Mrs Sunita Manish Surana, Nagpur V. Income-tax Officer Ward 3(3), Nagpur

ITA 275/NAG/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2208 (ITAT-NAGPUR)
• Duration Of Justice: 3 year(s) 10 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 07-04-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 06-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Business income; Additional evidence; Tax effect
• Section: 143(3); 2(14)

Judgement Text

1 ITA NO. 275/NAG/2012 & ITA NO. 175/NAG/2014. IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR. BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. I.T.A. NO. 275/NAG/2012 ASSESSMENT YEAR : 2007 - 08. I.T.A. NO. 175/NAG/2014. ASSESSMENT YEAR : 2009 - 10. MRS. SUNITA MANISH SURANA, THE INCOME - TAX OFFICER, NAGPUR. VS. WARD - 3(3), NAGPUR. PAN ALTPS7079M. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.P. DEWANI. RESPONDENT : SHRI NARENDRA KANE. DATE OF HEARING : 07 - 04 - 2016 DATE OF PRONOUNCEMENT : 31 ST MAY, 2016. O R D E R PER MUKUL K. SHRAWAT, J.M. THESE TWO APPEALS PERTAINING TO ASSESSMENT YEARS 2007 - 08 AND 2009 - 10 HAVE BEEN FILED BY THE ASSESSEE ARISING FROM THE ORDERS OF LEARNED CIT(APPEALS) - II, NAGPUR RESPECTIVELY DATED 27 - 01 - 2012 AND 31 - 12 - 2013. THE GROUNDS RAISED ARE REPRODUCED BELOW : A. ASSTT. YEAR : 2007 - 08. 1. THE LEARNED ASSESSING OFFICER ERRED IN TAXING A SUM OF RS.2,43,71,592/ - BEING SURPLUS ON SALE OF AGRICULTURAL LAND EXIGIBLE TO TAX. 2. THE ADDITION MADE BY THE LEARNED ASSESSING OFFICER OF RS.2,43,71,592/ - IS UNJUSTIFIED, UNWARRANTED AND BAD IN LAW. 3. THE LEARNED ASSESSING OFFICER ERRED IN TREATING SURPLUS ON SALE OF AGRICULTURAL LAND EXIGIBLE TO TAX AS INCOME FROM ADVENTURE IN THE NATURE OF TR ADE. 2 ITA NO. 275/NAG/2012 & ITA NO. 175/NAG/2014. 4. THE LEARNED ASSESSING OFFICER SHOULD HAVE HELD THAT THE SALE OF AGRICULTURAL LAND IS NOT CAPITAL ASSET WITHIN THE MEANING OF SECTION 2(14) OF THE INCOME TAX ACT, 1961. B. ASSTT. YEAR : 2009 - 10. 1. THE LEARNED ASSESSING OFFICER ERRED IN TAXING A SUM OF RS. 50,32,000/ - BEING SURPLUS ON SALE OF AGRICULTURAL LAND EXIGIBLE TO TAX. 2. THE ADDITION MADE BY THE LEARNED ASSESSING OFFICER OF RS.50,32,000/ - IS UNJUSTIFIED, UNWARRANTED AND BAD IN LAW. 3. THE LEARNED ASSESSING OFFICER ERRED IN TREATING SURPLUS ON SALE OF AGRI CULTURAL LAND EXIGIBLE TO TAX AS INCOME FROM ADVENTURE IN THE NATURE OF TRADE. 4. THE LEARNED ASSESSING OFFICER SHOULD HAVE HELD THAT THE SALE OF AGRICULTURAL LAND IS NOT CAPITAL ASSET WITHIN THE MEANING OF SECTION 2(14) OF THE INCOME TAX ACT, 1961. 5. THE LEARN ED ASSESSING OFFICER ERRED IN LAW AS WELL AS ON FACTS IN TREATING THE AGRICULTURAL INCOME OF RS.1,92,000/ - AS INCOME OF THE APPELLANT FROM UNDISCLOSED SOURCES. 6. THE LEARNED ASSESSING OFFICER ERRED IN LAW AS WELL AS ON FACTS IN TREATING THE SHORT TERM CAPITAL GAIN EARNED ON SALE OF FLAT AT RS.4,21,000/ - AS BUSINESS INCOME OF THE APPELLANT. 7. THE LEARNED ASSESSING OFFICER ERRED IN LAW AS WELL AS ON FACTS IN DISALLOWING A SUM OF RS.1,42,366/ - BEING INTEREST PAID AND CLAIMED FROM THE HOUSE PROPERTY INCOME. 2. FOR BOTH THE YEARS THE FACTS IN RESPECT OF THE MAIN GROUND OF SALE OF AGRICULTURAL LAND WHETHER SUBJECT TO TAX OR NO T ARE IDENTICAL, THEREFORE, MENTIONED HEREIN BELOW FROM THE LEAD ASSESSMENT YEAR 2007 - 08. 3. FOR ASSESSMENT YEAR 2007 - 08 ASSESSMENT W AS MADE U/S 143(3) OF I.T. ACT ON AN INCOME OF RS.2,45,34,682/ - . THE AO HAS HELD THAT THE SALE OF AGRICULTURAL LAND WAS ADVENTURE IN THE NATURE OF TRADE U/S 2(13) OF I.T. ACT. THE AO HAS RECEIVED AN INFORMATION FROM SUB REGISTRAR OFFICE THAT THE ASSESSEE HAD SOLD 3 ITA NO. 275/NAG/2012 & ITA NO. 175/NAG/2014. IMMOVABLE PROPERTY ON 10 - 10 - 2006 FOR A CONSIDERATION OF RS.2,49,70,000/ - . DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS NOTICED BY THE AO THAT THE ASSESSEE HAD SOLD LAND SITUATED IN MOUZA CHIMANZARI, PATWARI HALKA NO. 94, NAGPUR (RURAL). THE DETAILS OF THE PURCHASE AND THE DESCRIPTION OF THE PROPERTY IN QUESTION WAS NARRATED BY THE AO AS UNDER : PURCHASES: ( 1 ) THE ASSESSEE VIDE SALE/ PURCHASE DEED DATED 8.8.2005/6.10.2005 S.NO.19013 PURCHASED LAND FROM (1) SMT. PUNAM KIRIT SANGHANI, AND (2) SHRI MUKESH NATWARLAL SANGHANI, ITWARI, NAGPUR (POWER OF ATTORNEY HOLDER OF VARIOUS FAMILY MEMBERS ALSO). FOR RS.4,00,000/ - , THE DETAILS OF WHICH AS PER THE SALE UNDER IS AS UNDER: - MOUZA CHIMNAZARI, PATWARI HALKA NO.94, TAH. NAGPUR(RURAL), DIST - NAGPUR KORADWAHU AGRICULTURAL LAND KH. NO. 132, ADMEASURING 5.35 HECTOR.R. (2) VIDE ANOTHER SALE/PURCHASE DEED OF THE SAME DATE I.E. DATED 8.8.2005/6.10.2005 BEARING S. NO. 19014 THE ASSESSEE PURCHASED LAND FROM SHRI BHUPESH NATWARLAL SANGHANI AND SHRI KIRIT NATWARLAL SANGHANI (POWER OF ATTORNEY HOLDER OF VARIOUS FAMILY MEMBERS ALSO) FOR RS.3,50,000/ - THE DETAILS AS PER THE SALE D EED IS AS UNDER: - MOUZA CHIMNAZARI, PATWARI HALKA NO.94, TAH. NAGPUR(GRAMIN), DIST - NAGPUR SITUATED KORADWAHU AGRICULTURAL LAND KH. NO. 137, ADMEASURING 6.72 HECTOR.R 3.1 THE LAND IN QUESTION WAS STATED TO BE PURCHASED IN THE YEAR 2002, HOWEVER, THE POSSESSION WAS NOT TAKEN OVER BY THE ASSESSEE. THIS FACT WAS MENTIONED BY THE AO IN PARA 6 OF THE ASSESSMENT ORDER REPRODUCED BELOW : 6 AS PER THE SALE DEED THE ASSESSEE HAS MADE PAYMENTS TO THE SELLERS I.E. SHRI BHUPESH NATWARLAL SANGANI AND OTHERS IN THE YEAR 2002 HOWEVER, THE ACTUAL POSSESSION OF THE LAND WAS GIVEN ONLY ON 06.10.2005. THUS, IT COULD BE SEEN THAT ASSESSEE WAS HAVING POSSESSION OF THIS LAND ONLY FOR A PERIOD OF LESS THAN ONE YEAR BEFORE SHE FURTHER DIVIDED AND SOLD MAJOR PORTION OF THE LAND LEAVING LAND FACING 4 ITA NO. 275/NAG/2012 & ITA NO. 175/NAG/2014. NAGPUR - HYDERABAD ROAD HAVING COMMERCIAL VALUE WITH HER. IT IS NOT A CASE THAT THE ASSESSEE HAS SOLD THE ENTIRE SO CALLED AGRICULTURAL LAND TO TRANSPORT CORPORATION OF INDIA. IN FACT, SHE HAS PURCHASED THE LAND IN TWO PARTS FRO M THE SANGHANIS AND FURTHER DIVIDED IT KEEPING A PORTION HAVING HIGH COMMERCIAL VALUE FOR HERSELF AND SELLING THE BALANCE TO TCI. AS PER THE 7/12 EXTRACT FROM TALATHI, OBTAINED ON 18.11.2009 IT COULD BE SEEN THAT THE LAND IS PADIT (BARREN) AND NO AGRICULT URAL OPERATION WERE CONDUCTED DURING 2005 - 06 TO 2007 - 08. THUS, THE LAND IS BARRED AND FROM THE CONDUCT OF THE ASSESSEE THAT SHE HAS NOT BOTHERED TO TAKE POSSESSION OF THE LAND AND REGISTER THE SALE DEED TILL 6 TH OCTOBER,2005, PROVES THAT THE ASSESSEE HAS NOT PURCHASED THE LAND FOR AGRICULTURAL OPERATIONS, THE LAND IS NOT BEING USED FOR AGRICULTURAL OPERATIONS, AND THE SAME IS PURCHASED FOR COMMERCIAL EXPLOITATION. 4. THE AO HAD GIVEN CERTAIN REASONS THAT THE TRANSACTION IN QUESTION WAS AN ADVENTURE OF PURCHASE AND SALE OF LAND UNDERTAKEN BY THE ASSESSEE. HE HAS NOTED THAT THE MAJOR PORTION OF THE LAND WAS SOLD TO TCI ON 10 - 10 - 2006. ACCORDING TO THE AO THE LAND WAS CLOSED TO NAGPUR - HYDERABAD HIGHWAY AND ALSO CL OSED TO MIHAN AND MIDC. ON THE OTHER HAND, THE ASSESSEE HAS OBJECTED THE VIEW OF THE AO ON THE GROUND THAT THE TRANSACTION WAS A SOLITARY TRANSACTION MADE IN THE YEAR. THE ASSESSEE WAS NOT IN REGULAR PRACTICE OF PURCHASE AND SALE OF AGRICULTURAL LAND IN A SYSTEMATIC ORGANIZED MANNER. EVEN IN THE PAST THERE WAS NO YEAR - WISE TRANSACTION OF SALE AND PURCHASE OF LAND. THE AGRICULTURAL LAND WAS NOT A STOCK IN TRADE BUT IT WAS A CAPITAL ASSET. THE ASSESSEE HAD NOT CONVERTED THE AGRICULTURAL LAND INTO NON AGRICU LTURAL LAND. THE ASSESSEE HAD NOT INCURRED ANY EXPENDITURE TOWARDS DEVELOPMENT OR PLOTTING OF THE LAND IN QUESTION. HOWEVER, THE AO WAS NOT CONVINCED AND AFTER MENTIONING FEW CASE LAWS HELD THAT THE TRANSACTION ENTERED INTO BY THE ASSESSEE WITH THE TRANSP ORT CORPORATION OF INDIA ON 10 - 10 - 2006 FOR SALE OF PART OF LAND SITUATED AT CHIMANZARI, NAGPUR FOR A CONSIDERATION OF RS.2,49,75,000/ - WAS WITHIN THE PURVIEW OF ADVENTURE IN THE NATURE OF TRADE AS PER SECTION 2(13) OF I.T. ACT. THE TAXABLE INCOME WAS COMPU TED BY THE AO AS UNDER : 5 ITA NO. 275/NAG/2012 & ITA NO. 175/NAG/2014. IN VIEW OF THE ABOVE, I WOULD HOLD THAT THE TRANSACTION ENTERED INTO BY THE ASSESSEE WITH TRANSPORT CORPORATION OF INDIA, NAGPUR ON 10.10.2006 FOR SALE OF PART OF LAND IN CHIMNAZARI, DISTT - NAGPUR FOR RS.2,49,70,000/ - BY FURTHER S UBDIVIDING THE LAND PURCHASED BY HER IN TWO PARTS FROM THE SANGHANI FAMILY COMES WITHIN THE PURVIEW OF ADVENTURE IN THE NATURE OF TRADE AS PER SECTION 2(13) OF THE INCOME TAX ACT,1961 AND THE INCOME DERIVED THERE FROM IS TAXABLE IN THE HANDS OF THE ASSESSE E AS SUCH. THEREFORE I WOULD TREAT AN AMOUNT OF RS.2,43,71,592/ - (RS.2,49,70,000/ - ( - ) RS.5,98,408/ - ) AS INCOME OF THE ASSESSEE FROM ADVENTURE IN THE NATURE OF BUSINESS U/S. 2(13) OF THE INCOME TAX ACT, AS STATED ABOVE, AND ADD THE SAME TO THE INCOME RETURN ED. 5. BEFORE THE LEARNED CIT(APPEALS) IT WAS REITERATED BY THE APPELLANT THAT THE LAND IN QUESTION WAS PURCHASED IN THE YEAR 2002 AND HELD AS INVESTMENT, HENCE NOT AN ADVENTURE BUT A SIMPLE PURCHASE AND SALE OF AGRICULTURAL LAND. IT WAS INFORMED THAT THE ASSESSEE HAPPENED TO BE HOUSE - WIFE AND NOT DEALING IN LAND. THE LAND WAS SOLD WITHOUT ANY DEVELOPMENT, HENCE THERE WAS NO ORGANIZED BUSINESS ACTIVITY. IT WAS A SI MPLE TRANSACTION OF SALE OF AGRICULTURAL LAND. THE LAND WAS HELD FOR ABOUT 7 TO 8 YEARS. T HE LAND WAS RECORDED AS AGRICULTURAL LAND IN REVENUE RECORDS. HOWEVER, LEARNED CIT(APPEALS) WAS NOT CONVINCED AND HE HAS EXPRESSED THAT THE LAND IN QUESTION WAS NOT PURCHASED WITH AN INTENTION O F INVESTMENT IN AGRICULTURAL LAND BUT TO EARN HUGE PROFIT. TH E PRICES OF THE LAND OF T HAT AREA WERE SKY ROCKETING, THEREFORE, THE ASSESSEE HAD MADE AN INVESTMENT TO EARN BUSINESS PROFIT ON LAND TRANSACTION. LEARNED CIT(APPEALS) HAS REPRODUCED IN THE APPELLATE ORDER FEW PHOTOGRAPHS OF THAT AREA AND ALLEGED THAT THER E WAS