ITO, Jaipur V. SHRI MEGH CHAND MEENA HUF, Jaipur

ITA 235/JPR/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5340 (ITAT-JAIPUR)
• Duration Of Justice: 4 year(s) 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-05-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 12-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJ MEHRA JCIT DHK
• Keywords: Capital asset; Competent authority; Benefit of exemption
• Section: 143(3); 54B; 2(14); 15

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH FOE FLAG ;KN O] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI VIKRAM SINGH YA DAV, AM VK;DJ VIHY LA-@ ITA NO.235/JP/12 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2008-09 INCOME TAX OFFICER, WARD 7(2), JAIPUR CUKE VS. SHRI MEGH CHAND MEENA, HUF 87, MEGHANUMAHAL, SUDAMA NAGAR, TONK ROAD, SANGANER, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AAIHM 6437 R VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI MANISH AGARWAL (C.A.) SHRI O.P. AGARWAL (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI RAJ MEHRA (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 23.02.2016 ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 17/05/2016. VKNS'K@ ORDER PER SHRI VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A)-III, JAIPUR DATED 05.12.2011 WHEREIN THE REVENUE HAS TA KEN FOLLOWING GROUNDS OF APPEAL: (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 1,26,63,199/ - MADE BY THE AO ON ACCOUNT OF CAPITAL GAINS, BY IGNORING THE RELEVANT AND VALID FACTS AND RELYING ON THE IRRELEVANT AND INVALID ONES. ITA NO.235/JP/12 THE ITO, WARD 7(2), JAIPUR VS. SHRI MEGH CHAND MEEN A (HUF), JAIPUR 2 (2) THE LD. CIT(A) HAS PASSED A PERVERSE ORDER BY HOL DING THAT THE MATERIAL DATE OF TRANSFER OF LAND WAS 02.04.2007, AND NOT D ATE WHEN IT WAS REGISTERED. (3) THE LD. CIT(A) HAS PASSED A PERVERSE ORDER IN ASS UMING THAT THE POSSESSION OF THE IMPUGNED LANDS WAS GIVEN ON 02.04 .2009 WHEN ADVANCE PAYMENT OF APPROXIMATELY 5% OF THE TOTAL S ALE CONSIDERATION I.E. RS. 10 LAKHS BY CHEQUE NO. 90161 WAS RECEIVED. (4) THE LD. CIT(A) HAS PASSED A PERVERSE ORDER IN IGNO RING THE FACT THAT THE RECEIPT OF RS. 10 LAKHS VIDE CHEQUE NO. 90161, AS MENTIONED ON PAGE 2 OF THE STATED AGREEMENT DATED 2.4.2007 WAS INCORREC T AS THE SAID CHEQUE WAS ENCASHED ONLY ON 2.5.2007 EVEN AS PER THE DETAI LS FURNISHED BY THE ASSESSEE. (5) THE LD. CIT(A) HAS PASSED A PERVERSE ORDER IN FURT HER IGNORING THE FACT, ALSO MENTIONED IN THE REGISTERED SALE DEEDS, THAT FOR PURPOSE OF CHANGE OF LAND USE UNDER SEC. 90B THE OWNERSHIP/POSSESSION OF THE LAND HAD TO VEST WITH THE OWNER(S). (6) THE ORDER OF THE LD.CIT(A) IS PERVERSE IN ACCEPTING THE DATE OF POSSESSION AS ON 2.4.2007 ONLY ON THE BASIS OF THE CONTENT OF PAGE-2 OF THE SALE AGREEMENT DATED 6.4.2007, MENTIONING THAT THE BUYER CAN COMMENCE BUILDING WORK IMMEDIATELY. (7) THE LD. CIT(A) HAS PASSED A PERVERSE ORDER IN EQU ATING THE STATEMENT IN AGREEMENT OF THE PURCHASER BEING ENABLED TO COMME NCE CONSTRUCTION WORK, AS AMOUNTING TO ACTUAL HANDING OVER OF THE PO SSESSION OF THE IMPUGNED LANDS AND OF THE CONSTRUCTION HAVING BEEN COMMENCED WITH IMMEDIATE EFFECT, EVEN BEFORE THE CHANGE OF LAND US E. (8) THE LD. CIT(A) HAS PASSED A PERVERSE ORDER IN STAT ING THAT THE HANDING OVER OF LAND ON 2.4.2007 WAS AN ADMITTED FACT, PA RTICULARLY WHEN THIS CONCLUSION IS NEGATED BY THE CONTENTS SPECIFICALL Y ON PAGE 2 OF THE REGISTERED DEEDS AND EVEN OF THE AGREEMENT DATED 2. 4.2007. (9) THE LD. CIT(A) HAS PASSED A PERVERSE ORDER IN CONC LUDING THAT THE IMPUGNED LAND WAS NOT A CAPITAL ASSET FOR THE PURPO SE OF SEC. 2(47). ITA NO.235/JP/12 THE ITO, WARD 7(2), JAIPUR VS. SHRI MEGH CHAND MEEN A (HUF), JAIPUR 3 2. ALL THE ABOVE GROUNDS ARE AGAINST THE ACTION OF LD. CIT(A) IN DELETING THE ADDITION OF RS. 1,26,63,199/- ON ACCOUNT OF CAPITAL GAINS ON SALE OF LAND AND THE SAME WERE HEARD AND DISPOSED OFF TOGETHER. 2.1 BRIEFLY STATED THE FACTS OF THE CASE ARE THAT T HE APPELLANT HUF HAS ENTERED INTO AN AGREEMENT FOR SALE OF AGRICULTURE L AND ON 2/4/2007 FOR AN AMOUNT OF RS 1,85,83,000. AS PER THE AO, THE LAND WAS SOLD BY THE REGISTERED DEEDS AFTER CONVERSION OF LAND BY GETTING THE LAND USE CHANGED UNDER SECTION 90B AND THUS, LAND SOLD NO LONGER REMAINED AGRICULT URE LAND. IN VIEW OF THAT, THE AO HELD THAT THE TRANSACTION SHALL BE SUBJECT T O CAPITAL GAINS TAX AND ACCORDINGLY, HE BROUGHT THE SAME TO TAX. AGAINST THE ORDER OF THE AO, THE ASSESSEE FILED AN APPEAL BEFORE CIT(A), WHO VIDE HIS ORDER DATED 05.12.2011 HAS ALLOWED THE APP EAL AND DELETED THE IMPUGNED ADDITION OF RS. 1,26,63,199/- BY HOLDING T HAT THE SAID LAND AS AGRICULTURE LAND AND THEREFORE, AGAINST THE SAID DE LETION OF RS. 1,26,63,199/- THE DEPARTMENT IS IN APPEAL BEFORE US. 2.2 THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE A SSESSEE OWNED AGRICULTURAL LAND MEASURING 4.07 HECTARES BEARING K HASRA NOS. 370 TO 373, 375 AND 376 SITUATED IN VILLAGE VIMALPURA TEHSIL SANGAN ER DISTRICT JAIPUR IN AN AREA BEING AT A DISTANCE MORE THAN 8 KMS AWAY FROM THE M UNICIPAL LIMITS OF JAIPUR. THE ASSESSEE PURCHASED THE SAID AGRICULTURAL LAND O N 15.04.1994 AND 29.06.1995. THE SALE TRANSACTION WAS MADE ON 02.04. 