Shri Madan Mohan Das Shah (HUF), Secunderabad V. Dy.CIT., CentralCircle-2, Hyderabad

ITA 205/HYD/2014

• Counselvise Citation: 20522514 RSA 2014
• Duration Of Justice: 44 year(s) 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-06-2014
• Appeal Filed By: Assessee
• Assessment Year: misc
• Appeal Filed On: 01-01-1970
• Court: TRIBUNAL
• Department Lawyers: ADAGIRI
• Keywords: Capital asset; Search and seizure; Cost of acquisition; Valuation report; Onus to prove
• Section: 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA.NO.204/HYD/2014 ASSESSMENT YEAR 2006-07 SRI MADAN MOHAN DAS SHAH (HUF), HYDERABAD PAN AAFHM-5887-E VS. DCIT, CENTRAL CIRCLE- 2 HYDERABAD (APPELLANT) (RESPONDENT) ITA.NO.205/HYD/2014 ASSESSMENT YEAR 2008-09 SRI MADAN MOHAN DAS SHAH (HUF), HYDERABAD PAN AAFHM-5887-E VS. DCIT, CENTRAL CIRCLE- 2 HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE MR. K.C. DEVDAS FOR REVENUE MR. B. YADAGIRI DATE OF HEARING 24.04.2014 DATE OF PRONOUNCEMENT 13.06.2014 ORDER PER B. RAMAKOTAIAH, A.M. THESE TWO APPEALS ARE BY ASSESSEE AGAINST THE COMMON ORDER OF THE CIT(A)-I, HYDERABAD DATED 27.01 .2014 FOR THE A.Y. 2006-07 AND 2008-09. ASSESSEE IS AGGRIEVED ON THE LEVY OF CAPITAL GAINS ON SALE OF LAND STATED TO BE AGRICULTURAL LAND BY HIM BUT TREATED AS NON-AGRICULTURAL LAND BY REVENUE. 2. BRIEFLY STATED, ASSESSEE IS THE OWNER OF AC.3.2 7 GTS SITUATED AT SURVEY NO.262 AND 263 AS WELL AS AC.11. 34 GTS SITUATED AT SURVEY NO.163, 164 OF VATTINAGULAPALLI VILLAGE, RAJENDRANAGAR MANDAL, RANGAREDDY DIST. WHILE SETTLI NG HIS 2 ITA.NO.204/HYD/2013 & 205/HYD/2014 SRI MADAN MOHAN DAS SHAH (HUF), HYDERABAD LANDS TO HIS FAMILY MEMBERS SITUATED AT SURVEY NO.1 63, 164, ASSESSEE ALSO ENTERED INTO AN AGREEMENT OF SALE DAT ED 27.01.2006 WITH M/S. SPLENDID APARNA PROJECTS P. LT D., (SAPPL) FOR SALE OF LANDS AC 3.27 GTS SITUATED AT S URVEY NO. 262 AND 263 FOR CONSIDERATION OF RS.2,64,60,000/- AT RS.72,00,000/- PER ACRE (40 GUNTAS MAKE ONE ACRE). THE ENTIRE CONSIDERATION WAS PAID BY SAPPL BETWEEN 27.08.2005 TO 27.11.2005 THOUGH THE LAND WAS NOT REGISTERED. 3. THERE WERE SEARCH AND SEIZURE PROCEEDINGS IN TH E CASE OF M/S SPLENDID APARNA PROJECTS P. LTD., GROUP ON 19.09.2007 AND CONSEQUENT TO THAT ASSESSEES GROUP WERE ALSO COVERED BY THE PROCEEDINGS. ASSESSEE DID FILE RETUR N OF INCOME FOR A.Y. 2006-07 ADMITTING AN INCOME OF RS.1,68,328 /- ON 26.07.2006 WHEREAS, RETURN FOR A.Y. 2008-09 WAS NOT DUE BY THAT TIME. CONSEQUENT TO THE NOTICE ISSUED UNDER SE CTION 153A ON 20.10.2008 ASSESSEE FILED RETURN OF INCOME DECLA RING THE SAME INCOME FOR A.Y. 2006-07 AND AN AMOUNT OF RS.2,42,550/- FOR A.Y. 2008-09. AT THE TIME OF FILI NG ORIGINAL RETURN OF INCOME FOR AY 2006-07, ASSESSEE MADE A NO TING IN THE COMPUTATION SHEET THAT ASSESSEE HAS RECEIVED AD VANCE FROM THE SAID SAPPL OF AN AMOUNT OF RS.2,64,60,000/ -. AS AGREEMENT OF SALE WITH THE GROUP SAPPL WAS FOUND IN THE SEARCH, ASSESSEE WAS ASKED TO EXPLAIN WHY CAPITAL G AINS TAX LIABILITY ON THE SALE OF LAND WAS NOT DISCLOSED. IT WAS THE CONTENTION OF THE ASSESSEE THAT THE SAID LANDS WERE AGRICULTURAL LANDS AND THEREFORE, THERE IS NO LIABILITY TO CAPIT AL GAINS. A.O. WAS OF THE OPINION THAT THE SAID LANDS WERE NOT AGR ICULTURAL LANDS AND THE OTHER FAMILY MEMBERS I.E., ASSESSEES BROTHERS 3 ITA.NO.204/HYD/2013 & 205/HYD/2014 SRI MADAN MOHAN DAS SHAH (HUF), HYDERABAD MR. KRISHNA KUMAR D. SHAH, SURESH KUMAR D. SHAH, AN D LATE SRI PRABHUCHARAN DAS HAVE OFFERED THE CAPITAL GAINS IN THE RESPECTIVE CASES FOR THE TRANSFER OF THE LANDS IN T HE SAME SURVEY NUMBER. IT WAS CONTENDED BY THE ASSESSEE THA T THE SAID LANDS WERE INDEED AGRICULTURAL LANDS AND AGRICULTUR AL CROPS WERE GROWN AND IS GROWING AND SUBMITTED VARIOUS EVI DENCES LIKE ELECTRICITY BILLS FOR THE PUMP SET ON THE SITE AND DETAILS OF INCOMES DECLARED IN EARLIER YEARS, RETURNS FILED FO R A.Y. 2004- 05, 2005-06 ADMITTING AGRICULTURAL INCOME AND ALSO VARIOUS PAHANI PATRIKAS EVIDENCING AGRICULTURAL OPERATIONS. NOT ONLY THAT ASSESSEE ALSO SUBSEQUENTLY IN THE COURSE OF AS SESSMENT PROCEEDINGS FURNISHED THE ORDERS OF THE AUTHORITIES ACQUIRING AN AREA OF AC.1.36 GTS OUT OF THIS LAND FOR THE PUR POSE OF ORR PROJECT OF HYDERABAD FOR AN AMOUNT OF RS.37,69,600/ - WHICH WERE RECEIVED BY THE ASSESSEE ON 16.11.2007 AND 03. 11.2008, TO SUBSTANTIATE THAT THE COMPENSATION WAS RECEIVED FOR AGRICULTURAL LAND AND ALSO FOR HORTICULTURAL CROPS, PUMP SHED ETC., IT WAS THE CONTENTION THAT THE SAID LANDS WER E AGRICULTURAL LANDS. IN ADDITION, IT WAS ALSO CONTENDED THAT ASSE SSEE EVEN THOUGH ENTERED INTO AN AGREEMENT OF SALE, THE LAND WAS NOT GIVEN POSSESSION TO THE SAID BUYER AS THE LAND WAS COVERED BY G.O.MS.NO.111 OF GOVERNMENT OF ANDHRA PRADESH, WHER E DEVELOPMENT OF COMMERCIAL NATURE WAS NOT PERMITTED. FURTHER, NOTIFICATION FOR ACQUIRING THE LAND FOR THE ORR PRO JECT WAS ALREADY ISSUED COVERING PART OF THE SURVEY LAND. IT WAS THE CONTENTION THAT SINCE THE SALE AGREEMENT WITHOUT PO SSESSION OF THE LAND CANNOT BE CONSIDERED AS TRANSFER, CAPITA L GAINS IS NOT EXIGIBLE. ASSESSEE RELIED ON VARIOUS CASE LAW I N SUPPORT OF HIS CONTENTIONS THAT CAPITAL GAINS CANNOT BE LEVIED . 