Shri. Anil R Bihani., Pune V. ITO, Pune

ITA 2502/PUN/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2000 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-04-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 07-12-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 17-12-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: POOJA RASTOGI
• Keywords: Capital asset; Business income; Additional evidence; Cost of acquisition; Wholly owned subsidiary; Corroborative evidences
• Section: 2(14); 234B; 54; 63

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E , , !'#'' $ , % & BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM / ITA NO. 2502/PN/2012 %' ( ')( / ASSESSMENT YEAR : 2009-10 SHRI ANIL R. BIHANI, 216, NEETA CHAMBERS, SHIVAJI NAGAR, PUNE 411005 PAN : ABGPB3708F ....... / APPELLANT ' / V/S. INCOME TAX OFFICER, WARD 3(2), PUNE / RESPONDENT ASSESSEE BY : SHRI SUNIL GANOO REVENUE BY : SMT. POOJA RASTOGI / DATE OF HEARING : 11-02-2016 / DATE OF PRONOUNCEMENT : 11-04-2016 * / ORDER PER VIKAS AWASTHY, JM : THE APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE OR DER OF COMMISSIONER OF INCOME TAX (APPEALS)-II, PUNE DATED 23-08 -2012 FOR THE ASSESSMENT YEAR 2009-10. IN APPEAL, THE ASSESSEE HAS PRIMARILY ASSAILED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) IN CONFIRMING THE FINDINGS OF 2 ITA NO. 2502/PN/2012, A.Y. 2009-10 ASSESSING OFFICER IN HOLDING THE LAND SOLD BY ASSESSEE IN GAT NO. 41 SITUATED AT VILLAGE SATE AS CAPITAL ASSET U/S. 2(14) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). THE AS SESSEE HAS FURTHER ASSAILED THE ORDER OF COMMISSIONER OF INCOME TAX (A PPEALS) IN CONFIRMING THE FINDINGS OF ASSESSING OFFICER IN TREATING THE SUR PLUS ARISING FROM SALE OF LAND AS BUSINESS INCOME. 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORD S ARE: THE ASSESSEE IS AN INDIVIDUAL AND HAS FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009-10 ON 06-05-2010 DECLARING TOTAL INCOME OF ` 4,17,160/- FROM SALARY, INCOME FROM BUSINESS AND INCOME FROM OTHER SOURCES. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCR UTINY UNDER CASS AND ACCORDINGLY NOTICE U/S. 143(2) WAS ISSUED TO THE ASSESSEE ON 06-09-2011. DURING THE COURSE OF SCRUTINY ASSESSMENT, T HE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD SOLD LAND SITUATED AT VILLAGE SATE TO M/S. KOHINOOR DEVELOPMENT CORPORATION FOR A CONSIDERAT ION OF ` 85,00,000/- ON 23-05-2008. THE ASSESSEE HAD NOT DISCLOS ED THE INCOME FROM SAID TRANSACTION IN HIS RETURN OF INCOME. THE C ONTENTION OF THE ASSESSEE IS THAT THE LAND SOLD IS AN AGRICULTURAL LAN D SITUATED MORE THAN 8 KMS. AWAY FROM THE NEAREST MUNICIPAL LIMITS OF T ALEGAON. HENCE, THE LAND IS NOT ASSESSABLE TO TAX AND THEREFORE, T HE INCOME FROM SALE OF LAND WAS NOT DISCLOSED IN THE RETURN OF INCOME. THE ASSESSING OFFICER DISREGARDING THE SUBMISSIONS OF THE ASSESSEE MADE A DDITION OF ` 66,53,223/- AS PROFIT FROM SALE OF LAND BY TREATING THE TRAN SACTION AS ADVENTURE IN THE NATURE OF TRADE. AGGRIEVED BY THE ASSESSMENT ORDER DATED 27-12-2011, T HE ASSESSEE PREFERRED AN APPEAL BEFORE THE COMMISSIONER OF I NCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) VIDE IMPUG NED 3 ITA NO. 2502/PN/2012, A.Y. 2009-10 ORDER REJECTED THE CONTENTIONS OF THE ASSESSEE AND DIS MISSED THE APPEAL. NOW, THE ASSESSEE IS BEFORE THE TRIBUNAL IN SECOND APPEAL. 3. THE ASSESSEE HAS ASSAILED THE FINDINGS OF COMMISSIONER O F INCOME TAX (APPEALS) BY RAISING FOLLOWING GROUNDS IN THE APPEAL: 1. HON'BLE COMMISSIONER OF INCOME TAX (APPEALS) HAS ER RED IN CONFIRMING THE ADDITION MADE BY ASSESSING OFFICER A ND ASSESSING THE INCOME AT RS.70,70,383/- AGAINST RETURNED INCOME OF RS.4,17,160/- APPELLANT PRAYS TO ACCEPT THE RETURNED INCOME. 2. HON'BLE CIT(A) HAS ERRED IN REJECTING APPELLANTS CL AIM THAT SURPLUS ON SALE OF LAND AT GAT NO. 41 SATE VILLAGE IS EXEMPT BEING AGRICULTURAL LAND NOT FALLING WITHIN THE DEFINITION OF 'CAPITAL ASSET' U/S 2(14) OF INCOME TAX ACT, 1961. APPELLANT PRAYS THAT IT BE HELD THAT SAID SURPLUS IS NOT TAXABLE UNDER INCOME TAX A CT, 1961. 3. WITHOUT PREJUDICE TO GROUND NO.1 & 2 ABOVE, IF IT IS HELD THAT SAID SURPLUS IS TAXABLE, IN THAT EVENT THE DEDUCTION FOR RS.15,40,000/- PAYMENT TO MR. EKNATH YEWALE BEING DEDUCTIBLE FOR C OMPUTATION OF INCOME, BE ALLOWED. 4. CIT(A) HAS ERRED IN CONFIRMING THE SAID TRANSACTION AS 'ADVENTURE IN THE NATURE OF TRADE'. 5. CIT(A) HAS ERRED IN CONFIRMING LIABILITY & APPLICABILITY OF SEC. 234A, 234B & 234C. SAME BE CANCELLED. 6. APPELLANT PRAYS FOR JUST AND EQUITABLE RELIEF. 7. APPELLANT PRAYS TO ADD, ALTER, AMEND, MODIFY, EXPLA IN AND / OR WITHDRAW THE GROUND/S AS OCCASION MAY DEMAND. 