DCIT, CHENNAI V. Late Dr. N.Rangabashyam By Wife and L/R Mrs. R.Chitralekha, CHENNAI

ITA 1337/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8086 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-11-2016
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 20-10-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 13-05-2016
• Court: TRIBUNAL
• Assessee Lawyers: WIFE
• Keywords: Capital asset; Valuation report
• Section: 2(14)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : CHENNAI . . . , !.. # $% , & '( ) [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D. S. SUNDER SINGH, ACCOUNTANT MEMBER ] ./ I.T.A.NO. 1337/MDS/2016 / ASSESSMENT YEAR : 2012-13 THE DY. COMMISSIONER OF INCOME-TAX NON-CORPORATE CIRCLE 2 CHENNAI VS. LATE DR.N.RANGABASHYAM REP. BY WIFE & L/R MRS. R. CHITRALEKHA NO.38, VENKATNARAYANA ROAD T. NAGAR, CHENNAI 600 017 [PAN AAAPR 6056 P ] ( *+ / APPELLANT) ( ,-*+ /RESPONDENT) / APPELLANT BY : SHRI SUPRIYOPAL, JCIT /RESPONDENT BY : SHRI G. SEETHARAMAN, CA / DATE OF HEARING : 20 - 10 - 2016 ! / DATE OF PRONOUNCEMENT : 10 - 11 - 2016 / O R D E R PER D.S. SUNDER SINGH, ACCOUNTANT MEMBER THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-2, CHENNA I, DATED 23.3.2016 FOR ASSESSMENT YEAR 2012-13. 2. THE ASSESSEE FILED THE RETURN OF INCOME FOR THE AS SESSMENT YEAR 2012-13 ELECTRONICALLY ON 28.9.2012 DECLARING A TOTAL INCOME OF ` 2,13,43,800/-. THE ASSESSEE WAS A GASTROENTEROLO GIST AND EXPIRED ITA NO.1337/16 :- 2 -: ON 14.7.2013 AND REPRESENTED BY HIS WIFE AND LEGAL HEIR, SMT. R.CHITRALEKHA. THE ASSESSEE HAS SOLD A PROPERTY A DMEASURING 4.91 ACRES OF VACANT LAND AT KRISHNANKARANAI VILLAGE, CH ENGALPET TALUK, VIDE REGISTERED DOCUMENT NO.13202/2011, SRO, TIRUPORUR F OR A CONSIDERATION OF ` 9,76,76,000/- TO M/S EAST COAST RESORTS AND FARMS (P) LTD ON 12.12.2011. THE MARKET VALUE OF THE PRO PERTY AS PER THE GUIDELINE VALUE OF SRO WAS ` 11,05,38,000/-. THE ASSESSEE CLAIMED THE ENTIRE SALE CONSIDERATION AS EXEMPT U/S2(14) AS THE LANDS SOLD WERE AGRICULTURAL LANDS. THE ASSESSEE CLAIMED THA T THE LANDS IN QUESTION WERE AGRICULTURAL LANDS NOT BEING CAPITAL ASSET, NO CAPITAL GAINS ARISES ON SALE . DURING ASSESSMENT PROCEEDI NGS, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE ACQUIRED THE LANDS DURING 1985 TO 1988 AND THE ASSESSEE HAS NOT RETURNED ANY AGRICUL TURAL INCOME FROM THE ASSESSMENT YEAR 2006-07 TO 2011-12 AND HENCE, T HE ASSESSING OFFICER PRESUMED THAT THE ASSESSEE WAS NOT CARRYIN G ON ANY AGRICULTURAL OPERATION IN THE SAID LANDS AND HENCE, THE LANDS WERE NOT AGRICULTURAL LANDS AND ACCORDINGLY, HELD AS CAPITAL ASSET. THE ASSESSING OFFICER FURTHER PRESUMED THAT SINCE THER E WAS HUGE JUMP IN THE VALUE OF THE LANDS AND THE ASSESSEE HAS SOLD T HE LANDS TO A REAL ESTATE DEVELOPER AND NOT CARRYING ON AGRICULTURAL A CTIVITIES, THE LANDS IN QUESTION WERE NOT AGRICULTURAL LANDS AND DOES NO T FALL UNDER EXPLANATION ITA NO.1337/16 :- 3 -: PROVIDED U/S 2(14) OF THE ACT, AND ACCORDINGLY B ROUGHT TO TAX THE SALE CONSIDERATION UNDER LONG TERM CAPITAL GAINS. 3. AGGRIEVED, THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND THE CIT(A) ALLOWED THE ASSESSEES APPEAL HOLDI NG THAT THE LANDS IN QUESTION TRANSFERRED WERE AGRICULTURAL LANDS AND TH ERE WAS SUFFICIENT EVIDENCE TO PROVE THAT THE LANDS WERE USED FOR AGRI CULTURAL PURPOSES. FOR THE SAKE OF CONVENIENCE WE EXTRACT THE RELEVAN T PARAGRAPHS OF CIT(A)S ORDER: 6. MY OBSERVATIONS: I H A VE C A R EFULLY ANALYSED THE FACTUAL EV I DENC E ON R E C O RD. T H E FOLL OW IN G ARE MY OB S E RV AT I ONS: 6 .1 . TH E ENTI RE LA N D IN QUEST ION , MEASURING 4 . 9 1 A C RES , H A S BE EN PURC HAS ED DU R ING TH E PE RI OD 1985-88, AS EV I DEN C ED BY T HE COP I ES OF FIVE S ALE DEEDS PRODUCED BY TH E APPEL L ANT . IT IS S EEN THA T IN ALL THES E SALE DEED S, TH E L ANDS HA VE BEEN DESC RI BE D AS ' AG RI CULTURAL LA ND BEARING PUNJAI SURVEY NO . ... '. A S I S W E L L KNOWN, THE WO R D ' PUNJA I ' DENOTES ' DRY LAND'. 6.2. THE APPELLANT CLAIMS THAT TRE E S SUCH AS COCONUT , M ANG O , CH APPO T T E AND CASUA R IN A, AS WELL AS VEGETAB LES WERE GROWN ON THESE LAN D. IT IS SE EN T HAT THE COP I ES OF ' ADANGAL ' F URNISHED B Y THE APPELLANT M ENTIONS THAT M ANGO , C OCONUT AND CASUAR I NA ARE CULTIVATED . 6.3 . BESIDES T HE ADANG A L, T HE APPELLAN T H AS PRODUCE D A C ERT IFIC AT E D T . 2 . 11 . 2011 F ROM T HE VAO, NEMMIL I V IL LAGE AND KR I SHN AKARANA I VIL L AGE, C HEN GL E PE T TALUK TO T H E EFFECT THAT THE LANDS I N QUESTION, BEARI NG THE RE L E VANT SU RVE Y NOS , ARE L OCATED AT A DISTANCE OF MO RE THAN NIN E KIL OM ET R E S F R O M MA MALLAPURAM PANCHAYAT , AND THA T THE POPU L ATI ON OF KRISH NAKA RAN AI VILLA G E I S APP R O XIMATE L Y 624 . ANOTHER CERTIFICATE DATED 26 . 03.20 15 FR OM T HE V A O HAS A LSO BEEN , PRODUCED STATING THAT THE LANDS IN QUESTION A RE L OCAT ED A T A D I STAN CE O F A PPROX . 24 K I LOMETRES FROM UTHANDI, T HE OUTER L I M IT OF C HEN NA I C O R PO R A TI O N. THE APPELLANT HAS ALS O PRODUCED THE SU RVEY NUMBE R- WISE G UIDEL I N E V A LU ES P E R T A INING TO KRISHNAKARANA I VIL L AGE, AS PE R W HICH, THE SUR VE Y NO S. OF T H E L ANDS I N QU ES T I O N HAVE BEEN CATEGO RISED AS 'DRY-W ELL/BORE WEL L IRR IGAT IO N ITA NO.1337/16 :- 4 -: CLA S S I L'. 6 . 4. THE APPE L LANT CLAIMS THAT DURING THE PERIOD 200 4 - 0 5 TO 200 8- 09 , HE HAS RETURNED POS ITIVE AGRICU L TUR A L I NCOME AND THE SAM E HAS B EEN DULY SHOW N I N HIS CAPITAL ACCOUN T AND A L SO REFLECT ED IN THE RETURN OF I N COM E FOR THES E YEAR S FOR RATE PURPOSES. THE APPELLANT H A S ENCLOSED THE COPI ES OF H IS R ETURNS AN D THE BALANCE SHEET F OR THE RELEVA N T YEARS FROM W HICH IT IS S E E N THA T T H E N ET AGRICULTURAL INCOM E (AF T ER DEBITING EXPENSES LIK E S ALAR Y T O CA R E-TAKER S ET C.) IS AS FOLLOW S : ASSESSMENT YEAR NET AGRICULTURAL INCOME 2004-05 RS.93,675 2005-06 RS.43,119 2006-07 RS. 7,310 2007-08 RS.12,680 2008-09 RS.35,041 HOWEVER, B ETWEEN AYS.2009- 10 TO 20 1 2 -13, TH E APPEL L A N T CLA I MS TO H A VE I NCURR E D LOSSES FRO M AG R ICULT U RAL ACT IVITIES AND HA S SHOWN THE SAME IN H IS C AP I TAL ACCOUNT AS AMOUN T TR A NSFERRED TO DR AWINGS ACCOUNT. CO PI ES OF CAPITAL ACCOUNT F OR THIS PER I OD HAVE A LSO BEEN PRODUCED AND EXAMINED . 6.5. T HE APPEL LANT P L ACES RELIANC E ON THE VA L U A TION RE PORT D A TED 27 . 0 3.2 015 S UBMIT T ED BY THE DEP A RTMENTAL VALU ATION OFFICER ( DVO) . A PERUS AL OF THE SAID DEP ARTMENTA L V ALU AT I O N REPO R T S HO WS THAT TH E DETAILS OF THE PLA NTATIONS SEEN IN THE LAND PO RTI ON ME NT I O N S TH A T G R O WN UP CASUARINAS TREES , AND CHAPPOT T E TREES ARE FO U ND, A L ONG W IT H MANGO TRE E S , COCONUT TREES ETC. THE REPORT ALS O M ENT I ONS THA T A PORT I ON OF THE L AND WA S RE ADY FOR PLANTING VEGETABLES. THE SAME PORTI ON OF TH E REPORT ALSO MENTIONS THA T THATCHED ROOF SHELTERS AND MANGALORE TIL ED ROOF SHE LTERS MEANT FOR FARM WORKER S EXISTS IN THIS POCKET OF LAND . 6 . 6. IT IS SEEN THAT THE LANDS IN Q U EST I ON , PU RCHASED AS EARLY AS 1985-8 8 HAVE BEEN USED BY THE APPELLANT FOR CUL T I V A TION PUR POSES, TIL L THEY WERE ALL SOL D ON 12.12 . 2011 . IT IS PERTINENT TO NOT E T H AT NO PO R T I ON OF THE L AND WAS SOLD BY THE APPELLANT DURING ITA NO.1337/16 :- 5 -: THESE YEARS . FRO M T H E P L E THOR A OF DOCUMENTARY EV I DENCE SUBMITTED BY THE APPELLANT, IT IS EV I D ENT THAT TH E L ANDS HAVE BEEN USED FAIRLY CONTINUOUSLY, FOR CULTIVAT I ON OF TREES SU C H AS COCO NUT, MANGO , CHAPPOTTE AND CASUARINA AS WELL AS VEGETABLES. AS MEN TI O NED EAR L I ER(VIDE PARA 6 . 4 SUPRA), THE APPEL L ANT HAS RETURNED POSITIVE INCOM E A T LEAST FO R 5 ASST. YEARS AND FOR FOUR ASST . YEARS, THE LOSSES INCURRED HAVE B EE N TRANSF ER R ED TO THE DRAW I NGS ACCOUNT, DULY REFLECTING THE SAME IN THE CAPITAL ACC O U NT . ALTHOUGH THE NET AGR I CULTU RAL INC OME RE F L ECTED IN THE RETURN I S NOT SUBSTANTIAL, THE FACT REMAINS THAT TH IS EV I D ENC E S BEY OND DOUBT, THE CARRY I NG ON OF ACTIVITIES OF CULTIVATION , IN THE LAN DS I N QUES T I ON. I T MAY BE NOTED THAT THE LANDS AT KRISHNAKARANAI ARE THE ONLY LA NDS H ELD B Y THE APPELLANT . 6.7. AS FAR AS THE CONDITIONS LAID DOWN I N S ECTI O N 2(14)(III ) ARE CONCERNED ALSO, THE APPELLANT HAS FULFI L LED ALL THE CON D ITI ONS LAID DOWN, AS IS CLEAR FROM THE WRITTEN SUBMISSIONS, SIN CE : (A) THE LAND AT KRISHNAKARA NAI I S L OCATED IN THIRUPORUR TALUK IN KANCHEEPURAM DISTRICT. T H E N E AR EST NOTIFIED MUNICIPALITY (TO KRISHNAKARANAI) IS CHINGLEP ET, WH I CH IS 3 5 . 8 KM (I.E . BEYOND 8 KM) FROM KRISHNAKARANAI VILLAGE . ( B) THE NEAREST MUNICIPAL CORP ORATION IS CHEN NA I CORPORATION , WITH L I MIT UPTO UTHANDI, AND KRISHNA KARA N AI V I LLA GE IS LOCATED AT A DISTAN C E OF 4 KM DISTANCE FROM UTH ANDI, A S PER THE CERTIFICATE OF VAO, KRISHNAKARANAI , DT . 22 . 4.20 1 5. (C) THE NEA R EST CANTONMENT BOA RD IS P ALL A V A RAM AND THE DISTANCE BETWEEN PALLAVARAM AND KRISHNAKARA NAI IS 44 K M 7 . CONCLUSION : 7.1 . I T I S A F AC T THA T T HE LANDS IN QUE S TIO N H AVE B EEN SOLD FOR A HIGH PRICE OF RS . 9,76,7 6 , 000 / -. HOW EVER , THE FACT REM A I NS T H AT AGRICULTURAL A CTIVIT I ES I . E. C U LTI V A T I ON O F TREES AND VEGE T ABLES HA V E B EE N ACTUAL LY CARRIED OUT IN THE LANDS AS E V I D ENC ED B Y THE ADAN GAL C O P IES AND T HE F AC T THAT P OSITIV E INCO ME / L OSS FROM THE S A I D ACTIVITIES HAVE BE EN DULY REFLECTED IN T HE CAPI TAL A CCO UNT OF T H E AP PELL A NT AN D A LSO REF LE CTED I N TH E RETURNS OF I N COM E OF THE A PPEL LAN T, D ULY S U P PO RTED BY T HE M ENT I ON OF THE SAM E I N THE DVO ' S R EPO RT AN D PHO TOGR AP HS T A K E N BY TH E DVO DU RI NG T HE INSPECTIO N . AS MENTIONED E ARLI ER (PARA 6 .7 SU PRA ) T HE CO N DITI O N S LAID D OW N I N SECT I ON 2(1 4) A R E ALSO FU L FILLE D AS FAR AS DISTANC E FR O M NEAREST M U NICI PAL I TY /M UN I C I PAL CO R PORATION/CAN T ONM ENT BO ARD IS C O NCERNED A N D A L S O WITH R ESPECT TO POPULATION. T HE APPELLANT , ALO NGW I TH THE WR I TTEN S U BMIS S IO N, FU RN ISHE D A COPY OF THE R EC EIPT NO . 0 1 44926 D T . 19 . 3.2014 FO R THE FASL I Y E ARS 141 3 TO 141 8 A ND 1419 TO 1 420 , F O R R S . 640 /- T OWARDS LAND R EVE NUE , I SSUE D B Y THE % THE VILLAGE A D MINI STRATIVE OF FI CER , L AND REVENUE, K RI SHNA K A RANAI VILL AGE , ITA NO.1337/16 :- 6 -: CH ENGELP ET DI S TRICT . THE OTHER FACTORS HIGHLI GH TED BY T HE ASSESSING OFFICER I.E. L O CATION O F THE LAND AT ECR, WHIC H IS A FAVOURITE D ESTINATION OF THE AFFLUE N T A S A FARM HOUSE ETC., ARE NOT RE LEVANT, IN VIEW OF THE FACT THAT EVIDENCE H AS BEEN BROUGHT ON RECORD TO P ROVE THE CARRYIN G ON OF AGR I CULTURAL ACTIVI T IES HENCE , THE LA NDS IN QUESTI ON I.E . 4 . 91 AC R ES O F LAND A T KRISHNAKARANAI VILLAG E SOLD BY T HE APPELLANT DURING TH E RELEVANT FINANCIAL YEAR, ARE HE LD TO BE AGRICULT URAL LANDS . THE ADDITI O N MADE BY COMPUTING LONG TERM CAP I TAL GAINS O F RS. 9,88 , 56 , 215 /- ON A C COUNT OF THE SALE THEREOF, STAND S DELETED. THIS GROUND IS H ENCE ALLOWED . ( EMPHASIS SUPPLIED ) 4. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE REVEN UE IS IN APPEAL BEFORE THE TRIBUNAL. 5. THE LD. DR APPEARING FOR THE REVENUE ARGUED THAT TH OUGH THE SCHEDULE OF THE SALE DEED CLASSIFIED THE ASSETS SOLD AS AGRICULTURAL LANDS AND LOCATION OF THE PROPERTY BEYOND IS 8 KMS FROM THE MUNICIPAL LIMITS, THE ASSET FAILED TO QUALIFY FOR EXEMPTION BECAUSE OF THE REASON THAT THE PROPERTY WAS NEVER PUT TO USE FOR AGRICULT URAL PURPOSES IN THE PAST. THE LANDS WERE UTILIZED BY THE ASSESSEE FOR RECREATIONAL PURPOSES AND AGRICULTURAL OPERATION WAS NEVER CARR IED OUT. THE ASSESSING OFFICER ALSO RELIED ON THE JUDGMENT IN TH E CASE OF VWT VS OFFICER IN CHARGE (COURT OF WARDS) PAIGAH, 105 ITR 133 WHICH HAS MADE THE FOLLOWING OBSERVATION. ONE OF THE OBJECTS OF THE EXEMPTION SEEMED TO BE T O ENCOURAGE CULTIVATION OR ACTUAL UTILISATION OF LAND FOR AGRIC ULTURAL PURPOSES. IF THERE IS NEITHER ANYTHING IN ITS CONDITION, NOR ANYTHING IN EVIDENCE TO INDICATE THE INTENTION OF ITS OWNERS OR POSSESSORS, SO AS TO CON NECT IT WITH AN ITA NO.1337/16 :- 7 -: AGRICULTURAL PURPOSE, THE LAND COULD NOT BE 'AGRICU LTURAL LAND' FOR THE PURPOSES OF EARNING AN EXEMPTION UNDER THE ACT. ENT RIES IN REVENUE RECORDS ARE, NOT CONCLUSIVE AND SUCH ENTRIES CAN RA ISE ONLY A REBUTTABLE PRESUMPTION, THEY ARE, HOWEVER, GOOD PRIMA FACIE EVIDENCE. SINCE ALL THESE CONSIDERATIONS WERE KEPT IN VIEW BY THE TAXIN G AUTHORITIES IN DECIDING THE QUESTION OF FACT WHICH WAS REALLY FOR THE ASSESSING AUTHORITIES TO DETERMINE HAVING REGARD TO ALL THE R ELEVANT EVIDENCE THE HIGH COURT SHOULD HAVE SENT BACK THE CASE TO THE AS SESSING AUTHORITIES FOR DECIDING THE QUESTION OF FACT AFTER STATING THE LAW CORRECTLY. 6. THE LD. DR ALSO RELIED ON THE DECISION OF THIS TRIB UNAL IN THE CASE OF ABOO BUCKER IN I.T.A.NO.1793/MDS/2013 DATED 31.12.2015, WHEREIN THE TRIBUNAL HAS OBSERVED AS FOLLOWS: ' IN THE PRESENT CASE , THE P URCHASER OF TH E PR OPERTY WAS A COMP A NY BY NAME M/S . MENAKUR I NFRASTRUCTURE PRIV ATE LIMITED W HICH I S A R EGISTERED COMP A NY UNDER THE C O MPAN I ES ACT, 1956 , INCO R PORATE D ON 0410812004 VIDE REGISTRATIO N NO. U 45204T N 2 004PTC053884 WIT H A N I NTENTION TO DEVELOP HO USING PROJECTS , IN FORMATION T ECHNO L OGY BUILDINGS AND FAMILY HOUS ING C O NSTRUCTION IN AND AROU ND CHE NN A I. THE PROPERTY SOLD IS SITUATE D IN N A VALUR WHICH I S A SUBURB IN CHE NN AI , I T IS SITUATED IN KANCHIPURA M DI S TRICTT , T AMIL NADU , LO C A T E D SO UTH OF \ T HE CITY OF CHENNAI , ALONG THE O L D MAHABALIP URAM ROAD . N AVA LUR I S L OCA T ED BETWEEN SHOL I NGA NALLU R AND SIRU S ERI AND IS ARO UN D 6 KM S . F ROM SHOLINGANALLUR AND CO MES UNDER THIR P OR UR TALUK . TH E P LACE W AS ONCE A VII/AGE BUT W I TH THE ADVENT O F IN FORMA T IO N TE CHNO L OGY COMPANIES AND THE RAP I D D EVE L O P MENT OF TH E OLD MAHABAL I PURA M, IT HAS BECOME A BUSTLING SUB URBAN . NAVALUR IS AN UPCO M ING R ESIDE N TIAL AREA W I TH MANY NUMBER O F FLAT S COMING UP, MOSTLY P RO FESS I O N ALS F ROM I NFORMATION TECHNO LOGY COMPAN I ES RENTING A N D BUYING A PARTMENTS . AS DETAILED AB OVE , T H E PROPERTY SOLD BY T H E ASSESSEE IS I N THE MIDST OF DEVELOPMENT ACTIVITIES BEING CARRIED OUT BY BUILDERS IN PROMOTING HOUS IN G/ INFOR MATION TECHN O LN OLOGY CORRIDORS, AND NO AGRICULTURAL ACTIVIT IES WERE BE IN G CA RRI ED O UT EITHER BY THE ASSESSE N OR BY OT H ERS I N TH AT AREA , THE PR OPE RTY IS DESCRIBED AS A MANGO GROV E A S PER THE COPY OF THE SALE D EED/PATTA , CHITTA ADANGAL PRODUCED . IN VIEW O F THE SAME, T HE SALE PRICE R ECE IV ED F O R TH E PROPERTY HAS INCREA SED MANIFOLD WHIC H A NORMAL A GRICU LTUR A L L AND WILL NOT FETCH . THE PRIC E IS IN ACCORD A NC E WITH THE DE V ELOP M EN T ACTIVITIES AND CHANGES HAP PENING IN THE N ATURE OF T HE L AND FR OM AGRICUL TU RAL TO THAT OF HOUSIN G 5. 14 IF WE CONSI DER THE ABO VE FACT S AND O F THE PRESE NT CASE AS A W H OL E AND AN OVE R ALL VIE W IS T O BE TAKEN IN DECIDING WHE THER THE LAND WAS AN AGRIC U LTU RAL LAN D , WE WO UL D COME TO A CONCLUSIO N THAT THE PROPERTY CANNOT BE CO NSID ER ED A S AG R ICULTURAL LAND . THO UGH THE CIRCUMST ANCE THAT THE LA ND IS C LASSIFIED AS AGRICULTURAL IN THE REVENU E RE CORDS AND THE VILLA GE PANCHAYAT PRES I DENT , NAV ALLUR , HAS CERTI F IED THAT THE LA ND I S AW A Y F RO M MUNICIPALITY . IN OUR V IEW THE OTHER CIRC UMSTANCES POI NTE D O UT ABO V E OUTWEIGHS ALL OF THE ITA NO.1337/16 :- 8 -: CIRCUMSTANCE S IN FAVOUR OF THE RE VEN UE A ND O N T HE BASIS OF THOSE CIRCUMSTANCES , W E ARE INCLINED TO C O NCLU DE T HA T THE PROPERT Y WAS NO T AN AGRICULTURAL LA ND . THE ID . A UTH ORI SED REPRESENTATIVE FOR ASSES SEE ALSO RELIED ON T HE JU DG MEN TS O F SA K UN T HA VEDACHALAM & VANITHA MANICKAVA SAGAR VS . A CIT 36 9 ITR 558 A N D CIT VS . MAFWA T EXTURISING P . LT D 2 92 ITR 488 ( MP) WHI C H ARE DISTINGUISHABL E ON FAC T S . AC CO RDIN G LY , THIS APPEAL OF THE REVENUE IS A L LOWED. ' 7. THE LD. DR FURTHER SUBMITTED THAT THE LD. CIT(A) IS NOT JUSTIFIED IN TREATING THE LANDS SOLD BY THE ASSESS EE AS AGRICULTURAL LANDS. 8. ON THE OTHER HAND, THE LD. AR ARGUED THAT THE ASSE SSEE WAS A RENOWNED GASTROENTEROLOGIST. THE LANDS IN QUESTI ON WERE PURCHASED IN 1988 FOR CARRYING OUT AGRICULTURAL OPERATIONS. THE ASSESSEE WAS CARRYING ON AGRICULTURAL OPERATIONS IN THE SAID LAN DS RIGHT FROM THE DATE OF ACQUISITION OF THE LANDS. DURING ASSESSMENT Y EARS 2006-07 TO 2012-13, THERE WAS NO POSITIVE AGRICULTURAL INCOME AND THE ASSESSEE DID NOT DECLARE ANY AGRICULTURAL INCOME. MERELY BE CAUSE THE ASSESSEE DID NOT DECLARE AGRICULTURAL INCOME, IT IS INCORREC T TO CONSTRUE THAT THE ASSESSEE HAS NOT CARRIED OUT ANY AGRICULTURAL ACTIV ITIES. THE LD. AR ALSO SUBMITTED THAT IN REVENUE RECORDS ADANGAL, CHITTA A ND PATTA, IT WAS MENTIONED THAT THE LANDS IN QUESTION WERE USED FOR THE PURPOSE OF AGRICULTURAL ACTIVITIES. HE FURTHER SUBMITTED THAT IN THE SURVEY REPORT OF REGISTRATION DEPARTMENT SURVEY NO.67/22, 67/8C 1 D16A, 67/8C 1D16C,67/8C,1D16F AND 67/8C1D19 THE LANDS WERE CATEGORIZED AS DRY ITA NO.1337/16 :- 9 -: WELL/BOREWELL IRRIGATION CLASS-II. FURTHER, T HE LD. AR REFERRED THE DVOS VALUATION REPORT WHEREIN HE HAS ANNEXED THE P HOTOGRAPHS OF THE LANDS SHOWING THAT IN THE SAID LANDS CASURINA T REES, SAPPOTTA TREES AND MANGO TREES WERE GROWN. THE DVO IN HIS REPORT CLEARLY MENTIONED THAT IN THE ENTIRE CHUNK OF LANDS, AGRICU LTURAL ACTIVITIES WERE CARRIED OUT. HE, THEREFORE SUBMITTED THAT THE ASS ESSEE WAS CARRYING ON AGRICULTURAL ACTIVITIES AND THE LANDS WERE CATEG ORIZED AS AGRICULTURAL LANDS, THEREFORE, THE ENTIRE SALE PROCEEDS OF SALE OF LANDS CANNOT BE HELD AS CAPITAL ASSET AS PROVIDED U/S 2(14) OF THE ACT AND HENCE, THE QUESTION OF CAPITAL GAINS DO NOT ARISE AND RELIED ON THE ORDER OF THE CIT(A). 9. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATE RIAL PLACED BEFORE US. THE LD. AR PRODUCED THE COPY OF THE SALE DEED. IN THE COPY OF THE SALE DEED, THE SCHEDULED PROPERTY W AS RECORDED AS AGRICULTURAL LANDS. THE ASSESSEE PRODUCED THE C OPY OF THE REVENUE RECORDS. IN THE REVENUE RECORDS, THE LANDS IN QUES TION WERE RECORDED AS AGRICULTURAL LANDS. THE SURVEY REPORT SHOWS T HAT THE LANDS IN SURVEY NO.67/22, 67/8C 1D16A, 67/8C 1D16C, 67/8C 1D 16F AND 67/8C1D19 WERE CATEGORIZED AS DRY WELL/BOREWEL L IRRIGATION CLASS-II. THE ASSESSING OFFICER HAS REFERRED THE PROPERTY FOR VALUATION ITA NO.1337/16 :- 10 -: TO THE DVO, AND THE DVO HAS MADE FIELD INSPECTION A ND MADE HIS COMMENTS IN PARA 3.5 OF HIS REPORT AS UNDER: 3 . 5: USAGE/TENANCY : IN ALL T HE TO T A L PROPERTY IS I N 5 POCKETS. PRO P ERTY IN POCKET 1 AND 2 IS LOCATED EAST OF EAST C O AST ROAD (EC R) WITH A GAP I N BETWEEN M E A S URING APPROXIMATE LY 60 - 75 M . THE REMAININ G PR OPER T Y IN P OCKETS 3 , 4 AND 5 ARE ADJACENT TO EACH OTHER AND ARE LOCATED AT A DISTANCE OF 250 - 275 M FROM ECR EXTE N DING UPTO SEA. ( BAY OF BENGAL). G R OWN UP CHAPPOTTE PLANTS WERE S E E N. CA S U R I NA WERE SEE N DENSE L Y PLA N TED IN MAJO R ITY OF THE AREA . COCONUT TREES & MANGO TREES W E R E SEEN THEN AND THER E AS TA B ULATED BELOW. APART FROM THIS A SMALL PORTION O F LAN D T O AN E X TENT OF 300-400 SQFT W A S MAD E READY F OR PLANTING GREEN VEGETABL E S . ONE THATCHED ROOF S H ED AND O NE M A D R AS TERRA CE ROOFED SHED ALSO EX I STING FO R THE USE BY THE CARE TAKERS OF THE PROPERT Y. TWO S T OR I E D RCC BUILDING (GROUND AND P A RT FIRS T FLOOR) IS EXI S TING WHICH IS RESEMBLING A FARM HO U S E AS W ELL AS USED FOR STORAGE OF M A TE RI ALS. DUR I NG THE INSPECT I ON IT IS S EEN THAT N O ONE IS LIVING I N T HE HOUSE . 3 TO 4 BAGS OF MANUR E MATERIALS WERE STORED IN THE BUILDING . ONE B ORE WELL WITH MOTOR WE R E SEEN W HI CH I S BEING USED F OR IRRIGAT I NG THE PLANT A TIONS . D U RING TH E INTERACT I ON W I TH ONE OF T H E WORK E R PRE S E N T I N T HE FARM LAND DUR I NG THE SI T E VISI T, I T W AS TOLD BY HIM T H AT THE POWER CONNECT I ON FOR R U NNING THE PU M P I N G MOTOR IS THE ON E A L LO T T ED U N D E R ' F ULL SUBS I DY SCHEME' MEANT FOR AGRICULT U RE. IN ALL THE TOTAL PROPERTY IS IN FIVE POCKETS. POCK ET 1 & 2 IS LOCATED EAST OF EAST COAST ROAD WITH A GAP IN BETWEEN MEASURING APPROX 60-75 MTRS. THE REMAINING PROPERTY IN POCKETS 3,4 & 5 ARE ADJAC ENT TO EACH OTHER AND ARE LOCATED AT A DISTANCE OF 250-275 MTRS. FROM EAS T COAST ROAD EXTENDING UPTO SEA. SAPPOTTE TREES, CASURINA WERE SEEN DENSE LY PLANTED IN MAJORITY OF THE LANDS. COCONUT AND MANGO TREES WERE SEEN. APA RT FROM THAT, SMALL PORTION OF LAND MEASURING 300-400 SQ FT WAS MADE R EADY FOR PLANTING GREEN VEGETABLES. THERE IS A THATCHED ROOF SHELTER AND O NE MANGALORE TILED ROOF SHED ALSO EXISTING FOR USE OF CARETAKERS OF THE LAN DS. TWO STORIED RCC BUILDING IS EXISTING WHICH IS RESEMBLING A FARMHOUS E AS WELL AS USED FOR STORAGE OF MATERIALS. DURING INSPECTION IT IS SEEN THAT NO ONE IS LIVING IN THE HOUSE. 3 TO 4 BAGS OF MANURE MATERIALS WERE STORED IN THE BUILDING. ONE BORE WELL WITH MOTOR WERE SEEN WHICH IS BEING USED FOR IRRIGATING THE PLANTATIONS. DURING THE INTERACTION WITH ONE OF THE WORKER, IT WAS TOLD BY HIM THAT POWER CONNECTION FOR RUNNING THE PUMPING M OTOR IS ALLOTTED UNDER FULL SUBSIDY SCHEME. THE DVO HAS GIVEN THE PLANT ATION DETAILS ALSO AS UNDER: ITA NO.1337/16 :- 11 -: SI . POC K E T SURVEY NO: E XTENT OF T H E RE MARKS NO O F L AND POCKETS IN L A ND C ENTS L . I 67/8C /1 D/16 A 4 2 CENTS GRO WN UP CAS U R IN A PL ANTA T I ON S 2. I I 6 7/8C/ 1 D/16 C 2 2 CE N TS GR OWN UP CA SU R I NA P LA N T A TI O NS & C H APPOTTE PLANTA TI ONS 3. III OLD S . NO:67/8C / LD/ 16 F ( PART ) , NE W S . N B: 67/ 196 1 35 CEN T S G R OWN UP CASU R IN A P LA NT A TI O NS OF L ARG E DENS I T Y . O F 4. IV S . NO : 67 / 8C/1D/19 1 50 CENT S M AN GO TREES, COCONUT T RE E S , CA S U R I N A, A CO U NT AB L E N U M B E R OF MONKE Y POD TREES OR MADRAS THORN TREES AND MANY OHER VARIETY OF SPECIES SEEN. THE THATCHED ROOF SHELTERS AND MANGALORE TILED ROOF SHELTERS MEANT FOR THE FARM WORKERS EXISTS IN THIS POCKET OF LAND. THE RCC BUILDING IS SITUATED IN THIS POCKET OF LAND. 5 . V S . N O :67 /22 1 42 CENTS 10. IN HIS REPORT, THE DVO HAS ALSO ENCLOSED THE PHOTO GRAPHS TAKEN DURING HIS SURVEY. AS PER THE PHOTOGRAPHS EN CLOSED ALONGWITH THE DVOS REPORT, THE ASSESSEE WAS GROWING CASURIN A TREES, SAPOTTA TREES, COCONUT TREES AND MANGO TREES. IN A NUTSHEL L, THE DVOS REPORT ALSO SUPPORTS THAT THE ASSESSEE WAS USING THE LAND S FOR AGRICULTURAL PURPOSES AND CARRYING ON AGRICULTURAL OPERATIONS. D VO IS DEPARTMENTAL VALUER REFERRED BY THE ASSESSING OFFICER FOR VALUA TION WHO HAS PERSONALLY VISITED AND SATISFIED THAT THE LANDS WER E USED FOR AGRICULTURAL PURPOSES..THE ASSESSING OFFICER AND THE LD. DR REFE RRED THE OBSERVATIONS OF THE SUPREME COURT IN THE CASE OF CW T VS OFFICER IN CHARGE(COURT OF WARDS) PAIGAH (SUPRA). THE HON'BLE SUPREME COURT OBSERVED IN THE CASE LAW RELIED ON BY THE REVENUE THAT THE CHARACTER OF THE ASSET IS TO BE DECIDED INDIVIDUALLY BASED ON FACTS OF THE CASE AND ITA NO.1337/16 :- 12 -: THE NATURE AND CHARACTERISTICS OF THE ASSETS AND IT SHOULD HAVE BEEN USED FOR AGRICULTURAL PURPOSES. IN THE ASSESSEES CASE, THE ASSESSEE HAS PROVED WITH REVENUE RECORDS AS WELL AS THE FIE LD INSPECTION REPORT OF THE DVO THAT THE LANDS WERE AGRICULTURAL LANDS N OT ONLY AS PER REVENUE RECORDS BUT ALSO USED FOR AGRICULTURAL PURP OSES. THEREFORE, AS PER THE OBSERVATION OF THE HON'BLE SUPREME COURT IN THE CASE CITED SUPRA ALSO FALLS UNDER THE CHARACTER OF AGRICULTUR AL LANDS WITHIN THE MEANING OF SEC. 2(14) OF THE ACT. 11. THE ASSESSING OFFICER HAS RELIED ON THE DECI SION OF THIS TRIBUNAL IN THE CASE OF ABOO BUCKER(SUPRA) WHEREIN THE TRIBUNAL HELD THAT THE PROPERTY SOLD BY THE ASSESSEE WAS A CAPIT AL ASSET. WHILE HOLDING SO, THIS TRIBUNAL AS MADE AN OBSERVATION TH AT THE PROPERTY SOLD BY THE ASSESSEE WAS IN THE MIDST OF DEVELOPMENTAL ACTIVITIES BEING CARRIED OUT BY THE BUILDERS IN PROMOTING HOUSING/IN FORMATION TECHNOLOGY AND AGRICULTURAL ACTIVITIES WERE NOT BE ING CARRIED OUT EITHER BY THE ASSESSEE OR BY ANY OTHERS IN THAT AREA. I N THE CASE RELIED UPON BY THE LD. DR, THE TRIBUNAL HAS GIVEN A FINDIN G THAT THE LANDS WERE NOT USED FOR AGRICULTURAL LAND PURPOSES. THER EFORE, THE TRIBUNAL HELD THAT IT WAS A CAPITAL ASSET. THE CASE LAW REL IED UPON BY THE ASSESSING OFFICER CANNOT COME TO THE HELP OF REVENU E IN THE INSTANT CASE. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES , WE HOLD THAT THE ITA NO.1337/16 :- 13 -: LANDS SOLD WERE AGRICULTURAL LANDS NOT BEING CAPITA L ASSET AND THEREFORE, CONFIRM THE ORDER OF THE LD.CIT(A). 12. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH NOVEMBER, 2016, AT CHENNAI. SD/- SD/- ( . . . ' ) (N.R.S. GANESAN) / JUDICIAL MEMBER ( ! . . # $% ) (D.S. SUNDER SINGH) & / ACCOUNTANT MEMBER #$ / CHENNAI %& / DATED: 10 TH NOVEMBER, 2016 RD &' ()*) / COPY TO: 1 . / APPELLANT 4. + / CIT 2. / RESPONDENT 5. ),- . / DR 3. +/' / CIT(A) 6. -01 / GF