4 ITA.NO.204/HYD/2013 & 205/HYD/2014 SRI MADAN MOHAN DAS SHAH (HUF), HYDERABAD 4. THE A.O. HOWEVER, DID NOT AGREE WITH THE SAID CONTENTIONS. HE SEEMS TO HAVE OBTAINED SEPARATE PAHANI PATRIKAS FROM THE MRO AND ALSO SEEMS TO HAVE INSPECTED THE LAND. HIS FINDINGS ON BOTH THE CONTENTIONS OF THE A SSESSEE ARE AS UNDER : 1. AS PER THE AGREEMENT OF SALE, THERE WAS NO MENTION THAT IT WAS AN AGRICULTURAL LAND. 2. THE ASSESSEE ACQUIRED THE LAND FROM HIS MOTHER, SMT.LAKSHMI DEVI THROUGH AN ORAL PARTITION DEED DT. 25-1- 1980, ALONG WITH HIS BROTHERS, SRI KRISHNA KUMAR D. SHAH, SURESH KUMAR D.SHAH AND LATE PRABHU CHARAN DAS AND THE LAND THAT WAS PARTITIONED WAS ALSO SHOWN AS BAR REN LAND AND IT CANNOT BE CLAIMED AS AGRICULTURAL LAND. 3. THE ASSESSING OFFICER ALSO VISITED THE LAND AND FOU ND THAT THE ENTIRE LAND WAS SURROUNDED WITH ROCKS AND MOUNTAINS AND NOT AMENABLE FOR CULTIVATION. 4. ONE OF HIS BROTHERS, SRI KRISHNA KUMAR D.SHAH WHO A LSO GOT LAND FROM HIS MOTHER IN THE SAME SURVEY NUMBER HAD ADMITTED CAPITAL GAIN ON THE LAND ACQUIRED BY STATE GOVERNMENT. WHEN ALL THE FOUR BROTHERS DERIVED THE LAND FROM THE COMMON SOURCE IN THE SAME SURVEY NUMBER, H OW CAN ONE PIECE OF LAND BE TAXED AND THE OTHER PIECE CAN BE EXEMPTED. 5. THE RETURNS FILED IN THE STATUS OF HUF SHOWED NO AGRICULTURAL INCOME OFFERED BY , THE ASSESSEE FOR ASST.YEARS 2002-03 AND 2003-04 AND ONLY IN THE ASST.YEARS 2004-05 & 2005-06, AN AMOUNT OF RS.50,00 0J- WAS OFFERED AS AGRICULTURAL INCOME WHICH SHOWS THAT THE ASSESSEE WANTED TO MISLEAD THE DEPARTMENT TO ESCAPE THE CAPITAL GAINS TAX BY ADMITTING AND INTRODUCING SUCH BOGUS AGRICULTURAL INCOME JUST PRIOR TO THE DATE OF AGREE MENT. THIS INTENTION IS EVEN MANIFESTED IN THE APPLICATIO N MADE UJS.144A OF I.T. ACT DT.13-11-2009 BEFORE ADDI.CIT, CENTRAL RANGE-1 WHERE THEY REFERRED TO THE PROVISIO NS OF SECTION 10(37)(II) OF I.T. ACT (AS PER THE SAID PRO VISIONS, THE 5 ITA.NO.204/HYD/2013 & 205/HYD/2014 SRI MADAN MOHAN DAS SHAH (HUF), HYDERABAD CAPITAL GAIN ARISING FROM TRANSFER OF AGRICULTURAL LAND WHERE SUCH LAND DURING THE PERIOD OF TWO YEARS IMMEDIATELY PRECEDING THE DATE OF TRANSFER, WAS BEI NG USED FOR AGRICULTURAL PURPOSES BY SUCH INDIVIDUAL O R HUF IS EXEMPTED) AND INTENDED TO CLAIM EXEMPTION ON THI S GROUND. 6. WHEN THE ASSESSING OFFICER ASKED TO GIVE THE DETAIL S OF THE AGRICULTURAL INCOME SUCH AS CROPS GROWN ETC. WI TH DOCUMENTARY EVIDENCES, THE ASSESSEE STATED VIDE LET TER DT.20-10-2009 THAT HE HAS BEEN CULTIVATING PADDY, J OWAR, CORN, SEASONAL VEGETABLES, FLOWERS AND FRUITS (MANG O, MAUSAMBI, COCONUT, SAPOTA, GUAVA) ON THAT LAND. HE ALSO INCLUDED CEREALS, MILLETS, VEGETABLES, FRUITS ETC. THE ASSESSING OFFICER WONDERED AS TO HOW A PERSON CAN CULTIVATE ALL THE DIFFERENT TYPES OF CROPS ON A PIE CE OF AC.3- 27 GUNTAS WHICH - REQUIRE ITS OWN SOIL, CLIMATE, IR RIGATION REQUIREMENT, FERTILIZERS, PESTICIDES AND FUNGICIDES . 7. THE ASSESSING OFFICER MADE ENQUIRIES FROM THE MRO O FFICE AND VERIFIED THE PAHANIS AND FOUND THAT THE LAND WA S CLASSIFIED AS VACANT LAND (PADAVA IN TELUGU) AND NO CROPS WERE CULTIVATED ON THE PIECE OF LAND SITUATED IN SU RVEY NO.262 & 263 FROM THE FY 2000-01 TO 2007-08. THE SA ID INFORMATION WAS PUT TO THE ASSESSEE AND THE ASSESSE E IN REPLY HAS FILED A VALUATION REPORT OF HORTICULTURE OFFICER WHO HAS STATED TO HAVE VALUED CERTAIN TREE CROPS SI TUATED AT SURVEY NO.262 OF THE ASSESSEE WHERE THE VALUATIO N WAS DONE FOR THE PURPOSE OF LAND ACQUISITION. THE HORTI CULTURE OFFICER WAS SUMMONED U/S.131 OF I.T. ACT AND HIS SW ORN STATEMENT WAS RECORDED ON 25-11-2009 IN WHICH HE STATED THAT HE FURNISHED THE VALUATION REPORT BY IDENTIFYING CERTAIN TREE CROPS ON SURVEY NO. 262 AN D IT WAS ALSO MENTIONED IN THAT REPORT THEY WERE ALL 3-4 YEA RS OLD. THE ASSESSING OFFICER AVERRED THAT IF THIS CONTENTI ON IS CORRECT THEN THERE COULD HAVE BEEN MENTION OF THESE CROPS IN THE REVENUE RECORDS FOR THE FYS 2000-01 TO 2007- 08. THE ASSESSING OFFICER NOTED THAT THE REVENUE RECORD S MAINTAINED WITH MANDAL REVENUE OFFICER IS THE BASIC DOCUMENT OF LANDS, OWNERS, EXTENT, CROPS CULTIVATED ETC. AND THE VILLAGE ADMINISTRATIVE OFFICER SUBMIT THIS REPORT 6 ITA.NO.204/HYD/2013 & 205/HYD/2014 SRI MADAN MOHAN DAS SHAH (HUF), HYDERABAD EVERY YEAR TO THE MRO AND IN TURN THESE RECORDS ARE BEING PREPARED ACCORDINGLY. 