2007 AFTER A PERIOD OF ABOUT 14 YEARS. FOR THE PERIOD OF 14 YEARS INTERVEN ING THE SALE OF AGRICULTURAL LAND, THE ASSESSEE CONTINUED TO USE THE LAND FOR AG RICULTURAL PURPOSES AND DERIVED INCOME FROM SALE OF AGRICULTURAL PRODUCE AN D ADMITTEDLY THE ASSESSEE DID NOT TAKE ANY STEPS TO EFFECT ANY KIND OF IMPROV EMENT IN THE LAND SO AS TO BE ITA NO.235/JP/12 THE ITO, WARD 7(2), JAIPUR VS. SHRI MEGH CHAND MEEN A (HUF), JAIPUR 4 ABLE TO USE THE LAND FOR NON-AGRICULTURAL PURPOSES OR SELL THE SAME AT A HIGHER PRICE. 2.3 LD AR FURTHER SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE FILED A COPY OF A LETTER D ATED 24.06.2010 OF THE SDO, JAIPUR BEFORE THE ASSESSING OFFICER WHEREIN HE HAS CLEARLY MENTIONED THAT THE AGRICULTURAL LAND SOLD BY THE ASSESSEE IN VILLAGE V IMALPURA, TEHSIL SANGANER, DISTRICT JAIPUR WAS AGRICULTURAL LAND AND IS SITUAT ED BEYOND 8 KMS. FROM THE MUNICIPAL LIMITS. 2.4 LD AR FURTHER SUBMITTED THAT THERE IS NO DISPUT E ABOUT THE FACT THAT THE AGRICULTURAL LAND IN QUESTION IS LYING IN AN AREA B EYOND 8 KMS OF THE MUNICIPAL LIMITS AS IS COMING OUT OF THE ASSESSMENT ORDER PAS SED BY THE AO U/S 143(3) ON 30.12.2010. THE ONLY CONTROVERSY IS THAT THE AO WAS OF THE VIEW THAT THE AGRICULTURAL LAND IN QUESTION WAS NOT AGRICULTURAL LAND ON THE DATE WHEN CONVEYANCE DEEDS WERE REGISTERED WITH THE SUB-REGIS TRAR, SANGANER. IN OTHER WORDS, THE LD. AO HAS ALLEGED THE TRANSFER OF THE S UBJECT LAND TOOK PLACE ONLY AFTER CONVERSION OF THE LAND USE U/S 90-B OF LAND R EVENUE ACT AND THEREFORE, THE SAME IS TAXABLE AS CAPITAL ASSET. 2.5 LD AR FURTHER SUBMITTED THAT THE SAID AGRICULTU RAL LAND WAS ACTUALLY BEING USED FOR AGRICULTURAL PURPOSES ONLY BY THE ASSESSEE TILL THE DATE OF TRANSFER WHICH TOOK PLACE ON 02.04.2007. THE LAND WAS SURROU NDED BY AGRICULTURAL LAND FROM ALL SIDES, WHERE ACTUAL AGRICULTURAL OPERATION S WERE BEING CARRIED ON BY THE CULTIVATORS. THE ASSESSEE HAD BEEN ACTUALLY CUL TIVATING AND TILLING THE LAND TILL THE DATE OF TRANSFER. THE ASSESSEE NEVER EXPLO ITED NOR INTENDED TO EXPLOIT THE SAID AGRICULTURAL LAND FOR NON AGRICULTURAL PUR POSES. THE WHOLE OF AGRICULTURAL LAND WAS SOLD TO ONE SHRI ASHOK AGARWA L RESIDENT OF 25, DAYAL ITA NO.235/JP/12 THE ITO, WARD 7(2), JAIPUR VS. SHRI MEGH CHAND MEEN A (HUF), JAIPUR 5 NAGAR, GOPALPURA BYEPASS, JAIPUR ON 02.04.2007 FOR A TOTAL CONSIDERATION OF RS. 1,85,83,000/- ON AS IS WHERE IS BASIS. 2.6 A WRITTEN AGREEMENT DATED 02.04.2007 FOR SALE O F AGRICULTURAL LAND WAS ENTERED INTO BY THE ASSESSEE WITH HIM ON 02.04.2007 FOR A TOTAL CONSIDERATION OF RS. 1,85,83,000/- AND RECEIVED RS. 10,00,000/- A S ADVANCE BY CHEQUE NO. 90161 DRAWN ON CENTRAL BANK OF INDIA, TONK ROAD BRA NCH, JAIPUR. THE AGREEMENT IS A CONTRACT OF SALE AND NOT AGREEMENT T O SELL. THE LD. AO HAS NOT ASCERTAINED THE MATERIAL DATE OF TRANSFER. THE FACT S AND STATUS OF THE LAND PREVAILING AS ON THE DATE OF TRANSFER ARE RELEVANT. 2.7 AS PER PROVISIONS OF SECTION 45 CAPITAL GAINS A RISE ON THE DATE OF TRANSFER. CAPITAL GAIN UNDER SECTION 45 ARISES ONLY ON ACCOUN T OF TRANSFER OF CAPITAL ASSET AND NOT RESTRICTED TO SALE OF CAPITAL ASSET . SALE IS NOT THE ONLY MODE OF TRANSFER OF A CAPITAL ASSET FOR PURPOSE OF CAPITAL GAIN UNDER THE ACT. THE SECTION DOES NOT SAY THAT THE DEFINITION OF TRANSFER SHALL BE AS PER THE DEFINITION OF SALE UNDER THE SALE OF GOODS ACT, 1930. SECTION 2 (47) DEFINES THE EXPRESSION TRANSFER IN RELATION TO A CAPITAL ASSET. A BARE RE ADING OF THE SAID SECTION SHOWS THAT THE EXPRESSION TRANSFER USED IN THE ACT HAS MUCH WIDER MEANING AND CONNOTATION AND THE SAME IS NOT CONFINED TO SALE ON LY. IT ENTAILS AND COVERS MANY OTHER SITUATIONS FOR THE PURPOSES OF CAPITAL G AINS UNDER THE ACT. 2.8 FROM THE PERUSAL OF VARIOUS STIPULATIONS OF THE AGREEMENT CLEARLY SUGGESTS THAT THE REAL NATURE OF THE AGREEMENT IS S ALE OF THE AGRICULTURAL LAND. THE AGREEMENT FOR SALE IS NOT A DEVELOPMENT AGREEME NT UNDER WHICH THE BUYER IS GIVEN THE RIGHT OF DEVELOPMENT FOR AND ON BEHALF OF THE LAND OWNER. THE NATURE OF THE AGREEMENT IS NOT SUCH AS WHERE TH E OWNER RETAINS HIS CONTROL AND OWNERSHIP OVER THE LAND. TILL THE DATE OF SALE THE LAND WAS CATEGORIZED AS AGRICULTURAL LAND IN LAND RECORDS. COPIES OF LAND R ECORDS GIRDAWARI AND ITA NO.235/JP/12 THE ITO, WARD 7(2), JAIPUR VS. SHRI MEGH CHAND MEEN A (HUF), JAIPUR 6 JAMABANDI WERE FILED BEFORE THE ASSESSING OFFICER I N THE COURSE OF ASSESSMENT PROCEEDINGS. 2.9 LD AR FURTHER SUBMITTED THAT AS PER TERMS AND C ONDITIONS SET OUT IN THE AGREEMENT FOR SALE THE ASSESSEE ALLOWED / HANDED OV ER COMPLETE PHYSICAL POSSESSION AND FULL CONTROL OVER THE LAND TO THE BU YER ON 02.04.2007 AS OWNER OF THE LAND IN HIS OWN RIGHT AND THE ASSESSEE (SELL ER) STOOD DIVESTED OF ITS PROPRIETARY RIGHTS ON 02.04.2007. BOTH THE PARTIES AGREED TO IT. FURTHER THE ASSESSEE WAS REQUIRED TO EXECUTE FORMAL CONVEYANCE DEEDS WITHIN 4 MONTHS OF EXECUTION OF THE AGREEMENT OF SALE DATED 02.04.2007 AND THE BUYER SHRI ASHOK AGARWAL WAS GIVEN ALL RIGHTS TO DEVELOP THE LAND OR / AND START CONSTRUCTION OVER THE AGRICULTURAL LAND ON HIS OWN BEHALF AND NO T FOR AND ON BEHALF OF THE ASSESSEE. HE COULD ALSO CONTINUE TO USE THE LAND FO R AGRICULTURAL PURPOSES IF HE SO DESIRED. THERE BEING NO FORFEITURE OR TERMINATIO N CLAUSE, THE EXECUTION OF AGREEMENT GAVE COMPLETE CONTROL AND AUTONOMY OVER T HE AGRICULTURAL LAND TO THE PURCHASER. THUS ALL THE PRIVILEGES OF OWNERSHIP WERE CONFERRED ON THE BUYER ON 02.04.2007 AS PER TERMS OF AGREEMENT / CON TRACT DATED 02.04.2007. 