4. SHRI SUNIL GANOO APPEARING ON BEHALF OF THE ASSESSEE FILED AN APPLICATION FOR PLACING ON RECORD ADDITIONAL EVIDENCE. THE ASSESSEE FILED TWO DOCUMENTS AS ADDITIONAL EVIDENCE: (I) COPY OF REGISTERED CONSENT DEED DATED 14-05-2008; AND 4 ITA NO. 2502/PN/2012, A.Y. 2009-10 (II) A COPY OF LETTER DATED 02-06-2015 ISSUED BY DY. ENGINE ER PUBLIC WORKS DEPARTMENT, TO SUPPORT HIS CLAIM THAT THE LAND IS M ORE THAN 8 KMS. AWAY FROM THE MUNICIPAL LIMITS OF TALEGAON. THE LD. AR CONTENDED THAT THE CONSENT DEED WAS AVAILABLE WITH THE ASSESSEE AT THE TIME OF PROCEEDINGS BEFORE THE AUTH ORITIES BELOW HOWEVER THE ASSESSEE DID NOT FURNISH THE SAME AS THERE IS REFERENCE OF CONSENT DEED IN THE SALE DEED WHICH IS ALREADY ON RECORD . AS FAR AS CERTIFICATE FROM PWD IS CONCERNED THE SAME WAS OBTAINED A FTER THE PASSING OF ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS). THE LD. DR STRONGLY OPPOSED THE ADDITIONAL EVIDENCE FILED B Y THE ASSESSEE. THE LD. DR STATED THAT SUFFICIENT OPPORTUNITY W AS GIVEN BY THE AUTHORITIES BELOW TO THE ASSESSEE TO SUBSTANTIATE H IS SUBMISSIONS DESPITE THAT THE ASSESSEE CHOOSE NOT TO FILE THE DOCUME NTS WHICH WERE AVAILABLE WITH HIM. 4.1 THE LD. AR OF THE ASSESSEE FURTHER SUBMITTED THAT THE ASSESSEE HAD PURCHASED AGRICULTURAL LAND IN JANUARY, 2007 FOR A CON SIDERATION OF ` 15,50,000/- AGAINST VISAR PAVATI. HOWEVER, A FORMAL AGRE EMENT FOR PURCHASE OF LAND WAS EXECUTED ON 02-04-2008. THE ASSE SSEE HAD CARRIED AGRICULTURAL ACTIVITIES ON THE SAID LAND. THE ASSES SEE WAS IN POSSESSION OF THE LAND FOR ABOUT ONE YEAR. THE ONLY CRO P THAT COULD BE GROWN ON THE LAND WAS RICE. SINCE, THERE WAS NOT MUCH I NCOME FROM AGRICULTURAL OPERATIONS, THE INCOME FROM AGRICULTURE WAS NOT SHOWN IN THE RETURN OF INCOME. THE LD. AR SUBMITTED THAT THE ASSE SSEE NEVER INTENDED TO CARRY ON THE BUSINESS OF SALE AND PURCHASE OF THE LAND. THE AUTHORITIES BELOW HAVE ERRED IN COMING TO THE CONCLUS ION THAT THE SURPLUS ARISING FROM THE SALE OF LAND IN QUESTION IS THE BUSIN ESS INCOME 5 ITA NO. 2502/PN/2012, A.Y. 2009-10 OF THE ASSESSEE. THE ASSESSEE IS AN AGRICULTURIST AND H AS SOLD THE LAND TO M/S. KOHINOOR DEVELOPMENT CORPORATION ON 23-05-2008 A PARTNERSHIP FIRM THROUGH ITS PARTNER SHRI RAJESH KRISHNAK UMAR GOYAL WHO IS ALSO AN AGRICULTURIST. AS PER THE PROVISIONS OF SECT ION 63 OF THE BOMBAY TENANCY AND AGRICULTURAL LANDS ACT, 1948 (HEREINAFT ER REFERRED TO AS THE BOMBAY TENANCY ACT), AN AGRICULTURAL LAND C AN BE SOLD TO AN AGRICULTURIST ONLY. THE LD. AR PLACED ON RECORD RELEVANT PROVISIONS OF THE BOMBAY TENANCY AND AGRICULTURAL LANDS ACT, 1948. TH E LD. AR STATED AT THE BAR THAT EVEN TODAY THE LAND IS BEING US ED AS AN AGRICULTURAL LAND AND THE PURCHASER OF THE LAND HAS NOT C ONVERTED THE LAND FOR NON-AGRICULTURAL PURPOSE. THE LD. AR FURTHER SUBM ITTED THAT THE ASSESSEE HAD PLACED ON RECORD BEFORE THE AUTHORITIE S BELOW A CERTIFICATE FROM TALATHI TO SHOW THAT THE LAND IS MORE THA N 8 KMS AWAY FROM THE NEAREST MUNICIPAL LIMIT OF TALEGAON. THE ASSESSEE HAS ALSO PLACED ON RECORD A CERTIFICATE FROM THE GRAM PANCHAYAT T O SHOW THAT AS PER THE CENSUS OF 2001 THE POPULATION OF THE VILLAGE IS FAR BELOW THAN 10000. FROM THE FACTS OF THE CASE AND DOCUMENTS ON RE CORD IT IS QUITE EVIDENT THAT THE AGRICULTURAL LAND SOLD BY THE ASSESSEE D OES NOT FALL WITHIN THE AMBIT OF DEFINITION OF CAPITAL ASSET DEFINED U/S. 2(14) OF THE ACT. THE LD. AR POINTED OUT THAT THE ASSESSING OFFICER HAS ALSO ADMITTED THE FACT THAT THE LAND IS AGRICULTURAL LAND IN PARA 7(VI) OF HIS ORDER. 4.2 THE LD. AR CONTENDED THAT THE AUTHORITIES BELOW HAVE ERRED IN COMING TO THE CONCLUSION THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF SALE AND PURCHASE OF THE LAND. THE SALE TRANSACTION OF THE LAND IN QUESTION IS THE ONLY TRANSACTIONS THE ASSESSEE HAD ENT ERED INTO. THERE IS NO OTHER TRANSACTION THE ASSESSEE HAS ENTERED INTO 3-4 YEARS PRIOR OR 6 ITA NO. 2502/PN/2012, A.Y. 2009-10 AFTER THE TRANSACTION WHICH IS SUBJECT MATTER OF DISPUTE IN PRESENT APPEAL. THE LD. AR SUBMITTED THAT THE ONUS IS ON THE DEP ARTMENT TO SHOW THAT THE ASSESSEE IS CARRYING ON THE ACTIVITIES WHIC H ARE ADVENTURE IN THE NATURE OF TRADE. THE SALE OF LAND WAS AN ISOLATED T RANSACTION THEREFORE IT CANNOT BE CONSIDERED AS AN ACTIVITY IN THE A DVENTURE OF TRADE. THE ONUS IS ON THE DEPARTMENT TO SHOW THAT TH E LAND WAS A BUSINESS ASSETS. IN SUPPORT OF HIS SUBMISSIONS, THE LD. AR PLACED RELIANCE ON THE JUDGMENT OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. DHABLE, BOBDE, PAROSE, KALE, LUTE AND CHOUDHARI REP ORTED AS 202 ITR 98 (BOM) AND IN THE CASE OF CIT VS. MADHUBHAI H PATEL REPORTED AS 208 ITR 638 (GUJ). 4.3 THE LD. AR FURTHER SUBMITTED THAT THE AUTHORITIES BELOW HAVE PLACED RELIANCE ON THE CERTIFICATE ISSUED BY THE TALATHI DAT ED 15-12- 2011 WHEREIN IT HAS BEEN MENTIONED THAT THE LAND IS 6 TO 7 KMS AWAY FROM MUNICIPAL LIMITS OF TALEGAON. THE ASSESSEE HAD ALSO PLACE D ON RECORD CERTIFICATE ISSUED BY THE TALATHI WHICH CATEGORICALLY STATED THAT LAND OF ASSESSEE AT SATE VILLAGE IS AT A DISTANCE OF 10 KMS . FROM THE NEAREST MUNICIPAL LIMITS OF TALEGAON. SINCE, THE TALATHI HAS GIVEN TWO CONTRADICTORY CERTIFICATES, THE ASSESSEE HAS OBTAINED A C ERTIFICATE FROM THE OFFICE OF PUBLIC WORKS DEPARTMENT (PWD) VADGAON, MAVAL. T HE MEASUREMENT GIVEN IN THE SAID CERTIFICATE ARE BASED ON MO RE SCIENTIFIC METHOD OF MEASURING THE DISTANCE BETWEEN TALEGAON AND S ATE. IN THE SAID CERTIFICATE THE DY. ENGINEER, PUBLIC WORKS DEPARTMENT S UB DIVISION, VADGAON MAVAL HAS CERTIFIED THAT THE DISTANCE BET WEEN TALEGAON TO SATE AS PER PWD ROAD MAPPING CYCLE IS 10 KM . THUS, THE CERTIFICATE ISSUED BY THE PWD IS MORE RELIABLE AND SHOULD BE ACCEPTED. THE LD. AR IN ORDER TO SUPPORT THE VALIDITY OF CERTIFICATE IS SUED BY THE 7 ITA NO. 2502/PN/2012, A.Y. 2009-10 PWD PLACED RELIANCE ON THE ORDER OF CO-ORDINATE BENCH IN THE CASE OF POOJA ROHIT BHANDARI VS. ITO IN ITA NOS. 762 & 763/PN/20 11 FOR THE ASSESSMENT YEARS 2005-06 AND 2006-07 DECIDED ON 31-01-2013 . 