8. THE ASSESSING OFFICER OBSERVED THAT THE LAND IN SUR VEY NO.262 AND 263 WERE DISTRIBUTED AMONG 4 BROTHERS AN D THE OTHER MEMBERS THOUGH CONTESTED INITIALLY THAT T HEY WERE AGRICULTURAL LANDS, LATER ON WHEN THE ENQUIRIE S WERE MADE WITH MRO, RAJENDRANAGAR, HAVE FILED THE REVISE D RETURN BY OFFERING CAPITAL GAIN ON ACCOUNT OF THE S AID LANDS IN SURVEY NO.262 & 263 BY THE STATE GOVERNMEN T FOR THE PURPOSE OF ORR PROJECT. EVEN SRI KRISHNA KU MAR SHAH, WHO WAS HAVING AC 4-17 GUNTAS IN THE SAME SURVEY NUMBER I.E., 262 HAD ADMITTED CAPITAL GAIN O N THE DATE OF SEARCH ITSELF AND PAID THE TAXES. 9. THE ASSESSING OFFICER HAS ALSO FOUND AN INTERESTING POINT IN THE REPORT OF THE HORTICULTURE OFFICER I.E., THE HORTICULTURE OFFICER IN HIS REPORT MENTIONED ONLY THE NAME OF MADANMOHAN SHAH AGAINST SURVEY NO.262 EVEN THOUGH THERE ARE THREE DIFFERENT BROTHERS OWNED AROUND AC1 2-20 GUNTAS IN THE SAME SURVEY NUMBER. 10. THE ASSESSING OFFICER HAS ALSO EXPLAINED WITH FACTS AND FIGURES HOW THE ASSESSEE COULD NOT HAVE HARVESTED A NY FRUITS FROM THE TREES MENTIONED. 11. THE ASSESSING OFFICER HAS ALSO POINTED OUT THAT THE ASSESSE2 WAS OBJECTING THE 'PAHANI PATRAS' COLLECTE D BY THE ASSESSING OFFICER FROM MRO AND ON THE OTHER HAN D, HE HIMSELF HAS SUBMITTED ANOTHER PAHANI PATRA ISSUED B Y VAO ON A LATER DATE (NOT RELEVANT TO THE SUBJECT YE AR) AND RELIED ON THE SAME I.E., LAND WAS AGRICULTURAL LAND THEREBY CHOOSING EVIDENCES TO SUIT HIS NEEDS AND PURPOSE. 12. THE ELECTRICITY BILL OF 1988 TO 1990 CLAIMING THAT THE AP STATE ELECTRICITY BOARD COLLECTED ELECTRICITY CHARG ES APPLICABLE TO AGRICULTURAL CATEGORY CONSUMERS FILED BY THE ASSESSEE HAS ALSO BEEN REJECTED BY THE ASSESSING OF FICER AS NOT BEING RELEVANT. 7 ITA.NO.204/HYD/2013 & 205/HYD/2014 SRI MADAN MOHAN DAS SHAH (HUF), HYDERABAD FROM THE ABOVE DISCUSSION, IT IS AMPLY CLEAR THAT T HE PROPERTY IN QUESTION IS NOT AN AGRICULTURAL LAND AS CLAIMED BY THE ASSESSEE AND IS EXIGIBLE TO CAPITAL GAINS TA X. 5. ON THE ISSUE OF PART-PERFORMANCE OF THE AGREEME NT OF SALE, A.O. WAS OF THE OPINION THAT BOTH THE PART IES ARE AWARE AND ENTERED INTO TRANSACTIONS WITH COMPLETE KNOWLED GE OF G.O.MS.NO.111. MOREOVER, THERE WAS ALSO A CLAUSE IN THE AGREEMENT THAT IF THE ASSESSEE IS UNSUCCESSFUL IN D E-NOTIFYING THE LAND BEING ACQUIRED FOR ORR, HE HAS TO COMPENSA TE SIMILAR LAND IN SURVEY NO.163 AND 164 AND THEREFORE, A.O. W AS OF THE OPINION THAT ASSESSEE HAS EXTINGUISHED HIS RIGHTS A S PER SECTION 2(47)(II) OF THE ACT, NOTWITHSTANDING REGIS TRATION OF THE DEED. ACCORDINGLY, HE BROUGHT SALE CONSIDERATION FO R COMPUTATION OF CAPITAL GAINS. THEREAFTER, TAKING CU E FROM THE OTHER FAMILY MEMBERS RETURNS, A.O. ALSO DETERMINED THE COST OF ACQUISITION AT A VERY SMALL AMOUNT THEREBY, DETE RMINING THE CAPITAL GAIN ON SALE OF THE LAND IN A.Y. 2006-07 AT RS.2,64,42,407/-. IN THE PROCESS, HE BROUGHT THE EN TIRE AC.3.27 GTS TO TAX. THE MATTER DID NOT REST THERE. AS THE A SSESSEE HAS RECEIVED COMPENSATION FROM THE GOVERNMENT FOR ACQUI RING LAND IN SURVEY NO. 262 AND 263 TO AN EXTENT OF AC.1.36 G TS (OUT OF THE SAME DEEMED TO HAVE SOLD IN A.Y. 2006-07) AN AM OUNT OF RS.21,91,471/- WAS ALSO BROUGHT TO TAX AS INCOME F ROM OTHER SOURCES AND ACCORDINGLY, ASSESSMENT FOR A.Y. 2008- 09 WAS COMPLETED BY THE A.O. 6. BEFORE THE LD. CIT(A), ASSESSEE CONTESTED EACH OF THE ISSUES RAISED BY THE A.O. AND RELIED ON VARIOUS REVENUE RECEIPTS, ELECTRICITY BILLS, PAHANI PATRIKAS AND ALSO ORDERS OF THE AUTHORITIES ACQUIRING LAND TO SUBMIT THAT THE LAND IN QUESTION 8 ITA.NO.204/HYD/2013 & 205/HYD/2014 SRI MADAN MOHAN DAS SHAH (HUF), HYDERABAD WAS AGRICULTURAL LAND. WITHOUT PREJUDICE IT WAS ALS O CONTENDED THAT THERE WAS NO TRANSFER OF LAND TO THE SAID BUYE R, THEREFORE, CAPITAL GAINS IS NOT EXIGIBLE IN THOSE YEARS. HOWEV ER, LD. CIT(A), DID NOT AGREE WITH THE ASSESSEES CONTENTIONS. THE RELEVANT ORDERS OF THE CIT(A) IN PARA 4.8 AND 7.0, 8.0 ARE A S UNDER : 04.8 THE BURDEN OF PROVING THE FACT THAT THE LAND TRANSFERRED WAS AGRICULTURAL LANE OR NOT IS ON THE ASSESSEE AND THE ONUS TO PROVE ITS CLAIM OR OF ITS INCOME AS BEING EXEMPT UNDER THE ACT IS ONLY ON THE ASSESSEE AND IT MAY BE NOTED THAT THE APPELLANT HAS FAILED TO DISCHARGE THIS BURDEN/ONUS ALTOGETHER. TH E LAND UNDER REFERENCE HAS NOT BEEN SHOWN AS USED FOR AGRICULTURAL PURPOSES THERE IS NOTHING TO SHOW THAT THE LAND WAS BEING CULTIVATED PRIOR TO ITS SALE AND HE HAS DERIVED ANY AGRICULTURAL INCOME THERE FROM. EVEN THOUGH THE APPELLANT OR THE PREVIOUS OWNERS HAD OWNED THIS LAND EVEN PRIOR TO 1-4-1981, IT IS ONLY THE STATUS OF THE LAND AT THE TIME OF ITS SALE THAT IS RELEVANT AND EVEN AGRICULTURAL ACTIVITY THEREON IN THE PAST WOULD BE OF NO AVAIL AND THE PRICE FETCHED FOR THE LAND W OULD TANTAMOUNT TO THE PRICE FOR URBAN LANDS RATHER THAN FOR AGRICULTURAL LAND AND ACCORDINGLY THE LAND UNDER REFERENCE WAS NOT AN AGRICULTURAL LAND BUT A CAPITA L ASSETS EXIGIBLE TO CAPITAL GAINS TAX. IT MAY BE NOT ED THAT NO PRUDENT PERSON WOULD INVEST SUBSTANTIAL AMOUNTS FOR ACQUIRING DRY AGRICULTURAL LANDS WHILE THE OUTPUT ON ACCOUNT OF AGRICULTURAL ACTIVITY IS MEAGR E COMPARED TO THE INVESTMENT AND THE LAND SHEDS ITS CHARACTER OF AGRICULTURAL ONCE IT HAS BEEN ENTERED INTO DEVELOPMENT AGREEMENT. THIS CLEARLY ESTABLISHES THE FACT THAT THE ASSET IN QUESTION IS NOT AN AGRICULTU RAL LAND. AS NOTED EARLIER, THE LAND HOLDING OF THE FAM ILY MEMBERS HAS BEEN TRANSFERRED TO M/S. DAKSHIR SHELTERS PVT.LTD., (THE LAND HOLDING OF THE ENTIRE FAMILY HAS BEEN TRANSFERRED BY M/S. DAKSHIN SHELTERS PVT. LTD. WHICH IS EVIDENT FROM THE NOTE BOOK FOUND IN T HE HAND WRITING OF HIS NEPHEW, SRI APOORVA SHAH) WHICH IS A REAL ESTATE DEVELOPER AND THE EXECUTION OF DEVELOPMENT AGREEMENT BY THE APPELLANT AMOUNTED TO TRANSFER WITHIN THE MEANING OF SEC.2(47) OF THE I.T . ACT. 9 ITA.NO.204/HYD/2013 & 205/HYD/2014 SRI MADAN MOHAN DAS SHAH (HUF), HYDERABAD THEREFORE, THE TREATMENT OF THE PROPERTY AS CAPITAL ASSET EXIGIBLE TO INCOME TAX BY THE ASSESSING OFFIC ER IS CORRECT. 04.9 . . . . 05.0. ... 06.0 ... 07.0. IT MAY BE NOTED ALL THE FACTS OF THE INSTANT CASE ARE IDENTICAL TO THE CASE CITED ABOVE AND EVEN THE PURCHASER IS ALSO THE SAME PARTY I.E., SAPPL AND AS PER THE AGREEMENT OF SALE DT. 27-1-2006, IT IS CLEARLY MENTIONED THAT THE VENDOR HAS OFFERED TO SELL THE L AND ADMEASURING AC.3-27 GUNTAS IN SURVEY NO. 262 AND 26 3 OF VATTINAGULAPALLY VILLAGE, RAJENDRA NAGAR MANDAL, RANGA REDDY DISTRICT, AND AS PER CLAUSE-3, THE VEND OR I.E., THE ASSESSEE HAS AGREED TO GIVE EQUIVALENT LA NDS IN SURVEY NO.163 AND 164 ON THE SAME TERMS AND CONDITI ONS OF THE AGREEMENT IF HE FAILS TO GET DE-NOTIFICATION OF THE LAND FALLING IN THE PROPERTY UNDER CONSIDERATION FR OM THE PROPOSED ORR AND FINALLY AS PER C1AUSE-12 IN THE EV ENT IF THE VENDOR FAILS TO EXECUTE THE SALE DEED, THE PURC HASER WILL BE ENTITLED TO SEEK SPECIFIC PERFORMANCE OF AG REEMENT. ALL THESE SHOWS THAT THE CONDITIONS LAID DOWN IN SE CTION 2(47)(V) HAVE BEEN SATISFIED AND THE ASSESSING OFFI CER IS JUSTIFIED IN TREATING THE TRANSACTION AS LIABLE FOR CAPITAL GAINS IN THE YEAR OF THE AGREEMENT. 08.0. THE APPELLANT'S ARGUMENT THAT THE ELECTRICIT Y CHARGES WERE PAID BY HIM IS ALSO CONSIDERED (AND TH E EVIDENCE FILED BY THE APPELLANT SHOWS THAT THE BILL WAS DATED 121988 AND IT IS NOT UNDERSTOOD HOW IT IS REL EVANT TO ESTABLISH THE LANDS IN QUESTION WERE AGRICULTURA L LANDS. DURING THE RELEVANT PERIOD. THE CONTENTION OF THE A PPELLANT THAT HE HAS SHOWN AGRICULTURAL INCOME FROM THE SAID LANDS PRIOR TO THE SALE OF THE LANDS HAS BEEN REBUT TED WITH CLEAR FINDING BY THE ASSESSING OFFICER IN THE ASSES SMENT ORDER AND I ENTIRELY AGREE WITH THE OBSERVATION MAD E BY THE ASSESSING OFFICER THAT THE FILING OF RETURNS SH OWING AGRICULTURAL INCOME FOR TWO ASSESSMENT YEARS PRIOR TO THE SALE OF THE LANDS THROUGH DEVELOPMENT AGREEMENT WAS 10 ITA.NO.204/HYD/2013 & 205/HYD/2014 SRI MADAN MOHAN DAS SHAH (HUF), HYDERABAD ONLY TO CLAIM EXEMPTION UJS.10(37)(II) OF I.T. ACT AND ALSO THE IMPOSSIBILITY OF CULTIVATION OF THE LAND AND AL SO CULTIVATION OF DIFFERENT TYPES OF CROPS ON A PIECE OF AC.3-27 GTS. WHICH REQUIRE ITS OWN SOIL, CLIMATE, IRRIGATIO N REQUIREMENT, FERTILIZERS, PESTICIDES ETC., IS ALSO REJECTED. ACCORDINGLY, FINDING NO INFIRMITY IN THE ACTION OF THE ASSESSING OFFICER, THE TREATMENT OF PROFITS ON SALE OF IMPUGNED LANDS AS RESULTING IN LONG TERM CAPITAL GA INS IS UPHELD. 6.1. IN PARA 4.9, LD. CIT(A) RELIED ON THE DECISIO N OF THE ITAT, PUNE BENCH, PUNE IN THE CASE OF SUNANDA ULLAS CHOUDHURY VS. ITO ITA.NO.1492/PN/2008 DATED 03.10.2 011 FOR THE PROPOSITION THAT THE LAND WHICH WAS WORTHY FOR EARNING COMMERCIAL PROFITS WOULD NOT BE CONSIDERED AS AGRIC ULTURAL LAND. VIDE PARA 6.0, LD. CIT(A) RELIED ON THE COORD INATE BENCH DECISION IN THE CASE OF KRISHNA KUMAR D. SHAH (HUF) , PRAMOD SHAH (HUF), BRIJ GOPAL SHAH (HUF) AND SANDEEP SHAH (HUF) IN ITA.NO.1164-1167/HYD/2010 DATED 12.07.2012 TO HO LD THAT FACTS IN THAT CASE ARE SIMILAR TO THE ASSESSEES CA SE AND THEREFORE, AS HELD BY THE ITAT THERE WAS PART-PERFO RMANCE OF THE AGREEMENT AND POSSESSION WAS HANDED-OVER. THERE FORE, CAPITAL GAINS WAS EXIGIBLE. 7. ASSESSEE IS AGGRIEVED ON THE ABOVE AND RAISED 2 2 GROUNDS WHICH ARE NOTHING BUT VARIOUS SUBMISSIONS O N THE FINDINGS GIVEN BY THE LD. CIT(A), CONSEQUENT TO THE FINDINGS OF THE A.O. GROUND NOS. 1 TO 17 AND 21 PERTAIN TO THE ISSUE OF CAPITAL GAINS ON THE SAID LAND. GROUND NOS. 18 AND 19 PERTAIN TO THE COST OF ACQUISITION AND GROUND NO.20 IS WITH OUT PREJUDICE TO THE OTHER GROUNDS THAT SALE CONSIDERAT ION ATTRIBUTABLE TO LAND ADMEASURING AC.1.36 GTS WHICH WAS 11 ITA.NO.204/HYD/2013 & 205/HYD/2014 SRI MADAN MOHAN DAS SHAH (HUF), HYDERABAD ACQUIRED BY THE STATE GOVERNMENT WAS ALSO BROUGHT T O TAX IN A.Y. 2006-07. 8. IN A.Y. 2008-09, A.O. TREATED THE ENTIRE COMPENSATION RECEIVED FROM THE ACQUISITION OF AC.1. 36 GTS BY THE STATE GOVERNMENT FOR THE PURPOSE OF OUTER RING ROAD AS INCOME FROM OTHER SOURCES AND BROUGHT TO TAX THE AM OUNT RECEIVED DURING THE YEAR AS SUCH TO TAX. LD. CIT(A) , HOWEVER, WHILE CONFIRMING THE CAPITAL GAINS IN A.Y. 2006-07 DIRECTED THE A.O. TO TAX THE AMOUNTS IN A.YS. 2008-09 AND 2009-1 0 AS PER THE RECEIPT, EVEN THOUGH A.O. HAS ALREADY TAXED THE AMOUNT IN A.Y. 2008-09 ON RECEIPT BASIS. THEREFORE, IN A WAY, LD. CIT(A) CONFIRMED THE ORDER OF THE A.O. IT IS THE ASSESSEE S CONTENTION THAT THIS LAND ACQUIRED BY THE STATE GOVERNMENT WAS AGRICULTURAL LAND AND RELIED ON THE ORDERS OF THE A UTHORITIES TO CONTEND THAT THE LAND IN QUESTION WAS AGRICULTURAL LAND. THE GROUNDS IN A.Y. 2008-09 ARE ACCORDINGLY RAISED. 9. LD. COUNSEL AFTER EXPLAINING THE FACTS AND REFE RRING TO THE PAPER BOOK PLACED ON RECORD CONTAINING PAGES 1 TO 296 AND ALSO SUPPLEMENTARY PAPER BOOK CONTAINING THE DA TA SHEETS AND JUDGMENTS CONTAINING PAGE NOS.1 TO 39, SUBMITTE D THAT THE FINDINGS OF THE A.O. AND CONSEQUENTIAL FINDING BY T HE LD. CIT(A) ARE NOT ONLY FACTUALLY WRONG BUT ALSO JUDICIALLY NO T SUSTAINABLE. TO START WITH, IT WAS SUBMITTED THAT A.O. MADE A MI STAKE IN OBSERVING THAT AGREEMENT OF SALE DOES NOT MENTION T HAT THE LAND WAS AGRICULTURAL LAND. HE REFERRED TO THE SCHE DULE TO THE AGRICULTURAL LAND WHICH CLEARLY INDICATES THAT THE LAND IN QUESTION IS AGRICULTURAL LAND. THEN, HE REFERRED TO THE LETTER 12 ITA.NO.204/HYD/2013 & 205/HYD/2014 SRI MADAN MOHAN DAS SHAH (HUF), HYDERABAD SUBMITTED FROM SAPPL THAT THE LAND WAS NOT TAKEN PO SSESSION AND IS IN THE CUSTODY OF THE ASSESSEE. 9.1. THE NEXT ASPECT THE LD. COUNSEL SUBMITTED WAS THAT THE AGREEMENT BY OTHER BROTHERS VIZ., KRISHNA KUMAR D. SHAH (HUF), SANDEEP KUMAR D. SHAH (HUF) , BRIJ GOPAL SHAH AND PRAMOD SHAH(HUF) WAS NOT AN AGREEMENT OF SALE BUT DEVELOPMENT AGREEMENT WHEREIN THEY WERE TO RECEIV E NOT ONLY PART OF CONSIDERATION IN CASH BUT ALSO DEVELOPED AR EA SUBSEQUENTLY. HE REFERRED TO THE ORDER OF ITAT EXTR ACTED BY THE LD. CIT(A) IN PARA 6.0, TO SUBMIT THAT THE TERMS AN D CONDITIONS BETWEEN THE DEVELOPMENT AGREEMENT ENTERED BY THE OT HER PERSONS AND AGREEMENT OF SALE BY THE ASSESSEE ARE E NTIRELY DIFFERENT. THEREFORE, THE COORDINATE BENCH DECISION IN THE CASE DOES NOT APPLY. 9.2. COMING TO THE EVIDENCE FURNISHED BY THE A.O. THAT ASSESSEE DID HAVE AGRICULTURAL LAND, IT WAS CONTENT ION THAT ASSESSEE WAS HAVING AGRICULTURAL POWER CONNECTION F ROM LAST 20 YEARS OR SO AND IN SUPPORT THEREOF, ASSESSEE FUR NISHED LAND REVENUE RECEIPT AS WELL AS ELECTRICITY PAYMENT BILL S IN ORDER TO SUBSTANTIATE THAT AGRICULTURAL OPERATIONS ARE BEING CARRIED OUT THERE IN THE SAID LAND. HE ALSO REFERRED TO THE REP ORT OF THE HORTICULTURAL OFFICER AT THE TIME OF ACQUISITION OF PART OF LAND AT BOTH SURVEY NOS. 263 AND 264 TO SUBMIT THAT LAND WA S CLASSIFIED AS AGRICULTURAL LAND. THERE WERE PLANTAT IONS ON THE PLOT AND COMPENSATION WAS PAID AS AGRICULTURAL LAND . HE ALSO SUBMITTED THAT EVEN THOUGH A.O. OBTAINED THE MRO CERTIFICATES, HE DID NOT FURNISH THE SAME TO THE AS SESSEE BUT ONLY MENTIONED IN A SHOW CAUSE LETTER THAT HE OBTAI NED LETTERS. 13 ITA.NO.204/HYD/2013 & 205/HYD/2014 SRI MADAN MOHAN DAS SHAH (HUF), HYDERABAD IT WAS THE SUBMISSION THAT WITHOUT GIVING THE COPY OF THE DOCUMENTS OBTAINED FROM THE SAID MRO, THE SAME CANN OT BE RELIED UPON AND FURTHER WHEN ASSESSEE WANTED TO CRO SS- EXAMINE THE SAID AUTHORITY BOTH A.O. AND LD. CIT(A) DID NOT ALLOW, THEREFORE, THE SAID EVIDENCE IS NOT ADMISSIB LE. IT WAS FURTHER SUBMITTED THAT THE REPORT CONTAINING 75 TRE ES IN AREA OF LAND ACQUIRED, A.O. HIMSELF AGREES THAT THERE CAN B E 45 TREES IN ONE ACRE OF LAND. THEN IN TWO ACRES THERE CAN BE 90 TREES. (AC1.36 GUNTAS IS ALMOST TWO ACRES). HOW HAVING 75 TREES IN THE AREA WHICH WAS ACQUIRED BY THE GOVERNMENT CANNOT BE ACCEPTED IS NOT UNDERSTANDABLE, WHEN EVEN A.O. HIMS ELF CLAIMS TO BE A DOCTORATE IN HORTICULTURE. 9.3. IT IS ALSO SUBMITTED THAT IN THE NEXT PART IN PAGE 7 ITSELF, A.O. DOUBTS THE VERY EXISTENCE OF THE PLANT S/TREES WHILE SAYING THAT THE PLANTS CAN BE 5 YEARS OLD. IT WAS S UBMITTED THAT ASSESSEE IS NOT CLAIMING THAT TREES ARE FRUIT BEARING BUT THE CONTENTION IS THAT THE LAND IS AGRICULTURAL LAN D. INSTEAD OF ANSWERING THIS QUESTION, A.O. WITH LOT OF PREJUDICE TO THE ASSESSEE, STATED THAT THOSE TREES WOULD NOT HAVE BE EN HARVESTED SO AS TO STATE THAT THE AGRICULTURAL OPER ATIONS ARE NOT CARRIED OUT. EVEN WITH REFERENCE TO THE CONTENT ION THAT ASSESSEE WAS CLAIMING TO HAVE CULTIVATED PADDY, JOW AR, CORN, VEGETABLES, FLOWERS AND FRUITS, IT WAS SUBMITTED TH AT ASSESSEE WAS HAVING NOT ONLY THIS AC.3.27 GTS IN SURVEY NOS. 262 AND 263 BUT ALSO AC.11.34 GTS IN SURVEY NOS. 163 AND 16 4 AND IN THAT ENTIRE LAND OF AC.15.00 OR SO ASSESSEE WAS CUL TIVATING VARIOUS CROPS. THEREFORE, A.OS CONTENTIONS ARE NOT CORRECT. IT WAS FURTHER SUBMITTED THAT A.O. SEEMS TO HAVE INSPE CTED THE 14 ITA.NO.204/HYD/2013 & 205/HYD/2014 SRI MADAN MOHAN DAS SHAH (HUF), HYDERABAD LAND WITHOUT TAKING THE ASSESSEE OR ANY OTHER PERSO N TO ASSIST WHERE THE LANDS ARE EXACTLY SITUATED. IT WAS SUBMIT TED THAT WITHOUT GIVING OPPORTUNITY TO THE ASSESSEE A.O. MAD E LOT OF ALLEGATIONS AND CLAIMS AND WHEN QUESTIONED, THEY WE RE ALL REJECTED. FURTHER, THE CONTENTION THAT ASSESSEE HAS NOT HANDED-OVER THE POSSESSION, IT WAS SUBMITTED THAT S TATE GOVERNMENT HAS ACQUIRED THE LAND OUT OF THE LAND AG REED FOR SALE AND COMPENSATION WAS PAID ONLY TO THE ASSESSEE AND THE ASSESSEE WAS ONLY INVOLVED IN GETTING VERIFICATION BY THE HORTICULTURE OFFICER, MEASUREMENTS BY MRO AND ALSO FURNISHED AN AFFIDAVIT TO GOVT. AGREEING TO THE CON DITIONS OF ACQUISITION THAT ASSESSEE WILL NOT CONTEST IN COURT OF LAW. HE REFERRED TO THE COPY OF THE AFFIDAVIT FILED AND THE FACT THAT PART OF THE LAND WAS ACQUIRED BY THE STATE GOVERNMENT AS AGRICULTURAL LAND SO AS TO SUBMIT THAT THE AGRICULT URAL LAND IN QUESTION IS NOT ONLY AN AGRICULTURAL LAND BUT ALSO POSSESSION WAS NOT GIVEN TO THE SAID SAPPL. IN FACT, IT WAS TH E CONTENTION THAT EVEN AS OF NOW, ASSESSEE IS CULTIVATING THE LA NDS AND A.O. CAN INSPECT IF HE SO DESIRE. HE REFERRED TO THE SUB MISSIONS MADE BEFORE THE LD. CIT(A) IN DECEMBER, 2012 ASKING FOR INSPECTION OF THE LAND EVEN AT THAT POINT OF TIME. IT WAS THE CONTENTION OF THE LD. COUNSEL THAT THE LAND IN QUES TION IS AGRICULTURAL LAND. 9.4. FURTHER IT WAS SUBMITTED THAT OTHER FAM ILY MEMBERS WHO ENTERED INTO DEVELOPMENT AGREEMENT MIGH T HAVE HANDED-OVER THE POSSESSION FOR THE PURPOSE OF DEVEL OPMENT AND THEREFORE, THEY HAVE OFFERED THE CAPITAL GAINS, WHEREAS, ASSESSEE HAS NOT HANDED-OVER THE POSSESSION AND POS SESSION 15 ITA.NO.204/HYD/2013 & 205/HYD/2014 SRI MADAN MOHAN DAS SHAH (HUF), HYDERABAD OF THE LAND IS IN HIS CUSTODY, SO HE DID NOT OFFER THE CAPITAL GAINS. LD. COUNSEL RELIED ON THE FOLLOWING CASES IN SUPPORT OF HIS CONTENTION : I) ORDER IN ITA.NO.1164 TO 1167/HYD/2010 DATED 12.07.2012 IN THE CASE OF M/S. KRISHNA KUMAR D. SHA H (HUF), HYDERABAD II) ORDER IN ITA.NO.360 & 361/HYD/2012 AND ITA.NO.457 & 458/HYD/2012 DATED 31.12.2013 IN THE CASE OF M/S. PARAGON TECHNICAL SOLUTIONS P. LTD., HYDERABAD. III) ORDER IN ITA.NO.550 & 551/HYD/2012 DATED 04.07 .2013 IN THE CASE OF SRI TULLA VEERENDER AND ANOTHER IV) CIT VS. SIDDHARTH J. DESAI (1983) 139 ITR 628 (GUJ. )(HC) V) GORDHANBHAI KAHANDAS DAL WADI VS. CIT (1981) 127 ITR 664 (GUJ.) (HC) VI) CIT VS. MINGUEL CHANDRA PAIS (2006) 282 ITR 619 (BOM.) (HC) VII) CIT VS. SMT. DEBBIE ALEMAO (2011) 331 ITR 59 ( BOM.) (HC) VIII) VIPAN KHANNA VS. CIT (2002) 255 ITR 220 (P & H) (HC ) IX) HINDUSTAN INDUSTRIA L RESOURCES LTD. VS. ACIT (2009) 180 TAXMAN 114 (DEL.) X) LAVLEEN SINGHAL VS. DCIT (2007) 111 TTJ (DEL.) 3 26 XI) ITO VS. AMRUTILAL B. SHAH (2013) 22 ITR (TRIBU. ) 668 (MUM.) XII) SARIFABIBI MOHD. IBRAHIM VS. CIT (1993) 204 IT R 631 (SC) 10. LEARNED D.R. HOWEVER, RELIED ON THE VARIOUS FINDINGS OF THE A.O. AND LD. CIT(A) AND SUPPORTED T HE ORDERS IN HIS DETAILED SUBMISSIONS ON THE ISSUE. IT WAS ALSO HIS CONTENTION THAT THE FACT THAT COMPENSATION WAS PAID TO ASSESSEE CAN NOT BE TAKEN AS EVIDENCE AS THAT AMOUN T WOULD BE PAID TO OWNER ONLY PENDING REGISTRATION. ISSUE I S WHETHER ASSESSEE GAVE POSSESSION AS DEFINED UNDER TRANSFER OF PROPERTY ACT. 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND EXAMINED THE DOCUMENTS ON RECORD ALONG WITH THE ORD ERS OF 16 ITA.NO.204/HYD/2013 & 205/HYD/2014 SRI MADAN MOHAN DAS SHAH (HUF), HYDERABAD THE AUTHORITIES. FIRST OF ALL, WE HAVE TO ADMIT THA T THE ORDER OF THE A.O. SEEMS TO BE BASED ON SOME WRONG PRESUMPTIO NS AND BIAS AGAINST THE ASSESSEE FOR WHATEVER MAY BE THE R EASON. THIS OPINION WAS FORMED ON NOTICING VARIOUS OBSERVATION S OF THE A.O. STATED TO BE FINDINGS FOR REJECTING ASSESSEES CONTENTIONS. TO START WITH, A.O. MENTIONS THE FOLLOWING AS A FIN DING OF FACT IN PARA -1. 1. THE PLAIN READING OF THE SAID AGREEMENT OF SALE TH AT WAS FOUND AND SEIZED DURING THE COURSE OF SEARCH AN D SEIZURE OPERATION REVEALED A FACT THAT THE ASSESSEE HAS OFFERED TO SELL LAND ADMEASURING AC.3.27 GTS SITUAT ED AT SURVEY NO. 262 & 263 OF VATINAGULAPALLI VILLAGE. THE AGREEMENT DID NOT MENTION THE FACT THAT IT WAS AN AGRICULTURE LAND. 11.1. CONTRAST TO THE ABOVE FINDING, THE AGREEMENT OF SALE, PLACED ON RECORD AT PAGE 215 OF THE PAPER BOO K, DATED 27.01.2006 HAS THE FOLLOWING SCHEDULE IN PAGE 4 OF THE DOCUMENT: SCHEDULE ALL THAT AGRICULTURAL LAND , ADMEASURING AC.3.27 GTS. IN SURVEY NOS. 262 & 263 SITUATED AT VATTINAGULAPALLI VILLAGE, RAJENDRANAGAR MANDAL, RANGA REDDY DISTRICT AND BOUN DED AS FOLLOWS : NORTH 20 ROAD SOUTH PART OF SY.NO.262 OF K. RADHIKA W/O. SRINIVASA RAO EAST PART OF SY.NO.262 OF KRISHNA KUMAR DWARAKA DAS WEST PART OF SY.NO.263 OF SURESH KUMAR DWARAKA DAS. 17 ITA.NO.204/HYD/2013 & 205/HYD/2014 SRI MADAN MOHAN DAS SHAH (HUF), HYDERABAD 11.2. THIS SCHEDULE IS PART AND PARCEL OF AGREEMEN T AND CLEARLY INDICATES THAT THE LAND OF AC.3.27 GTS IN S URVEY NOS. 262 AND 263 ARE AGRICULTURAL LANDS. THEREFORE, THIS PAR TICULAR FINDING OF THE A.O. THAT THE AGREEMENT DID NOT MEN TION THE FACT THAT IT WAS AN AGRICULTURAL LAND IS PATENTLY WRON G. 11.3. VIDE PARA-2 IN PAGE 3, A.O. GIVES A FINDING THAT NEITHER SMT. LAKSHMI DEVI (MOTHER OF THE ASSESSEE) NOR CO- OWNERS WHO HAD PURCHASED THE LAND IN 1967 ARE IN AGRICULTURAL OPERATIONS ON THAT LAND. THERE IS NO B ASIS FOR THIS FINDING AS ASSESSEE HAD ENCLOSED COPIES OF THE RETU RNS FILED IN EARLIER A.YS DISCLOSING AGRICULTURAL INCOME IN HIS RETURNS. ON WHAT BASIS THIS PARTICULAR FINDING WAS GIVEN IS NOT DISCERNIBLE FROM THE RECORD. A.O. ALSO RECORDS THAT HE HAS VISI TED THE LAND AND FOUND THAT ENTIRE LAND WAS SURROUNDED WITH ROCK S AND MOUNTAINS AND NOT AMENABLE FOR CULTIVATION. THERE I S NO DATE OF INSPECTION NOR THE WITNESSES WHO CAME ALONG SO T HAT THIS STATEMENT CAN BE ACCEPTED. IN FACT, ASSESSEE BROUGH T SOME PHOTOS, NOT PLACED ON RECORD, IN THE COURSE OF ARGU MENTS THAT THE LAND IS STILL UNDER CULTIVATION, PART OF THE LA ND WHICH WAS NOT ACQUIRED. IF A.O. HAS VISITED AFTER ACQUISITION BY THE STATE GOVERNMENT AND SEEN PART OF THE LAND ON WHICH ROAD WAS LAID THE ABOVE FINDING COULD BE JUSTIFIED, BUT THERE IS NO SUCH CLARITY. THEREFORE, THE VERY FACT THAT A.O. VISITED THE LAND COULD BE DOUBTED AS THERE IS NO OTHER CORROBORATIVE EVIDE NCE THAT HE HAS VISITED THE SAID LAND. 11.4. NOT ONLY THIS, HIS FINDINGS IN PARA 5 ABOUT CULTIVATION OF VARIOUS CROPS CAN ALSO BE REJECTED A S THEY ARE WITHOUT ANY BASIS. JUST BECAUSE ASSESSEE HAS MENTIO NED THAT 18 ITA.NO.204/HYD/2013 & 205/HYD/2014 SRI MADAN MOHAN DAS SHAH (HUF), HYDERABAD HE HAS CULTIVATED DIFFERENT TYPES OF CROPS, THE ARG UMENT CANNOT BE REJECTED WITHOUT ANY EVIDENCE TO THE CONTRARY. N O WHERE IT WAS MENTIONED THAT HE HAS CULTIVATED ONLY ON THE PI ECE OF AC.3.27 GTS THAT ASSESSEE IS CULTIVATING THE LAND B Y GROWING VARIOUS CROPS. HE HAS MORE LAND AS STATED EARLIER T O AN EXTENT OF 15 ACRES. BE THAT AS IT MAY, ASSESSEE RELIED ON SOME PAHANI PATRIKAS OBTAINED AT A LATER POINT OF TIME WHICH INDICATE T HAT THE LAND IS STILL AGRICULTURAL LAND. WHEREAS, THE A .O. SEEMS TO HAVE OBTAINED SOME PAHANIS FROM MANDAL REVENUE OFFICER, RAJENDRANAGAR MANDAL COPIES OF WHICH ARE NOT PLACED ON RECORD. ASSESSEE SAYS THAT THESE WERE NEVER PUT TO THE ASSESSEE EXCEPT MENTIONING IN THE SHOW CAUSE NOTICE AS A.OS OBSERVATIONS. THIS ASPECT WAS ALSO VERIFIED BY US I N THE COURSE OF HEARING AND NOTHING WAS BROUGHT ON RECORD ABOUT THE SO- CALLED PAHANIES OBTAINED FROM MRO, RAJENDRANAGAR MANDAL. ASSESSEE IN FACT ASKED FOR CROSS-EXAMINATION OF THE SAID DOCUMENTS THROUGH THE MRO WHICH WAS DENIED STATING THAT THE AUTHORITY IS A GOVERNMENT AUTHORITY AND ASSESSE E NEED NOT CROSS-EXAMINE, WHILE A.O. REJECTING AT THE SAME TIM E DOCUMENTS RELIED BY ASSESSEE. IN FACT, HE ALSO DOUB TED THE HORTICULTURAL OFFICERS REPORT GIVEN AT THE TIME OF ACQUISITION OF LAND BY THE STATE GOVERNMENT, AS MENTIONED IN PAGE- 6 ON THE REASON THAT HORTICULTURE OFFICER WAS NOT AWARE OF T HE SURVEY NUMBER AND NAME OF THE LAND LORD WHEN HE QUESTIONED . THE ENTIRE TONE AND TENOR OF THE ORDER SEEMS TO BE TOTA LLY BIASED AGAINST THE ASSESSEE FOR REJECTING THE EVIDENCES FU RNISHED BY THE ASSESSEE. 19 ITA.NO.204/HYD/2013 & 205/HYD/2014 SRI MADAN MOHAN DAS SHAH (HUF), HYDERABAD 11.5. CONSIDERING THE FACT THAT ASSESSEE HAS SOLD AGRICULTURAL LAND WHICH IS AWAY FROM THE MUNICIPAL LIMITS ON WHICH THERE IS NO DOUBT AND FURTHER FACT THAT ASSES SEES LAND WAS ACQUIRED BY THE STATE GOVERNMENT AS AGRICULTURA L LAND AND BASED ON THE PAHANI PATRIKAS AND THE REPORT OF THE MRO AS WELL AS HORTICULTURE OFFICER EVIDENCING THAT THE SE SURVEY NUMBERS ARE HAVING AGRICULTURAL OPERATIONS, WE CANN OT UPHOLD THE CONTENTIONS OF THE A.O. THAT THIS LAND IS NOT A GRICULTURAL LAND. PRIMA FACIE EVIDENCE INDICATES THAT ASSESSEE IS INDEED CULTIVATING THE LAND AND THE LAND IN QUESTION IS AG RICULTURAL LAND. SALE OF AGRICULTURAL LAND DOES NOT RESULT IN CAPITAL GAINS TAX AS AGRICULTURAL LAND IS NOT A CAPITAL ASSET UND ER THE DEFINITION OF CAPITAL ASSET IN THE INCOME TAX ACT . HOWEVER, SINCE THE A.O. DID NOT GIVE ANY OPPORTUNITY WHILE I NSPECTING THE LAND NOR HE HAS GIVEN ANY OPPORTUNITY TO EXAMIN E THE MRO CERTIFICATES OBTAINED BY HIM, WE ARE OF THE OPINION THAT ASSESSEE SHOULD BE GIVEN ONE MORE OPPORTUNITY TO SU PPORT HIS CONTENTIONS. ASSESSEE IS ALSO WILLING TO TAKE THE A .O. TO THE LAND TO SHOW THAT THE LAND IN QUESTION IS STILL AGR ICULTURAL LAND. THEREFORE, WE ARE OF THE OPINION THAT PHYSICAL VERI FICATION OF THE LAND WILL CLINCH THE ISSUE WITHOUT ANY DOUBT, SO TH AT NOT ONLY ON LEGAL PRINCIPLES BUT ALSO FACTUALLY ALSO ASSESSE ES CONTENTIONS CAN BE PROVED OR DISPROVED. IN VIEW OF THIS, ORDERS OF A.O. AND LD. CIT(A) ARE SET ASIDE AND MATTER IS RESTORED TO THE FILE OF THE A.O. WHO SHOULD GIVE AN OPPORTUNIT Y TO THE ASSESSEE, INSPECT THE LAND ALONG WITH ASSESSEE AND EXAMINE WHETHER THE LAND IN QUESTION IS/WAS AGRICULTURAL L AND OR NOT. A.O. IS DIRECTED NOT TO GET PREJUDICED BY THE OBSER VATIONS OF THE A.O. IN EARLIER PROCEEDINGS AND SHOULD EXAMINE ALL THE 20 ITA.NO.204/HYD/2013 & 205/HYD/2014 SRI MADAN MOHAN DAS SHAH (HUF), HYDERABAD CONTENTIONS DISPASSIONATELY WITHOUT ANY BIAS. IN CA SE IT WAS PROVED THAT LAND IN QUESTION IS/WAS AGRICULTURAL LA ND, CAPITAL GAINS ON THE SAID LAND DOES NOT ARISE AT ALL. ISSUE OF GIVING POSSESSION BECOMES ACADEMIC IN NATURE. THEREFORE, A SSESSEES GROUNDS ARE ACCORDINGLY ALLOWED FOR STATISTICAL PUR POSES. 12. THERE ARE CONTENTIONS ABOUT THE COST OF LAND. IN CASE A.OS FINDINGS ARE THAT THE LAND IS/WAS NOT US ED FOR AGRICULTURAL OPERATIONS OR ARE NOT CAPABLE FOR AGRI CULTURAL OPERATIONS AT ANY POINT OF TIME, THEN WHILE COMPUTI NG CAPITAL GAINS, A.O. SHOULD CONSIDER DETERMINING THE COST OF ACQUISITION BY GIVING DUE OPPORTUNITY TO THE ASSESSEE. THEREFOR E, THIS ISSUE ON WHICH ASSESSEE HAS RAISED GROUNDS 18 AND 19 ARE ALSO SET ASIDE TO THE FILE OF A.O. TO CONSIDER, IF REQUIRED. 13. AS FAR AS THIS ISSUE IN A.Y. 2008-09 IS CONCER NED, THE STATE GOVERNMENT HAS ACQUIRED THE LAND AS AGRIC ULTURAL LAND AND COMPENSATION WAS ALSO PAID AS AGRICULTURAL LAND. DETAILS OF COMPENSATION RECEIVED ARE AS UNDER: PARTICULARS AMOUNT IN RS. COMPENSATION OF AGRICULTURAL LANDS 37,69,600 COMPENSATION FOR FRUIT BEARING TREES (PAGES 48 & 52 OF P.B.II) 27,343 STORAGE HOUSE (PAGES 38 TO 52 OF P.B.II) 1,74,402 BOREWELL 15,000 THE EVIDENCE ON RECORD DOES PROVE THAT LAND WAS AGR ICULTURAL LAND. THEREFORE, QUESTION OF COMPUTING CAPITAL GAIN S ON THE COMPENSATION AMOUNT AND TREATING THE SAME AS INCOME FROM OTHER SOURCES DOES NOT ARISE AT ALL. THEREFORE, ASS ESSEES 21 ITA.NO.204/HYD/2013 & 205/HYD/2014 SRI MADAN MOHAN DAS SHAH (HUF), HYDERABAD GROUNDS ARE ACCEPTED IN A.Y. 2008-09 AND A.O. IS DI RECTED TO DELETE THE ADDITION SO MADE. 14. ONE MORE ASPECT CONTESTED IN GROUND NO.20 IN A Y 2006-07 IS WITH REFERENCE TO TAXING THE ENTIRE CONS IDERATION AS PART OF CAPITAL GAINS. AS PART OF THE LAND WAS ACQU IRED BY THE STATE GOVERNMENT AND CAPITAL GAINS ON THAT WAS SEPA RATELY CONSIDERED IN A.Y. 2008-09, A.O. IS DIRECTED TO EXC LUDE THE CAPITAL GAINS TO THAT EXTENT OF LAND AS IT WAS TAKE N OVER BY STATE GOVT. THERE CANNOT BE TWO CAPITAL GAIN COMPUT ATIONS ON SAME PIECE OF LAND. AS AND WHEN ASSESSEE SUBSTITUTE S THE LAND AS PER THE AGREEMENT OF SALE, A.O. IS FREE TO TAX T HE CAPITAL GAINS IN THAT YEAR DEPENDING ON THE NATURE OF THE L AND SUBSTITUTED AND WHETHER THE CAPITAL GAINS ARISES ON TRANSFER OF SUCH LAND. THEREFORE, A.O. IS DIRECTED TO RESTRICT THE COMPUTATION OF CAPITAL GAINS BY TAKING THE SALE CON SIDERATION ONLY TO THAT EXTENT OF LAND WHICH WAS NOT ACQUIRED BY THE STATE GOVERNMENT IN THE EVENT CAPITAL GAINS IS EXIGIBLE I N A.Y 2006- 07. 15. THE BASIC ISSUE WHETHER LAND IN QUESTION IS AGRICULTURAL LAND OR NOT IS TO BE DECIDED. IN VIEW OF THIS, THE DETAILED CONTENTIONS RAISED IN VARIOUS GROUNDS ABOU T LEVY OF CAPITAL GAINS ON THE REASON OF TRANSFER OF LAND B Y WAY OF POSSESSION ARE LEFT OPEN FOR FUTURE CONSIDERATION, IF REQUIRED. THEREFORE, ASSESSEE IS FREE TO RAISE ANY OTHER CONT ENTIONS IN CASE A.O. DECIDES THAT LAND IN QUESTION IS NOT AGRI CULTURAL LAND. WITH THESE OBSERVATIONS ORDERS IN AY 2006-07 ARE SET ASIDE TO REDO AS DIRECTED ABOVE. 22 ITA.NO.204/HYD/2013 & 205/HYD/2014 SRI MADAN MOHAN DAS SHAH (HUF), HYDERABAD 16. IN THE RESULT, ITA.NO.204/HYD/2013 OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES AND ITA.NO.205/HYD/2014 OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 13.06.2014. SD/- SD/- (SAKTIJIT DEY) (B.RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATE 13 TH JUNE, 2014 VBP/- COPY TO 1. MR. MADAN MOHAN DAS SHAH (HUF) FLAT NO.207, D.NO.8-2-547/1, APARNA CHANDRADEEP APARTMENT, R OAD NO.7, BANJARA HILLS, HYDERABAD. C/O. MR. K.C. D EVADAS, ADVOCATE, 133/4, R.P. ROAD, SECUNDERABAD 500 003. 2. DCIT, CENTRAL CIRCLE 2, HYDERABAD. 3. CIT(A)-I, HYDERABAD. 2 COPIES 4. CIT (CENTRAL), HYDERABAD 5. D.R. B BENCH, ITAT, HYDERABAD.