2.10 LD AR FURTHER SUBMITTED THAT TILL 31 ST MARCH, 1987, IN THE ABSENCE OF A REGISTERED CONVEYANCE DEED IF THE OWNER OF AN IMMOV ABLE PROPERTY HAD PUT THE PURCHASER IN POSSESSION OF THE IMMOVABLE PROPER TY HE WAS NOT REQUIRED TO PAY CAPITAL GAINS TAX. THE LAW WAS AMENDED TO RECTI FY THIS LOOPHOLE AND THE CLAUSE (V) WAS INSERTED IN SECTION 2(47) WHICH READ S AS UNDER: TRANSFER IN RELATION TO A CAPITAL ASSET, INCLUDES, (I) (II) ..... (III) . ITA NO.235/JP/12 THE ITO, WARD 7(2), JAIPUR VS. SHRI MEGH CHAND MEEN A (HUF), JAIPUR 7 (IV) . (V) ANY TRANSACTION INVOLVING THE ALLOWING OF THE POSSE SSION OF ANY IMMOVABLE PROPERTY TO BE TAKEN OR RETAINED IN PART PERFORMANCE OF A CONTRACT OF THE NATURE REFERRED TO IN S. 53A OF T HE TRANSFER OF PROPERTY ACT, 1882 (4 OF 1882). 2.11 THE APPLICATION OF SECTION 2(47)(V) REQUIRES ALLOWING OF THE POSSESSION OF ANY IMMOVABLE PROPERTY TO BE TAKEN OR RETAINED I N PART PERFORMANCE OF A CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A O F THE TRANSFER OF PROPERTY ACT, 1882. SECTION 53A OF THE TRANSFER OF PROPERTY ACT APPLIES WHERE THE TRANSFEREE HAS IN PART PERFORMANCE OF THE CONTRACT TAKEN POSSESSION OF THE PROPERTY OR ANY PART THEREOF. IN SUCH A SITUATION N OTWITHSTANDING THAT THE TRANSFER HAS NOT BEEN COMPLETED IN THE MANNER PRESC RIBED THEREFORE BY THE LAW, THE TRANSFEROR SHALL BE DEBARRED FROM ENFORCIN G AGAINST THE TRANSFEREE ANY RIGHT IN RESPECT OF THE PROPERTY. PUTTING THE TRANS FEREE IN POSSESSION OF THE AGRICULTURAL LAND IN PART PERFORMANCE OF THE CONTRA CT TANTAMOUNTS TO TRANSFER. 2.12 IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE THE DATE OF CONTRACT VIZ, 02.04.2007 IS THE DATE OF TRANSFER U/S 2(47)(V ) OF THE INCOME TAX ACT, 1961 WHEN THE ASSESSEE PARTED WITH THE POSSESSION AND CO NTROL OF THE AGRICULTURAL LAND AND THE BUYER WAS PUT IN POSSESSION WITH ALL R IGHTS OF OWNERSHIP AND CONTROL OVER THE AGRICULTURAL LAND WERE TRANSFERRED TO SHRI ASHOK AGARWAL. THE ASSESSEE IS THEREFORE, ENTITLED TO TAKE THE DAT E OF AGREEMENT / CONTRACT VIZ. 02.04.2007 AS THE DATE OF TRANSFER AND THE SITUATIO N PREVAILING ON 02.04.2007 IS RELEVANT FOR ALLOWING EXEMPTION U/S 2(14)(III) OF T HE INCOME TAX ACT, 1961. ITA NO.235/JP/12 THE ITO, WARD 7(2), JAIPUR VS. SHRI MEGH CHAND MEEN A (HUF), JAIPUR 8 2.13 LD AR FURTHER DRAWN REFERENCE TO THE DECISION OF THE AMRITSAR BENCH OF TRIBUNAL IN THE CASE OF MAX TELECOM VENTURES LTD. VS. ACIT (2008) 114 ITD 4 6 (ASR) HELD AS UNDER: SECTION 45 PROVIDES THAT ANY PROFITS OR GAINS ARIS ING FROM THE TRANSFER OF A CAPITAL ASSET EFFECTED IN THE PREVIOUS YEAR SHALL, SAVE AS OTHERWISE PROVIDED IN SECTIONS 54, 54B ETC., TO CHARGEABLE TO INCOME T AX UNDER THE HEAD CAPITAL GAINS, AND SHALL BE DEEMED TO BE THE INCOME OF THE PREVIOUS YEAR IN WHICH THE TRANSFER TOOK PLACE. THE EXPRESSION TRANSFER USED IN THE SAID SECTION IS TRANSFER IN RELATION TO A CAPITAL ASSET AND NOT S ALE OF CAPITAL ASSET. SALE IS NOT THE ONLY MODE OF TRANSFER OF A CAPITAL ASSET FOR THE PURPOSE OF CAPITAL GAIN UNDER THE ACT. SECTION 2(47) DEFINES THE EXPRE SSION TRANSFER IN RELATION TO A CAPITAL ASSET. A BARE READING OF THE SAID SECT ION WOULD SHOW THAT EXPRESSION TRANSFER USED IN THE ACT HAS MUCH WIDE R MEANING AND CONNOTATION AND THE SAME IS NOT ONLY CONFINED TO SA LE. IT EXTENDS AND COVERS MANY OTHER SITUATIONS FOR THE PURPOSE OF CAPITAL GA INS UNDER THE ACT. NOWHERE, THE SECTION SAYS THAT DEFINITION OF TRANS FER SHALL BE AS PER THE DEFINITION OF SALE UNDER THE SALE OF GOODS ACT, 1 930. THE ITAT REFERRED TO CASES OF CIT VS. TATA IRON AND STEEL CO. LTD. (1994) 206 ITR 196 (BOM.) AND K.N. NARAYANAN VS. ITO (1988) 173 ITR 61 (KER.) . THE RATIO LAID DOWN BY THE ITAT IN THE CASE OF MAX TELECOM VE NTURES IS APPLICABLE TO THE CASE OF THE ASSESSEE AND CONSEQUENTLY THE TRANSFER TOOK PLACE ON 02.04.2007 WHEN THE AGREEMENT FOR SALE HAD BEEN ENTERED INTO. 2.14 IT IS FURTHER SUBMITTED THAT THE LD. AO WAS SA TISFIED ABOUT THE EXECUTION AND IMPLEMENTATION OF THE AGREEMENT AS IS APPARENT FROM THE ASSESSMENT ORDER IS REPRODUCED BELOW FOR YOUR HONOURS KIND PE RUSAL: ITA NO.235/JP/12 THE ITO, WARD 7(2), JAIPUR VS. SHRI MEGH CHAND MEEN A (HUF), JAIPUR 9 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A SSESSEE FILED THE DETAILS CONSISTING OF THE COPY OF AGREEMENT OF SALE THE AGRICULTURAL LAND, COPIES OF REGISTRIES OF LAND SOLD, COPY OF REGISTRY OF THE HOUSE PURCHASED AND THE INVESTMENTS MADE IN PURCHASE OF AGRICULTURA L LANDS. THE DETAILS THEREOF, IS DISCUSSED HEREUNDER:- A) LAND SOLD: THE ASSESSEE HAS ENTERED INTO AGREEMENT FOR THE SAL E OF AGRICULTURAL LAND FOR THE SALE CONSIDERATION OF RS. 1,85,83,000/- ON 02.04.2007. THE LAND SOLD BY THE ASSESSEE IS MORE T HAN 8 KMS. FROM MUNICIPAL LIMITS AS PER THE CERTIFICATE ISSUED BY T HE SDO, JAIPUR. THE ASSESSEE HAS ALSO FURNISHED THE COPY OF LETTER OF S HRI ASHOK AGARWAL ADDRESSED TO ASSESSEE STATING THAT HE HAS PURCHASED THE AGRICULTURAL LAND AND THE EXPENSES FOR THE DEVELOPMENT AND CONVE RSION OF LAND HAS BEEN BORNE BY HIM. 2.15 IN VIEW OF THE ABOVE SUBMISSION, THE TRANSFER TOOK PLACE ON THE DATE OF AGREEMENT I.E. 02.04.2007. AS PER PROVISIONS OF SEC TION 45, THE LIABILITY TO CAPITAL GAINS TAX IS SADDLED WITH DATE OF TRANSFER. ADMITTEDLY ON THAT DATE THE CHARACTER AND NATURE OF THE LAND WAS THAT OF AGRICU LTURAL LAND. IT IS, THEREFORE, PRAYED THAT THE IMPUGNED ADDITION MAY KINDLY BE DEL ETED. 2.16 REGARDING APPLICABILITY OF CLAUSE (III) OF SEC TION 2(14), IT WAS SUBMITTED THAT AS PER PROVISIONS OF CHARGING SECTION 45, CAPI TAL GAIN ARISES / ACCRUES ON TRANSFER OF A CAPITAL ASSET. CAPITAL ASSET IS DEFIN ED IN SECTION 2(14) OF THE INCOME TAX ACT, 1961 WHICH READS AS UNDER: (14) CAPITAL ASSET MEANS PROPERTY OF ANY KIND HE LD BY AN ASSESSEE, WHETHER OR NOT CONNECTED WITH HIS BUSINESS OR PROFE SSION, BUT DOES NOT INCLUDE ITA NO.235/JP/12 THE ITO, WARD 7(2), JAIPUR VS. SHRI MEGH CHAND MEEN A (HUF), JAIPUR 10 (I) (II) ..... (III) AGRICULTURAL LAND IN INDIA, NOT BEING LAND SI TUATE (A) IN ANY AREA WHICH IS COMPRISED WITHIN THE JURI SDICTION OF A MUNICIPALITY (WHETHER KNOWN AS A MUNICIPALITY, MUNICIPAL CORPORATION, NOTIFIED AREA COMMITTEE, T OWN AREA COMMITTEE, TOWN COMMITTEE, OR BY ANY OTHER NAME) OR A CANTONMENT BOARD AND WHICH HAS A POPULATION OF NOT LESS THAN TEN THOUSAND ACCORDING TO THE LAST PRECEDING CENSUS O F WHICH THE RELEVANT FIGURES HAVE BEEN PUBLISHED BEFORE THE F IRST DAY OF THE PREVIOUS YEAR ; OR (B) IN ANY AREA WITHIN SUCH DISTANCE, NOT BEING MOR E THAN EIGHT KILOMETRES, FROM THE LOCAL LIMITS OF ANY MUNICIPALI TY OR CANTONMENT BOARD REFERRED TO IN ITEM (A), AS THE CE NTRAL GOVERNMENT MAY, HAVING REGARD TO THE EXTENT OF, AND SCOPE FOR, URBANISATION OF THAT AREA AND OTHER RELEVANT CONSIDERATIONS, SPECIFY IN THIS BEHALF BY NOTIFICAT ION IN THE OFFICIAL GAZETTE;] 2.17 THE CAPITAL GAIN ARISING ON SALE OF AGRICULTUR AL LAND WAS CLAIMED TO BE EXEMPT AS THE AGRICULTURAL LAND BEING NOT A CAPITAL ASSET AT ALL. THE FOLLOWING TWO CONDITIONS ATTRACTING PROVISIONS OF SECTION 2(1 4)(III) ARE CUMULATIVELY SATISFIED AND WERE EXISTENT IN THE CASE OF THE ASSE SSEE. (I) THE LAND IN QUESTION IS AGRICULTURAL AND (II) THE LAND SOLD BY THE ASSESSEE IS BEYOND 8 KMS. OF THE MUNICIPAL LIMITS. ITA NO.235/JP/12 THE ITO, WARD 7(2), JAIPUR VS. SHRI MEGH CHAND MEEN A (HUF), JAIPUR 11 2.18 A PHOTOCOPY OF LETTER DATED 29.12.2010 OF SHRI ASHOK AGARWAL ADDRESSED TO THE ASSESSEE IN RESPONSE TO ASSESSEES LETTER WA S FILED BEFORE THE LD. AO IN THE COURSE OF ASSESSMENT PROCEEDINGS. THE CONTENTS OF THE SAID LETTER CLEARLY INDICATE THAT THE ASSESSEE SOLD AGRICULTURAL LAND T O HIM AND WHOLE OF EXPENDITURE ON CONVERSION AND DEVELOPMENT WAS MADE BY HIM. 2.19 IT WAS FURTHER SUBMITTED THAT THE INTENTION OF THE ASSESSEE FROM THE VERY BEGINNING BEING TO PURCHASE SOME OTHER AGRICULTURAL LAND WITH A MAJOR PART OF SALE CONSIDERATION TO BE RECEIVED FROM THE BUYER, T HE ASSESSEE IMMEDIATELY PURCHASED THE NEW ASSET I.E. AGRICULTURAL LAND ON R ECEIPT OF FULL SALE CONSIDERATION FROM SHRI ASHOK AGARWAL UNDER REGISTE RED CONVEYANCE DEED. THE ASSESSEE NEITHER EXPLOITED NOR INTENDED TO EXPLOIT, THE AGRICULTURAL LAND IN FUTURE FOR NON-AGRICULTURAL PURPOSES.THE ASSESSING OFFICER MADE ADDITION ON THE BASIS OF ONLY ADVERSE FINDING GIVEN BY HIM AT P AGE 4 OF THE ASSESSMENT ORDER WHICH READS AS UNDER: THE SAME LAND WAS SOLD BY THE REGISTERED DEEDS AFT ER CONVERSION OF LAND BY GETTING THE LAND USE CHANGED UNDER 90B. THUS, TH E LAND SOLD NO LONGER REMAINED THE AGRICULTURAL LAND. THEREFORE, IN VIEW OF THE SAME, THE CAPITAL GAIN IS CHARGEABLE IN RESPECT OF THE TRANSA CTIONS ENTERED INTO BY THE ASSESSEE. THE DETAILS OF THE LAND SOLD AFTER TH E CONVERSION UNDER SECTION 90B(3) OF THE RAJASTHAN LAND REVENUE ACT, 1 956 BY THE DIFFERENT INSTRUMENTS / REGISTRIES BY WHICH THE LAND SALE DEE DS ARE REGISTERED IS AS UNDER:. 2.20 THE AO HAS RENDERED THE FINDING WITHOUT CONSID ERING THE TOTALITY OF THE CIRCUMSTANCES AND MATERIAL BROUGHT ON RECORD, IT IS SUBMITTED THAT THE ITA NO.235/JP/12 THE ITO, WARD 7(2), JAIPUR VS. SHRI MEGH CHAND MEEN A (HUF), JAIPUR 12 STIPULATIONS MADE IN THE AGREEMENT FOR SALE WITH RE FERENCE TO THE FACILITATION OF THE CONVERSION OF LAND IN TERMS OF THE PROVISIONS O F SECTION 90B OF THE LAND REVENUE ACT WAS A NECESSARY COMMITMENT TO THE TRANS ACTION OF TRANSFER AND BY NO STRETCH OF IMAGINATION IT COULD BE SAID THAT THE CHARACTER OF THE LAND TRANSFERRED WAS NOT THAT OF THE AGRICULTURAL LAND A S THE ASSISTANCE PROVIDED FOR THE CONVERSION DOES IN NO WAY BRING BACK THE AGRICU LTURAL LAND TO THE FOLD OF THE LAND OTHER THAN AGRICULTURAL LAND. IT IS ALSO R ELEVANT TO SUBMIT THAT THE COMPETENT AUTHORITIES HAS NOT CONVERTED THE LAND US E OF THE SUBJECT LAND FROM AGRICULTURE WHICH IS EVIDENT FROM THE ORDER OF JDA . THUS THE CHARACTER AND NATURE OF THE LAND IN QUESTION WAS AGRICULTURAL THR OUGHOUT FOR DECADES TILL THE LAND WAS HELD BY THE ASSESSEE. ORDER U/S 90B HAS NO IMPACT SO FAR AS ASSESSEE IS CONCERNED. IT IS NOT A RELEVANT FACTOR THAT AFTE R SALE THE BUYER USED THE LAND FOR NON-AGRICULTURAL PURPOSE. 