Sri.Paul P.Abraham, Ernakulam V. The ACIT, Ernakulam

ITA 194/COCH/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86391 (ITAT-COCHIN)
• Duration Of Justice: 8 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 17-11-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 05-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K K JOHN
• Assessee Lawyers: RAMESH CHERIAN JOHN
• Keywords: Capital asset; Revised return
• Section: 54B; 54F; 2(14); 142(1)

Judgement Text

1 ITA NO.194/COCH/2014 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI CHANDRA PO OJARI (AM) I.T.A NO. 194/COCH/2014 (ASSESSMENT YEAR 2008-09) SHRI PAUL P ABRAHAM VS ACIT, CIR.2(2) PALATHULLIL HOUSE KOCHI BRAHMAPURAM, AMBALAMEDU ERNAKULAM DIST. 682 303 PAN : ACKPA9728R (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAMESH CHERIAN JOHN RESPONDENT BY : SHRI K.K. JOHN DATE OF HEARING : 17-11-2014 DATE OF PRONOUNCEMENT : 09-01-2015 O R D E R PER N.R.S. GANESAN (JM) THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF CIT(A)- II, KOCHI DATED 12-12-2013 AND PERTAINS TO ASSESSME NT YEAR 2008-09. 2. SHRI RAMESH CHERIAN JOHN, THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE SOLD 201 CENTS OF LAND TO M /S GLOBAL TOWNSHIP PVT LTD FOR A TOTAL CONSIDERATION OF RS.40 2 LAKHS. ACCORDING TO THE LD.COUNSEL, THE ASSESSEE ACQUIRED THE SAID LAND BY MEANS OF A 2 ITA NO.194/COCH/2014 SETTLEMENT DEED EXECUTED BY HIS FATHER ON 02-05-200 3. FOR THE PURPOSE OF COMPUTING CAPITAL GAIN THE ASSESSEE ESTIMATED THE C OST OF ACQUISITION AS ON 01-04-1981 AT RS.25,000 PER CENT. THE ASSESSEE HAS ALSO CLAIMED COST OF IMPROVEMENT AT RS.27,30,885. ACCORDING TO THE LD.COUNSEL THOUGH THE ASSESSEE RETURNED CAPITAL GAIN IN THE RETURN OF INCOME DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE CLAI MED THAT WHAT WAS TRANSFERRED WAS AN AGRICULTURAL LAND, THEREFORE, IT IS NOT LIABLE FOR CAPITAL GAIN TAX. THE ASSESSING OFFICER DISALLOWED THE CLAI M OF THE ASSESSEE ON THE GROUND THAT THE EXEMPTION OF CAPITAL GAIN FOR TRANS FER OF AGRICULTURAL LAND WAS NOT CLAIMED IN THE RETURN OF INCOME ON THE BASI S OF THE JUDGMENT OF THE APEX COURT IN GOETZE INDIA LTD VS CIT 284 ITR 323 ( SC). THE LD.COUNSEL FURTHER SUBMITTED THAT THE ASSESSEE HAS ALSO RAISED THE VERY SAME ISSUE BEFORE THE CIT(A). THE ASSESSEE HAS ALSO CLAIMED E XEMPTION U/S 54F AND 54B OF THE ACT. ACCORDING TO THE LD.COUNSEL, THE V ILLAGE OFFICER, VADAVUKODE PANCHAYAT CERTIFIED THAT THE LAND WAS US ED FOR AGRICULTURAL PURPOSE TILL 2007. A MEMBER OF GRAMA PANCHAYAT, VA DAVUKODE, PUTHENCRUZ HAS ALSO CERTIFIED THAT THE SUBJECT LAND WAS USED FOR AGRICULTURAL PURPOSE UPTO THE FINANCIAL YEAR 2006-07. ACCORDING TO THE LD.COUNSEL, THE LAND WAS CULTIVATED WITH PEPPER, RUBBER, CLOVES, NU TMEG, ETC. HOWEVER, THE CIT(A) REJECTED THE CLAIM OF THE ASSESSEE ON TH E BASIS OF A RECITAL FOUND IN THE REGISTERED SALE DEED DATED 05-07-2007. ACCORDING TO THE LD.COUNSEL, IN THE REGISTERED SALE DEED, THE PROPER TY WAS WRONGLY DESCRIBED 3 ITA NO.194/COCH/2014 AS NOT AGRICULTURAL LAND. ACCORDING TO THE LD.CO UNSEL, IN FACT, THE LAND IS AN AGRICULTURAL LAND AND USED FOR CULTIVATION TILL 2007. MERELY BECAUSE THE DESCRIPTION WAS WRONGLY GIVEN IN THE SALE DEED, ACC ORDING TO THE LD.COUNSEL, IT WILL NOT LOSE ITS CHARACTER AS AGRIC ULTURAL LAND; HENCE, THE ASSESSEE IS ENTITLED FOR EXEMPTION FROM CAPITAL GAI N TAX. THE CIT(A) HAS ALSO REJECTED THE CLAIM OF THE ASSESSEE U/S 54F AND 54B ON THE GROUND THAT THESE CLAIMS ARE AVAILABLE ONLY FOR TRANSFER O F AGRICULTURAL LAND. IN THE CASE BEFORE US, THE CIT(A) FOUND THAT THE SUBJECT L AND IS NOT AN AGRICULTURAL LAND, THEREFORE, THE CLAIM OF THE ASSESSEE FOR DEDU CTION U/S 54F AND 54B WAS ALSO REJECTED. 3. THE LD.COUNSEL FURTHER SUBMITTED THAT IN THE REG ISTERED SALE DEED, THE COPY OF WHICH IS AVAILABLE AT PAGE 1 OF THE PAPER B OOK IT HAS BEEN CLEARLY REFERRED THAT THE PURCHASER IS ENTITLED TO TAKE ALL THE YIELDS AND PROFIT FROM THE SAID LAND. THE PROPERTY WAS TRANSFERRED WITH A LL TREES AND IMPROVEMENTS MADE THEREON. ACCORDING TO THE LD.COU NSEL, WHEN THE INCOME WHICH WAS NOT CHARGEABLE TO TAX UNDER THE IN COME-TAX ACT WAS INCLUDED IN THE TOTAL INCOME COMPUTATION, THE ASSES SEE CAN VERY WELL BRING TO THE NOTICE OF THE CONCERNED AUTHORITY DURING THE COURSE OF ASSESSMENT PROCEEDINGS THAT WHAT WAS INCLUDED IN HIS TOTAL INC OME WAS NOT CHARGEABLE TO TAX. ACCORDING TO THE LD.COUNSEL, WHEN THE ASS ESSING OFFICER ISSUED NOTICE U/S 142(1) AND 143(2), THE ASSESSEE IS ENTIT LED TO MAKE THE CLAIM OF 4 ITA NO.194/COCH/2014 EXEMPTION EVEN THOUGH IT IS NOT CLAIMED IN THE RETU RN AS PER THE PRINCIPLES LAID DOWN BY THE APEX COURT IN THE CASE OF CIT VS. WILLIAMSON FINANCIAL SERVICES & ORS 297 ITR 17 (SC). ACCORDING TO THE L D.COUNSEL, SINCE THE AGRICULTURAL LAND WAS TRANSFERRED THE GAIN ARISING OUT OF SUCH TRANSFER OF AGRICULTURAL LAND IS EXEMPT U/S 2(14) OF THE ACT IN VIEW OF THE UNAMBIGUOUS LANGUAGE EMPLOYED IN SECTION 2(14)(III)(A) OF THE A CT. THE LD.REPRESENTATIVE SUBMITTED THAT THE SUBJECT LAND IS BEYOND 8 KMS RAD IUS OF NOTIFIED MUNICIPALITY. THE LD.COUNSEL PLACED HIS RELIANCE O N THE JUDGMENT OF THE KERALA HIGH COURT IN CIT VS MURALI LODGE 194 ITR 12 5 (KER), JUDGMENT OF THE MADRAS HIGH COURT IN M.S. SRINIVASA NAICKER & O RS VS ITO (2007) 292 ITR 491 (MAD). THE LD.REPRESENTATIVE FURTHER SUBMI TTED THAT WHEN THE LAND WAS RECORDED AS AGRICULTURAL LAND IN THE REVENUE RE CORDS AND IN FACT THE LAND WAS USED FOR AGRICULTURAL PURPOSE IT HAS TO BE TREATED AS AGRICULTURAL LAND AS HELD BY THE BOMBAY HIGH COURT IN THE CASE O F CIT VS SMT. DEBBIE ALEMAO (2011) 331 ITR 59 (BOM). 4. REFERRING TO THE JUDGMENT OF THE APEX COURT IN G OETZE INDIA LTD (SUPRA), THE LD.COUNSEL SUBMITTED THAT MERELY BECAU SE OF THE ASSESSEE INCLUDED THE GAIN ON TRANSFER OF THE AGRICULTURAL L AND IN THE COMPUTATION, THE REVENUE CANNOT TAKE ADVANTAGE OF THE SAME SINCE IT CANNOT BE A TAXABLE INCOME. REFERRING TO THE JUDGMENT OF THE KERALA HIG H COURT IN CIT VS K.N. NARAYANA 150 ITR 105, THE LD.COUNSEL SUBMITTED THAT THE OFFICERS OF THE 5 ITA NO.194/COCH/2014 DEPARTMENT MUST NOT TAKE ADVANTAGE OF THE IGNORANCE OF THE ASSESSEE AS A MATTER OF RIGHT. IT IS THE DUTY OF THE ASSESSING O FFICER TO ASSIST A TAXPAYER IN EVERY WAY PARTICULARLY IN THE MATTER OF CLAIMING AN D SECURING THE RELIEF. ACCORDING TO THE LD.COUNSEL, SINCE THERE IS NO AUTH ORITY TO COLLECT TAX ON TRANSFER OF AGRICULTURAL LAND, IGNORANCE OF THE ASS ESSEE CANNOT BE TAKEN AS A GROUND FOR LEVYING TAX ON THE CAPITAL GAIN. ACCO RDING TO THE LD.COUNSEL, THE CIT(A) OBSERVED THAT THERE IS NO PROOF OF AGRIC ULTURAL OPERATION AND THERE IS NO EVIDENCE FOR SALE OF AGRICULTURAL PRODU CT. ACCORDING TO THE LD.COUNSEL, THIS OBSERVATION WAS MADE IGNORING THE CERTIFICATE ISSUED BY THE VILLAGE OFFICER AND THE MEMBER OF THE VILLAGE GRAMA PANCHAYAT. THE CIT(A) HAS ALSO FAILED TO TAKE NOTE OF THE PURCHASE BILL FOR SALE OF RUBBER WHICH IS ENCLOSED ALONGWITH THE RETURN STATEMENT FI LED BY THE ASSESSEE BEFORE THIS TRIBUNAL. THE