5. PER CONTRA SMT. POOJA RASTOGI REPRESENTING THE DEPA RTMENT VEHEMENTLY SUPPORTED THE FINDINGS OF COMMISSIONER OF INCOM E TAX (APPEALS) AND PRAYED FOR DISMISSING THE APPEAL OF THE ASSESS EE. THE LD. DR SUBMITTED THAT THE LAND SOLD BY THE ASSESSEE IS LESS THAN 8 KMS FROM THE MINICIPAL LIMITS OF TALEGAON. THUS, THE LAND FALL WITHIN T HE DEFINITION OF CAPITAL ASSET AS DEFINED U/S. 2(14) OF THE ACT. TH E LD. DR FURTHER SUBMITTED THAT THE CONTENTION OF THE LD. AR THAT THE ASSESSEE HAS CARRIED OUT AGRICULTURAL ACTIVITY IS NOT SUBSTANTIATED BY ANY SUPPORTING EVIDENCE. IN THE FIRST INSTANCE THE ASSESSEE IN HIS RETURN OF INCOME HAS NOT DISCLOSED ANY INCOME FROM AGRICULTURAL OPERA TION. SECONDLY, THE ASSESSEE HAS NOT PLACED ON RECORD ANY D OCUMENT TO SHOW THAT ANY AGRICULTURAL ACTIVITY WAS CARRIED OUT BY THE ASS ESSEE ON THE LAND IN QUESTION. THE ASSESSEE HAD PURCHASED THE LAND IN APRIL, 2008 FOR ` 15,50,000/- AND SOLD THE SAME WITHIN A SHORT SPAN OF LESS THAN 2 MONTHS TO M/S. KOHINOOR DEVELOPMENT CORPORATION FOR A CO NSIDERATION OF ` 85,00,000/-. THE INTENTION OF THE ASSESSEE WAS NOT TO PU RCHASE THE LAND FOR CARRYING OUT ANY AGRICULTURAL OPERATION BUT TO EA RN HUGE PROFITS FROM THE SALE OF LAND. THE FACTS OF THE PRESENT CASE CLEAR LY INDICATE THAT THE ACTIVITY CARRIED BY THE ASSESSEE WAS ADVENTURE IN T HE NATURE OF TRADE. THE LD. DR IN SUPPORT OF HIS SUBMISSIONS PLACED RELIA NCE ON THE DECISION OF CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF ABHIJIT SUBHASH GAIKWAD VS. THE DY. COMMISSIONER OF INCOME TAX IN ITA NO. 699/PN/2013 FOR THE ASSESSMENT YEAR 2009-10 DECIDED ON 27-05 -2015. THE LD. DR ALSO PLACED RELIANCE ON THE JUDGMENT OF HON'BLE SUPREME 8 ITA NO. 2502/PN/2012, A.Y. 2009-10 COURT OF INDIA IN THE CASE OF SARIFABIBI MOHMED IBRAHIM AND OTHERS VS. COMMISSIONER OF INCOME TAX REPORTED AS 204 ITR 631 (SC). 6. THE LD. AR CONTROVERTING THE SUBMISSIONS ADVANCED BY THE REVENUE SUBMITTED THAT THE DECISION RENDERED BY THE PU NE BENCH OF TRIBUNAL IN THE CASE OF ABHIJIT SUBHASH GAIKWAD VS. THE D Y. COMMISSIONER OF INCOME TAX (SUPRA) IS DISTINGUISHABLE ON THE FACTS. IN THE SAID CASE THE ASSESSING OFFICER HAD CONDUCTED DETAILE D ENQUIRY. HOWEVER, IN THE PRESENT CASE NO ENQUIRY WAS CONDUCTED BY THE ASSESSING OFFICER. THE LAND IN THE CASE OF ABHIJIT SUBHASH GAIKWAD VS. THE DY. COMMISSIONER OF INCOME TAX (SUPRA) WAS PAD (NOT CULTIVABLE) AS PER 7/12 EXTRACTS, WHEREAS IN THE CASE IN HAND A PE RUSAL OF REVENUE RECORDS WOULD CLEARLY INDICATE THAT THE LAND IS CULTIVABLE AND THERE WAS CULTIVATION OF CROP ON THE LAND DURING AND AFTER THE SALE O F LAND BY THE ASSESSEE. IN THE CASE OF ABHIJIT SUBHASH GAIKWAD VS. T HE DY. COMMISSIONER OF INCOME TAX (SUPRA) THERE WAS ADMISSION BY THE ASSESSEE WHICH WAS NOT RETRACTED AT ANY STAGE. FURTH ER, THE ASSESSEE HAD CLAIMED RELIEF U/S. 54 OF THE ACT. IN THE CASE IN HAND THERE IS NO SUCH ADMISSION BY THE ASSESSEE. THE LD. AR SUBMITTED THA T THE MATTER CAN BE REMITTED BACK TO ASSESSING OFFICER FOR LIMITED PURPOS E FOR VERIFICATION OF DISTANCE ONLY. THE ASSESSEE CANNOT BE PUT IN WORSE SITUATION BY REMITTING THE CASE TO ASSESSING OFFICER IN OPE N REMAND. AUTHORITIES CANNOT BE GIVEN SECOND INNINGS WHERE THE FACT S ARE CLEARLY EVIDENT AND ONLY CERTIFICATE, DOCUMENTS ARE REQUIRED BE V ERIFIED WHICH ARE PRODUCED BEFORE THE APPELLATE AUTHORITY AS ADDITIONAL EVIDENCE. IN SUPPORT OF HIS SUBMISSIONS THE LD. AR PLACED RELIANCE ON THE FOLLOWING DECISIONS : 9 ITA NO. 2502/PN/2012, A.Y. 2009-10 I. ZUARI LEASING & FINANCE CORPORATION LTD. VS. ITO, 112 ITD 205 (DELHI)(TM); II. SMT. NEENA SYAL VS. ASSTT. CIT, 70 ITD 62 (CHANDIGARH); III. ASSTT. CIT VS. ANIMA INVESTMENT LTD., 73 ITD 125 (DELHI)(TM). 7. THE LD. DR OBJECTED TO THE SUBMISSIONS MADE ON BEHALF OF THE ASSESSEE FOR REMANDING THE MATTER FOR LIMITED PURPOSE. TH E LD. DR SUBMITTED THAT IF THE MATTER HAS TO GO BACK TO THE ASS ESSING OFFICER IT SHOULD BE AN OPEN REMAND TO DETERMINE THE NATURE OF LAND AS WELL. THE REMAND SHOULD NOT BE FOR THE LIMITED PURPOSE OF THE VERIFICA TION OF THE DISTANCE ALONE. 8. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESEN TATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIE S BELOW. WE HAVE ALSO CONSIDERED THE DECISIONS ON WHICH BOTH THE SIDE S HAVE PLACED RELIANCE. FROM THE GROUNDS RAISED IN THE APPEAL AND THE SUBMISSIONS MADE BY THE RIVAL SIDES TWO ISSUES HAVE EMERGED FOR ADJUDICATION. I. WHETHER THE SALE OF LAND BY ASSESSEE IS AN ADVENTURE IN THE NATURE OF TRADE? II. WHETHER THE LAND SOLD BY THE ASSESSEE IS A CAPITAL ASSET WITHIN THE MEANING OF SECTION 2(14) OF THE ACT BEING WITHIN 8 KMS FROM THE MUNICIPAL LIMITS OF TALEGAON? 9. THE CONTENTION OF THE ASSESSEE IS THAT THE ASSESSE E IS AN AGRICULTURALIST AND THE LAND SOLD BY HIM SITUATED AT VILLAGE SATE, TALUKA-MAVAL, DISTT.-PUNE IS A AGRICULTURAL LAND. THE ASSES SEE HAD PURCHASED THE LAND IN 2007 FOR CARRYING AGRICULTURAL OPERA TIONS. SINCE, THE ASSESSEE IS STAYING IN PUNE WHICH IS 50 KMS AWAY FRO M THE LAND IN 10 ITA NO. 2502/PN/2012, A.Y. 2009-10 QUESTION, THE ASSESSEE DID NOT FIND IT VIABLE TO CARRY OUT AGRICULTURAL OPERATIONS AND THUS, SOLD THE LAND TO M/S. KOHINOOR DEVE LOPMENT CORPORATION A PARTNERSHIP FIRM THROUGH ITS PARTNER SHRI R AJESH KRISHNAKUMAR GOYAL FOR A CONSIDERATION OF ` 85,00,000/-. SHRI RAJESH KRISHNAKUMAR GOYAL IS ALSO AN AGRICULTURIST. THE LAND WAS U SED BY THE ASSESSEE FOR AGRICULTURAL PURPOSES AND EVEN AFTER SALE S HRI RAJESH KRISHNAKUMAR GOYAL IS CULTIVATING THE LAND. NEITHER THE AS SESSEE, NOR THE PURCHASER OF THE LAND HAD EVER APPLIED FOR CHANGE OF LAND USE FOR CONVERTING THE LAND FROM AGRICULTURAL TO NON-AGRICULTURAL PU RPOSE. THE LAND IN QUESTIONS IS SITUATED 10 KMS. AWAY FROM THE MUNICIPA L LIMITS OF TALEGAON. THE SALE OF AGRICULTURAL LAND AT VILLAGE SATE IS ONL Y SALE TRANSACTION CARRIED OUT BY THE ASSESSEE. THE INTENTION OF THE ASSESSEE WAS TO USE THE LAND FOR AGRICULTURAL PURPOSE. THEREFORE, NO DEVELOPMENT ACTIVITY SUCH AS PLOTTING OR CONVERTING THE LA ND FROM AGRICULTURAL TO NON-AGRICULTURAL WAS EVER UNDERTAKEN BY THE ASSE SSEE. THE ASSESSING OFFICER ON THE OTHER HAND HELD THAT THE AS SESSEE HAD SOLD THE LAND IN VERY SHORT SPAN OF TIME OF LESS THAN 2 MONTHS FROM THE DATE OF PURCHASE EARNING A HUGE PROFIT ON SALE OF LAND . THE ASSESSEE NEVER DISCLOSED ANY AGRICULTURAL INCOME IN HIS RET URN OF INCOME. THE INTENTION OF THE ASSESSEE WAS NOT TO RETAIN THE LAND FOR AGRICULTURAL PURPOSE BUT TO EARN QUICK PROFIT BY TRADING IN LAND. THE ASSESSING OFFICER HELD THAT THE LAND IS SITUATED ONLY 6-7 K MS FROM THE MUNICIPAL LIMITS OF TALEGAON. THEREFORE, IT FALLS WITHIN THE DEFINITION OF CAPITAL ASSETS. THE FINDINGS OF THE ASSESSING OFFICER WERE U PHELD BY THE COMMISSIONER OF INCOME TAX (APPEALS) HENCE, THE PRESENT APP EAL BY THE ASSESSEE. 11 ITA NO. 2502/PN/2012, A.Y. 2009-10 10. ONE OF THE REASONS FOR TREATING THE SALE TRANSACTIO N AS ADVENTURE IN THE NATURE OF TRADE BY THE REVENUE IS THE SHORT DUR ATION BETWEEN PURCHASE AND SALE OF LAND. AS PER THE CONTENTIONS OF THE ASSESSEE THE LAND WAS PURCHASED BY THE ASSESSEE IN 2007 AGAINST VIS AR PAVATI FOR A CONSIDERATION OF ` 15,50,000/-. HOWEVER, THE SALE DEED OF THE LAND WAS EXECUTED IN MARCH, 2008. THE ASSESSEE PURPORTEDLY GOT POSSESSION OF LAND AT THE TIME OF PAYMENT OF CONSIDERATION IN JANUARY, 20 07. THESE CONTENTIONS OF THE ASSESSEE HAVE BEEN DISBELIEVED BY THE AUTHORITIES BELOW. AFTER PERUSAL OF THE DOCUMENTS ON RECORD WE FIND T HAT THERE IS NO DOCUMENT ON RECORD TO SHOW THAT THE ASSESSEE HAD IN FACT PURCHASED THE LAND IN JANUARY, 2007. THE ASSESSEE HAS NEITHER PLACED ON RECORD THE VISAR PAVATI AGAINST WHICH THE LAND WAS ALLEGEDLY PURCHASED NOR ANY OTHER DOCUMENT SUCH AS BANK STATE MENT ETC. TO SUBSTANTIATE HIS CONTENTIONS. HOWEVER, THE REVENUE HAS NOT CONTROVERTED THE FACT THAT THE PRESENT TRANSACTION WA S THE ONLY TRANSACTION CARRIED OUT BY THE ASSESSEE IN RESPECT OF SALE OR PURCHASE OF LAND. THE REVENUE HAS NOT BEEN ABLE TO SHOW FROM RECOR DS THAT THE ASSESSEE WAS ENGAGED IN THE ORGANIZED/REGULAR BUSINESS OF SALE AND PURCHASE OF LAND OR DEVELOPMENT OF LAND. 11. THE LD. AR HAS PLACED RELIANCE ON THE DECISION OF HON'B LE BOMBAY HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. D HABLE, BOBDE PAROSE, KALE, LUTE AND CHOUDHARY (SUPRA) IN SUPPORT OF HIS SUBMISSIONS THAT ONUS IS ON THE REVENUE TO SHOW THAT L AND WAS A BUSINESS ASSET. THE HON'BLE HIGH COURT IN THE AFORESAID C ASE HAS HELD THAT THE ONUS OF PROVING THAT THE LAND FORMED PART OF TH E BUSINESS ASSETS OF THE ASSESSEE WAS ON THE DEPARTMENT AND IN T HE ABSENCE OF EVIDENCE, THE PRESUMPTION WOULD BE THAT THE LAND WAS HEL D AS CAPITAL 12 ITA NO. 2502/PN/2012, A.Y. 2009-10 ASSET BY THE ASSESSEE. THE RELEVANT FACTS AND THE FINDI NGS OF THE HON'BLE HIGH COURT ARE AS UNDER: THE CONTROVERSY MAY NOW BE EXAMINED FROM THE THIRD AND THE LAST ANGLE. IN THE INSTANT CASE, IT IS NOT THE CASE OF T HE REVENUE THAT THE ASSESSEE WAS CARRYING ON THE REGULAR BUSINESS OF SA LE OR PURCHASE OF LAND. THE CASE OF THE REVENUE MAINLY APPEARS TO BE THAT ' THE LAND IN QUESTION WAS NOT PURCHASED BY THE ASSESSEE FOR CARR YING ON AGRICULTURAL OPERATIONS AND THAT THERE WAS AN INTENTION OF DOING BUSINESS '. HOWEVER, NO MATERIALS COULD BE BROUGHT ON RECORD BY THE REVE NUE IN SUPPORT OF THIS STAND EXCEPT THE ALLEGATION THAT SOME OF THE MEMBER S OF THE ASSESSEE ASSOCIATION OF PERSONS, HAD ALSO ENTERED INTO SIMIL AR DEALS IN THEIR INDIVIDUAL CAPACITY AND THAT THE LAND IN QUESTION W AS SOLD BY THE ASSESSEE WITHIN THREE MONTHS FROM THE DATE OF PURCH ASE. THE TRIBUNAL DID NOT ACCEPT THIS CONTENTION OF THE REVENUE. THE FACT OF PURCHASE AND SALE OF THE LAND BY THE MEMBERS OF THE ASSESSEE ASS OCIATION OF PERSONS WAS ALSO CONTRADICTED BY THE ASSESSEE. THE CASE OF THE ASSESSEE WAS THAT ALL ITS MEMBERS WERE AGRICULTURISTS AND THEY N EVER INDULGED IN ANY SUCH PURCHASE OR SALE OF AGRICULTURAL LAND. THE TRI BUNAL DID NOT ACCEPT THE CONTENTION OF THE REVENUE IN THIS REGARD. IN TH AT VIEW OF THE MATTER, THERE BEING NO FINDING IN REGARD TO THE CARRYING ON OF THE BUSINESS BY THE ASSESSEE OF SALE AND PURCHASE OF THE LAND AND THE L AND BEING STOCK IN TRADE, THE CONTENTION OF THE REVENUE THAT THE INCOM E FROM SALE OF LAND AMOUNTED TO PROFITS AND GAINS OF BUSINESS CANNOT BE SUSTAINED. IN VIEW OF THE AFORESAID FACTUAL POSITION, IT IS NOT NECESS ARY TO GO INTO AN ELABORATE DISCUSSION ON THE POINT AS TO WHEN A TRAN SACTION WILL FALL WITHIN THE DEFINITION OF BUSINESS AS BEING AN ADVENTURE IN THE NATURE OF TRADE. AS IN THE INSTANT CASE, THERE IS NO EVIDENCE AT ALL OF ANY TRADING ACTIVITY IN THE ISOLATED TRANSACTION OF PURCHASE AND SALE OF LAND BY THE ASSESSEE, THE TRANSACTION CANNOT BE TREATED, WITHOUT MORE, TO BE A VENTURE IN THE NATURE OF TRADE. THE ONUS OF PROVING THAT THE LAND FORMED PART OF THE BUSINESS ASSETS OF THE ASSESSEE IS ON THE DEPARTMEN T AND IN THE ABSENCE OF ANY EVIDENCE TO THAT EFFECT THE PRESUMPTION WILL BE THAT THE LAND WAS HELD AS A CAPITAL ASSET BY THE ASSESSEE AND THE INC OME FROM TRANSFER THEREOF WAS NOT INCOME FROM BUSINESS. IN VIEW OF THE FOREGOING DISCUSSION, IT IS CLEAR TH AT THE INCOME IN QUESTION COULD NOT BE SUBJECTED TO TAX UNDER THE INCOME TAX ACT EITHER AS BUSINESS INCOME OR AS CAPITAL GAINS. 13 ITA NO. 2502/PN/2012, A.Y. 2009-10 12. THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF FORT P ROPERTIES PVT. LTD. VS. COMMISSIONER OF INCOME TAX REPORTED AS 208 ITR 232 (BOM) WHILE DEALING WITH THE CASE WHEREIN AN ISOLATED SALE TRA NSACTION OF LAND WAS HELD TO BE ADVENTURE IN THE NATURE OF TRADE BY THE REVENUE AUTHORITIES. THE HON'BLE HIGH COURT AFTER PLACING RELIANCE O N THE DECISION OF HON'BLE SUPREME COURT OF INDIA IN THE CASE OF VENKATASWAMI NAIDU (G.) AND CO. VS. CIT REPORTED AS 35 IT R 594 (SC) AND KHAN BAHADUR AHMED ALLADIN AND SONS VS. CIT REPORTED AS 68 IT R 573 (SC) AND THE FACTS OF THE CASE HELD THAT THERE IS A M ATERIAL DISTINCTION BETWEEN TRANSACTIONS IN COMMERCIAL COMMODITIES A ND TRANSACTIONS OF PURCHASE OF LAND. IN THE ABSENCE OF EVIDE NCE TO THE EFFECT THAT THE LAND FORMED PART OF THE BUSINESS ASSETS OF THE ASSESSEE, THE PRESUMPTION WILL BE THAT THE LAND WAS HELD AS A CAPITA L ASSET BY THE ASSESSEE AND THE INCOME FROM THE TRANSFER THEREOF WAS NOT INCOME FROM BUSINESS. THE ISSUE BEFORE THE HON'BLE HIGH COURT IN THE SAID CASE WAS: '1. WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT THE PURCHASE AND SALE OF FORT PROPERTY IN THE HANDS OF THE ASSESSEE COMPANY WAS A PURCHASE AND SALE OF A CAPITAL ASSET AND THE ASSESSEE COMPANY WAS, TH EREFORE, LIABLE TO BE ASSESSED UNDER THE HEAD 'CAPITAL GAINS' UNDER SECTI ON 45 OF THE INCOME TAX ACT, 1961 ? THE HON'BLE HIGH COURT ANSWERED THE SAID QUESTION AS UNDER : WE MAY, THEREFORE, TURN TO THE FACTS OF THE CASE A ND THE FINDINGS OF THE TRIBUNAL TO DECIDE WHETHER THE TRIBUNAL WAS JUSTIFI ED IN HOLDING THAT THE ISOLATED TRANSACTION OF PURCHASE AND SALE OF LANDED PROPERTY BY THE ASSESSEE IN THE INSTANT CASE WAS A TRANSACTION OF P URCHASE AND SALE OF A CAPITAL ASSET AND NOT A VENTURE IN THE NATURE OF TR ADE. THE RELEVANT FACTS ARE: (I) THE ASSESSEE COMPANY WAS INCORPORATED ON SEPTEM BER 27, 1966, AS A WHOLLY OWNED SUBSIDIARY OF ONE KILACHAND DEVCHAND A ND CO. PVT. LTD. (HOLDING COMPANY). 14 ITA NO. 2502/PN/2012, A.Y. 2009-10 (II) THE ASSESSEE PURCHASED THE IMMOVABLE PROPERTY K NOWN AS 'FORT PROPERTY' FROM ITS HOLDING COMPANY FOR A CONSIDERAT ION OF RS. 60 LAKHS. THIS PROPERTY WAS A CAPITAL ASSET OF THE HOLDING CO MPANY ACQUIRED BY IT IN THE YEAR 1933 FOR A SUM OF RS. 2,21,501. (III) THE SALE CONSIDERATION OF RS. 60 LAKHS WAS PA YABLE AS FOLLOWS: RS. 20 LAKHS BEFORE EXECUTION OF THE DEED OF CONVEYANCE AND THE BALANCE RS. 40 LAKHS WITHIN TWO YEARS THEREAFTER WITHOUT ANY IN TEREST. (IV) THE SALE DEED IN FAVOUR OF THE ASSESSEE WAS EX ECUTED ON SEPTEMBER 30, 1966, AND IT WAS PRESENTED FOR REGISTRATION ON OCTOBER 12, 1966. (V) THE ASSESSEE FINALISED THE NEGOTIATIONS FOR RES ALE OF THE ABOVE PROPERTY TO THE BANK OF MAHARASHTRA FOR A SUM OF RS . 57.5 LAKHS AND THE SALE DEED WAS EXECUTED ON OCTOBER 11, 1967, AND PRE SENTED FOR REGISTRATION ON THE SAME DATE. (VI) THE OBJECTS CLAUSE IN THE MEMORANDUM AND ARTIC LES OF ASSOCIATION OF THE ASSESSEE ENUMERATES 47 OBJECTS WHICH INCLUDES, INTER ALIA, THE FOLLOWING : 'TO HOLD MAINTAIN OR TO ALIENATE, SELL, LET, MORTGA GE, CHARGE OR OTHERWISE DEAL WITH OR DISPOSE OF ALL OR ANY OF SUCH LANDS, B UILDINGS, STRUCTURES OF HEREDITAMENTS . . . . ; TO LET OR UNDER LET ALL OR ANY OF SUCH LANDS, BUILD INGS, STRUCTURES, HEREDITAMENTS AND PREMISES EITHER UPON LEASE OR OTH ERWISE ; TO PURCHASE FOR INVESTMENT OR RESALE AND TO TRAFFIC IN LAND AND HOUSE OR OTHER PROPERTY OF ANY TENURE. . . . ;' THE ABOVE CLAUSE CLEARLY GOES TO SHOW THAT THE OBJE CT OF THE ASSESSEE COMPANY IS NOT ONLY TO PURCHASE FOR RESALE BUT ALSO PURCHASE IMMOVABLE PROPERTY, TO HOLD, MAINTAIN, SELL, LET OR MORTGAGE THE SAME, TO LET ON LEASE, ETC. EMPHASIS ON THE SUB CLAUSE WHICH SPEAKS OF DEA LING IN REAL ESTATE IS MISPLACED. ON A READING OF THE OBJECTS CLAUSE AS A WHOLE, NO SPECIAL SIGNIFICANCE CAN BE ATTACHED TO THIS SUB CLAUSE. (VII) THE FACTS AND CIRCUMSTANCES OF THE CASE ARE A CLEAR POINTER TO THE CONCLUSION THAT THE PROPERTY WAS PURCHASED BY THE A SSESSEE AS A CAPITAL ASSET FOR INVESTMENT AND NOT AS 'STOCK IN TRADE' OF BUSINESS. (VIII) THIS WAS AN ISOLATED TRANSACTION OF PURCHASE AND SALE OF PROPERTY BY THE ASSESSEE. THE PURCHASE OF TWO OTHER OPEN PLO TS OF LAND FOR SMALL 15 ITA NO. 2502/PN/2012, A.Y. 2009-10 AMOUNTS IS OF NO RELEVANCE IN DECIDING THE NATURE O F ACTIVITY OF THE ASSESSEE. THOSE PLOTS HAD NOT BEEN SOLD NOR ANY EXP ENDITURE INCURRED FOR DEVELOPING THE SAME IN THE PREVIOUS YEAR OR LATER Y EARS. (IX) THE TRIBUNAL RECORDED A CLEAR FINDING THAT THE ASSESSEE WAS NOT A DEALER IN REAL ESTATE AT ALL. (X) IT WAS ACQUIRED BY THE ASSESSEE AS A CAPITAL AS SET AND SOLD AS SUCH. (XI) IT WAS NOT CONVERTED BY THE ASSESSEE INTO STOC K IN TRADE. (XII) THE ASSESSEE HAD NO INTENTION TO TRADE IN IT AND NO TRADING WAS IN FACT DONE IN PROPERTY AND IT WAS SOLD AS A CAPITAL ASSET. (PARAGRAPH 20 OF THE TRIBUNAL'S ORDER). (XIII) THE MERE FACT THAT THE ASSESSEE SHOWED IT AS STOCK IN TRADE IN ITS BOOKS OF ACCOUNT IS NOT DETERMINATIVE OF THE NATURE OF THE ASSET. (XIV) THE VARIOUS FACTS AND CIRCUMSTANCES OF THE CA SE CLEARLY GO TO SHOW THAT THE TRANSACTION OF SALE OF THE ABOVE PROPERTY WAS NOT AN ADVENTURE IN THE NATURE OF TRADE. ON A CAREFUL CONSIDERATION OF THE CUMULATIVE EFFECT OF THE ABOVE FACTS IN THE LIGHT OF THE TESTS LAID DOWN BY THE COURTS, WE FIND OURSELVES IN AGREEMENT WITH THE TRIBUNAL THAT THE TRANSACTION OF SALE OF THE FORT PROPERTY BY THE ASSESSEE IN THE INSTANT CASE IS NOT AN ADVENTURE IN THE NATURE OF TRADE. IT IS A TRANSACTION OF TRANSFER OF A CAPITAL ASSET. WE ARE, THEREFORE, OF THE CLEAR OPINION THAT THE TR ANSACTION OF THE PURCHASE AND SALE OF THE PROPERTY IN QUESTION BY TH E ASSESSEE COMPANY WAS A TRANSACTION OF PURCHASE AND SALE OF A CAPITAL ASSET AND NOT AN ADVENTURE IN THE NATURE OF TRADE AND, AS SUCH, THE PROFITS OR GAINS THEREFROM WOULD BE ASSESSABLE TO CAPITAL GAINS TAX UNDER SECTION 45 OF THE INCOME TAX ACT, 1961. THAT BEING SO, IN THE INS TANT CASE SECTION 49(1)(III)(E) WILL BE ATTRACTED AS THE PROPERTY BEC AME THE PROPERTY OF THE ASSESSEE UNDER A TRANSFER REFERRED TO IN CLAUSE (IV ) OF SECTION 47 OF THE ACT. THE COST OF ACQUISITION OF THE ASSET, THEREFOR E, SHALL BE DEEMED TO BE THE COST FOR WHICH THE PREVIOUS OWNER OF THE PROPER TY HAD ACQUIRED IT. IN VIEW OF THE FOREGOING DISCUSSION, THE FIRST QUESTIO N REFERRED TO US IS ANSWERED IN THE AFFIRMATIVE, THAT IS, IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE. 16 ITA NO. 2502/PN/2012, A.Y. 2009-10 13. THUS, IN VIEW OF THE FACTS OF THE PRESENT CASE AND TH E JUDGMENTS DISCUSSED ABOVE, WE HOLD THAT THE LAND SALE TRANSACTION U NDERTAKEN BY THE ASSESSEE IS NOT ADVENTURE IN THE NATURE OF TRADE. THE REVENUE HAS NOT BEEN ABLE TO SHOW THAT THE LAND WAS HELD AS A TRAD ING ASSET. THE AUTHORITIES BELOW HAVE DRAWN INFERENCE ONLY FROM THE PROX IMITY OF ALLEGED DATE OF PURCHASE AND SALE OF LAND TO FORM A PRESU MPTIVE OPINION THAT THE TRANSACTION WAS A BUSINESS TRANSACTION. MEREL Y FOR THE REASON THAT LAND WAS HELD BY THE ASSESSEE FOR SHORT DURATION, IT CANNOT BE SAID THAT THE LAND PURCHASED AND SOLD BY THE ASSESSEE IS IN THE ADVENTURE IN THE NATURE OF TRADE. AS HAS BEEN HELD IN THE CASE OF CI T VS. DHABLE, BOBDE, PAROSE, KALE, LUTE AND CHOUDHARI (SUPRA), THE ONUS IS ON THE REVENUE TO PROVE THAT THE LAND WAS PART OF BUSINESS AS SETS. THE DEPARTMENT HAS NOT BEEN ABLE TO SHOW THAT THE ASSESS EE WAS ENGAGED IN THE ORGANIZED ACTIVITY OF SALE AND PURCHASE OF LAND OR P ROPERTY DEALING. FURTHER, THERE IS NO DOCUMENT ON RECORD TO SHO W THAT THE ASSESSEE HAD DEVELOPED THE LAND OR HAS DIVIDED THE LAND IN TO PLOTS. THE DEPARTMENT HAS FAILED TO CONTROVERT THE ASSERTIONS OF T HE ASSESSEE THAT THERE HAS BEEN NO CHANGE OF LAND USE I.E. CONVERSION FROM AGRICULTURAL TO NON-AGRICULTURAL USE. RATHER, THE ASSESSEE HAS BEEN ABLE TO SHOW FROM RECORDS THAT THE LAND HAS BEEN SOLD TO AN AGRICULTU RIST IN COMPLIANCE WITH THE PROVISIONS OF SECTION 63 OF THE BOMBAY TENANCY ACT. IN OUR CONSIDERED VIEW THE REVENUE HAS FAILED TO DI SCHARGE ITS ONUS TO SHOW THAT THE SALE OF LAND BY THE ASSESSEE WAS A BUSINESS TRANSACTION. THUS, THE FIRST QUESTION RAISED BEFORE US IS A NSWERED IN FAVOUR OF THE ASSESSEE. 14. NOW, WE PROCEED TO DECIDE THE SECOND ISSUE, WHETHER THE LAND IS AGRICULTURAL OR CAPITAL ASSET? THE DEPARTMENT HAS PLACED RELIANCE ON 17 ITA NO. 2502/PN/2012, A.Y. 2009-10 THE DECISION OF CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CA SE OF MR. ABHIJIT SUBHASH GAIKWAD VS. THE DY. COMMISSIONER OF INCOM E TAX (SUPRA). AS PER CONTENTIONS OF THE DEPARTMENT THE ASSES SEE HAS NEITHER CARRIED OUT ANY AGRICULTURAL ACTIVITY ON THE LAND NOR THE ASSESSEE HAS SHOWN ANY AGRICULTURAL INCOME IN HIS RETURN OF INCOME. THE ASSESSEE HAS ALSO NOT SUBSTANTIATED FROM THE DOCUMENTS ON RECOR D THAT THE ASSESSEE HAS CULTIVATED THE LAND IN THE RECENT PAST. TH E LD. AR HAS DISTINGUISHED THE DECISION OF CO-ORDINATE BENCH ON THE FACTS. WE FIND MERIT IN THE SUBMISSIONS OF LD. AR. THE FACTS IN THE CASE OF ABHIJIT SUBHASH GAIKWAD VS. THE DY. COMMISSIONER OF INCO ME TAX (SUPRA) ARE AT VARIANCE WITH THE FACTS OF THE PRESENT CAS E. IN THE SAID CASE THE ASSESSING OFFICER HAD OBTAINED REPORT FROM THE I NSPECTOR WHICH CLEARLY MENTIONED THAT THE LAND IS NOT FIT FOR CULTIV ATION. THIS FINDING OF FACT WAS NOT CHALLENGED BY THE ASSESSEE. AS PER THE REVENUE RECORD THE LAND IN THE SAID CASE WAS NOT CULTIVABLE. FURT HER, THE ASSESSEE HAD HIMSELF ADMITTED THE LAND TO BE CAPITAL ASSET . THE ASSESSEE HAD CLAIMED DEDUCTION U/S. 54 OF THE ACT ON THE CAPITAL GAINS ARISING FROM THE SAID LAND. WHEREAS, IN THE PRESENT CASE NO SPECIFIC ENQUIRY WAS CONDUCTED BY THE ASSESSING OFFICER WITH REGAR D TO THE NATURE OF LAND. AS PER REVENUE RECORDS THE LAND IS CULTIV ABLE AND THERE IS NO ADMISSION BY THE ASSESSEE TO TREAT THE LAND AS CA PITAL ASSET. THE DEPARTMENT HAS NOT REBUTTED THESE CONTENTIONS OF THE ASSESSEE. THUS, THE RATIO LAID DOWN IN THE CASE OF ABHIJIT SUBHASH GAIKWA D VS. THE DY. COMMISSIONER OF INCOME TAX (SUPRA) WOULD NOT APPLY ON THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. 15. THE LD. AR OF THE ASSESSEE IN ORDER TO CONTROVERT THE FINDINGS OF THE AUTHORITIES BELOW THAT THE SALE OF LAND MADE BY THE A SSESSEE IS NOT 18 ITA NO. 2502/PN/2012, A.Y. 2009-10 A CAPITAL ASSET BUT AN AGRICULTURAL LAND HAS DRAWN OUR AT TENTION TOWARDS THE BOMBAY TENANCY ACT. A PERUSAL OF SECTION 6 3 OF THE BOMBAY TENANCY ACT WOULD SHOW THAT THE TRANSFER OF AGR ICULTURAL LAND TO NON-AGRICULTURIST IS BARRED IN THE STATE OF MAHARASHTR A. THE TERM AGRICULTURIST AS DEFINED U/S. 2(2) OF BOMBAY TENANCY ACT MEA NS, A PERSON WHO CULTIVATES LAND PERSONALLY . AND THE TERM USED IN SECTION 2(2) TO CULTIVATE PERSONALLY IS DEFINED IN SUB-SECTION (6) TO SECTION 2 OF THE BOMBAY TENANCY ACT WHICH IS REPRODUCED HERE-IN-BELOW: (6) 'TO CULTIVATE PERSONALLY' MEANS TO CULTIVATE L AND ON ONE'S OWN ACCOUNT:- (I) BY ONE'S OWN LABOUR, OR (II) BY THE LABOUR OF ANY MEMBER OF ONE'S FAMILY, O R (III) UNDER THE PERSONAL SUPERVISION OF ONESELF OR ANY MEMBER OF ONE'S FAMILY, BY HIRED LABOUR OR BY SERVANTS ON WAGES PAY ABLE IN CASH OR KIND BUT NOT IN CROP SHARE, BEING LAND, THE ENTIRE AREA OF WHICH:- (A) IS SITUATE WITHIN THE LIMITS OF A SINGLE VILLAG E, OR (B) IS SO SITUATED THAT NO PIECE OF LAND IS SEPARAT ED FROM ANOTHER BY A DISTANCE OF MORE THAN FIVE MILES, OR (C) FORMS ONE COMPACT BLOCK: PROVIDED THAT, THE RESTRICTIONS CONTAINED IN CLAUSE S (A), (B) AND (C) SHALL NOT APPLY TO ANY LAND:- (I) WHICH DOES NOT EXCEED TWICE THE CEILING AREA; (II) UPTO TWICE THE CEILING AREA, IF SUCH LAND EXCE EDS TWICE THE CEILING AREA. EXPLANATION 1:- A WIDOW OR A MINOR, OR A PERSON WHO IS SUBJECT TO PHYSICAL OR MENTAL DISABILITY, OR A SERVING MEMBER OF THE ARMED FORCES SHALL BE DEEMED TO CULTIVATE THE LAND PERSONALLY IF SUCH LAND IS CULTIVATED BY SERVANTS, OR BY HIRED LABOUR, OR THROUGH TENANTS . A PERUSAL OF SALE DEED DATED 23-05-2008 EXECUTED BY TH E ASSESSEE IN FAVOUR OF M/S. KOHINOOR DEVELOPMENT CORPORAT ION THROUGH ITS PARTNER SHRI RAJESH KRISHNAKUMAR GOYAL SHOWS THAT T HE PURCHASER OF THE LAND IS IN THE OCCUPATION OF FARMING AND BUSINESS. T HUS, THE LAND HAS BEEN SOLD BY THE ASSESSEE IN ACCORDANCE WITH T HE PROVISIONS OF SECTION 63 OF THE BOMBAY TENANCY ACT. 19 ITA NO. 2502/PN/2012, A.Y. 2009-10 16. THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF COMMIS SIONER OF INCOME TAX VS. MADHABHAI H. PATEL (SUPRA) AFTER CONSIDERING THE JUDGMENTS RENDERED IN THE CASE OF ARUNDHATI BALKRISHA V S. CIT REPORTED AS 138 ITR 245 (GUJ) AND IN THE CASE OF CIT VS . SIDDHARTH J. DESAI REPORTED AS 139 ITR 628 (GUJ) HAS HELD AS UNDER : IN OUR OPINION, WHAT IS REQUIRED TO BE CONSIDERED IS : WAS IT AGRICULTURAL LAND WHEN IT WAS SOLD ? IF THE LAND IS RECORDED AS AGRICULTURAL LAND IN THE REVENUE RECORDS AND IF TILL THE DATE OF ITS SALE IT IS USED AND EXPLOITED AS AGRICULTURAL LAND, AND IF THE OWNER OF THE LAND HAD NOT TAKEN ANY STEP, WHICH WOULD INDICATE HIS INTENTION TO EXPLOIT THE L AND THEREAFTER AS NON AGRICULTURAL LAND, THEN SUCH A PIECE OF LAND WILL H AVE TO BE REGARDED AS AGRICULTURAL EVEN THOUGH IT IS INCLUDED WITHIN THE MUNICIPAL LIMITS OR IT IS SOLD ON A PER SQUARE YARD BASIS AND NOT ACREAGE BAS IS. THE PURPOSE FOR WHICH SUCH A LAND IS SOLD, THOUGH NOT RELEVANT, WIL L NOT HAVE THAT MUCH IMPORTANCE AND WEIGHT AS IT WOULD HAVE BEEN IN A CA SE WHERE THE LAND HAS REMAINED AS PADATAR OR IDLE OR IS USED FOR AGRI CULTURAL PURPOSES ONLY BY WAY OF A STOP GAP ARRANGEMENT. SO FAR AS THE FAC TS OF THIS CASE ARE CONCERNED, THERE IS NO DISPUTE THAT THE LAND, TILL IT WAS SOLD, WAS CLASSIFIED AS AGRICULTURAL LAND IN THE REVENUE RECO RDS. IN THE VILLAGE FORMS NOS. VII AND XII, POPULARLY KNOWN AS 'RECORD OF RIGHTS', IT IS MENTIONED THAT THE WHOLE OF THE LAND WAS CULTIVATED TILL THE YEAR 1967- 68. THE LAND WAS CULTIVATED PERSONALLY BY THE ASSES SEE. THE SAID LAND BELONGED TO THE FAMILY AND HE GOT IT BY WAY OF INHE RITANCE AND NOT BY WAY OF PURCHASE FROM SOME OTHER PARTY. THERE IS NO MATERIAL WHICH DISCLOSES THAT ATTEMPT WAS MADE BY THE ASSESSEE EIT HER TO PURCHASE OR SELL ANY OTHER LAND IN THE PAST. HE HAD NOT, AT ANY POINT OF TIME, APPLIED FOR PERMISSION TO USE THE LAND FOR NON AGRICULTURAL PURPOSES. ALL THESE FACTORS HAVE BEEN TAKEN INTO CONSIDERATION ALONG WI TH THE OTHER RELEVANT FACTORS, VIZ., THAT THE LAND WAS SOLD TO A CO OPERA TIVE HOUSING SOCIETY ; THAT IT WAS SOLD AT RS. 20 PER SQ. YARD, AND THAT I T WAS SITUATED WITHIN THE CORPORATION LIMITS OF AHMEDABAD CITY. IT IS, TH EREFORE, NOT POSSIBLE FOR US TO SAY THAT THE VIEW TAKEN BY THE TRIBUNAL IS UN REASONABLE OR ERRONEOUS IN LAW. EVEN IF WE HAVE TO CONSIDER THE I NTENTION OF THE ASSESSEE, WHEN HE DECIDED TO SELL THE LAND, IT BECO MES CLEAR THAT HE WANTED TO SELL THE LAND AS AGRICULTURAL LAND. IN TH E AGREEMENT DATED DECEMBER 18, 1963, IT IS IN TERMS STATED THAT THE A SSESSEE WAS SELLING THE LAND AS AGRICULTURAL LAND ONLY AND, THEREFORE, WAS NOT GOING TO SIGN ANY APPLICATION OR PLAN FOR A NON AGRICULTURAL USE OF THE SAID LAND. THERE IS NO MATERIAL TO SHOW THAT THE ASSESSEE HAD TAKEN ANY PART EITHER IN 20 ITA NO. 2502/PN/2012, A.Y. 2009-10 GETTING THE PLOTS SUBDIVIDED INTO SUB PLOTS, OR IN GETTING THE PLANS PREPARED AND PASSED FOR NON AGRICULTURAL USE. ALL T HOSE STEPS WERE TAKEN BY THE PURCHASER OF THE LAND AND NOT BY THE ASSESSE E. THUS, THE TRIBUNAL, AFTER CONSIDERING ALL THE RELEVANT FACTOR S AND ALSO THE DECISION OF THE SUPREME COURT IN CWT V. OFFICER IN CHARGE (C OURT OF WARDS), PAIGAH [1976] 105 ITR 133, WHEREIN THE SUPREME COUR T HAS HELD THAT THE EXPRESSION, ' AGRICULTURAL LAND' FOR THE PURPOSE OF THE WEALTH TAX ACT WOULD MEAN THE LAND ACTUALLY USED FOR AGRICULTURAL PURPOSE, HAS HELD THAT THE LAND IN QUESTION IS AN AGRICULTURAL LAND. IT IS, THEREFORE, NOT POSSIBLE TO ACCEPT THE CONTENTION RAISED ON BEHALF OF THE REVENUE THAT THE TRIBUNAL COMMITTED AN ERROR IN HOLDING THAT THE LAND IN QUESTION WAS AGRICULTURAL LAND. IN THIS VIEW OF THE MATTER, WE A NSWER THE QUESTION IN THE AFFIRMATIVE, THAT IS, AGAINST THE REVENUE AND I N FAVOUR OF THE ASSESSEE. NO ORDER AS TO COSTS. IN THE PRESENT CASE, AS HAS BEEN POINTED OUT EARLIER, T HE ASSESSEE HAS NEITHER SOUGHT ANY APPROVAL/PERMISSION FOR CHANGE OF LAND USE FROM AGRICULTURAL TO NON-AGRICULTURAL NOR THERE IS ANY EVIDE NCE ON RECORD WHICH SUGGEST THAT THE ASSESSEE HAS DEVELOPED THE LAND BY PLOTTING OR ANY SUCH ACTIVITY. THE LAND AT THE TIME OF SALE AS PER REVENUE RECORD WAS AN AGRICULTURAL LAND AND WAS SOLD TO AN AGRICULTURIST. THE CONTENTION OF THE ASSESSEE THAT POST SALE, THE PURCHASER OF LAND HAS NOT CONVERTED THE LAND FOR NO-AGR ICULTURAL PURPOSE AND AS PER REVENUE RECORDS THE LAND IN QUESTIO N IS STILL UNDER CULTIVATION HAS NOT BEEN REBUTTED BY THE DEPARTMENT. 17. NOW, THE ONLY POINT OF CONTENTION IS, WHETHER THE LAND IS SITUATED WITHIN 8 KMS OR BEYOND 8 KMS FROM THE MUNICIPAL LIMITS OF TALE GOAN. INITIALLY, THE ASSESSEE HAD OBTAINED A CERTIFICATE FROM VILLAGE TALATHI TO SUBSTANTIATE HIS SUBMISSIONS THAT THE LAND IN QUESTION IS M ORE THAN 8 KMS AWAY FROM THE MUNICIPAL LIMITS OF TALEGAON. THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS HAS ALSO OBTAINED CER TIFICATE FROM VILLAGE TALATHI WHICH SHOWS THAT THE LAND IS SITUATED WITHIN 6 TO 7 KMS 21 ITA NO. 2502/PN/2012, A.Y. 2009-10 FROM THE MUNICIPAL LIMITS OF TALEGOAN. IN VIEW OF THIS CONTRAD ICTORY CERTIFICATES ISSUED BY THE VILLAGE TALATHI, NO RELIANCE CAN BE PLACED ON EITHER OF THE CERTIFICATES. THE ASSESSEE HAS PLACED ON R ECORD A CERTIFICATE FROM THE OFFICE OF DY. ENGINEER PUBLIC WORKS DEPART MENT SUB DIVISION, VADGAON MAVAL AS ADDITIONAL EVIDENCE. THE RELEVANT EXTRACT OF THE CERTIFICATE IS REPRODUCED HERE-IN-UNDER: WITH REFERENCE TO ABOVE SUBJECT THE DISTANCE BETWE EN TALEGAON TO SATE WAS COUNT BY PWD ROAD MAPPING CYCLE AND THE SA ID DISTANCE IS 10 KM. THIS CERTIFICATE HAS BEEN ISSUED ON YOUR REQUE ST AND FOR YOUR INFORMATION. SD/- DY. ENGINEER PWD SUB DIVISION VADGAON MAVAL. SINCE, THE CERTIFICATE HAS BEEN ISSUED BY THE GOVT. DEPART MENT RELIANCE CAN BE PLACED ON THE SAME. HOWEVER, A PERUSA L OF THE CERTIFICATE SHOWS THAT THE DISTANCE MENTIONED IS BETWEEN TALEGAON AND SATE. THE CERTIFICATE DOES NOT MENTION THAT VILLAGE SATE IS 10 KM FROM THE MUNICIPAL LIMITS OF TALEGAON. THERE IS A DIFFERENCE BETWEEN THE DISTANCE FROM THE MUNICIPAL LIMITS AND DISTANCE BETWEEN TO T OWN/CITIES WHIH IS GENERALLY MEASURE FROM THE CENTER OF THE TOWN WE RE BUS STAND/RAILWAY STATION IS SITUATED. PWD BEING ENGAGED IN THE CONSTRUCTION OF ROADS AND BRIDGES, FOR THE PURPOSE OF ME ASURING DISTANCE BETWEEN THE TWO CITIES GENERALLY MEASURES THE DISTANCE FROM BUS STAND/RAILWAY STATION OF ONE CITY TO THE BUS STAND/ RAILWAY STATION OF THE OTHER. THE CERTIFICATE ISSUED BY PWD DOES NOT ME NTION THAT WHETHER THE DISTANCE IS FROM MUNICIPAL LIMITS OR ANY OTHER POINT/LANDMARK. THUS, IN VIEW OF AMBIGUITY IN THE CERTIFICATE ISSUED BY THE PWD, WE DEEM IT APPROPRIATE TO REMIT THE FILE BACK TO THE ASSESSING 22 ITA NO. 2502/PN/2012, A.Y. 2009-10 OFFICER FOR THE LIMITED PURPOSE OF ASCERTAINING THE DISTANCE O F THE LAND IN QUESTION FORM THE MUNICIPAL LIMITS OF TALEGAON. THE ASSESS ING OFFICER MAY SEEK CLARIFICATION ON THIS ISSUE FROM PWD OR SEE K FRESH CERTIFICATE FROM ANY GOVERNMENT AGENCY OTHER THAN VILLAGE TALATHI. THE SECOND ISSUE RAISED IN THE APPEAL OF THE ASSESSEE IS ACCO RDINGLY ALLOWED FOR STATISTICAL PURPOSE. 18. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY A LLOWED IN THE AFORESAID TERMS. ORDER PRONOUNCED ON MONDAY, THE 11 TH DAY OF APRIL, 2016. SD/- SD/- ( . . / R.K. PANDA) ( ! ' / VIKAS AWASTHY) #' / ACCOUNTANT MEMBER $ % #' / JUDICIAL MEMBER / PUNE; &# / DATED : 11 TH APRIL, 2016 RK *+,%-.#/#)- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ' () / THE CIT(A)-II, PUNE 4. ' / THE CIT-II, PUNE 5. !*+ %%,- , ,- , . ./0 , / DR, ITAT, B BENCH, PUNE. 6. + 1 23 / GUARD FILE. // ! % // TRUE COPY// #4 / BY ORDER, %5 ,0 / PRIVATE SECRETARY, ,- , / ITAT, PUNE