED QUES TION OF LAW AND FACT. IN THAT CASE, IT WAS NOT THE FACT BROUGHT ON RECORD BY THE REVENUE THAT THE ASSESSEE IS DOING SUCH REGULAR PURCHASE AND SALE OF THE PROPERTY WHEREAS IN THE PRESENT CASE, ASSESSEE IS REGULARLY PURCHASI NG AND SELLING THE LAND AND, THEREFORE, THIS JUDGEMENT IS NOT APPLICABLE IN THE PRESENT CASE. - THE 2 ND JUDGMENT CITED BY THE LD. A.R. IS THE JUDGMENT OF HONBLE BOMBAY HIGH COURT RENDERED IN THE CASE OF BHOGILAL H PATEL (SUPRA). THIS JUDGMENT IS ALSO NOT APPLICABLE IN THE PRESENT CASE BECAUSE THE FACTS ARE DIFFERENT. IN THAT CASE, IT WAS HELD THAT PURC HASE OF TWO PLOTS OF LAND BY THE ASSESSEE WAS ONLY AN INVESTMENT IN THE CAPIT AL FIELD AND PROFITS EARNED ON THE SALE WAS ACCRETION TO THE CAPITAL AND NOT PROFIT FROM BUSINESS OR FROM AN ADVENTURE IN THE NATURE OF TRAD E. IN THAT CASE, THE FACT WAS NOTED THAT THE INTENTION FOR PURCHASE OF LAND W AS TO HOLD FOR SOMETIME AND THEN SELL IT ON A PROFIT. IN THE PRES ENT CASE, IT IS SEEN THAT TILL 1998-99, THE MAJOR CROP ON MAJOR PART OF LAND IS SHOWN TO BE GRASS ONLY AND SOME OTHER CROPS WERE CULTIVATED ON VERY S MALL PORTION OF LAND AND NO AGRICULTURAL INCOME HAS BEEN SHOWN BY THE AS SESSEE IN ANY OF THE I.T.A.NO.1001/AHD/2004 & I.T.A.NOS.1123, 1124 /AHD/2006 12 YEAR AFTER THE PURCHASE OF LAND IN QUESTION AND HEN CE, IT IS NOT THE CASE WHERE THE LAND IN QUESTION WAS UTILIZED FOR EARNING ANY INCOME AND THEREFORE, THE INTENTION CANNOT BE FOR HOLDING THE LAND TO EARN INCOME THEREFROM, AS IN THAT CASE. HENCE, THIS JUDGEMENT OF HONBLE BOMBAY HIGH COURT IS ALSO NOT APPLICABLE IN THE PRESENT CA SE. - THE 3 RD JUDGEMENT CITED BY THE LD. A.R. IS THE JUDGEMENT O F HONBLE JURISDICTIONAL HIGH COURT RENDERED IN THE C ASE OF CIT VS PREMJI GOPALBHAI (SUPRA). THIS JUDGEMENT IS ALSO NOT APPL ICABLE IN THE PRESENT CASE BECAUSE THE FACTS ARE DIFFERENT. THE FACTS OF THAT CASE ARE THAT THE ASSESSEE OWNED SOME AGRICULTURAL LAND WHICH WAS INH ERITED BY HIM FROM HIS ANCESTORS AND THE SAME WAS CONVERTED BY THE ASS ESSEE IN 1957-58 IN NON AGRICULTURAL LAND AND HE SOLD THE PLOTS AS AND WHEN PURCHASERS WERE AVAILABLE PRIOR TO 1969-70 AND WHENEVER A PLOT OF L AND OR PLOTS OF LAND WERE SOLD, THE PROFIT REALIZED BY THE ASSESSEE ON S UCH SALE HAD BEEN ASSESSED AS CAPITAL GAIN AND AT NO TIME, THE ASSESS EE WAS TREATED AS A DEALER IN LAND. THE ASSESSEE SOLD TWO PLOTS OF LAN D IN THE YEAR 1961 AND REALIZED RS.3,500/- IN 1961 AND SUBSEQUENTLY IN THE YEA 