LD.COUNSEL FURTHER SUBMI TTED THAT THE ASSESSEE HAS ALSO RAISED AN ALTERNATIVE CONTENTION CLAIMING EXEMPTION U/S 54F AND 54B OF THE ACT. THIS WAS REJECTED BY THE CIT(A) ON THE WRONG PRESUMPTION THAT EXEMPTION U/S 54B AND 54F IS AVAILABLE FOR SAL E OF AGRICULTURAL LAND. ACCORDING TO THE LD.COUNSEL, SECTION 54F DEALS WITH TRANSFER OF LONG TERM CAPITAL ASSET WHEREAS SECTION 54B DEALS WITH TRANSF ER OF LAND USED FOR AGRICULTURAL PURPOSE IN THE TWO IMMEDIATELY PRECEDI NG YEARS FROM THE DATE OF TRANSFER. THE USAGE OF THE LAND FOR AGRICULTURA L PURPOSE FOR TWO YEARS IMMEDIATELY PRECEDING THE DATE OF TRANSFER OF THE L AND IS EVIDENCED BY THE CERTIFICATE ISSUED BY THE VILLAGE OFFICER AND THE M EMBER OF THE GRAM 6 ITA NO.194/COCH/2014 PANCHAYAT. THEREFORE, ACCORDING TO THE LD.COUNSEL, THE ASSESSEE IS ENTITLED FOR EXEMPTION U/S 54B OF THE ACT. REFERRING TO THE RECITAL IN THE SALE DEED AT COLUMN 8, THE LD.COUNSEL SUBMITTED THAT THE DESC RIPTION OF THE LAND WAS WRONGLY MADE. ACCORDING TO THE LD.COUNSEL, WHEN TH E LAND WAS SUBJECTED TO ACTUAL CULTIVATION, WRONG DESCRIPTION IN THE SAL E DEED WILL NOT CHANGE THE CHARACTER OF THE LAND. 5. ON THE CONTRARY, SHRI K.K. JOHN, LD.DR SUBMITTED THAT WHAT WAS SOLD BY THE ASSESSEE IS NOT AGRICULTURAL LAND. IN FACT, THE ASSESSEE HIMSELF DESCRIBED THE LAND AT CLAUSE 7 OF THE SALE DEED AS NOT AGRICULTURAL LAND. THE ASSESSEE HAS DECLARED IN THE SALE DEED THAT APA RTMENTS, COMMERCIAL ESTABLISHMENTS, VILLAS AND OTHER BUILDINGS CAN BE C ONSTRUCTED ON THE PROPERTY WITHOUT CONVERSION FOR USER OF THE LAND. THEREFORE, IT IS OBVIOUS THAT THE LAND ITSELF IS NOT CLASSIFIED AS AN AGRICU LTURAL LAND. IF IT IS AN AGRICULTURAL LAND, IT CANNOT BE USED FOR CONSTRUCTI ON OF COMMERCIAL ESTABLISHMENTS, VILLAS AND APARTMENTS WITHOUT RECLA SSIFICATION. ACCORDING TO THE LD.DR, THIS IS THE ADMISSION MADE BY THE ASSESS EE IN THE SALE DEED. THE LD.DR PLACED HIS RELIANCE ON THE JUDGMENT OF TH E KERALA HIGH COURT IN KUNHASU VS CIT ITA NO.94 OF 2014 JUDGMENT DATED 03 RD SEPTEMBER 2014, COPY OF WHICH IS AVAILABLE ON RECORD AND SUBMITTED THAT ON IDENTICAL SET OF FACTS WHEN THE LAND WAS DESCRIBED AS STADIUM LAND I N THE SALE DEED, THIS TRIBUNAL FOUND THAT IT CANNOT BE TREATED AS AGRICUL TURAL LAND WHICH WAS 7 ITA NO.194/COCH/2014 CONFIRMED BY THE HIGH COURT. AFTER REFERRING TO TH E CERTIFICATE ISSUED BY THE VILLAGE OFFICER AND THE MEMBER OF THE GRAMA PANCHAY AT, THE LD.DR SUBMITTED THAT THE HIGH COURT, AFTER GOING THROUGH A SIMILAR CERTIFICATE FOUND THAT THESE ARE ALL TOTALLY INSUFFICIENT TO CO NCLUSIVELY PROVE THAT THE LAND IN QUESTION WAS AGRICULTURAL LAND AT THE TIME OF SALE. IN VIEW OF THIS JUDGMENT OF THE KERALA HIGH COURT, ACCORDING TO THE LD.DR, SINCE THE ASSESSEE HIMSELF ADMITS THAT THE LAND IS NOT AGRICU LTURAL LAND, THE CERTIFICATE OBTAINED FROM THE VILLAGE OFFICER AND THE MEMBER OF THE VILLAGE PANCHAYAT MAY NOT BE SUFFICIENT TO PROVE THAT THE LAND IN QUE STION WAS AGRICULTURAL LAND AND WAS USED FOR CULTIVATION AT THE TIME OF SA LE. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS NO T IN DISPUTE THAT IN THE ORIGINAL RETURN FILED BY THE ASSESSEE, THE ASSESSEE HIMSELF OFFERED THE PROFIT ON SALE OF THE LAND AS CAPITAL GAIN. DURING THE CO URSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE CLAIMED BEFORE THE ASSESSI NG OFFICER, BY WAY OF A LETTER DATED 09-11-2010 THAT THE LAND IN QUESTION WAS AGRICULTURAL LAND, THEREFORE, THE GAIN ARISING FROM SALE OF THAT LAND IS NOT TAXABLE. THE CLAIM OF THE ASSESSEE TO TREAT THE LAND IN QUESTION AS AG RICULTURAL LAND WAS REJECTED BY THE ASSESSING OFFICER BY PLACING RELIAN CE ON THE JUDGMENT OF THE APEX COURT IN GOETZE INDIA LTD (SUPRA). 8 ITA NO.194/COCH/2014 7. WE HAVE CAREFULLY GONE THROUGH THE JUDGMENT OF T HE APEX COURT IN GOETZE INDIA LTD (SUPRA). THE APEX COURT IN THIS C ASE EXPRESSLY OBSERVED THAT OBSERVATION IS LIMITED TO THE POWER OF THE ASS ESSING AUTHORITY AND DOES NOT IMPINGE ON THE POWER OF THE INCOME-TAX APPELLAT E TRIBUNAL U/S 254 OF THE INCOME-TAX ACT, 1961. IN FACT, THE APEX COURT HAS OBSERVED AS FOLLOWS: THE DECISION IN QUESTION IS THAT THE POWER OF THE TRIBUNAL UNDER SECTION 254 OF THE INCOME-TAX ACT, 1961, IS T O ENTERTAIN FOR THE FIRST TIME A POINT OF LAW PROVIDED THE FACT ON THE BASIS OF WHICH THE ISSUE OF LAW CAN BE RAISED BEFORE THE TRI BUNAL. THE DECISION DOES NOT IN ANY WAY RELATE TO THE POWER OF THE ASSESSING OFFICER TO ENTERTAIN A CLAIM FOR DEDUCTIO N OTHERWISE THAN BY FILING A REVISED RETURN. IN THE CIRCUMSTAN CES OF THE CASE, WE DISMISS THE CIVIL APPEAL. HOWEVER, WE MAK E IT CLEAR THAT THE ISSUE IN THIS CASE IS LIMITED TO THE POWER OF THE ASSESSING AUTHORITY AND DOES NOT IMPINGE ON THE POW ER OF THE INCOME-TAX APPELLATE TRIBUNAL UNDER SECTION 254 OF THE INCOME-TAX ACT, 1961. THERE SHALL BE NO ORDER AS T O COSTS. THUS, THE POWER OF THIS TRIBUNAL TO ENTERTAIN A POI NT OF LAW ON THE BASIS OF THE FACTS AVAILABLE ON RECORD HAS BEEN UPHELD BY TH E SUPREME COURT. MOREOVER, THE APEX COURT IN THE CASE OF CIT VS SHEL LY PRODUCTS & ANOTHER 261 ITR 367 HAD AN OCCASION TO EXAMINE AN IDENTICAL SITUATION. THE APEX COURT FOUND THAT BY MISTAKE OR INADVERTENCE, THE AS SESSEE INCLUDED IN HIS INCOME ANOTHER AMOUNT WHICH IS EXEMPT FROM PAYMENT OF INCOME-TAX OR 9 ITA NO.194/COCH/2014 HIS NET INCOME WITHIN THE CONTEMPLATION OF LAW, HE MAY BRING THIS TO THE NOTICE OF THE ASSESSING AUTHORITY. THE ASSESSING A UTHORITY, IF SATISFIED MAY GRANT RELIEF AND REFUND THE TAX PAID IN EXCESS. IN FACT, THE APEX COURT OBSERVED AS FOLLOWS AT PAGE 382 OF THE ITR: . SIMILARLY, IF HE HAS ANY MISTAKE OR INADVERTEN CE OR ON ACCOUNT OF IGNORANCE, INCLUDED IN HIS INCOME ANY AM OUNT WHICH IS EXEMPTED FROM PAYMENT OF INCOME-TAX, OR IS NOT INCOME WITHIN THE CONTEMPLATION OF LAW, HE MAY LIKE WISE BRING THIS TO THE NOTICE OF THE ASSESSING AUTHORITY, WHIC H IF SATISFIED, MAY GRANT HIM RELIEF AND REFUND THE TAX PAID IN EXC ESS, IF ANY. SUCH MATTERS CAN BE BROUGHT TO THE NOTICE OF THE CO NCERNED AUTHORITY IN A CASE WHEN REFUND IS DUE AND PAYABLE, AND THE AUTHORITY CONCERNED, ON BEING SATISFIED, SHALL GRAN T APPROPRIATE RELIEF 8. IN VIEW OF THE ABOVE APEX COURT JUDGMENT, THIS T RIBUNAL IS OF THE CONSIDERED OPINION THAT WHENEVER AN INCOME WHICH WA S EXEMPT FROM TAXATION WAS INCLUDED IN THE TOTAL INCOME COMPUTED, IT IS OPEN TO THE ASSESSEE TO BRING THE SAME TO THE NOTICE OF THE ASS ESSING AUTHORITY. IF THE ASSESSING AUTHORITY IS SATISFIED THAT THE INCOME WH ICH WAS INCLUDED BY THE ASSESSEE IS NOT SUBJECT TO TAX UNDER THE INCOME-TAX ACT, THEN THE SAME HAS TO BE EXCLUDED. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION 10 ITA NO.194/COCH/2014 THAT THE ASSESSING OFFICER OUGHT TO HAVE EXAMINED T HE CLAIM OF THE ASSESSEE ON MERIT INSTEAD OF REJECTING THE SAME ON ITS THRESHOLD. 