2.22 FOR THE SAKE OF ARGUMENT IT IS SUBMITTED THAT EVEN IF THE AGRICULTURAL LAND WAS SOLD BY THE ASSESSEE AFTER PASSING OF ORDER U/S 90B THEN TOO IT DOES NOT ADVANCE THE CASE OF THE DEPARTMENT. THE ASSESSEE IS AGRICULTURIST AND IS ACTIVELY ENGAGED IN AGRICULTURE. ITS ONLY SOURCE OF INCOME IS AGRICULTURE. A PART OF THE SALE CONSIDERATION WAS UTILIZED IN RESIDENTI AL HOUSE AND MAJOR PART OF THE SAME WAS SPENT IN PURCHASE OF AGRICULTURAL LAND. I MMEDIATELY AFTER RECEIPT OF SALE CONSIDERATION THE ASSESSEE PURCHASED NEW AGRIC ULTURAL LAND. THE CONDUCT OF THE ASSESSEE PROVES BEYOND DOUBT THAT HE NEVER W ANTED TO EXPLOIT THE LAND FOR NON-AGRICULTURAL PURPOSES. 2.23 IT WAS FURTHER SUBMITTED THAT THE ONUS IS ON T HE DEPARTMENT TO PROVE THAT THE LAND IS NOT AGRICULTURAL. THE AO HAS NOT D ISCHARGED HIS BURDEN THAT LAY ON HIM. RELIANCE IS PLACED ON GEMINI PICTURES CIRCU IT (P) LTD. VS. CIT (1981) 130 ITR 686 (MAD.) WHEREIN IT WAS HELD THAT ONUS IS ON THE DEPARTMENT TO PROVE ITA NO.235/JP/12 THE ITO, WARD 7(2), JAIPUR VS. SHRI MEGH CHAND MEEN A (HUF), JAIPUR 13 THAT LAND IS NON AGRICULTURAL OR THAT IT FORMS PART OF BUSINESS ASSETS. ONCE THE ASSESSEE PROVES THAT THE LAND IS AGRICULTURAL LAND THE BURDEN OF PROVING THAT IT IS NOT AGRICULTURAL LAND IS ON THE REVENUE. IN SUPP ORT OF ITS VARIOUS SUBMISSIONS CONTENTIONS AND PLEAS THE ASSESSEE RELIED ON THE FO LLOWING JUDICIAL DECISIONS. IN CASE OF GORDHANBHAI KAHANDAS DALWADI VS. CIT [19 81] 127 ITR 664 (GUJ.), IT WAS HELD THAT THE CORRECT TEST THAT HAS TO BE APPLI ED IS WHETHER ON THE DATE OF SALE THE LAND WAS AGRICULTURAL LAND OR NOT. JUST BE CAUSE AFTER THE SALE THE PURCHASER WAS GOING TO PUT THE LAND TO NON-AGRICULT URAL USE, IT DOES NOT MEAN THAT THE LAND HAD CEASED TO BE AGRICULTURAL LAND ON THE DATE OF SALE. IN CASE OF CIT VS. BORHAT TEA CO. LTD. [1982] 138 I TR 783 (CAL.), IT WAS HELD THAT FOR THE PURPOSE OF LAND BEING AGRICULTURAL LAND, AC TUAL AGRICULTURAL OPERATIONS OR CULTIVATION OR TILLING OF THE LAND IS NOT NECESSARY . WHAT IS TO BE SEEN IS WHETHER SUCH LAND IS CAPABLE OF AGRICULTURAL OPERATIONS BEI NG CARRIED ON. IN CASE OF CIT VS. MODHA BHAI H. PATEL (1994) 208 I TR 638 (GUJ.), IT WAS HELD THAT IF A LAND IS RECORDED AS AGRICULTURAL LAND IN THE REVENUE RECORDS AND IF TILL THE DATE OF ITS SALE IT IS USED AND EXPLOITED AS AG RICULTURAL LAND, AND IF THE OWNER OF THE LAND HAS NOT TAKEN ANY STEP WHICH WOULD INDI CATE HIS INTENTION TO EXPLOIT THE LAND THEREAFTER AS NON-AGRICULTURAL LAND, THEN SUCH A PIECE OF LAND WOULD HAVE TO BE REGARDED AS AGRICULTURAL EVEN THOUGH IT WAS INCLUDED WITHIN THE MUNICIPAL LIMITS OR IT WAS SOLD ON A PER SQUARE YAR D BASIS AND NOT ACREAGE BASIS. THE PURPOSE FOR WHICH SUCH A LAND IS SOLD, THOUGH N OT RELEVANT, WILL NOT HAVE THAT MUCH IMPORTANCE AND WEIGHT AS IT WOULD HAVE IN A CASE WHERE THE LAND HAS REMAINED A SPADATAR OR IDLE OR IS USED FOR AGRI CULTURAL PURPOSES ONLY BY WAY OF A STOP-GAP ARRANGEMENT . ITA NO.235/JP/12 THE ITO, WARD 7(2), JAIPUR VS. SHRI MEGH CHAND MEEN A (HUF), JAIPUR 14 2.24 IT WAS FINALLY SUBMITTED THAT THE SECTION 2(14 )(III) IS A PURPOSIVE SECTION AND IT SHOULD BE INTERPRETED LIBERALLY. THE ASSESSE E SHOULD NOT BE DEPRIVED OF BENEFIT OF EXEMPTION U/S 2(14)(III) ON MERE TECHNIC AL AND VENIAL GROUNDS. SECTION 2(47)(V) READ WITH SECTION 45 AND SECTION 2 (14)(III) AND VARIOUS JUDICIAL DECISIONS CITED ABOVE COME TO THE AID OF THE ASSESS EE. THE CHARACTER AND NATURE OF THE LAND WAS AGRICULTURAL TILL IT WAS HEL D BY THE ASSESSEE. 2.25 THE LD. CIT(A) HAS DELETED THE ADDITION SO MAD E BY THE AO AND HIS FINDINGS ARE AT PAGE 9-12 OF HIS ORDER WHICH ARE RE PRODUCED AS UNDER- IN THE LIGHT OF THE ABOVE FACTUAL AND LEGAL POSITI ON, MY OBSERVATIONS CUM FINDING IN THIS REGARD ARE AS UNDER:- I. THE UNDISPUTED FACTS OF THE ISSUE UNDER CONSIDERATI ON ARE THAT THE LAND WAS OF AGRICULTURAL LAND IN NATURE AND SAME WAS SIT UATED BEYOND 8 KM FROM THE MUNICIPAL LIMIT. ACCORDINGLY PRIMA FACIE T HE SALE CONSIDERATION OF SUCH LAND IS NOT SUBJECTED TO THE CAPITAL GAIN A SPECT, AS PROVIDED U/S 45 OF THE IT ACT. II. THE CONTRACT FOR SALE WAS EFFECTUATED ON 02.04.2007 AND THE LAND POSSESSION WAS GIVEN TO THE BUYER ON THE SAME DATE AFTER RECEIVING THE PART SALE CONSIDERATION IN THIS REGARD. THUS, THE A BOVE CONDUCTS ON THE PART OF THE BUYER AND SELLER FALL UNDER THE CATEGOR Y OF PART PERFORMANCE AS DESCRIBED UNDER THE T.P. ACT AND ALSO COVERED AS A TRANSFER OF CAPITAL ASSETS, AS ENUMERATED U/S 2(47)(III) OF THE ACT. IN OTHER WORDS, FOR ALL LEGAL AND PRACTICAL PURPOSES THE AGRICULTURAL LAND WAS TRANSFERRED TO THE BUYER AS ON 02.04.2007 ONLY. ITA NO.235/JP/12 THE ITO, WARD 7(2), JAIPUR VS. SHRI MEGH CHAND MEEN A (HUF), JAIPUR 15 III. SEC. 53A OF T.P. ACT APPLIES IN A CASE WHERE THE TR ANSFER OF PROPERTY HAS BEEN EFFECTUATED BY TRANSFEREE, IN PURSUANCE OF A C ONTRACT, HAS TAKEN THE POSSESSION OF THE PROPERTY AND PART/FULL PAYMENT HA S BEEN MADE, IN THIS REGARD. UNDER SUCH CIRCUMSTANCE, THE TRANSFER OF SU CH PROPERTY IS DEEMED TO BE COMPLETED FOR INCOME TAX PURPOSES, EVE N IF THE TRANSFER IS NOT COMPLETED IN THE MANNER AS PRESCRIBED IN THE RE LEVANT LAW, I.E. THE NON-REGISTRATION OF SUCH SALE DEED ETC. THIS IS AN ADMITTED FACT THAT IN THE PRESENT CASE ALSO THE SALE OF AGREEMENT WAS MADE ON 02.04.2007 AND THE LAND WAS HANDED OVER TO THE TRANSFEREE, AFTER R ECEIVING THE PART PAYMENT BY THE ASSESSEE, THUS THE TRANSFER OF CAPIT AL IS ALREADY COMPLETED ON 02.04.2007 ITSELF, U/S 