1964, HE REPURCHASED THESE TWO PLOTS AT RS.4,900/- FOR THE P URPOSE OF CONSTRUCTING A BUILDING THEREON BUT NO CONSTRUCTION TOOK PLACE A ND ULTIMATELY THESE TWO PLOTS WERE RESOLD IN 1968-69 WHICH RESULTED INT O A GAIN OF RS.23,627/-. UNDER THESE FACTS, IT WAS HELD THAT S UCH GAIN IS NOT TAXABLE AS BUSINESS INCOME AND THE SAME HAS TO BE TAXED AS CAP ITAL GAIN BECAUSE APART FROM THIS SOLITARY INSTANCE OF REPURCHASE AND SALE, NO OTHER REPURCHASE HAD BEEN MADE BY THE ASSESSEE. THE LAND WAS REPURCHASED BY THE ASSESSEE BECAUSE IT WAS ADJACENT TO THE LAND IN WHICH THE EXISTING BUILDING OF THE ASSESSEE STOOD. BUT IN THE PRESENT CASE, THE FACTS ARE DIFFERENT AND HENCE, THIS JUDGMENT IS ALSO OF NO HE LP TO THE ASSESSEE. I.T.A.NO.1001/AHD/2004 & I.T.A.NOS.1123, 1124 /AHD/2006 13 - THE NEXT JUDGMENT CITED BY THE ASSESSEE IS OF HON BLE GUJARAT HIGH COURT RENDERED IN THE CASE OF CIT VS HIRALAL MANILA L MODY (SUPRA). THIS JUDGEMENT IS ALSO NOT APPLICABLE IN THE PRESENT CAS E BECAUSE THE FACTS ARE DIFFERENT. IN THAT CASE, THERE WAS AN AGREEMENT FO R PURCHASE OF PROPERTY AND THE VENDOR FAILED TO EXECUTE DEED OF CONVEYANCE WITHIN THE STIPULATED TIME AND VENDOR AGREED TO PAY DAMAGES AND THE ISSUE IN DISPUTE WAS WHETHER SUCH DAMAGE PAID BY THE VENDOR WAS TAXABLE AS BUSINESS INCOME AND IT WAS HELD THAT THIS IS NOT AN INCOME OF THE A SSESSEE AND NOT TAXABLE BECAUSE THE VENDOR HAD AGREED TO PAY THE ASSESSEE F OR HE LOSS OF A GOOD BARGAIN WHICH THE ASSESSEE HAD TO FOREGO BECAUSE TH E VENDOR WAS NOT PREPARED TO EXECUTE DEED OF CONVEYANCE AND IT DID N OT REPRESENT THE INCOME OF THE ASSESSEE. IN THE PRESENT CASE, THE F ACTS ARE DIFFERENT AND THEREFORE, THIS JUDGEMENT IS ALSO NOT APPLICABLE IN THE PRESENT CASE. - THE NEXT DECISION CITED BY THE LD. A.R. IS THE TR IBUNAL DECISION RENDERED IN THE CASE OF RAJESH KUMAR KABRA VS ITO ( SUPRA). THIS DECISION IS ALSO NOT APPLICABLE IN THE PRESENT CASE BECAUSE THE FACTS ARE DIFFERENT. IN THAT CASE, THE LAND IN QUESTION WAS SOLD AFTER ABOUT 10 YEARS AND A CLEAR FINDING IS GIVEN BY THE TRIBUNAL THAT T HE LAND WAS PURCHASED AS INVESTMENT AND THERE WAS NO INTENTION TO SELL THE S AME IMMEDIATELY. IN THE PRESENT CASE, WE HAVE SEEN THAT THE LAND WAS PU RCHASED IN 1994-95 AND 1995-96 AND IN THE MONTH OF MARCH 1999, THE ASS ESSEE APPLIED FOR CONVERSION OF LAND INTO NON AGRICULTURAL AND IN JUL Y 1998, HE HAS MADE AN APPLICATION BEFORE AUDA FOR PERMISSION FOR CONSTRUC TION OF RESIDENTIAL UNITS ON THIS LAND AND HENCE, THIS IS NOT ACCEPTABL E THAT THE LAND IN QUESTION WAS PURCHASED FOR CARRYING ON AGRICULTURAL ACTIVITIES AS HAS BEEN CLAIMED BY THE ASSESSEE. THE A.O. HAS ALSO NOTED O N PAGE 4 OF THE ASSESSMENT ORDER THAT THE ASSESSEE HAS APPLIED FOR CONSTRUCTION ACTIVITIES I.T.A.NO.1001/AHD/2004 & I.T.A.NOS.1123, 1124 /AHD/2006 14 ON IT UNDER THE SCHEME OF THE NATURAL GROWTH AND DE VELOPMENT PLAN VIDE HIS APPLICATION DATED 18.06.1997 AND 19.07.1997. THE A.O. HAS MADE THESE APPLICATIONS OF THE ASSESSEE A PART OF THE AS SESSMENT ORDER AS PER ANNEXURE C AND D OF THE ASSESSMENT ORDER. IT IS ALSO NOTED BY THE LD. CIT(A) ON PAGES 13 & 14 OF HIS ORDER THAT HE ASSESS EE IS NOT PERSONALLY IN THE BUSINESS OF DEVELOPMENT OF LAND OR CONSTRUCTION OF HOUSES AND SALE BUT THERE ARE SISTER CONCERNS WHERE THE ASSESSEE HA S MAJOR ROLE TO PLAY WHICH HAVE UNDERTAKEN SUCH BUSINESS. THIS FACT IS ALSO VERY VITAL FOR THE PURPOSE OF DECIDING THE ISSUE BEFORE US. AFTER CON SIDERING ALL THE FACTS IN THE PRESENT CASE, WE ARE OF THE CONSIDERED OPINION, THAT THIS TRIBUNAL DECISION IS NOT APPLICABLE IN THE PRESENT CASE BECA USE THE FACTS ARE DIFFERENT. - THE NEXT JUDGMENT CITED BY THE LD. A.R. IS THE JU DGMENT OF HONBLE MADRAS HIGH COURT RENDERED IN THE CASE OF C IT VS NSS INVESTMENTS PVT. LTD. (SUPRA). THIS JUDGMENT IS NO T AT ALL APPLICABLE IN THE PRESENT CASE BECAUSE THE FACTS ARE TOTALLY DIFF ERENT. IN THAT CASE, THE DISPUTE WAS REGARDING THE HOLDING OF SHARES AND A C LEAR FINDING IS GIVEN IN THAT CASE THAT THE SHARES WERE HELD FOR EARNING DIV IDEND ONLY. IN THE PRESENT CASE, THE ASSESSEE COULD NOT SATISFY THE AU THORITIES BELOW OR US THAT THE LAND IN QUESTION WERE HELD FOR CARRYING OUT AGR ICULTURAL ACTIVITIES AND HENCE, THIS JUDGEMENT OF HONBLE MADRAS HIGH COURT IS NOT APPLICABLE IN THE PRESENT CASE. - THE NEXT DECISION CITED BY THE LD. A.R. IS THE TR IBUNAL DECISION RENDERED IN THE CASE OF GOMTI CREDITS PVT. LTD. VS DCIT (SUPRA). IN THAT CASE, THE DISPUTE WAS REGARDING THE AMOUNT RECEIVED BY THE ASSESSEE TOWARDS NON COMPETE FEE AND IT WAS HELD THAT IT WAS NOT IN THE COURSE OF ORDINARY BUSINESS OPERATION AND THEREFORE, THE SAME IS TO BE TREATED AS I.T.A.NO.1001/AHD/2004 & I.T.A.NOS.1123, 1124 /AHD/2006 15 CAPITAL RECEIPT. IN THE PRESENT CASE, THE FACTS AR E TOTALLY DIFFERENT AND HENCE, THIS TRIBUNAL DECISION IS OF NO HELP TO THE ASSESSEE IN THE PRESENT CASE. - THE NEXT TRIBUNAL DECISION CITED BY THE LD. A.R. OF THE ASSESSEE IS THE JUDGEMENT RENDERED IN THE CASE OF J.M. SHARE & STOCK BROKERS LTD. VS JCIT (SUPRA). COPY OF THIS JUDGMENT IS AVAILABL E ON PAGES 10-21 OF THE PAPER BOOK CONTAINING JUDGMENTS. IN THAT CASE, THE FACTS ARE THAT IT IS NOTED BY THE TRIBUNAL IN PARA 15 OF THE TRIBUNAL DE CISION THAT THE ASSESSEE IS A SHARE BROKER AND EARNING BROKERAGE INCOME AND IN ADDITION TO THIS, ASSESSEE IS PURCHASING AND SELLING THE SHARES AND D EBENTURES ETC. BOTH AS STOCK IN TRADE AND ALSO AS INVESTMENT. IT IS ALSO NOTED THAT THESE PROFITS / LOSSES ON SALE OF SHARES AND DEBENTURES HELD AS STO CK IN TRADE HAS BEEN OFFERED TO TAX AS BUSINESS INCOME BUT THE PROFITS / LOSS ON SALE OF SHARES HELD AS INVESTMENT WAS OFFERED TO TAX AS CAPITAL GA IN AND THE SAME WAS ACCEPTED BY THE DEPARTMENT. THIS TRIBUNAL DECISION IS BASED ON ONE MORE FACTUAL ASPECT THAT THE SHARES HELD BY THE ASSESSEE AS STOCK IN TRADE IS BEING VALUED BY THE ASSESSEE AT THE LOWER OF COST O R MARKET PRICE WHEREAS, SHARES HELD BY THE ASSESSEE AS INVESTMENT WERE VALU ED BY THE ASSESSEE ON THE BALANCE SHEET DATE AT COST. THERE WAS A CONTEN TION RAISED BY THE ASSESSEE BEFORE THE TRIBUNAL THAT IF THE SHARES CLA IMED TO HAVE BEEN HELD AS INVESTMENT IS VALUED AT LOWER OF COST OR MARKET PRI CE, THEN THE VALUE OF INVESTMENT WILL BE LESSER BY RS.409.67 LACS WHEREAS THE AMOUNT OF CAPITAL GAIN IN DISPUTE WAS RS.656.72 LACS. AFTER CONSIDER ING ALL THESE FACTS, IT WAS HELD Y THE TRIBUNAL THAT THE ASSESSEE CAN HOLD THE SHARES AS INVESTMENT AS WELL AS IN STOCK IN TRADE. THE FACTS OF THE PRE SENT CASE ARE NOT SUCH AND, THEREFORE, THIS TRIBUNAL DECISION IS ALSO OF N O HELP TO THE ASSESSEE IN THE PRESENT CASE. I.T.A.NO.1001/AHD/2004 & I.T.A.NOS.1123, 1124 /AHD/2006 16 - THE NEXT JUDGMENT CITED BY THE LD. A.R. IS THE JU DGMENT O HONBLE DELHI HIGH COURT RENDERED IN THE CASE OF CIT VS ESS JAY ENTERPRISES PVT. LTD. (SUPRA). IN THAT CASE, 95000 SHARES OF A COMP ANY WERE PURCHASED BY THE ASSESSEE IN 1991 AND SUBSEQUENTLY, THE ASSESSEE WAS ISSUED SOME RIGHT SHARES AND IN 1993-94, THE ASSESSEE PURCHASED ANOTH ER 20,000 SHARES OF THE SAME COMPANY AND THEREAFTER, THESE SHARES WERE SOLD BY THE ASSESSEE IN ASSESSMENT YEAR 1996-97 AND 1997-98. THESE SHAR ES WERE HELD AS INVESTMENT ALL THROUGH AND THE SAME WERE NEVER CONV ERTED INTO STOCK IN TRADE OF THE ASSESSEE. THE BUSINESS OF THE ASSESSE E WAS THAT OF RUNNING A RESTAURANT. THE FACTS OF THAT CASE ARE DIFFERENT A ND, THEREFORE, THIS JUDGEMENT OF HONBLE DELHI HIGH COURT IS ALSO NOT A PPLICABLE IN THE PRESENT CASE. - RELIANCE WAS ALSO PLACED ON THE JUDGMENT OF HONB LE DELHI HIGH COURT RENDERED IN THE CASE OF HINDUSTAN INDUSTRIAL RESOURCES LTD. VS ACIT AS REPORTED IN 335 ITR 77 (DEL.). THIS JUDGME NT IS ALSO NOT APPLICABLE IN THE PRESENT CASE BECAUSE THE FACTS AR E DIFFERENT. IN THAT CASE, THE LAND WAS AGRICULTURAL LAND AND IT AS HELD THAT INTENTION TO USE THE LAND FOR INDUSTRIAL PURPOSE AND NOT CARRYING AGRICULTURA L ACTIVITIES DOES NOT CHANGE THE NATURE AND CHARACTER OF THE LAND AND HEN CE, IT IS CAPITAL RECEIPT AND NOT LIABLE TO TAX. IN THE PRESENT CASE, EVEN I F IT IS AN AGRICULTURAL LAND, THE SALE THEREOF IS LIABLE TO TAX EITHER AS CAPITAL GAIN IF IT IS HELD AS INVESTMENT OR AS BUSINESS INCOME IF IT IS HELD AS B USINESS ASSET AND FOR THE PURPOSE OF ADVENTURE IN NATURE AND TRADE AND, THERE FORE, THIS JUDGMENT OF HONBLE DELHI HIGH COURT IS NOT APPLICABLE IN THE P RESENT CASE. - ANOTHER DECISION CITED BY THE LD. A.R. BEING THE JUDGMENT OF HONBLE BOMBAY HIGH COURT RENDERED IN THE CASE OF C IT VS SMT. DEBBIE ALEMAO AND JOAQUIM ALEMAO AS REPORTED IN 331 ITR 59 (BBY.). THIS I.T.A.NO.1001/AHD/2004 & I.T.A.NOS.1123, 1124 /AHD/2006 17 JUDGMENT IS ALSO NOT APPLICABLE IN THE PRESENT CASE BECAUSE THE FACTS ARE DIFFERENT. IN THAT CASE, THE QUESTION WAS WHETHER CERTAIN PIECE OF LAND WAS AGRICULTURAL OR NON AGRICULTURAL. IN THE PRESENT C ASE, THE DECISION IS NOT BASED ON THIS ASPECT AS TO WHETHER THIS LAND IN QUE STION WAS AGRICULTURAL LAND OR NOT BECAUSE EARNING PROFIT ON SALE THEREOF ARE LIABLE TO TAX EITHER AS CAPITAL GAIN IF IT IS HELD AS INVESTMENT AND OTHERW ISE, AS BUSINESS INCOME. HENCE, THIS DECISION OF HONBLE BOMBAY HIGH COURT I S ALSO NOT APPLICABLE IN THE PRESENT CASE. 11. WE HAVE SEEN THAT NONE OF THE JUDGMENTS CITED B Y THE LD. A.R. IS RENDERING ANY HELP TO THE ASSESSEE IN THE PRESENT C ASE. WE HAVE ALSO SEEN THAT IN SPITE OF THE FACT THAT ULCA WAS APPLICABLE, AS PER THE EXCEPTION CARVED OUT IN SECTION 21 IN ULCA, EVEN EXCESS VACAN T LAND COVERING LAND FOR NON AGRICULTURAL PURPOSES IN SOME SPECIFIED CAS ES IS NOT HIT BY ULCA. THE LAND IN QUESTION WERE ACQUIRED IN 1994-95 AND 1 995-96. THE ASSESSEE IS MAKING AN EFFORT TO CONVERT IT INTO NA AND IT TO GET PERMISSION FOR CONSTRUCTION THEREON AND THE ASSESSEE SISTER CO NCERNS ARE ALREADY IN SIMILAR BUSINESS. CONSIDERING ALL THESE FACTS, WE ARE OF THE CONSIDERED OPINION THAT THE ACTIVITIES OF THE ASSESSEE ARE FOR DEALING IN LAND AND, THEREFORE, THE INCOME IN QUESTION IS LIABLE TO TAX AS BUSINESS INCOME AND NOT AS CAPITAL GAIN. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. 13. NOW, WE DECIDE THE APPEAL OF THE REVENUE FOR AS SESSMENT YEAR 1999-2000 IN I.T.A.NO. 1123/AHD/2006:- THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER: 1) THE ID. CIT(A) HAS ERRED IN LAW AND ON FACTS IN TREATING THE PROFIT OF RS. 17,80,013/- ON SALE OF LAND AS LONG T ERM CAPITAL GAINS AS AGAINST TREATING THE SAME AS BUSINESS INCO ME AS DONE BY THE ASSESSING OFFICER. I.T.A.NO.1001/AHD/2004 & I.T.A.NOS.1123, 1124 /AHD/2006 18 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE ID. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESS ING OFFICER. IT IS THEREFORE, PRAYED THAT THE ORDER OF THE LD. C IT(A) MAY BE SET- ASIDE AND THAT OF THE ORDER OF THE ASSESSING OFFICE R BE RESTORED TO THE ABOVE EXTENT. 14. BOTH THE SIDES AGREED THAT THIS ISSUE IS ON SIM ILAR ISSUE RAISED BY THE ASSESSEE IN HIS APPEAL FOR ASSESSMENT YEAR 2000-01 AND THE SAME CAN BE DECIDED ON THE SIMILAR LINES. IN ASSESSMENT YEAR 2 000-01, WE HAVE DECIDED THE ISSUE AGAINST THE ASSESSEE AND IN FAVOU R OF THE REVENUE AND HENCE, IN THIS YEAR ALSO, WE DECIDE THE ISSUE IN FA VOUR OF THE REVENUE AND HENCE, WE REVERSE THE ORDER OF LD. CIT(A) AND RESTO RE THAT OF THE A.O. 15. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED . 16. NOW, WE TAKE UP THE REMAINING APPEAL OF THE REV ENUE REGARDING PENALTY IMPOSED BYTE A.O. U/S 271(1)(C) IN ASSESSME NT YEAR 2000-01 IN I.T.A.NO. 1124/AHD/2006. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER: 1. THE ID. CIT(A) HAS ERRED IN LAW AND ON FAC TS IN DELETING THE PENALTY OF RS. 13,59,517/- LEVIED U/S. 271(L)(C) OF THE ACT BY THE ASSESSING OFFICER. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE ID. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESS ING OFFICER. 3. IT IS THEREFORE, PRAYED THAT THE ORDER OF THE LD. CIT(A) MAY BE SET-ASIDE AND THAT OF THE ORDER OF THE ASSESSING OFFICER BE RESTORED TO THE ABOVE EXTENT. 17. LD. D.R. SUPPORTED THE PENALTY ORDER WHEREAS LD . A.R. SUPPORTED THE ORDER OF LD. CIT(A). RELIANCE WAS PLACED BY HI M ON THE JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF CIT VS R ELIANCE PETRO PRODUCTS PVT. LTD. AS REPORTED IN 322 ITR 158 (S.C. ) AND ON THE JUDGMENT OF HONBLE GUJARAT HIGH COURT RENDERED IN THE CASE OF HOTEL SABAR PVT. I.T.A.NO.1001/AHD/2004 & I.T.A.NOS.1123, 1124 /AHD/2006 19 LTD. AS REPORTED IN 264 ITR 381 (GUJ.). THIS ISSU E HAS BEEN DECIDED BY LD. CIT(A) AS PER PARA 4 OF HIS ORDER WHICH IS REPR ODUCED BELOW: 4. I HAVE CONSIDERED THE SUBMISSIONS OF TH E AUTHORISED REPRESENTATIVE CAREFULLY. THE APPELLANT HAD FURNI SHED DETAILS OF LONG TERM CAPITAL GAIN OF RS. 65,65,5897- WITH PART ICULARS OF LAND, AREA OF LAND SOLD, DATE OF PURCHASE AND DATE OF SAL E. THE LANDS PURCHASED BY THE APPELLANT AT AMIAPUR WERE AGRICULT URAL LANDS AND THE SAME WERE EXISTING IN SPECIAL AGRICULTURAL ZONE . SO THE LAND WAS TO BE USED ONLY FOR AGRICULTURAL PURPOSES. AS EXPLAINED BY THE APPELLANT, THE APPELLANT ENTERED INTO AGREEMENT FOR SALE OF LAND TO NEMISHWAR PARK CO.OP. HOUSING SOCIETY LTD. TO OB TAIN PERMISSION FROM GOVERNMENT FOR CONSTRUCTION AND TO CONVERT THE AGRICULTURAL LAND INTO NON-AGRICULTURAL, TO OBTAIN APPROVAL OF PLAN, THE APPELLANT HAD ONLY GIVEN ITS SIGNATURE AS THE S AME WERE REQUIRED BY THE PURCHASER. THE APPELLANT WAS ABLE T O SELL THE LAND BECAUSE OF ABOLITION OF URBAN LAND CEILING ACT IN M ARCH, 1999. IT WAS THE CLAIM OF THE APPELLANT BEFORE THE ASSESSING OFFICER THAT EXCEPT HOLDING AND CARRYING OUT AGRICULTURAL ACTIVI TY ON THE SAID LANDS, IT HAS NOT DONE ANY DEVELOPMENT ACTIVITIES O N THE SAID LANDS, THE SAID DEVELOPMENT ACTIVITIES WERE CARRIED OUT BY THE SOCIETY AND THE DEVELOPER APPOINTED BY THE SOCIETY. IT WAS ALSO THE CLAIM OF THE APPELLANT THAT IT HAD NOT CARRIED ON ANY BUSINESS I N LANDS IN THE PAST. THIS CLAIM OF THE APPELLANT HAS BEEN NEGATIV ED BY THE ASSESSING OFFICER AND FINDINGS OF THE ASSESSING OFF ICER HAVE BEEN CONFIRMED BY THE CIT(A). HOWEVER, THE APPELLANT HA S FILED AN APPEAL BEFORE THE HON'BLE I TAT. 1 FIND FROM THE F ACTS OF THE CASE THAT IT IS A REJECTION OF CLAIM AND CONTENTION OF THE APPELLANT. THE APPELLANT HAD FURNISHED ALL NECESSARY DETAILS IN RE SPECT OF SALE OF SAND. THE ASSESSING OFFICER HAD CHANGED THE HEA D OF INCOME. ACCORDING TO THE ASSESSING OFFICER THE APPELLANT HA D TAKEN SEVERAL STEPS SHOWING A SYSTEMATIC, ORGANIZED ACTIVITY I.E. CONVERSION OF LAND FROM AGRICULTURAL TO NON AGRICULTURAL LAND, OBTAINING PLAN APPROVAL FROM AUDA, WHEREAS IT IS THE APPELLANT'S C LAIM THAT IT HAD SIGNED THE SAID APPLICATIONS AS OWNER OF LAND BEFORE TITLE WAS TRANSFERRED AND AS REQUIRED BY THE PURCHASER. THE APPELLANT HAS CITED SEVERAL COURT DECISIONS IN SUPPORT OF ITS CON TENTION THAT SALE WAS EFFECTED OF AGRICULTURAL LAND ONLY. WHETHER THE PROFIT ON SALE OF LAND IS TO BE ASSESSED AS BUSINESS INCOME OR LONG T ERM CAPITAL GAIN I.T.A.NO.1001/AHD/2004 & I.T.A.NOS.1123, 1124 /AHD/2006 20 IS A DEBATABLE ISSUE AND AS ALL PARTICULARS HAVE BE EN DISCLOSED BY THE APPELLANT, IT CANNOT BE HELD AS A CASE OF FURNI SHING OF INACCURATE PARTICULARS OF INCOME SO AS TO ATTRACT LEVY OF CONC EALMENT PENALTY. FURTHER, THE EXPLANATION OF THE APPELLANT HAS NOT B EEN PROVED TO BE FALSE. ACCORDINGLY, IT IS HELD TO BE NOT A FIT CAS E FOR LEVY OF CONCEALMENT PENALTY. ACCORDINGLY, THE PENALTY LEVI ED BY THE A.O. IS DELETED. 18. WE FIND THAT IT IS NOTED BY THE LD. CIT(A) IN T HE ABOVE PARA OF HIS ORDER THAT IT IS A REJECTION OF CLAIM AND CONTENTIO N OF THE ASSESSEE BUT THE ASSESSEE FURNISHED ALL NECESSARY DETAILS IN RESPECT OF SALE OF LAND. IT IS ALSO NOTED BY THE LD. CIT(A) AS TO WHETHER THE PRO FIT ON SALE OF LAND IS ASSESSABLE AS BUSINESS INCOME OR CAPITAL GAIN IS A DEBATABLE ISSUE AND SINCE ALL THE PARTICULARS HAVE BEEN DISCLOSED BY TH E ASSESSEE, IT CANNOT BE HELD TO BE A CASE OF FURNISHING INACCURATE PARTICUL ARS OF INCOME SO AS TO ATTRACT LEVY OF PENALTY. THIS FINDING OF LD. CIT(A ) COULD NOT BE CONTROVERTED BY THE LD. D.R. OF THE REVENUE AND HEN CE, WE ARE OF THE CONSIDERED OPINION THAT IN THE PRESENT CASE, NO INT ERFERENCE IS CALLED FOR IN THE ORDER OF LD. CIT(A) REGARDING DELETION OF PENAL TY. 19. IN THE RESULT, THIS APPEAL OF THE REVENUE IS DI SMISSED. 20. IN THE COMBINED RESULT, THE APPEAL OF THE ASSES SEE IS DISMISSED AND THE QUANTUM APPEAL OF THE REVENUE IS ALLOWED FOR AS SESSMENT YEAR 1999- 2000 AND PENALTY APPEAL OF THE REVENUE IS DISMISSED FOR THE ASSESSMENT YEAR 2000-01. 21. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED HEREINABOVE. SD./- SD./- (D.K.TYAGI) (A. K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER SP I.T.A.NO.1001/AHD/2004 & I.T.A.NOS.1123, 1124 /AHD/2006 21 COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD BY ORDER 6. THE GUARD FILE AR,ITAT,AHMEDABAD 1. DATE OF DICTATION 19/12 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 21/12.OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S.22/12 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 22/12 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.28/12 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 28/12/2011 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. ..