9. NOW COMING TO THE MERIT OF THE CLAIM OF THE ASSE SSEE THAT IT IS AN AGRICULTURAL LAND, THE ASSESSEE HAS FILED CERTIFICA TE FROM THE VILLAGE OFFICER. THE VILLAGE OFFICERS CERTIFICATE DATED 28-11-2013 , THE TRANSLATED COPY OF THE CERTIFICATE IS AVAILABLE AT PAGE 23 OF THE PAPE R BOOK, SHOWS THAT THE LAND IN SURVEY NO.115/2-2, 115/3 TO THE EXTENT OF 1 4.17 ARES AND 56.19 ARES RESPECTIVELY WAS OWNED BY THE ASSESSEE AND WAS USED FOR CULTIVATION TILL 2007. THE VILLAGE OFFICER FURTHER CERTIFIES THAT THE LAND WAS CULTIVATED WITH RUBBER AND NUTMEG, ETC. FROM THE COPIES OF TH E CERTIFICATE GIVEN BY MEMBER, GRAMA PANCHAYAT WHICH IS AVAILABLE AT PAGE 1 OF THE PAPER BOOK SHOWS THAT APART FROM THE LAND IN SURVEY NO.115/2-2 AND 115/3 THE ASSESSEE HAS ALSO CULTIVATED LANDS IN SURVEY NO.115 /8, 115/6, 1157, 115/2, 115/10. HOWEVER, THE COPY OF THE SALE DEED, COPY F WHICH IS AVAILABLE AT PAGE 1 OF THE PAPER BOOK, IT APPEARS THAT LANDS IN SURVEY NO.115/12, 115/13, 115/9-2, 115/14 WAS ALSO SOLD AND TRANSFERR ED. 10. THE CERTIFICATE ISSUED BY THE MEMBER OF VADAVUK ODE PUTHENCRUZ GRAMA PANCHAYAT, IT APPEARS THAT THE LAND IN SURVEY NO.115/2-2, 115/3, 115/8, 115/10, 115/6, 115/7, 115/2 WHICH SAID TO BE BELONGED TO THE PRESENT ASSESSEE AND DR. GRACE B ABRAHAM WAS USED F OR AGRICULTURAL 11 ITA NO.194/COCH/2014 PURPOSE UPTO THE FINANCIAL YEAR 2006-07. THE LAND WAS CULTIVATED WITH PEPPER, CLOVES, NUTMEG, ETC. THE WARD MEMBER FURTH ER CLAIMS THAT WAS ASSOCIATED WITH PEOPLE AND THEIR ACTIVITIES CLOSELY . FROM THE TWO CERTIFICATES PRODUCED BY THE ASSESSEE IT APPEARS TH AT SOME LANDS WERE USED FOR CULTIVATION AND THE LAND IN SURVEY NO.115/ 9, 115/12, 115/13, 115/14 ARE NOT USED FOR AGRICULTURAL PURPOSE. IT IS ALSO NOT KNOWN HOW THE LAND WAS CLASSIFIED IN THE REVENUE RECORDS OF THE S TATE GOVERNMENT. THE ASSESSEE IN THE SALE DEED AT COLUMN 8 HAS DESCRIBED THE LAND S FOLLOWS: THE VENDORS FURTHER COVENANT THAT APARTMENTS, COMME RCIAL ESTABLISHMENTS, VILLAS AND OTHER BUILDINGS CAN BE C ONSTRUCTED ON THE SAID PROPERTY WITHOUT CONVERSION OF USER OF THE LAND. THE SAID PROPERTY IS NOT N AGRICULTURAL LAND. 11. THIS RECITAL IN THE SALE DEED SHOWS THAT WITHOU T CONVERSION OF THE LAND IN THE REVENUE RECORDS THE LAND CAN BE USED FO R CONSTRUCTION OF COMMERCIAL COMPLEX, APARTMENTS, ETC. THE ASSESSEE HAS ALSO CLAIMS THAT THE LAND IS NOT AGRICULTURAL LAND. 12. NOW THE ASSESSEE CLAIMS BEFORE THIS TRIBUNAL TH AT THIS DESCRIPTION OF THE LAND IN THE SALE DEED, MORE PARTICULARLY AT COL UMN 8, IS WRONGLY MADE. THEREFORE, THE SAME CANNOT BE USED AGAINST THE ASSE SSEE ESPECIALLY WHEN THE LAND WAS ACTUALLY SUBJECTED TO CULTIVATION ON T HE BASIS OF THE CERTIFICATE 12 ITA NO.194/COCH/2014 ISSUED BY THE VILLAGE OFFICER AND THE MEMBER OF THE VILLAGE PANCHAYAT. THE ASSESSEE HAS ALSO PRODUCED COPIES OF THE RECEIPT FO R PAYMENT OF TAX AS AGRICULTURAL LAND TO THE VILLAGE OFFICER, THE COPIE S OF THE SAME ARE AVAILABLE AT PAGES 61 TO 63. THE ASSESSEE HAS ALSO FILED A R ECEIPT ISSUED BY ST. MARYS RUBBER STORES FOR SALE OF RUBBER. FROM THE MATERIAL AVAILABLE ON RECORD, PRIMA FACIE, IT APPEARS THAT A PART OF THE LAND MIGHT HAVE BEEN SUBJECTED TO CULTIVATION AND THE RUBBER WAS ALSO SO LD. IN THE STATE OF KERALA, THE STATE GOVERNMENT IS NOT MAINTAINING ANY ACCOUNT / RECORDS FOR CULTIVATION. IN FACT, THIS TRIBUNAL EXAMINED THE I SSUE ELABORATELY IN THE CASE OF MTHOMS VS DCIT ITA NO.224/COCH/2011 DATED 06-06 -2014 AND FOUND THAT IN THE ABSENCE OF ANY RECORD MAINTAINED BY THE STATE GOVERNMENT FOR CULTIVATION, THE CERTIFICATE ISSUED BY THE VILLAGE OFFICER AND THE MEMBER OF THE PANCHAYAT CANNOT BE IGNORED. THI S TRIBUNAL FOUND THAT NO OTHER MATERIALS COULD POSSIBLY BE PRODUCED BY TH E ASSESSEE. IF SUCH CERTIFICATE IS NOT CONSIDERED, THEN THE ASSESSEE BE ING AN AGRICULTURIST MAY NOT BE ABLE TO PROVE THE FACT THAT THE LAND WAS SUB JECTED TO CULTIVATION FOR EARLIER YEARS. IN FACT, THIS TRIBUNAL HAS OBSERVE D AS FOLLOWS AT PARAGRAPHS 18 TO 29: 18. THE NEXT ISSUE WOULD ARISE FOR CONSIDERATION I S WHETHER THE SUBJECT LAND IS AN AGRICULTURAL LAND OR NOT? I F THE SUBJECT LAND IS NOT AN AGRICULTURAL LAND THEN IT WOULD FALL WITHIN THE 13 ITA NO.194/COCH/2014 DEFINITION OF CAPITAL ASSET. WHAT IS EXCLUDED IS O NLY THE AGRICULTURAL LAND AND NOT ALL LAND. THEREFORE, WE HAVE TO SEE WHETHER THE SUBJECT LAND IS AN AGRICULTURAL LAND OR NOT? THE TERM AGRICULTURAL LAND IS NOT DEFINED IN THE INCOME -TAX ACT. THE CONSTITUTION OF INDIA, ARTICLE 366(1) DEFINES A GRICULTURE INCOME WHICH READS AS FOLLOWS: ART.366(1). AGRICULTURAL INCOME MEANS AGRICULTUR AL INCOME AS DEFINED FOR THE PURPOSE OF THE ENACTMENT RELATIN G TO INCOME-TAX. IN VIEW OF THE ABOVE CONSTITUTIONAL PROVISION EVEN FOR AGRICULTURAL INCOME WE HAVE TO REFER TO THE DEFINIT ION GIVEN IN THE INCOME-TAX ACT. IN THE ABSENCE OF ANY EXPRESS DEFINITION EITHER IN THE CONSTITUTION OF INDIA OR IN THE INCOM E-TAX ACT IN RESPECT OF AGRICULTURAL LAND WE HAVE TO TAKE THE ME ANING IN COMMON PARLANCE. IN COMMON PARLANCE, THE LAND WHIC H IS MEANT FOR CULTIVATION IS CONSIDERED TO BE AN AGRICU LTURAL LAND. THIS TRIBUNAL FINDS A SIMILAR REFERENCE AGRICULTUR AL LAND IN WEALTH-TAX ACT. SECTION 2(E) OF THE WEALTH-TAX ACT , 1957 READS AS FOLLOWS: 2. IN THIS ACT, UNLESS THE CONTEXT OTHERWISE REQUI RES,- (A) TO (D) XXXXXXXXXXXXXXXXXXX (E) ASSETS INCLUDES PROPERTY OF EVERY DESCRIPTION , MOVABLE OR IMMOVABLE, BUT DOES NOT INCLUDE,- (1) IN RELATION TO ASSESSMENT YEAR COMMENCING ON THE 1 ST DAY OF APRIL, 1969, OR ANY EARLIER ASSESSMENT YEAR 14 ITA NO.194/COCH/2014 (I) AGRICULTURAL LAND AND GROWING CROPS, GRASS OR STANDING TREES ON SUCH LAND: THEREFORE, AGRICULTURAL LAND AND GROWING CROPS, GRA SS AND STANDING TREES ON SUCH LAND ARE EXCLUDED FROM THE D EFINITION OF ASSET EVEN UNDER THE WEALTH-TAX ACT. AN OCCASION AROSE BEFORE THE APEX COURT IN CWT VS OFFICER INCHARGE (C OURT OF WARD PAIGAH (1976) 105 ITR 133 (SC) TO CONSIDER THE TERM AGRICULTURAL LAND OCCURRED IN SECTION 2(E) OF THE WEALTH-TAX ACT. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE INTERPRETATION GIVEN BY THE APEX COURT IN THE C ASE OF CWT VS OFFICER INCHARGE (SUPRA) IN RESPECT OF AGRICULTU RAL LAND UNDER THE CONTEXT OF WEALTH-TAX ACT WOULD BE MORE APPROPRIATE AND PROPER FOR DEFINING THE TERM AGRIC ULTURAL LAND. THE APEX COURT, AFTER REFERRING TO THE PROVISIONS O F THE CONSTITUTION OF INDIA, MORE PARTICULARLY ENTRY 86, LIST I TO 7 TH SCHEDULE, FOUND THAT AGRICULTURAL LAND IS ONLY A SP ECIES OF LAND. THE MAIN QUESTION IS WHETHER IT SHOULD STAND FOR AL L LANDS WHICH IS CAPABLE OF BEING UTILIZED FOR AGRICULTURAL PURPOSE AND OR FOR SOME LAND WHICH EITHER IS BEING ACTUALLY USE D OR HAS BEEN SET APART OR PREPARED FOR USE FOR AGRICULTURAL PURPOSE SO AS TO INDICATE THE INTENTION OF THE OWNER OR OCCUPI ER OF THE LAND TO PUT IT TO AGRICULTURAL USES. REFERRING TO THE E ARLIER JUDGMENT OF THE APEX COURT IN CIT VS RAJA BINOY KUMAR SUHAS ROY (1957) 32 ITR 466 THE APEX COURT FOUND THAT THE DETERMINATION OF THE CHARACTER OF THE LAND ACCORDIN G TO THE PURPOSE FOR WHICH IT IS MEANT OR SET UP FOR AND CAP ABLE USE IS A MATTER WHICH OUGHT TO BE DETERMINED ON THE FACTS OF EACH PARTICULAR CASE. IN FACT, THE APEX COURT HELD AS F OLLOWS: 15 ITA NO.194/COCH/2014 . WHAT IS REALLY