2(47) OF THE AC T. SINCE AT THAT POINT OF TIME THE LAND WAS BEING CATEGORIZED AND USED AS AGRICULTURAL LAND AS SUCH, THEREFORE, THE SALE DEAL THEREOF ALSO QUALIFI ES AS EXEMPTED AS PRESCRIBED U/S 2(14) OF THE ACT. IV. THE AO'S MAIN CONTENTION IS THAT THE SALE DEED WAS REGISTERED AFTER CONVERSION OF THE LAND, THUS THE LAND SOLD NO LONGE R REMAINED AS AGRICULTURAL LAND, THEREFORE, THE SAME FALLS UNDER THE CATEGORY OF CAPITAL ASSETS, CHARGEABLE TO CAPITAL GAIN IS CONCERNED; I FIND SUCH VIEW OF THE AO AS CONTRARY TO THE LEGAL POSSESSION AS SUCH. THIS I S SO THAT AS PER SEC. 2(47), THE CONCEPTS OF 'TRANSFER' IS HAVING MUCH WI DER CONNOTATION AND IT INCLUDES ALL TYPE OF TRANSFER OF LAND INCLUDING SAL E, EXCHANGE RELINQUISHMENT OF THE ASSETS ETC. AND RELATED PART PERFORMANCE OF SUCH CONTRACTS ALSO. AS STATED ABOVE THE RELATED FACTS O F THE LAND DEAL CLEARLY ENUMERATES THAT THE TRANSFER OF LAND HAS BEEN EFFEC TUATED, IN THE FORM OF THE PART PERFORMANCE ON THE PART OF INTERESTED PART Y, AS SUCH. ITA NO.235/JP/12 THE ITO, WARD 7(2), JAIPUR VS. SHRI MEGH CHAND MEEN A (HUF), JAIPUR 16 V. FROM THE ASSESSMENT ORDER, IT IS EVIDENT THAT THE A O HAS OVER EMPHASIZED ON THE ISSUE OF REGISTRATION OF THE SALE DEED AFTER THE CONVERSION OF THE LAND U/R 90B OF LAND REVENUE ACT. HERE IS RELEVANT TO MENTIONED THAT VARIOUS COURTS, INCLUDING THE APEX C OURT, HAVE STIPULATED THAT THE ISSUE OF REGISTRATION OF SALE / TRANSFER D EED IS NOT RELEVANT FACTOR TO THE MATTER OF CAPITAL GAIN AND RELATED ASPECT. 1. PODDAR CEMENT(P) LTD. - 226 ITR 125 (SC) 2. MYSORE MINERALS LTD. - 239 ITR 775 (SC) 3. B.L. SOOD - 245 ITR 727 (SC) IN OTHER WORDS, THE HARMONIOUS INTERPRETATION OF RE LEVANT SECTIONS, I.E. 2(14), 2(47), 45 OF THE IT ACT AND SEC. 53A OF T.P. ACT, CLEARLY MANIFEST THAT THE RELEVANT AND MATERIAL DATE OF TRANSFER IN THE PRESENT CASE WOULD BE 02.04.2007 ONLY AND NOT THE DATE OF REGISTRATION OF THE SALE DEED AS SUCH. VI. HERE IS ALSO PERTINENT TO NOTE, AS ALSO POINTED OUT BY THE LD. AR THAT EVEN WHILE CONVERTING THE LAND USES BY THE COMPETENT AUT HORITY OF JDA, ONLY THE SURRENDER OF THE LAND WAS ADMITTED U/R 90B AND NOT THE CHANGE OF USES OF LAND AS THE SAME WAS TO BE CONVERTED IN SMA LL FARM HOUSES, WHICH WAS CONSIDERED AS AGRICULTURAL ACTIVITY BY SU CH AUTHORITY. IN VIEW OF THE SAME, THE MAIN CONTENTION OF THE AO ALSO FAL LS FLAT AS EVENTUALLY THE LAND REMAINED THE AGRICULTURAL LAND ONLY EVEN A FTER THE CONVERSION OF THE SAME, AS DISCUSSED ABOVE. VII. REGARDING THE ACTUAL DATE OF TRANSFER OF CAPITAL AS SETS, INVOLVING THE SIMILAR FACTS, THE HON'BLE KERALA HIGH COURT IN THE CASE OF M.D. JOSEPH ITA NO.235/JP/12 THE ITO, WARD 7(2), JAIPUR VS. SHRI MEGH CHAND MEEN A (HUF), JAIPUR 17 (187 ITR 112) HELD THAT IN A CASE OF OUTRIGHT SALE OF AN ASSETS, THE ACTUAL DATE OF TRANSFER OF A CAPITAL ASSETS WOULD BE EFFEC TIVE FROM DATE OF AGREEMENT ONLY AND NOT THE FULFILLMENT OF ALL THE R ELEVANT TERMS AND CONDITION OF SUCH AGREEMENT. AS STATED ABOVE IN THE PRESENT CASE ALSO THE AGREEMENT FOR SALE WAS MADE FOR AN OUTRIGHT SAL E OF THE LAND AS SUCH. WHILE APPLYING THE SAME RATIO, IN THE INSTANT CASE OF THE DATE OF AGREEMENT WAS 02-04-2007 AND IN ACCORDANCE TO THE S AME, THE TRANSFER OF THE LAND WAS EFFECTUATED ON 02-04-2007 ONLY. THU S THE NATURE OF THE TRANSACTION HAS TO BE DECIDED, BASED ON SUCH FACTUA L ASPECT. SINCE AS ON 02-04-2007 THE LAND WAS PURELY AND AGRICULTURAL LAN D, THEREFORE, THE SAME WAS AN EXEMPTED CAPITAL ASSETS U/S. 2(14) OF T HE IT ACT. VIII. THE ASSESSING OFFICER HAD NOT CONSIDERED THE ISSUE IN ITS TRUE PERSPECTIVE. THE NATURE AND CHARACTER OF THE LAND WAS AGRICULTUR AL LAND WHEN THE TRANSFER TOOK PLACE WITHIN THE MEANING OF SECTION 2 (47)(V) AND ALSO THE CONCERNED AUTHORITIES HAS NOT CHANGED THE CHARACTER OF THE LAND FROM AGRICULTURAL. IT CAN ALSO BE SEEN THAT THE FOLLOWIN G TWO CONDITIONS ATTRACTING PROVISIONS OF SECTION 2(14)(III), I.E. L AND BEING AN AGRICULTURAL LAND AND SITUATED BEYOND 8 K.M. OF THE MUNICIPAL LI MITS, ARE CUMULATIVELY SATISFIED AND WERE EXISTENT IN THE CASE OF APPELLAN T WHEN THE TRANSFER TOOK PLACE. AFTER CONSIDERING THE ENTIRETY OF THE FACTS, CIRCUM STANCE OF THE CASE AND MATERIALS AVAILABLE ON THE RECORDS AND ALSO THE LEG AL POSITION, I TEND TO AGREE WITH THE LD. AR'S CONTENTION THAT THE IMPUGNED AGRI CULTURAL LAND, NOT BEING A CAPITAL ASSETS AS FALLS UNDER SEC. 2(14)(III) OF TH E ACT AND THE SAME WAS EFFECTIVELY TRANSFERRED ON 02.04.2007 AS STIPULATED U/S 2(47)(V) OF THE ACT, EVEN PRIOR TO THE CONVERSION OF LAND. THUS SALE CONSIDER ATION OF SUCH LAND DOSE NOT ITA NO.235/JP/12 THE ITO, WARD 7(2), JAIPUR VS. SHRI MEGH CHAND MEEN A (HUF), JAIPUR 18 ATTRACTS THE PROVISION OF SEC. 45 OF THE ACT. IN TH E LIGHT OF THE ABOVE DISCUSSION THE ACTION OF THE AO IS NOT SUSTAINABLE. ACCORDINGL Y, THE ADDITION MADE BY THE AO OF RS. 1,26,63,199/- IS HEREBY DELETED AND THE G ROUND OF APPEAL IS ALLOWED. CONSEQUENTLY THIS GROUND OF APPEAL IS UPHELD. 