Shri Shaktiprasad Sadashiv Shinde, Pune V. ITO, Pune

ITA 1643/PUN/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1825 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 9 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 11-02-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 06-08-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: DEEPAK S SA S
• Keywords: Capital asset; Gift; Business income; Additional evidence; Cost of acquisition; Valuation report; Revised return
• Section: 54B; 54F; 2(14); 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA , A M . / ITA NO. 1 643 /PN/201 2 / ASSESSMENT YEAR : 20 0 8 - 0 9 SHRI SHAKTIPRASAD SADASHIV SHINDE, VANSHAJ GARDEN ROAD, FLAT NO. 302, PASHAN, PUNE 41 1021 . / APPELLANT PAN: A KXPS6803J VS. THE INCOME TAX OFFICER , WARD 3 (2), PUNE . / RESPONDENT / APPELLANT BY : S /S HRI AJAY SINGH AND DEEPAK S. SA S AR / RESPONDENT BY : SHRI NAVALGIT, KAPOOR, CIT / RESPONDENT BY : SHRI NAVALGIT, KAPOOR, CIT / DATE OF HEARING : 1 1 . 0 2 .201 6 / DATE OF PRONOUNCEMENT: 11 . 0 5 .201 6 / ORDER PER SUSHMA CHOWLA, J M : TH IS APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF CIT (A) - II , PUNE , DATED 3 0 . 0 3 .20 1 2 RELATING TO ASSESSMENT YEAR 20 0 8 - 0 9 AGAINST ORDER PASSED UNDER SECTION 1 4 3(3 ) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2 . THE ASSESSEE HAS FILED REVISED GROUNDS OF APPEAL , WHICH READ AS UNDER : - 1. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER BRINGING TO TAX, THE INCOME ARISING FROM TRANSFER O F AN AGRICULTURE PROPERTY UNDER HEAD CAPITAL GAIN, HAVING NO COST OF ACQUISITION. SINCE THE PROPERTY WAS RECEIVED BY THE ANCESTORS OF ASSESSEE FROM ERSTWHILE BRITISH RULER. ITA NO. 1 643 /PN/20 1 2 SHRI SHAKTIPRASA D SADASHIV SHINDE 2 2. THE LEARNED CIT(A) ERRED IN REJECTING THE VALUATION REPORT DTD. 28/10/2010 OF THE REGISTERED VALUER SUBMITTED BY THE ASSESSEE IN THE COURSE OF ASSESSMENT PROCEEDINGS MERELY ON THE GROUND THAT FRESH CLAIM WAS MADE BY THE ASSESSEE. 3. WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED CIT(A) ERRED IN CONFIRMING THE ORDER OF THE AO REGARDING NOT ALLOWING THE COMPLETE COST OF IMPROVEMENT CLAIMED BY THE ASSESSEE FOR FENCING THE LAND. 4. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ORDER OF THE AO REGARDING NOT ALLOWING THE INVESTMENT MADE U/S.54B OF RS. 20,46,790/ - IGNORING THE FACTS THAT SAID LA ND WAS AGRICULTURAL LAND AS EVIDENCED BY THE 7/12 EXTRACT OF THE SAME. 5. THE LEARNED CIT(A) ERRED IN HOLDING THE LAND AS NON - AGRICULTURAL LAND MERELY ON THE GROUND THAT NO AGRICULTURAL INCOME SHOWN IN THE RETURN OF INCOME OF THE ASSESSEE. 6. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ORDER OF THE AO REGARDING NO ALLOWING THE INVESTMENT OF RS.12,30,000/ - U/S.54F OF THE ACT. 7. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE LAND SOLD WAS JOINTLY OWNED BY THE TWO MINOR DAUGHTERS, HENCE THE DEDUCTION WITH RESPECT TO CLUBBING OF INCOME SHOULD BE ALLOWED. 8. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER OR DELETE ANY OR ALL THE ABOVE GROUNDS OF APPEAL. 3 . THE REVISED GROUND OF APPEAL NO.3 IS NOT PRESSED AND HENCE, THE SAME IS DISMISSED AS N OT PRESSED. 4 . THE ISSUE ARISING IN OTHER GROUNDS OF APPEAL IS WITH REGARD TO COMPUTATION OF INCOME UNDER THE HEAD INCOME FROM CAPITAL GAINS ON THE TRANSFER OF AGRICULTURAL PROPERTY. 5 . BRIEFLY, IN THE FACTS OF THE PRESENT CASE, THE ASSESSEE WAS ENGAGED IN THE BUS INESS OF MAKING BRICKS AND SELLING OF SAND. DURING THE YEAR UNDER CONSIDERATION, IN ADDITION TO THE BUSINESS ACTIVITY, THE ASSESSEE HAD SOLD THE LAND ALONG WITH HIS SISTERS AT KIVLE, TALUKA HAVELI , WHICH WAS CLAIMED TO BE HIS ANCESTRAL PROPERTY. THE TOTA L AREA OF LAND WAS 457 R, IN WHICH THE ASSESSEE HAS SHOWN HIS SHARE TO BE 1/3 RD AND HAS DECLARED THE SALE CONSIDERATION AT RS.1 CRORE OUT OF TOTAL CONSIDERATION OF RS.3 CRORES. THE ASSESSEE HAD ADOPTED THE COST OF LAND AS ON 01.04.1981 AT RS. 2,22,412/ - AN D WORKED OUT THE INDEXED COST OF ACQUISITION AT RS. 12,25,490/ - . THE ASSESSEE FURTHER CLAIMED TO HAVE ITA NO. 1 643 /PN/20 1 2 SHRI SHAKTIPRASA D SADASHIV SHINDE 3 SPENT RS.7 LAKHS ON FENCING THE LAND IN THE YEAR 1990 AND RS. 15 LAKHS ON LEVELING AND CONSTRUCTION OF HOUSE IN THE YEAR 1992. BOTH THESE COSTS WERE INDEX ED AND THE INDEXED COST OF IMPROVEMENT WAS CLAIMED AT RS. 12,25,490/ - AND RS. 21,19,231/ - RESPECTIVELY FOR FENCING THE LAND . THE ASSESSEE ACCORDINGLY, WORKED THE LONG TERM CAPITAL GAINS AT RS. 25,02,013/ - AND FURTHER CLAIMED DEDUCTION UNDER SECTION 54 OF THE ACT AT RS. 12,30,000/ - BEING THE AMOUNT INVESTED IN PURCHASE OF RESIDENTIAL HOUSE PROPERTY. THE LONG TERM CAPITAL GAINS OFFERED FOR TAXATION WAS RS. 12,72,013/ - . THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS ASKED THE ASSESSEE TO FURNI SH THE DETAILS IN SUPPORT OF ITS CLAIM UNDER THE HEAD INCOME FROM LONG TERM CAPITAL GAINS. HE WAS ALSO ASKED TO PRODUCE THE SALE DEED AND FURNISH THE DETAILS OF FAMILY MEMBERS AND EVIDENCES IN RESPECT OF THE COST OF IMPROVEMENT CLAIMED AND ALSO THE DETA ILS OF INVESTMENT IN FLAT. THE ASSESSEE FURNISHED THE COPY OF SALE DEED. HE FURTHER SUBMITTED THAT HE HAD NOT OBTAINED ANY VALUATION REPORT FROM THE CERTIFIED VALUER AT THE TIME OF SALE OF LAND BUT HAD COMPUTED THE LONG TERM CAPITAL GAINS ON THE BASIS OF INFORMATION AVAILABLE FROM NEAR BY VICINITY . HE FURTHER SUBMITTED THAT HE HAD APPOINTED VALUER IN THIS REGARD AND VALUATION CERTIFICATE WOULD BE SUBMITTED. ANOTHER CONTENTION RAISED BY THE ASSESSEE WAS THAT THE SAID PROPERTY WAS ACQUIRED INITIALLY BY MR. SHANKAR SHINDE AND MRS. PARVATI SHINDE. AFTER DEMISE OF BOTH THE PERSONS, THE PROPERTY WAS SUCCEEDED BY THEIR SON MR. SADASHIV SHINDE AND HIS WIFE. AFTER THE DEMISE OF MR. SADASHIV SHINDE AND HIS WIFE, THE PROPERTY WAS SUCCEEDED BY THEIR CHILDREN I.E. T HE ASSESSEE RECEIVED 117 R , OUT OF WHICH 97 R LAND WAS TRANSFERRED. FURTHER, ALL SEVEN SISTERS RECEIVED 28 R RESPECTIVELY, WHICH WAS ALSO TRANSFERRED BY THEM INDEPENDENTLY . IT WAS ALSO EXPLAINED THAT THE DIVISION OF LAND WAS AS PER ORDER OF THE COURT OF C IVIL JUDGE. FURTHER, THE ASSESSEE FURNISHED THE VALUATION REPORT OF LAND AS ON 01.04.1981 AT RS. 4,65,000/ - AS AGAINST RS. 2,22,412/ - ITA NO. 1 643 /PN/20 1 2 SHRI SHAKTIPRASA D SADASHIV SHINDE 4 SHOWN IN THE ORIGINAL RETURN OF INCOME. THOUGH THE ASSESSEE CLAIMED THAT THE ENHANCED VALUE OF COST SHOULD BE ADOPTED AS O N 01.04.1981 BUT THE VALUATION REPORT WAS AFTER THE COST OF IMPROVEMENT CLAIMED BY THE ASSESSEE I.E. RS.7 LAKHS SPENT IN 1990 FOR FENCING AND RS.15 LAKHS ON COST OF LEVELING AND CONSTRUCTION THEREON. FURTHER, THE ASSESSEE FAILED TO PRODUCE ANY EVIDENCE IN RESPECT OF COST OF IMPROVEMENT AND HENCE THE CLAIM OF ASSESSEE IN THIS REGARD WAS REJECTED BY THE ASSESSING OFFICER. EVEN THE ENHANCED COST OF ACQUISITION WAS NOT ALLOWED BY THE ASSESSING OFFICER. THE ASSESSING OFFICER ALSO NOTED THAT THE ASSESSEE HAD S HOWN LOW BUSINESS INCOME AND IT WAS NOT CLEAR AS TO HOW HE COULD HAVE EXPENDED SUCH HUGE SUMS IN THE YEARS 1990 AND 1999 TOWARDS COST OF IMPROVEMENT. HOWEVER, SINCE THE VALUER HAD COMMENTED THAT THE LAND WAS LEVELED AND FENCED, 1/3 RD OF TWO AMOUNTS I.E. R S.7 LAKHS AND RS.15 LAKHS WAS ALLOWED TO THE ASSESSEE. THE ASSESSEE VIDE SUBMISSIONS DATED 27.12.2010 RAISED ANOTHER PLEA THAT THE LAND WAS RECEIVED AS GIFT / AWARD FOR SUCCESSFUL PARTICIPATION IN WORLD WAR II AND WHERE THE COST OF ACQUISITION WAS NIL, NO CAPITAL GAIN WAS CHARGEABLE IN THE HANDS OF ASSESSEE. HE FURTHER CLAIMED THAT THE REVENUE RECORD MAINTAINED BY GOVERNMENT OF MAHARASHTRA WOULD SUBSTANTIATE THE GIFT / AWARD OF LAND WAS MADE BY THE FORMER RULER. ANOTHER CLAIM RAISED BY THE ASSESSEE WAS T HAT THE LAND TRANSFERRED WAS AN AGRICULTURAL LAND AT THE TIME OF TRANSFER, WHICH IN TURN IS EVIDENCED BY 7/12 EXTRACT. HOWEVER, THE ASSESSEE ACCEPTED THAT IT HAD NOT SHOWN ANY AGRICULTURAL INCOME IN HIS RETURN OF INCOME AS THE SAID ACTIVITY DID NOT RESULT ANY PROFIT. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HIMSELF HAD DECLARED THE INCOME UNDER THE HEAD INCOME FROM CAPITAL GAINS IN THE RETURN OF INCOME AND WHEN VARIOUS DISALLOWANCES WERE BROUGHT TO HIS NOTICE, HE CHOOSE AN ARGUMENT THAT THE TRANSAC TION WOULD NOT AMOUNT TO CAPITAL GAINS. THE ASSESSING OFFICER FURTHER OBSERVED THAT THE PLEA OF AGRICULTURAL LAND BEING A GIFT FROM ERSTWHILE ITA NO. 1 643 /PN/20 1 2 SHRI SHAKTIPRASA D SADASHIV SHINDE 5 BRITISH RULER FOR SUCCESSFUL PARTICIPATION IN WORLD WAR II WAS MADE AN AFTERTHOUGHT AND NOT BACKED BY ANY DOCUMEN TARY EVIDENCE, HENCE, THE SAME WAS NOT ACCEPTED. FURTHER, THE CLAIM OF ASSESSEE FOR DEDUCTION UNDER SECTION 54F OF THE ACT I.E. INVESTMENT IN RESIDENTIAL HOUSE, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD PURCHASED ONE HOUSE ON 03.11.2000 AND HE HAD PURCHASED ANOTHER FLAT IN THE YEAR 2005 - 06 . FURTHER, THE ASSESSEE WAS RESIDING AT B - 4, DURGAMATA APARTMENTS, SENAPATI BAPAT ROAD, PUNE, WHICH IS ALSO OWNED BY HIM, HENCE THE ASSESSEE COULD NOT CLAIM THE DEDUCTION UNDER SECTION 54F OF THE ACT AS HE ALREAD Y OWNED TWO RESIDENTIAL HOUSES. HENCE, THE CLAIM OF DEDUCTION UNDER SECTION 54F OF THE ACT WAS REJECTED. THE PLEA OF THE ASSESSEE THAT THERE WAS NO PROFIT IN THE AGRICULTURAL ACTIVITY WAS ALSO REJECTED BECAUSE OF NO EVIDENCE FILED BY THE ASSESSEE. THE L AST PLEA RAISED BY THE ASSESSEE THAT THE RESIDENTIAL HOUSE AT B - 4, SENAPATI ROAD, PUNE WAS NOT HABITABLE WAS ALSO NOT ACCEPTED AND HENCE, THE CLAIM OF DEDUCTION UNDER SECTION 54F OF THE ACT WAS NOT ACCEPTED. 6 . THE FIRST PLEA RAISED BY THE ASSESSEE BEFO RE THE CIT(A) WAS AGAINST THE REJECTION OF VALUERS REPORT ENHANCING THE COST OF VALUE OF LAND AS ON 01.04.1981. THE SAID PLEA OF THE ASSESSEE WAS REJECTED AS THE SAME WAS RAISED ON A LATER DATE AND IN THE ABSENCE OF ANY REVISED RETURN OF INCOME FILED IN TIME , WAS NOT CORRECT . THE SECOND PLEA OF THE ASSESSEE WITH REGARD TO THE IMPROVEMENT IN LAND AND FENCING OF LAND WAS ALSO REJECTED IN THE ABSENCE OF ANY EVIDENCE OF HAVING INCURRED EXPENSES WAS FILED BY THE ASSESSEE. FURTHER CLAIM OF THE ASSESSEE THAT I T WAS CARRYING ON THE AGRICULTURAL ACTIVITY BUT NOT MAKING ANY PROFIT WAS ALSO REJECTED IN THE ABSENCE OF ANY DOCUMENTARY EVIDENCE. IT WAS FURTHER NOTED BY THE CIT(A) THAT THE EXISTENCE OF THE SAID LAND WAS WITHIN MUNICIPAL LIMITS OF PIMPRI CHINCHWAD MUNI CIPAL CORPORATION AND THE LAND WAS GOVERNED BY DEVELOPMENT PLAN OF PUNE METROPOLITAN REGION AND ITA NO. 1 643 /PN/20 1 2 SHRI SHAKTIPRASA D SADASHIV SHINDE 6 G R AMPANCHAYAT. THE AFORESAID PROPERTY WAS SITUATED IN COMMERCIAL 2 ZONE AND THEREFORE, WHERE THE ASSET COMES WITHIN PURVIEW OF SECTION 2( 14) OF THE ACT AS A CAPITAL ASSET, THE SAME IS EXIGIBLE TO CAPITAL GAIN TAX. FURTHER, THE COPY OF 7/12 EXTRACT SUBMITTED BY THE ASSESSEE CLEARLY INDICATED THAT THERE WERE NO CROP OR AGRICULTURAL ACTIVITY CARRIED ON THE SAID LAND. WITH REGARD TO THE CLAIM OF EXEMPTION UNDER SECTION 54B OF THE ACT ON INVESTMENT IN PURCHASE OF AGRICULTURAL LAND AMOUNTING TO RS. 20,46,790/ - , SINCE THE ASSESSEE HAD NOT FURNISHED THE DETAILS OF DEVELOPMENT EXPENSES, SAM E WAS REJECTED. FURTHER, THE ASSESSEE HAD NOT CLAIMED THE SAID EXEMPTION IN THE ORIGINAL RETURN OF INCOME BUT ONLY DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE CIT(A) HELD EVEN IF THE PLEA OF THE ASSESSEE IS ACCEPTED THAT THE LAND TRANSFERRED WAS AGRICULTURAL LAND BUT IN THE ABSENCE OF SAID LAND BEING NOT PUT TO AGRICULTURAL ACT IVITY FOR THE PRECEDING TWO YEARS, THE ASSESSEE IS NOT ENTITLED TO THE DEDUCTION ALLOWABLE UNDER SECTION 54B OF THE ACT AND THE SAME WAS ALSO REJECTED. THE LAST PLEA OF THE ASSESSEE WAS WITH REGARD TO THE CLAIM OF DEDUCTION UNDER SECTION 54 AND 54F OF THE ACT. SINCE THE LAND SOLD BY THE ASSESSEE WAS NOT HOUSE PROPERTY, THE CLAIM OF DEDUCTION UNDER SECTION 54 OF THE ACT WAS NOT MAINTAINABLE. WITH REGARD TO THE CLAIM OF DEDUCTION UNDER SECTION 54F OF THE ACT, THE CIT(A) HELD THAT IN VIEW OF VARIOUS PROPERT IES BEING HELD BY THE ASSESSEE, HE WAS NOT ELIGIBLE FOR AVAILING THE SAID DEDUCTION. THEN THE CIT(A) CONSIDERED THE CLAIM OF ASSESSEE THAT WHERE NO COST OF ACQUISITION WAS CONSIDERED, NO CAPITAL GAINS WAS CHARGEABLE TO TAX IN HIS HANDS. THE CIT(A) VIDE P ARAS 7 AND 7.1 HELD AS UNDER: - 7. IN GROUND NO.8 RAISED BY THE APPELLANT IT IS CONTENDED THAT THE A.O. ERRED IN ASSESSING THE INCOME FROM THE TRANSFER OF AGRICULTURAL LAND AS INCOME FROM CAPITAL GAIN AS THE COST OF ACQUISITION WAS NOT CONCEIVABLE. DURING THE APPELLATE PROCEEDINGS IT HAS BEEN CONTENDED BY THE APPELLANT THAT CAPITAL GAINS WAS NOT CHARGEABLE WHERE NO COST OF ACQUISITION WAS CONCEIVABLE AND THAT THE VERY BASIS OF CAPITAL GAINS WAS THAT AT SOME POINT OF TIME THE PERSON WHO INITIALLY ACQUIRED T HE PROPERTY DID SO AT SOME COST IN TERMS OF MONEY. IT HAS BEEN STATED BY THE APPELLANT THAT THE SAID AGRICULTURAL LAND WAS RECEIVED AS A GIFT FROM THE ERSTWHILE BRITISH RULER FOR SUCCESSFUL PARTICIPATION IN WORLD WAR - II. ITA NO. 1 643 /PN/20 1 2 SHRI SHAKTIPRASA D SADASHIV SHINDE 7 THE APPELLANT ALSO SUBMITT E D THE ALLOTMENT OF LAND PAPERS FROM THE GOVERNMENT. HENCE IT HAS BEEN CONTENDED THAT THE COST OF ACQUISITION IN SUCH A CASE IS NOT CONCEIVABLE. THE APPELLANT HAS RELIED ON A FEW CASE LAWS IN SUPPORT OF THE CLAIM MADE. SUPPORT OF THE CLAIM MADE. SIM I LAR SUBMISSION WAS ALSO MADE DURING THE ASSESSMENT PROCEEDINGS BEFORE THE AO AND THE AO HELD THAT THE APPEL L ANT HAD HIMSELF DISCLOSED THE SALE O F AGR I CULTURAL . LAND IN THE RETURN OF INCO M E FOR WHICH CONSIDERATION OF RS . 1 C R OR E WAS REFLECTED IN THE RETURN OF INCOME AND HAD WORKED OUT THE CAPI TAL GAINS PART WHICH WERE ALSO OFFERED TO TAX BY THE APPELLANT AFTER CLA I MING CERTA I N DEDUCT I ONS ON COST OF IMPROVEMENT AND EXEMPTION U/S 54 . THE AO THUS HELD THE FIRST ARGUMENT PUT FORTH BY THE APPELLANT THAT NO CAPITAL GAINS AROSE TO BE AN AFTERTHOUGHT AND ALSO HELD THAT THE PRINCIPLE OF ESTOPPEL WAS APPLICABLE IN THE CASE AND THUS THE ASSESSEE CANNOT BE ALLOWED TO TAKE A PLEA OF NO CAPITAL GAINS AFTER HAV I NG DISCLOSED THE SAME IN THE RETURN OF INCOME . THE PLEA TAKEN BY THE APPELLANT OF THE AGRICULTURAL LAND HAVING BEEN RECEIVED AS A GIFT FROM THE ERSTWHILE BRITISH RULER FOR A SUCCESSFUL FIGHT I N WORLD WAR - II DID NOT F I ND FAVOUR WITH THE AO WHO HELD IT TO BE AN A FTERTHOUGHT A ND ALSO NOT BACKED BY ANY WITH THE AO WHO HELD IT TO BE AN A FTERTHOUGHT A ND ALSO NOT BACKED BY ANY DOCUMENTARY EVIDENCE , HENCE THE SAID PLEA TAKEN BY THE APPELLANT WAS NOT CONSIDERED BY THE AO DURING THE ASSESSMENT PROCEEDINGS . 7.1 ON PERUSAL OF THE STATEMENT OF INCOME APPENDED WITH THE RETURN OF INCOME CLEARLY INDICATES THAT DISCLOSURE MADE BY THE APPELLANT OF THE EARNING ON ACCOUNT OF LONG - TERM CAPITAL GAINS WHICH HAS BEEN OFFERED TO TAX AFTER CLAIMING CERTAIN DEDUCTION ON ACCOUNT OF I MPROVEMENT FROM THE SALES CONSIDERAT I ON WITH RESPECT TO THE AGRICULTURAL LAND , HOWEVER , NO CLAIM IN THIS REGARD HAD BEEN M ADE BY THE APPELLANT IN THE RETURN OF INCOME FOR CLAIMING THE LONG - TERM CAPITAL GAINS TO BE EXEMPT IN ENT I RETY AS NO COST OF ACQUISITION WAS CONCEIVABLE . THE COP I ES OF THE DOCUMENTS WHICH HAVE BEEN FILED DURI N G THE APPELLATE PROCEEDINGS DO NOT REVEAL ANY SUCH FACT AS CONTENDED BY THE APPELLANT . THE CONTE NTION OF THE APPELLANT THAT THE SAID AGRICULTURAL LAND WAS RECEIVED AS G I FT FROM THE ERSTWHILE BRITISH RULERS HAS NOT BEEN PROVED BY THE RECEIVED AS G I FT FROM THE ERSTWHILE BRITISH RULERS HAS NOT BEEN PROVED BY THE APPELLANT BY WAY OF ANY DOCUMENTARY EVIDENCE OR GIFT DEED OR ANY LETTER OF HONO U R INDICATING THE PARTICIPATION OF THE A PPELLANT ' S GRANDFATHER FOR A SUCCESSFUL FIGHT IN WORLD WAR - II. MOREOVER , T H IS I S A TOTALLY FRESH CLAIM MADE BY THE APPELLANT CLAIMING ENT I RE CAPITAL GAIN AS EXEMPT IS NOT BACKED BY PROPER EVIDENCE AND PROOF AND THE BURDEN OF PROVING T H E NECESSARY FACT IN CONNECTION WITH A CLAIM RESTS ON THE APPELLANT AND THE SAME HAS NOT BEEN DISCHARGED. THE FACTS BROUGHT ON RECORD BY THE APPELLANT AND THE FINDINGS OF THE A.O. DO NOT SUPPORT THE GROUND OF APPEAL RAISED BY THE APPELLANT. 7 . THE ASSESSEE IS IN APPEAL AGAI NST THE ORDER OF CIT(A). 8 . THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE MADE ELABORATE SUBMISSIONS IN RELATION TO THE ACQUISITION OF THE SAID ASSET. IT WAS POINTED OUT BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT THE SAID LAN D WAS RECEIVED BY THE GRANDFATHER OF ASSESSEE AS INAM LAND. OUR ATTENTION WAS DRAWN TO THE DOCUMENTS PLACED AT PAGE 2 OF ADDITIONAL EVIDENCE PAPER BOOK AND IT WAS POINTED OUT THE STATUS OF LAND WAS PROVIDED IN ALIENATION REGISTER OF SURVEY NO.84/1, VILLAG E KIVALE, TAL. HAVELI, DIST. PUNE. THE LEARNED AUTHORIZED ITA NO. 1 643 /PN/20 1 2 SHRI SHAKTIPRASA D SADASHIV SHINDE 8 REPRESENTATIVE FOR THE ASSESSEE FURTHER POINTED OUT THAT IN CASE ANY PROPERTY IS PURCHASED, THEN THERE IS MUTATION ENTRY TO THAT EFFECT. HOWEVER, SINCE THE ASSESSEE HAD NOT PURCHASED THE SAID PROP ERTY, THE ALIENATION REGISTER DID NOT REFLECT THE ENTRY OF PURCHASE OF LAND. IN THIS REGARD, OUR ATTENTION WAS DRAWN TO THE MUTATION ENTRY IN RESPECT OF PIECE OF LAND OWNED BY ANOTHER P ERSON. IN THE ALIENATION REGISTER IN COLUMN 4, IT IS MENTIONED THAT C LASS II PERSONAL INAM I.E. IT WAS GIVEN AS PERSONAL INAM TO MADHAVRAO GANESH PENDSE. THE ASSESSEE BEFORE US IS SHAKTIPRASAD SADASHIV SHINDE , WHO HAD RECEIVED THE PROPERTY FROM HIS GRANDFATHER AND IT WAS PUT TO THE ASSESSEE THAT WHETHER IT HAD ANY DOCUME NT TO PROVE HOW THE SAID LAND WAS DEVOLVED UPON HIS GRANDFATHER. THE ASSESSEE HAS POINTED OUT THAT THE ORDER OF 1924 WAS NOT TRACEABLE AND THE DISTRICT COLLECTOR REFUSED AND STATED THAT IT WAS NOT AVAILABLE WITH HIM. FURTHER, COMING TO THE SECOND CLAIM O F ASSESSEE BEFORE US, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT IN THE ORIGINAL RETURN OF INCOME, THE ASSESSEE HAD SHOWN COST OF ACQUISITION OF RS.2,22,412/ - AND ALSO SHOWN IMPROVEMENT IN THE COST OF LAND. HOWEVER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE CLAIM OF ASSESSEE WAS THAT WHERE THERE WAS NO COST OF ACQUISITION, THEN NO INCOME FROM CAPITAL GAINS WAS ASSESSABLE IN THE HANDS OF ASSESSEE. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT BO TH THE ASSESSING OFFICER AND CIT(A) REJECTED THIS CLAIM ON THE BASIS THAT THERE WAS NO SPECIFIC DOCUMENT TO SUPPORT THE CONTENTION. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE REFERRING TO THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN CIT VS. PRUTHVI BROKERS AND SHAREHOLDERS PVT. LTD. (2012) 349 ITR 336 (BOM) , POINTED OUT THAT IT COULD RAISE A NEW PLEA DURING THE COURSE OF ASSESSMENT PROCEEDINGS OR APPELLATE PROCEEDINGS. HE FURTHER PLACED RELIANCE ON SERIES OF DECISIONS TO THE EFFECT THAT WHEN THERE WAS NO COST OF ACQUISITION, INCOME FROM CAPITAL GAINS WAS NOT ITA NO. 1 643 /PN/20 1 2 SHRI SHAKTIPRASA D SADASHIV SHINDE 9 ASSESSABLE IN ITS HANDS. HE FURTHER STRESSED THAT COURTS TIME AND AGAIN SAID THAT IT WAS THE DUTY OF ASSESSING OFFICER TO ESTABLISH THAT THE COST WHERE ASSESSEE S CLAIM WAS NO C OST . HE FURTHER ADMITTED THAT NO DOCUMENT WAS AVAILABLE WITH THE ASSESSEE TO ESTABLISH THAT IT WAS INAM LAND BUT HE STRESSED THAT THE SAID LAND WAS GIVEN TO THE ASSESSEE AS INAM. 9 . THE NEXT PLEA RAISED BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE WAS THE COST OF ACQUISITION TO BE ADOPTED. HE POINTED OUT THAT HE HAD ESTIMATED RS.2,22,412/ - WHILE CALCULATING THE INCOME FROM LONG TERM CAPITAL GAINS , IN THE RETURN OF INCOME . HOWEVER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A REPORT WAS RECEIVED FROM REGISTERED VALUER, WHEREIN HE WORKED OUT THE COST OF SAID PROPERTY AT RS. 4,65,000/ - , BUT THE ASSESSING OFFICER DOES NOT REFER TO THE SAID PLEA OF THE ASSESSEE IN THE ASSESSMENT ORDER. IT WAS FURTHER ACCEPTED BY HIM THAT 1/3 RD OF RS.7 LAKHS A ND 1/3 RD OF RS.15 LAKHS I.E. COST OF IMPROVEMENT SHOULD BE ALLOWED TO THE ASSESSEE. OF IMPROVEMENT SHOULD BE ALLOWED TO THE ASSESSEE. 10 . WITH REGARD TO CLAIM UNDER SECTION 54B OF THE ACT, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE SAME WAS REJECTED BY ASSESSING OFFICER HOLDING THAT THE ASSESSEE WAS NOT CARRYING ON ANY ACTIVITY AND NO AGRICULTURAL INCOME WAS SHOWN BY THE ASSESSEE. HE STRESSED THAT ON ABOUT 2.5 ACRES, HE WAS GROWING GRASS AND 7/12 EXTRACT OF THE SAID LAND ALSO REFLECTS THAT GRASS WAS GROWN WHICH WAS USED FOR HOMELY CONSUMPTION. HE STRESSED THAT SINCE HE HAD FULFILLED CONDITIONS OF CARRYING ON THE AGRICULTURAL ACTIVITY FOR THE PRECEDING TWO YEARS, THE ASSESSEE WAS ENTITLED TO THE CLAIM OF DEDUCTION UNDER SECTION 54B OF THE ACT. 1 1 . IN RESPECT OF CLAIM OF DEDUCTION UNDER SECTION 54F OF THE ACT, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT ONE ANCESTRAL ITA NO. 1 643 /PN/20 1 2 SHRI SHAKTIPRASA D SADASHIV SHINDE 10 PROPERTY WAS GIVEN TO HIM BY CONSENT AND THE SECOND PROPERTY WAS HELD WITH HIS WIFE AND AS SUCH, HE WAS ENTITLED TO THE CLAIM O F DEDUCTION UNDER SECTION 54F OF THE ACT. 1 2 . THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE PLACED RELIANCE ON THE ORDER OF CIT(A) AND POINTED OUT THAT 7/12 EXTRACT ITSELF REFLECTS THAT THE LAND WAS WITHIN PCMC LIMITS AND THE PROPERTY WAS SITUAT ED IN COMMERCIAL ZONE NO.2. HE FURTHER POINTED OUT THAT IN THE COMPUTATION OF INCOME, THE ASSESSEE HAD SHOWN THE SALE OF LAND AND HAD CLAIMED THE DEDUCTION UNDER SECTION 54 OF THE ACT AND NO CLAIM FOR DEDUCTION UNDER SECTIONS 54B OR 54F OF THE ACT WAS MAD E. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE REFERRED TO THE DEVELOPMENT AGREEMENT PLACED AT PAGE 13 OF THE PAPER BOOK AND POINTED OUT THAT THERE IS NO MENTION OF AGRICULTURAL LAND OR AGRICULTURAL ACTIVITY AND THE INCOME IS TO BE ASSESSED AS ADVENTURE IN THE NATURE OF TRADE. HOWEVER, THE SAME WAS ASSESSED AS INCOME ADVENTURE IN THE NATURE OF TRADE. HOWEVER, THE SAME WAS ASSESSED AS INCOME FROM CAPITAL GAINS BY THE ASSESSING OFFICER. WHERE THERE WAS LACK OF WATER I N THE AREA AND ONLY GRASS WAS SOWN AND IN THE ABSENCE OF ANY AGRICULTURAL ACTIVITY OR AGRICULTURAL LAN D, THEN NO BENEFIT OF SECTION 54B OF THE ACT ALLOWED TO THE ASSESSEE. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE FURTHER REFERRED TO DEFINITION OF AGRICULTURAL LAND UNDER SECTION 2(14)(III) OF THE ACT, WHEREIN IT IS PROVIDED THAT WHICH IS NOT IN THE AREA WITHIN JURISDICTION OF MUNICIPALITY OR POPULATION OF 10,000 IS TO BE CALLED AS AGRICULTURAL LAND. HE REFERRED TO THE ORDER OF CIT(A) AT PAGE 12, WHEREIN IT WAS POINTED OUT THAT THE LAND WAS SITUATED IN COMMERCIAL ZONE , T HE LAND OWNED BY THE A SSESSEE WAS THUS, URBAN LAND. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE PLACED RELIANCE ON THE RATIO LAID DOWN BY PUNE BENCH OF TRIBUNAL IN ABHIJIT SUBHASH GAIKWAD VS. DCIT (2015) 60 TAXMANN.COM 259 (PUNE TRIB) THAT THE LAND OWNED BY THE S AID PERSON WAS JIRAYAT FALLOW LAND AND SALE PROCEEDS WERE ITA NO. 1 643 /PN/20 1 2 SHRI SHAKTIPRASA D SADASHIV SHINDE 11 HELD TO BE INCOME FROM BUSINESS OF THE SAID ASSESSEE. FURTHER, RELIANCE WAS PLACED ON THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN SMT. SARIFABIBI MOHMED IBRAHIM VS. CIT (1993) 204 ITR 6 31 ( SC) AND HONBLE BOMBAY HIGH COURT IN GOPAL C. SHARMA VS. CIT (1994) 209 ITR 946 (BOM) AND THE DECISION OF CHENNAI BENCH OF TRIBUNAL IN G.BABU VS. ITO (2012) 24 TAXMANN.COM 36 (CHENNA) . 1 3 . THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE IN REJOINDE R POINTED OUT THAT UNDER SECTION 54B OF THE ACT, THE REQUIREMENT WAS THE OWNING OF CAPITAL ASSETS AND CARRYING ON OF AGRICULTURAL ACTIVITY AND THE PROVISIONS OF SAID SECTION DOES NOT REQUIRE IT TO BE AGRICULTURAL LAND. 1 4 . WE HAVE HEARD THE RIVAL CONTENTI ONS AND PERUSED THE RECORD. THE ISSUE ARISING IN THE PRESENT APPEAL IS IN RESPECT OF COMPUTATION OF INCOME FROM CAPITAL GAINS IN THE HANDS OF ASSESSEE. THE PROPERTY SOLD BY THE ASSESSEE IS IN GAINS IN THE HANDS OF ASSESSEE. THE PROPERTY SOLD BY THE ASSESSEE IS IN SURVEY NO.84/1, VILLAGE KIVALE, TAL. HAVELI, DIST. PUNE. THE CLAIM OF THE ASSESSEE BEFORE THE AUTHORITIES BELOW AND BEFORE US IS THAT THE GAIN ARISING FROM SALE OF HIS SHARE IN THE SAID PROPERTY IS NOT ASSESSABLE AS INCOME IN HIS HANDS SINCE THE SAID PROPERTY WAS RECEIVED AS I NAM FROM THE BRITISH RULER BY HIS GRANDF ATHER AND IT HAD NIL COST OF ACQUISITION. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAD TIME AND AGAIN MADE ELABORATE SUBMISSIONS IN THIS REGARD AND REFERRED TO THE VARIOUS DOCUMENTS PLACED IN THE PAPER BOOK. THE CLAIM OF ASSESSEE BEFORE US WAS THAT THE SAID PROPERTY WAS RECEIVED BY LATE SHANKAR SHINDE FROM ERSTWHILE BRITISH RULER IN THE YEAR 25.06.1924 . OUR ATTENTION WAS DRAWN TO THE MUTATION ENTRY RELATING TO ALLOTMENT OF LAND AT SURVEY NO.84/1, VILLAGE KIVALE, TAL. HAVELI, DIST. PUNE DATE D 30.04.1924 ALONG WITH ENGLISH TRANSLATION, PLACED AT PAGES 311 AND 312 OF PAPER BOOK. THE PERUSAL OF MUTATION ENTRY REFLECTS THE RECORD OF MUTATION DATE ITA NO. 1 643 /PN/20 1 2 SHRI SHAKTIPRASA D SADASHIV SHINDE 12 25.06.24 IN RESPECT OF SURVEY NO.84 WITH AREA OF 11 ACRES AND 28 GUNTHE AND WHERE THE OCCUPIER OF LA ND & CLASS HOLDER OF LAND SHANKAR SAYAJI SHINDE IN RESPECT OF TYPE OF RIGHT, IT IS MENTIONED ORDER NO.19/6 /24 HELD BY HONBLE MEMLEDAR TAHSIL HAVELI, AND RECEIVED BY OCCUPANT IN ACCORDANCE WITH ORDER NO.SR/104/328 DT. 30/4/1924 MADE BY HONBLE COLLECTOR PU NE DIST. AND IN ACCORDANCE WITH NEW TENURE. THE PERUSAL OF ABOVE SAID ENTRY IN THE MUTATION REGISTER REFLECTS THAT THE GRANDFATHER OF ASSESSEE HAD RECEIVED THE SAID LAND VIDE ORDER NO.19/6/24 AND IN ACCORDANCE WITH ORDER NO.SR/104/328 DT. 30/4/1924 , WHI CH WAS MADE BY THE COLLECTOR, PUNE DISTRICT. THERE IS NO MENTION OF ANY INAM LAND IN THE SAID ENTRY AND THERE IS ALSO NO MENTION OF SAID PROPERTY BEING GIVEN BY THE BRITISH RULER IN THE SAID YEAR I.E. ON 25.06.24 . THE ASSESSEE WAS TIME AND AGAIN ASKED TO FURNISH THE EVIDENCE OR ANY DOCUMENT TO PROVE THAT THE SAID LAND DEVOLVED UPON HIS GRANDFATHER. HOWEVER, THE ASSESSEE FAILED TO FILE ANY DOCUMENT EXCEPT THE CHART RECEIVED FROM ARCHEOLOGICAL SURVEY OF INDIA REGARDING THE STATUS OF LAND IN ALIENATION REGI STER OF SURVEY NO.84/1, VILLAGE KIVALE, TAL. HAVELI, DIST. PUNE , WHICH IS PLACED AT PAGES 1 AND 2 OF ADDITIONAL EVIDENCE PAPER BOOK INDEX NO.II . THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE BEING REVENUE RECORD, IS ADMITTED. THE PERUSAL OF SAID DOCUMENT REFLECTS THAT IN RESPECT OF LAND ALLOTMENT TO THE EARLIER OWNER OF LAND I.E. MADHAVRAO GANESH PENDSE UNDER THE CLASS OF ALLOTMENT, IT IS WRITTEN CLASS II PERSONAL INAM AND IS DATED 28.01.1870 . T HE NAME OF HOLDER IS THE SAME AND THE SURVEY NUMBER IS 84. HOWEVER, THE NAME OF ASSESSEE IS NOT MENTIONED THEREIN AND FURTHER, THE ASSESSEE ACQUIRED THE RIGHTS IN THE SAID LAND AS ON 25.06.1924 . FURTHER, THE ASSESSEE ALSO REQUESTED THE DISTRICT COLLECTOR TO GIVE CERTIFIED COPY OF CASE NO.104/328, DATED 30.04.19 24 REGARDING LAND IN SURVEY NO.84/1, AT POST KIVALE, TAL. HAVELI, DIST. PUNE. IN REPLY, THE COLLECTOR INFORMED THAT THE SAID ORDER NO.104/328, DATED 30.4.1924 WAS SEARCHED ON ITA NO. 1 643 /PN/20 1 2 SHRI SHAKTIPRASA D SADASHIV SHINDE 13 COMPUTER BASED RECORD AND ALSO ON ACTUAL RECORD AND THE SAME WAS NOT FOUND. THE SAID COMMUNICATION ALONG WITH ENGLISH TRANSACTION IS PLACED AT PAGES 5 TO 8 OF ADDITIONAL PAPER BOOK II. THE RELEVANCE OF THE ORDER NO.104/328, DATED 30. 0 4.1924 IS THE ENTRY WHICH IS IN THE MUTATION REGISTER, WHICH IS PLACED AT PAGES 311 AND 312 OF THE PAPER BOOK. WE FIND NO MERIT IN THE CASE PUT UP BEFORE US BY THE ASSESSEE, WHEREIN UNDOUBTEDLY, THE LAND WAS RECEIVED AS INAM AND THE MUTATION TO THAT EFFECT WAS MADE IN THE HANDS OF ORIGINAL ALLOTTEE OF THE SAID LAND , WHO WAS A THIRD PARTY . HOWEVER, WI TH REGARD TO MUTATION ENTRY VIS - - VIS GRANDFATHER OF ASSESSEE UNDER THE COLUMN TYPE OF RIGHT OR HOW THE RIGHT IS RECEIVED, MENTION IS OF ORDER DATED 30.04.1924 MADE BY THE COLLECTOR, PUNE DISTRICT. IN CASE, THE AFORESAID LAND WAS RECEIVED AS INAM LAND, TH E NECESSARY ENTRY TO THAT EFFECT IS NOT AVAILABLE IN THE MUTATION RECORD AND IN THE ABSENCE OF THE SAME, WE FIND NO MERIT IN THE CLAIM OF ASSESSEE IN THIS REGARD. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAS FURTHER TAKEN US THROUGH HISTORY OF THE SUCCESSION BY THE ASSESSEE AND HIS SISTERS AND HAS CLAIMED THAT THE LAND AREA OF 337R WAS ALLOTTED TO THE SHARE OF ASSESSEE , OUT OF WHICH 97R WAS SOLD BY THE ASSESSEE VIDE AGREEMENT DATED 16.04.2007 . THE SAID SHARE BEING SOLD BY THE ASSESSEE AND TH E VALUE FOR WHICH IT IS BEING SOLD BY THE ASSESSEE I.E. TO THE EXTENT RS.1 CRORE DECLARED BY THE ASSESSEE IS NOT UNDER DISPUTE AND ACCORDINGLY, WE NEED NOT ADJUDICATE THE SAID ISSUE ON THE SAID CLAIM. ADMITTEDLY, THE SALE CONSIDERATION DECLARED BY THE ASS ESSEE AT RS.1 CRORE HAS BEEN ACCEPTED BY BOTH THE AUTHORITIES BELOW AND IS NOT DOUBTED. 1 5 . THE NEXT ISSUE IS ONLY WITH REGARD TO COST OF ACQUISITION. THE FIRST CLAIM OF THE ASSESSEE WAS SINCE IT HAD NIL COST OF ACQUISITION, THEN NO CAPITAL GAINS IS TO B E ASSESSED IN HIS HANDS. HOWEVER, THE ASSESSEE HAS FAILED TO PROVE ITS CLAIM AND HAS FAILED TO FURNISH ANY EVIDENCE TO ESTABLISH THAT THE SAID LAND WAS ITA NO. 1 643 /PN/20 1 2 SHRI SHAKTIPRASA D SADASHIV SHINDE 14 INAM LAND IN HIS HANDS AND IN THE ABSENCE OF SAME, WE FIND NO MERIT IN THE SAID CLAIM OF ASSESSEE. 1 6 . NOW, COMING TO THE ALTERNATE PLEA OF ASSESSEE VIS - - VIS COST OF ACQUISI TION, THE ASSESSEE IN THE ORIGINAL RETURN OF INCOME HAD DECLARED THE INCOME FROM CAPITAL GAINS BY TAKING THE SALE VALUE OF PROPERTY AT RS.1 CRORE AND DEBITING SUM OF RS.2,22,412/ - AS O N 01.04.1981 . HOWEVER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE POINTED OUT THAT THE SAID ESTIMATED COST OF ACQUISITION WAS SHOWN ON THE BASIS OF LOCAL ENQUIRIES AND IN ORDER TO ESTABLISH ITS CLAIM OF HIGHER COST OF ACQUISITION, THE ASSES SEE FURNISHED VALUERS REPORT, UNDER WHICH THE COST OF ACQUISITION WAS SHOWN AT RS.4,65,000/ - . THE CLAIM OF ASSESSEE WAS REJECTED SINCE THE ASSESSEE HAD NOT SHOWN THE SAID COST IN ORIGINAL RETURN OF INCOME. THE FIRST ASPECT TO BE KEPT IN MIND WAS THAT TH E INCOME UNDER THE HEAD CAPITAL GAINS WAS DECLARED BY THE ASSESSEE IN THE FIRST INSTANCE. HOWEVER, WHEN VARIOUS DISALLOWANCES WERE BEING MADE IN THE FIRST INSTANCE. HOWEVER, WHEN VARIOUS DISALLOWANCES WERE BEING MADE IN THE HANDS OF ASSESSEE, HE CHANGED HIS STAND AS TO NO CAPITAL GAINS IS TO BE PAID ON THE SAID SALE OF LAND SI NCE THE COST OF ACQUISITION WAS NIL. WE HAVE ALREADY ADJUDICATED THE SAID PLEA OF THE ASSESSEE IN THE PARAS HEREINABOVE AND FIND NO MERIT IN THE SAME. HOWEVER, WE FIND MERIT IN THE CLAIM OF ASSESSEE IN RESPECT OF COST OF LAND AS ON 01.04.1981 AT RS.4,65, 000/ - . WHERE THE SAID VALUE AS ON 01.04.1981 IS BACKED BY A REPORT OF REGISTERED VALUER, WHO IS QUAILED PERSON IN THE SAID FIELD, THE VALUE DECLARED BY THE ASSESSEE ON ESTIMATE BASIS OF RS.2,22,412/ - NEEDS TO BE REPLACED BY THE VALUE OF LAND AS ON 01.04.1 981 AS PER THE REGISTERED VALUER AT RS.4,65,000/ - . ACCORDINGLY, WE DIRECT SO. 1 7 . NOW, COMING TO THE SECOND STAND OF ASSESSEE I.E. IN RESPECT OF COST OF IMPROVEMENT OF THE SAID LAND BY WAY OF LEVELING OF LAND AND ITS FENCING. THE ASSESSEE HAD CLAIMED THE SAID EXPENDITURE TO BE AT RS.7 LAKHS AND RS.15 LAKHS ITA NO. 1 643 /PN/20 1 2 SHRI SHAKTIPRASA D SADASHIV SHINDE 15 RESPECTIVELY, WHICH WAS NOT ALLOWED IN THE HANDS OF ASSESSEE , IN VIEW OF NO EVIDENCE HAVING BEEN PRODUCED BY THE ASSESSEE IN THIS REGARD . THE ASSESSING OFFICER HOWEVER, NOTED THE COMMENTS OF VALUER THAT THE SAID LAND WAS LEVELED AND FENCED AND HENCE , 1/3 RD OF THE SAID AMOUNT I.E. RS.7 LAKHS AND RS.15 LAKHS WAS ALLOWED TO THE ASSESSEE. THE ASSESSEE IS IN APPEAL AGAINST RESTRICTION OF SAID AMOUNT. WE FIND NO MERIT IN THE CLAIM OF ASSESSEE IN THIS REG ARD IN THE ABSENCE OF ANY EVIDENCE HAVING BEEN FILED TO ESTABLISH THE SOURCES OF SAID AMOUNT HAVING BEEN INCURRED BY THE ASSESSEE AND ANY EVIDENCE TO SHOW THAT THE SAID CLAIM WAS DECLARED IN THE Y EARS IN WHICH IT WAS MADE. IN THE ABSENCE OF SAME, WE UPHOL D THE ORDER OF ASSESSING OFFICER IN ALLOWING 1/3 RD COST OF LEVELING OF LAND AND ITS FENCING. 1 8 . THE ASSESSEE FURTHER IN THE ORIGINAL RETURN OF INCOME HAD DECLARED INCOME FROM CAPITAL GAINS AND HAD CLAIMED THE DEDUCTION UNDER SECTION 54 OF THE ACT. HOWEV ER, THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ACT. HOWEV ER, THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS CHANGED ITS STAND AND POINTED OUT THAT DEDUCTION UNDER SECTION 54B OF THE ACT WAS ALLOWABLE TO IT AS IT HAD SOLD AGRICULTURAL LAND AND HAD PURCHASED THE NEW AGRICULTURAL LAND. THE SAID STAND OF THE ASSESSEE WAS REJECTED BY AUTHORITIES BELOW AS THE ASSESSEE HAD FAILED TO FULFILL THE CONDITION THAT ON THE LAND, WHICH IS BEING CLAIMED TO BE AGRICULTURAL LAND, AGRICULTURAL ACTIVITIES HAVE BEEN CARRIED ON FOR THE PAST TWO YEARS. ADMITTEDLY, NO AGRICU LTURAL ACTIVITY WAS CARRIED ON BY THE ASSESSEE ON THE SAID LAND EXCEPT THAT GRASS WAS GROWN ON THE SAID LAND. THE SAID LAND WAS JIRAYAT FALLOW LAND, ON WHICH NO OTHER CROP WAS GROWN , E VEN 7/12 EXTRACT INDICATES THAT ONLY GRASS WAS GROWN. FURTHER, THE ASS ESSEE HAS FAILED TO SHOW ANY AGRICULTURAL INCOME IN LINE WITH THE AGRICULTURAL ACTIVITIES CARRIED ON BY IT AND IT WAS POINTED OUT THAT GRASS GROWN ON THE SAID LAND WAS USED FOR HOMELY CONSUMPTION AND NOT ENOUGH INCOME WAS DECLARED IN HIS HANDS. WE FIND NO MERIT IN THE CLAIM OF ASSESSEE IN THIS REGARD. ITA NO. 1 643 /PN/20 1 2 SHRI SHAKTIPRASA D SADASHIV SHINDE 16 1 9 . WE FIND THAT SIMILAR ISSUE OF CLAIM OF DEDUCTION UNDER SECTION 54B OF THE ACT AROSE BEFORE THE TRIBUNAL IN ABHIJIT SUBHASH GAIKWAD VS. DCIT (SUPRA) , WHEREIN LAND HELD BY THE ASSESSEE WAS JIRAYAT FALLOW LAND I.E. LAND BEING NOT CAPABLE OF CULTIVATION. FURTHER, THE ASSESSEE HAD NOT DECLARED ANY AGRICULTURAL INCOME IN ITS HANDS NOR ANY EVIDENCE WAS FILED THAT ANY CULTIVATION AT ANY TIME OR ANY BASIC OPERATION WAS BEING CARRIED OUT. IN THE ABSENCE OF FULFI LLMENT OF FUNDAMENTAL CONDITION THAT THE LAND WAS USED FOR AGRICULTURE, MERELY MENTIONING OF THE LAND AS AGRICULTURAL LAND IN THE PURCHASE DEED OR THE SALE DEED OR EVEN IN THE REVENUE RECORDS COULD NOT ESTABLISH THE CASE OF ASSESSEE THAT THE LAND SOLD BY I T WAS AN AGRICULTURAL LAND. THE TRIBUNAL WHILE DECIDING THE ISSUE IN ABHIJIT SUBHASH GAIKWAD VS. DCIT (SUPRA) HAD PLACED RELIANCE ON THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN SMT. SARIFABIBI MOHMED IBRAHIM VS. CIT (SUPRA) AND GOPAL C. SHARMA VS. CIT (SUPRA) AND HELD AS UNDER : - 12. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE ARISING BEFORE US IS IN RELATION TO THE ASSESSABILITY OF CAPITAL GAINS IN THE HANDS OF ASSESSEE ON SALE OF LAND. THE ASSESSEE CLAIMS TO HAVE SOLD AGRICULTURAL OF ASSESSEE ON SALE OF LAND. THE ASSESSEE CLAIMS TO HAVE SOLD AGRICULTURAL LAND FOR TOTAL CONSIDERATION OF RS.1,01,00,000/ - DURING THE YEAR UNDER CONSIDERATION. THOUGH IN THE RETURN OF INCOME THE ASSESSEE HAD COMPUTED THE INCOME FROM CAPITAL GAINS AND CLAIMED DEDUCTION UNDER SECTION 54 OF THE ACT, HOWEVER, DURING TH E COURSE OF ASSESSMENT PROCEEDINGS, THE PLEA OF THE ASSESSEE WAS THAT THE SAID LAND SOLD BY THE ASSESSEE WAS AN AGRICULTURAL LAND AND HENCE OUTSIDE THE PURVIEW OF BEING TAXED UNDER THE HEAD INCOME FROM CAPITAL GAINS AS IT FELL OUTSIDE THE DEFINITION OF C APITAL ASSET UNDER SECTION 2(14) OF THE ACT. 13. SECOND 2(14) OF THE ACT DEFINES AGRICULTURAL LAND AS UNDER: - 2. IN THIS ACT, UNLESS THE CONTEXT OTHERWISE REQUIRES, - (14) CAPITAL ASSET MEANS PROPERTY OF ANY KIND HELD BY AN ASSESSEE, WHETHER OR NOT CONNECTED WITH HIS BUSINESS OR PROFESSION, BUT DOES NOT INCLUDE (I) .. (II) . (III) AGRICULTURAL LAND IN INDIA, NOT BEING LAND SITUATE - ( A ) IN ANY AREA WHICH IS COMPRISED WITHIN THE JURISDICTION OF A MUNICIPALITY (WHETHER KNOWN AS A MUNICIPALITY, MUNIC IPAL CORPORATION, NOTIFIED AREA COMMITTEE, TOWN AREA COMMITTEE, TOWN COMMITTEE, OR BY ANY OTHER NAME) OR A CANTONMENT BOARD AND WHICH HAS A POPULATION OF NOT LESS THAN TEN THOUSAND ACCORDING TO THE LAST PRECEDING CENSUS OF WHICH THE RELEVANT FIGURES HAVE B EEN PUBLISHED BEFORE THE FIRST DAY OF THE PREVIOUS YEAR; OR ( B ) IN ANY AREA WITHIN SUCH DISTANCE, NOT BEING MORE THAN EIGHT KILOMETERS, FROM THE LOCAL LIMITS OF ANY MUNICIPALITY ITA NO. 1 643 /PN/20 1 2 SHRI SHAKTIPRASA D SADASHIV SHINDE 17 OR CANTONMENT BOARD REFERRED TO IN ITEM (A), AS THE CENTRAL GOVERNMENT MAY, HAVING REGARD TO THE EXTENT OF, AND SCOPE FOR, URBANIZATION OF THAT AREA AND OTHER RELEVANT CONSIDERATIONS, SPECIFY IN THIS BEHALF BY NOTIFICATION IN THE OFFICIAL GAZETTE; 14. UNDER THE DEFINITION, LAND, WHICH IS AGRICULTURAL LAND FALLS OUTSIDE THE PURVIEW OF BEING CAPITAL ASSET SUBJECT TO FULFILMENT OF SUB - CLAUSES (A) AND (B), WHICH INTER - ALIA PROVIDED THAT THE LAND IN QUESTION SHOULD NOT BE WITHIN THE JURISDICTION OF A MUNICIPALITY OR CANTONMENT BOARD, ITS POPULATION OF NOT LESS THAN 10,000 PERSONS AND FU RTHER IT SHOULD NOT BE IN AN AREA NOT BEING MORE THAN 8 KILOMETERS FROM THE MUNICIPAL LIMITS OR CANTONMENT BOARD. IN THE PRESENT CASE, THE FULFILLMENT OF CONDITIONS IN CLAUSES (A) AND (B) ARE CONSIDERED TO HAVE BEEN MET I.E. THE LAND IN QUESTION IS SITUAT ED BEYOND 8 KILOMETERS FROM THE LOCAL LIMITS OF ANY MUNICIPALITY OR CANTONMENT BOARD AND ALSO THE AREA IN WHICH THE SAID LAND IS SITUATED DOES NOT HAVE POPULATION OF MORE THAN 10,000. THE ONLY QUESTION WHICH REMAINS TO BE ADJUDICATED IN THE PRESENT CASE I S WHETHER THE LAND SOLD BY THE ASSESSEE WAS AN AGRICULTURAL LAND AND WHETHER IT FALLS OUTSIDE THE DEFINITION OF CAPITAL ASSET. 15. THE HONBLE SUPREME COURT IN CIT VS. RAJA BENOY KUMAR SAHAS ROY (1957) 32 ITR 466 (SC) HAD HELD THAT AGRICULTURE IN ITS ROOT SENSE MEAN AGAR, A FIELD AND CULTURE, I.E. CULTIVATION OF A FIELD. AGRICULTURE IMPLIES EXPENDITURE OF HUMAN SKILLS AND LABOUR UPON LAND. AFTER EXHAUSTIVELY DISCUSSING THE VARIOUS CASES DEALING WITH THE SUBJECT, THE APEX COURT HELD THAT AGRICUL TURE INVOLVED 'BASIC OPERATIONS', SUCH AS TILLING OF LAND, SOWING OF SEEDS, PLANTING ETC. AND 'SUBSEQUENT OPERATIONS', SUCH AS WEEDING, TENDING, PRUNING, CUTTING, HARVESTING AND RENDERING THE PRODUCE FIT FOR MARKET. 16. FURTHER, THE HONBLE GUJARAT HIGH COURT IN CIT VS. SIDDHARTH J. DESAI (SUPRA) HAD LAID DOWN 13 TESTS TO DETERMINE WHETHER A PARTICULAR LAND IS (SUPRA) HAD LAID DOWN 13 TESTS TO DETERMINE WHETHER A PARTICULAR LAND IS AGRICULTURAL LAND OR NOR WHICH ARE AS UNDER: - (1) WHETHER THE LAND WAS CLASSIFIED IN THE REVENUE RECORDS AS AGRICULTURAL LAND WHETHER IT WAS SUBJ ECT TO THE PAYMENT OF LAND REVENUE? (2) WHETHER THE LAND WAS ACTUALLY OR ORDINARILY USED FOR AGRICULTURAL PURPOSES AT OR ABOUT THE RELEVANT TIME? (3) WHETHER SUCH USER OF THE LAND WAS FOR A LONG PERIOD OR WHETHER IT WAS OF A TEMPORARY CHARACTER OR BY WAY OF A STOP - GAP ARRANGEMENT (4) WHETHER THE INCOME DERIVED FROM THE AGRICULTURAL OPERATIONS CARRIED ON IN THE LAND BORE ANY RATIONAL PROPORTION TO THE INVESTMENT MADE IN PURCHASING THE LAND? (5) WHETHER, THE PERMISSION UNDER S.65 OF THE BOMBAY LAND REVEN UE CODE WAS OBTAINED FOR THE NON - AGRICULTURAL USE OF THE LAND? IF SO, WHEN AND BY WHOM (THE VENDOR OR THE VENDEE)? WHETHER SUCH PERMISSION WAS IN RESPECT OF A PORTION OF THE LAND AND IF IT WAS OBTAINED IN THE PAST, WHAT WAS THE NATURE OF THE USER OF THE S AID PORTION OF THE LAND ON THE MATERIAL DATE? (6) WHETHER THE LAND, ON THE RELEVANT DATE, HAD CEASED TO BE PUT TO AGRICULTURAL USE? IF SO, WHETHER IT WAS PUT TO AN ALTERNATIVE USE? WHETHER SUCH CESSER AND/OR ALTERNATIVE USER WAS OF A PERMANENT OR TEMPORAR Y NATURE? ITA NO. 1 643 /PN/20 1 2 SHRI SHAKTIPRASA D SADASHIV SHINDE 18 (7) WHETHER THE LAND, THOUGH ENTERED IN REVENUE RECORDS, HAD NEVER BEEN ACTUALLY USED FOR AGRICULTURE, THAT IS, IT HAD NEVER BEEN PLOUGHED OR TILLED? WHETHER THE OWNER MEANT OR INTENDED TO USE IT FOR AGRICULTURAL PURPOSES? (8) WHETHER THE LAND WAS SITUATE IN A DEVELOPED AREA? WHETHER ITS PHYSICAL CHARACTERISTICS, SURROUNDING SITUATION AND USE OF THE LANDS IN THE ADJOINING AREA WERE SUCH AS WOULD INDICATE THAT THE LAND WAS AGRICULTURAL? (9) WHETHER THE LAND ITSELF WAS DEVELOPED BY PLOTTING AND P ROVIDING ROADS AND OTHER FACILITIES? (10) WHETHER THERE WERE ANY PREVIOUS SALES OF PORTIONS OF THE LAND FOR NON - AGRICULTURAL USE? (11) WHETHER PERMISSION UNDER S.63 OF THE BOMBAY TENANCY AND AGRICULTURAL LANDS ACT, 1948, WAS OBTAINED BECAUSE THE SALE OR INTENDED SALE WAS IN FAVOUR OF A NON - AGRICULTURIST? IF SO, WHETHER THE SALE OR INTENDED SALE TO SUCH NON - AGRICULTURIST WAS FOR NON - AGRICULTURAL OR AGRICULTURAL USER? (12) WHETHER THE LAND WAS SOLD ON YARDAGE OR ON ACREAGE BASIS? (13) WHETHER AN AGRICULTU RIST WOULD PURCHASE THE LAND FOR AGRICULTURAL PURPOSES AT THE PRICE AT WHICH THE LAND WAS SOLD AND WHETHER THE OWNER WOULD HAVE EVER SOLD THE LAND VALUING IT AS A PROPERTY YIELDING AGRICULTURAL PRODUCE ON THE BASIS OF ITS YIELD? 17. THE HONBLE GUJARAT H IGH COURT FURTHER HELD THAT AT THE RISK OF REPETITION, WE MAY MENTION THAT NOT ALL OF THESE FACTORS WOULD BE PRESENT OR ABSENT IN ANY WE MAY MENTION THAT NOT ALL OF THESE FACTORS WOULD BE PRESENT OR ABSENT IN ANY CASE AND THAT IN EACH CASE ONE OR MORE OF THOSE FACTORS MAY MAKE APPEARANCE AND THAT THE ULTIMATE DECISION WILL HAVE TO BE REACHED ON A BALANCED CONSIDERATION OF THE TOTALITY OF CIRCUMSTANCES. 18. THE HONBLE SUPREME COURT IN SMT. SARIFABIBI MOHMED IBRAHIM & OTHERS VS. CIT (SUPRA) HAD LAID DOWN AS UNDER: - WHETHER A PIECE OF LAND IS AGRICULTURAL LAND OR NOT IS ESSENTIALLY A QUESTION OF FACT. SEVERAL TESTS HAVE BEEN EVOLVED IN DECISIONS OF THE SUPREME COURT AND THE HIGH COURTS, BUT ALL OF THEM ARE MORE IN THE NATURE OF GUIDELINES. THE QUESTION HAS TO BE ANSWERED IN EACH CASE, HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THAT CASE. THERE MAY BE FACTORS BOTH FOR OR AGAINST A PARTICULAR POINT OF VIEW. THE COURT HAS TO ANSWER THE QUESTION ON A CONSIDERATION OF ALL OF THEM A PROCESS OF EVALUATION. THE INFERENCE HAS TO BE DRAWN ON A CUMULATIVE CONSIDERATION OF ALL THE RELE VANT FACTS. 19. THE HONBLE BOMBAY HIGH COURT IN CIT VS. V.A. TRIVEDI (1988) 172 ITR 95 (BOM) I.E. THE DECISION RELIED UPON BY THE ASSESSING OFFICER, AFTER CONSIDERING THE FACTS OF THE CASE, IT WAS HELD THAT TO ASCERTAIN THE TRUE CHARACTER AND NATURE OF THE LAND, IT MUST BE SEEN WHETHER IT HAS BEEN PUT TO USE FOR AGRICULTURAL PURPOSES FOR A REASONABLE SPAN OF TIME, PRIOR TO THE RELEVANT DATE AND FURTHER WHETHER ON THE RELEVANT DATE THE LAND WAS INTENDED TO BE PUT TO USE FOR AGRICULTURAL PURPOSES FOR A REA SONABLE SPAN OF TIME IN THE FUTURE. 20. FOLLOWING THE JUDICIAL PROPOSITION LAID DOWN BY THE HONBLE SUPREME COURT AND VARIOUS HIGH COURTS IN ORDER TO DETERMINE THE NATURE OF THE AGRICULTURAL LAND, THE FIRST AND FOREMOST TEST WAS WHETHER THE LAND WAS ACTUA LLY AND ORDINARILY USED FOR THE PURPOSE OF AGRICULTURE. WHERE THE SAID LAND HAD NOT ITA NO. 1 643 /PN/20 1 2 SHRI SHAKTIPRASA D SADASHIV SHINDE 19 BEEN ACTUALLY CULTIVATED IN THE RECENT PAST AND / OR THERE WAS NO INTENTION OF USING THE LAND FOR AGRICULTURAL PURPOSES IN NEAR FUTURE, WAS HELD BY THE COURTS TO BE THE MO ST CONCLUSIVE FEATURE TO DETERMINE THE NATURE OF LAND IN QUESTION. MERELY BECAUSE THE LAND WAS SHOWN AS AGRICULTURAL IN REVENUE RECORDS WAS HELD TO BE NOT THE CONCLUSIVE TEST TO DETERMINE THAT THE LAND WAS AGRICULTURAL LAND. 21. THE HONBLE BOMBAY HIGH COURT IN GOPAL C. SHARMA VS. CIT (SUPRA) HAD HELD AS UNDER: - THE EXPRESSION AGRICULTURAL LAND' IS NOT DEFINED IN THE INCOME TAX ACT, 1961. THE UNDERLYING OBJECT OF THE ACT TO EXEMPT AGRICULTURAL INCOME FROM INCOME TAX IS TO ENCOURAGE ACTUAL CULTIVATION OR DE FACTO AGRICULTURAL OPERATIONS. ACTUAL USE OF THE LAND FOR AGRICULTURAL PURPOSE OR ABSENCE THEREOF AT THE RELEVANT TIME IS UNDOUBTEDLY ONE OF THE CRUCIAL TESTS FOR THE DETERMINATION OF THE ISSUE. IT IS WELL SETTLED THAT THE NATURE AND CHARACTER OF LAN D MAY UNDERGO A CHANGE DEPENDING UPON ITS SITUATION, GROWTH OF THE LOCALITY OR ZONE IN WHICH IT IS SITUATE AND ITS POTENTIALITY. THE FACT THAT THE LAND IS SOLD OR TRANSFERRED TO A NON AGRICULTURIST FOR A NON AGRICULTURAL PURPOSE OR THAT IT IS LIKELY TO BE USED FOR NON AGRICULTURAL PURPOSES SOON AFTER ITS TRANSFER IS ALSO A RELEVANT FACTOR GERMANE TO THE DETERMINATION OF THE ISSUE. MERELY BECAUSE THE LAND WAS USED FOR AGRICULTURAL PURPOSES IN THE REMOTE PAST OR ITS CONTINUES TO BE ASSESSED TO LAND REVENUE A AGRICULTURAL LAND IS NOT DECISIVE. IN ORDER TO ASCERTAIN THE TRUE CHARACTER AND NATURE OF THE LAND IT MUST BE SEEN WHETHER THE LAND HAD BEEN PUT TO USE FOR AGRICULTURAL PURPOSES FOR A REASONABLE SPAN OF TIME PRIOR TO THE RELEVANT DATE AND FURTHER AS TO WHE THER ON THE DATE OF THE TRANSFER THE LAND IN QUESTION WAS INTENDED TO BE PUT TO USE BY THE PURCHASER FOR AGRICULTURAL PURPOSES FOR A REASONABLE SPAN OF TIME IN FUTURE' 22. THE JUDICIAL PRECEDENTS HAVE LAID DOWN THAT THE EXPRESSION AGRICULTURAL 22. THE JUDICIAL PRECEDENTS HAVE LAID DOWN THAT THE EXPRESSION AGRICULTURAL LAND THOU GH NOT DEFINED UNDER THE INCOME - TAX ACT, BUT WOULD BE APPLICABLE TO SUCH LAND WHERE THE ACTUAL USER OF THE LAND WAS FOR AGRICULTURAL PURPOSES IN RECENT TIMES. JUST BECAUSE THE LAND WAS USED FOR AGRICULTURAL PURPOSES IN THE REMOTE PAST OR IT CONTINUES TO BE ASSESSED IN THE LAND REVENUE RECORDS AS AGRICULTURAL LAND IS NOT DECISIVE TO DETERMINE THE NATURE OF LAND BEING AGRICULTURAL LAND. WHERE THE LAND HAS NOT BEEN PUT TO USE FOR AGRICULTURAL PURPOSES FOR REASONABLE SPAN OF TIME PRIOR TO THE DATE OF ITS TRA NSFER, THE LAND IN QUESTION CANNOT BE HELD TO BE AGRICULTURAL LAND. THE ONUS WAS UPON THE ASSESSEE TO ESTABLISH ITS CASE OF HAVING CULTIVATED THE LAND IN RECENT PAST AND IN THE ABSENCE OF ASSESSEE HAVING DISCHARGED ITS ONUS AND MERELY BECAUSE THE LAND IS RECORDED AS AGRICULTURAL LAND IN THE REVENUE RECORDS, DOES NOT ESTABLISH THE CASE OF ASSESSEE. 20 . IN THE FACTS OF THE PRESENT CASE, AS REFERRED TO BY US IN THE PARAS HEREINABOVE, THE LAND SOLD BY THE ASSESSEE IS SITUATED WITHIN THE MUNICIPAL LIMITS OF PCMC AND IS WITHIN COMMERCIAL ZONE - II . ON THE SAID LAND, NO AGRICULTURAL ACTIVITY IS BEING CARRIED OUT AND IN THE ABSENCE OF THE SAME AND MERELY BECAUSE IN 7/12 EXTRACT , IT REC ORDS AS AGRICULTURAL LAND IS NOT DECISIVE TO DETERMINE THE NATURE OF LAND BEIN G AGRICULTURAL LAND. ANOTHER ASPECT TO BE KEPT IN MIND IS THAT THE ASSESSEE IN THE RETURN OF INCOME FILED FOR THE YEAR UNDER ITA NO. 1 643 /PN/20 1 2 SHRI SHAKTIPRASA D SADASHIV SHINDE 20 CONSIDERATION HAD NOT CLAIM ED THAT IT HAD SOLD THE AGRICULTURAL LAND BUT HAD CLAIMED DEDUCTION UNDER SECTION 54 OF THE ACT AND THE SAID CLAIM WAS REFUSED BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS. SIMILARLY, IN THE CASE BEFORE PUNE BENCH OF TRIBUNAL IN ABHIJIT SUBHASH GAIKWAD VS. DCIT (SUPRA) , THE ASSESSEE HAD NOT CLAIMED IN THE RETURN OF INCOME THAT IT HA D SOLD AGRICULTURAL LAND AND THE TRIBUNAL OBSERVED AS UNDER: - 24. THE ASSESSEE IN THE RETURN OF INCOME HAD NOT CLAIMED THAT IT SOLD AGRICULTURAL LAND, BUT ON THE OTHER HAND HAD CLAIMED DEDUCTION UNDER SECTION 54 OF THE ACT, IN SUPPORT OF WHICH, ASSESSEE F AILED TO FURNISH ANY DOCUMENTS AND HENCE THAT CLAIM OF SECTION 54 OF THE ACT WAS HELD TO BE NOT ALLOWABLE TO THE ASSESSEE. ONLY DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE CLAIMED THAT THE SAID LAND WAS AGRICULTURAL LAND BEING OUTSIDE THE CITY LIMITS AND IN SUPPORT THEREOF, THE NECESSARY EVIDENCE WAS FILED. HOWEVER, THE ASSESSEE FAILED TO FURNISH ON RECORD ANY EVIDENCE TO ESTABLISH ITS CASE OF HAVING CULTIVATED THE SAID LAND OR HAVING CARRIED OUT ANY AGRICULTURAL OPERATIONS. NO AGRICULTURAL INCOME HAS BEEN DECLARED IN ANY OF THE YEAR OF HOLDING OF SUCH LAND. IN THE ABSENCE OF THE SAME AND IN THE TOTALITY OF THE FACTS AND CIRCUMSTANCES, WE FIND NO MERIT IN THE CLAIM OF THE ASSESSEE THAT THE SAID LAND SOLD BY THE ASSESSEE IS AN AGRICULTURAL LAND AND SALE PROCEEDS OF WHICH ARE EXEMPT FROM TAX. 25. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE ON THE OTHER HAND PLACED RELIANCE ON THE RATIO LAID DOWN BY THE HONBLE DELHI HIGH COURT IN HINDUSTAN INDUSTRIAL RESOURCES LTD. VS. ACIT (SUPRA), WHEREIN IT WAS HELD THAT HINDUSTAN INDUSTRIAL RESOURCES LTD. VS. ACIT (SUPRA), WHEREIN IT WAS HELD THAT THE FACT THAT THE ASSESSEE DID NOT CARRY OUT ANY AGRICULTURAL OPERATIONS DID NOT RESULT IN ANY CONVERSION OF THE SAID LAND INTO INDUSTRIAL LAND AND THE FINDING THAT THE LAND WAS NOT AGRI CULTURAL LAND WAS REVERSED BY THE HONBLE DELHI HIGH COURT (SUPRA). HOWEVER, THE FINDING OF THE HONBLE DELHI HIGH COURT (SUPRA) IS CONTRARY TO THE FINDING OF JURISDICTIONAL HIGH COURT IN GOPAL C. SHARMA VS. CIT (SUPRA), WHICH HAS BEEN REFERRED TO BY US I N THE PARAS HEREINABOVE, WHICH IN TURN HAS BEEN RELIED UPON BY THE ASSESSING OFFICER / CIT(A) AND ALSO BY THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE. THOUGH THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAD FILED COMPILATION OF CASE LAWS, BUT DURING THE COURSE OF HEARING HAD ONLY RELIED ON THE RATIO LAID DOWN BY THE HONBLE DELHI HIGH COURT IN HINDUSTAN INDUSTRIAL RESOURCES LTD. VS. ACIT (SUPRA). THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE PLACED RELIANCE ON THE DECISION O F HONBLE HIGH COURT OF BOMBAY AT GOA IN CIT VS. SMT. DEBBIE ALEMAO (2011) 331 ITR 59 AND PUNE BENCH OF TRIBUNAL IN HARESH V. MILANI VS. JCIT IN ITA NO.192/PN/2003 RELATING TO ASSESSMENT YEAR 1995 - 96 REPORTED IN (2007) 111 TTJ (PUNE) 310. THE PERUSAL OF F ACTS OF BOTH THE CASES REFLECT THAT IN BOTH THE ABOVE SAID DECISIONS, THE LAND WAS CULTIVATED BY THE ASSESSEE AND EVEN THE NATURE OF THE CROP IS MENTIONED. HOWEVER, IN THE FACTS OF THE PRESENT CASE BEFORE US AS POINTED OUT BY US IN THE PARAS HEREINABOVE, THE ASSESSEE HAS FAILED TO ESTABLISH WHETHER THE LAND WAS USED FOR CARRYING ON ANY AGRICULTURAL ACTIVITY. ON THE OTHER HAND, FINDINGS OF THE AUTHORITIES BELOW IS THAT THE LAND WAS IN FACT BARREN LAND, AS REPORTED IN 7/12 EXTRACT FURNISHED PRIOR TO THE COM PLETION OF ASSESSMENT AND THE LAND WAS NOT AT ALL USED FOR AGRICULTURAL ACTIVITIES AS BEING CLAIMED BY THE ASSESSEE. IN REPLY, THE CASE OF THE ASSESSEE IS THAT THE LAND IS CAPABLE OF DOING CULTIVATION AND AGRICULTURAL ACTIVITY. HOWEVER, THE ASSESSEE HAS NOT FILED ON RECORD ANY EVIDENCE OF HAVING CULTIVATED THE LAND OR ANY AGRICULTURAL ACTIVITY WAS BEING CARRIED ON EXCEPT FOR ITA NO. 1 643 /PN/20 1 2 SHRI SHAKTIPRASA D SADASHIV SHINDE 21 HIS CLAIM THAT THE STATUS OF THE LAND BOTH IN THE PURCHASE AND SALE DEED AND ALSO IN THE REVENUE RECORDS WAS AN AGRICULTURAL LAND. 26. IN VIEW OF THE DECISION OF JURISDICTIONAL HIGH COURT IN CIT VS. V.A. TRIVEDI (SUPRA) AND GOPAL C. SHARMA VS. CIT (SUPRA), WE FIND NO MERIT IN THE RELIANCE PLACED UPON BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE ON THE RATIO LAID DOWN B Y THE HONBLE DELHI HIGH COURT IN HINDUSTAN INDUSTRIAL RESOURCES LTD. VS. ACIT (SUPRA). REJECTING THE SAME, WE HOLD THAT IN THE ABSENCE OF THE ASSESSEE HAVING ESTABLISHED ITS CASE OF THE LAND SOLD BY HIM WAS AGRICULTURAL LAND, WE UPHOLD THE ORDER OF CIT(A ) IN ASSESSING THE INCOME UNDER THE HEAD INCOME FROM CAPITAL GAINS AT RS.96 LAKHS. IN THE ABSENCE OF ASSESSEE HAVING FAILED TO FURNISH ANY EVIDENCE VIS - - VIS ITS CLAIM OF DEDUCTION UNDER SECTION 54 OF THE ACT, THE SAME IS ALSO REJECTED. UPHOLDING THE O RDER OF CIT(A), WE DISMISS THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE. 2 1 . IN THE TOTALITY OF THE ABOVE SAID FACTS AND CIRCUMSTANCES, WHERE THE FACTS AND ISSUE ARISING BEFORE US ARE SIMILAR TO THE FACTS AND ISSUES BEFORE PUNE BENCH OF TRIBUNAL IN ABHIJI T SUBHASH GAIKWAD VS. DCIT (SUPRA) , WE HOLD THAT THE ASSESSEE IS NOT ENTITLED TO THE CLAIM OF DEDUCTION UNDER SECTION 54B OF THE ACT. SIMILAR RATIO HAS BEEN LAID DOWN BY THE CHENNAI BENCH OF TRIBUNAL IN G. BABU VS. ITO (SUPRA), WHICH WAS RELIED UPON BY TH E LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE. 2 2 . NOW, COMING TO THE NEXT CLAIM OF ASSESSEE I.E. CLAIM OF DEDUCTION UNDER SECTION 54F OF THE ACT. 2 3 . THE SECTION ITSELF PROVIDES THAT WHERE THE ASSESSEE IS HOLDING TWO PROPERTIES ON THE DATE OF SA LE OF ORIGINAL ASSET, THEN THE ASSESSEE IS NOT ENTITLED TO CLAIM THE DEDUCTION UNDER SECTION 54F OF THE ACT. THE ASSESSEES CLAIM BEFORE US WAS THAT ONE PROPERTY OWNED BY IT WAS AN ANCESTRAL PROPERTY, WHICH WAS GIVEN TO THE ASSESSEE BY CONSENT AND THE SEC OND PROPERTY WAS HELD ALONG WITH HIS WIFE . I N THE ABSENCE OF ASSESSEE HAVING FULFILLED THE CONDITIONS LAID DOWN IN SECTION 54F OF THE ACT, WE FIND NO MERIT IN THE CLAIM OF ASSESSEE IN THIS REGARD AND THE SAME IS REJECTED. ACCORDINGLY, WE HOLD THAT THE IN COME FROM SALE OF AGRICULTURAL LAND IS ASSESSABLE IN THE HANDS OF ASSESSEE AS INCOME FROM ITA NO. 1 643 /PN/20 1 2 SHRI SHAKTIPRASA D SADASHIV SHINDE 22 CAPITAL GAINS AND THE COST AS ON 01.04.1981 IS TO BE ADOPTED AT RS. 4,65,000/ - AS PER THE REPORT OF VALUER. FURTHER, AS ALLOWED BY THE ASSESSING OFFICER, THE ASSESSEE SHALL GET THE BENEFIT OF 1/3 RD COST OF IMPROVEMENT OUT OF RS.7 LAKHS AND RS.15 LAKHS AFTER INDEXATION . THE ASSESSEE IS NOT ENTITLED TO ANY OTHER EXEMPTION / DEDUCTION AND THE BALANCE INCOME IS CAPITAL GAINS AND IS TO BE ASSESSED IN THE HANDS OF ASSESSEE AS SUCH. ACCORDI NGLY, THE VARIOUS GROUNDS OF APPEAL RAISED BY THE ASSESSEE IN THIS REGARD ARE PARTLY ALLOWED. 2 4 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 11 TH DAY OF MAY , 201 6 . SD/ - SD/ - (PRADIP KUMAR KEDIA) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 11 TH MAY , 201 6 . / PUNE ; DATED : 11 TH MAY , 201 6 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A) - II , PUNE ; 4. / THE CIT - II , PUNE ; 5. , , / DR A , ITAT, PU NE; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE