Smt.V.Krishna Kumari, Hyderabad V. Dy. CIT, Central Circle-5, Hyderabad

ITA 1744/HYD/2013

• Counselvise Citation: 174422514 RSA 2013
• Duration Of Justice: 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 14-07-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 18-12-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D SUDHAKAR RAO
• Keywords: Capital asset; Business income; Search and seizure
• Section: 143(3); 54F; 2(14); 153A; 54; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICAL MEMBER ITA.NO.1700/HYD/2012 ASSESSMENT YEAR 2005-2006 MR. VENIGALLA ANAND PRASAD, HYDERABAD - 033. PAN AEWPP-1096-B VS. DCIT, CENTRAL CIRCLE - 5 HYDERABAD. (APPELLANT) (RESPONDENT) ITA.NO.1744/HYD/2013 ASSESSMENT YEAR 2005-2006 SMT. V. KRISHNA KUMARI, HYDERABAD - 033. PAN AFEPK-5311-F VS. DCIT, CENTRAL CIRCLE - 5 HYDERABAD. (APPELLANT) (RESPONDENT) ITA.NO.1701/HYD/2012 ASSESSMENT YEAR 2007-2008 MR. VENIGALLA ANAND PRASAD, HYDERABAD - 033. PAN AEWPP - 1096 - B VS. DCIT, CENTRAL CIRCLE - 5 HYDERABAD. (APPELLANT) (RESPONDENT) ITA.NO.1745/HYD/2013 ASSESSMENT YEAR 2007-2008 SMT. V. KRISHNA KUMARI, HYDERABAD - 033. PAN AFEPK - 5311 - F VS. DCIT, CENTRAL CIRCLE - 5 HYDERABAD. (APPELLANT) (RESPONDENT) 2 ITA.NO.1700, 1701/H/12, 1744, 1745/H/13 & 1753/H/12 MR. VENIGALLA ANAND PRASAD & SMT. V. KRISHNA KUMARI, HYDERABAD. ITA.NO.1753/HYD/2012 ASSESSMENT YEAR 2007-2008 ACIT, CENTRAL CIRCLE - 5, HYDERABAD. VS. MR. VENIGALLA ANAND PRASAD, HYDERABAD. PAN AEWPP-1096-B (APPELLANT) (RESPONDENT) FOR ASSESSEE : MR. A. SRINIVAS FOR REVENUE : MR. D. SUDHAKAR RAO DATE OF HEARING : 25.08.2014 DATE OF PRONOUNCEMENT : 1 2 .09.2014 ORDER ORDER ORDER ORDER PER B PER B PER B PER BENCH ENCH ENCH ENCH THESE ARE GROUP OF APPEALS MAINLY BY ASSESSEES FO R A.YS. 2005-06 AND 2007-08. SINCE COMMON ISSUES ARE INVOLVED, THESE APPEALS ARE HEARD TOGETHER AND DISPOSED OFF B Y THIS COMMON ORDER. 2. BRIEFLY STATED, ASSESSEES HEREIN ARE SPOUSES HA VING THEIR INDIVIDUAL INCOMES. SEARCH AND SEIZURE OPERAT IONS WERE CARRIED OUT IN THE BUSINESS AND RESIDENTIAL PREMISE S OF ASSESSEE SRI V A PRASAD ALONG WITH OTHER GROUP OF CASES ON 07.10.2009. FOR THE SAKE OF CONSIDERATION, FACTS IN THE CASE OF MR. V A PRASAD ARE DISCUSSED IN DETAIL. IN RESPONSE TO THE NOTICE ISSUED U/S. 153A OF THE INCOME TAX ACT, ASSESSEE HAS FILED THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION DECLARIN G INCOME OF RS.6,94,927 ALONG WITH AGRICULTURAL INCOME OF RS.1, 82,000. IN COURSE OF ASSESSMENT PROCEEDINGS, THE A.O. MADE AN ADDITION OF 3 ITA.NO.1700, 1701/H/12, 1744, 1745/H/13 & 1753/H/12 MR. VENIGALLA ANAND PRASAD & SMT. V. KRISHNA KUMARI, HYDERABAD. RS.85,48,953 ON ACCOUNT OF LONG TERM CAPITAL GAINS ARISING TO ASSESSEE IN RESPECT OF THE DEVELOPMENT AGREEMENT EN TERED WITH M/S. RAAGA CONSTRUCTIONS VIDE AGREEMENT DATED 08.12 .2004. APPARENTLY, IN COURSE OF SEARCH OPERATION IN THE PR EMISES OF BHAVYA CONSTRUCTIONS P. LTD., IT WAS FOUND THAT ASS ESSEE ALONG WITH HIS WIFE HAS ENTERED INTO DEVELOPMENT AGREEMEN T WITH M/S. RAAGA CONSTRUCTIONS. ACCORDING TO THE SAID DEVELOPM ENT AGREEMENT, ASSESSEE WAS TO RECEIVE A BUILT-UP AREA OF 6457 SQ. FT. FOR TRANSFERRING THE LAND FOR DEVELOPMENT. ASSE SSEE RECEIVED THE BUILT-UP AREA (FLATS) AND SUBSEQUENTLY SOLD IT IN THE F.Y. 2006-07 AND OFFERED THE LONG TERM CAPITAL GAINS OF RS.69,68,373 IN AY 2007-08. ASSESSEE HAD ALSO CLAIMED EXEMPTION UNDER SECTION 54F ON PURCHASE OF HOUSE AT KONDAPUR. THE A .O. HOWEVER, DID NOT AGREE TO THE CLAIM OF ASSESSEE THA T THE CAPITAL GAIN HAD ARISEN IN THE A.Y. 2007-08. A.O. RELIED O N THE ORDER OF THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF DR. MAYA SHENOY IN ITA.NO.266/HYD/2005 DATED 24.10.2008 AS A LSO THE DECISION OF AUTHORITY FOR ADVANCED RULINGS IN THE C ASE OF JASBEER SINGH SARKARIA REPORTED IN 294 ITR 196 WHEREIN IT H AS BEEN HELD THAT THE LIABILITY OF CAPITAL GAINS ARISES IN THE Y EAR OF EXECUTION OF DEVELOPMENT. ACCORDINGLY, IT WAS HELD THAT LONG TER M CAPITAL GAINS ARISES IN THE CASE OF ASSESSEE IN A.Y. 2005-0 6 AND NOT IN A.Y. 2007-08, AS CLAIMED BY ASSESSEE. 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESSEE HAS OBJECTED TO THE CONTENTION RAISED BY T HE A.O. THAT THE ENTIRE TRANSACTION OF ASSESSEE GIVES RISE TO TW O TYPES OF CAPITAL GAINS VIZ., ONE FOR THE TRANSFER OF LAND IN A.Y. 2005-06 AND THE OTHER FOR SALE OF THE FLAT IN THE A.Y. 2007 -08. THE CONTENTION OF ASSESSEE WAS THAT THE DATE OF TRANSFE R OF THE LAND 4 ITA.NO.1700, 1701/H/12, 1744, 1745/H/13 & 1753/H/12 MR. VENIGALLA ANAND PRASAD & SMT. V. KRISHNA KUMARI, HYDERABAD. IS THE DATE ON WHICH THE DEVELOPER HAS GIVEN POSSES SION FOR THE BUILT-UP FLATS AND IT IS ONLY ONE TRANSACTION OF CA PITAL GAIN. HOWEVER, THE A.O. HAD ELABORATELY DISCUSSED THIS IS SUE IN THE ASSESSMENT ORDER IN PARA 2 AND CAME TO THE CONCLUSI ON THAT ASSESSEE WAS LIABLE TO CAPITAL GAINS IN A.Y. 2005-0 6 IN TERMS OF THE DECISIONS RELIED UPON BY HIM. ACCORDINGLY, A.O. COMPUTED THE CAPITAL GAIN IN RESPECT OF ASSESSEE AT RS.85,48 ,953 [AND IN THE CASE OF HIS WIFE SMT. V. KRISHNA KUMARI AT RS.2 ,55,70,407( FOR 19,665 SQ.FT)]. THE LONG TERM CAPITAL GAIN ARRI VED AT BY THE A.O. WAS ADDED TO THE RETURNED INCOME AND THE TOTAL INCOME WAS ASSESSED AT RS.92,43,880. 4. AGGRIEVED BY THE ORDER OF THE A.O. ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A). THE SAID OR DER WAS CONFIRMED BY LD. CIT(A). BASED ON THE FINDINGS IN A .Y. 2005-06, THE A.O. MODIFIED THE COMPUTATION OF CAPITAL GAINS IN A.Y. 2007- 08 AND BROUGHT TO TAX ONLY SHORT TERM CAPITAL GAINS . ASSESSEE CLAIMED DEDUCTION UNDER SECTION 54F IN A.Y. 2007-08 ON THE LONG TERM CAPITAL GAIN OFFERED IN THAT YEAR. A.O. AS WEL L AS LD. CIT(A) REJECTED THE CLAIM OF ASSESSEE UNDER SECTION 54F ON THE REASON THAT THERE IS NO LONG TERM CAPITAL GAIN TO BE EXEMP T IN A.Y. 2007-08. ASSESSEE IS AGGRIEVED AND RAISED RESPECTIV E GROUNDS IN BOTH THE ASSESSMENT YEARS. 4.1. IN A.Y. 2005-06 IT WAS THE CONTENTION BEFORE THE LD. CIT(A) THAT CAPITAL GAINS IS NOT EXIGIBLE AS ASSESS EE HAS ENTERED ONLY DEVELOPMENT AGREEMENT AND GOT POSSESSION OF TH E DEVELOPED PROPERTY IN A.Y. 2007-08 ONLY. LD. CIT(A) AFTER CONSIDERING THE DETAILED SUBMISSIONS OF ASSESSEE HO WEVER, CONFIRMED THE CAPITAL GAINS IN A.Y. 2005-06 BY HOLD ING AS UNDER: 5 ITA.NO.1700, 1701/H/12, 1744, 1745/H/13 & 1753/H/12 MR. VENIGALLA ANAND PRASAD & SMT. V. KRISHNA KUMARI, HYDERABAD. 6.0. THE FIRST EFFECTIVE GROUND OF APPEAL IS TH AT THE AO IS NOT LEGALLY CORRECT TO HOLD THAT THE DATE OF REGIST RATION OF DEVELOPMENT AGREERNENT IS THE DATE OF TRANSFER OF T HE ASSET FOR CONSIDERATION OF THE CAPITAL GAIN. 6.1. I HAVE GONE THROUGH THIS ISSUE AND I FIND THAT THE AO WHILE HOLDING THAT THE CAPITAL GAIN ARISES IN THE A Y 05-06 IN RESPECT OF THE DEVELOPMENT AGREEMENT HAS RELIED ON THE DECISION OF THE JURISDICTIONAL TRIBUNAL IN THE CASE OF DR.MAYA SHENOY AS ALSO THE DECISION OF AAR IN THE CASE OF JASBEERSINGH SARKARIA. THE AO HAS ALSO DISCUSSED IN DETAIL THE APPLICABILITY OF SECTION 2( 47)(V). IT IS NOT D ISPUTED THAT ASSESSEE ALONG WITH THE WIFE HAS GIVEN POSSESSION O F THE LAND FOR DEVELOPMENT AND IN MY VIEW THE SAME CONSTI TUTES TRANSFER WITHIN THE MEANING OF SECTION 2(47)(V). TH IS VIEW HAS ALSO BEEN CONFIRMED BY ITAT, HYDEABAD A BENCH I N THE CASE OF SHANTHA ANNAM (ITA NO.885/HYD/2003. THE HON 'BLE MUMBAI TRIBUNAL IN THE CASE OF CHATURBHUJ DWARAKADA S KAPADIA VS CIT (2003) 260 ITR 491 (BOMBAY) HAS OBSE RVED THAT IF THE CONTRACT INDICATE PASSING OF OR TRANSFE RRING OF COMPLETE CONTROL OVER THE PROPERTY IN FAVOUR OF THE DEVELOPER THEN THE DATE OF CONTRACT WOULD BE RELEVANT TO DECI DE THE YEAR OF CHARGEABILITY. THE VIEW HELD BY THE ITAT IN THE CASE OF DR.MAYA SHENOY HAS BEEN AFFIRMED BY THE ITAT , HYDERABAD IN THE CASE OF K.RADHIKA & OTHERS IN ITA NO.208 TO 211 AND 328/HYD/2011, WHEREIN, IT HAS BEEN AFFIR MED THAT THE DATE OF DEVELOPMENT AGREEMENT IS THE BASIS OF CHARGEABILITY OF CAPITAL GAIN. CONSIDERING THE ABOV E, I DO NOT FIND ANY MERIT IN THE GROUNDS TAKEN BY THE APPELLAN T AND THE GROUND IS SQUARELY DISMISSED. I HOLD THAT THE AO WA S JUSTIFIED IN OBSERVING THAT DATE OF REGISTRATION OF THE DEVELOPMENT AGREEMENT IS THE DATE OF TRANSFER OF TH E ASSET FOR CONSIDERATION OF CAPITAL GAIN IN THE CASE OF AS SESSEE. 7.0. THE NEXT EFFECTIVE GROUND IS THAT THE AO FAILE D TO APPRECIATE THE DEFINITION OF TRANSFER U/S 2(47)(V) OF THE ACT AND THE AO ERRED IN HOLDING THAT THE SUBJECT TRANSA CTION GIVES RISE TO TWO TYPES OF CAPITAL GAINS ONE AT THE TIME OF ENTERING INTO DEVELOPMENT AGREEMENT AND THE OTHER W HEN ASSESSEE RECEIVES THE SHARE OF THE BUILT UP AREA, W HICH HE/SHE HOLDS. IT IS ALSO THE CONTENTION OF THE APPE LLANT IN THE GROUNDS OF APPEAL THAT THE AA OUGHT TO HAVE APPRECI ATED THAT THE CAPITAL GAINS ARISES ON THE DATE ON WHICH THE B UILT UP AREA IS HANDED OVER TO ASSESSEE BY THE DEVELOPER. A SSESSEE 6 ITA.NO.1700, 1701/H/12, 1744, 1745/H/13 & 1753/H/12 MR. VENIGALLA ANAND PRASAD & SMT. V. KRISHNA KUMARI, HYDERABAD. ALSO CONTENDED THAT THE AO WENT WRONG IN HIS ANALYS IS OF HIS PROVISION OF SECTION 53A OF THE TRANSFER OF PROPERT Y ACT ADOPTED IN THE PROVISION OF SECTION 2(4 7)(V), IN A S MUCH AS THE TRANSACTION IS NOT COMPLETE, EVEN UNDER THE PRO VISIONS OF SECTION 53A OF THE TP ACT. 7.1. I FIND THAT THE AO HAS DEALT IN DETAIL ALL THE ABOVE ISSUES IN THE ASSESSMENT ORDER GIVING PLAUSIBLE REA SON FOR HIS FINDINGS. IN SO FAR AS APPLICABILITY OF SECTION 53A OF THE TRANSFER OF PROPERTY ACT IN THE CASE OF ASSESSEE IS CONCERNED, I FIND THAT THE CASE OF ASSESSEE SQUAREL Y COVERS BY SECTION 2( 47)(V) OF THE ACT, SINCE ASSESSEE HAS NOT ONLY GIVEN POSSESSION OF THE LAND TO THE DEVELOPER BUT A LSO THE DEVELOPER HAS COMPLETED THE PROJECT AND HAS ALSO HA NDED OVER THE POSSESSION OF THE BUILT UP AREA TO ASSESSE E. ANALYZING FROM THIS POINT OF VIEW ASSESSEE'S CASE I S COVERED BY SECTION 2( 47)(V) OF THE I.T. ACT AND THE AO IS FULLY JUSTIFIED IN TREATING THE TRANSACTION AS TRANSFER W ITHIN THE MEANING OF SAID SECTION AND CORRECTLY COMPUTED THE CAPITAL GAIN TO BE APPLICABLE FOR THE AY 2005-06. 7.2. THUS CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, I HOLD THAT THERE IS NO INFIRMITY OF THE AO IN COMPUTING THE CAPITAL GAIN IN SO FAR AS T HE TRANSFER OF LAND TO THE DEVELOPER IS CONCERNED. TO THAT EXTE NT, THE ACTION OF THE AO IS CONFIRMED AND THIS GROUND OF AP PEALS FAILS. 5. IN THE COURSE OF PRESENT ASSESSMENT PROCEEDINGS , LD. COUNSEL, WITHOUT CONCEDING, ADMITTED THAT THE F ACTS OF THE CASE ARE SIMILAR TO THE DECISION OF HONBLE HIGH CO URT IN THE CASE OF POTLA NAGESWARA RAO VS. DCIT (2014) 89 CCH 022 A PHC WHEREIN THE HONBLE HIGH COURT HAS UPHELD LEVY OF C APITAL GAIN IN THE YEAR OF ENTERING INTO AGREEMENT WHEN THE POSSES SION WAS GIVEN AND THE DEVELOPMENT AGREEMENT WAS EXECUTED WI THOUT ANY PROBLEM. CONSIDERING THIS, WE ARE OF THE OPINIO N THAT THERE IS NO NEED TO DIFFER FROM THE ORDER OF LD. CIT(A) A ND ACCORDINGLY ASSESSEES GROUNDS RAISED IN BOTH APPEALS ON THE IS SUE OF LEVY OF CAPITAL GAINS IN THE IMPUGNED A.Y. 2005-06 ARE REJE CTED. 7 ITA.NO.1700, 1701/H/12, 1744, 1745/H/13 & 1753/H/12 MR. VENIGALLA ANAND PRASAD & SMT. V. KRISHNA KUMARI, HYDERABAD. 5.1 IN A.Y. 2005-06 ASSESSEE HAS RAISED ADDITIONAL GROUND AS UNDER : THE A.O. HAVING BROUGHT TO TAX THE CAPITAL GAINS O N THE BASIS OF DEVELOPMENT AGREEMENT IN THE A.Y. 2005-06, OUGHT TO HAVE ALLOWED THE EXEMPTION U/S.54 OR 54F AS APPL ICABLE ON THE CAPITAL GAINS SO DETERMINED. IT WAS SUBMITTED THAT ASSESSEE BY MISTAKE HAS RAISE D THE GROUND IN A.Y. 2007-08 IN ITA.NO.1745/HYD/2013 AND 1701/HYD/2012 ON THE WRONG IMPRESSION THAT DEDUCTIO N WAS ALLOWABLE IN THAT YEAR AND THIS CAN ALSO BE CONSIDE RED IN A.Y. 2005-06. THIS BEING A LEGAL GROUND, AFTER CONSIDERI NG THE ARGUMENT OF THE LEARNED D.R. THE SAME IS ADMITTED. 5.2. IT WAS THE SUBMISSION THAT ASSESSEE IS ELIGIB LE FOR DEDUCTION UNDER SECTION 54/ 54F ON THE INVESTMENT M ADE IN THE HOUSE WHICH WAS CLAIMED IN A.Y. 2007-08. SINCE THE CAPITAL GAIN IS TAXED IN A.Y. 2005-06 THE SAME MAY BE CONSIDERED IN THIS ASSESSMENT YEAR AS THE ENTIRE FACTS ARE AVAILABLE O N RECORD. 5.3. WHILE ACCEPTING THE CONTENTION THAT ASSESSEE MAY BE ELIGIBLE FOR DEDUCTION UNDER SECTION 54/ 54F ON THE INVESTMENT IN THE NEW HOUSE, THE SAME WAS NOT EXAMINED BY THE A.O , SINCE ASSESSEE HAS NOT CLAIMED THE SAME EITHER BEFORE THE A.O. OR BEFORE THE LD. CIT(A) IN AY 2005-06. CONSEQUENTLY, AS THE LONG TERM CAPITAL GAINS IS BEING TAXED IN A.Y. 2005-06, ASSESSEES CONTENTION THAT THEY ARE ELIGIBLE FOR DEDUCTION UND ER SECTION 54F HAS TO BE EXAMINED BY THE A.O. FOR THIS PURPOSE, TH E ISSUE IS RESTORED TO THE FILE OF A.O. TO EXAMINE THE FACTS O F THE CASE AND THE PROVISIONS OF THE I.T. ACT FOR GRANTING NECESSA RY EXEMPTION/DEDUCTION IF ASSESSEES HEREIN ARE ELIGIBL E FOR 8 ITA.NO.1700, 1701/H/12, 1744, 1745/H/13 & 1753/H/12 MR. VENIGALLA ANAND PRASAD & SMT. V. KRISHNA KUMARI, HYDERABAD. DEDUCTION ON THE LONG TERM CAPITAL GAINS BROUGHT TO TAX IN THIS YEAR. WITH THESE OBSERVATIONS, APPEAL IN A.Y. 2005- 06 IN ITA.NO.1700/HYD/2012 AND ITA.NO.1744/HYD/2013 IN TH E CASE OF MR. VENIGALLA ANAND PRASAD AND SMT. V. KRISHNA K UMARI ARE CONSIDERED AS PARTLY ALLOWED FOR STATISTICAL PURPOS ES. ITA.NO.1701/HYD/2012 & 1745/HYD/2013 A.Y. 2007-08 : 6. CONSEQUENT TO THE CONFIRMATION OF CAPITAL GAINS IN A.Y. 2005-06, THE CONTENTIONS RAISED IN THIS YEAR W ITH REFERENCE TO LEVY OF CAPITAL GAINS AS ADMITTED BY ASSESSEE DO ES NOT ARISE. THEREFORE, THE CONTENTIONS OF ASSESSEE IN THESE YEA RS ARE REJECTED. 7. WITH RESPECT TO ISSUE OF CLAIM UNDER SECTION 54 AND 54F THE SAME WAS DIRECTED TO BE CONSIDERED HEREINAB OVE IN A.Y. 2005-06 AND THEREFORE, GROUNDS PERTAINING TO THAT I SSUE IN A.Y. 2007-08 SHOULD ALSO STAND DISPOSED OFF ACCORDINGLY. 8. IN THE RESULT, ITA.NO.1701/H/2012 AND 1745/HYD/2013 FOR THE A.Y. 2007-08 IN THE CASE OF V ENIGALLA ANAND PRASAD AND SMT. KRISHNA KUMARI ARE DISMISSED. ITA.NO.1753/HYD/2012 A.Y. 2007-08 9. THIS IS REVENUE APPEAL AGAINST THE ORDER OF LD. CIT(A)-VII, HYDERABAD DATED 28.09.2012. REVENUE IS AGGRIEVED ON THE FINDING OF LD. CIT(A) THAT THE CAPITAL GAIN FROM THE SALE OF LAND AT BOWRAMPET IS EXEMPT. THE ISSUE IN THIS APPE AL IS WITH REFERENCE TO COMPUTING CAPITAL GAINS ON THE LANDS S OLD BY ASSESSEE ALONG WITH OTHERS TO M/S. VARUN CONSTRUCT IONS. 9 ITA.NO.1700, 1701/H/12, 1744, 1745/H/13 & 1753/H/12 MR. VENIGALLA ANAND PRASAD & SMT. V. KRISHNA KUMARI, HYDERABAD. 10. BRIEFLY STATED, WHILE COMPUTING THE TAXABLE IN COME OF ASSESSEE FOR THE YEAR UNDER CONSIDERATION, THE A .O. HAS MADE THE ADDITION OF RS. 6,11,25,000/- ON ACCOUNT OF SAL E OF LAND BY ASSESSEE, TREATING THE SAME AS IN THE NATURE OF ADV ENTURE IN NATURE OF TRADE, AFTER REJECTING THE CLAIM OF ASSES SEE THAT THE GAIN ARISING OUT OF THE TRANSACTION IS EXEMPT FROM TAX SINCE THE LAND IS AGRICULTURAL IN NATURE AND SITUATED BEYOND 8 KMS FROM THE NOTIFIED MUNICIPALITY. WHILE COMING TO SUCH A C ONCLUSION, THE AO HAS FULLY RELIED ON THE POST-SEARCH ENQUIRIES AN D INVESTIGATION CONDUCTED IN THE CASE OF BHAVYA CONST RUCTIONS PVT LTD (FOR SHORT BCPL) FOR THE AY 2007-08 ON THE GROU ND THAT ASSESSEE WHO HAPPENS TO BE MANAGING DIRECTOR OF BHA VYA CONSTRUCTIONS PVT LTD ALONG WITH 33 OTHERS HAD ALSO SOLD THEIR LANDS IN THE SAME AREA TO THE SAME PURCHASER I.E. M /S VARUN CONSTRUCTIONS. AO APPLIED THE FINDINGS IN THE CASE OF BCPL AND TREATED THE TRANSACTIONS OF ASSESSEE AS ADVENTURE I N THE NATURE OF TRADE AS WAS HELD IN THE CASE OF BCPL FOR THE AY 2007-08. IN FACT THE AO HAS REPRODUCED THE FINDINGS OF BCPL IN THE ASSESSMENT ORDER OF ASSESSEE, WHILE REJECTING THE C LAIM OF EXEMPTION OF ASSESSEE AND COMPUTING THE GAINS ARISI NG OUT OF THE SALE OF LAND AS BUSINESS INCOME AND TAXED ACCOR DINGLY. 10.1. DURING THE COURSE OF APPELLATE PROCEEDINGS B EFORE LD.CIT(A), ASSESSEE HAS OBJECTED TO THE CONCLUSION DRAWN BY THE AO TOTALLY RELYING ON THE FINDINGS IN THE CASE OF B CPL AND SUBMITTED THAT THE FACTS AND FINDINGS IN THE CASE O F BCPL ARE NEITHER CONNECTED NOR RELEVANT TO THE FACTS OF ASSE SSEE, FOR THE YEAR UNDER APPEAL. HENCE, THE AO ORDER IS WITHOUT A PPLICATION OF MIND. AS SUCH, THERE IS NO JUSTIFICATION FOR MAKING AN ADDITION OF RS.5,98,95,625/- (RS.6,11,25,OOO -RS.12,29,375) WIT HOUT ANY 10 ITA.NO.1700, 1701/H/12, 1744, 1745/H/13 & 1753/H/12 MR. VENIGALLA ANAND PRASAD & SMT. V. KRISHNA KUMARI, HYDERABAD. MATERIAL WHATSOEVER AND THE ADDITION IS LIABLE TO B E DELETED. 11. LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS H ELD AS UNDER : 5.3. I HAVE GONE THROUGH THE FACT OF THE CASE AND THE SUBMISSIONS MADE BY ASSESSEE. IT IS EVIDENT FROM TH E ORDER PASSED BY THE AO THAT THE AO HAS REJECTED ASSESSEE' S CLAIM OF EXEMPTION OF THE SALE TRANSACTION OF THE LAND BA SED ON THE ENQUIRIES CONDUCTED IN THE CASE OF BCPL. IT IS NOT DISPUTED THAT THE AO HAS REPRODUCED THE ENTIRE FINDINGS IN T HE CASE OF BCPL IN THE ASSESSMENT ORDER IN THE CASE OF ASSESSE E. INCIDENTALLY, THE COMPANY BCPL HAS FILED AN APPEAL AGAINST THE REJECTION OF CLAIM OF EXEMPTION AND TREATING TH E GAIN ON SALE OF LAND AS BUSINESS INCOME. THE APPEAL IN THE CASE OF BCPL FOR THE AY 2007-08 HAS BEEN DISPOSED BY ME IN ITA NO.2593/DCIT CC-5,HYD/CIT(A)-VII/2011-12, DATED 28.09.12, WHEREIN, AFTER DISCUSSING THE ISSUES IN DETAIL, I HAD HELD THAT THE GAIN ARISING ON THE SALE TRANSACTION OF THE LAND HELD BY ASSESSEE CANNOT BE TREATED AS BUSINESS INCO ME, BEING ADVENTURE IN THE NATURE OF TRADE. THE FACT OF THE CASE OF THE PRESENT ASSESSEE BEING IDENTICAL TO THAT IN THE CASE OF BCPL, FOLLOWING THE STAND TAKEN BY ME IN THE CASE O F BCPL, I HEREBY HOLD THAT THE AO WAS NOT JUSTIFIED IN REJECT ING THE CLAIM OF ASSESSEE OF EXEMPTED CAPITAL GAIN AND TREA TING THE GAIN ON SALE OF LAND AS BUSINESS INCOME. ACCORDINGL Y, THE ADDITION MADE BY THE AO OF RS.5,98,95,625/-, BEING THE GAIN ON SALE OF LAND, IS DIRECTED TO BE DELETED. THIS EF FECTIVE GROUND OF APPEAL IS THUS ALLOWED. 12. IT WAS FAIRLY ADMITTED THAT THIS ISSUE IS LINK ED TO THE ISSUE DECIDED BY THE COORDINATE BENCH OF THIS TRIBU NAL IN THE CASE OF ACIT, CENTRAL CIRCLE-5, HYDERABAD VS. M/S. BHAVYA CONSTRUCTIONS P. LTD., IN ITA.NO.1751/HYD/2012 DATE D 28.08.2014 WHEREIN THE TRIBUNAL HAS HELD AS UNDER : 13. WE HAVE HEARD THE PARTIES AND PERUSED THE MATERIALS ON RECORD AS WELL AS THE ORDERS OF REVENU E AUTHORITIES. WE HAVE ALSO APPLIED OUR MIND TO THE D ECISIONS 11 ITA.NO.1700, 1701/H/12, 1744, 1745/H/13 & 1753/H/12 MR. VENIGALLA ANAND PRASAD & SMT. V. KRISHNA KUMARI, HYDERABAD. PLACED BEFORE US. ON GOING THROUGH THE ORDER OF TH E LEARNED CIT(A) WE DO NOT FIND ANY INFIRMITY EITHER WITH REGARD TO HIS CONCLUSION IN RESPECT OF THE NATURE O F LAND SOLD BY ASSESSEE OR WITH REGARD TO THE ISSUE AS TO WHETH ER THE TRANSACTION IS TO BE TREATED AS AN ADVENTURE IN THE NATURE OF TRADE. AS CAN BE SEEN FROM THE FACTS AND MATERIALS PLACED ON RECORD, THE NATURE OF LAND AT THE TIME OF PURCHA SE BY ASSESSEE FROM M/S DECCAN PROPERTIES LTD. AND ALSO A T THE TIME OF SALE TO M/S VARUN CONSTRUCTIONS, REMAINED T HE SAME I.E. AGRICULTURAL NOT ONLY IN REVENUE RECORDS BUT A LSO IN THE PAHANIS. IT IS ALSO A FACT ON RECORD ASSESSEE HAS S HOWN INCOME FROM AGRICULTURAL OPERATIONS CARRIED ON OVER THE SAID LAND IN THE RETURN OF INCOME FILED FOR THE IMPUGNED ASSESSMENT YEAR AS WELL AS THE PRECEDING ASSESSMENT YEAR WHICH HAS BEEN ACCEPTED BY AO. IN FACT THE AO HAS NOT TOTALLY RULED OUT AGRICULTURAL OPERATION, THOUGH AC CORDING TO HIM IT IS NOT SUBSTANTIAL. IN THESE CIRCUMSTANCES, WHEN THE NATURE OF LAND SOLD BY ASSESSEE STILL REMAINS TO BE AGRICULTURAL IN REVENUE RECORDS AND ASSESSEE HAS NO T APPLIED FOR CONVERSION OF THE LAND TO NON-AGRICULTU RAL IT CANNOT BE TREATED AS NON-AGRICULTURAL LAND ONLY BEC AUSE THE AO WAS OF THE VIEW THAT AGRICULTURAL OPERATION ON T HE SAID LAND IS NOT POSSIBLE TO THE EXTENT SHOWN BY ASSESSE E. IN THIS CONTEXT IT IS TO BE NOTED THAT THE CERTIFICATE ISSUED BY THE DY. COLLECTOR AND MANDAL REVENUE OFFICER, QUTUB ULLAPUR MANDAL ( AT PAGE 99 OF ASSESSEES PAPER BOOK) CLEAR LY INDICATE THAT THE LAND UNDER THE SAME SURVEY NOS. S ITUATED AT BOWRAMPET VILLAGE ARE UNDER CULTIVATION BY RAISI NG CROPS OF PADDY, CATTLE FEED, MAIZE, JOWAR ETC. FURTHER TH E PAHANIS ALSO INDICATE THE CROPS GROWN OVER THE SAID LAND. W HEN CERTIFICATE HAS BEEN ISSUED BY GOVT. AUTHORITIES CE RTIFYING CULTIVATION OF AGRICULTURAL PRODUCE THE AO WAS NOT CORRECT IN REJECTING THEM WITHOUT PROPER EVIDENCE. MOREOVER, CERTIFICATE DT. 04/02/2009 ISSUED BY DY. COLLECTOR AND TAHSILDAR QUTUBULLAPUR MANDAL ( AT PAGE 100 OF ASSE SSEES PAPER BOOK) AND CERTIFICATE DT. 04/10/2008 OF TOWN PLANNING OFFICER, GHMC (AT PAGE 101 OF PAPER BOOK) CLEARLY INDICATE THAT BOWRAMPET VILLAGE WHERE ASSESSEES LA ND IS SITUATED IS BEYOND THE LIMIT OF GHMC. IT IS A FACT ON RECORD, IN THE ORIGINAL ASSESSMENT ORDER PASSED U/S 143(3) OF THE ACT, THE AO HAS EXAMINED THE NATURE OF TRANSACTION BY CONDUCTING NECESSARY ENQUIRY AND AFTER PROPER APPLI CATION OF MIND HAD ACCEPTED THE CLAIM OF ASSESSEE THAT THE ASSET BEING SOLD BEING AGRICULTURAL LAND WILL NOT ATTRACT CAPITAL 12 ITA.NO.1700, 1701/H/12, 1744, 1745/H/13 & 1753/H/12 MR. VENIGALLA ANAND PRASAD & SMT. V. KRISHNA KUMARI, HYDERABAD. GAIN TAX. THE DEPARTMENT HAS NOT BROUGHT ANY COGEN T EVIDENCE OR MATERIAL ON RECORD TO DISPROVE ASSESSEE S CLAIM EITHER IN RESPECT OF AGRICULTURAL INCOME EARNED TH ROUGH AGRICULTURAL OPERATION CONDUCTED ON THE SAID LAND O R THE FACT THAT THE LAND IS SITUATED BEYOND THE PRESCRIBED LIM IT OF THE NEAREST MUNICIPALITY NOTIFIED BY THE CENTRAL GOVERN MENT. IN THE AFORESAID CIRCUMSTANCES, THE FINDING OF THE CIT(A) REMAINS UNCONTROVERTED. THEREFORE, IT HAS TO BE HEL D THAT AS THE LAND SOLD BY ASSESSEE IS IN THE NATURE OF AGRIC ULTURAL LAND AND IS SITUATED BEYOND THE PRESCRIBED LIMIT OF ANY MUNICIPALITY NOTIFIED BY THE CENTRAL GOVT. IT CANNO T COME WITHIN THE DEFINITION OF CAPITAL ASSET AS ENVISAGED U/S 2(14) OF THE ACT. SO FAR AS THE FINDING OF THE AO THAT T HE TRANSACTION ENTERED INTO BY ASSESSEE IS AN ADVENTUR E IN THE NATURE OF TRADE, THE SAME IS ALSO WITHOUT MERIT FOR THE STRONG AND VALID REASONS RECORDED BY THE CIT(A). O N A PERUSAL OF THE ASSESSMENT ORDER, IT APPEARS, THAT T HE AO HAS TREATED THE TRANSACTION AS AN ADVENTURE IN THE NATURE OF TRADE ONLY TO OVERCOME ASSESSEES CLAIM OF EXEMPTIO N FROM CAPITAL GAIN ON THE GROUND THAT THE ASSET SOLD IS N OT A CAPITAL ASSET WITHIN THE MEANING OF SECTION 2(14) O F THE ACT. AS RIGHTLY OBSERVED BY THE LEARNED CIT(A), THE FACT S CLEARLY INDICATE THAT ASSESSEE HAS HELD THE ASSET FOR MORE THAN TWO YEARS AND ONLY BECAUSE OF COMPELLING CIRCUMSTANCES SOLD IT TO M/S VARUN CONSTRUCTIONS IN THE YEAR UNDER CONSID ERATION. THEREFORE, NONE OF THE ATTRIBUTES OF AN ADVENTURE IN THE NATURE OF TRADE IS PRESENT IN THE TRANSACTION. IT WILL BE PERTINENT TO MENTION HERE THAT EARLIER A BENCH OF T HIS TRIBUNAL HAD AN OCCASION TO EXAMINE SIMILAR NATURE OF DISPUTE ARISING OUT OF SIMILAR NATURE OF TRANSACTIO N RELATING TO SALE OF AGRICULTURAL LAND LOCATED IN THE SAME AR EA IN CASE OF SOME OTHER ASSESSEES, NAMELY, SMT. M. VIJAYA AND OTHERS VS. DCIT (ITA NOS. 306, 307, 309 & 311/HYD/1 3 ORDER DATED 06/06/2014) WHO ALSO SOLD THEIR LAND TO M/S VARUN CONSTRUCTIONS. THE TRIBUNAL AFTER EXAMINING T HE CONTENTIONS OF THE PARTIES AND REFERRING TO A NUMBE R OF JUDGMENTS HELD AS UNDER: 23. ADVERTING TO THE FACTS OF THE PRESENT CASE, TH E LAND IN QUESTION IS CLASSIFIED IN REVENUE RECORDS AS AGR ICULTURAL LAND AND THERE IS NO DISPUTE REGARDING THIS ISSUE A ND ACTUAL CULTIVATION HAS BEEN CARRIED ON THIS LAND AND INCOM E WAS DECLARED FROM THIS LAND IN THE RETURN OF INCOME FIL ED BY ASSESSEE FOR THE AY AS AGRICULTURAL INCOME. IT IS ALSO AN 13 ITA.NO.1700, 1701/H/12, 1744, 1745/H/13 & 1753/H/12 MR. VENIGALLA ANAND PRASAD & SMT. V. KRISHNA KUMARI, HYDERABAD. ADMITTED FACT THAT ASSESSEE HAS NOT APPLIED FOR CON VERSION OF THIS AGRICULTURAL LAND FOR NON-AGRICULTURAL PURP OSES BEFORE SALE OF THIS PROPERTY AND ASSESSEE HAS NOT PUT THE LAND TO ANY PURPOSES OTHER THAN AGRICULTURAL PURPOSES. IT IS ALSO AN ADMITTED FACT THAT NEITHER THE IMPUGNED PROPERTY NO R THE SURROUNDING AREAS WERE SUBJECT TO ANY DEVELOPMENTAL ACTIVITIES AT THE RELEVANT POINT OF TIME OF SALE OF THE LAND AS PER THE EVIDENCE BROUGHT ON RECORD. 24. THE PROVISIONS OF ANDHRA PRADESH AGRICULTURAL L AND (CONVERSION FOR NON-AGRICULTURAL PURPOSES) ACT, 200 6 ALSO PRESCRIBED THE PROCEDURE FOR CONVERSION OF AGRICULT URAL LAND INTO NON-AGRICULTURAL LAND. BEING SO, WHENEVER THE AGRICULTURAL LAND TO BE TREATED AS NON-AGRICULTURAL LAND, THE SAME HAS TO BE CONVERTED IN ACCORDANCE WITH THE PRO VISIONS OF ANDHRA PRADESH AGRICULTURAL LAND (CONVERSION FOR NON- AGRICULTURAL PURPOSES) ACT, 2006. IF BY A GOVERNM ENT NOTIFICATION, THE NATURE AND CHARACTER OF LAND CHAN GES FROM AGRICULTURE INTO NON-AGRICULTURE THEN THERE IS NO Q UESTION OF CONVERSION OF THIS LAND FOR NON-AGRICULTURAL PURPOS ES BY REVENUE AUTHORITIES CONCERNED. TO OUR UNDERSTAND ING NATURE OF LAND CANNOT BE CHANGED BY ANY STATE GOVER NMENT NOTIFICATION AND THE LAND OWNERS ARE REQUIRED TO AP PLY TO THE CONCERNED REVENUE AUTHORITIES FOR THE PURPOSE O F CONVERSION OF THE AGRICULTURAL LAND INTO NON-AGRICU LTURAL LAND AND THERE IS NO AUTOMATIC CONVERSION PER SE BY STAT E GOVERNMENT NOTIFICATION. 25. IN THE INSTANT CASE, AT THE RELEVANT POINT OF S ALE OF THE LAND IN QUESTION, THE SURROUNDING AREA WAS TOTA LLY UNDEVELOPED AND EXCEPT MERE FUTURE POSSIBILITY TO P UT THE LAND INTO USE FOR NON-AGRICULTURAL PURPOSES WOULD N OT CHANGE THE CHARACTER OF THE AGRICULTURAL LAND INTO NON- AGRICULTURAL LAND AT THE RELEVANT POINT OF TIME WHE N THE LAND WAS SOLD BY ASSESSEE. IT IS ALSO AN ADMITTED POSITI ON THAT ASSESSEE HAD NOT APPLIED FOR CONVERSION OF THE LAND IN QUESTION INTO NON-AGRICULTURAL PURPOSES AND NO SUCH PERMISSIONS WERE OBTAINED FROM THE CONCERNED AUTHOR ITY. IN REVENUE RECORDS, THE LAND IS CLASSIFIED AS AGRICULT URAL LAND AND HAS NOT BEEN CHANGED FROM AGRICULTURAL LAND TO NON- AGRICULTURAL LAND AT THE RELEVANT POINT OF TIME WHE N THE LAND WAS SOLD BY ASSESSEE. IT IS ALSO NOT IN DISPUTE THA T THERE WAS NO ACTIVITY UNDERTAKEN BY ASSESSEE OF DEVELOPIN G THE LAND BY PLOTTING AND PROVIDING ROADS AND OTHER FACI LITIES AND 14 ITA.NO.1700, 1701/H/12, 1744, 1745/H/13 & 1753/H/12 MR. VENIGALLA ANAND PRASAD & SMT. V. KRISHNA KUMARI, HYDERABAD. THERE WAS NO INTENTION ALSO ON THE PART OF ASSESSEE S HEREIN TO PUT THE SAME FOR NON-AGRICULTURAL PURPOSES AT TI ME OF THEIR OWNERSHIP THAT LAND. NO SUCH FINDING HAS BEEN GIVEN BY THE DEPARTMENT. NO MATERIAL OR EVIDENCE IN SUPPO RT OF THE FACT THAT ASSESSEES HAVE PUT THE LAND IN USE FO R NON- AGRICULTURAL PURPOSES HAS BEEN BROUGHT ON RECORD. T HE NATURE OF THE CROP AND THE PERSON WHO CULTIVATED TH E LAND ARE DULY MENTIONED IN REVENUE RECORDS SHOWS THAT AT THE RELEVANT POINT OF TIME THE LAND WAS USED FOR AGRICU LTURAL PURPOSES ONLY AND NOTHING IS BROUGHT ON RECORD TO S HOW THAT THE LAND WAS PUT IN USE FOR NON-AGRICULTURAL P URPOSES BY ASSESSEES. IN VIEW OF THE DECISION OF THE HONBL E HIGH COURT IN THE CASE OF GOPAL C. SHARMA VS. CIT (209 I TR 946) (BOM), IT IS ALSO CLEAR THAT THE PROFIT MOTIVE OF A SSESSEE IN SELLING THE LAND WITHOUT ANYTHING MORE BY ITSELF CA N NEVER BE DECISIVE TO SAY THAT ASSESSEE USED THE LAND FOR NON- AGRICULTURAL PURPOSES. WE MAY ALSO REFER TO A DECIS ION OF THE HONBLE SUPREME COURT IN THE CASE OF N. SRINIVA SA RAO VS. SPECIAL COURT (2006) 4 SCC 214 WHERE IT WAS OBS ERVED THAT THE FACT THAT AGRICULTURAL LAND IN QUESTION IS INCLUDED IN URBAN AREA WITHOUT MORE, HELD NOT ENOUGH TO CONCLUD E THAT THE USER OF THE SAME HAD BEEN ALTERED WITH PASSAGE OF TIME. THUS, THE FACT THAT THE LAND IN QUESTION IN T HE INSTANT CASE IS BOUGHT BY DEVELOPER CANNOT BE A DETERMINING FACTOR BY ITSELF TO SAY THAT THE LAND WAS CONVERTED INTO U SE FOR NON-AGRICULTURAL PURPOSES. 26. RECENTLY THE KARNATAKA HIGH COURT IN THE CASE O F CIT VS. MADHUKUMAR N. (HUF) (2012) 78 DTR (KAR) 391 HEL D AS FOLLOWS: '9. AN AGRICULTURAL LAND IN INDIA IS NOT A CAPITAL ASSET BUT BECOMES A CAPITAL ASSET IF IT IS THE LAND LOCATED U NDER SECTION 2(14)(III)(A) & (B) OF THE ACT, SECTION 2(1 4) (III) (A) OF THE ACT COVERS A SITUATION WHERE THE SUBJECT AGR ICULTURAL LAND IS LOCATED WITHIN THE LIMITS OF MUNICIPAL COR PORATION, NOTIFIED AREA COMMITTEE, TOWN AREA COMMITTEE, TOWN COMMITTEE, OR CANTONMENT COMMITTEE AND WHICH HAS A POPULATION OF NOT LESS THAN 10,000. 10. SECTION 2(14)(M)(B) OF THE ACT COVERS THE SITU ATION WHERE THE SUBJECT LAND IS NOT ONLY LOCATED WITHIN T HE DISTANCE OF 8 KMS FROM THE LOCAL LIMITS, WHICH IS C OVERED BY CLAUSE (A) TO SECTION 2(14)(III) OF THE ACT, BUT AL SO REQUIRES 15 ITA.NO.1700, 1701/H/12, 1744, 1745/H/13 & 1753/H/12 MR. VENIGALLA ANAND PRASAD & SMT. V. KRISHNA KUMARI, HYDERABAD. THE FULFILMENT OF THE CONDITION THAT THE CENTRAL GO VERNMENT HAS ISSUED A NOTIFICATION UNDER THIS CLAUSE FOR THE PURPOSE OF INCLUDING THE AREA UP TO 8 KMS, FROM THE MUNICIP AL LIMITS, TO RENDER THE LAND AS A CAPITAL ASSET. 11. IN THE PRESENT CASE, IT IS NOT IN DISPUTE THAT THE SUBJECT LAND IS NOT LOCATED WITHIN THE LIMITS OF DASARAHALL I CITY MUNICIPAL COUNCIL THEREFORE, CLAUSE (A) TO SECTION 2(14][III] OF THE ACT IS NOT ATTRACTED. 12. HOWEVER, THOUGH IT IS CONTENDED THAT IT IS LOCA TED WITHIN 8 KNITS,, WITHIN THE MUNICIPAL LIMITS OF DAS ARAHALLI CITY MUNICIPAL COUNCIL IN THE ABSENCE OF ANY NOTIFI CATION ISSUED UNDER CLAUSE (B) TO SECTION 2(14)(III) OF TH E ACT, IT CANNOT BE LOOKED IN AS A CAPITAL ASSET WITHIN THE M EANING OF SECTION 2(14)(III)(B) OF THE ACT ALSO AND THEREF ORE THOUGH THE TRIBUNAL MAY NOT HAVE SPELT OUT THE REASON AS T O WHY THE SUBJECT LAND CANNOT BE CONSIDERED AS A CAPITAL ASSET BE GIVING THIS VERY REASON, WE FIND THE CONCLUSION ARRIVED AT BY THE TRIBUNAL IS NEVERTHELESS THE CORRECT CONCLUS ION.' 27. FURTHER THE KOLKATA BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS. ARIJIT MITRA (48 SOT 544) (KOL ) HELD AS FOLLOWS: '7. FROM THE ABOVE, IT IS CLEAR THAT AGRICULTURAL L AND SITUATED IN AREAS LYING WITHIN A DISTANCE NOT EXCEEDING 8 KM FROM THE LOCAL LIMITS OF SUCH MUNICIPALITIES OR CANTONMENT B OARDS ARE COVERED BY THE AMENDED DEFINITIONS OF 'CAPITAL ASSE T', IF SUCH AREAS ARE, HAVING REGARD TO THE EXTENT OF AND SCOPE FOR THEIR URBANIZATION AND OTHER RELEVANT CONSIDERATIONS, IS NOTIFIED BY THE CENTRAL GOVERNMENT IN THIS BEHALF. CENTRAL GOVERNMENT IN EXERCISE OF SUCH POWERS HAS ISSUED TH E ABOVE NOTIFICATION, AS AMENDED LATEST BY NOTIFICATI ON NO. 11186 DATED 28.12.1999 CLEARLY CLARIFIES THAT AGRIC ULTURAL LAND SITUATION IN RURAL AREAS, AREAS OUTSIDE THE MU NICIPALITY OR CANTONMENT BOARD ETC., HAVING A POPULATION OF NO T LESS THAN 10,000 AND ALSO BEYOND THE DISTANCE NOTIFIED B Y CENTRAL GOVERNMENT FROM LOCAL LIMITS I.E. THE OUTER LIMITS OF ANY SUCH MUNICIPALITY OR CANTONMENT BOARD ETC., STI LL CONTINUES TO BE EXCLUDED FROM THE DEFINITION OF 'CA PITAL ASSET'. ACCORDINGLY, IN VIEW OF SUB-CLAUSE (B) OF S ECTION 2(14)(III) OF THE ACT EVEN UNDER THE AMENDED DEFINI TION OF EXPRESSION 'CAPITAL ASSET', THE AGRICULTURAL LAND S ITUATED IN 16 ITA.NO.1700, 1701/H/12, 1744, 1745/H/13 & 1753/H/12 MR. VENIGALLA ANAND PRASAD & SMT. V. KRISHNA KUMARI, HYDERABAD. RURAL AREAS CONTINUES TO BE EXCLUDED FROM THAT DEFI NITION. AND AS IN THE PRESENT CASE, ADMITTEDLY, THE AGRICUL TURAL LAND OF ASSESSEE IS OUTSIDE THE MUNICIPAL LIMITS OF RAJA RHAT MUNICIPALITY AND THAT ALSO 2.5 KM AWAY FROM THE OUT ER LIMITS OF THE SAID MUNICIPALITY, ASSESSEE'S LAND DOES NOT COME WITHIN THE PURVIEW OF SECTION 2(14)(III) EITHER UND ER SUB CLAUSE (A) OR (B) OF THE ACT, HENCE THE SAME CANNOT BE CONSIDERED AS CAPITAL ASSET WITHIN THE MEANING OF T HIS SECTION. HENCE, NO CAPITAL GAIN TAX CAN BE CHARGED ON THE SALE TRANSACTION OF THIS LAND ENTERED BY ASSESSEE. ACCORDINGLY, WE QUASH THE ASSESSMENT ORDER QUA CHAR GING OF CAPITAL GAINS ON VERY JURISDICTION OF THE ISSUE IS QUASHED. THE CROSS OBJECTION OF ASSESSEE IS ALLOWED.' 28. IT WAS HELD IN THE CASE OF CIT VS. MANILAL SOMN ATH (106 ITR 917) AS FOLLOWS: UNDER THE INCOME-TAX ACT OF 1961, AGRICULTURAL LEN D SITUATED IN INDIA WAS EXCLUDED FROM THE DEFINITION OF ' CAPITAL ASSET' AND ANY GAIN FROM THE SALE THEREOF W AS NOT TO BE INCLUDED IN THE TOTAL INCOME OF AN ASSESSEE TIND ER THE HEAD 'CAPITAL GAINS'. IN ORDER TO DETERMINE WHETHE R A PARTICULAR LAND IS AGRICULTURAL LAND OR NOT ONE HAS TO FIRST FIND OUT IF IT IS BEING PUT TO ANY USE. IF IT IS US ED FOR AGRICULTURAL PURPOSES THERE IS A PRESUMPTION THAT I T IS AGRICULTURAL LAND. IF IT IS USED FOR NON-AGRICULTU RAL PURPOSES THE PRESUMPTION IS THAT IT IS NON-AGRICULTURAL LAND . THIS PRESUMPTION ARISING FROM ACTUAL USE CAN BE REBUTTED BY THE PRESENCE OF OTHER FACTORS. THERE MAY BE CASES WHER E LAND WHICH IS ADMITTEDLY NON-AGRICULTURAL IS USED TEMPOR ARILY FOR AGRICULTURAL PURPOSES. THE DETERMINATION OF THE QUE STION WOULD, THEREFORE, DEPEND ON THE FACTS OF EACH CASE. ASSESSEE, HINDU, UNDIVIDED FAMILY, HAD OBTAINED SOM E LAND ON A PARTITION IN 1939. FROM THAT TIME, UP TO THE T IME OF ITS SALE, AGRICULTURAL OPERATIONS WERE CARRIED ON IN TH E LAND. THERE WAS NO REGULAR ROAD TO THE LAND AND IT WAS WI TH THE AID OF A TRACTOR THAT AGRICULTURAL OPERATIONS WERE BEING CARRIED ON. THE LAND WAS INCLUDED WITHIN A DRAFT TO WN PLANNING SCHEME. ASSESSEE GOT PERMISSION OF THE COL LECTOR TO SELL THE LAND FOR RESIDENTIAL PURPOSES AND SOLD IT. ON THE QUESTION WHETHER THE LAND WAS AGRICULTURAL LAND : 17 ITA.NO.1700, 1701/H/12, 1744, 1745/H/13 & 1753/H/12 MR. VENIGALLA ANAND PRASAD & SMT. V. KRISHNA KUMARI, HYDERABAD. HELD, THAT WHAT HAD TO BE CONSIDERED IS NOT WHAT TH E PURCHASER DID WITH THE LAND OR THE PURCHASER WAS SU PPOSED TO DO WITH THE LAND, BUT WHAT WAS THE CHARACTER OF THE LAND AT THE TIME WHEN THE SALE TOOK PLACE. THE FACT THA T THE LAND WAS WITHIN MUNICIPAL LIMITS OR THAT IT WAS INC LUDED WITHIN A PROPOSED TOWN PLANNING SCHEME WAS NOT BY I TSELF SUFFICIENT TO REBUT THE PRESUMPTION ARISING FROM AC TUAL USE OF THE LAND. THE LAND HAD BEEN USED FOR AGRICULTURA L PURPOSES FOR A LONG TIME AND NOTHING HAD HAPPENED T ILL THE DATE OF THE SALE TO CHANGE THAT CHARACTER OF THE LA ND. THE POTENTIAL NON-AGRICULTURAL VALUE OF THE LAND FOR WH ICH A PURCHASER MAY BE PREPARED TO PAY A LARGE PRICE WOUL D NOT DETRACT FROM ITS CHARACTER AS AGRICULTURAL LAND AT THE DATE OF THE SALE. THE LAND IN QUESTION WAS, THEREFORE, AGR ICULTURAL LAND. 29. FURTHER THE WORD 'CAPITAL ASSET' IS DEFINED IN SECTION 2(14) TO MEAN PROPERTY OF ANY KIND HELD BY AN ASSES SEE, WHETHER OR NOT CONNECTED WITH HIS BUSINESS OR PROFE SSION, BUT DOES NOT INCLUDE- (III) AGRICULTURAL LAND IN INDIA, NOT BEING LAND SI TUATE- (A) IN ANY AREA WHICH IS COMPRISED WITHIN THE JURISDICTION OF A MUNICIPALITY (WHETHER KNOWN AS A MUNICIPALITY, MUNICIPAL 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 BEEN PUBLISHED BEFORE THE FIRST DAY OF THE PREVIOUS YEAR; OR (B) IN ANY AREA WITHIN SUCH DISTANCE, NOT BEING MORE THAN EIGHT KILOMETRES, FROM THE LOCAL LIMITS OF ANY MUNICIPALITY OR CANTONMENT BOARD REFERRED TO IN ITE M (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 BEHA LF BY NOTIFICATION IN THE OFFICIAL GAZETTE; 30. IT IS VERY CLEAR FROM THE ABOVE THAT THE GAIN O N SALE OF AN AGRICULTURAL LAND WOULD BE EXIGIBLE TO TAX ON LY WHEN THE LAND TRANSFERRED IS LOCATED WITHIN THE JURISDIC TION OF A 18 ITA.NO.1700, 1701/H/12, 1744, 1745/H/13 & 1753/H/12 MR. VENIGALLA ANAND PRASAD & SMT. V. KRISHNA KUMARI, HYDERABAD. MUNICIPALITY. THE FACT THAT ALL THE EXPRESSIONS ENL ISTED AFTER THE WORD MUNICIPALITY ARE PLACED WITHIN THE BRACKET S STARTING WITH THE WORDS 'WHETHER KNOWN AS' CLEARLY INDICATES THAT SUCH EXPRESSIONS ARE USED TO DENOTE A MUNICIPA LITY ONLY, IRRESPECTIVE OF THE NAME BY WHICH SUCH MUNICI PALITY IS CALLED. THIS FACT IS FURTHER SUBSTANTIATED BY THE P ROVISIONS CONTAINED UNDER CLAUSE (B) WHEREIN IT HAS BEEN CLEA RLY PROVIDED THAT THE AUTHORITY REFERRED TO IN CLAUSE ( A) WAS ONLY MUNICIPALITY. 31. WE ALSO PERUSED THE MEANING OF THE TERM LOCAL AUTHORITY AS REFERRED IN SECTION 10(20) OF THE ACT. (20) THE INCOME OF A LOCAL AUTHORITY WHICH IS CHARG EABLE UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY', 'CAPIT AL GAINS' OR 'INCOME FROM OTHER SOURCES' OR FROM A TRA DE OR BUSINESS CARRIED ON BY IT WHICH ACCRUES OR ARISES F ROM THE SUPPLY OF A COMMODITY OR SERVICE [(NOT BEING WATER OR ELECTRICITY) WITHIN ITS OWN JURISDICTIONAL AREA OR FROM THE SUPPLY OF WATER OR ELECTRICITY WITHIN OR OUTSIDE IT S OWN JURISDICTIONAL AREA]. [EXPLANATION. - FOR THE PURPOSES OF THIS CLAUSE, TH E EXPRESSION 'LOCAL AUTHORITY' MEANS - (I) PANCHAYAT AS REFERRED TO IN CLAUSE (D) OF ART ICLE 243 OF THE CONSTITUTION; OR (II) MUNICIPALITY AS REFERRED TO IN CLAUSE (E) OF ARTICLE 243P OF THE CONSTITUTION; OR (III) MUNICIPAL COMMITTEE AND DISTRICT BOARD, LEG ALLY ENTITLED TO, OR ENTRUSTED BY THE GOVERNMENT WITH, THE CONTROL OR MANAGEMENT OF A MUNICIPAL OR LOCAL FUND; OR (IV) CANTONMENT BOARD AS DEFINED IN SECTION 3 OF THE CANTONMENTS ACT, 1924 (2 OF 1924); 32. IT IS ALSO EVIDENT FROM THE MEMORANDUM EXPLAINI NG THE PROVISIONS OF FINANCE ACT, 1970, WHEREBY S. 2(1 4) WAS AMENDED SO AS TO INCLUDE THE AGRICULTURAL LANDS LOC ATED WITHIN THE JURISDICTION OF A MUNICIPALITY IN THE DE FINITION OF THE EXPRESSION 'CAPITAL ASSET'. THE RELEVANT PORT ION OF THE SAID MEMORANDUM IS REPRODUCED HEREUNDER: 19 ITA.NO.1700, 1701/H/12, 1744, 1745/H/13 & 1753/H/12 MR. VENIGALLA ANAND PRASAD & SMT. V. KRISHNA KUMARI, HYDERABAD. '30. ... THE FINANCE ACT, 1970 HAS, ACCORDINGLY, AM ENDED THE RELEVANT PROVISIONS OF THE INCOME-TAX ACT SO AS TO BRING WITHIN THE SCOPE OF TAXATION CAPITAL GAINS ARISING FROM THE TRANSFER OF AGRICULTURAL LAND SITUATED IN CERTAIN A REAS. FOR THIS PURPOSE, THE DEFINITION OF THE TERM 'CAPITAL A SSET' IN SECTION 2(14) HAS BEEN AMENDED SO AS TO EXCLUDE FRO M ITS SCOPE ONLY AGRICULTURAL LAND IN INDIA WHICH IS NOT SITUATE IN ANY AREA COMPRISED WITHIN THE JURISDICTION OF A MUN ICIPALITY OR CANTONMENT BOARD AND WHICH HAS A POPULATION OF N OT LESS THAN TEN THOUSAND PERSONS ACCORDING TO THE LAS T PRECEDING CENSUS FOR WHICH THE RELEVANT FIGURES HAV E BEEN PUBLISHED BEFORE THE FIRST DAY OF THE PREVIOUS YEAR . THE CENTRAL GOVERNMENT HAS BEEN AUTHORISED TO NOTIFY IN THE OFFICIAL GAZETTE ANY AREA OUTSIDE THE LIMITS OF ANY MUNICIPALITY OR CANTONMENT BOARD HAVING A POPULATIO N OF NOT LESS THAN TEN THOUSAND UP TO A MAXIMUM DISTANCE OF 8 KILOMETRES FROM SUCH LIMITS, FOR THE PURPOSES OF TH IS PROVISION. SUCH NOTIFICATION WILL BE ISSUED BY THE CENTRAL GOVERNMENT, HAVING REGARD TO THE EXTENT OF, AND SCO PE FOR, URBANISATION OF SUCH AREA, AND, WHEN ANY SUCH AREA IS NOTIFIED BY THE CENTRAL GOVERNMENT, AGRICULTURAL LA ND SITUATED WITHIN SUCH AREA WILL STAND INCLUDED WITHI N THE TERM 'CAPITAL ASSET'. AGRICULTURAL LAND SITUATED I N RURAL AREAS, I.E., AREAS OUTSIDE ANY MUNICIPALITY OR CANT ONMENT BOARD HAVING A POPULATION OF NOT LESS THAN TEN THOU SAND AND ALSO BEYOND THE DISTANCE NOTIFIED BY THE CENTRA L GOVERNMENT FROM THE LIMITS OF ANY SUCH MUNICIPALITY OR CANTONMENT BOARD, WILL CONTINUE TO BE EXCLUDED FROM THE TERM 'CAPITAL ASSET'. 33. FURTHER IT IS NOBODY'S CASE THAT THE PROPERTY F ALLS WITHIN ANY AREA WHICH IS COMPRISED WITHIN THE JURIS DICTION OF A MUNICIPALITY OR CANTONMENT BOARD OR WHICH HAS A POPULATION OF NOT LESS THAN 10,000 ACCORDING TO THE LAST PRECEDING CENSUS OF WHICH THE RELEVANT FIGURES HAVE BEEN PUBLISHED BEFORE THE FIRST DAY OF THE PREVIOUS YEAR . IN OTHER WORDS, THE LAND DOES NOT FALL IN SUB-CLAUSE (A) OF SECTION 2(14)(III) OF THE ACT AS THE LAND IS OUTSIDE OF ANY MUNICIPALITY INCLUDING GHMC. FURTHER WE HAVE TO SE E WHETHER THE LAND FALLS IN CLAUSE (B) OF SECTION 2(1 4)(III). THIS SECTION PRESCRIBES THAT ANY AREA WITHIN SUCH D ISTANCE, NOT BEING MORE THAN 8 KM FROM THE LOCAL LIMIT OF AN Y MUNICIPALITY OR CANTONMENT BOARD AS REFERRED TO IN SUB- CLAUSE (A) OF SECTION 2(14)(III) OF THE ACT, AS THE CENTRAL 20 ITA.NO.1700, 1701/H/12, 1744, 1745/H/13 & 1753/H/12 MR. VENIGALLA ANAND PRASAD & SMT. V. KRISHNA KUMARI, HYDERABAD. GOVERNMENT MAY, HAVING REGARD TO THE EXTENT OF, AND SCOPE FOR, URBANISATION OF THAT AREA AND OTHER RELE VANT CONSIDERATIONS, SPECIFY IN THIS BEHALF BY NOTIFICAT ION IN THE OFFICIAL GAZETTE. 34. WE HAVE CAREFULLY GONE THROUGH THE NOTIFICATION ISSUED BY THE CENTRAL GOVERNMENT U/S. 2(1A)(C) PROV ISO (II)(B) AND 2(14)(3B) VIDE NO. 9447 (F. NO. 164/(3) /87/ITA- I) DATED 6 TH JANUARY, 1994 AS AMENDED BY NOTIFICATION NO. 11186 DATED 28 TH DECEMBER, 1999. IN THE SCHEDULE ANNEXED TO THE NOTIFICATION DATED 6.1.1994, ENTRY N O. 17 IS RELATING TO HYDERABAD WHEREIN MENTIONED THAT THE AR EAS UP TO A DISTANCE OF 8 KM FROM THE MUNICIPAL LIMITS IN ALL DIRECTIONS. IN THE NOTIFICATION 11186 DATED 28.12.1 999 THERE IS NO ENTRY RELATING TO HYDERABAD. IT IS CLEAR FRO M THESE NOTIFICATIONS THAT AGRICULTURAL LAND SITUATED IN AR EAS LYING WITHIN A DISTANCE NOT EXCEEDING 8 KM FROM THE LOCAL LIMITS OF HYDERABAD MUNICIPALITY (GHMC) IS COVERED BY THE AMENDED DEFINITIONS OF 'CAPITAL ASSET'. CENTRAL GO VERNMENT IN EXERCISE OF SUCH POWERS HAS ISSUED THE ABOVE NOTIFICATION, AS AMENDED LATEST BY NOTIFICATION NO. 11186 DATED 28.12.1999 CLEARLY CLARIFIES THAT AGRICULTURA L LAND SITUATION IN RURAL AREAS, AREAS OUTSIDE THE MUNICIP ALITY OR CANTONMENT BOARD ETC., HAVING A POPULATION OF NOT L ESS THAN 10,000 AND ALSO BEYOND THE DISTANCE NOTIFIED BY CEN TRAL GOVERNMENT FROM LOCAL LIMITS I.E. THE OUTER LIMITS OF ANY SUCH MUNICIPALITY OR CANTONMENT BOARD ETC., STILL C ONTINUES TO BE EXCLUDED FROM THE DEFINITION OF 'CAPITAL ASSE T'. ACCORDINGLY, IN VIEW OF SUB-CLAUSE (B) OF SECTION 2 (14)(III) OF THE ACT EVEN UNDER THE AMENDED DEFINITION OF EXPRES SION 'CAPITAL ASSET', THE AGRICULTURAL LAND SITUATED IN RURAL AREAS CONTINUES TO BE EXCLUDED FROM THAT DEFINITION. AND AS IN THE PRESENT CASE, ADMITTEDLY, THE AGRICULTURAL LAND OF ASSESSEE IS OUTSIDE THE MUNICIPAL LIMITS OF HYDERABAD MUNICI PALITY AND THAT ALSO 8 KM AWAY FROM THE OUTER LIMITS OF TH IS MUNICIPALITY, ASSESSEE'S LAND DOES NOT COME WITHIN THE PURVIEW OF SECTION 2(14)(III) EITHER UNDER SUB CLAU SE (A) OR (B) OF THE ACT, HENCE THE SAME CANNOT BE CONSIDERED AS CAPITAL ASSET WITHIN THE MEANING OF THIS SECTION. H ENCE, NO CAPITAL GAIN TAX CAN BE CHARGED ON THE SALE TRANSAC TION OF THIS LAND ENTERED BY ASSESSEE. THIS IS SUPPORTED B Y THE ORDER OF KOLKATA BENCH OF THIS TRIBUNAL IN THE CASE OF ARIJIT MITRA (CITED SUPRA), HARISH V. MILANI (SUPRA) AND M .S. SRINIVAS NAICKER VS. ITO (292 ITR 481) (MAD). BY 21 ITA.NO.1700, 1701/H/12, 1744, 1745/H/13 & 1753/H/12 MR. VENIGALLA ANAND PRASAD & SMT. V. KRISHNA KUMARI, HYDERABAD. BORROWING THE MEANING FROM THE ABOVE SECTION, WE AR E NOT ABLE TO APPRECIATE THAT THE LAND FALLS WITHIN THE T ERRITORIAL LIMIT OF ANY MUNICIPALITY WITHOUT NOTIFICATION OF C ENTRAL GOVERNMENT AS HELD BY THE KARNATAKA HIGH COURT IN T HE CASE OF MADHUKUMAR N. (HUF) (CITED SUPRA). 35. FROM THE FACTS AND CIRCUMSTANCES OF THE CASE, A S NARRATED BEFORE US, IT IS IMPORTANT TO NOTE THAT WH AT WAS THE INTENTION OF ASSESSEES AT THE TIME OF ACQUIRING THE LAND OR INTERVAL ACTION BY ASSESSEE BETWEEN THE PERIOD F ROM PURCHASE AND SALE OF THE LAND AND THE RELEVANT IMPROVEMENT/ DEVELOPMENT TAKEN PLACE DURING THIS TI ME IS RELEVANT FOR DECIDING THE ISSUE WHETHER TRANSACTION WAS IN THE NATURE OF TRADE. THOUGH INTENTION SUBSEQUENTLY FORMED MAY BE DIFFERENT, IT IS THE INTENTION AT THE INCEPT ION IS CRUCIAL. ONE OF THE ESSENTIAL ELEMENTS IN AN ADVEN TURE OF THE TRADE IS THE INTENTION TO TRADE; THAT INTENTION MUST BE PRESENT AT THE TIME OF PURCHASE. THE MERE CIRCUMST ANCES THAT A PROPERTY IS PURCHASED IN THE HOPE THAT WHEN SOLD LATER ON IT WOULD LEAVE A MARGIN OF PROFIT, WOULD N OT BE SUFFICIENT TO SHOW, AN INTENTION TO TRADE AT THE IN CEPTION. IN A CASE WHERE THE PURCHASE HAS BEEN MADE SOLELY AND EXCLUSIVELY WITH THE INTENTION TO RESELL AT A PROFI T AND THE PURCHASER HAS NO INTENTION OF HOLDING THE PROPERTY FOR HIMSELF OR OTHERWISE ENJOYING OR USING IT, THE PRES ENCE OF SUCH AN INTENTION IS A RELEVANT FACTOR AND UNLESS I T IS OFFSET BY THE PRESENCE OF OTHER FACTORS IT WOULD RAISE AS STRONG PRESUMPTION THAT THE TRANSACTION IS AN ADVENTURE IN THE NATURE OF TRADE. EVEN SO, THE PRESUMPTION IS NOT C ONCLUSIVE AND IT IS CONCEIVABLE THAT, ON CONSIDERING ALL THE FACTS AND CIRCUMSTANCES IN THE CASE, THE COURT MAY, DESPITE T HE SAID INITIAL INTENTION, BE INCLINED TO HOLD THAT THE TRA NSACTION WAS NOT AN ADVENTURE IN THE NATURE OF TRADE. THE PRESU MPTION MAY BE REBUTTED. IN THE PRESENT CASE, CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE IT CANNOT BE CONSIDER ED AS AN ADVENTURE IN THE NATURE OF TRADE. THE INTENTION OF ASSESSEE FROM THE INCEPTION WAS TO CARRY ON AGRICULTURAL OPE RATIONS. MERELY BECAUSE OF THE FACT THAT THE LAND WAS SOLD I N A SHORT PERIOD OF HOLDING, IT CANNOT BE HELD THAT INCOME AR ISING FROM THE SALE OF LAND WAS TAXABLE AS PROFIT ARISING FROM THE ADVENTURE IN THE NATURE OF TRADE OR CAPITAL GAIN. THE PERIOD OF HOLDING SHOULD NOT SUGGEST THAT THE ACTIVITY WAS AN ADVENTURE IN THE NATURE OF TRADE. 22 ITA.NO.1700, 1701/H/12, 1744, 1745/H/13 & 1753/H/12 MR. VENIGALLA ANAND PRASAD & SMT. V. KRISHNA KUMARI, HYDERABAD. 36. IN VIEW OF OUR ABOVE DISCUSSION, IN OUR OPINIO N, THE LAND IS NOT SITUATED WITHIN THE QUTUBULLAPUR MUNICI PALITY, BUT, THE SAME SITUATED IN THE DUNDIGAL VILLAGE AND THE EVIDENCE BROUGHT ON RECORD SUGGEST THAT THE LAND IS AN AGRICULTURAL LAND, HENCE, IT IS NOT LIABLE FOR TAXA TION. ACCORDINGLY, THE ADDITION MADE ON THIS COUNT IS DEL ETED IN ALL THE APPEALS UNDER CONSIDERATION. NO EVIDENCE SU GGESTS THAT DUNDIGAL VILLAGE FALLS WITHIN QUTUBULLAPUR MU NICIPALITY AND ALSO THIS QUTUBULLAPUR MUNICIPALITY HAS NOT NOT IFIED IN THE YEAR UNDER SECTION 2(14)(III) OF THE I.T. ACT A ND QUTUBULLAPUR MUNICIPALITY ABOLISHED AND MERGED WITH MUNICIPAL CORPORATION OF HYDERABAD WITH EFFECT FROM 16/04/2007. WE HAVE ALSO GONE THROUGH THE RECORD PL ACED IN THE PAPER BOOK AT PAGES 76 & 77. AT PAGE 76, A C OPY OF THE INTIMATION IS PLACED ISSUED BY THE TOWN PLANNIN G OFFICER, QUTHBULLAPUR , CIRCLE 15, GHMC VIDE REF. NO. G/1240/2008, DATED 04/10/2008 INFORMING THAT THE LA ND IS NOT FALLING IN THE GHMC LIMITS. AT PAGE 77, A COPY OF THE AGRICULTURAL LAND CERTIFICATE IS PLACED, ISSUED BY THE DEPUTY COLLECTOR & MANDAL REVENUE OFFICER, QUTUBULLAPUR MA NDAL VIDE REF. NO. A/13607/2005, DATED 20/08/2005 STATIN G THAT THE LANDS ARE UNDER CULTIVATION BY RAISING CROPS I. E. PADDY, CATTLE FEED, MAIZE, JOWAR, VEGETEABLES ETC. 37. FURTHER, WE MAKE IT CLEAR THAT WHEN THE LAND W HICH DOES NOT FALL UNDER THE PROVISIONS OF SECTION 2(14) (III) OF THE IT ACT AND AN ASSESSEE WHO IS ENGAGED IN AGRICULTUR AL OPERATIONS IN SUCH AGRICULTURAL LAND AND ALSO BEING SPECIFIED AS AGRICULTURAL LAND IN REVENUE RECORDS, THE LAND I S NOT SUBJECTED TO ANY CONVERSION AS NON-AGRICULTURAL LAN D BY ASSESSEE OR ANY OTHER CONCERNED PERSON, TRANSFERS S UCH AGRICULTURAL LAND AS IT IS AND WHERE IT IS BASIS, I N SUCH CIRCUMSTANCES, IN OUR OPINION, SUCH TRANSFER LIKE T HE CASE BEFORE US CANNOT BE CONSIDERED AS A TRANSFER OF CAP ITAL ASSET OR THE TRANSACTION RELATING TO SALE OF LAND W AS NOT AN ADVENTURE IN THE NATURE OF TRADE SO AS TO TAX THE I NCOME ARISING OUT OF THIS TRANSACTION AS BUSINESS INCOME . 14. ON GOING THROUGH THE AFORESAID ORDER OF THE COORDINATE BENCH, WE FIND THE FACTS DEALT UPON BY T HE TRIBUNAL IS IDENTICAL TO THE FACTS IN THE PRESENT C ASE. THEREFORE, RATIO LAID DOWN THEREIN ALSO EQUALLY AP PLIES TO THE FACTS OF THE PRESENT CASE AS THE LAND SOLD IS N OT ONLY 23 ITA.NO.1700, 1701/H/12, 1744, 1745/H/13 & 1753/H/12 MR. VENIGALLA ANAND PRASAD & SMT. V. KRISHNA KUMARI, HYDERABAD. AGRICULTURAL IN NATURE BUT IS ALSO SITUATED BEYOND 12 KMS FROM THE LIMIT OF A MUNICIPALITY NOTIFIED BY THE CE NTRAL GOVT. HENCE, LAND SOLD BY ASSESSEE NOT BEING A CAPITAL AS SET, THE GAIN DERIVED THERE FROM IS NOT TAXABLE AT THE HANDS OF ASSESSEE. ACCORDINGLY, WE UPHOLD THE ORDER OF THE CIT(A) BY DISMISSING THE GROUND RAISED. 15. THE FACTS AND GROUNDS BEING SIMILAR, THE DECISI ON ABOVE WILL EQUALLY APPLY TO OTHER APPEALS AS WELL. 16. IN THE RESULT, ALL THE APPEALS OF THE DEPARTMEN T ARE DISMISSED. 13. THE ORDER OF LD.CIT(A) IS CONSISTENT WITH THE ABOVE. IN VIEW OF THE ABOVE, WE DO NOT SEE ANY MERIT IN RE VENUE APPEAL AND ACCORDINGLY THE SAME IS DISMISSED. 14. TO SUM-UP, ITA.NO.1700/HYD/2012 AND ITA. NO. 1744/HYD/2013 FOR THE A.Y. 2005-06 ARE CONSIDERED A S PARTLY ALLOWED FOR STATISTICAL PURPOSES, ITA.NO.1701/H/201 2 AND 1745/ HYD/2013 FOR THE A.Y. 2007-08 OF ASSESSEES AND ITA . NO. 1753/HYD/2012 FOR THE A.Y. 2007-08 OF REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 12.09.2014. S SS SD DD D/ // /- -- - S SS SD DD D/ // /- -- - (SAKTIJIT DEY) (SAKTIJIT DEY) (SAKTIJIT DEY) (SAKTIJIT DEY) (B.RAMAKOTAIAH) (B.RAMAKOTAIAH) (B.RAMAKOTAIAH) (B.RAMAKOTAIAH) JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED 12 TH SEPTEMBER, 2014 VBP/- COPY TO 1. MR. VENIGALLA ANAND PRASAD, PLOT NO.41, JUBILEE HIL LS, HYDERABAD 500 033. 2. SMT. V. KRISHNA KUMARI, PLOT NO.1099A, ROAD NO.41, JUBILEE HILLS, HYDERABAD 500 033. 3. CIT(A) - V II , HYDERABAD + 2 COPIES 4. CIT (CENTRAL) , HYDERABAD 5. D.R. B BENCH, ITAT, HYDERABAD.