2.26 THE LD DR IS HEARD WHO HAS SUBMITTED THAT IT IS THE DATE OF REGISTRATION OF SALE DEED WHICH SHOULD BE CONSIDERED AS THE DATE OF TRANSFER AND AT THAT POINT IN TIME, GIVEN THAT THE AGRICULTURE LAND HAS BEEN C ONVERTED U/S 90B, THE SAME HAS BEEN RIGHTLY BROUGHT TO TAX. HE HAS FURTHER RE LIED ON THE ORDER OF THE AO. 2.27 WE HAVE HEARD THE RIVAL CONTENTIONS, PURSUED T HE MATERIAL ON RECORD AND HAVE GIVEN A CAREFUL CONSIDERATION TO THE FACTU AL MATRIX HAVING A BEARING ON THE MATTER UNDER CONSIDERATION. IN OUR VIEW, THE FUNDAMENTAL ISSUE THAT ARISES FOR CONSIDERATION IS WHAT IS THE NATURE OF L AND WHICH HAS BEEN TRANSFERRED AND MORE PARTICULARLY, WHETHER THERE IS CHANGE OF LAND USE FROM AGRICULTURAL TO NON-AGRICULTURAL BY THE ORDER OF JD A U/S 90B OF RAJASTHAN LAND REVENUE ACT, 1956 AND IT IS NOT THE AGRICULTURAL LA ND BUT NON-AGRICULTURAL LAND WHICH HAS BEEN TRANSFERRED. IF THE ANSWER TO THE A BOVE IS IN AFFIRMATIVE, THE NEXT QUESTION THAT ARISES IS DETERMINATION OF DATE OF ACTUAL TRANSFER IE, WHETHER THE DATE OF TRANSFER SHOULD THE DATE OF AGREEMENT T O SELL I.E, 02.04.2007 WHEN THE APPELLANT CLAIM THAT IT PARTED WITH THE POSSESS ION AND CONTROL OF THE AGRICULTURAL LAND AND THE BUYER WAS PUT IN POSSESSI ON WITH ALL RIGHTS OF OWNERSHIP AND CONTROL OVER THE AGRICULTURAL LAND AN D THUS THE SAME RESULTS IN A TRANSFER UNDER SECTION 53A OF THE TRANSFER OF PROPE RTY ACT WHICH IS A RECOGNISED FORM OF TRANSFER UNDER SECTION 2(47)(V) OF THE INCOME ACT. ALTERNATIVELY, AS CLAIMED BY THE REVENUE, THE DATE OF TRANSFER SHOULD BE THE DATE WHEN THE REGISTRATION OF THE SALE DEED WAS COM PLETED ON 28.04.2007 AND ONWARD, AFTER THE CONVERSION OF THE LAND U/S 90B OF THE RAJASTHAN LAND ITA NO.235/JP/12 THE ITO, WARD 7(2), JAIPUR VS. SHRI MEGH CHAND MEEN A (HUF), JAIPUR 19 REVENUE ACT, 1956. 2.28 AS PER THE AO, THE REGISTRATION OF THE SALE DE EDS OF VARIOUS PARCELS OF LAND WAS DONE ON 28.04.2007 AND ON SUBSEQUENT DATES , AFTER THE CONVERSION OF THE LAND U/S 90B OF THE RAJASTHAN LAND REVENUE ACT, 1956. ACCORDINGLY, THE AO WAS OF THE OPINION THAT SINCE THE USE OF THE LAND H AS BEEN CHANGED FROM AGRICULTURAL LAND AND THE REGISTRATION OF THE SALE DEED WAS EXECUTED AFTER SUCH DEVELOPMENT, THEREFORE, THE LAND CEASES TO BE AGRIC ULTURAL LAND, THUS, AMOUNTS TO CAPITAL ASSET AND SUBJECTED TO THE CAPITAL GAIN TAX. 2.29 AS PER LD AR, THE STIPULATIONS MADE IN THE AGR EEMENT FOR SALE WITH REFERENCE TO THE FACILITATION OF THE CONVERSION OF LAND IN SMALL FARM HOUSES IN TERMS OF THE PROVISIONS OF SECTION 90B OF THE LAND REVENUE ACT WAS A NECESSARY COMMITMENT TO THE TRANSACTION OF TRANSFER AND BY NO STRETCH OF IMAGINATION IT COULD BE SAID THAT THE CHARACTER OF THE LAND TRANSFERRED WAS NOT THAT OF THE AGRICULTURAL LAND AS THE ASSISTANCE PRO VIDED FOR THE CONVERSION DOES IN NO WAY BRING BACK THE AGRICULTURAL LAND TO THE F OLD OF THE LAND OTHER THAN AGRICULTURAL LAND. IT IS ALSO RELEVANT TO SUBMIT TH AT THE COMPETENT AUTHORITIES HAVE NOT CONVERTED THE LAND USE OF THE SUBJECT LAND FROM AGRICULTURE WHICH IS EVIDENT FROM THE ORDER OF JDA . THUS THE CHARACTER AND NATURE OF THE LAND IN QUESTION WAS AGRICULTURAL THROUGHOUT FOR DECADES TI LL THE LAND WAS HELD BY THE ASSESSEE. THE ORDER U/S 90B HAS NO IMPACT SO FAR AS THE ASSESSEE IS CONCERNED. IT WAS FURTHER SUBMITTED THAT LD CIT(A) HAS ALSO AC CEPTED THE CONTENTION OF THE APPELLANT AND HELD THAT EVEN WHILE CONVERTING THE L AND USES BY THE COMPETENT AUTHORITY OF JDA, ONLY THE SURRENDER OF THE LAND WA S ADMITTED U/S 90B AND NOT THE CHANGE OF USE OF LAND AS THE SAME WAS TO BE CON VERTED IN SMALL FARM HOUSES, WHICH WAS CONSIDERED AS AGRICULTURAL ACTIVI TY BY SUCH AUTHORITY. IN VIEW OF THE SAME, AS PER LD CIT(A), THE MAIN CONTENTION OF THE AO ALSO FALLS FLAT AS EVENTUALLY THE LAND REMAINED THE AGRICULTURAL LAND ONLY EVEN AFTER THE ITA NO.235/JP/12 THE ITO, WARD 7(2), JAIPUR VS. SHRI MEGH CHAND MEEN A (HUF), JAIPUR 20 CONVERSION OF THE SAME. 2.30 THE RELEVANT PROVISIONS OF SECTION 90-B OF RAJ ASTHAN LAND REVENUE ACT, 1956 READS AS UNDER: (3) WHEN THE TENANT OF SUCH LAND OF ANY PERSON DULY A UTHORIZED BY HIM, AS THE CASE MAY BE MAKES AN APPLICATION TO THE COLLECT OR OR THE OFFICER AUTHORIZED BY THE STATE GOVERNMENT IN THIS BEHALF, EXPRESSING HIS WILLINGNESS TO SURRENDER HIS RIGHTS IN SUCH LAND, WITH THE INTENTION OF DE VELOPING SUCH LAND OR HOUSING, COMMERCIAL , INSTITUTIONAL, SEMI -COMMERCIAL, INDU STRIAL, CINEMA OR PETROL PUMP PURPOSES OR, FOR THE PURPOSE OF MULTIPLEX UNI TS, INFRASTRUCTURE PROJECTS OR TOURISM PROJECTS, OR FOR SUCH OTHER COMMUNITY F ACILITIES OR PUBLIC UTILITY PURPOSES, AS MAY BE NOTIFIED BY THE STATE GOVERNME NT, THE COLLECTOR OR THE OFFICER AUTHORIZED BY THE STATE GOVERNMENT IN THIS BEHALF, SHALL UPON BEING SATISFIED ABOUT THE WILLINGNESS OF EACH PERSON, ORD ER FOR TERMINATION OF RIGHTS AND INTEREST OF SUCH PERSON IN THE SAID LAND AND OR DER FOR RESUMPTION OF SUCH LAND. (4) THE PROCEEDINGS IN THE MATTER SHALL BE CONDUCTE D SUMMARILY AND SHALL ORDINARILY BE CONCLUDED WITHIN A PERIOD OF SIX DA YS FROM THE FIRST DATE OF HEARING SPECIFIED IN THE NOTICE SERVED UNDER SUB -SECTION (2). (5) WHERE, AFTER HEARING THE PARTIES, THE COLLECTOR OR THE OFFICER AUTHORISED BY THE STATE GOVERNMENT IN THIS BEHALF, IS OF THE OPINION THAT THE LAND IS LIABLE TO BE RESUMED UNDER SUB-SECTION (1), HE SHALL AFTER RECORDING REASONS IN WRITING, ORDER FOR TERMINATION OF RIGHTS AND INTERE ST OF SUCH PERSON IN THE SAID LAND AND ORDER FOR RESUMPTION OF THE SAID LAND. (6) THE LAND SO RESUMED UNDER SUB-SECTIONS (3) AND (5) SHALL VEST IN THE STATE FREE FROM ALL ENCUMBRANCES AND SHALL BE DEEME D TO HAVE BEEN PLACED AT THE DISPOSAL OF THE CONCERNED LOCAL AUTHORITY UNDE R SECTION 102-A OF THIS ACT WITH EFFECT FROM THE DATE OF PASSING SUCH ORDER. PROVIDED THAT THE LAND SURRENDERED UNDER SUB-SECTIO N (3) ABOVE, SHALL BE MADE AVAILABLE TO THE PERSON, WHO SURRENDERS THE LAND, F OR ITS PLANNED DEVELOPMENT IN ACCORDANCE WITH THE RULE, REGULATION AND BYE-LAW S APPLICABLE TO THE LOCAL BODY CONCERNED (FOR HOUSING, COMMERCIAL INSTITUTIO NAL, SEMI-COMMERCIAL, ITA NO.235/JP/12 THE ITO, WARD 7(2), JAIPUR VS. SHRI MEGH CHAND MEEN A (HUF), JAIPUR 21 INDUSTRIAL, CINEMA OR PETROL PUMP PURPOSES, OR FOR THE PURPOSE OF MULTIPLEX UNITS, INFRASTRUCTURE PROJECTS OR TOURISM PROJECTS OR, FOR OTHER COMMUNITY FACILITIES OR PUBLIC UTILITY PURPOSES). 2.31 ON PERUSAL OF THE ABOVE PROVISIONS, IT IS NOTE D THAT AN APPLICATION IS REQUIRED TO BE MADE TO THE RELEVANT AUTHORITIES FOR LAND CONVERSION WHERE THE APPELLANT HOLDING LAND FOR AGRICULTURAL PURPOSES IN TEND TO DEVELOP SUCH LAND FOR HOUSING, COMMERCIAL, INSTITUTIONAL, SEMI-COMMERCIAL , INDUSTRIAL, CINEMA OR PETROL PUMP PURPOSES OR FOR THE PURPOSES OF MULTIPL EX UNITS, INFRASTRUCTURE PROJECTS OR TOURISM PROJECTS OR FOR SUCH OTHER COMM UNITY FACILITIES OR PUBLIC UTILITIES PURPOSES AS MAY BE NOTIFIED. THEREFORE, W HAT NEED TO BE SEEN IS WHETHER THE APPELLANT HAS MOVED AN APPLICATION FOR LAND CONVERSION AS SPECIFIED UNDER SECTION 90-B(3) OF THE LAND REVENUE ACT FOR THE ABOVE SPECIFIED PURPOSES OR NOT. 2.32 AS PER JDA ORDER NO. 52/2007 DATED 29.5.2007 P LACED ON RECORD, IT IS STATED THAT THE APPELLANT HAS MOVED AN APPLICATION UNDER SECTION 90-B(3) IN RESPECT OF LAND BEARING KHASRA NOS. 370 SITUATED IN VILLAGE VIMALPURA TEHSIL SANGANER DISTRICT JAIPUR FOR CONVERTING THE SAID LA ND INTO FARM HOUSES. FURTHER, ON PERUSAL OF THE JDAS ORDER, IT IS STATED THEREIN THAT IN THE VILLAGE AREA, CONSTRUCTING FARM HOUSES IS PERMISSIBLE AND THERE I S NO NEED FOR LAND CONVERSION AND ACCORDINGLY, THE APPELLANTS APPLICA TION FOR SURRENDER OF AGRICULTURAL LAND WAS ACCEPTED BY JDA U/S 90-B(6) W HEREBY THE LAND SHALL VEST WITH JDA WITH EFFECT FROM DATE OF PASSING OF SUCH O RDER. SIMILARLY, THERE IS ANOTHER ORDER OF JDA BEARING ORDER NO. 21/2007 DATE D 26.04.2007 IN RESPECT OF LAND BEARING KHASRA NOS. 371 SITUATED IN VILLAGE VI MALPURA TEHSIL SANGANER DISTRICT JAIPUR FOR CONVERTING THE SAID LAND INTO F ARM HOUSES. THE LD AR HAS SUBMITTED DURING THE COURSE OF HEARING THAT JDA HAS ISSUED SIMILAR ORDERS IN RESPECT OF OTHER PARCELS OF LANDS WHEREBY THE APPEL LANT HAS APPLIED FOR ITA NO.235/JP/12 THE ITO, WARD 7(2), JAIPUR VS. SHRI MEGH CHAND MEEN A (HUF), JAIPUR 22 CONVERSION OF AGRICULTURAL LAND INTO FARM HOUSES AN D IT WAS ORDERED BY JDA THAT THERE IS NO NEED FOR LAND CONVERSION FOR FARM HOUSE S. THE REVENUE HAS NOT BROUGHT ANY EVIDENCE TO CONTROVERT THE ABOVE ORDERS OF JDA. 2.33 IN LIGHT OF ABOVE, IT IS CLEAR THAT THE APPELL ANT HAS MOVED AN APPLICATION FOR LAND CONVERSION UNDER SECTION 90-B OF LAND REVE NUE ACT FOR CONVERSION OF AGRICULTURAL LAND INTO FARM HOUSES AND AS PER THE O RDERS OF THE JDA, CONSTRUCTING FARM HOUSES IS PERMISSIBLE ON AGRICULT URE LAND AND THERE IS NO NEED FOR LAND CONVERSION. GIVEN THAT THERE IS NO C ONVERSION OF AGRICULTURE LAND AS CONFIRMED BY JDA, BEING THE APPROPRIATE AUTHORIT Y UNDER LAND REVENUE ACT, WHAT HAS BEEN TRANSFERRED BY THE APPELLANT CONTINUE S TO BE THE AGRICULTURE LAND. 2.34 UNDISPUTEDLY, THE SAID AGRICULTURAL LAND IN QU ESTION IS LYING IN AN AREA BEYOND 8 KMS. OF THE MUNICIPAL LIMITS. ONCE IT IS HELD THAT THE AGRICULTURE LAND HAS BEEN TRANSFERRED WHICH IS LYING IN AN AREA BEYO ND 8 KMS. OF THE MUNICIPAL LIMITS, IT IS OF NO CONSEQUENCE FROM TAX POINT OF V IEW WHETHER THE DATE OF TRANSFER SHOULD BE THE DATE OF AGREEMENT TO SELL I. E, 02.04.2007 OR THE REGISTRATION OF THE SALE DEEDS OF VARIOUS PARCELS O F LAND DONE ON 28.04.2007 AND ON SUBSEQUENT DATES FALLING WITHIN THE SAME FIN ANCIAL YEAR, AS THE AGRICULTURE LAND WILL FALL OUTSIDE THE DEFINITION O F CAPITAL ASSET UNDER SEC. 2(14)(III) OF THE ACT AND WE ARE NOT INCLINED TO EX AMINE THE SAME AND OTHER RELATED GROUNDS RAISED BY THE REVENUE AS THE SAME H AVE BECOME INFRUCTIOUS. 2.35 IN THE ENTIRETY OF FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT THE IMPUGNED AGRICULTURAL LAND , NOT BEING A CAPITAL ASSET UNDER SEC. 2(14)(III) OF THE ACT, PROVISIONS OF SEC TION 45 OF THE ACT ARE NOT ITA NO.235/JP/12 THE ITO, WARD 7(2), JAIPUR VS. SHRI MEGH CHAND MEEN A (HUF), JAIPUR 23 ATTRACTED IN THE INSTANT CASE AND HENCE, THE SALE C ONSIDERATION ON TRANSFER OF AGRICULTURE LAND CANNOT BE BROUGHT TO TAX. IN THE RESULT THE APPEAL FILED BY THE DEPARTMENT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17/0 5/2016. SD/- SD/- ( R.P. TOLANI) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER JAIPUR DATED:- 17/ 05 /2016 PILLAI VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- THE INCOME TAX OFFICER, WARD 7(2 ), JAIPUR 2. THE RESPONDENT- SHRI MEGH CHAND MEENA(HUF), JAIP UR 3. THE CIT(A) III, JAIPUR 4. THE CIT-III, JAIPUR 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO SA NO.235 /JP/12) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR