DCIT, Tambaram V. R.Vasanthi Ram Narayan, CHENNAI

ITA 1804/CHNY/2015

• Counselvise Citation: 180421714 RSA 2015
• Duration Of Justice: 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 12-11-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 10-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN
• Assessee Lawyers: N DEVANATHAN I T A NOS TO MDS
• Keywords: Reopening of assessment; Capital asset; Business income
• Section: 147; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . . . , . !'# ! , % !& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NOS.1802 & 1803/MDS/2015 & C.O. NOS.114 & 115/MDS/2015 (IN I.T.A. NOS.1802 & 1803/MDS/2015) ( )( / ASSESSMENT YEARS : 2008-09 & 2009-10 THE DEPUTY COMMISSIONER OF INCOME TAX, NON CORPORATE CIRCLE 22, NO.7, RAMAKRISHNA STREET, WEST TAMBARAM, CHENNAI - 600 045. V. M/S SHIRDI ESTATES, NEW NO.32, OLD NO.28, RAMACHANDRA ROAD, NEHRU NAGAR, CHROMEPET, CHENNAI - 600 044. PAN : AAAHS 8731 E (+,/ APPELLANT) ( RESPONDENT & CROSS-OBJECTOR) ./ ITA NOS.1804, 1805 & 1806/MDS/2015 & C.O. NOS.116, 117 & 118/MDS/2015 (IN I.T.A. NOS.1804, 1805 & 1806/MDS/2015) ( )( / ASSESSMENT YEARS : 2008-09, 2009-10 & 2011-12 THE DEPUTY COMMISSIONER OF INCOME TAX, NON CORPORATE CIRCLE 22, NO.7, RAMAKRISHNA STREET, WEST TAMBARAM, CHENNAI - 600 045. V. SMT. R. VASANTHI RAM NARAYAN, NEW NO.32, OLD NO.28, RAMACHANDRA ROAD, NEHRU NAGAR, CHROMEPET, CHENNAI - 600 044. PAN : AADPV 7989 A (+,/ APPELLANT) ( RESPONDENT & CROSS-OBJECTOR) +, - . / APPELLANT BY : SH. P. RADHAKRISHNAN, JCIT /0+, - . / RESPONDENTS BY : SH. N. DEVANATHAN, ADVOCATE 2 I.T.A. NOS.1802 TO 1806/MDS/15 C.O. NOS.114 TO 118/MDS/15 1 - 2% / DATE OF HEARING : 12.11.2015 3') - 2% / DATE OF PRONOUNCEMENT : 18.12.2015 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: ALL THE FIVE APPEALS OF THE REVENUE ARE DIRECTED AGAINST THE RESPECTIVE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS)-10, INVESTIGATION WING, CHENNAI, IN RESPECT OF TWO DIFF ERENT ASSESSEES. THE RESPECTIVE ASSESSEES HAVE ALSO FILED CROSS-OBJE CTIONS AGAINST THE VERY SAME ORDERS OF THE CIT(APPEALS). THEREFOR E, WE HEARD THE APPEALS OF THE REVENUE AND CROSS-OBJECTIONS OF THE ASSESSEES TOGETHER AND DISPOSING OF THE SAME BY THIS COMMON O RDER. 2. THE FIRST COMMON GROUND IN ALL THE APPEALS OF TH E REVENUE IS REGARDING CLASSIFICATION OF INCOME, I.E. EITHER AS CAPITAL GAIN OR BUSINESS INCOME. 3. SH. P. RADHAKRISHNAN, THE LD. DEPARTMENTAL REPRE SENTATIVE, SUBMITTED THAT THE ASSESSEE-HUF PURCHASED 82 CENTS OF AGRICULTURAL LAND AT RAJAKILPAKKAM ON 09.09.1999. DURING THE YE AR UNDER CONSIDERATION, THE HUF SOLD SOME OF THE LANDS TO M/ S TELLUS AVENUE. ACCORDING TO THE LD. D.R., THE ASSESSEE CO NVERTED THE LANDS IN TO VARIOUS HOUSING PLOTS AND OBTAINED APPR OVAL FROM THE CHENNAI METROPOLITAN DEVELOPMENT AUTHORITY. SINCE THE ACTIVITIES OF 3 I.T.A. NOS.1802 TO 1806/MDS/15 C.O. NOS.114 TO 118/MDS/15 THE ASSESSEE IN CONVERTING THE LANDED PROPERTY INTO HOUSING PLOTS AFTER OBTAINING NECESSARY APPROVAL AND THEREAFTER S ELLING THE SAME TO DIFFERENT PERSONS WOULD AMOUNT TO ADVENTURE IN T HE NATURE OF LAND, THEREFORE, THE PROFIT ON SALE OF LAND WAS TAK EN AS INCOME FROM BUSINESS BY THE ASSESSING OFFICER. THE ASSESSING O FFICER BY APPLYING THE JUDGMENTS OF APEX COURT IN RAJA J. RAM ESWAR RAO V. CIT (42 ITR 179), INDRAMANI BAI & ANOTHER V. ADDL. CIT (200 ITR 594) AND IN G. VENKATASWAMI NAIDU & CO. V. CIT (35 ITR 594), FOUND THAT THE PROFIT ON SALE OF LAND HAS TO BE TRE ATED AS BUSINESS INCOME. ACCORDINGLY, HE REJECTED THE CLAIM OF THE ASSESSEE TO ASSESS THE INCOME ON SALE OF LAND AS LONG TERM CAPI TAL GAIN. HOWEVER, ON APPEAL BY THE ASSESSEE, THE CIT(APPEALS ) FOUND THAT ON IDENTICAL SET OF FACTS IN THE CASE OF SHRI S. VA SANTHAKUMAR IN I.T.A. NO.1491/MDS/2010 DATED 08.08.2012, THIS TRIB UNAL BY RELYING UPON THE JUDGMENT OF MADRAS HIGH COURT IN CIT V. S. PALANICHAMY IN TAX CASE (APPEAL) NO.232 OF 2005 DATED 08.08.201 1, FOUND THAT EVEN THOUGH A TRANSACTION BY ITSELF COULD CONSTITUT E BUSINESS, YET THE MERE FACT THAT THE ASSESSEE SOLD A PORTION OF THE P ROPERTY TO WRIGGLE OUT OF THE FINANCIAL HARDSHIP WOULD NOT MAKE THE AC TIVITY, AN ADVENTURE IN THE NATURE OF TRADE. THE ONLY OBJECT ION OF THE LD. D.R. IS THAT THE JUDGMENT OF APEX COURT, WHICH WAS RELIE D UPON BY THE 4 I.T.A. NOS.1802 TO 1806/MDS/15 C.O. NOS.114 TO 118/MDS/15 ASSESSING OFFICER IN THE ASSESSMENT ORDER, WAS NOT CONSIDERED BY THE CIT(APPEALS) WHILE ALLOWING THE CLAIM OF THE AS SESSEE. THEREFORE, ACCORDING TO THE LD. D.R., THE JUDGMENT OF APEX COURT HAS TO BE FOLLOWED AND PROFIT ON SALE OF LAND HAS T O BE TREATED AS BUSINESS INCOME FOR ASSESSMENT PURPOSE. 4. ON THE CONTRARY, SHRI N. DEVANATHAN, THE LD.COUN SEL FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSEE FILED THE ORI GINAL RETURN ON 31.10.2009 DISCLOSING THE CAPITAL GAIN ON SALE OF T HE LAND. ACCORDING TO THE LD. COUNSEL, ON THE BASIS OF THE A UDIT REPORT WHICH SUGGESTED THAT THE ASSESSING OFFICER SHOULD HAVE TR EATED THE PROFIT ON SALE OF LAND AS BUSINESS INCOME, THE ASSESSING O FFICER REOPENED THE ASSESSMENT BY ISSUING A NOTICE UNDER SECTION 14 8 OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') ON 26.03. 2013. ACCORDING TO THE LD. COUNSEL, UNDER THE SCHEME OF THE INCOME- TAX ACT, POWER TO REOPEN THE ASSESSMENT WAS SPECIFICALLY CONFERRED ON THE ASSESSING OFFICER. THE ASSESSING OFFICER, IF SATIS FIED THAT THE INCOME OTHERWISE CHARGEABLE TO TAX HAS ESCAPED ASSE SSMENT, HE HAS TO RECORD THE SATISFACTION AND THEREAFTER ISSUE THE NOTICE UNDER SECTION 148 OF THE ACT FOR REOPENING THE ASSESSMENT . IN THE CASE BEFORE US, ACCORDING TO THE LD. COUNSEL, IT IS NOT THE SATISFACTION OF 5 I.T.A. NOS.1802 TO 1806/MDS/15 C.O. NOS.114 TO 118/MDS/15 THE ASSESSING OFFICER, IT WAS THE SATISFACTION OF T HE AUDIT WING OF THE DEPARTMENT WHICH SUGGESTED THAT THE ASSESSING OFFIC ER SHOULD REOPEN THE ASSESSMENT. THEREFORE, ASSESSING OFFICE R IN FACT CARRIED OUT THE INSTRUCTION OF THE AUDIT WING OF THE DEPART MENT. REFERRING TO THE JUDGMENT OF GUJARAT HIGH COURT IN ADANI EXPORTS V. DCIT (240 ITR 224), THE LD.COUNSEL SUBMITTED THAT THE ASSESSI NG OFFICER CANNOT SURRENDER HIS JUDICIAL FUNCTION TO ANY AUTHO RITY INCLUDING THE SUPERIOR AUTHORITIES. THE SUPERIOR AUTHORITIES CAN NOT ARROGATE THEMSELVES TO TAKE AWAY THE POWER CONFERRED ON THE ASSESSING OFFICER TO REOPEN THE ASSESSMENT. ACCORDING TO THE LD. COUNSEL, THE ASSESSING OFFICER HAS TO SATISFY HIMSELF INDEPENDEN TLY THAT INCOME OTHERWISE CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. THE SUPERIOR AUTHORITIES OR THE AUDIT WING OF THE DEPARTMENT, AS THE CASE MAY BE, HAVE NO AUTHORITY EITHER TO INSTRUCT THE ASSESSING OFFICER OR SUGGEST OTHERWISE TO REOPEN THE ASSESSMENT UNDER SECTION 14 7 OF THE ACT. 5. THE LD. COUNSEL FURTHER SUBMITTED THAT THE REASO N RECORDED BY THE ASSESSING OFFICER SHALL BE ON DUE APPLICATIO N OF MIND TO THE INFORMATION / MATERIAL AVAILABLE ON RECORD. HE CAN NOT REOPEN THE ASSESSMENT MERELY BECAUSE THE ASSESSING OFFICER WAS DIRECTED TO DO SO BY HIS SUPERIOR OFFICER OR AUDIT WING OF THE DEPARTMENT. THE 6 I.T.A. NOS.1802 TO 1806/MDS/15 C.O. NOS.114 TO 118/MDS/15 LD.COUNSEL PLACED HIS RELIANCE ON THE JUDGMENT OF T HE DELHI HIGH COURT IN CIT V. SFIL STOCK BROKING LTD. (325 ITR 28 5). 6. REFERRING TO THE MERIT OF THE ADDITION, THE LD.C OUNSEL SUBMITTED THAT ADMITTEDLY THE ASSESSEE SOLD THE LAN D TO M/S TELLUS AVENUE. THE CONTENTION OF THE ASSESSING OFFICER IS THAT 82 CENTS OF AGRICULTURAL LAND AT RAJAKILPAKKAM WAS DIVIDED INTO VARIOUS PLOTS OF HOUSING SITE AND THEREAFTER THE SAME WAS SOLD TO VA RIOUS PERSONS. IT IS AN ADMITTED FACT THAT THE ASSESSEE HAS OFFERE D THE PROFIT ON SALE OF THE LAND AS LONG TERM CAPITAL GAIN. HOWEVER, TH E ASSESSING OFFICER TREATED THE SAME AS BUSINESS INCOME ON THE GROUND THAT THE ACTIVITY OF THE ASSESSEE IN CONVERTING THE AGRICULT URAL LAND INTO HOUSING PLOT WOULD AMOUNT TO ADVENTURE IN THE NATUR E OF TRADE. THE LAND WAS PURCHASED ON 09.09.1999. IT WAS SOLD IN T HE YEAR 2009, I.E. ALMOST AFTER TEN YEARS. ACCORDING TO THE LD. COUNSEL, THE ASSESSEE NEVER INTENDED TO TRADE IN LANDED PROPERTI ES. AT THE TIME OF PURCHASING THE PROPERTY IN THE YEAR 1999, THE AS SESSEE INTENDED TO TREAT THE SAME AS CAPITAL ASSET. SINCE NO PURCH ASERS WERE AVAILABLE TO PURCHASE THE PROPERTY IN ONE LOT, THE ASSESSEE TO OBTAIN BETTER PRICE, ENGAGED M/S TELLUS AVENUE TO TAKE APP ROPRIATE STEPS FOR SALE OF LAND FOR BETTER PRICE. ACCORDINGLY, AL L THE CO-OWNERS OF THE 7 I.T.A. NOS.1802 TO 1806/MDS/15 C.O. NOS.114 TO 118/MDS/15 LAND ENTERED INTO AN AGREEMENT ON 12.05.2006 WITH M /S TELLUS AVENUE. M/S TELLUS AVENUE HAS TO SUB-DIVIDE THE LA ND INTO VARIOUS PLOTS AND THEREAFTER, SELL THE SAME TO VARIOUS PERS ONS IN ORDER TO GET BETTER PRICE FOR THE LAND. THE INTENTION OF THE AS SESSEE IS TO GET BETTER PRICE ON SALE OF THE LAND AFTER KEEPING THE SAME FOR MORE THAN TEN YEARS AS INVESTMENT. IT IS NOT THE CASE OF THE REVENUE THAT THE ASSESSEE INTENDED TO DEAL IN LAND AT THE TIME OF PU RCHASE OF THE PROPERTY. ON AN IDENTICAL SET OF FACTS, THE MADRAS HIGH COURT IN CIT V. A. MOHAMMED MOHIDEEN (1989) 176 ITR 393, AFTER C ONSIDERING THE JUDGMENT IN CIT V. KASTURI ESTATES (P.) LTD. (1 966) 62 ITR 578, FOUND THAT IF A LAND OWNER DEVELOPED HIS LAND, EXPE NDED MONEY IN LAYING ROADS, CONVERTED THE SAME TO THE HOUSING SIT ES, WITH AN INTENTION OF GETTING BETTER PRICE ON SALE OF THE LA ND AND SOLD THE PLOTS FOR A CONSIDERATION TO VARIOUS PERSONS WHICH RESULT ED IN SURPLUS, IT COULD HARDLY BE SAID THAT THE TRANSACTION WAS ANYTH ING MORE THAN A REALIZATION OF A CAPITAL INVESTMENT. THE LD.COUNSE L FURTHER SUBMITTED THAT EACH CASE DEPENDS UPON ITS OWN FACT AND SIMILARLY BETWEEN ONE CASE AND ANOTHER IS NOT ENOUGH. ACCORD ING TO THE LD. COUNSEL, AT THE TIME OF PURCHASE OF THE PROPERTY IN THE YEAR 1999, THE ASSESSEE INTENDED TO HOLD THE SAME AS INVESTMEN T. 8 I.T.A. NOS.1802 TO 1806/MDS/15 C.O. NOS.114 TO 118/MDS/15 SUBSEQUENTLY, IN ORDER TO SELL THE LAND FOR BETTER PRICE, ENGAGED M/S TELLUS AVENUE. 7. M/S TELLUS AVENUE OBTAINED THE APPROVAL OF CMDA AND THEREAFTER IT WAS SOLD TO VARIOUS PURCHASERS IDENTI FIED BY M/S TELLUS AVENUE. ACCORDING TO THE LD. COUNSEL, IF AT ALL AN Y BUSINESS IS THERE, IT COULD BE ATTRIBUTABLE TO ONLY M/S TELLUS AVENUE AND NOT THE ASSESSEE. THEREFORE, THE CIT(APPEALS), ACCORDING T O THE LD. COUNSEL, HAS RIGHTLY TREATED THE PROFIT ON SALE OF LAND AS LONG TERM CAPITAL GAINS. THE LD.COUNSEL FURTHER SUBMITTED TH AT ONE OF THE CO- OWNER, NAMELY, SHRI VASANTHA KUMAR, WHO WAS ALSO A PARTY TO THE VERY SAME AGREEMENT DATED 12.05.2006 MADE WITH M/S TELLUS AVENUE, HAS SOLD A SIMILAR PROPERTY ADJACENT TO THE LAND OF THE ASSESSEE. THIS TRIBUNAL IN I.T.A. NO.1491/MDS/2010 FOUND THAT THE PROFIT ON SALE OF THE LAND HAS TO BE ASSESSED ONLY AS LONG TERM CAPITAL GAINS. A SIMILAR VIEW WAS TAKEN BY THIS TR IBUNAL IN THE CASE OF SHRI G. GNANASEKARAN IN I.T.A. NO.1380/MDS/2013. IN FACT, THE CIT(APPEALS) FOLLOWED THE ORDER OF THIS TRIBUNAL IN THE CASE OF CO- OWNER. THIS TRIBUNAL FOUND THAT WHEN A PORTION OF THE PROPERTY WAS SOLD TO WRIGGLE OUT OF THE FINANCIAL HARDSHIP WOULD NOT MAKE THE ACTIVITY, AN ADVENTURE IN THE NATURE OF TRADE. THE LD.COUNSEL FURTHER 9 I.T.A. NOS.1802 TO 1806/MDS/15 C.O. NOS.114 TO 118/MDS/15 SUBMITTED THAT THIS TRIBUNAL PLACED ITS RELIANCE ON THE JUDGMENT OF MADRAS HIGH COURT IN KASTURI ESTATES (P.) LTD. (SUP RA) AND JUDGMENT OF THE MADRAS HIGH COURT IN CIT V. S. PALANICHAMY I N TAX CASE (APPEAL) NO.232 OF 2005. THEREFORE, ACCORDING TO T HE LD. COUNSEL, THE CIT(APPEALS) HAS RIGHTLY TREATED THE PROFIT ON SALE OF THE LAND AS LONG TERM CAPITAL GAINS. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. ADMITTEDLY, THE ASSESSEE SOLD 82 CENTS OF LAND AFTER DIVIDING THE S AME INTO VARIOUS PLOTS TO THE PURCHASERS IDENTIFIED BY M/S TELLUS AV ENUE. WE HAVE CAREFULLY GONE THROUGH THE AGREEMENT DATED 12.05.20 06 ENTERED INTO BETWEEN VARIOUS CO-OWNERS OF THE LAND WITH M/S TELLUS AVENUE. IN PURSUANCE OF THIS AGREEMENT, THEY HAVE APPROACHE D M/S TELLUS AVENUE TO TAKE APPROPRIATE STEPS TO DIVIDE THE SAME INTO VARIOUS PLOTS AND TO OBTAIN APPROVAL FROM THE CONCERNED LOC AL BODY. M/S TELLUS AVENUE WAS EMPOWERED TO IDENTIFY THE PROSPEC TIVE PURCHASERS OF THE PROPERTY EITHER AT ONE STROKE OR ON DIFFERENT OCCASIONS AND ALSO COLLECT PURCHASE PRICE EITHER IN ADVANCE OR OTHERWISE. FROM THIS AGREEMENT, IT IS OBVIOUS THAT ALL THE CO-OWNERS OF THE LAND JOINED TOGETHER TO SELL THE LAND FOR A BETTER CONSIDERATION. 10 I.T.A. NOS.1802 TO 1806/MDS/15 C.O. NOS.114 TO 118/MDS/15 AS RIGHTLY SUBMITTED BY THE LD.COUNSEL FOR THE ASSE SSEE, TO CONSIDER THE TRANSACTION AS BUSINESS TRANSACTION, THE INTENT ION OF THE ASSESSEE AT THE TIME OF ACQUISITION OF THE PROPERTY HAS TO BE CONSIDERED. IT IS A WELL SETTLED PRINCIPLE OF LAW THAT THE ASSESSEE CAN HAVE TWO PORTFOLIOS ONE IS FOR INVESTMENT AND ANOTHER IS FOR TRADING. IF THE INTENTION OF THE ASSESSEE AT THE T IME OF ACQUISITION OF THE PROPERTY IS TO TRADE IN LAND, THEN NATURALLY TH E PROFIT ON SALE OF SUCH LAND HAS TO BE TREATED AS PROFIT FROM BUSINESS . IF THE ASSESSEE HAS NO SUCH INTENTION AT THE TIME OF ACQUISITION OF THE LAND AND IT WAS INTENDED TO BE KEPT AS INVESTMENT, THEN NATURAL LY AT THE TIME OF SALE OF THE LAND, THE PROFIT HAS TO BE TREATED AS C APITAL GAIN. THEREFORE, THE INTENTION OF THE ASSESSEE NEEDS TO B E ASCERTAINED AT THE TIME OF ACQUISITION OF THE PROPERTY. 9. THE MADRAS HIGH COURT IN A. MOHAMMED MOHIDEEN (S UPRA) HAD AN OCCASION TO CONSIDER AN IDENTICAL SET OF FAC TS. THE MADRAS HIGH COURT FOUND THAT IN ORDER TO HOLD THAT AN ACTI VITY IS IN THE NATURE OF AN ADVENTURE IN THE NATURE OF TRADE, THERE MUST BE POSITIVE MATERIAL TO PROVE THAT THE ASSESSEE INTENDED TO TRA DE IN SUCH AN ACTIVITY. IN THE ABSENCE OF EVIDENCE, THE SALE OF IMMOVABLE PROPERTY CONSISTING OF LAND COULD RISE ONLY TO CAPITAL ACCRE TION. THE MADRAS 11 I.T.A. NOS.1802 TO 1806/MDS/15 C.O. NOS.114 TO 118/MDS/15 HIGH COURT FURTHER FOUND THAT IF A LAND OWNER DEVEL OPED HIS LAND, EXPENDED MONEY ON IT AND LAID ROADS, CONVERTED THE LAND INTO HOUSING SITES AND WITH A VIEW TO GET BETTER PRICE F OR THE LAND, IT COULD HARDLY BE SAID THAT THE TRANSACTION IS ANYTHING MOR E THAN A REALIZATION OF A CAPITAL INVESTMENT. THE SURPLUS O N SALE OF THE LAND CANNOT BE TREATED AS TRADING OR BUSINESS PROFIT BEC AUSE THE TRANSACTION IS ONE OF REALIZATION OF ASSETS IN INVE STMENT RATHER THAN ONE IN THE COURSE OF TRADE CARRIED ON BY THE ASSESS EE OR AN ADVENTURE IN THE NATURE OF TRADE. THE MADRAS HIGH COURT PLACED ITS RELIANCE ON ITS OWN EARLIER JUDGMENT IN KASTURI EST ATES (P) LTD. (SUPRA) AND ALSO ON THE JUDGMENT OF APEX COURT IN V ENKATASWAMI NAIDU AND CO. (SUPRA). THE MADRAS HIGH COURT HAS A LSO REFERRED TO THE JUDGMENT OF APEX COURT IN RAJA J. RAMESHWAR RAO (SUPRA). AT THE TIME OF DELIVERY OF JUDGMENT BY THE MADRAS HIGH COURT IN A. MOHAMMED MOHIDEEN (SUPRA), THE JUDGMENT OF APEX COU RT IN SMT. INDIRAMANI BAI (SUPRA) WAS NOT AVAILABLE. THEREFOR E, THE MADRAS HIGH COURT HAD NO OCCASION TO CONSIDER THE CASE OF SMT. INDRAMANI BAI (SUPRA). WE HAVE CAREFULLY GONE THROUGH THE JU DGMENT OF APEX COURT IN SMT. INDRAMANI BAI (SUPRA). IN THE CASE B EFORE APEX COURT, TWO LADIES WHO ARE PARTNERS IN A FIRM, PURCHASED A PIECE OF LAND IN BANJARA HILLS, HYDERABAD. SHORTLY AFTER PURCHASING THE LAND, THEY 12 I.T.A. NOS.1802 TO 1806/MDS/15 C.O. NOS.114 TO 118/MDS/15 CARVED INTO FOUR PLOTS AND SOLD THEM INDIVIDUALLY. IN FACT, THE LAND WAS PURCHASED IN 1963 AND IT WAS DIVIDED INTO PLOTS IN NOVEMBER 13, 1964 AND THE SAME WAS SOLD. THE APEX COURT, AF TER CONSIDERING THE BACKGROUND OF THE LADIES AND THE FACT THAT SOON AFTER THE PURCHASE, THE ASSESSEE CARVED IT INTO PLOTS AND SOL D THEM WITHIN FEW MONTHS FROM THE DATE OF PURCHASE, FOUND THAT THE AC TIVITIES ARE BUSINESS IN NATURE. 10. IN THE CASE BEFORE US, THE LAND WAS PURCHASED I N 1999. THE ASSESSEE KEPT THE SAME AS INVESTMENT FOR ALMOST TEN YEARS AND THEREAFTER, FOR REALIZING BETTER PRICE, DIVIDED THE LAND INTO VARIOUS PLOTS AND SOLD THE SAME THROUGH M/S TELLUS AVENUE. THEREFORE, THE JUDGMENT OF APEX COURT IN SMT. INDRAMANI BAI (SUPRA ) IS NOT IDENTICAL TO THE CASE OF THE ASSESSEE. MOREOVER, THE APEX COURT IN SMT. INDRAMANI BAI (SUPRA) HAS NOT CONSIDERED THE J UDGMENT IN RAJA J. RAMESHWAR RAO (SUPRA) AND G. VENKATASWAMI NAIDU & CO. (SUPRA). THE MADRAS HIGH COURT IN IDENTICAL SET OF FACTS, AFTER CONSIDERING THE JUDGMENT OF APEX COURT IN RAJA J. R AMESHWAR RAO (SUPRA) AND G. VENKATASWAMI NAIDU & CO. (SUPRA) FOU ND THAT THE PROFIT ON SALE OF THE LAND IS ONLY A REALIZATION OF CAPITAL INVESTMENT. THEREFORE, THE CIT(APPEALS) HAS RIGHTLY FOUND THAT THE PROFIT ON SALE 13 I.T.A. NOS.1802 TO 1806/MDS/15 C.O. NOS.114 TO 118/MDS/15 OF THE LAND HAS TO TBE TREATED AS LONG TERM CAPITAL GAIN. THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH T HE ORDER OF THE LOWER AUTHORITY AND ACCORDINGLY, THE SAME IS CONFIR MED. 11. NOW COMING TO THE CROSS-OBJECTION OF THE ASSESS EE IN C.O. NOS.114 & 115/MDS/2015, THE MAIN OBJECTION IS REOPE NING OF THE ASSESSMENT ON THE BASIS OF THE AUDIT OPINION. THE ASSESSEE HAS PRODUCED THE COMMUNICATION OBTAINED FROM ASSESSING OFFICER UNDER RIGHT TO INFORMATION ACT WHICH CLEARLY SHOWS THAT T HE AUDIT WING OF THE DEPARTMENT SUGGESTED TO THE ASSESSING OFFICER T HAT THE PROFIT ON SALE OF THE LAND HAS TO BE ASSESSED AS BUSINESS INC OME AND NOT AS CAPITAL GAIN. WE HAVE ALSO CAREFULLY GONE THROUGH THE PROVISIONS OF SECTION 147 OF THE ACT. SECTION 147 OF THE ACT CLE ARLY SAYS THAT THE ASSESSING OFFICER HIMSELF HAS TO BELIEVE THAT THE I NCOME CHARGEABLE TO TAX ESCAPED ASSESSMENT AND NOT ON THE INFLUENCE OF ANY OTHER AUTHORITY UNDER THE INCOME-TAX ACT. THEREFORE, EVE N THOUGH THERE MAY BE JUSTIFICATION IN THE CONTENTION OF THE ASSES SEE THAT REOPENING IS INVALID, THIS TRIBUNAL IS OF THE CONSIDERED OPIN ION THAT IT MAY NOT BE NECESSARY TO ADJUDICATE THE CONTENTION OF THE AS SESSEE WITH REGARD TO VALIDITY OF REOPENING SINCE ON MERIT THIS TRIBUNAL FINDS THAT THE PROFIT ON SALE OF LAND HAS TO BE ASSESSED ONLY AS LONG TERM 14 I.T.A. NOS.1802 TO 1806/MDS/15 C.O. NOS.114 TO 118/MDS/15 CAPITAL GAIN AND NOT AS BUSINESS INCOME. THEREFORE , THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITY. 12. NOW COMING TO APPEAL OF ASSESSEE SMT. VASANTI R AM NARAYAN, THE FIRST GROUND OF APPEAL IS REGARDING AD DITION OF ` 2,45,032/- REGARDING EXCHANGE OF LAND. 13. SH. P. RADHAKRISHNAN, THE LD. DEPARTMENTAL REPR ESENTATIVE, SUBMITTED THAT THE ASSESSEE EXCHANGED HER AGRICULTU RAL LAND TO THE EXTENT OF 10 CENTS IN SURVEY NO.142/1 WITH ONE SHRI C. DEVARAJ FOR 8 CENTS OF LAND IN SURVEY NO.143/1. ACCORDING TO THE LD. D.R., IN FACT, THE ASSESSEE HAS RECEIVED 2 CENTS OF LAND IN EXCESS OF WHAT WAS EXCHANGED. THEREFORE, THE ASSESSING OFFICER HAS TA KEN THE GUIDELINE VALUE OF THE LAND AT ` 281/- PER SQ.FT. AND COMPUTED THE DIFFERENCE IN VALUE AT ` 2,45,032/- FOR THE PURPOSE OF COMPUTING SHORT TERM CAPITAL GAIN. ON APPEAL BY THE ASSESSEE, THE CIT(APPEALS) FOUND THAT THE ASSESSEE HAS NOT MADE ANY PROFIT ON EXCHANGE OF THE LAND. THEREFORE, THE ADDITION MADE BY THE ASSESSIN G OFFICER COULD NOT BE SUSTAINED. ACCORDING TO THE LD. D.R., IN VI EW OF THE EXCHANGE, IN FACT, THE ASSESSEE HAS GAINED 2 CENTS OF LAND WHICH COST ABOUT ` 2,45,032/-. THEREFORE, ACCORDING TO THE LD. D.R., THE 15 I.T.A. NOS.1802 TO 1806/MDS/15 C.O. NOS.114 TO 118/MDS/15 SUM OF ` 2,45,032/-, WHICH WAS GAINED BY THE ASSESSEE, HAS T O BE ASSESSED AS SHORT TERM CAPITAL GAIN. 14. ON THE CONTRARY, SH. N. DEVANATHAN, THE LD.COUN SEL FOR THE ASSESSEE, SUBMITTED THAT NO DOUBT, THE ASSESSEE EXC HANGED 10 CENTS OF LAND WITH ONE SHRI C. DEVARAJ FOR 8 CENTS OF LAND. ACCORDING TO THE LD. COUNSEL, THE 10 CENTS OF LAND WAS IN SURVEY NO.142/1 AND THE 8 CENTS OF LAND WAS IN SURVEY NO.1 43/1. THOUGH THERE WAS DIFFERENCE TO THE EXTENT OF 2 CENTS, THE MARKET VALUE OF THE LAND IS ONE AND SAME. THERE IS NO DIFFERENCE IN VA LUATION. ACCORDING TO THE LD. COUNSEL, THE ASSESSING OFFICER HAS TAKEN GUIDELINE VALUE AT ` 281/- PER SQ.FT. IN FACT, THE GUIDELINE VALUE ON THE DATE OF EXCHANGE WAS ` 46/- PER SQ.FT. IRRESPECTIVE OF THE GUIDELINE VALUE, ACCORDING TO THE LD. COUNSEL, THE MARKET VALUE OF THE LAND HAS TO BE TAKEN INTO CONSIDERATION. THE M ARKET VALUE OF THE LAND IS EQUAL FOR BOTH THE LANDS WHICH ARE SUBJECT MATTER OF EXCHANGE. ACCORDING TO THE LD. COUNSEL, THERE CANN OT BE ANY CAPITAL GAIN. 15. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. ADMITTEDLY, THE ASSESSEE HAS EXCHANGED 10 CENTS OF LAND WITH ONE SH RI C. DEVARAJ 16 I.T.A. NOS.1802 TO 1806/MDS/15 C.O. NOS.114 TO 118/MDS/15 BY EXECUTION OF A DEED OF EXCHANGE ON 13.10.2010. THE ASSESSING OFFICER FOUND THAT THE EXCESS LAND OF 2 CENTS IS TH E GAIN FOR THE ASSESSEE. THEREFORE, HE COMPUTED THE GAIN AT THE R ATE OF ` 281/- PER SQ.FT. ON THE BASIS OF THE GUIDELINE VALUE. IT IS A WELL SETTLED PRINCIPLE OF LAW THAT GUIDELINE VALUE IS THE BASIS FOR ASCERTAINING THE MARKET VALUE. THE GUIDELINE VALUE IN ALL CASES WOU LD NOT REPRESENT THE MARKET VALUE. WHEN THE PARTIES TO THE TRANSACT ION EXCHANGE LAND AND EXCHANGE DEED DOES NOT DISCLOSE ANY PAYMEN T MADE IN ADDITION TO EXCHANGE OF LAND, THIS TRIBUNAL IS OF T HE CONSIDERED OPINION THAT IT WOULD NOT BE CORRECT TO COMPUTE THE VALUE OF THE LAND ON THE BASIS OF THE GUIDELINE VALUE. THE MARKET VA LUE ACCEPTED BY THE PARTIES, CANNOT BE DOUBTED IN THE ABSENCE OF AN Y OTHER MATERIAL. IN THIS CASE, NO MATERIAL IS AVAILABLE ON RECORD OT HER THAN THE SO- CALLED GUIDELINE VALUE OF THE REGISTRATION DEPARTME NT. THIS GUIDELINE VALUE ALSO VARIES BETWEEN PARTIES. ACCOR DING TO THE LD. COUNSEL, THE GUIDELINE VALUE PER SQ.FT. WAS ` 46/-. HOWEVER, THE DEPARTMENT CLAIMS THE SAME TO BE ` 281/- PER SQ.FT. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT IRRESPECTIVE OF THE GUIDELINE VALUE OF THE REGISTRATION DEPARTMENT, WHEN THE PARTIES EXCHA NGED THE LAND ON THE BASIS OF THE AGREED PRICE, THE ASSESSING OFF ICER CANNOT DOUBT THE SAME. THEREFORE, THIS TRIBUNAL DO NOT FIND ANY REASON TO 17 I.T.A. NOS.1802 TO 1806/MDS/15 C.O. NOS.114 TO 118/MDS/15 INTERFERE WITH THE ORDER OF THE LOWER AUTHORITY AND ACCORDINGLY THE SAME IS CONFIRMED. 16. THE NEXT GROUND OF APPEAL IS WITH REGARD TO ADD ITION OF ` 1,00,000/- TOWARDS AGRICULTURAL INCOME. 17. SH. P. RADHAKRISHNAN, THE LD. DEPARTMENTAL REPR ESENTATIVE, SUBMITTED THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE CLAIMED A SUM OF ` 1,00,000/- FROM AGRICULTURAL OPERATION. HOWEVER, THE ASSESSING OFFICER REJECTED THE CLAIM OF THE ASS ESSEE AND ASSESSED THE SAME AS INCOME FROM OTHER SOURCES. AC CORDING TO THE LD. D.R., THE ASSESSEE HAS NOT PRODUCED ANY MATERIA L TO ESTABLISH THAT AN INCOME OF ` 1,00,000/- WAS EARNED FROM AGRICULTURAL ACTIVITY. HOWEVER, ON APPEAL BY THE ASSESSEE, THE CIT(APPEALS ), ON THE BASIS OF THE ADANGAL EXTRACT AND CERTIFICATE FROM V ILLAGE ADMINISTRATIVE OFFICER, ALLOWED THE CLAIM OF THE AS SESSEE. ACCORDING TO THE LD. D.R., IN THE ABSENCE OF ANY OT HER MATERIAL FOR SALE OF AGRICULTURAL PRODUCE AND THE CULTIVATION SA ID TO BE MADE BY THE ASSESSEE, THE SAME CANNOT BE TREATED AS INCOME FROM AGRICULTURE. 18 I.T.A. NOS.1802 TO 1806/MDS/15 C.O. NOS.114 TO 118/MDS/15 18. ON THE CONTRARY, SH. N. DEVANATHAN, THE LD.COUN SEL FOR THE ASSESSEE, SUBMITTED THAT IN FACT THE ASSESSEE SOLD THE AGRICULTURAL LAND ALONG WITH STANDING CROPS. THE PURCHASER OF T HE LAND GAVE A SUM OF ` 1,00,000/- FOR THE STANDING CROPS CULTIVATED BY THE ASSESSEE. THEREFORE, THE ASSESSEE CLAIMED THE AMOU NT RECEIVED FROM THE PURCHASER OF THE LAND TOWARDS STANDING CRO PS AS AGRICULTURAL INCOME. THE ASSESSEE HAS FILED COPIES OF ADANGAL EXTRACT AND CERTIFICATE FROM VILLAGE ADMINISTRATIVE OFFICER TO ESTABLISH THAT THE LAND WAS SUBJECTED TO CULTIVATION BY THE A SSESSEE. THE CIT(APPEALS) BY REFERRING TO THE CERTIFICATE PRODUC ED BY THE ASSESSEE, FOUND THAT THE CLAIM OF AGRICULTURAL INCO ME CANNOT BE BRUSHED ASIDE. SINCE THE AMOUNT WAS RECEIVED FROM PURCHASER IN RESPECT OF THE YIELD FROM THE STANDING CROPS, IT CA NNOT BE TREATED AS INCOME FROM OTHER SOURCES. 19. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ADANGAL EXTRACT AND CERTIFICATE FROM THE VILLAGE ADMINISTRA TIVE OFFICER, PRODUCED BY THE ASSESSEE, CLEARLY SHOW THAT THE SUB JECT LAND WAS CULTIVATED BY THE ASSESSEE. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE SOLD THE LAND ALONG WITH STANDING CROP S. IT IS A WELL 19 I.T.A. NOS.1802 TO 1806/MDS/15 C.O. NOS.114 TO 118/MDS/15 SETTLED PRINCIPLE OF LAW THAT STANDING TREE AND CRO PS ON THE LAND ARE ALSO TO BE TREATED AS CAPITAL ASSET / FIXED ASSET. THE YIELD WHICH MAY BE HARVESTED FROM THE AGRICULTURAL CROP, HAS TO BE TREATED AS AGRICULTURAL PRODUCE AND HENCE, THE VALUE OF SUCH A GRICULTURAL PRODUCE HAS TO BE TREATED AS AGRICULTURAL INCOME. HOWEVER, VALUE OF STANDING CROPS HAS TO BE TREATED ONLY AS CAPITAL ASSET. IT IS NOT IN DISPUTE THAT THE ASSESSEE HAS RECEIVED A SUM OF ` 1,00,000/- FROM THE PURCHASER TOWARDS THE VALUE OF STANDING CROPS. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE RECE IPT OF ` 1,00,000/- HAS TO BE TREATED AS VALUE OF THE STANDING CROP AND NOT AS INCOME FROM OTHER SOURCES. IN OTHER WORDS, THE SALE PROCE EDS OF AGRICULTURAL LAND ALONG WITH STANDING CROPS ARE EXC LUDED FROM CAPITAL GAIN, THEREFORE, THE SAME CANNOT BE SUBJECT MATTER OF TAXATION. HENCE, THE ADDITION OF ` 1,00,000/- IS NOT JUSTIFIED. THEREFORE, THIS TRIBUNAL DO NOT HAVE ANY REASON TO INTERFERE WITH T HE ORDER OF THE LOWER AUTHORITY. ACCORDINGLY THE SAME IS CONFIRMED . 20. THE NEXT GROUND OF APPEAL IS WITH REGARD TO ADD ITION OF ` 49,50,000/- BEING THE GAIN ON SALE OF LAND AT RATNA MANGALAM VILLAGE. 20 I.T.A. NOS.1802 TO 1806/MDS/15 C.O. NOS.114 TO 118/MDS/15 21. SH. P. RADHAKRISHNAN, THE LD. DEPARTMENTAL REPR ESENTATIVE, SUBMITTED THAT THE ASSESSEE HAS SOLD 72.5 CENTS OF LAND AT RATNAMANGALAM VILLAGE, KANCHEEPURAM DISTRICT, OUT O F 1.30 ACRES, FOR A TOTAL CONSIDERATION OF ` 49,50,000/-. THE ASSESSEE CLAIMED EXEMPTION ON THE GAIN ON SALE OF SUCH LAND ON THE G ROUND THAT THE SAME WAS AGRICULTURAL LAND. THE ASSESSING OFFICER CALLED FOR THE DETAILS OF THE AGRICULTURAL PRODUCE SOLD BY THE ASS ESSEE AND MATERIAL TO ESTABLISH THE RECEIPT OF AGRICULTURAL INCOME. T HE ASSESSEE CLAIMED BEFORE THE ASSESSING OFFICER THAT THE AGRIC ULTURAL LAND WAS LEASED OUT AND THE LESSEE WAS CULTIVATING THE LAND. THE ASSESSEE HAS PRODUCED A CERTIFICATE FROM VILLAGE ADMINISTRAT IVE OFFICER TO SHOW THAT THE LAND WAS UNDER CULTIVATION. THE LD. D.R. FURTHER POINTED OUT THAT THE LAND IS SITUATED WITHIN 8 KMS RADIUS OF TAMBARAM MUNICIPALITY. SINCE THE LAND IS WITHIN 8 KMS RADIUS, ACCORDING TO THE LD. D.R., IT CANNOT BE TREATED AS AGRICULTURAL LAND. IN OTHER WORDS, THE LAND HAS TO BE TREATED AS CAPIT AL ASSET. THEREFORE, THE CAPITAL GAIN ARISING ON SALE OF SUCH LAND TO THE EXTENT OF ` 49,50,000/- HAS TO BE ASSESSED AS CAPITAL GAIN. 22. ON THE CONTRARY, SH. N. DEVANATHAN, THE LD.COUN SEL FOR THE ASSESSEE, SUBMITTED THAT THE CERTIFICATE ISSUED BY THE VILLAGE 21 I.T.A. NOS.1802 TO 1806/MDS/15 C.O. NOS.114 TO 118/MDS/15 ADMINISTRATIVE OFFICER, RATNAMANGALAM VILLAGE, CLEA RLY SHOWS THAT THE LAND IN QUESTION IS SUBJECT TO CULTIVATION. AD MITTEDLY, THE LAND IS NOT WITHIN THE JURISDICTION OF ANY MUNICIPALITY. T HERE WAS NO MUNICIPALITY WITHIN 8 KMS RADIUS. THE ASSESSING OF FICER SIMPLY FOUND THAT THE LAND IN QUESTION WAS WITHIN 8 KMS RA DIUS FROM SELAYIUR. SELAYIUR IS A PANCHAYAT AND NOT A NOTIFI ED MUNICIPALITY. ACCORDING TO THE LD. COUNSEL, WHAT IS TO BE TREATED AS CAPITAL GAIN IS THE LAND WHICH IS SITUATED WITHIN 8 KMS RADIUS OF N OTIFIED MUNICIPALITY. NO NOTIFIED MUNICIPALITY IS WITHIN 8 KMS RADIUS OF THE LAND. THE ASSESSING OFFICER WITHOUT ACCEPTING THE CERTIFICATE ISSUED BY THE VILLAGE ADMINISTRATIVE OFFICER, REGARDING DI STANCE, HE SIMPLY PLACED RELIANCE ON AN ADVERTISEMENT GIVEN BY ONE OF THE PRIVATE REAL ESTATE AGENTS. ACCORDING TO THE LD. COUNSEL, THE C ERTIFICATE ISSUED BY THE VILLAGE ADMINISTRATIVE OFFICER HAS TO BE PRE FERRED RATHER THAN THE ADVERTISEMENT GIVEN BY ANY PRIVATE AGENT. REFE RRING TO THE JUDGMENT OF MADRAS HIGH COURT IN MRS. SAKUNTHALA VE DACHALAM V. ACIT 53 TAXMANN.COM 62, THE LD.COUNSEL SUBMITTED TH AT WHEN THE ADANGAL INDICATES THAT THE LAND WAS SUBJECT TO CULT IVATION, WHICH WAS FURTHER CERTIFIED BY VILLAGE ADMINISTRATIVE OFFICER , THE ASSESSING OFFICER CANNOT CLAIM THAT THE LAND WAS NOT SUBJECT TO CULTIVATION AT ALL. THE LD.COUNSEL FURTHER SUBMITTED THAT ONCE A LAND WAS 22 I.T.A. NOS.1802 TO 1806/MDS/15 C.O. NOS.114 TO 118/MDS/15 CLASSIFIED AS AGRICULTURAL LAND IN REVENUE RECORD A ND IT WAS NOT FALLING WITHIN THE TERRITORIAL LIMITS OF ANY MUNICIPALITY O R CANTONMENT OR WITHIN THE DISTANCE OF 8 KMS RADIUS OF ANY OTHER NOTIFIED MUNICIPALITY, THEN THE SAME HAS TO BE TREATED AS AGRICULTURAL LAND. I N THIS CASE, ACCORDING TO THE LD. COUNSEL, THE LAND IS BEYOND 8 KMS RADIUS OF TAMBARAM MUNICIPALITY. THEREFORE, THE CIT(APPEALS) HAS RIGHTLY FOUND THAT THE CAPITAL GAIN ARISING ON SALE OF LAND AT RATNAMANGALAM VILLAGE IS EXEMPTED FROM TAXATION. 23. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS RIGHTLY SUBMITTED BY THE LD.COUNSEL FOR THE ASSESSEE, THE A SSESSING OFFICER PLACED RELIANCE ON THE ADVERTISEMENT GIVEN BY ONE O F THE REAL ESTATE AGENTS, AND FOUND THAT THE SUBJECT LAND IS WITHIN 8 KMS RADIUS FROM SELAYIUR. SELAYIUR IS PANCHAYAT. AS RIGHTLY SUBMI TTED BY THE LD.COUNSEL FOR THE ASSESSEE, THE LAND SHOULD BE WIT HIN 8 KMS RADIUS OF THE NOTIFIED MUNICIPALITY. IT IS NOT THE CASE O F THE REVENUE THAT THE LAND FALLS WITHIN 8 KMS RADIUS OF ANY OF THE NO TIFIED MUNICIPALITY. IT IS NOT IN DISPUTE THAT THE LAND WAS CLASSIFIED A S AGRICULTURAL LAND IN REVENUE RECORDS. SINCE SELAYIUR IS A PANCHAYAT AND THE LAND IN QUESTION IS NOT WITHIN 8 KMS OF ANY OF THE NOTIFIED MUNICIPALITY, THIS 23 I.T.A. NOS.1802 TO 1806/MDS/15 C.O. NOS.114 TO 118/MDS/15 TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE LAND SOLD BY THE ASSESSEE AT RATNAMANGALAM VILLAGE CANNOT BE TREATED AS CAPITAL ASSET. THE ADANGAL REGISTER AND THE CERTIFICATE OF VILLAGE ADMINISTRATIVE OFFICER WOULD ESTABLISH THAT THE LAN D WAS SUBJECTED TO CULTIVATION. IT IS NOT NECESSARY FOR THE ASSESSEE TO CULTIVATE THE LAND DIRECTLY. EVEN THE CULTIVATION MADE BY A TENANT/ L ESSEE OF THE LAND HAS TO BE CONSTRUED AS CULTIVATION. THEREFORE, THI S TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(APPEALS) AND ACCORDINGLY, THE SAME IS CONFIRMED. 24. THE NEXT GROUND OF APPEAL IS WITH REGARD TO ADD ITION OF ` 2,75,00,000/- BEING SHORT TERM CAPITAL GAIN ON SALE OF LAND AT NATHANALLUR VILLAGE. 25. SH. P. RADHAKRISHNAN, THE LD. DEPARTMENTAL REPR ESENTATIVE, SUBMITTED THAT THE ASSESSEE HAS SOLD 3.63 ACRES OF LAND AT NATHANALLUR VILLAGE ON 10.05.2010. ACCORDING TO TH E LD. D.R., THE ASSESSEE ACQUIRED THE LAND ON 31.08.2007. THE GAIN ON SALE OF SUCH LAND WAS CLAIMED BY THE ASSESSEE AS EXEMPTED. ACCORDING TO THE LD. D.R., THE ASSESSEE CLAIMED THE LAND IN NATH ANALLUR VILLAGE AS AGRICULTURAL LAND. THE ASSESSING OFFICER, HOWEV ER, REJECTED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE ASSESS EE HAS NOT 24 I.T.A. NOS.1802 TO 1806/MDS/15 C.O. NOS.114 TO 118/MDS/15 PRODUCED ANY EVIDENCE IN SUPPORT THAT THE LAND IN Q UESTION IS AN AGRICULTURAL LAND. ACCORDING TO THE LD. D.R., SINC E THE LAND IN QUESTION IS NOT CULTIVATED, IT CANNOT BE TREATED AS AGRICULTURAL LAND. THEREFORE, THE ASSESSING OFFICER HAS RIGHTLY TREATE D THE SAME AS SHORT TERM CAPITAL GAIN. 26. ON THE CONTRARY, SH. N. DEVANATHAN, THE LD.COUN SEL FOR THE ASSESSEE, SUBMITTED THAT ADMITTEDLY THE ASSESSEE HA S SOLD 3.63 ACRES OF LAND AT NATHANALLUR VILLAGE AND CLAIMED EX EMPTION AS AGRICULTURAL LAND. THE ASSESSEE HAS PRODUCED COPIE S OF ADANGAL EXTRACT AND CERTIFICATE OF VILLAGE ADMINISTRATIVE O FFICER TO ESTABLISH THAT THE SUBJECT LAND WAS UNDER CULTIVATION. ONCE THE ADANGAL AND CERTIFICATE OF VILLAGE ADMINISTRATIVE OFFICER ESTAB LISH THAT THE LAND WAS SUBJECTWD TO CULTIVATION, ACCORDING TO THE LD. COUNSEL, IT HAS TO BE TREATED AS AGRICULTURAL LAND. THEREFORE, IT CAN NOT BE TREATED AS CAPITAL ASSET. IT IS ALSO NOT THE CASE OF THE REVE NUE THAT THE SUBJECT LAND IN NATHANALLUR VILLAGE IS FALLING WITHIN ANY M UNICIPALITY. ACCORDING TO THE LD. COUNSEL, THE VILLAGE ADMINISTR ATIVE OFFICER HAS CERTIFIED THAT THE LAND IN QUESTION WAS BEYOND 8 KM S RADIUS OF ANY NOTIFIED MUNICIPALITY. THEREFORE, ACCORDING TO THE LD. COUNSEL, THE 25 I.T.A. NOS.1802 TO 1806/MDS/15 C.O. NOS.114 TO 118/MDS/15 LAND IN QUESTION CANNOT BE TREATED AS CAPITAL ASSET AND HENCE IT IS TO BE EXEMPTED. 27. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ASSESSEE HAS PRODUCED COPIES OF ADANGAL EXTRACT AND CERTIFIC ATE FROM VILLAGE ADMINISTRATIVE OFFICER TO ESTABLISH THAT THE LAND I N QUESTION AT NATHANALLUR VILLAGE TO THE EXTENT OF 3.63 ACRES IS AGRICULTURAL LAND. IT IS NOT IN DISPUTE THAT THE LAND IN QUESTION IS CLAS SIFIED AS AGRICULTURAL LAND IN REVENUE RECORDS. THE VILLAGE ADMINISTRATIV E OFFICER, WHO IS EMPOWERED BY THE STATE GOVERNMENT TO TAKE THE CROPS ACCOUNT IN THE VILLAGE, HAS CERTIFIED THAT THE SUBJECT LAND WA S SUBJECTED TO CULTIVATION. THE ADANGAL EXTRACT MAINTAINED BY THE VILLAGE ADMINISTRATIVE OFFICER UNDER THE SUPERVISION OF TEH SILDAR, CLEARLY ESTABLISHES THAT THE LAND IN QUESTION IS SUBJECTED TO CULTIVATION. IGNORING THE CERTIFICATE ISSUED BY THE VILLAGE ADMI NISTRATIVE OFFICER AND THE ADANGAL EXTRACT, THE ASSESSING OFFICER FOUN D THAT THE LAND IS NOT AN AGRICULTURAL LAND. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ADANGAL EXTRACT AND THE VILLAGE ADMINISTRA TIVE OFFICERS CERTIFICATE HAVE TO BE PREFERRED IN DECIDING THE CH ARACTERISTICS OF THE LAND IN QUESTION. THE ADANGAL EXTRACT MAINTAINED B Y THE VILLAGE 26 I.T.A. NOS.1802 TO 1806/MDS/15 C.O. NOS.114 TO 118/MDS/15 ADMINISTRATIVE OFFICER UNDER THE SUPERVISION OF SEN IOR OFFICERS OF THE REVENUE DEPARTMENT IS AN OFFICIAL DOCUMENT OF THE S TATE GOVERNMENT. THEREFORE, IT CANNOT BE BRUSHED ASIDE SO LIGHTLY BY THE ASSESSING OFFICER. WHEN THE LAND IN QUESTION IS SU BJECTED TO CULTIVATION AS ESTABLISHED BY THE CERTIFICATE OF VI LLAGE ADMINISTRATIVE OFFICER AND THE ADANGAL EXTRACT, THIS TRIBUNAL HAS NO REASON TO DOUBT THE CLAIM OF THE ASSESSEE. THE VILLAGE ADMINISTRA TIVE OFFICER HAS ALSO CERTIFIED THAT THE LAND IN QUESTION IS BEYOND 8 KMS RADIUS OF ANY NOTIFIED MUNICIPALITY. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE CIT(APPEALS) HAS RIGHTLY PLACED RE LIANCE ON THE JUDGMENT OF MADRAS HIGH COURT IN MRS. SAKUNTHALA VE DACHALAM (SUPRA). THEREFORE, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(APPEALS) AND ACCORDINGLY, THE SAME IS CONFIRMED. 28. NOW COMING TO CROSS-OBJECTIONS FILED BY THE ASS ESSEE IN C.O. NOS.116 TO 118/MDS/2015, THE MAIN GROUND RAISE D BY THE ASSESSEE IS WITH REGARD TO REOPENING OF THE ASSESSM ENT UNDER SECTION 147 OF THE ACT ON THE BASIS OF THE SUGGESTI ON MADE BY THE AUDIT WING OF THE DEPARTMENT. SINCE THE APPEALS OF THE REVENUE WERE CONSIDERED ON MERIT AND THIS TRIBUNAL UPHOLD T HE ORDERS OF THE 27 I.T.A. NOS.1802 TO 1806/MDS/15 C.O. NOS.114 TO 118/MDS/15 CIT(APPEALS), IT MAY NOT BE NECESSARY TO ADJUDICATE THE REOPENING OF ASSESSMENT UNDER SECTION 147 OF THE ACT. IN OTH ER WORDS, THE GROUND RAISED BY THE ASSESSEE IN THE CROSS-OBJECTIO NS NEED NOT BE ADJUDICATED IN VIEW OF THE FINDING OF THIS TRIBUNAL ON MERIT IN EARLIER PART OF THIS ORDER. 25. IN THE RESULT, ALL THE APPEALS OF THE REVENUE A ND CROSS- OBJECTIONS OF THE ASSESSEE STAND DISMISSED. ORDER PRONOUNCED ON 18 TH DECEMBER, 2015 AT CHENNAI. SD/- SD/- (. !'# ! ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 18 TH DECEMBER, 2015. KRI. - /267 87)2 /COPY TO: 1. +, /APPELLANT 2. /0+, /RESPONDENT 3. 1 92 () /CIT(A)-10, CHENNAI-34 4. 1 92 /CIT, CHENNAI-7, CHENNAI 5. 7: /2 /DR 6. ;( < /GF.