DEVELOPMENT GOING ON DUE TO WHICH THE ASSESSEE HAS EARNED HUGE PROFIT. LEARNED CIT(APPEALS) HAS ALSO REJECTED THE PLEA OF THE ASSESSEE THAT THE LAND IN QUESTION WAS IN POSSESSION SINCE 2002. ACCORDING TO HIM THE ASSESSEE GOT POSSESSION ON 06 - 10 - 2005. ACCORDING TO HIM THE ASSESSEE HAD NOT CARRIED OUT ANY AGRICULTURAL ACTIVITY. THE APPELLANT HAS CONTESTED THAT THE LAND IN QUESTION WAS OUTSIDE THE MUNICIPAL LIMIT , BUT THAT PLEA WAS ALSO REJECTED BY MENTIONING 6 ITA NO. 275/NAG/2012 & ITA NO. 175/NAG/2014. THAT ABOUT 34 VILLAGES AROUND NAGPUR HAD BEEN INCLUDED IN THE NAGPUR MUNICIPAL CORPORATION LIMIT. ACCORDING TO LEARNED CIT(APPEALS) THE LAND IN QUESTION WAS AN URBAN LAND, HENCE NOT EXEMPT FROM TAX. AFTER MENTIONING FEW CASE LAWS, HE HAS HELD AS UNDER : 14.7 THUS THE GAIN OUT OF THE TRANSACTION , I.E., THE LAND WAS PURCHASED AT RS.5,98,408/ - AND SOLD FOR RS.2,49,70,000/ - , WHICH RESULTED IN GAIN OF RS.2,43,71,592/ - IS CORRECTLY TAXED U/S.28 OF THE I.T. ACT,1961, BY THE AO IN VIEW OF THE FOLLOWING : - THE SAID LANDS WERE SOLD WITHIN ONE YEAR OF PURCHASE. THE LAND WAS SITUATED ON WARDHA ROAD, WHICH WAS THE EPICENTER OF COMMERCIAL EXPLOITATION OF LAND AND MOST PROMINENT DESTINATION FOR DEVELOPMENTAL INVESTMENTS. INVESTMENT IN LAND IS DISPROPORTIONATE TO INCOME EARNED OUT OF IT THROUGH AGRICULTURAL ACTIVITY AND THEREFORE IS A POINTER TO THE FACT THAT THERE WAS NO INTENTION TO CARRY OUT AGRICULTURAL ACTIVITY. NO INTENTION TO CARRY OUT AGRICULTURAL ACTIVITY, ASSESSEES CONTENTION THAT AGRICULTURAL OPERATIONS WERE CARRIED OUT ON THE SAID LANDS IS UNSUBSTANTIATED AS THE ASSESSEE COMPLETELY FAILED TO PROVE THE GENUINENESS OF AGRICULTURAL INCOME. THE NATURE OF TRANSACTION AND THE MANNER OF TRANSACTION, I.E. SALE OF LAND TO TRANSPORT CORPORATION OF INDIA AND FREQU ENCY OF TRADING IN LAND BY THE ASSESSEE, IT IS VERY CLEAR THAT THE LAND HAS BEEN TREATED AS A TRADING ASSET AND HAS ACCORDINGLY BEEN BOUGHT & SOLD BY THE ASSESSEE. MOREOVER, INVESTMENT IN LAND HAS BEEN DONE BY BORROWING FUNDS. 6. FROM THE SIDE OF THE APPELLANT, LEARNED A.R. MR. K.P. DEWANI APPEARED AND POINT - WISE PLEADED AS UNDER : A) ASSESSEE HAD ACQUIRED BOTH THE CAPITAL ASSETS BEING AGRICULTURAL LANDS IN FINANCIAL YEAR 2002 - 03 WITH THE SOLE OBJECTIVE OF CARRYING OUT AGRICULTURAL ACTIVITIES. 7 ITA NO. 275/NAG/2012 & ITA NO. 175/NAG/2014. B) OBSERVATIO N OF A.O. AT PARA 6 THAT ACTUAL POSSESSION OF LAND WAS GIVEN ON 06/10/2005 IS FACTUALLY INCORRECT. ADDITIONAL EVIDENCE SUBMITTED BEFORE CIT(A) AND ADMITTED HAS GONE UNREBUTTED. POSSESSION OF AGRICULTURAL LAND IS WITH ASSESSEE FROM 23/12/2002 ONWARDS AND AS SESSEE IS CULTIVATING AGRICULTURAL LANDS FOR AGRICULTURAL ACTIVITIES. HE HAS REFERRED PAPER BOOK PAGE NO. 74 TO 83 IN RESPECT OF POSSESSION OVER THE LAND. C) BOTH THE AGRICULTURAL LANDS ARE SITUATED AT A DISTANCE BEYOND 30 KMS. FROM NAGPUR MUNICIPAL CORPORATION LIMITS. HE HAS REFERRED PAGE NO. 68 A CERTIFICATE. D) EXTRACTS IN FORM NO.7/12 IN RESPECT TO BOTH THE AGRICULTURAL LANDS SOLD INDICATING THAT BOTH THE LA NDS ARE DESCRIBED IN REVENUE RECORD AS AGRICULTURAL LANDS AND AGRICULTURAL ACTIVITIES ARE CARRIED THERE UPON. REFERRED PAGES 60 TO 61. E) BOTH THE AGRICULTURAL LANDS ARE SITUATED IN A COMPLETE RURAL BELT. THERE IS NO INDUSTRIAL OR COMMERCIAL ACTIVITY IN THAT REGION. THE LANDS ARE ENRICHED WITH BLACK COTTON SOIL AND ARE IDEAL FOR AGRICULTURE ONLY. F) THE ASSESSEE HAS NOT APPLIED FOR PERMISSION TO USE AGRICULTURAL LANDS FOR NON - AGRICULTURAL PURPOSE. G) THE PURCHASE OF AGRICULTURAL LAND IS SHOWN AS INVESTMENT IN BALANCE SHEET AND IT IS NOT ACQUIRED OUT OF BORROWED MONEY. H) THE ASSESSEE IS HOLDING OTHER AGRICULTURAL LANDS AS IS EVIDENT FROM BALANCE SHEET OBSERVED IN ASSESSMENT ORDER AT PAGE 3. THE AGRICULTURAL LANDS ARE HELD AS FIXED ASSETS AND NEVER HELD AS STOCK IN TRADE. I) THERE IS NO EVIDENCE ON RECORD TO SHOW THAT AGRICULTURAL LANDS SOLD HAVE BEEN PUT TO USE FOR THE PURPOSE OTHER THAN AGRICULTURAL. J) A.O. HAS NOT BROUGHT ANY LEGAL EVIDENCE OR MATERIAL ON RECORD WHICH INDICATES THAT ASSESSEE IS INVOLVED IN ANY ACT IVITY ON LAND SOLD THAT 8 ITA NO. 275/NAG/2012 & ITA NO. 175/NAG/2014. CONSTITUTE ADVENTURE IN THE NATURE OF TRADE. THE ASSESSEE HAS NOT CARRIED OUT ANY ACTIVITY FOR DEVELOPMENT AND TO MAKE THE LANDS READILY MARKETABLE. K) THE AGRICULTURAL LAND IS ACQUIRED AND SOLD AS AGRICULTURAL LAND THEREFORE THE SURPL US ARISING ON SA L E IS NOT EXIGIBLE TO TAX AS INCOME FROM BUSINESS. ON THE DATE OF PURCHASE AND ON THE DATE OF SALE IF THE CHARACTER OF ASSET SOLD IS AGRICULTURAL LAND THE SURPLUS ARISING ON SAME IS NOT EXIGIBLE TO TAX. RELIANCE ON : - 1. (2011) 331 ITR 59 CI T VS. SMT. DEBBIE ALEMAO] 2. SUPREME COURT JUDGEMENT (SLP) (CIVIL) CC 1727 - 1729/98 IN THE CASE OF CIT VS. M/S. D.L.F. UNITED LTD. VIDE ORDER DATED 14/9/1995. 3. (1996) 217 ITR 333 ((DEL.) DLF UNITED LTD. VS. CIT. 4. (2011) 335 ITR 77 HINDUSTAN INDUSTRIAL RESOURCES LTD. VS. ACIT. 5. ITAT ORDER IN ITA NO.169/NAG/12 IN THE CASE OF SHRI SATYANARAYAN O. AGRAWAL VIDE ORDER DATED, 30/11/2012. 6. ITAT ORDER IN ITA NO.209/NAG/09 IN THE CASE OF M/S. SHAGUN INFRASTRUCTURE P. LTD., VIDE ORDER DATED 27/06/2011 L. SURPLUS ARISING ON SALE OF AGRICULTURE LAND IS AGRICULTURAL INCOME AS PER PROVISION OF SEC.2 (1A) OF I.T. ACT, 1961. RELIANCE ON: - 1. ITAT ORDER IN ITA NO.362/JU/2010 IN THE CASE OF SMT. SUPRIYA KANWAR VIDE ORDER DATED 13/05/2014 2. (2001) 247 ITR 150 (SC) SINGHAI R AKESH KUMAR VS. UNION OF INDIA & ORS. 3. (1981) 128 ITR 87 (BOM.) MANUBHAI A. SHETH & ORS. VS. N.D. NIRGUDKAR, ITO & ANR. 7. FROM THE SIDE OF THE REVENUE DEPARTMENT LEARNED D.R. MR. NARENDRA KANE APPEARED AND SUPPORTED THE ACTION TAKEN BY THE REVENUE AUTHOR ITIES. A 9 ITA NO. 275/NAG/2012 & ITA NO. 175/NAG/2014. VEHEMENT RELIANCE WAS PLACED ON THE ORDER OF LEARNED CIT(APPE A LS) SPECIALLY THE INFORMATION COLLECTED BY HIM FROM INTERNET SOURCE. LEARNED D.R. HAS PLEADED THAT THERE WAS DEVELOPMENT ON WARDHA ROAD DUE TO WHICH THE APPELLANT HAD MADE AN INVESTMENT IN THE AGRICULTURAL LAND TO GET HUGE PROFITS. THE PRICES OF LAND WERE EXPECTED TO GO VERY HIGH , H ENCE THE INVESTMENT WAS MADE SIMPLY TO EARN MAXIMUM PROFIT ON PURCHASE AND SALE OF LAND. 8. WE HAVE HEARD BOTH THE SIDES AT SOME LENGTH AS WELL AS CAREFULLY PERUSED THE ORDERS OF THE AUTHORITIES BELOW IN THE LIGHT OF THE COMPILATION FILED. THE PAPER BOOK CONTAINED A COPY OF THE P URCHASE D EED OF THE AGRICULTURAL LAND TO DEMONSTRATE THAT THE LAND IN QUESTION WAS SPECIFIED AS AGRICULTURAL LAND IN THE REVENUE R ECORDS WHEN IT WAS PURCHASED BY THE ASSESSEE. OUR ATTENTION HAS ALSO BEEN DRAWN ON THE S ALE D EED OF THE LAND EXECUTED BY THE ASSESSEE ON 10 TH DAY OF OCT., 2006 IN FAVOUR OF M/S TRANSPORT CORPORATION OF INDIA FOR A CONSIDERATION OF RS.2,49,70,000/ - . LEARNED A.R. HAS PLEADED THAT AS PER THE CLAUSES OF THE SALE DEED IT WAS EVIDENT THAT THE CEILING PROVISIONS AS PRESCRIBED UNDER MAHARASHTRA AGRICUL TURE LAND (CEILINGS AND HOLDINGS) ACT, 1961 WERE APPLICABLE ON THE LAND IN QUESTION. OUR ATTENTION HAS ALSO BEEN DRAWN ON 7/12 EXTRACT FURNISHED BY THE ASSESSEE. A CERTIFICATE HAS ALSO BEEN PLACED ON RECORD TO DEMONSTRATE THAT THE LAND IN QUESTION WAS LOCA TED BEYOND 8 KMS. OF MUNICIPAL LIMIT OF NAGPUR CITY. AN AFFIDAVIT HAS ALSO BEEN PLACED ON RECORD OF ONE SMT. POONAM KIRIT SANGHANI AND SHRI MUKESH NATWARLAL SANGHANI WHO HAVE SOLD THE PROPERTY IN THE YEAR 2002 TO THE ASSESSEE WHEREIN IT WAS STATED ON OATH THAT IN THE YEAR 2002 VIDE AN AGREEMENT TO SALE THE LAND IN QUESTION WAS SOLD TO MRS. SUNITA SURANA AND THE POSSESSION WAS HANDED OVER ON 23 - 12 - 2002 TO MRS. SUNITA SSURANA. THE LAND WAS AN AGRICULTURAL LAND WHICH WAS USED FOR CULTIVATION. 10 ITA NO. 275/NAG/2012 & ITA NO. 175/NAG/2014. 9. IN THE LIGHT OF THE ABOVE FACTS OUR ATTENTION HAS BEEN DRAWN ON AN ORDER OF THE RESPECTED COORDINATE BENCH, ITAT, NAGPUR (E - COURT MUMBAI) IN THE CASE OF SANJAY NAGARO PAIDLEWAR (ITA NO. 112/NAG/2012), NITISH RAMESHCHANDRA CHORDIA (ITA NO. 113/NAG/2012) AND SHAISHIR S. DIOTE (ITA NO. 147/NAG/2012) ORDER DATED 22 ND MARCH, 2013 WHEREIN ALMOST IN IDENTICAL SITUATION A VIEW WAS TAKEN AS UNDER : 17. FACTS IN THE CASE IN HAND ARE SIMILAR. THE LAND IN QUESTION WAS SHOWN AS AGRICULTURAL LAND IN THE REVENUE RECORD . WHETHER THERE WAS ANY AGRICULTURAL INCOME OR NOT, IS NOT THE MOOT QUESTION TO DECIDE THE ISSUE, HOWEVER, THE IMPORTANT FACTOR IS TO BE DECIDED AS TO WHETHER THE CHARACTER OF THE LAND IS AGRICULTURE OR NOT. UNDISPUTEDLY, IN THE REVENUE RECORD AND AS PER T HE PATWARI CERTIFICATE, THE LAND IN QUESTION IS AGRICULTURAL LAND, THEREFORE, THE SALE CONSIDERATION WAS NOT TAXABLE ON THE SALE OF SAID LAND I.E. EITHER ON ACCOUNT OF CAPITAL GAIN OR ON ACCOUNT OF BUSINESS INCOME. 18. EVEN WE FOUND THAT THIS ISSUE HAS BE EN DECIDED BY THE HONBLE APEX COURT WHILE CONFIRMING THE ORDER OF THE HONBLE DELHI HIGH COURT IN THE CASE OF DLF UNITED LIMITED, 217 ITR 337. THE FACTS IN THE CASE OF DLF UNITED LIMITED (SUPRA) WERE THAT THE DLF LIMITED PURCHASED AGRICULTURAL LAND FROM V ARIOUS FARMERS IN THE EAR AND SHOWN EXEMPTION, HOWEVER, THE AO TREATED THE SALE CONSIDERATION AS REVENUE RECEIPT. UPTO THE STAGE OF TRIBUNAL, THE ORDER OF AO WAS CONFIRMED, HOWEVER, THE HONBLE DELHI HIGH COURT HELD THAT THE LAND IN QUESTION WAS OF AGRICUL TURAL LAND AND THEREFORE, ANY RECEIPT ON ACCOUNT OF SALE OF AGRICULTURAL LAND IS NOT TAXABLE. THIS DECISION OF THE HONBLE DELHI HIGH COURT HAS BEEN CONFIRMED BY THE HONBLE APEX COURT, WHEREBY IT HAS BEEN HELD THAT EVEN AND OTHERWISE WE SEE NO MERIT IN TH E SPECIAL LEAVE PETITION AND THE SAME ARE ACCORDINGLY DISMISSED ON THE GROUND OF DELAY AS WELL AS ON MERITS. COPIES OF THESE ORDERS ARE PLACED IN THE COMPILATION. 19. THIS ISSUE HAS ALSO BEEN CONSIDERED IN VARIOUS OTHER DECISION I.E. IN CASE OF HINDUSTAN INDUSTRIAL RESOURCES LIMITED VS. ACIT, REPORTED IN 335 ITR 77, WHEREIN IT WAS HELD THAT IN VIEW OF THE FINDING OF THE TRIBUNAL THAT THE LAND IN QUESTION WAS AGRICULTURAL LAND AT THE TIME OF PURCHASE BY THE ASSESSEE AS ALSO AT THE TIME OF ACQUISITION, THE LAND WAS CLEARLY AGRICULTURAL LAND IRRESPECTIVE OF THE FACT THAT THE ASSESSEE INTENDED TO USE THE LAND FOR INDUSTRIAL PURPOSES AND DID NOT CARRY OUT ANY AGRICULTURAL OPERATIONS AND, THEREFORE, NO CAPITAL GAINS COULD BE CHARGED ON ACQUISITION THEREOF UNDER THE LAND ACQUISITION ACT,1894. WHILE HOLDING 11 ITA NO. 275/NAG/2012 & ITA NO. 175/NAG/2014. SO, THE DECISION IN THE CASE OF DLF UNITED LIMITED (SUPRA), WAS TAKEN INTO CONSIDERATION BY THE HONBLE DELHI HIGH COURT. 20. IN CASE OF SHRI SATYANARAYAN O. AGRAWAL VS. ADCIT, DECIDED IN ITA NO.169/NAG/2012 FO R ASSESSMENT YEAR 2007 - 08, SIMILAR VIEW ALSO WAS TAKEN FOLLOWING THE VARIOUS CASE LAWS AND ULTIMATELY IT WAS HELD THAT THE CONSIDERATION RECEIVED OUT OF SALE OF AGRICULTURAL LAND WAS NOT TAXABLE. 21. SINCE THIS ISSUE HAS ALREADY BEEN DECIDED BY VARIOUS BE NCHES OF THE TRIBUNAL AND THE HONBLE BOMBAY HIGH COURT AS WELL AS THE HONBLE HIGH COURT AND THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF DLF UNITED LIMITED (SUPRA), WHICH HAS BEEN CONFIRMED BY THE HONBLE SUPREME COURT, THEREFORE, WE HOLD THAT ANY CONSIDERATION RECEIVED OUT OF SALE OF AGRICULTURAL LAND, CANNOT TREATED AS BUSINESS INCOME FOR THE PURPOSE OF CAPITAL GAIN OR FOR THE PURPOSE OF BUSINESS INCOME, WHATEVER THE CASE MAY BE. IN VIEW OF THE AFORESAID FACTS AND CIRCUMSTANCES OF THE CAS E, WE ALLOW THIS GROUND IN FAVOUR OF ALL THE ASSESSEES. 10. OUR ATTENTION HAS ALSO BEEN DRAWN ON AN ORDER OF LEARNED CIT(APPEALS) - II, NAGPUR WHEREIN VIDE ORDER DATED 30 TH OF JANUARY, 2012 ORDER NO. CIT(A) - II - 322/10 - 11 IN THE CASE OF SHRI FARUK JIKAR KACHHI (BAWALA), NAGPUR, LEARNED CIT(APPEALS) HAS HELD THAT THE PURCHASE AND SALE OF THE LAND IN QUESTION WAS IN THE NATURE OF BUSINESS ADVENTURE. THE ARGUMENT OF LEARNED A.R. BEFORE US IS THAT ALMOST IN IDENTICAL MANNER THE LEARNED CIT(APPEALS) HAS DOWNLOADED CERTAIN INFORMATION FROM THE INTERNET AND REPRODUCED FEW PHOTOGRAPHS IN THE ORDER AND THEREAFTER HELD THAT THE LAND TRANSACTION WAS IN THE NATURE OF BUSINESS ACTIVITY OF THE ASSESSEE. IN IDENTICAL MANNER THE APPEAL OF THE ASSESSEE HAS ALSO BEEN DECIDED BY THAT VERY CIT(APPEALS). HOWEVER, THE SAID ORDER WAS CONTESTED AND REACHED UPTO THE HONBLE BOMBAY HIGH COURT IN INCOME TAX APPEAL NO. 129 OF 2013 AND INCOME TAX APPEAL NO. 131 OF 2013 AND VIDE AN ORDER DATED 30 TH MARCH, 2015 THE VIEW OF THE REVENUE AUTHORITIES WAS REVERSED AND HELD THAT THE FACTS AND CIRCUMSTANCES HAVE CLEARLY INDICATED THAT THE CONSIDERATION RECEIVED ON SALE OF AGRICULTURAL LAND COULD NOT BE TREATED AS BUSINESS INCOME. 12 ITA NO. 275/NAG/2012 & ITA NO. 175/NAG/2014. THE HONBLE BOMBAY HIGH COURT HAS ALSO REFERRED THE DECISION OF D LF UNIT ED LTD. VS. CIT 129 CTR 33 (DEL.), RELEVANT PORTION IS REPRODUCED BELOW: WE HAVE CAREFULLY CONSIDERED AND APPLIED OUR MIND TO THE RIVAL SUBMISSIONS AND THE RULINGS C ITED AT THE BAR. WE AGREE WITH THE SUBMISSION THAT THE AMENDMENTS IN THE TAXING STATUTE, UNLESS A DIFFERENT LEGISLATIVE INTENTION IS CLEARLY EXPRESSED, SHALL OPERATE PROSPECTIVELY. IN OUR VIEW, IF THE ASSESSEE HAS EARNED BUSINESS INCOME AND NOT THE AGRICUL TURAL INCOME, SECTION 11 OF THE GENERAL CLAUSES ACT WILL PREVAIL UNLESS A DIFFERENT INTENTION APPEARS TO THE CONTRARY. THE IMPUGNED ORDER APPEARS WELL REASONED IN THE FACTS AND CIRCUMSTANCES TO CLEARLY IND ICATE THAT ANY CONSIDERATION RECEIVED OUT OF SALE OF THE AGRICULTURAL LAND CANNOT BE TREATED AS BUSINESS INCOME FOR THE PURPOSE OF INCOME TAX. THE DISTANCE BETWEEN THE MUNICIPAL LIMITS AND ASSESSED PROPERTY/ASSET IS TO BE MEASURED HAVING REGARD TO THE SHOR TEST ROAD DISTANCE AND NOT AS PER THE CROW'S FLIES I.E. A STRAIGHT LINE DISTANCE AS CANVASSED BY THE REVENUE. THE LEARNED COUNSEL FOR THE RESPONDENT HAS CONTENDED IN THIS REGARD THAT THE DECISION HAS BEEN RENDERED BY THE MUMBAI BENCH IN THE CASE OF LAUKIK DEVELOPERS (SUPRA) IN THE CONTEXT OF THE PROVISIONS OF SECTION 80IB(10) AND NOT IN CONNECTION WITH THE ISSUE 18 ITA120.13.ODT OF DETERMINING A CAPITAL ASSET WITHIN THE MEANING OF SECTION 2(14) . IT IS NOT IN DISPUTE THAT THE VIEW TAKEN IN THE CASE OF LAUKIK DEVELOPERS (SUPRA) WAS NOT CHALLENGED BY THE REVENUE. 13. IN THE RULING IN THE CASE OF DLF UNITED LTD. VS. COMMISSIONER OF INCOME TAX , (1995) 129 CTR (DEL) 33, THE HON'BLE DELHI HIGH COURT REFERRED TO EXPLANATION 2(1)(A) RELIED UPON BY THE COUNSEL FOR THE REVENUE AND HELD THAT SURPLUS OF THE COMPENSATION AMOUNT ARISING AS A RESULT OF ACQUISITION OF AG RICULTURAL LAND IN QUESTION WAS CAPITAL ASSET AND NOT THE INCOME AT ALL. THE QUESTION OF CHANGE IN THE DEFINITION OF AGRICULTURAL INCOME BECAUSE OF INSERTION OF THE EXPLANATION HAS NO RELEVANCE. THUS, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WHEN M/S.DL F UNITED LTD. WAS CARRYING ON BUSINESS AS COLONISERS BY PURCHASE, DEVELOPMENT AND SELLING THE PLOTS OF LANDS IN AND AROUND DELHI IN THE COURSE OF ITS BUSINESS AND THE COMPANY HAD ACQUIRED CERTAIN AGRICULTURAL LAND IN CERTAIN VILLAGES AROUND DELHI, OUT OF W HICH SOME LAND WAS ACQUIRED BY THE GOVERNMENT THROUGH A NOTIFICATION ISSUED U/S.4 OF THE LAND ACQUISITION ACT FOLLOWED BY DECLARATION ISSUED UNDER SECTION 6 OF THE LAND ACQUISITION ACT AND THE COMPANY RECEIVED COMPENSATION FOR THE LAND AFTER ASSESSMENT UNDER THE LAND ACQUISITION ACT , THE INCOME 19 ITA120.13.ODT TAX OFFICER, WHILE ASSESSING THAT THE COMPANY WAS A DEALER IN LANDS, HAD HELD THAT THE ACQUIRED LAND CONSTITUTED THE COMPANY'S STOCK - IN - TRADE AND COMPENSATION RECEIVED BY THE COMPANY WAS LIABLE TO BE TAXED AS AN INCOME IN THREE ASSESSMENT YEARS UNDER CONSIDERATION. THE QUESTION WHICH WAS RAISED WAS ANSWE RED BY THE DELHI COURT IN PARAGRAPH 9 OF THE RULING UNDER CONSIDERATION, WHICH READS THUS : '.......THIS COURT FURTHER HELD THAT IN OTHER WORDS THE AGRICULTURAL LANDS PURCHASED ORIGINALLY BY THE ASSESSEE FOR URBANISATION OR CONVERSION INTO BUILDING PLOTS REMAINED AGRICULTURAL LAND TILL THE ACQUISITION AND PAYMENT OF COMPENSATION, AND IN VIEW OF T HE SAID FINDING THIS COURT HELD THAT THE FIRST QUESTION HAS TO BE ANSWERED IN THE NEGATIVE, I.E. THE PROFITS WERE NOT BUSINESS PROFITS. WITH REGARD TO THE SECOND QUESTION THIS COURT FOUND THAT AS THE 13 ITA NO. 275/NAG/2012 & ITA NO. 175/NAG/2014. COMPENSATION HAD BEEN PAID FOR THE ACQUISITION OF AGRICU LTURAL LAND, THE QUESTION REALLY INVOLVED A DETERMINATION AS TO WHETHER THE PRICE PAID FOR THE LAND BY WAY OF COMPENSATION COULD BE INCLUDED WITHIN THE DEFINITION OF AGRICULTURAL INCOME. IT WAS FURTHER HELD THAT AGRICULTURAL LAND WAS EXCLUDED FROM THE DEFI NITION OF 'CAPITAL ASSET' OCCURRING IN S. 2(14)(III) AND ACCORDINGLY ANY GAIN RESULTING FROM THE ACQUISITION OF AGRICULTURAL LAND WAS NOT INCOME, AND ACCORDINGLY THE ANSWER TO THE 20 ITA120.13.ODT SAID QUE STION WAS THAT THE COMPENSATION AMOUNT WAS NOT INCOME.' 14. THUS, THE INCOME OUT OF TRANSACTIONS OF IMMOVABLE PROPERTY IN THE NATURE OF AGRICULTURAL LAND IS HELD AS CAPITAL GAIN EXEMPTED UNDER THE INCOME TAX AS ARISING FROM THE AGRICULTURAL LAND. WE FIND THE RULING IN THE CASE OF DLF UNITED LTD. WAS CHALLENGED IN S.L.P. (CIVIL) NO...CC 1727 - 1729/98 AND THE HON'BLE APEX COURT FOUND THAT THERE WAS NO MERIT IN THE S.L.P. AND IT WAS ACCORDINGLY DISMISSED ON MERITS. THUS, CAPITAL GAIN ARISING FROM THE TRANSACTI ON IN RESPECT OF AGRICULTURAL LAND CANNOT BE CONSIDERED AS BUSINESS INCOME. THE RULING IS SQUARELY APPLICABLE TO THE FACTS AND CIRCUMSTANCES UNDER OUR CONSIDERATI ON IN THE PRESENT CASE AS WELL. 11. BEFORE US AN ORDER OF ITAT, NAGPUR BENCH PRONOUNCED IN T HE CASE OF M/S MUTUAL TRUST BEARING ITA NO. 46/NAG/2013 ASSESSMENT YEAR 2009 - 10 ORDER DATED 31 ST JULY, 2015 HAS ALSO BEEN CITED WHEREIN VIDE PARA 9 AND 14 A VIEW WAS EXPRESSED AS UNDER : 9. THE ABOVE FACTS ARE NOT DISPUTED AND ARE THE FACTS OF THE CASE. THE ASSESSING OFFICER HAS DISPUTED THE CLAIM OF AGRICULTURAL ACTIVITY BY HOLDING THAT THERE IS NO EVIDENCE OF SALE OF CROP, PURCHASE OF SEED, EXPENSES FOR AGRICULTURAL OPERATION. HOWEVER, IT R EMAINS UNDISPUTED THAT IN THE RETURN OF INCOME AGRICULTURAL INCOME WAS SHOWN WHICH WAS CONSIDERED MEAGER BY THE ASSESSING OFFICER. THE ASSESSING OFFICER HAS ALSO DRAWN ADVERSE INFERENCE ON THE GROUND THAT THE LAND WAS SOLD TO A NON AGRICULTURIST WHO IS A LAND DEVELOPER. NOW IN THIS REGARD THE ASSESSEE HAD SUBMITTED BEFORE THE ASSESSING OFFICER THAT AGRICULTURAL ACTIVITIES WERE IN FACT PERFORMED ON THE SAID LANDS. IT WAS ALSO SUBMITTED THAT AGRICULTURAL OPERATIONS ON BEHALF OF THE ASSESSEE WERE CARRIED OU T BY SHRI A.B. CHOUDHARI, ADVOCATE WHO WAS LATER ELEVATED AS JUDGE OF THE HONBLE BOMBAY HIGH COURT. THE ASSESSING OFFICER HAD ALSO MADE ENQUIRY FROM HONBLE JUSTICE A.B. CHOUDHARI, SITTING JUDGE OF HONBLE JURISDICTIONAL HIGH COURT. IN REPLY GIVEN VIDE LE TTER DATED 27 - 07 - 2010 ATTACHED IN PAPER BOOK VOL. I IN PAGE NO. 1, HE HAS UNAMBIGUOUSLY STATED THAT AGRICULTURAL ACTIVITIES WERE CARRIED OUT BY HIS HUF ON THE LAND BELONGING TO M/S MUTUAL TRUST DURING THE PERIOD 2005 - 06. RECEIPT FROM AGRICULTURAL PRODUCE S OLD FOR FINANCIAL YEAR 2005 - 06 AND THE SAME HAS 14 ITA NO. 275/NAG/2012 & ITA NO. 175/NAG/2014. BEEN DULY REFLECTED IN THE INCOME TAX RETURN FILED FOR ASSESSMENT YEAR 2006 - 07. THE SAID LETTER DULY SUPPORTS THE CLAIM OF THE ASSESSEE THAT AGRICULTURAL OPERATIONS WERE DONE ON THE SAID LAND. THE ASSESSING O FFICER HAS NOWHERE DRAWN ANY ADVERSE INFERENCE OF THE ABOVE ENQUIRY CONDUCTED WITH HONBLE JUSTICE A.B. CHOUDHARI. THE ASSESSING OFFICER HAD ALSO EXAMINED THE PERSON SUKHRAM BHOI WHO WAS LATERON PERFORMING AGRICULTURAL OPERATIONS ON THE SAID LAND ON BEH ALF OF THE ASSESSEE. THE SAID PERSON HAS ALSO ACCEPTED BEFORE THE ASSESSING OFFICER THAT CROPS WERE BEING CULTIVATED ON THE SAID AGRICULTURAL LAND. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 14. FROM THE ABOVE IT IS EVIDENT THAT ON SA LE OF AGRICULTURAL LAND THE RECEIPT IS NOT EXIGIBLE TO CAPITAL GAINS TAX. THE PURPOSE OF ACQUIRING/SELLING THE LAND IS NOT RELEVANT. WHAT IS RELEVANT IS WHETHER THE CONCERNED LANDS ARE AGRICULTURAL LANDS OR NOT. IN THE FACTS OF THE PRESENT CASE, IT IS UNDI SPUTED THAT THE SAID LANDS WERE AGRICULTURAL LANDS. IT IS SO REFLECTED IN THE LAND REVENUE RECORDS. UPON ENQUIRY BY THE ASSESSING OFFICER THE CONCERNED PERSONS WHO WERE DOING AGRICULTURAL OPERATIONS HAVE ACCEPTED THAT THEY WERE PERFORMING AGRICULTURAL OPER ATIONS ON THE SAID LAND. ONE OF THOSE PERSONS IS AT PRESENT A SITTING HONBLE HIGH COURT JUDGE. THE ADVERSE INFERENCE DRAWN BY THE ASSESSING OFFICER, THAT THE ASSESSEE HAS SHOWN MEAGER INCOME FROM AGRICULTURE BUT OWNS LARGE TRACT OF LAND IS NOT AT ALL SUS TAINABLE. THERE IS NO PRESUMPTION THAT AGRICULTURAL ACTIVITIES ARE BOUND TO BE HUGELY PROFITABLE. IT IS ALSO UNDISPUTED THAT THE SAID LAND WAS NOT CONVERTED FOR NON AGRICULTURAL PURPOSES. THE SAID LAND WAS BOUGHT AND HELD FOR A PERIOD OF 18 TO 19 YEARS AS AGRICULTURAL LAND. IN OUR CONSIDERED OPINION ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE REVENUES PLEA THAT THIS IS NOT A CASE OF SALE OF AGRICULTURAL LAND IS NOT AT ALL SUSTAINABLE. 12. IN THE LIGHT OF THE ABOVE FACTUAL AS WELL AS LEGAL DISCUSSION , WE ARE OF THE CONSIDERED OPINION THAT IN A SITUATION WHEN ON SIMILAR CIRCUMSTANCES A VIEW HAD ALREADY BEEN EXPRESSED BY THE HONBLE COURTS AS WELL AS BY THE RESPECTED COORDINATE BENCHES, HENCE THERE IS NO OCCASION TO TAKE ANY CONTRARY VIEW SPECIALLY UNDE R THE CIRCUMSTANCES WHEN THE EVIDENCES WERE ON RECORD THAT THE AGRICULTURAL LAND IN QUESTION WAS HELD BY THE ASSESSEE SINCE 2002 WHICH WAS NOT WITHIN THE NAGPUR MUNICIPAL LIMIT AND THE LAND WAS SOLD AFTER HOLDING FOR SO MANY YEARS AS SUCH WITHOUT ANY DEVEL OPMENT VIDE A SALE DEED DATED 10 TH DAY OF 15 ITA NO. 275/NAG/2012 & ITA NO. 175/NAG/2014. OCT., 2006. ALTHOUGH THE PROFITS HAVE BEEN EARNED BUT THE CONDUCT OF THE ASSESSEE AS WELL AS THE CIRCUMSTANCES OF THE CASE HAVE NOT SATISFACTORILY DEMONSTRATED THAT THE ASSESSEE HAD ENTERED INTO A BUSINESS ACTIVITY ALLEGED TO BE AN ADVENTURE IN THE NATUR E OF TRADE. AS A RESULT THE FINDINGS OF THE REVENUE AUTHORITIES ARE HEREBY REVERSED AND TH E GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 13. TO SUM UP THE ABOVE DISCUSSION, GROUNDS OF APPEAL FOR ASSESSMENT YEAR 2007 - 0 8 BEARING GROUND NOS. 1, 2,3, & 4 AND GROUNDS OF APPEAL FOR ASSESSMENT YEAR 2009 - 10 BEARING GROUND NOS. 1, 2,3 & 4 ARE ALLOWED. 14. APROPOS GROUND NO. 5 FOR ASSESSMENT YEAR 2009 - 10: THE OBSERVATION OF THE AO WAS THAT ONLY 7/12 EXTRACT WAS SUBMITTED BUT THERE WAS NO DETAILS OF AGRICULTURE OPERATION CARRIED OUT BY THE ASSESSEE. ACCORDING TO THE AO SIMPLY BECAUSE THE LAND WAS SHOWN AS AGRICULTURAL LAND IN REVENUE RECORDS DID NOT ESTABLISH THAT THE ASSESSEE HAD CONDUCTED AGRICULTURE OPERATION. THE AO HAS, T HEREFORE, TREATED THE SAID AGRICULTURAL INCOME OF RS.1,92,000/ - AS INCOME FROM UNEXPLAINED SOURCES. WHEN THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY, LEARNED CIT(APPEALS) HAS AFFIRMED THE ACTION OF THE AO. 15. ON THIS SHORT ISSUE WE HAVE HEARD BOTH THE SIDES. THE ARGUMENT BEFORE US IS THAT THE AGRICULTURAL INCOME AS DISCLOSED BY THE ASSESSEE WAS ADEQUATE CONSIDERING THE HOLDING OF 60.44 ACRES OF AGRICULTURAL LAND. THE LIST OF AGRICULTURE LAND HOLDING AT VARIOUS PLACE S , NAMELY, CHIMNAZARI, JAMTHA, UMARI, GAWSI ETC. IS ALSO ON RECORD. A RELIANCE HAS ALSO BEEN PLACED ON THE DECISION OF ITAT, NAGPUR BENCH PRONOUNCED IN THE CASE OF SMT. RUKSANA BEGUM BEARING ITA NO. 1/NAG/2008 FOR ASSESSMENT YEAR 1999 - 2000 ORDER DATED 26 - 06 - 2009. I N THIS CASE THE FACTS WERE THAT AN ORCHARD OF ORANGES WAS NOT IN DISPUTE AND THE LAND WAS FOUND TO BE A F ER TILE AGRICULTURAL LAND FOR CROPS. IN THE SAID CASE THE 16 ITA NO. 275/NAG/2012 & ITA NO. 175/NAG/2014. ASSESSEE HAD ESTABLISHED EARNING OF ORCHARD INCOME. I T IS A KNOWN POSITION THAT THE REVEN UE RECORDS NOT ONLY ESTABLISH THE OWNERSHIP BUT ALSO RECORD THE CROP GROWN ON THE AGRICULTURAL LAND. IN SOME OF THE STATES THESE TWO TYPE OF REVENUE RECORDS ARE COMMONLY KNOWN AS KHASARA AND KHATONI. THE ASSESSEE HAD PLACED BOTH THE CERTIFICATES OF REV ENUE RECORDS BEFORE THE AO TO ESTABLISH THE OWNERSHIP OF THE AGRICULTURAL LAND AS WELL AS THE CROP GROWN OVER THE SAID LAND. THE AO HAS ONLY MENTIONED THAT THE PROOF OF AGRICULTURE OPERATION WAS NOT FURNISHED BY THE ASSESSEE, BUT HE HAD NOT EXAMINED THE CO MPLETE REVENUE RECORDS. THUS UNDER THE FITNESS OF CIRCUMSTANCES WHEN THE REVENUE RECORDS HAVE SHOWN THE NATURE OF THE CROP PRODUCED ON THE AGRICULTURE LAND THEN RESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY THE RESPECTED COORDINATE BENCH WE HEREBY HOLD T HAT CONSIDERING THE AREA OF LAND HOLDING THE AGRICULTURAL INCOME DISCLOSED OF RS.1,92,000/ - SHOULD NOT HAVE BEEN DISPUTED BY THE REVENUE. AS A RESULT THIS GROUND RAISED BY THE ASSESSEE IS HEREBY ALLOWED. 16. APROPOS GROUND NO. 6 - ASSTT. YEAR 2009 - 10. THE ASSESSEE HAD DECLARED SHORT TERM CAPITAL GAIN ON SALE OF FLAT. AS AGAINST THAT THE AO HAD TREATED THE GAIN AS BUSINESS INCOME. THE APPELLANT HAD SOLD A FLAT IN WHICH SHE HAD 50% SHARE. THE FLAT WAS SOLD FOR A CONSIDERATION OF RS.15,50,000/ - . AS PER THE AO THE ASSESSEE WAS IN THE BUSINESS OF PURCHASE AND SALE OF IMMOVABLE PROPERTY. THUS HE HAS HELD THAT THE INCOME EARNED WAS NOT A CAPITAL GAIN BUT A BUSINESS INCOME. WHEN THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY, LEARNED CIT(APPEALS) HA D DECLINED TO INTERFERE WITH THE FINDINGS OF THE AO AND CONFIRMED THE ADDITION. 17. WE HAVE HEARD BOTH THE SIDES. THE REVENUE AUTHORITIES HAVE ALLEGED THAT THE ASSESSEE HAPPENED TO BE IN THE BUSINESS OF PURCHASE AND SALE OF IMMOVABLE PROPERTY BUT THERE WA S NO INSTANCE MENTIONED IN SUPPORT OF THE IMPUGNED ALLEGATION. THE CLAIM OF THE ASSESSEE WAS THAT THE EARNING ON SALE OF FLAT WAS A 17 ITA NO. 275/NAG/2012 & ITA NO. 175/NAG/2014. SHORT TERM CAPITAL GAIN DUE TO THE SHORT PERIOD OF HOLDING. WE HAVE N OTED THAT WHILE COMPUTING THE TAXABLE INCOME THE AO HAS MENTIONED THAT THE AMOUNT IN QUESTION I.E. RS.4,21,000/ - WAS ALREADY INCLUDED IN THE INCOME ASSESSED U/S 143(1). AS A CONSEQUENCE , IN OUR OPINION, NO PREJUDICE HAD BEEN CAUSED TO THE ASSESSEE. THE ASSESSEE HAS NOT ESTABLISHED THAT THERE WAS AN INCIDENCE O F ADVERSE TAX EFFECT BY TREATING THE INCOME AS BUSINESS INCOME AS AGAINST THE SHORT TERM CAPITAL GAIN DISCLOSED BY THE ASSESSEE. THEREFORE, IT WAS NOTHING BUT AN ACADEMIC EXERCISE, HENCE NEEDS NO FURTHER ADJUDICATION IN EXTENSO . THE GROUND RAISED BY THE AS SESSEE IS, THEREFORE, DISMISSED. 18. APROPOS GROUND NO. 7 ASSTT. YEAR 2009 - 10. THE OBSERVATION OF THE AO WAS AS UNDER : 12. IN THE COMPUTATION OF INCOME THE ASSESSEE HAD SHOWN RENT RECEIVED AT RS.1,29,000/ - AND INTEREST NON BORROWED CAPITAL AT RS.1 ,42,366/ - AND CLAIMED LOSS OF RS.67,239/ - . THE ASSESSEE WAS ASKED TO FURNISH INTEREST PAID/RECEIVED ACCOUNT AND DETAILS IN RESPECT OF INTEREST PAID ON BORROWED FUNDS TO PURCHASE THE HOUSE PROPERTY AS PER WHICH THE ASSESSEE HAS SHOWN RECEIPT OF INTEREST OF RS.6,75,135/ - AND PAYMENT OF RS.8,17,101/ - AND THE EXCESS INTEREST SHOWN HAS BEEN SET OFF AMOUNTING TO RS.1,42,366/ - AGAINST THE INCOME FROM HOUSE PROPERTY AND ADJUSTED AGAINST OTHER INCOME. THE CONTENTION OF THE ASSESSEE CANNOT BE ACCEPTED. FOR SETTING OF F THE INTEREST PAID AGAINST THE HOUSE PROPERTY, THE ASSESSEE HAS TO SHOW THE DETAILS IN RESPECT PURCHASE OF HOUSE PROPERTY AND EXACT INTEREST PAYMENTS TOWARDS THE LOAN. FOR WANT OF DETAILS THIS EXPENSE CANNOT BE ALLOWED. THEREFORE AN AMOUNT OF RS.1,42,366 / - BEING INTEREST CLAIMED TOWARDS PURCHASE OF HOUSE PROPERTY IS DISALLOWED AND ADDED TO THE INCOME. 19. WHEN THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY, THE ACTION OF THE AO WAS CONFIRMED. 18 ITA NO. 275/NAG/2012 & ITA NO. 175/NAG/2014. 20. THE MAIN QUESTION WHICH WAS TO BE ANSWERED BY THE APPELLANT WAS THAT WHETHER THE BORROWED FUNDS WERE USED FOR THE PURCHASE OF THE HOUSE PROPERTY. THE ASSESSEE WAS ASKED TO FURNISH THE INTEREST PAID AND THE DETAILS OF THE BORROWED FUNDS UTILIZED TOWARDS PURCHASE OF THE HOUSE PROPERTY. THE O NLY ANSWER OF THE ASSESSEE WAS THAT THE INTEREST RECEIPTS WERE TO THE TUNE OF RS.6,75,135/ - AND THE INTEREST PAID AMOUNTED TO RS.8,17,101/ - . THE EXCESS INTEREST PAID OF RS.1,42,366/ - WAS ADJUSTED AGAINST THE INCOME FROM HOUSE PROPERTY. IN THE ABSENCE OF THE DETAILS OF THE BORROWED FUNDS UTILIZED TOWARDS PURCHASE OF HOUSE PROPERTY AS WELL AS IN THE ABSENCE OF ANY NEXUS OF INTEREST PAYMENT WITH THE HOUSE PROPERTY INCOME, WE HERE BY HOLD THAT THE SET OFF OF INT EREST INCOME AGAINST THE HOUSE PROPERTY INCOME WAS NOT TENABLE IN THE EYES OF LAW. AS A RESULT, THE VIEW TAKEN BY THE REVENUE AUTHORITIES IS HEREBY CONFIRMED AND THIS GROUND OF THE ASSESSEE IS DISMISSED. 21. IN THE RESULT, THE APPEAL FOR ASSESSMENT YEAR 2 007 - 08 IS ALLOWED AND THE APPEAL FOR ASSESSMENT YEAR 2009 - 10 IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 31 ST DAY OF MAY, 2016. SD/ - SD/ - (SHAMIM YAHYA) (MUKUL K. SHRAWAT) ACCOUNTANT MEMBER JUDICIAL MEMBER NAGPUR, DATED: 31 ST MAY, 2016. 19 ITA NO. 275/NAG/2012 & ITA NO. 175/NAG/2014. COPY FORWARDED TO : 1. MRS. SUNITA MANISH SURANA, SURANA COMPLEX, NIKHALAS MANDIR ROAD, ITWARI, NAGPUR - 440 002. 2. I.T.O., WARD - 3(3), NAGPUR. 3. COMMISSIONER OF INCOME - TAX - III,NAGPUR. 4. CIT(APPEALS) - II, NAGPUR. 5. D.R., ITAT, NAGPUR. 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR, ITAT, NAGPUR WAKODE.