REQUIRED TO BE SHOWN IS THE CON NECTION WITH AN AGRICULTURAL PURPOSE AND USER AND NOT THE M ERE POSSIBILITY OF USER OF LAND, BY SOME POSSIBLE FUTUR E OWNER OR POSSESSOR, FOR AN AGRICULTURAL PURPOSE. IT IS NOT THE MERE POTENTIALITY, WHICH WILL ONLY AFFECT ITS VALUATION AS PART OF ASSETS, BUT ITS ACTUAL CONDITION AND INTENDED USE R WHICH HAS TO BE SEEN FOR PURPOSES OF EXEMPTION FROM WEALTH-TA X. IN VIEW OF THE ABOVE JUDGMENT OF THE APEX COURT THE RE SHOULD BE AN CONNECTION TO INDICATE THE INTENTION OF THE O WNERS OR POSSESSORS SO AS TO CONNECT WITH AGRICULTURAL PURPO SE IN RESPECT OF THE LAND. THE ENTRIES IN THE REVENUE RE CORD ARE PRIMA FACIE EVIDENCE TO INDICATE THAT THE LAND IN Q UESTION IS AGRICULTURAL LAND. 19. WE HAVE ALSO CAREFULLY GONE THROUGH THE PROVISI ONS OF SECTION 10(37) OF THE ACT WHICH READS AS FOLLOWS: 10(37) IN THE CASE OF AN ASSESSEE, BEING AN INDIVID UAL OR A HINDU UNDIVIDED FAMILY, ANY INCOME CHARGEABLE UND ER THE HEAD CAPITAL GAINS ARISING FROM THE TRANSFER OF A GRICULTURAL LAND, WHERE (I) SUCH LAND IS SITUATED IN ANY AREA REFERRED TO I N ITEM (A) OR ITEM (B) OF SUB-CLAUSE (III) OF CLAUSE (14) OF SECTION 2 ; (II) SUCH LAND, DURING THE PERIOD OF TWO YEARS IMME DIATELY PRECEDING THE DATE OF TRANSFER, WAS BEING USED FOR AGRICULTURAL PURPOSE BY SUCH HINDU UNDIVIDED FAMILY OR INDIVIDUA L OR A PARENT OF HIS; 16 ITA NO.194/COCH/2014 (III) SUCH TRANSFER IS BY WAY OF COMPULSORY ACQUISI TION UNDER ANY LAW, OR A TRANSFER THE CONSIDERATION FOR WHICH IS D ETERMINED OR APPROVED BY THE CENTRAL GOVERNMENT OR THE RESERVE B ANK OF INDIA; (IV) SUCH INCOME HAS ARISEN FROM THE COMPENSATION O R CONSIDERATION FOR SUCH TRANSFER RECEIVED BY SUCH AS SESSEE ON OR AFTER THE 1 ST DAY OF APRIL, 2004. EXPLANATION.- FOR THE PURPOSES OF THIS CLAUSE, THE EXPRESSION COMPENSATION OR CONSIDERATION INCLUDES THE COMPEN SATION OR CONSIDERATION ENHANCED OR FURTHER ENHANCED BY ANY C OURT, TRIBUNAL OR OTHER AUTHORITY; SECTION 10(37) WAS INTRODUCED FOR THE FIRST TIME IN THE STATUTE BOOK BY FINANCE ACT, 2004 WITH EFFECT FROM 01-04-20 05. SECTION 10(37) EXCLUDES THE CAPITAL GAIN ARISING FR OM TRANSFER OF AGRICULTURAL LAND WHICH WAS BEING USED FOR AGRIC ULTURAL PURPOSE IMMEDIATELY TWO PRECEDING YEARS. IN VIEW O F SECTION 10(37) TRANSFER OF AGRICULTURAL LAND WHICH IS SITUA TED WITHIN THE JURISDICTION OF MUNICIPALITY ARE EXCLUDED FROM CAPI TAL GAIN TAX PROVIDED SUCH LAND IS USED FOR AGRICULTURAL PURPOSE DURING THE PERIOD OF TWO YEARS IMMEDIATELY PRECEDING THE DATE OF TRANSFER. HOWEVER, THIS CONDITION OR REQUIREMENT OF USING THE LAND FOR AGRICULTURAL PURPOSE DURING THE TWO YEARS IMMEDIATE LY PRECEDING THE DATE OF TRANSFER WAS NOT PROVIDED IN RESPECT OF AGRICULTURAL LAND WHICH SITUATE OUTSIDE THE JURISDI CTION OF THE MUNICIPAL LIMITS IN SECTION 2(14) OF THE ACT. SECT ION 10(37) WAS INTRODUCED IN THE STATUTE BOOK TO MITIGATE THE HARDSHIP FACED BY THE LAND OWNERS WITHIN THE SPECIFIED URBAN AREA. IN THE MEMORANDUM EXPLAINING THE PROVISIONS OF THE FIN ANCE BILL, 17 ITA NO.194/COCH/2014 IT HAS BEEN CLEARLY STATED THAT SECTION 10(37) WAS INTRODUCED WITH A VIEW TO MITIGATE THE HARDSHIP FACED BY THE F ARMERS WHOSE AGRICULTURAL LAND SITUATE IN SPECIFIED URBAN LIMIT HAS BEEN COMPULSORILY ACQUIRED. THEREFORE, IN RESPECT OF THE AGRICULTURAL LAND WHICH WAS USED FOR AGRICULTURAL P URPOSE DURING THE TWO YEARS IMMEDIATELY PRECEDING THE DATE OF COMPULSORILY ACQUISITION UNDER ANY LAW OR TRANSFER FOR A CONSIDERATION WHICH WAS DETERMINED OR APPROVED BY C ENTRAL GOVERNMENT OR RESERVE BANK OF INDIA, THEN SUCH CAPI TAL GAIN WOULD NOT FORM PART OF THE TOTAL INCOME OF THE ASSE SSEE. 20. SIMILARLY, SECTION 54B ALSO REQUIRES THE ASSESS EE WHO CLAIMS EXEMPTION TO USE THE LAND FOR AGRICULTURAL P URPOSE FOR TWO YEAR IMMEDIATELY PRECEDING THE DATE OF TRANSFER . HOWEVER, SUCH REQUIREMENT OF USE OF AND FOR AGRICUL TURAL PURPOSE FOR TWO YEARS IMMEDIATELY PRECEDING THE TRA NSFER IS EXPRESSLY OMITTED BY THE PARLIAMENT IN SECTION 2(14 ) OF THE ACT. IT IS WELL SETTLED PRINCIPLES OF LAW THAT A T AXING STATUTE SHOULD BE STRICTLY INTERPRETED OR CONSTRUED. EQUIT Y, LOGIC, ETHIC AND MORALITY HAVE NO ROLE TO PLAY IN INTERPRETATION OF TAXING STATUTE. IT IS ALSO WELL SETTLED THAT NOTHING COUL D BE IMPLIED AND PLAIN LANGUAGE USED BY THE PARLIAMENT HAS TO BE REA D AS SUCH. IN FACT, THE APEX COURT IN ASST.DIRECTOR OF INSPECT ION VS KUM. A.B. SHANTHI (2002) 255 ITR 258 (SC) AFTER REFERRIN G TO ITS EARLIER JUDGMENT IN EAST INDIA TOBACCO CO VS STATE OF ANDHRA PRADESH (1962) AIR 1962 SC 1733 FOUND THAT PARLIAME NT HAS POWER TO PICK AND CHOOSE DISTRICTS, OBJECTS, PERSON S, METHODS AND EVEN RATE FOR TAXATION IF IT DOES SO REASONABLY . BY APPLYING THE ABOVE PRINCIPLE LAID DOWN BY APEX COUR T, SECTION 18 ITA NO.194/COCH/2014 2(14) HAS TO BE INTERPRETED STRICTLY. THEREFORE, T HE REQUIREMENT USING THE LAND FOR TWO YEARS IMMEDIATELY PRECEDING THE DATE OF TRANSFER CANNOT BE A PRE-CONDITION FOR THE PURPOSE OF SECTION 2(14) OF THE ACT. HENCE, THE JUDGMENT OF THE KERAL A HIGH COURT IN SMT. ASHA GEORGE (SUPRA) WHICH DEALS WITH SECTION 54B AND 54F MAY NOT BE APPLICABLE TO THE FACTS OF T HE CASE. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT WHA T IS REQUIRED FOR SECTION 2(14) IS CONNECTION WITH AGRICULTURAL P URPOSE. 21. THE NEXT QUESTION THAT WOULD FOLLOW IS THAT WHE THER THE SUBJECT LAND HAS ANY CONNECTION WITH AGRICULTURAL P URPOSE AND WHETHER IT IS USED FOR AGRICULTURAL PURPOSE? THE A SSESSEE CLAIMS THAT THE STATE GOVERNMENT HAS NOT MAINTAINED ANY RECORDS FOR CULTIVATION OF THE LANDED PROPERTIES EX CEPT CLASSIFICATION OF THE LAND AS WETLAND, RESIDENTIAL LAND, ETC. THE ASSESSEE ALSO CLAIMS THAT THE GOVERNMENT IS COLLECT ING AGRICULTURAL WORKERS WELFARE FUND FROM THE LAND OW NERS WHO CULTIVATED THE LAND. THE BASIC TAX REGISTER PREPAR ED BY THE VILLAGE ADMINISTRATIVE OFFICER FOR COLLECTION OF TA X ALSO SHOWS THAT THE LAND IS AN AGRICULTURAL LAND. THE VILLAGE ADMINISTRATIVE OFFICER OFFICER CERTIFIES THAT THE LAND IN QUESTION WAS A PADDY FIELD EARLIER AND SOME OF THE LANDS WERE FILLED IN SUBSEQUENTLY AND THEY HAVE CULTIVATED BANANA AND GINGER. IN ONE APPEAL, THE LAND WAS ACQUIRED BY THE GOVERNMENT IMMEDIATELY AFTER FILLING UP FOR THE PURPOSE OF CULTIVATING THE OTHER CROPS, VIZ. BANANA AND GINGER. THEREFORE, THE MATERIAL NOW AVA ILABLE ON RECORD TO PROVE THE USAGE OF LAND FOR AGRICULTURAL PURPOSE OR CONNECTION WITH AGRICULTURAL PURPOSE ARE 19 ITA NO.194/COCH/2014 (I) THE CERTIFICATE ISSUED BY THE VILLAGE ADMINIS TRATIVE OFFICER; (II) THE CERTIFICATE ISSUED BY THE AGRICULTURAL O FFICER; (III) CLASSIFICATION OF LAND BY THE STATE GOVERNM ENT AS AGRICULTURAL LAND; (IV) RECEIPT FOR PAYMENT OF CONTRIBUTION TO AGRIC ULTURAL WORKERS WELFARE FUND; AND (V) BASIC TAX REGISTER. 22. BEFORE INDEPENDENCE, LAND WHICH WAS UNDER THE D IRECT CONTROL OF THE BRITISH RULE / ADMINISTRATION, MORE PARTICULARLY, THE LAND WHICH FALLS WITHIN THE JURISDICTION OF ERS TWHILE MADRAS PROVINCE, THE BRITISH RULERS PRESCRIBED PROCEDURE M ETHOD AND FORMS FOR TAKING CULTIVATION ACCOUNTS. AS PER THE PROCEDURE PRESCRIBED BY THE BRITISH RULERS IN THE REVENUE BOA RDS STANDING ORDERS, THE VILLAGE OFFICER HAS TO VISIT E VERY AGRICULTURAL LAND AND TAKE NOTE OF THE CULTIVATION MADE, STANDING TREES, SOURCE OF IRRIGATION, ETC. ONCE IN SIX MONTHS. THE CULTIVATION AND OTHER DETAILS HAD TO BE RECORDE D IN VILLAGE ACCOUNT NO.2 WHICH WOULD OTHERWISE KNOWN AS ADANGAL . APART FROM THIS, THE VILLAGE OFFICER HAS TO MAINTAI N OTHER RECORDS FOR COLLECTING LAND REVENUE, WATER CESS, IR RIGATION TAX, ETC. THE ENTRY MADE BY VILLAGE OFFICER HAS TO BE V ERIFIED BY TAHSILDAR OR ANY OFFICER FROM THE TAHSILDAR OFFICE. THE VERY SAME METHOD OF TAKING CULTIVATION ACCOUNT ONCE IN S IX MONTHS WAS FOLLOWED BY THE STATE GOVERNMENTS AFTER INDEPEN DENCE. KEEPING THIS METHOD FOLLOWED BY BRITISH RULERS IN M IND, THIS TRIBUNAL WAS OF THE OPINION THAT SOME KIND OF MATER IAL WOULD BE AVAILABLE WITH THE STATE GOVERNMENT WITH REGARD TO THE 20 ITA NO.194/COCH/2014 CULTIVATION MADE BY THE RESPECTIVE OWNERS / POSSESS ORS OF THE LAND WHICH IS IN QUESTION NOW. 23. WE ARE CONSCIOUS THAT COCHIN IS AN INDEPENDENT PRINCELY STATE UNDER THE DIRECT ADMINISTRATION OF C OCHIN MAHARAJA DURING BRITISH RULE. THEREFORE, THE FORMS AND RULES PRESCRIBED BY BRITISH AUTHORITIES BEFORE INDEPENDEN CE OF INDIA MAY NOT HAVE BEEN FOLLOWED IN THE PRINCELY STATE OF COCHIN. HOWEVER, THE PRINCELY STATE OF COCHIN IS THE FIRST STATE WHO WILLINGLY JOINED ITSELF WITH THE INDEPENDENT INDIA. AFTER INDEPENDENCE GOVERNMENT OF INDIA IS TAKING STATISTI CAL REPORT ABOUT THE FOOD PRODUCTION IN THE COUNTRY INCLUDING THE STATE OF KERALA AND PROJECTING THE STATISTICAL FIGURE WITH R EGARD TO ANTICIPATED FOOD PRODUCTION, ANTICIPATED DEMAND AND WHETHER THE FOOD PRODUCTION WOULD BE SHORT OR EXCESS. THER EFORE, IN THE STATE OF KERALA ALSO EVEN THOUGH THE SUBJECT LA ND WAS SITUATED IN THE ERSTWHILE PRINCELY STATE OF COCHIN, SOME KIND OF RECORDS SHOULD BE AVAILABLE WITH STATE GOVERNMENT A TLEAST AFTER INDEPENDENCE FOR CULTIVATION. THEREFORE, WE CALLED FOR A REMAND REPORT DIRECTING THE ASSESSING OFFICER TO EX AMINE THE CONCERNED VILLAGE ADMINISTRATIVE OFFICER, TAHSILDAR , AGRICULTURAL OFFICER AND ANY RESPONSIBLE OFFICER IN THE COLLECTO RATE. FOR THE PURPOSE OF CONVENIENCE, WE ARE REPRODUCING THE ORDE R OF THE TRIBUNAL CALLING FOR THE REMAND REPORT BELOW: I.T.A. NO.311/COCH/2011 ASSESSMENT YEAR 2007-08 DY.CIT, CIR.2(2), ERNAKULAM 21 ITA NO.194/COCH/2014 VS SHRI M.J. THOMAS, MUKKADAYIL HOUSE ST. VINCENT ROAD, ERNAKULAM 08-10-2013 THE ASSESSEE CLAIMS THAT HE WAS CULTIVATING 4.448 ACRES OF LAND AT KAKKANAD WHICH WAS COMPULSOR ILY ACQUIRED BY GOVERNMENT FOR KINFRA SMART CITY PROJEC T. ACCORDING TO THE ASSESSEE, WHILE PAYING THE COMPENS ATION FOR LAND ACQUISITION, THE DISTRICT COLLECTOR HAS NOT DE DUCTED ANY TAX AT SOURCE SINCE IT WAS AGRICULTURAL LAND. ACCO RDING TO THE ASSESSEE, THE LAND AT KAKKANAD, WHICH IS SUBJECT MA TTER OF APPEAL IS USED FOR CULTIVATION OF BANANA, GINGER, E TC. AND THE ASSESSEE ALSO RETURNED AGRICULTURAL INCOME REGULARL Y. THE ASSESSEE HAS ALSO PRODUCED THE CERTIFICATE FROM THE VILLAGE OFFICER TO SUPPORT THE CLAIM THAT THE LAND IN QUEST ION WAS CULTIVATED BEFORE ACQUISITION. ON A QUERY FROM THE BENCH WHETHER THE STATE GOVERNMENT IS MAINTAINING ANY REC ORD FOR CULTIVATION OF LAND, THE LD.REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE STATE GOVERNMENT IS NOT MAINTAIN ING ANY RECORD FOR CULTIVATION OF THE LAND. THE DR ALSO SA YS NO RECORDS WERE FOUND TO BE MAINTAINED BY THE STATE GOVERNMENT FOR CULTIVATION OF LAND. THIS TRIBUNAL IS OF THE CONSI DERED OPINION THAT THE STATE GOVERNMENT THROUGH THE REVENUE DEPAR TMENT IS MAINTAINING CULTIVATION ACCOUNT. IN FACT, THE VILL AGE OFFICER HAS TO RECORD THE CULTIVATION IN THE RESPECTIVE ACCOUNT IN THE FORM PRESCRIBED BY THE STATE GOVERNMENT. THE ACCOUNTS P REPARED BY THE VILLAGE OFFICER HAVE TO BE VERIFIED BY A HIG HER AUTHORITY AT THE TALUK LEVEL. THEN THERE WILL BE A STATISTIC AL COMMITTEE AT 22 ITA NO.194/COCH/2014 THE TALUK LEVEL TO EXAMINE THE FOOD PRODUCTION OF T HE TALUK. THE STATISTICAL COMMITTEE AT TALUK LEVEL WILL CONSO LIDATE ALL THE REPORTS RECEIVED FROM THE RESPECTIVE VILLAGE OFFICE RS AND THEN FORWARD THE SAME TO THE DISTRICT COLLECTOR. THE ST ATISTICAL COMMITTEE IN THE DISTRICT HEADED BY THE DISTRICT CO LLECTOR WOULD EXAMINE THE DETAILS COLLECTED BY THE TALUK OF FICE AND WILL CONSOLIDATE THE EXPECTED FOOD PRODUCTION OF THE DIS TRICT AND THE SAME WOULD BE FORWARDED TO THE STATE GOVERNMENT . THE STATE GOVERNMENT, AFTER CONSOLIDATING ALL THE REPOR TS RECEIVED FROM THE RESPECTIVE DISTRICT COLLECTOR WOULD FORWAR D THE FOOD PRODUCTION ESTIMATE TO THE CENTRAL GOVERNMENT. THE CENTRAL GOVERNMENT, IN TURN, CONSOLIDATES ALL THE REPORTS R ECEIVED FROM THE RESPECTIVE STATE GOVERNMENT AND ESTIMATE THE FO OD PRODUCTION FOR THE YEAR. WHEN THIS IS THE PATTERN OF ADMINISTRATION IN THIS COUNTRY, IT IS NOT KNOWN HOW THE GOVERNMENT IN THE STATE OF KERALA IS NOT MAINTAININ G ANY RECORDS FOR CULTIVATION OF LAND. IF NO RECORD IS M AINTAINED FOR CULTIVATION OF THE LANDS THEN THE FOOD PRODUCTION I N KERALA CANNOT BE ESTIMATED. IN THAT CASE, THE STATISTICAL FIGURE PROJECTED BY THE GOVERNMENT OF INDIA FOR FOOD PRODU CTION IN THE COUNTRY MAY NOT INCLUDE THE FOOD PRODUCTION FIG URE OF KERALA STATE. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE CENTRAL GOVERNMENT WILL NEVER EXCLUDE THE EXPEC TED FOOD PRODUCTION OF KERALA WHILE ESTIMATING THE FOOD PROD UCTION OF THE COUNTRY AS A WHOLE. THEREFORE, SOME KIND OF MA TERIAL WOULD BE PREPARED AT THE TALUK LEVEL TO RECORD THE CULTIVATION OF THE LANDS. 23 ITA NO.194/COCH/2014 2. SINCE THE DETAILS ARE NOT FORTHCOMING EITHER FRO M THE ASSESSEE OR FROM THE DEPARTMENT, THIS TRIBUNAL IS O F THE CONSIDERED OPINION THAT THE EXAMINATION OF THE RESP ECTIVE VILLAGE OFFICER AND THE TAHSILDAR WITH REGARD TO RE CORDS MAINTAINED BY THE STATE GOVERNMENT FOR CULTIVATION OF LAND WOULD THROW SOME LIGHT FOR EFFECTIVE DISPOSAL OF TH IS APPEAL. THEREFORE, THE ASSESSING OFFICER IS HEREBY DIRECTED TO SUMMON THE VILLAGE OFFICER, KAKKANAD VILLAGE AND THE CONCE RNED TAHSILDAR IN PERSON AND EXAMINE THEM IN RESPECT OF THE FOLLOWING ASPECT: (1) WHETHER THE VILLAGE OFFICER AND THE TAHSILDAR A RE MAINTAINING ANY RECORDS FOR CULTIVATION OF LAND IN THEIR JURISDICTION? IF THAT IS SO, WHAT KIND OF RECORDS ARE MAINTAINED AND THE COPIES OF THE RESPECTIVE RECORDS / ACCOUNTS FROM THE FINANCIAL YEARS 2003 TO 2008 SHALL BE OBTAINED BY T HE ASSESSING OFFICER FOR THE LAND WHICH IS SUBJECT MAT TER OF APPEAL BEFORE THIS TRIBUNAL? (2) IN CASE, NO RECORDS ARE MAINTAINED FOR CULTIVAT ION OF LAND, THEN ASCERTAIN HOW THE STATISTICAL REPORT WIT H REGARD TO ESTIMATION OF THE FOOD PRODUCTION OF THE TALUK IS P REPARED. (3) WHAT ARE THE BASIC DOCUMENTS WHICH ARE CONSIDER ED FOR ESTIMATION OF THE FOOD PRODUCTION OF THE TALUK WHIL E SENDING THE STATISTICAL REPORT TO THE DISTRICT COLLECTOR. (4) IN CASE, THE TAHSILDAR AND VILLAGE OFFICER COUL D NOT EXPLAIN THE MATTER IT IS OPEN TO THE ASSESSING OFFI CER TO SUMMON SOME RESPONSIBLE OFFICER FROM THE DISTRICT C OLLECTORS 24 ITA NO.194/COCH/2014 OFFICE, WHO IS IN-CHARGE OF THE REVENUE ADMINISTRAT ION INCLUDING THE CONCERNED AGRICULTURAL OFFICER TO FIND OUT THE ACTUAL RECORD WHICH IS MAINTAINED BY THE STATE GOVERNMENT FOR CUL TIVATION OF LAND IN THE STATE OF KERALA. (5) THE ASSESSING OFFICER SHALL ALSO ASCERTAIN FROM THE VILLAGE OFFICER AND TAHSILDAR WITH REGARD TO CULTIV ATION SAID TO BE CARRIED OUT BY THE ASSESSEE AND THE NATURE OF CR OP CULTIVATED ON THE LAND WHICH IS SUBJECT MATTER OF A PPEAL. THE EXAMINATION SHALL BE MADE IN THE PRESENCE OF THE AS SESSEE OR HIS REPRESENTATIVE AND AN OPPORTUNITY TO CROSS EXAM INE MAY BE GIVEN IF THE ASSESSEE SO DESIRES. IN CASE THE A SSESSEE FAILS TO APPEAR AFTER RECEIVING NOTICE FROM THE ASS ESSING OFFICER ON THE DATE OF EXAMINATION, THE EXAMINATION MAY BE MADE IN THE ABSENCE OF THE ASSESSEE. THE ASSESSING OFFICER, AFTER EXAMINATION OF THE RESPECTIVE PERSONS AS STATED ABO VE, SHALL FILE HIS REPORT ALONG WITH THE COPIES OF THE STATEM ENT RECORDED INCLUDING THE DOCUMENTS, IF ANY, OBTAINED FROM THE RESPECTIVE OFFICERS BEFORE THIS TRIBUNAL ON OR BEFORE 29-11-20 13 AFTER SERVING A COPY OF THE REPORT TO THE ASSESSEE. IF T HE ASSESSEE INTENDS TO FILE OBJECTION TO THE REPORT FILED BY TH E ASSESSING OFFICER, HE MAY DO SO ON OR BEFORE 06-12-2013. THE REGISTRY IS DIRECTED TO POST THE APPEAL FOR FURTHER HEARING ON 09-12-2013. 3. THE REGISTRY IS FURTHER DIRECTED TO FORWARD THE COPY OF THIS ORDER TO THE ASSESSING OFFICER AND THE ASSESSE E. SD/- SD/- ACCOUNTANT MEMBER JUDICIAL MEMBER 25 ITA NO.194/COCH/2014 24. IN PURSUANCE TO THE REMAND REPORT, THE ASSESSIN G OFFICER EXAMINED THE VILLAGE ADMINISTRATIVE OFFICER, KAKKAN AD, ADDITIONAL TAHSILDAR AND AGRICULTURAL OFFICER. FOR THE PURPOSE OF CONVENIENCE, WE ARE REPRODUCING REMAND REPORT FI LED BY THE ASSESSING OFFICER BEFORE THIS TRIBUNAL: NO.REMAND REPORT/C-2(2)/2013-14 DATED:29-11-2013 TO THE ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH, COCHIN SIR SUB: CALLING FOR REMAND REPORT IN THE CASE OF S RI M.J. THOMAS FOR THE ASST.YEAR 2007-08 REG. REF: ITA NO.311/COCH/2011 DATED 08/10/2013 ********** KINDLY REFER TO THE ABOVE. A REMAND REPORT HAS BEEN CALLED FOR BY THE HONBLE ITAT IN THE CASE OF SRI M.J. THOMAS FOR THE ASST.YE AR 2007-08 TO CARRY OUT NECESSARY VERIFICATION REGARDING MAINT ENANCE OF RECORDS FOR CULTIVATION OF AND BY THE STATE GOVT. O F KERALA. THE HONBLE ITAT DIRECTED THE ASSESSING OFFICER TO SUMM ON THE VILLAGE OFFICER, KAKKANAD VILLAGE AND THE CONCERNED TAHSILDAR IN PERSON AND EXAMINE THEM IN RESPECT OF THE FOLLOW ING ASPECT: (1) WHETHER THE VILLAGE OFFICER AND TAHSILDAR ARE M AINTAINING ANY RECORDS FOR CULTIVATION OF LAND IN THEIR JURISDICTI ON? IF THAT IS SO, WHAT KIND OF RECORDS ARE MAINTAINED AND THE COPIES OF THE RESPECTIVE RECORDS / ACCOUNTS FROM THE FINANCIAL YE ARS 2003 TO 2008 SHALL BE OBTAINED BY THE AO. 26 ITA NO.194/COCH/2014 (2) IN CASE, NO RECORDS ARE MAINTAINED FOR CULTIVAT ION OF LAND, THEN HOW THE STATISTICAL REPORT WITH REGARD TO ESTIMATIO N OF THE FOOD PRODUCTION OF THE TALUK IS PREPARED. (3) WHAT ARE THE BASIC DOCUMENTS WHICH ARE CONSIDER ED FOR ESTIMATION OF THE FOOD PRODUCTION OF THE TALUK WHIL E SENDING THE STATISTICAL REPORT TO THE DISTRICT COLLECTOR. ACCORDINGLY, ON THE BASIS OF THE INFORMATION AND DOCUMENTS PROVIDED BY THE AUTHORITY CONCERNED, THE REMAND REPORT IS SUBMITTED AS FOLLOWS: 1. THE VILLAGE OFFICER, THE ADDITIONAL TAHSILDAR AN D THE PRINCIPAL AGRICULTURAL OFFICER WERE SUMMONED AND NONE OF THES E PEOPLE COULD SHED ANY LIGHT WHETHER THE PARTICULAR PIECE O F LAND IN QUESTION HAS BEEN CULTIVATED OR NOT. 2. THE CONCERNED VILLAGE OFFICER AND THE ADDITIONAL TAHSILDAR APPEARED BEFORE ME AND DEPOSED THAT NO RECORDS ARE MAINTAINED AT THEIR LEVEL. IT IS MAINTAINED AT THE LEVEL OF AGRICULTURAL OFFICER WHO OPERATES IN INDIVIDUAL PAN CHAYAT AT THE KRISH BHAVAN AND ARE RESPONSIBLE FOR IMPLEMENTATION OF THE CENTRALLY SPONSORED, STATE GOVT. AND GRAM PANCHAYAT SCHEME ON AGRICULTURE AND IS HEADED BY PRINCIPAL AG RICULTURAL OFFICER AT THE DISTRICT LEVEL. 3. THE ADDITIONAL TAHSILDAR AS WELL AS THE VILLAGE OFFICER DEPOSED THAT THE ONLY REGISTER AVAILABLE IN THIS RE GARD IN THEIR OFFICES IS THE KERALA AGRICULTURAL WORKERS WELFARE FUND (KAWWF) REGISTER IN WHICH THE LEVY CAST UPON THE LA ND OWNERS ARE RECORDED. FURTHER, THEY ELABORATED THAT THIS I S A LEVY COLLECTED FROM LAND OWNERS ON BEHALF OF AGRICULTURE LABOURERS BY THE STATE, UNDER THE STATUTE KAWWF ACT. THIS IS COLLECTED AT THE RATE OF RS.15.00 PER ANNUM FROM LAND OWNERS WHO OWN 27 ITA NO.194/COCH/2014 MORE THAN 50 ARES AND LESS THAN 100 ARES OF LAND, A ND RS.20.00 PER ANNUM FROM LAND OWNERS WHO OWN MORE TH AN 100 ARES OF AND. AN ATTEMPT WAS MADE BY THE ASSESS EE TO EQUATE THIS LEVY WITH AGRICULTURISTS AS IT IS A LEV Y COLLECTED ON BEHALF OF AGRICULTURAL LABOURERS. HOWEVER BOTH THE VILLAGE OFFICER AND THE ADDITIONAL TAHSILDAR CATEGORICALLY STATED THAT IT IS COLLECTED IN A ROUTINE MANNER FROM ALL THE LAND OWNERS WHO OWN MORE THAN A THRESHOLD LIMIT AND NOT RESTRICTED TO AGRICULTURISTS ALONE AND ALSO THAT THIS LEVY HAS NO T BEEN COLLECTED SINCE 31.03.2005 IN KAKKANAD VILLAGE. 4. THE VILLAGE OFFICER DEPOSED THAT HE MAINTAINS NO REGISTER EXCEPT FOR BASIC TAX REGISTER (BTR) AND KERALA AGRI CULTURAL WORKERS WELFARE FUND (KAWWF). BTR RECORDS THE BASI C CHARACTER OF LAND AS NILAM OR PURAYIDOM WHICH I S WET LAND AND DRY LAND RESPECTIVELY. THE WET LAND CAN BE A GRICULTURAL LAND WHICH IS PADDY OR OTHERWISE AND ALL OTHER LAND S WHICH ARE EITHER WATER LOGGED OR LIKELY TO BE WATER LOGGED AT SOME POINT OF TIME IN AN YEAR AND ALSO FALLOW LAND AND ALSO TH AT THEY HAD NO MEANS OF ASCERTAINING WHETHER THIS PARTICULAR PI ECE OF LAND WAS FALLOW, CULTIVABLE OR CULTIVATED. 5. THE PRINCIPAL AGRICULTURAL OFFICER ON BEING QUES TIONED DEPOSED THAT SHE ALSO DOES NOT HAVE ANY RECORD IN H ER OFFICE OR AT THE OFFICE OF HER SUBORDINATES TO ASCERTAIN W HETHER A PARTICULAR PIECE OF LAND WAS CULTIVATED OR NOT. HO WEVER SHE DEPOSED THAT A CERTIFICATE IS ALWAYS GRANTED BY THE AGRICULTURAL OFFICER OF THE PANCHAYAT FOR UTILIZATION OF LAND AF TER DUE INSPECTION OF PROPERTY. SINCE THE AGRICULTURAL OFF ICER SAID THAT AN INSPECTION IS ALWAYS ONE BEFORE ISSUING, THE CER TIFICATE AVAILABLE IN OUR RECORD, ISSUED BY THE THEN AGRICUL TURAL OFFICER 28 ITA NO.194/COCH/2014 ON 04/10/2009, WAS SHOWN AND SHE WAS ASKED TO EXPRE SS HER OPINION ON IT. SHE REPLIED THAT THE AGRICULTURAL O FFICER HAD TERMED THE LAND AS CULTIVABLE BUT LEFT FALLOW. S HE WAS ASKED TO EXPLAIN FALLOW LAND DURING CROSS EXAMINATION AGA INST WHICH SHE REPLIED ANY LAND CULTIVABLE BUT NOT CULTIVATED FOR THE LAST 10-15 YEARS CAN BE TERMED AS FALLOW LAND. AND DURI NG RE- EXAMINATION SHE EXPLAINED FURTHER THAT THE LAND NEE D NOT BE CULTIVATED AT ALL TO BE TERMED AS FOLLOW. 6. BTR IS A FUNDAMENTAL REGISTER AVAILABLE IN THE O FFICE OF AGRICULTURAL OFFICER. THERE IS A FARMERS REGISTER INTRODUCED SINCE 2012 WHEREIN THE FARMERS ARE REGISTERED ALONG WITH THEIR DETAILS WHICH ALSO CONTRIBUTES TO THE ESTIMATION OF FOOD PRODUCTION OF THE DISTRICT. 7. THE AGRICULTURAL OFFICER ALSO DO NOT HAVE RECORD S OF CULTIVATION OF INDIVIDUAL PROPERTIES, BUT HAS RECORDS OF PADASH EGHRAMS (COLLECTION OF PADDY FIELDS) AND OTHER PROPERTIES. THE EXTENT OF PADASHEGHARAMS ARE ARRIVED AT AND YIELD IS MULTIPL IED TO REACH THE FOOD PRODUCTION OF THE DISTRICT. 8. HENCE, MY CONCLUSION IS THAT, ON THE BASIS OF AV AILABLE RECORDS AND CERTIFICATES THE LAND IN QUESTION IS FALLOW LAN D, NOT CULTIVATED FOR A LONG TIME ATLEAST FOR A PERIOD OF 10-15 YEARS, BOUGHT AND LEFT FALLOW IN ANTICIPATION OF RISE IN P RICES DUE TO URBANIZATION AND LAND PRICE BOOM WHICH WAS TAKING P LACE DURING THE PERIOD IN QUESTION. THE ASSESSEE IS NOT AN AGRICULTURIST BY PROFESSION AND THE ASSESSEE HAS NO T INDULGED IN AGRICULTURE PRACTICES OR AGRICULTURE BEFORE OR A FTER THE PURCHASE AND ACQUISITION. THUS, THE CIRCUMSTANTIAL EVIDENCES TOO ALONG WITH AVAILABLE DOCUMENTS AND EVIDENCES, A RE 29 ITA NO.194/COCH/2014 AGAINST THE ASSESSEES CLAIM OF THE SAID PIECE OF L AND BEING AN AGRICULTURE LAND. 9. HENCE, ON THE BASIS OF MY INVESTIGATION IN THE M ATTER, I RECOMMEND THAT THE SAID PIECE OF LAND LYING IN SY.N OS.645/4, 646/4, 646/5 & 646/6 AND 647/1 AMOUNTING TO TOTAL A REA OF 173.08 ARES MAY BE CONSIDERED AS ALLOW LAND, NOT CU LTIVATED AND NOT AGRICULTURAL LAND. YOURS FAITHFULLY, SD/- (V. SRIVIJAY) ASSISTANT COMMISSIONER OF INCOME-TAX CIRCLE-2(2), KOCHI ENCLS: 1. COPY OF THE REPLY OF THE PRINCIPAL AGRICULTURAL OFFICER, ERNAKULAM 2. COPY OF THE REPLY OF THE ADDITIONAL TAHSILDAR, K ANAYANNUR TALUK. 3. COPY OF THE STATEMENT RECORDED FROM THE PRINCIPA L AGRICULTURAL OFFICER, ADDITIONAL TAHSILDAR AND VILLAGE OFFICER. 4. COPY OF THE LEVY COLLECTION REPORT OF KERALA AGR ICULTURAL LABOURER WELFARE BOARD. 25. IN ORDER TO GIVE AN OPPORTUNITY TO ALL THE ASSE SSEES COPIES OF THE REMAND REPORT ALONGWITH ITS ENCLOSURE S WERE FURNISHED TO ALL THE ASSESSEES. THE ASSESSEE IN TH E CASE OF SHRI M.J. THOMAS HAS FILED HIS OBJECTIONS / REPLY. IN RESPECT OF 30 ITA NO.194/COCH/2014 ALL OTHER ASSESSEES THEY HAVE NOT FILED ANY REPLY. ON A QUERY FROM THE BENCH, WHY THEY COULD NOT FILED THEIR REPL Y / OBJECTION, THEY SIMPLY SAID THAT THE REMAND REPORT FILED BY TH E ASSESSING OFFICER IS NOT AGAINST THE ASSESSEES AND THE ASSESS ING OFFICER HAS CLARIFIED THAT NO RECORDS ARE MAINTAINED BY THE STATE GOVERNMENT FOR THE PURPOSE OF CULTIVATION. THEREFO RE, THE EFFORT TAKEN BY THIS TRIBUNAL TO FIND OUT THE RECOR DS MAINTAINED BY THE STATE GOVERNMENT HAS ENDED IN VAIN. 26. NOW THE QUESTION ARISES FOR CONSIDERATION IS IN THE ABSENCE OF RECORDS MAINTAINED BY THE STATE GOVERNME NT FOR CULTIVATION WHETHER THE MATERIAL FILED BY THE ASSES SEES WOULD BE SUFFICIENT TO PROVE TO SHOW THAT THE ASSESSEES W ERE USING THE LAND FOR AGRICULTURAL PURPOSE / AND THE LAND IN QUESTION HAS ANY CONNECTION WITH AGRICULTURAL PURPOSE. ALL THE ASSESSEES ARE INDIVIDUAL ASSESSEES. AGRICULTURE IN THIS COUN TRY IS UNORGANISED. NORMALLY ILLITERATE CITIZENS OF THIS COUNTRY ARE ENGAGED IN AGRICULTURAL ACTIVITIES. THOUGH THE RES PECTIVE STATE GOVERNMENTS ARE TAKING STEPS TO SELL THE AGRICULTUR AL PRODUCE IN THE MARKETS, STILL, THE SALE OF AGRICULTURAL PRO DUCE IS NOT REGULATED PROPERLY. THE AGRICULTURAL LABOURERS, WH O ARE ENGAGED FOR CULTIVATION, ARE ALSO ILLITERATE. IN T HOSE CIRCUMSTANCES, EXPECTING MATERIAL EVIDENCES FROM TH E AGRICULTURISTS FOR CULTIVATION MAY BE FAR-FETCHED. IN RESPECT OF CORPORATE COMPANIES THAT ARE ENGAGED IN CULTIVATION , MAY MAINTAIN EVIDENCE FOR PURCHASE OF FERTILIZERS, PAYM ENT OF WAGES TO LABOURERS AND IN RESPECT OF SALE OF AGRICU LTURAL PRODUCES. HOWEVER, SUCH KIND OF EVIDENCE MAY NOT B E EXPECTED FROM INDIVIDUAL FARMERS SO LONG AS THE GOV ERNMENT 31 ITA NO.194/COCH/2014 DOES NOT REGULATE THE CULTIVATION OF LAND AND SALE OF AGRICULTURAL PRODUCE IN THIS COUNTRY. THIS GROUND REALITY CANNOT BE IGNORED BY JUDICIAL AUTHORITIES WHILE ADJUDICATI NG THE DISPUTE WITH REGARD TO CULTIVATION. THEREFORE, THIS TRIBUN AL CANNOT BLAME THE ASSESSEES FOR NOT MAINTAINING RECORDS FOR CULTIVATION. 27. THE STATE GOVERNMENT IS EXPECTED TO MAINTAIN CULTIVATION ACCOUNT FOR THE PURPOSE OF ESTIMATION O F FOOD PRODUCTION OF THE STATE AND POSSIBLE EXCESS OR DEFI CIT IN THE FOOD PRODUCTION SO AS TO MAKE NECESSARY ARRANGEMENT FOR SUPPLY OF FOOD TO THE PEOPLE. IN SPITE OF BEST EFF ORTS TAKEN BY THIS TRIBUNAL, NO EVIDENCE IS COMING FORWARD FROM T HE REVENUE TO SHOW THAT THE STATE GOVERNMENT WAS MAINTAINING A NY RECORD. IN FACT, THE ASSESSING OFFICER, AFTER EXAM INING THE VILLAGE ADMINISTRATIVE OFFICER, ADDITIONAL TAHSILDA R AND AGRICULTURAL OFFICER, FOUND THAT THE VILLAGE ADMINI STRATIVE OFFICER AND TAHSILDAR ARE NOT MAINTAINING ANY RECOR D FOR THE PURPOSE OF CULTIVATION. EVEN THE AGRICULTURAL OFFI CER IS NOT MAINTAINING ANY RECORDS FOR CULTIVATION. THE RECOR DS AVAILABLE WITH THE STATE GOVERNMENT ARE ONLY THE REGISTER FOR COLLECTION OF CONTRIBUTION TOWARDS KERALA AGRICULTURAL WORKERS W ELFARE FUND, BASIC TAX REGISTER AND THE CLASSIFICATION OF LAND AS AGRICULTURAL LAND. APART FROM THESE, THERE IS NO O THER MATERIAL AVAILABLE WITH THE STATE GOVERNMENT. IF THAT IS SO , IT IS NOT KNOWN HOW THE FOOD PRODUCTION OF THE STATE WAS ESTI MATED SO AS TO ENSURE SUFFICIENT SUPPLY OF FOOD TO THE PEOPL E OF THE STATE. THE FACT REMAINS IS THAT THE REVENUE COULD NOT PRODUCE ANY EVIDENCE FOR CULTIVATION OF LAND MAINTAINED BY GOVERNMENT 32 ITA NO.194/COCH/2014 OF KERALA. FROM THE REMAND REPORT FILED BY THE ASS ESSING OFFICER THE FOOD PRODUCTION OF THE STATE APPEARS TO HAVE BEEN ESTIMATED ON THE BASIS OF THE FARMERS, WHO WERE REG ISTERED ON THE RECORDS OF PADDY FIELD WITHOUT CONSIDERING THE ACTUAL CULTIVATION. THEREFORE, THE STATE GOVERNMENT FOR T HE PURPOSE OF FOOD PRODUCTION CONSIDERS THE PADDY FIELDS AND THE AGRICULTURISTS AS A BASIS FOR FOOD PRODUCTION. IN THOSE SITUATIONS, THE ASSESSEE HAS PRODUCED CERTIFICATES FROM THE VILLAGE OFFICER TO SHOW THAT THE SUBJECT LANDS WERE UNDER CULTIVATION. THIS TRIBUNAL IS OF THE CONSIDERED OP INION THAT IN THE ABSENCE OF ANY OTHER RECORD MAINTAINED BY THE S TATE GOVERNMENT FOR CULTIVATION OF THE LAND, THE CERTIFI CATE GIVEN BY THE VILLAGE ADMINISTRATIVE OFFICER, WHO IS PERSONAL LY ACQUAINTED WITH THE LAND MAY BE ONE OF THE FACTORS TO BE TAKEN INTO CONSIDERATION. THIS TRIBUNAL CANNOT IGNORE TH E CERTIFICATE GIVEN BY THE VILLAGE ADMINISTRATIVE OFFICER ON THE BASIS OF HIS ACQUAINTANCE WITH THE FIELD CERTIFYING THAT THE SUB JECT LANDS WERE SUBJECTED TO CULTIVATION. 28. WE HAVE CAREFULLY GONE THROUGH THE JUDGMENT OF THE APEX COURT IN THE CASE OF SARIFABIBI MOHMED IBRAHIM AND OTHERS VS CIT (1993) 204 ITR 631 (SC). IN THE CASE BEFORE THE APEX COURT, THE ASSESSEE SOLD A PIECE OF LAND S ITUATED WITHIN THE REVENUE LIMITS OF NAVAGAON VILLAGE IN TH E MUNICIPAL LIMITS OF SURAT MUNICIPALITY. IN THE YEAR 1967, TH E ASSESSEE AGREED TO SELL THE LAND TO A HOUSING SOCIETY. THE ASSESSEE CLAIMED THE GAIN ON TRANSFER OF SUCH LAND AS EXEMPT U/S 2(14) OF THE ACT. THE APEX COURT FOUND THAT THE ASSESSEE APPLYING FOR PERMISSION TO SELL THE LAND FOR NON AGRICULTURA L PURPOSE AND 33 ITA NO.194/COCH/2014 IMMEDIATELY AFTER APPLICATION FOR CONVERSION OF LAN D, THE LAND WAS NOT CULTIVATED FOR A PERIOD OF FOUR YEAR. IN TH OSE FACTUAL CIRCUMSTANCES, THE APEX COURT FOUND THAT THE LAND I N QUESTION IS NOT AN AGRICULTURAL LAND. IN THE CASE BEFORE US , THE ASSESSEE HAS NOT APPLIED FOR CONVERSION OF LAND FOR NON AGRICULTURAL PURPOSE. THE LAND IN QUESTION IS CLAS SIFIED AS AGRICULTURAL LAND AND THE VILLAGE OFFICER CERTIFIED THAT THE LAND WAS SUBJECTED TO CULTIVATION. THE ASSESSEE IS CONT RIBUTING TO THE AGRICULTURAL LABOURERS WELFARE FUND AND ALSO P AYING REVENUE TAX AS AGRICULTURAL LAND WHICH IS EVIDENCE FROM BASIC TAX REGISTER. IN VIEW OF THE MATERIAL AVAILABLE ON RECORD DISCLOSING THE CULTIVATION OF LAND, THIS TRIBUNAL I S OF THE CONSIDERED OPINION THAT JUDGMENT OF THE APEX COURT IN THE CASE OF SARIFABIBI MOHMED IBRAHIM AND OTHERS (SUPRA ) MAY NOT BE APPLICABLE TO THE FACTS OF THE CASE. 29. WE HAVE ALSO CAREFULLY GONE THROUGH THE JUDGMEN T OF THE KERALA HIGH COURT IN THE CASE OF SMT. ASHA GEOR GE (SUPRA). IN THE CASE BEFORE THE KERALA HIGH COURT IN THE CASE OF SMT. ASHA GEORGE (SUPRA), THE QUESTION AROSE FOR CONSIDERATION WAS EXEMPTIONS U/S 54B AND 54F OF THE ACT. ONE OF THE PRE-CONDITIONS FOR GRANT OF EXEMPTIONS U /S 54B AND 54F IS THAT THE LAND SHOULD BE USED FOR CULTIVATION IMMEDIATELY TWO YEARS BEFORE THE DATE OF TRANSACTION. SUCH A C ONDITION IS NOT AVAILABLE FOR TREATING THE LAND AS CAPITAL ASSE T U/S 2(14) OF THE ACT. THEREFORE, AS OBSERVED EARLIER, WHAT IS R EQUIRED IS THE CONNECTION BETWEEN THE LAND AND THE AGRICULTURAL PU RPOSE AND IF THE LAND IS CULTIVATED IN ANY OF THE EARLIER YEA RS, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE LAND HAS TO B E TREATED AS 34 ITA NO.194/COCH/2014 AGRICULTURAL LAND. THE MATERIAL EVIDENCE PRODUCED BY THE ASSESSEES ARE - (I) THE CERTIFICATE ISSUED BY THE V ILLAGE OFFICER; (II) CERTIFICATE ISSUED BY THE AGRICULTURAL OFFICER ; (III) CLASSIFICATION OF LAND BY STATE GOVERNMENT AS AGRIC ULTURAL LAND; (IV) RECEIPT FOR PAYMENT OF CONTRIBUTION TO AGRICUL TURAL WORKERS WELFARE FUND; AND (V) BASIC TAX REGISTER. FROM TH ESE MATERIALS, IT APPEARS THAT THE STATE GOVERNMENT HAS CLASSIFIED THE SUBJECT LAND AS AGRICULTURAL LAND. THE GOVERNM ENT IS COLLECTING TAX AS AGRICULTURAL LAND WHICH IS EVIDEN T FROM THE BASIC TAX REGISTER. THE ASSESSEES ARE ALSO CONTRIB UTING TOWARDS AGRICULTURAL WORKERS WELFARE FUND. THE VI LLAGE OFFICER CERTIFIED THAT THE SUBJECT LANDS WERE SUBJE CTED TO CULTIVATION. IN THOSE CIRCUMSTANCES, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE SUBJECT LANDS WERE AGRI CULTURAL LANDS BEYOND THE MUNICIPAL LIMITS OR BEYOND 8 KMS R ADIUS OF THE NOTIFIED MUNICIPALITY. THEREFORE, THE SUBJECT LAND CANNOT BE TREATED AS CAPITAL ASSET WITHIN THE MEANING OF S ECTION 2(14) OF THE ACT; HENCE NOT LIABLE FOR CAPITAL GAIN TAX U NDER THE INCOME-TAX ACT. 13. IN VIEW OF THE ABOVE, THE CERTIFICATE ISSUED BY THE VILLAGE OFFICER, THE MEMBER OF THE VILLAGE PANCHAYAT, THE RECEIPT FOR PA YMENT OF TAX AND THE CLASSIFICATION OF LANDS IN REVENUE RECORDS ASSUMES SIGNIFICANCE AND THE SAME HAVE TO BE CONSIDERED BEFORE DECIDING WHETHER THE LAND IN QUESTION IS AN AGRICULTURAL LAND OR NOT? AS RIGHTLY SUBMITT ED BY THE LD.COUNSEL FOR THE ASSESSEE, IGNORANCE OF THE ASSESSEE OR INADVERTENT REFERENCE ABOUT THE NATURE OF THE LAND IN THE SALE DEED CANNOT BE TAKEN ADVANTAGE OF BY THE 35 ITA NO.194/COCH/2014 DEPARTMENT IN CASE THE LAND IS ACTUALLY AN AGRICULT URAL LAND. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE MATT ER NEEDS TO BE EXAMINED BY THE ASSESSING OFFICER IN DETAIL AFTER CONSIDERIN G THE CERTIFICATE ISSUED BY THE VILLAGE OFFICER, MEMBER OF THE VILLAGE PANCHAYA T AND THE BILLS PRODUCED BY THE ASSESSEE FOR PAYMENT OF TAX, SALE OF RUBBER, ETC. THE ASSESSING OFFICER SHALL ALSO ASCERTAIN THE CLASSIFICATION OF THE SUBJECT LND IN THE STATE REVENUE RECORDS. 14. WE HAVE CAREFULLY GONE THROUGH THE JUDGMENT OF THE KERALA HIGH COURT IN KUNHANSU (SUPRA). IN THE CASE BEFORE THE KERALA HIGH COURT, THE ASSESSMENT WAS MADE U/S 153C OF THE ACT. THE ASSES SEE CLAIMED THE LAND IN QUESTION WAS AGRICULTURAL LAND. THE ASSESS EE HAS ALSO PRODUCED CERTIFICATE FROM THE AGRICULTURAL OFFICER, VILLAGE OFFICER, ADDITIONAL TEHSILDAR, ETC. AFTER CONSIDERING THE DOCUMENTS, THE KERALA H IGH COURT FOUND THAT THESE DOCUMENTS ARE INSUFFICIENT TO CONCLUSIVELY PR OVE THAT THE LAND IN QUESTION WAS AGRICULTURAL LAND. THIS OBSERVATION W AS MADE BY THE HIGH COURT AFTER CONSIDERING THE RECITAL FOUND IN THE SA LE DEED THAT LAND IN QUESTION WAS USED FOR CONDUCTING FOOTBALL TOURNAMEN T AND IT WAS ALSO DESCRIBED IN THE SALE DEED AS STADIUM LAND. THEREF ORE, EVEN THOUGH IT WAS AN AGRICULTURAL LAND IT WAS NOT USED FOR AGRICULTUR AL PURPOSE, THE USAGE OF THE LAND WAS CONVERTED INTO NON AGRICULTURAL PURPOS E / STADIUM BEFORE THE DATE OF SALE FOR CONDUCTING FOOTBALL TOURNAMENTS. I N THE CASE BEFORE US, IT IS 36 ITA NO.194/COCH/2014 NOBODYS CASE THAT LAND WAS USED FOR ANY OTHER PURP OSE. THE ASSESSEE CLAIMS THAT THE LAND WAS USED FOR AGRICULTURAL PURP OSE AND DESCRIPTION WAS WRONGLY MADE IN THE SALE DEED. MOREOVER, IN THE ST ATE OF KERALA, STATE GOVERNMENT IS NOT MAINTAINING ANY RECORDS FOR CULTI VATION. AGRICULTURE, BEING A STATE SUBJECT UNDER THE CONSTITUTION, NO RE CORDS WOULD BE AVAILABLE WITH THE CENTRAL GOVERNMENT. IN THOSE CIRCUMSTANCE S, THE CERTIFICATE ISSUED BY FIELD LEVEL OFFICERS / PEOPLES REPRESENTATIVE AS SUMES SIGNIFICANCE. OF COURSE, THE GENUINENESS OF THE CERTIFICATE NEEDS TO BE EXAMINED BY THE ASSESSING OFFICER. THIS TRIBUNAL BEING A FINAL FAC T FINDING AUTHORITY, THE ACTUAL FACTS NEEDS TO BE BROUGHT ON RECORD. THEREF ORE, THIS ISSUE NEEDS TO BE EXAMINED BY THE ASSESSING AUTHORITY. ACCORDINGL Y, THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND THE ISSUE WHETH ER THE LAND IS AGRICULTURAL LAND OR NOT HAS TO BE EXAMINED BY THE ASSESSING OFFICER AND THEREAFTER THE ASSESSING OFFICER SHALL DECIDE THE I SSUE IN ACCORDANCE WITH LAW AFTER GIVING A REASONABLE OPPORTUNITY TO THE AS SESSEE. THE ASSESSING OFFICER SHALL ALSO EXAMINE THE CLAIM OF THE ASSESSE E U/S 54F AND 54B ON ITS MERIT IN ACCORDANCE WITH LAW. 15. WITH THE ABOVE OBSERVATIONS, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. 37 ITA NO.194/COCH/2014 ORDER PRONOUNCED IN THE OPEN COURT ON THIS 09 TH JANUARY, 2015. SD/- SD/- (CHANDRA POOJARI) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 09 TH JANUARY, 2015 PK/- COPY TO: 1. SHRI PAUL P ABRAHAM, PALATHULLIL HOUSE, BRAHMAPU RAM, AMBALAMEDU, ERNAKULAM DIST. 682 303 2. ACIT, CIR.2(2), KOCHI 3. THE COMMISSIONER OF INCOME-TAX, KOCHI 4. THE COMMISSIONER OF INCOME-TAX(A)-II, KOCHI 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH