ITO, CHENNAI V. Mafaz Mohammed, CHENNAI

ITA 284/CHNY/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 6429 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 11 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2019
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 06-07-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 31-01-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: HOMI RAJVANSH
• Assessee Lawyers: S SRIDHAR
• Keywords: Capital asset; Gift; Business income; Rectification of order; Tax effect
• Section: 54B; 2(14); 63; 154

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, B BENCH : CHENNAI . , [BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBE R AND SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ] ./I.T.A. NO.2337/CHNY/2016. & ITA NOS.284 & 285/CHNY/2017 / ASSESSMENT YEARS : 2010-2011, 2008-09 AND 20 10- 11. INCOME TAX OFFICER, INTERNATIONAL TAXATION 1(2) CHENNAI 600 034. VS. MAFAZ MOHAMMED, NO.4 TH FLOOR, CELESTIAL CENTRE, SOUTH USMAN ROAD, T. NAGAR, CHENNAI 600 017. [PAN AFOPM 1910N] ./I.T.A. NOS.312 AND 323/CHNY/2017. / ASSESSMENT YEARS : 2012-13 & 2010-2011. MRS. SYED ABDUL KADER AYSTHATH FASLEEN AMINA, NO.5, WALLACE GARDEN, 2 ND STREET, NUNGAMBAKKAM, CHENNAI 600 006. VS. THE INCOME TAX OFFICER, NON CORPORATE WARD 3(1) CHENNAI. [PAN AAGPF 7986E ] ( / APPELLANT) ( /RESPONDENT) ASSESSEE BY : SHRI. S. SRIDHAR, ADVOCATE DEPARTMENT BY : SHRI HOMI RAJ VANSH, CIT. /DATE OF HEARING : 20 - 11 - 2018 /DATE OF PRONOUNCEMENT : 18 - 01 - 201 9 ITA NO.2337/16, 284-285, 312 &323/17 :- 2 -: / O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER OF THE ABOVE APPEALS, TAX EFFECT IN APPEAL NO.284/CHNY/2017 OF THE REVENUE FOR ASSESSMENT YEAR 2008-2009 IS LESS THAN 20,00,000/-. LD. DEPARTMENTAL REPRESENTA TIVE FAIRLY AGREED THAT THE TAX EFFECT IN THE APPEAL MENTIONED (SUPRA) WAS LESS THAN 20,00,000/- AND BY VIRTUE OF PARA 13 OF CBDT CIRCU LAR NO.3/2018, DATED 11.07.2018, APPEALS BELOW THE SPECIFIED TAX LIMIT HAD TO BE WITHDRAWN AS NOT PRESSED. ACCORDINGLY, APPEAL OF TH E REVENUE FOR ASSESSMENT YEAR 2008-09 STANDS DISMISSED. 2. APPEAL 2337/CHNY/2016 IS OF THE REVENUE AND RELATES TO THE ASSESSEE SHRI. MAFAZ MOHAMMED AND APPEAL 323/CHNY/2 017 IS AN APPEAL OF THE ASSESSEE SMT. SYED ABDUL KADER AYSTH ATH FASLEEN AMINA. BOTH THESE APPEALS ARE FOR THE SAME ASSESS MENT YEAR 2010- 11, AND FACTS RELATING THERETO LIE WITHIN VERY S AME COMPASS. 3. WHAT CAN BE RECAPITULATED FROM THE ASSESSMENT ORDER S, IS THAT SMT. SYED ABDUL KADER AYSTHATH FASLEEN AMINA HAD PURCHASED 11.37 ACRES OF LAND AT SURVEY NOS. 14/2C, 14/3A AN D 14/3B2 OF EGATTUR VILLAGE, THIRUPORUR TALUK FROM ONE SMT. S ARADAMBAL THROUGH FOLLOWING DOCUMENTS:- ITA NO.2337/16, 284-285, 312 &323/17 :- 3 -: (I) DOC. NO.3227 OF 1998, DATED 15.12.1988 (II) DOC. NO.686 OF 1989, DATED 20.03.1989 (III) DOC. NO.56 OF 1992, DATED 30.06.1991 (IV) DOC. NO.54 OF 1992, DATED 02.07 .1991 (V) DOC. NO.55 OF 1992, DATED 02.07.1991 (VI) DOC. NO.1833 OF 1992, DATED 30.09.1992 (VII) DOC. NO.701 OF 1993, DATED 27.04.1993 ALL THE ABOVE DOCUMENTS WERE REGISTERED WITH SUB- REGISTRAR, THIRUPORUR. IN ADDITION TO THE ABOVE SMT. SYED ABD UL KADER AYSTHATH FASLEEN AMINA HAD ALSO ACQUIRED 3 ACRES AND 81 CEN TS OF LAND AT SURVEY NO.14/3B1 IN 1992 THROUGH DOCUMENT NOS.114 /92 AND 115/92. ALL THESE LAND PIECES, IT SEEMS, WERE ADJA CENT TO EACHOTHER AND FORMED A SINGLE LAND PARCEL. SHE HAD THEREAFTER SETTLED 1/3 RD UNDIVIDED SHARE IN THE ABOVE LAND TO HER FATHER SH RI. S.A. SYED ABDUL KADER THROUGH A REGISTERED SETTLEMENT DEED DATED 1 1.04.2007. THE SAID SHRI. S.A. SYED ABDUL KADER IN TURN SETTLED 1/3 RD SHARE GIVEN TO HIM BY SMT. SYED ABDUL KADER AYSTHATH FASLEEN AMIN A, IN FAVOUR OF SHRI. S.A.MAFAZ MOHAMMED, WHO IS THE OTHER ASSESSEE BEFORE US, THROUGH ANOTHER SETTLEMENT DEED 16.04.2007. SHRI. S.A.MAFAZ MOHAMMED IS THE BROTHER OF SMT. SYED ABDUL KADER A YSTHATH FASLEEN ITA NO.2337/16, 284-285, 312 &323/17 :- 4 -: AMINA. OUT OF THE BALANCE 2/3 RD SHARE, SMT. SYED ABDUL KADER AYSTHATH FASLEEN AMINA SETTLED 1/3 RD SHARE IN FAVOUR OF HER MOTHER MRS. SITHI SAYEEDHA THROUGH A REGISTERED DOCUMENT DATED 11.04.2007. IT SEEMS 1/3 RD SHARE GIVEN BY THE ASSESSEE TO HER MOTHER MRS. SITHI SAYEEDHA WAS SETTLED BY THE LATTER IN FAVOUR OF SHRI. S.A. NADHER ABDUL KAREEM THROUGH ANOTHER SETTLEMENT DEE D DATED 16.04.2007. THE SAID SHRI. S.A. NADHER ABDUL KAREEM RESETTLED HIS 1/3 RD UNDIVIDED SHARE IN FAVOUR OF HIS WIFE SMT AYSHA TH ROUGH A REGISTERED SETTLEMENT DEED DATED 15.09.2009. BY VIR TUE OF THE ABOVE SETTLEMENT DEEDS, ASSESSEES SMT. SYED ABDUL KADER AYSTHATH FASLEEN AMINA, SHRI. S.A. MAFAZ MOHAMMED AND SMT. AYSHA GOT 1/3 RD SHARE IN THE FOLLOWING : (A) SURVEY NO.14/2CA MEASURING AREA OF LAN D 5.96 ACRES (B) SURVEY NO.14/3A2 MEASURING 1.53 ACRES SURVEY NO.14/3B1B MEASURING 1.50 ACRES (D) SURVEY NO.14/3B2B MEASURING 0.33 ACRES 9.23 ACRES 4. DURING THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEA R 2010- 2011, TO BE PRECISE, ON 05.02.2010, BOTH THE ASSE SSEES ALONGWITH SMT. AYSHA SOLD 1.85 ACRES OUT OF THE 9.32 ACRES TO TWO ENTITIES THROUGH REGISTERED DOCUMENTS NUMBERED AS 663 AND 6 64/2010. THESE ITA NO.2337/16, 284-285, 312 &323/17 :- 5 -: TWO ENTITIES WERE ONE M/S. INTERGLOBE HOTELS PVT. L TD (IN SHORT IGH) AND ONE M/S. ACCENT HOTELS PRIVATE LIMITED (IN SHOR T ACCENT) AND THEY RECEIVED 37.61% AND 62.39% SHARE, RESPECTIVEL Y IN THE LAND. TOTAL CONSIDERATION RECEIVED BY ALL THE THREE SELL ERS FROM THESE TWO COMPANIES CAME TO 37,50,00,000/- AND ACCORDINGLY 1 /3 RD SHARE OF EACH OF THE CO-OWNERS CAME TO 12,50,00,000/-. BOTH THE ASSESSEES SMT. SYED ABDUL KADER AYSTHATH FASLEEN AMINA AND SHRI. S.A. MAFAZ MOHAMMED HAD CLAIMED GAINS ARISING OUT OF SUCH SALE AS EXEMPT. ASSESSEES CLAIMED THE LAND SOLD AS AGRICULTURAL A ND NOT A CAPITAL ASSET. 5. LD. ASSESSING OFFICER DURING THE ASSESSMENT PROCEED INGS NOTED THAT SALE PRICE CAME TO 20,27,00,000/- PER A CRE AGAINST GUIDELINE VALUE OF 3,00,00,000/- PER ACRE. AS PER THE LD. ASSESSING OFFICER, THE LAND WAS SITUATED IN EGATTUR, WHICH WA S A SUBURB OF CHENNAI, IN THIRUPORUR TALUK OF KANCHIPURAM DISTRIC T, LYING ON THE SIDE OF OLD MAHABALIPURAM ROAD. ACCORDING TO THE LD. AS SESSING OFFICER, EGATTUR WAS AN UPCOMING RESIDENTIAL AREA WITH MANY FLATS CATERING TO PROFESSIONALS WORKING IN INFORMATION TECHNOLOGY COM PANIES IN AND AROUND OMR. LD. ASSESSING OFFICER ALSO NOTED THAT GOVERNMENT OF TAMIL NADU VIDE GAZETTE NOTIFICATION NO.VI(1)/109/2 009, DATED 09.03.2009 HAD DECLARED THE AREA OF 9.32 ACRES OWN ED BY THE ASSESSEES ALONGWITH SMT. AYSHA, AS A MULTI- STOREYE D BUILDING AREA FOR ITA NO.2337/16, 284-285, 312 &323/17 :- 6 -: CONSTRUCTION OF COMMERCIAL BUILDING. ASSESSEES WER E PUT ON NOTICE. SUMMARY OF THE REPLY GIVEN BY THE ASSESSEES WAS AS UNDER:- A THE LAND WAS PURCHASED AS AGRICULTURAL LAND AS PER PURCHASE DEEDS. IT IS CLEARLY MENTIONED IN THE PURC HASE DEEDS THAT WHAT WAS BROUGHT WAS AGRICULTURAL PUNJA LAND AND WAS BEING CULTIVATED. B AGRICULTURAL INCOME WAS DERIVED FROM THE LAND WHI CH WERE BEING OFFERED YEAR AFTER YEAR IN THE INDIVIDUA L INCOME-TAX-RETURNS. C COPY OF THE CHITTA, PATTA, ADANGAL CLEARLY STATE TH AT IT WAS AGRICULTURAL LAND. D THE LAND WAS SITUATED 18.6 KMS AWAY FROM THE MUNIC IPAL LIMITS AND THE POPULATION OF THE AREA WAS BELOW 10 ,000 AS PER CENSUS. E THE SALE DEEDS DATED 5.2.2010 CLEARLY MENTIONED IN CLAUSE NO. 2(4), THAT LAND ACQUISITION ACT AND LAND REFORMS ACTS WERE NOT APPLICABLE AND THIS CLEARLY IMPLIED THAT THE LAND SOLD WAS AGRICULTURAL. F LAND WAS NOT CONVERTED, BUT WAS SOLD AS AGRICULTU RAL LAND. G THE SALE DEED MENTIONED IN THE SCHEDULE THAT THE LA ND SOLD WAS 'AS PER PATTA'. IN THE PATTA IT WAS CLEAR LY MENTIONED THAT THE LAND WAS AGRICULTURAL. ITA NO.2337/16, 284-285, 312 &323/17 :- 7 -: H THE BUYERS AFTER PURCHASING THE LAND HAD OBTAINED P ATTA FROM THE AUTHORITIES, WHICH AGAIN CLASSIFIED THE L AND AS AGRICULTURAL LAND. HENCE THE INTENTION OF THE BUYER AND SELLER WAS TO PURCHASE AND SELL AGRICULTURAL LAND. I IN THE APPEALS OF MR. ABOOBUCKER AND MRS. AYISILA, LD. COMMISSIONER OF INCOME TAX (APPEALS) HAD HELD THAT THE LAND WAS NOT A CAPITAL ASSET AND HENCE THE GAIN ARI SING OUT OF THE SAME WAS NOT TAXABLE. 6. ON RECEIPT OF THE ABOVE REPLY OF THE ASSESSEE, LD. ASSESSING OFFICER ADDRESSED A LETTER TO THE COMMISSIONER, TOW N AND COUNTRY PLANNING, CHENNAI FOR IDENTIFYING THE APPLICANTS WH O HAD APPLIED FOR ZONE RECLASSIFICATION OF THE LAND. THE SAID AUTHO RITY THROUGH A LETTER DATED 11.02.2015 STATED THAT THE APPLICANT WAS ONE M/S. SSPDL INFRASTRUCTURE DEVELOPERS (P) LIMITED (IN SHORT S SPDL) REPRESENTED BY ITS DIRECTOR. IT SEEMS IN THE SAID LETTER, IT WAS ALSO STATED THAT ASSESSEES ALONGWITH SMT. AYSHA HAD GIVEN A POWER OF ATTORNEY TO M/S. SSPDL ON 27.06.2007. THEREAFTER LD. ASSESSIN G OFFICER ADDRESSED A LETTER TO M/S. SSPDL SEEKING DETAILS OF THE TRANSACTIONS IT HAD WITH ASSESSEES. M/S.SSPDL FURNISHED THE FOLLO WING RECORDS IN REPLY. (I) JOINT DEVELOPMENT AGREEMENT (JDA) EXECUTED ON 25.06 .2007 BETWEEN THEM AND THE ASSESSEE AND TWO OTHERS. ITA NO.2337/16, 284-285, 312 &323/17 :- 8 -: (II) POWER OF ATTORNEY (POA) DATED 27.06.2007 EXECUTED B Y THE ASSESSEE AND SHRI S A NADHEER ABDUL KAREEM IN FAVOU R OF M/S. SSPDL FOR THEIR 2/3 RD SHARE IN THE PROPERTY. (III) DEED OF CANCELLATION OF JDA BETWEEN THE ASSESSEE AN D TWO OTHERS AND SSPDL. 7. A SURVEY U/S.133A OF THE INCOME TAX ACT, 1961 (IN S HORT THE ACT) WAS CONDUCTED IN THE PREMISES OF THE A SSESSEE SHRI. MAFAZ MOHAMMED ON 09.03.2015, AND IT SEEMS THE REVENUE STUMBLED UPON THE JDA DATED 25.06.2007, AND A POWER OF ATTORNEY DATED 27.06.2007, EXECUTED BY THE ASSESSEES IN FAVOUR OF M/S. SSDPL. ASSESSEES HAD ENTERED INTO THE JDA WITH M/S. SSDPL TO DEVELOP THE LAND FOR CONSTRUCTING MULTI-STORIED BUILDING WITH MALL, RESIDENTIAL APARTMENTS AND FOR COMMERCIAL USE. THROUGH THIS J DA, PARTIES AGREED FOR 50:50 SHARE IN THE UNDIVIDED LAND. ASESSEES AL ONGWITH SMT. AYSHA WERE ENTITLED TO 50% OF THE TOTAL SALEABLE SPACE. LD. ASSESSING OFFICER ALSO NOTED THAT M/S. SSDPL HAD, IN TURN, E NTERED INTO AGREEMENTS WITH M/S. IGH AND M/S. ACCENT FOR SALE A ND CONSTRUCTION OF HOTEL ON 50% OF UDS IN THE LAND BELONGING TO M/S. SSDPL. M/S. SSDPL HAD ALSO RECEIVED A SUM OF 22,50,00,000/- FR OM M/S. IGH AND M/S. ACCENT, ON 11.04.2008. IT SEEMS, THE JOINT DE VELOPMENT AGREEMENT ENTERED BETWEEN ASSESSEES AND M/S. SSPDL WAS CANCELLED ON 04.02.2010 AND ASSESSEES, SOLD THE 1.85 ACRES OF LAND DIRECTLY TO ITA NO.2337/16, 284-285, 312 &323/17 :- 9 -: M/S. IGH AND M/S. ACCENT. THE IMPUGNED CAPITAL GAI NS AROSE OUT OF THE SALE EFFECTED BY THE ASSESSEES TO M/S. IGH AND M/S. ACCENT. 8. LD. ASSESSING OFFICER AFTER GOING THROUGH THE ARR AY OF TRANSACTIONS CAME TO A CONCLUSION THAT INTENTION O F THE ASSESSEES WERE TO COMMERCIALLY EXPLOIT THE LAND. ACCORDING TO HIM , SUCH COMMERCIAL PURPOSE WAS CLEAR FROM THE JDA ENTERED BY THE ASSE SSEES WITH M/S. SSPDL IN THE YEAR 2007. THOUGH THE ASSESSEES ARGUE D THAT THE JDA WITH M/S. SSPDL WAS NOT ACTED UPON AND CHARACTER OF THE LAND HAD NOT CHANGED, THIS WAS NOT ACCEPTED BY THE LD. ASSESSING OFFICER. LD. ASSESSING OFFICER ALSO NOTED THAT THE AGRICULTURAL INCOME CLAIMED BY SMT. SYED ABDUL KADER AYSTHATH FASLEEN AMINA CAME TO 1,80,000/- AND SHRI. MAFAZ MOHAMMED CAME TO 75,000/-, BUT NO SUPPORTING DETAILS WERE FILED, EXCEPT FOR CHITTA AND ADANGAL. ACCORDING TO THE LD. ASSESSING OFFICER, THOUGH THE CHITTA AND ADANGAL S TATED THAT THERE WERE COCONUT AND MANGO TREES CULTIVATED IN THE LAND , IT DID NOT PROVE THE CLAIM OF AGRICULTURAL INCOME. RELYING ON THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF SMT. SARIFABIBI VS. CIT, (1993) 204 ITR 631, HE HELD THAT NATURE OF THE LAND MENTIONED IN THE REVENUE RECORDS WAS NOT CONCLUSIVE EVIDENCE FOR PROVING ITS CHARACTER. LD. ASSESSING OFFICER ALSO NOTED THAT IN THE CONSTRUCTI ON AGREEMENT ENTERED BETWEEN M/S. IGH AND M/S. ACCENT WITH M/S. SSDPL, THE PROPERTY WAS SHOWN AS FALLING IN URBANIZABLE Z ONE. HE THUS HELD ITA NO.2337/16, 284-285, 312 &323/17 :- 10 - : THAT PROPERTY DID NOT FALL WITHIN THE EXCLUSION GIV EN UNDER CLAUSE (III) OF SECTION 2(14) OF THE ACT AND HELD THE ENTIRE SALE CONSIDERATION AS EXIGIBLE TO CAPITAL GAINS TAX. ACCORDINGLY, AN AD DITION OF 12,47,30,461/- WAS MADE IN THE HANDS OF THE ASSESS EE SMT. SYED ABDUL KADER AYSTHATH FASLEEN AMINA AND 12,49,11,76 9/- WAS MADE IN THE HANDS OF THE ASSESSEE SHRI. S.A.MAFAZ MOHAMMED. LD. ASSESSING OFFICER ALSO DISALLOWED THE CLAIM OF AGRICULTURAL INCOME OF 1,80,000/- MADE BY THE ASSESSEE SMT. SYED ABDUL KADER AYSTHATH FASLEEN AMINA AND 75,000/- CLAIMED BY THE ASSESSEE SHRI. S.A.MAF AZ MOHAMMED. 9. APART FROM THE ABOVE, IN THE ASSESSMENT DONE ON SH RI. S.A.MAFAZ MOHAMMED, THERE WERE CERTAIN OTHER DISAL LOWANCES ALSO. SHRI. S.A.MAFAZ MOHAMMED HAD ADMITTED INCOME OF 5 5,70,610/- FROM HOUSE PROPERTY AGAINST WHICH 85,946/- WAS C LAIMED AS MUNICIPAL TAXES. LD. ASSESSING OFFICER DISALLOWED THE CLAIM FINDING THAT THE RECEIPT PRODUCED AS EVIDENCE WAS IN THE NAME OF ONE SMT. K V A M SITHI SAYEEDA AND NOT THE ASSESSEE. SHRI. MAFAZ MOHAMMED HAD ALSO CLAIMED INTEREST OF 44,38,785/- AS DEDUCTION FROM INCOME FROM HOUSE PROPERTY. THOUGH THE ASSESSEE SUBMITTED THAT SUCH INTEREST WAS PAID ON LOANS TAKEN TO REPAY THE ADVANCE RECEIV ED FROM M/S. SSDPL, WHICH WAS USED FOR CONSTRUCTION OF THE BUIL DING, THIS WAS NOT ACCEPTED BY THE LD. ASSESSING OFFICER. LD. ASSESSIN G OFFICER NOTED THAT ITA NO.2337/16, 284-285, 312 &323/17 :- 11 - : A TERM LOAN OF 4,65,00,000/- AVAILED BY THE ASSESS EE FROM M/S. INDIAN OVERSEAS BANK, GEMINI CIRCLE, CHENNAI WAS FO R PURPOSE OF PRIVATE INVESTMENT IN IMMOVABLE PROPERTY. ACCORDIN G TO HIM, IT WAS CLEAR FROM A LETTER FROM ASSISTANT GENERAL MANAGER , INDIAN OVERSEAS BANK, CHENNAI THAT SUCH TERM LOAN WAS PRECLOSED B EING THE SURPLUS FUND AVAILABLE WITH THE ASSESSEE. LD. ASSESSING OFF ICER ALSO RELIED ON ANSWERS GIVEN BY THE ASSESSEE DURING THE STATEMENT TAKEN IN THE SURVEY. CLAIM OF INTEREST WAS ALSO THUS DISALLOWED. 10. AGGRIEVED, BOTH THE ASSESSEES MOVED IN APPEAL BEF ORE LD. COMMISSIONER OF INCOME TAX (APPEALS). WHEREAS ASSES SEE SHRI. MAFAZ MOHAMMED WAS SUCCESSFUL IN HIS APPEAL, THAT OF SMT. SYED ABDUL KADER AYSTHATH FASLEEN AMINA MET WITH A DIFFERENT FATE. WHAT WAS HELD BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS ) IN THE CASE OF THE ASSESSEE SHRI. MAFAZ MOHAMMED IN HIS ORDER DATE D 27.05.2016 ON THE QUESTION OF NATURE OF THE LAND IS REPRODUCED HE REUNDER:- I HAVE CONSIDERED THE ABOVE SUBMISSION OF THE ASSESSING OFFICER AND ALSO THE SUBMISSIONS OF THE OF THE ASSESSEE CAREFULLY. THERE ARE TWO BASIC ISSUES INVO LVES IN THE PRESENT APPEAL. I) WHETHER THE LAND UNDER CONSIDERATION ARE AGRICULTUR AL LANDS AND HENCE OUTSIDE THE SCOPE OF DEFINITION OF CAPITA L ASSET U/S.2(14) OF THE LT. ACT AND II) THE DATE (YEAR) OF TRANSFER OF THE LAND FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAINS, IF ANY, ITA NO.2337/16, 284-285, 312 &323/17 :- 12 - : AS THE CLAIMED BY THE ASSESSEE IN HIS RETURNS OF IN COME, THE LANDS ARE AGRICULTURAL LANDS AND HENCE THE PROCEEDS ARE NOT ELIGIBLE TO CAPITAL GAINS TAX. FURTHER THE TRANSFER OF LAND HAD TAKEN PLACE IN THE FINANCIAL YEAR 2007-08 (IE) ON 2 5.6.2007 WHEN THE ASSESSEE ENTERED INTO JOINT DEVELOPMENT AGREEMENT WITH M/S. SSPDL RECEIVED AS ADVANCE OF RS.5,00,00,000/ -, HANDED OV ER THE POSSESSION OF THE PROPERTY TO M/S. SSPDL AND ALSO E XECUTED A REGISTERED POWER OF ATTORNEY IN FAVOUR OF SSPDL. FROM THE PERUSAL OF THE RECORDS AND THE ASSESSING OFFICER'S ORDER AND OTHER DETAILS FILED BY THE ASSESSEE, THE LANDS UNDE R CONSIDERATION WERE ACQUIRED BY THE ASSESSEE'S SISTE R FROM 1988 TO 1992 BY DIFFERENT DOCUMENTS FROM SMT. SARAD AMBAL. THE ASSESSEE'S SISTER SETTLED 1/ 3 RD UNDIVIDED SHARE IN THE SAID LANDS TO HER FATHER MR. S.A.SYED ABDUL KADER, WHO IN TURN HAD SETTLED THE S AID 1/3 RD UNDIVIDED SHARE IN THE LAND IN FAVOUR OF THE ASSESS EE. AS PER THE REVENUE RECORDS, THE LANDS ARE AGRICULTURAL LAN DS. THE ASSESSEE AS WELL AS THE PREVIOUS OWNERS HAVE BEEN S HOWING AGRICULTURAL INCOME FROM THE SAID LANDS IN THEIR RE TURN OF INCOME FILED FROM YEAR TO YEAR UP TO 2010-11. EVEN THE ASSESSING OFFICER HAS ALSO ACCEPTED THESE FACTS. TH E ASSESSEE ALSO SUBMITTED THAT HE ALONG WITH OTHER 2 CO- OWNERS ENTERED INTO A JOINT DEVELOPMENT AGREEMENT W ITH SSPDL ON 25.6.2007 BASED ON THE SAID JOINT DEVELOPMENT AGREEMENT THEY ( HE AND OTHER EO OWNERS ) RECEIVED AN ADVANCE OF RS.5 CRORES, HANDED OVER THE POSSESSION OF THE PROPERTY TO M/S. SSPDL AND ALSO E XECUTED A POWER OF ATTORNEY ON 27.6.2007 REGISTERED AS DOCU MENT NO.429/2007. THE PERMISSION FROM COMMISSIONER OF TOWN AND COUNTR Y PLANNING FOR ZONE RECLASSIFICATION AND GETTING NOTI FICATION IN GAZETTEE TAMILNADU GOVERNMENT IN THE YEAR 2009 WERE OBTAINED BY THE DEVELOPERS USING THE POWER OF ATTOR NEY EXECUTED ON 2007, SUBSEQUENTLY, THE JOINT DEVELOPME NT AGREEMENT WAS CANCELLED ON 4.2.2010 AND THE POWER O F ATTORNEY WAS REVOKED THE DEVELOPER, SSPDL NOMINATED M/S.INTERGLOBE HOTELS PRIVATE LIMITED AND M/ S. ACC ENT HOTELS PRIVATE LIMITED, FOR THE PURPOSE OF REGISTRATION OF 1.85 ACRES OF LAND AND SURRENDERED THE BALANCE LAND BY CANCELLATI ON OF JOINT DEVELOPMENT AGREEMENT AND ACCORDINGLY THE ASSESSEE AND OTHER CO OWNERS HAD TO REGISTER THE PROPERTY IN THE NAME OF M/S. INTERGLOBE HOTELS PRIVATE LIMITED AND MY S. ACCENT HOTELS PRIVATE LIMITED BEING THE NOMINEE OF THE DEVELOPER. THE DEED OF CANCELLATION OF JOINT DE VELOPMENT AGREEMENT CLEARLY NARRATES THE NOMINATION MADE BY T HE SSPDL, THE DEVELOPER IN FAVOUR OF M/S. INTERGLOBE H OTELS PRIVATE LIMITED AND M/ S. ACCENT HOTELS PRIVATE LIM ITED. THUS THE REGISTRATION OF THE LAND IN FAVOUR OF M/S. INTE RGLOBE HOTELS PRIVATE LIMITED AND MY S. ACCENT HOTELS PRIVATE LIMITED ON 5.2.2010 IS NOT A NEW TRANSACTION, IT IS ONLY A CON SEQUENTIAL ITA NO.2337/16, 284-285, 312 &323/17 :- 13 - : ACT ON PART OF THE ASSESSEE TO REGISTER THE LAND AS PER THE REQ UIREMENTS OF THE DEVELOPERS AS CONTAINED IN THE JOINT DEVELOPMEN T AGREEMENT CANCELLATION DEED DATED 4.2.2010. AS PER SEC.2(47)(V) OF THE IT.ACT, TRANSFER IN RELATION TO CAPITAL ASSET INCLUDES ANY TRANSACTION INVOLVING THE ALLOWING THE POSSESSION O F ANY IMMOVABLE PROPERTY TO BE TAKEN OR RETAINED IN PART PERFORMANCE OF A CONTRACT OF THE NATURE REFERRED TO M SEC.53(A) OF THE TRANSFER OF PROPERTY ACT 1982 (4 O F 1882) SECTION 2(47)(V) IS REPRODUCED BELOW FOR READY REFE RENCE: SEC.2(47) 'TRANSFER' IN RELATION TO CAPITAL ASSETS INCLUDES (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 SEC,53A OF THE TRANSFER OF PROPERTY ACT 1882 (4 OF 1882). IN THE INSTANT CASE, CONSEQUENT TO THE JOINT DEVELO PMENT AGREEMENT ON 25.6.2007, THE ASSESSEE HAS HANDED OVE R THE POSSESSION OF THE LAND TO THE DEVELOPER EXECUTED A , POWER OF ATTORNEY AND RECEIVED PART OF THE CONSIDERATION AGR EED UPON. THEREFORE, IN VIEW OF THE PROVISIONS OF CLAUSE (V) OF SEC2(47) OF THE ACT, THE TRANSFER OF THE PROPERTY HAS BEEN EFFECTED IN THE FINANCIAL YEAR 2007-08 ITSELF, IRRESPECTIVE OF THE DATE OF REGISTRATION. REGISTRATION IS ONLY LEGAL REQUIREMEN TS FOR THE BUYER AND NOT FOR THE SELLER. IT IS ALSO IMPORTANT TO SEE WHETHER REGISTRATION IN THE NAME OF M/S. INTERGLOBE L IOTELS PRIVATE LIMITED AND M/S. ACCENT HOTELS PRIVATE LIMITED IS A NEW TRANSACTION , OR CONTINUATION OF THE TRANSACTION (JOINT DEVELOPMENT AGREEMENT) ALREADY ENTERED WITH SSPDL. M/ S, SSPDL IS A COMPANY CARRYING ON BUSINESS IN CHENNAI HAD ENTERED INTO JOINT DEVELOPMENT AGREEMENT WITH THE A SSESSEE AND OTHER CO OWNERS ON 25.6.2007 CONSEQUENT TO THE JOINT DEVELOPMENT AGREEMENT BETWEEN THE ASSESSEE AND SSPD L, THE ASSESSEE EXECUTED AND POWER OF ATTORNEY ON 27.6 .2007 IN FAVOUR OF SSPDL (VIDE REGISTERED DOCUMENT NO.429 DATED 2007) FOR OBTAININ G VARIOUS PERMISSIONS AND TO DEVELOP THE PROPERTY. IN FACT BA SED ON THE SAID GENERAL POWER OF ATTORNEY, SSPDL OBTAINED VARI OUS PERMISSIONS AND SANCTIONS FROM THE STATE GOVERNMENT AND LOCAL AUTHORITIES. THE LATEST OF SUCH APPROVALS BASED ON THE POWER OF ATTORNEY DOCUMENT NO.4290F 2007 WAS FROM DIRECTOR O F TOWN PLANNING BY NOTIFICATION IN TAMILNADU GOVERNMENT GA ZETTE IN NO.VI(I)/ 109/2009 MULTI-STOREY BUILDING AREA. CLAUSE 5.1.3 OF THE SAID JOINT DEVELOPMENT AGREEME NT STATES' IT IS A AGREED BY THE OWNER THAT THE DEVELOPER IS E NTITLED TO ENTER INTO AGREEMENTS FOR SALE, CONCLUDE SALE TRANSACTION AND RECEIVE ADVANCES FROM PROSPECTIVE CUSTOMERS AND APPROPRIATE THE SAME IN RESPECT OF THE DEVELOPER'S SHARE OF ALLOTMENT IN THE DEVELOPED ITA NO.2337/16, 284-285, 312 &323/17 :- 14 - : PROPERTY UNDER THIS AGREEMENT.' IN PURSUANCE OF THE SAID CLAUSE THE DEVELOPER VIZ. SSPDL HAS ENTERED INTO .AGREEMENTS WITH THAT M/S. INTERGLOBE HOTELS PRIVATE LIMITED AND M/S. ACCENT HOTELS PRIVATE LIMITED FOR SALE OF UNDIVIDED PORTION OF LAND. WHEN THE JOINT DEVELOPME NT AGREEMENT WAS CANCELLED ON 4.2.2010 BETWEEN THE ASS ESSEE AND SSPDL, IT HAS BECOME NECESSARY TO HONOUR THE COMMITMENT MADE TO THAT M/S. INTERGLOBE HOTELS PRIV ATE LIMITED AND M/S. ACCENT HOTELS PRIVATE LIMITED AND THE ASSE SSEE AND OTHER CO OWNERS HAD TO REGISTER 1.85 ACRES OF LAND TO THEM IN PURSUANCE OF THE AGREEMENT ENTERED IN CONSEQUENCE T O JOINT DEVELOPMENT AGREEMENT. ON 4.2.2010 M/S. SSPDL HAD NOMINATED M/S. INTERGLOB E HOTELS PRIVATE LIMITED AND M / S. ACCENT HOTELS PRI VATE LIMITED, AS THEIR NOMINEES FOR THE PURPOSE OF REGIS TRATION OF 1.85 ACRES OF LAND AND SURRENDERED THE BALANCE LAND TO THE ASSESSEE AND OTHER CO OWNERS BY CANCELLATION DEED OF JOINT DEVELOPMENT AGREEMENT. THUS, THE TRANSACTION BETWEEN THE ASSESS EE AND M/S. INTERGLOBE HOTELS PRIVATE LIMITED AND M/S. ACC ENT HOTELS PRIVATE LIMITED IS NOT A NEW SALE TRANSACTION BUT I T IS ONLY A CONSEQUENTIAL HAPPENING BASED ON THE JOINT DEVELOPM ENT AGREEMENT. IN THE DEED OF CANCELLATION OF JOINT DEVELOPMENT AG REEMENT IN CLAUSE NO.3, IT WAS MENTIONED THAT 'IT IS ALSO R EPRESENTED THAT THE PARTIES OF THE SECOND PART AND THE PARTIES OF THE FIRST PART, REPRESENTED BY THE PARTIES OF THE SECOND PART , HAD ENTERED INTO AGREEMENTS FOR SALE AND CONSTRUCTION D ATED 4.4.2008 WITH M/ S. INTERGLOBE HOTELS PRIVATE LIMIT ED AND M/S. ACCENT HOTELS PRIVATE LIMITED FOR CONSTRUCTION OF H OTELS AND CONVEYANCE OF UNDIVIDED SHARE IN THE SCHEDULE MENTI ONED PROPERTY IN PROPORTION TO THE CONSTRUCTED AREA OF T HE HOTELS. THESE AGREEMENTS OF SALE AND CONSTRUCTION WERE REGISTERED AS DOCUMENT NOS.2694/2 008 AND 2695/2008 RESPECTIVELY, AT THE OFFICE OF THE SU B-REGISTRAR, THIRUPORUR. SINCE THE PARTIES OF THE FIRST PART AND PARTIES OF THE SECOND PART HAVE MUTUALLY DECIDED TO CANCEL THE SAID AGREEMENT OF JOINT DEVELOPMENT DATED 25.06.2007, TO PROTECT THE INTEREST OF M/S. INTERGLOBE HOTELS PRIVATE LIMI TED AND M/ S. ACCENT HOTELS PRIVATE LIMITED, THE PARTIES OF THE F IRST PART HAVE AGREED TO CONVEY A DEMARCATED EXTENT OF LAND MEASURING 1.85 ACRES FROM THE OUT OF THE SCHEDULE MENTIONED PROPER TY DIRECTLY TO M/S. INTERGLOBE HOTELS PRIVATE LIMITED AND M/S. ACCENT HOTELS PRIVATE LIMITED. ON THIS UNDERSTANDING THE PARTIES OF THE FIRST PART, SECOND PART, M/S.INTERGLOBE HOTELS PRIVATE LIMITED AND M/S.ACCENT HOTELS PRIVATE LIMITED, HAVE MUTUALLY DECIDED TO CANCEL THE AGREEMENTS OF SALE AND CONSTR UCTION REGISTERED AS DOCUMENT NOS.2694/08 AND 2695/08. ITA NO.2337/16, 284-285, 312 &323/17 :- 15 - : THUS THE ABOVE FACTS CLEARLY PROVE THAT M/S. INTERG LOBE HOTELS PRIVATE LIMITED AND M/ S. ACCENT HOTELS PRIVATE LIM ITED ONLY NOMINEES OF SSPDL AND NOT A SEPARATE OF INDEPENDENT BUYER OF THE PROPERTY FROM THE ASSESSEE. HENCE THE REGIST RATION DEED DATED 05.02.2010 CANNOT BE CONSTRUED AS THE DA TE OF SALE OF THE LAND BY ASSESSEE AND OTHER CO-OWNERS. S INCE THE TRANSFER OF PROPERTY HAD ALREADY TAKEN PLACE IN TH E FINANCIAL YEAR 2009-10. IN THE PRESENT CASE THE ASSESSEE AND OTHER CO OWNERS HAVE BEEN USING THE SAID LAND FOR AGRICULTURAL LANDS TIL L THE JDA WAS ENTERED INTO WITH M/S.SSPDL ON 25.06.2007, WHEN. TH E POSSESSION OF THE SAID LANDS WAS HANDED OVER TO THE DEVELOPER. THE ASSESSEE HAS NOT APPLIED FOR ANY PER MISSION TO CONVERT THE LAND OR SOUGHT PERMISSION TO DEVELOP THE LAND. ON THE OTHER HAND THE DEVELOPER, USING THE POWER OF ATTORNEY HAS APPLIED TO VARIOUS AUTHORITIES FOR CONVERTING O F THE SAID LAND CONSTRUCTION OF COMMERCIAL BUILDING. BUT HOWEV ER THE SAID JDA WAS CANCELLED ON 4.2.2010 WITHOUT IMPLEMEN TING ANY ACTIVITIES AS PER THE SANCTION PERMISSION OBTAI NED. THE- LAND WAS KEPT AS AGRICULTURAL LAND BY THE SSPDL FRO M THE DATE OF ENTERING INTO JDA TILL IT WAS CANCELLED ON 4.2.2010. HENCE PERMISSION OBTAINED WAS NOT ACTED UPON. EVEN IN THE CANCELLATION DEED IT WAS CLEARLY MENTIONED THAT ONL Y LAND WAS HANDED OVER BACK TO THE ASSESSEE AND OTHER CO-OWNER S WITHOUT ANY DEVELOPMENT. THE DECISION OF ITAT TRIBUNAL CHENNAI IN THE CASE O F RAVIKUMAR (HUF) CHENNAI VS. DEPARTMENT OF INCOME-TA X IN ITAT NO.L076/MDS/2009, SQUARELY APPLICABLE TO THE C AUSE. IT HELD THAT MERE OBTAINING PERMISSION FOR THE LAYOUT DOES NOT CHANGE THE CHARACTER OF THE LANDS FROM AGRICULTURAL LANDS AND THE PERMISSION WAS NEVER IMPLEMENTED NOR ACTED UPON . EVEN AFTER THE JDA, THE LAND WAS CONTINUED TO BE USED FO R AGRICULTURAL PURPOSES, UP TO THE SALE OF THE LAND T O M/S.IGH AND M/ S.ACCENT . THIS IS EVIDENT FROM THE VAO CERTIFICATE, PATTA, CH ITTA, ADANGAL ISSUED IN FAVOUR OF THE BUYERS VIZ., M/S.IG H AND M/S. ACCENT. THE LAND WAS SOLD TO M.S, IGH AND M/S. ACCE NT ALSO AS AGRICULTURAL LANDS ONLY. EFFECTIVELY, THE LD. COMMISSIONER OF INCOME TAX (AP PEALS) HELD THAT THE LAND SOLD WAS AGRICULTURAL IN NATURE AND THE TR ANSFER WAS EFFECTED IN FINANCIAL YEAR 2007-08 RELEVANT TO ASSESSMENT YE AR 2008-09. ITA NO.2337/16, 284-285, 312 &323/17 :- 16 - : 11. AS AGAINST THE ABOVE, WHAT WAS HELD BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ON 24.10.2016 IN THE APPEAL FILED BY SMT. SYED ABDUL KADER AYSTHATH FASLEEN AMI NA IS REPRODUCED HEREUNDER:- 16. I HAVE GONE THROUGH THE FACTS OF THE CASE A ND HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE WRITTEN SUBMISSIONS FILED BY THE L D. AR ON 19.10.2016 DURING THE APPLICABLE OF THE HONBLE JURISDICTIONAL ITAT., D BENCH, CHENNAI IN THE CASE OF SMT. AYISHA FATHIMA, A.Y. 2009-10, ITA NO.1 371/MDS/2013, DATED 17.08.2016, WHICH HAS BEEN RELIED ON BY THE APPELLA NT TO SUBSTANTIATE HER CLAIM THAT (I) THE LAND SOLD BY HER WAS AGRICULTURAL LAND (II) AND EVEN IF THE SAME IS TREATED AS CAPITAL ASSET, IT HAS TO BE CONSIDERED I N THE A.Y. 2008-09, WHEN THE JDA WAS EXECUTED, THE PAO WAS ISSUED AND THE SALE C ONSIDERATION WAS RECEIVED AND NOT IN THE A.Y. 2010-11, AS ASSESSED BY THE LD. ASSESSING OFFICER. IN THE LIGHT OF THESE FACTS OF THE CASE, THE CASE IS DISCUSSED AS UNDER:- 17. WHETHER THE IMPUGNED LAND WAS AN AGRICULTURAL L AND OR OTHERWISE, THE OBSERVATION AND THE FINDINGS MADE BY THE LD. ASSESS ING OFFICER NEED TO BE DISCUSSED HERE. DURNG THE RELEVANT YEAR UNDER CONS IDERATION, THE APPELLANT ALONG WITH THE OTHER TWO CO-OWNERS NAMELY MR. MAFAZ MOHAMMED AND MRS. AYSHA HAD SOLD 1.85 ACRES OF ACRES OF M/S. INTERGLO BE HOTELS PVT LIMITED FOR A TOTAL CONSIDERATION OF 14,10,46,875/- ON 05.02.2010. THE REMAINING PART O F 62.39% OF THE UNDIVIDED SHARE OF LAND OUT OF 1.85 A CRES WAS SOLD TO M/S. ACCENT HOTELS PVT LTD FOR A TOTAL CONSIDERATION OF 23,39,53,125/- ON 05.02.2010. THE TOTAL SALE CONSIDERATION WAS 37.50 CRORES AND THE APPELLANTS ONE THIRD SHARE WORKED OUT TO 12,50,00,000/- WHICH WAS CLAIMED BY THE APPELLANT A S EXEMPT IN VIEW OF THE PROVISIONS OF SECTION 2(14) OF THE ACT. 18. THE SALE CONSIDERATION RECEIVED BY THE APPELLAN T AND THE OTHER SHAREHOLDERS WAS SUBSTANTIALLY HIGH IF THE LAND WAS TREATED AS A GRICULTURAL LAND. THE SALE PRICE OF THE LAND WORKED OUT TO 20.27 CRORES PER ACRE AS AGAINST THE GUIDELINE VALU E OF 3.00 CRORE. 19. THE IMPUGNED LAND IS SITUATED AT EGATTUR WHICH IS A SUBURB OF CHENNAI LOCATED SOUTH OF THE CHENNAI CITY ALONG THE OLD ROAD MAHABA LIPURAM ROAD(OMR) WHICH IS ONE OF THE MOST RAPIDLY DEVELOPING COMMERC IAL AREAS AND ALSO IS AN UPCOMING RESIDENTIAL AREA AS MOST OF. THE PROFESSIO NALS AND INFORMATION TECHNOLOGY COMPANIES ARE RENTING AND BUYING APARTME NTS THERE. 20. EVEN THE GOVERNMENT OF TAMILNADU HAS NOTIFIED THE S URVEY NOS. IN THE AREA AS MULTI STORIED BUILDING AREA FOR CONSTRUCTION OF COM MERCIAL BUILDINGS. 21. DURING THE FINANCIAL YEAR 2007 - 08, THE APPELLANT AND THE TWO OTHER ITA NO.2337/16, 284-285, 312 &323/17 :- 17 - : SHAREHOLDERS HAD GIVEN A POWER OF ATTORNEY DATED 27/06/2007 IN RESPECT OF THE IMPUGNED PROPERTY IN FAVOUR OF M/S SSPDL INFRASTRUCTURE DEVELOPERS PRIVATE LIMITED TO DO VARIOUS ACTS, DEEDS AND THINGS LIKE T O MAKE AND SUBMIT NECESSARY APPLICATIONS TO THE DIRECTORATE OF TOWN AND COUNTRY PLANNING, CM DA, TNEB, MWSSB, FIRE DEPARTMENT, LOCAL PANCHAYAT UNION, ETC. FOR OBTAINING NOTIFICATIONS, APPROVALS FOR DEMOLITION OF ANY STRU CTURE, RE - CLASSIFICATION OF THE PROPERTY, SUB - DIVISION OF THE PROPERTY, RE - CONS TITUTION OF THE PROPERTY ETC. ETC. 22. BASED ON THIS POA, M/S SSPDL HAD APPLIED BEFORE THE DIRECTORATE OF TOWN AND COUNTRY PLANNING FOR NOTIFYING THE IMPUGNED LAN D AS 'MULTI - STORIED BUILDING AREA' FOR CONSTRUCTION OF COMMERCIAL BUILD INGS AND THE DIRECTORATE OF TOWN AND COUNTRY PLANNING BY NOTIFICATION DECLARED THE IMPUGNED LAND AS 'MULTI - STORIED BUILDING AREA' FOR CONSTRUCTION OF COMMERCIAL BUILDINGS. 23. THE APPELLANT AND THE OTHER TWO SHAREHOLDERS HAD AL SO ENTERED INTO A JOINT DEVELOPMENT AGREEMENT WITH M/S SSPDL ON 25/06/2007 TO DEVELOP THE IMPUGNED PROPERTY BY CONSTRUCTION OF THE MULTI STOR IED BUILDINGS WHICH WOULD COMPRISE OF A MALL, RESIDENTIAL APARTMENTS AND COMM ERCIAL BUILDINGS. 24. MEANWHILE, M/S SSPDL ENTERED INTO AGREEMENT WITH M/S INTERGLOBE HOTELS PRIVATE LIMITED (IGH) AND M/S ACCENT FOR SALE AND CONSTRUCTION OF THE HOTELS AND THE IMPUGNED LAND AND RECEIVED A SUM OF RS.22.5 0 CRORES ON 11/04/2008 AND THE SALE DEED AND CONSTRUCTION AGREEMENT WERE E XECUTED. 25. THE ABOVE DISCUSSED JDA DATED 25/06/2007 WAS CANCELLED ON 04/02/2010 AND IN VIEW OF THIS CANCELLATION OF JDA, M/S SSPDL DELIVERED THE VACANT POSSESSION OF THE IMPUGNED PROPERTY TO THE APPELLANT AND OTHER TW O SHAREHOLDERS. ACCORDINGLY, THE IMPUGNED LANDS WERE SOLD BY THE AP PELLANT AND OTHER TWO SHAREHOLDERS ON 05102/2010 TO M/S IGH AND M/S ACCENT FOR A TOTAL SALE CONSIDERATION OF RS. 37.50 CRORES, AS DISCUSSED ALR EADY AT PARA 6 OF THE ASSESSMENT ORDER AND AT PARA 17 OF THIS ORDER. 26. FURTHER, IT WAS ALSO NOTICE FROM THE CONSTRUCTION A GREEMENT DATED 05.02.2010 ENTERED INTO BETWEEN M/S. IGH AND M/S. SSDPL, PAGE 26 PARA 10.2.3 THAT THE SCHEDULE B PROPERTY FEEL IN THE URBANISABLE ZONE AS PER THE EXISTING MASTER PLAN OF THE DTCP. 27. FROM THE ABOVE DISCUSSION, IT IS EVIDENTLY CLEA R THAT THE IMPUGNED PROPERTY SOLD BY THE APPELLANT WAS IN THE MIDST OF COMMERCIA L DEVELOPMENT ACTIVITIES BEING CARRIED OUT BY BUILDERS IN PROMOTING HOUSING AND IN FORMATION TECHNOLOGY CORRIDORS. IN VIEW OF THIS, THE SALE PRICE FETCHED BY THE IMPUGNED PROPERTY WAS MANIFOLD WHICH A NORMAL AGRICULTURAL LAND WOULD NEV ER GET. THERE IS A SHARP CONTRAST BETWEEN THE GUIDELINE VALUE OF THE IMPUGNE D PROPERTY AND THE ACTUAL SALE CONSIDERATION RECEIVED BY THE APPELLANT. 28.LN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, IT IS VERY CLEAR THAT THE INTENTION OF THE APPELLANT WAS TO COMMERCIALLY EXPL OIT THE IMPUGNED LAND. THIS INTENTION WAS EXPRESSED BY THE APPELLANT WAY BACK I N THE YEAR 2007 WHEN SHE HAD EXECUTED THE JDA WITH M/S SSDPL TO DEVELOP THE PROPERTY COMMERCIALLY. ITA NO.2337/16, 284-285, 312 &323/17 :- 18 - : 29.WITH REGARD TO THE AGRICULTURAL INCOME SHOWN IN THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION, THE APPELLANT WAS ASKED B Y THE AO TO FURNISH THE RELEVANT DETAILS TO SUBSTANTIATE THAT .SHE HAD CARR IED OUT AGRICULTURAL OPERATIONS AND HAD OBTAINED AGRICULTURAL PRODUCE. THE APPELLANT WA S ALSO ASKED TO FURNISH THE DETAILS OF EXPENSES INCURRED TOWARDS THE AGRICULTUR AL ACTIVITIES AND ALSO TO FURNISH THE DETAILS OF PAYMENT RECEIVED ON ACCOUNT OF SALE OF AGRICULTURAL PRODUCE. HOWEVER, THE APPELLANT FAILED TO PRODUCE ANY SUCH A DETAILS. SHE COULD FURNISH ONLY COPIES OF CHITTA AND ADANGAL WHICH STATED THAT THER E WERE COCONUT AND MANGO TREES PLANTED. 30.AFTER CONSIDERING THE ABOVE FACTS OF THE CASE AN D ALSO KEEPING IN VIEW THE OBSERVATIONS AND THE FINDINGS OF THE AO, I AM OF TH E CONSIDERED OPINION THAT THE IMPUGNED LAND WAS A LONG TERM CAPITAL ASSET ONLY AN D THE APPELLANT WAS REQUIRED TO PAY THE CAPITAL GAINS TAX ON THE SALE OF THIS LO NG-TERM CAPITAL ASSET. THE FACTS OF THE CASE AS REFERRED TO BY THE APPELLANT IN THE CAS E OF SMT. AYSHA FATHIMA, A.Y.2009-10, ITA NO.1371/MDS/2013 OF THE HON'BLE JURISDICTIONAL ITAT, DO NOT APPLY TO THE PRESENT CASE OF THE APPELLANT. IN THE REFERRED CASE, THE TRIBUNAL HAS OBSERVED THAT REGARDING THE NATURE OF LAND WHETHER IT IS AGRICULTURAL LAND OR NOT, IT ALWAYS DEPENDS UPON THE FACTS OF EACH CASE. BY THIS OBSERVATION OF THE HON'BLE TRIBUNAL, IT COULD VERY WELL BE INFERRED THAT A UNI FORM YARDSTICK CANNOT BE ADOPTED TO DECIDE A CASE WHEN THE FACTS DIFFER FROM EACH OT HER. SINCE IN THE PRESENT CASE OF THE APPELLANT, AS DISCUSSED IN DETAIL ABOVE, THE FACTS AND THE CIRCUMSTANCES ARE DIFFERENT FROM THE FACTS AVAILABLE IN THE CASE OF SMT. AYSHA FATHIMA, A.Y.2009-10, ITA NO.1371/MDS/2013, THE CONTENTIONS OF THE APPELLANT ARE NOT FOUND TENABLE. 31.THE ABOVE OBSERVATIONS AND THE FINDINGS CAN FURT HER BE SUBSTANTIATED WITH THE FOLLOWING DECISIONS OF THE HON'BLE COURTS. WHILE DI SCUSSING THE CASE OF SARIFABIBI MOHAMMAD IBRAHIM & OTH VS CIT , REPORTED IN 204 ITR 631, THE HON'BLE A PEX COURT HAS HELD THAT TO DECIDE 'WHETHER A LAND IS AN AGRICULTURAL LAND OR NOT IS ESSENTIALLY A QUESTION OF FACT. SEVERAL TESTS HAVE BEEN EVOLVED IN THE DECISIONS OF THE SUPREME COURT AND THE HIGH COURT, BUT ALL OF TH EM ARE MORE IN THE NATURE OF GUIDELINES. THE QUESTION HAS TO BE ANSWERED IN EAC H CASE HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THAT CASE. THEREE MAY B E FACTORS BOTH FOR AND AGAINST THE PARTICULAR POINT OF VIEW. THE COURT HAS TO ANS WER THE QUESTION ON A CONSIDERATION OF ALL OF THEM A PROCESS OF EVALUATIO N. THE INTERFERE HAS TO BE DRAWN ON CUMULATIVE CONSIDERATION OF ALL THE RELEVANT FAC TS. 32. IN THE SAID DECISION, THE HON'BLE SUPREME COURT HAS EV OLVED THE FOLLOWING 13 FACTORS/INDICATORS WHICH CAN BE APPLIED TO FIND OUT WHETHER A PARTICULAR LAND FALLS WITHIN THE DEFINITION OF CAPITAL ASSET OR NOT. THE 13 FACTORS ARE THE FOLLOWING: '(1) WHETHER THE LAND WAS CLASSIFIED IN THE REVEN UE RECORDS AS AGRICULTURAL AND WHETHER IT WAS SUBJECT TO THE PAYM ENT OF LAND REVENUE? (2) WHETHER THE LAND WAS ACTUALLY OR ORDINARILY U SED FOR AGRICULTURAL PURPOSES AT OR ABOUT THE RELEVANT TIME? (3) WHETHER SUCH USER OF THE LAND WAS FOR A LONG PERIOD OR WHETHER IT WAS OF A TEMPORARY CHARACTER OR BY WAY OF A STOP-GA P ARRANGEMENT? ITA NO.2337/16, 284-285, 312 &323/17 :- 19 - : (4) WHETHER THE INCOME DERIVED FROM THE AGRICULTU RAL OPERATIONS CARRIED ON IN THE LAND BORE ANY RATIONAL PROPORTION TO THE INVESTMENT MADE IN PURCHASING THE LAND? (5) WHETHER, THE PERMISSION UNDER SECTION 65 OF T HE BOMBAY LAND REVENUE CODE WAS OBTAINED FOR THE NON-AGRICULTURAL USE OF THE LAND? IF SO, WHEN AND BY WHOM (THE VENDOR OR THE VENDEE)? WH ETHER SUCH PERMISSION WAS IN RESPECT OF THE WHOLE OR A PORTION OF THE LAND? IF THE PERMISSION WAS IN RESPECT OF A PORTION OF THE LAND AND IF IT WAS OBTAINED IN THE PAST, WHAT WAS THE NATURE OF THE USER OF THE SAID PORTION OF THE LAND ON THE MATERIAL DATE? (6) WHETHER THE LAND, ON THE RELEVANT DATE, HAD C EASED TO BE PUT TO AGRICULTURAL USE? IF SO, WHETHER IT WAS PUT TO AN A LTERNATIVE USE? WHETHER SUCH CESSER AND/OR ALTERNATIVE USER WAS OF A PERMAN ENT OR TEMPORARY NATURE? (7) WHETHER THE LAND, THOUGH ENTERED IN REVENUE REC ORDS, HAD NEVER BEEN ACTUALLY USED FOR AGRICULTURE, THAT IS, IT HAD NEVER BEEN PLOUGHED OR TILLED? WHETHER THE OWNER MEANT OR INTENDED TO USE IT FOR AGRICULTURAL PURPOSES? (8) WHETHER THE LAND WAS SITUATE IN A DEVELOPED ARE A? WHETHER ITS PHYSICAL CHARACTERISTICS, SURROUNDING SITUATION AND USE OF THE LANDS IN THE ADJOINING AREA WERE SUCH AS WOULD INDICATE THAT THE LAND WAS AGRICULTURAL? (9) WHETHER THE LAND ITSELF WAS DEVELOPED BY PLOTTI NG AND PROVIDING ROADS AND OTHER FACILITIES. - (10) WHETHER THERE WERE ANY PREVIOUS SALES OF PORT IONS OF THE LAND FOR NON- AGRICULTURAL USE? (11) WHETHER PERMISSION UNDER SECTION 63 OF THE BO MBAY TENANCY AND AGRICULTURAL LANDS ACT, 1948, WAS OBTAINED BECAUSE THE SALE OR INTENDED SALE WAS IN FAVOUR OF A NON-AGRICULTURIST? IF SO, W HETHER THE SALE OR INTENDED SALE TO SUCH NON-AGRICULTURIST WAS FOR NON -AGRICULTURAL OR AGRICULTURAL USER? (12) WHETHER THE LAND WAS SOLD ON YARDAGE OR ON A CREAGE BASIS? (13) WHETHER AN AGRICULTURIST WOULD PURCHASE THE LAND FOR AGRICULTURAL PURPOSES AT THE PRICE AT WHICH THE LAND WAS SOLD AN D WHETHER THE OWNER WOULD HAVE EVER SOLD THE LAND VALUING IT AS A PROPE RTY YIELDING AGRICULTURAL PRODUCE ON THE. BASIS OF ITS YIELD? TAKING INTO ACCOUNT THE ABOVE 13 FACTORS, THE HON'B LE APEX COURT FURTHER OBSERVED THAT NOT ALL OF THESE FACTORS WOULD BE PRESENT OR A BSENT IN ANY CASE AND THAT IN EACH CASE ONE OR MORE OF THOSE FACTORS MAY MAKE APP EARANCE AND THAT. THE ULTIMATE DECISION WILL HAVE TO BE REACHED ON A BALA NCED CONSIDERATION OF THE TOTALITY OF CIRCUMSTANCES. 34. THEREFORE, HAVING REGARD TO THE FACTS AND CIRCUMSTA NCES OF THE PRESENT CASE, IT CAN BE INFERRED THAT ON CUMULATIVE CONSIDERATION OF THE ISSUES, THE IMPUGNED LAND OF THE APPELLANT FULFILS ALL THOSE RELEVANT CONDITI ONS WHICH BRINGS IT WITHIN THE AMBIT ITA NO.2337/16, 284-285, 312 &323/17 :- 20 - : OF CAPITAL ASSET. OUT OF THE ABOVE 13 FACTORS, ALMO ST 9 SUCH REASONS EXIST IN THE PRESENT CASE OF THE APPELLANT WHICH WOULD RENDER TH E IMPUGNED LAND AS CAPITAL ASSET. THESE NINE FACTORS ARE DISCUSSED AS UNDER: I. WHETHER THE LAND WAS ACTUALLY OR ORDINARILY USED FO R AGRICULTURAL PURPOSES AT OR ABOUT THE RELEVANT TIME? IN THE PRESENT CASE, THE APPELLANT HAD FAILED TO PR ODUCE ANY SUCH EVIDENCES WHICH COULD PROVE THAT SHE WAS CARRYING O N CERTAIN AGRICULTURAL OPERATIONS. THE APPELLANT HAD ALSO FAI LED TO FURNISH THE DETAILS OF EXPENSES INCURRED TOWARDS THE AGRICULTUR AL ACTIVITIES AND HAD ALSO NOT PRODUCED THE DETAILS OF THE SALES OF AGRIC ULTURAL PRODUCE. THE APPELLANT HAD NOT ADMITTED ANY AGRICULTURAL INCOME IN THE EARLIER ASSESSMENT YEAR. II. WHETHER SUCH USER OF THE LAND WAS FOR A LO NG PERIOD OR WHETHER IT WAS OF A TEMPORARY CHARACTER OR BY WAY OF A STOP-GA P ARRANGEMENT? EVEN IF IT IS ADMITTED THAT THE APPELLANT HAD ACTUA LLY ENJOYED AGRICULTURE INCOME DURING THE YEAR UNDER CONSIDERATION, SUCH I NCOME HAS NOT ACCRUED TO THE APPELLANT IN THE EARLIER YEARS. IT W AS SHOWN IN THE YEAR WHEN THE LAND WAS SOLD BY THE APPELLANT. IN FACT, I T WAS A STOP-GAP ARRANGEMENT ONLY. ILL. WHETHER THE INCOME DERIVED FROM THE AGRICULTURAL OP ERATIONS CARRIED ON IN THE LAND BORE ANY RATIONAL PROPORTION TO THE INVESTMENT MADE IN PURCHASING THE LAND? EVEN IF IT IS ADMITTED THAT THE APPELLANT HAD ACTUA LLY EARNED AGRICULTURE INCOME, THE SAME WAS TO THE TUNE OF RS.1,80,0001-ON LY WHICH WAS DISPROPORTIONATE TO THE LAND HELD BY THE APPELLANT. MOREOVER, IT IS NOT ASCERTAINABLE FROM THE SUBMISSIONS OF THE APPELLANT WHETHER THE AMOUNT OF RS.1 ,80,000/-WAS THE GROSS AMOUNT OR THE NET. IV. WHETHER, THE PERMISSION UNDER SECTION 65 OF THE BOM BAY LAND REVENUE CODE WAS OBTAINED FOR THE NON-AGRICULTURAL USE OF THE LAND? IF SO, WHEN AND BY WHOM (THE VENDOR OR THE VENDEE)? WH ETHER SUCH PERMISSION WAS IN RESPECT OF THE WHOLE OR A PORTION OF THE LAND? IF THE PERMISSION WAS IN . RESPECT OF A PORTION OF THE LAND AND IF IT WAS OBTAINED IN THE PAST, WHAT WAS THE NATURE OF THE USER OF THE SAID PORTION OF THE LAND ON THE MATERIAL DATE? IN THE PRESENT CASE, THE APPELLANT'S POA HOLDE R M/S SSDPL HAD APPLIED BEFORE THE DIRECTORATE OF TOWN AND COUNT RY PLANNING FOR NOTIFYING THE IMPUGNED LAND AS MULTI- STORIED BUILDING AREA FOR C ONSTRUCTION OF COMMERCIAL PROPERTIES AND VIDE THE NOTIFICATION N O. VI (1 )/109/2009 DATED 09/03/2009 THE IMPUGNED LAND WAS DECLARED AS MULTI-STORIED BUI LDING AREA FOR CONSTRUCTION OF COMMERCIAL BUILDINGS ITA NO.2337/16, 284-285, 312 &323/17 :- 21 - : V. WHETHER THE LAND, ON THE RELEVANT DATE, HAD CEAS ED TO BE PUT TO AGRICULTURAL USE? IF SO, WHETHER IT WAS PUT TO AN A LTERNATIVE USE? WHETHER SUCH CESSER AND/OR ALTERNATIVE USER WAS OF A PERMAN ENT OR TEMPORARY NATURE? AS DISCUSSED ABOVE, DURING THE RELEVANT YEAR UNDER CONSIDERATION THE LAND USE WAS USED FOR DEVELOPING MULTI-STORIED BUILDING AREA FOR CONSTRUCTION OF COMMERCIAL BUILDINGS. THIS USAGE OF LAND WAS PERMAN ENT IN CHARACTER VI. WHETHER THE LAND WAS SITUATE IN A DEVELOPED AREA? W HETHER ITS PHYSICAL CHARACTERISTICS, SURROUNDING SITUATION AND USE OF THE LANDS IN THE ADJOINING AREA WERE SUCH AS WOULD INDICATE THAT T HE LAND WAS AGRICULTURAL? THE GUIDELINE VALUE OF THE IMPUGNED LAND WAS RS.3.0 0 CRORES PER ACRE WHICH WAS SOLD ROUGHLY AT THE RATE OF RS.20.27 CROR ES PER ACRE. NO AGRICULTURIST COULD PURCHASE AGRICULTURAL LAND OF S UCH HIGH-VALUE FOR AGRICULTURAL PURPOSES. NEITHER, ANY AGRICULTURAL LA ND WOULD EVER FETCH SUCH A HIGH PRICE. 35. FROM THE PERUSAL OF THE ABOVE FACTS OF THE CASE, TH E CUMULATIVE EFFECT GOES TO PROVE THAT THE IMPUGNED LAND WAS IN THE CHA RACTER OF CAPITAL ASSET ONLY WHICH SHOULD HAVE BEEN SUBJECTED TO CAPITAL GA INS TAX BY THE APPELLANT. 36. IN THE CASE OF RAJA D. SESHAYYAMMA GARU VS. -C IT, REPORTED IN 156 ITR 820, THE HON'BLE JURISDICTIONAL HIGH COURT HAS HELD THAT A MERE INTENTION AS TO THE USER OF LAND WAS NOT CONCLUSIVE IN DETERMINING THE CHARACTER OF THE LAND AS AGRICULTURAL LAND. 37. IN THE CASE OF CIT VS. GEMINI PICTURES LIMITED REPO RTED IN (1996) 85 TAXMAN 594 (SC) WHILE DISCUSSING THE CASE THE HONB LE COURT OBSERVED THAT THE LAND WAS SITUATED ON MOUNT ROAD, MADRAS WHICH IS THE MOST IMPORTANT AND THE BUSIEST THOROUGHFARE IN THE CITY. THE LAND WAS SURROUNDED ON ALL SIDES BY INDUSTRIAL AND COMMERCIAL BUILDINGS. NO AG RICULTURAL OPERATIONS WERE BEING CARRIED ON ANY LAND NEARBY,. IN THE CASE OF THE ABOVE CIRCUMSTANCES, THE MERE FACT THAT VEGETABLES WERE BEING RAISED THE REON AT THE TIME OF THE SALE OR FOR SOME YEARS THERETO DID NOT CHANGE THE N ATURE AND CHARACTER OF THE LAND. OBVIOUSLY, IT WAS ONLY A STOPGAP ACTIVITY. IT WAS NOT A TRUE REFLECTION OF THE NATURE AND CHARACTER OF THE LAND. ONE HAS TO TAKE A REALISTIC VIEW AND SEE HOW ARE THE PERSONS SELLING AND PURCHA SING IT UNDERSTOOD IT. 38. THEREFORE, AFTER CONSIDERING ALL THE RELEVANT FACTORS AND THE PREVAILING CIRCUMSTANCES OF THE CASE AND ALSO TAKING INTO ACC OUNT THE OBSERVATIONS OF THE HON'BLE COURTS, I AM OF THE CONSIDERED OPINION THAT THE IMPUGNED LAND WAS A NON-AGRICULTURAL LAND AND FELL WITHIN THE AMBIT OF LONG TERM CAPITAL ASSET FOR THE PURPOSES OF CAPITAL GAINS TAX. HENCE, THE FINDINGS OF THE AO IN THIS REGARD ARE CONFIRMED. 39. THE OTHER CONTENTION RAISED BY THE APPELLANT IN THE GROUNDS OF APPEAL IS WITH REGARD TO THE YEAR OF TAXABILITY OF CAPITAL GA INS. IT HAS BEEN SUBMITTED BY THE APPELLANT THAT EVEN IF THE CAPITAL GAINS ARE TAXABL E, IT HAS TO BE CONSIDERED IN THE ITA NO.2337/16, 284-285, 312 &323/17 :- 22 - : ASSESSMENT YEAR WHEN THE JOA WAS ENTERED IN, I.E. I N THE AY. 2008-09, POA WAS ISSUED DURING THE AY. 2008-09 AND THE CONSIDERATION WAS A RECEIVED AS PER SECTION 2(47)(V) AND NOT IN THE AY. 2010-11 AS ASSESSED BY THE AO. IN ORDER TO SUBSTANTIATE HER CLAIM, THE APPELLANT HAS ALSO REFERRED TO THE DECISION OF THE HON'BLE JURISDICTIONAL ITAT IN THE CASE OF SMT. AYISHA FATHIMA ITA NO.. 1371/MDS/2013, AY. 2009-10. IN THE SAID CASE, THE TRIBUNAL AFTER CONSIDERING THE RELEVANT FACTS OF THE CASE HAS OBSERVED AS UNDE R:- AS PER ABOVE, THE POSSESSION IS GIVEN BY THE ASSE SSEE VIDE THIS JDA DATED 09/07/2005 AND ALSO AUTHORISED THE DEVELOPER TO GET NECESSARY APPROVALS FOR THE PURPOSE OF CONSTRUCTION. THE ASSE SSEE ALSO RECEIVED SUBSTANTIAL AMOUNT OF RS. 120 LAKHS AS REFUNDABLE D EPOSIT. THE TIME IS A SENSE OF THE CONTRACT WITHIN 30 DAYS FROM THE DATE OF GIVING VACANT POSITION OF THE PROPERTY. THE DEVELOPER HAS TO GET THE PERMISSION FOR CONSTRUCTION OF THE PROPERTY. AFTER GETTING PERMISS ION FOR CONSTRUCTION IN THE SAID PROPERTY, THE DEVELOPER HAS TO COMPLETE TH E CONSTRUCTION WITHIN 36 MONTHS HANDED OVER THE ASSESSEE'S SHARE OF THE C ONSTRUCTED PORTION OF BUILDING TO THE ASSESSEE, OTHERWISE IT ATTRACTS DAMAGES, IT SHALL BE 2 LAKHS PER MONTH TILL THE DELIVERY OF THE BUILDING. THE ASSESSEE HAS ALSO UNDERTAKEN TO REGISTER THE PROPERTY AT THE COST OF DEVELOPER OR ANY PERSON OR NOMINATED OF THE DEVELOPER. THEREFORE, IT IS OBVIOUS THAT THE PHYSICAL POSSESSION OF THE PROPERTY AS WELL AS MANA GEMENT OF THE PROPERTY WAS NOT IN THE HANDS OF ASSESSEE. 40. IN THE PRESENT CASE OF THE APPELLANT, THE JOA WAS E NTERED BETWEEN M/S SSPOL AND THE APPELLANT AND THE OTHER SHAREHOLDERS ON 25/06/2007 TO DEVELOP THE IMPUGNED PROPERTY FOR CONSTRUCTION OF THE MULTI-STO RIED BUILDINGS. THE POA WAS ISSUED BY THE APPELLANT AND OTHER TO SHAREHOLDERS I N FAVOUR OF M/S SSPOL TO GET THE APPROVALS ETC. FROM THE GOVERNMENT AND OTHER LO CAL AUTHORITIES REQUIRED FOR DEVELOPING THE IMPUGNED PROPERTY. HOWEVER, AS PER T HIS JDA, THE APPELLANT AND THE OTHER SHAREHOLDERS DID NOT HAND OVER THE POSSES SION OF THE IMPUGNED PROPERTY. MOST IMPORTANTLY THERE WAS NO SALE CONSI DERATION EITHER DISCUSSED IN THE JDA OR ACTUALLY PASSED ON THE APPELLANT AND THE TWO OTHER SHAREHDOLDERS. THE JDA WAS EXECUTED TO DEVELOP THE IMPUGNED PROPERTY J OINTLY BY M/S. SSPDL AND THE APPELLANT & OTHERS. IT IS PERTINENT TO MENTION HERE THAT THE JDA WAS CANCELLED BY THE CONCERNED PARTIES ON 04.02.2010. SUBSEQUENTL Y, ON 05.02.2010 THE IMPUGNED PROPERTY WAS SOLD BY THE APPELLANT AND THE OTHERS TO M/S. IGH AND M/S ACCENT FOR A TOTAL SALE CONSIDERATION OF RS.37.50 C RORES. FROM THE PERUSAL OF THE ENTIRE RELEVANT FACTS OF THE CASE, IT IS EVIDEN T THAT THE TRANSFER OF THE CAPITAL ASSET TOOK PLACE ONLY ON 05/02/2010 I.E. RELEVANT TO THE AY. 2010- 11 WHICH IS THE RELEVANT ASSESSMENT YEAR UNDER CONSIDERATION. I N VIEW OF THE ABOVE, THE CONTENTION OF THE APPELLANT THAT THE TRANSFER OF TH E IMPUGNED CAPITAL ASSET TOOK PLACE ON 25I06/2007, I.E. AY. 2008 - 09, WHEN THE JDA WAS EXECUTED WITH M/S SSPDL, IS FACTUALLY INCORRECT. THEREFORE, IT IS HEL D THAT THE TRANSFER OF THE IMPUGNED CAPITAL ASSET TOOK PLACE ON 05/02/2010, DURING THE RELEVANT AY. 2010 - 11 UNDER CONSIDERATION. HENCE, THIS CONTENTI ON OF THE ASSESSEE IS DISMISSED. . ITA NO.2337/16, 284-285, 312 &323/17 :- 23 - : THUS THE TWO DIFFERENT LD. COMMISSIONER OF INCOME T AX (APPEALS)S TOOK A DIAMETRICALLY OPPOSITE VIEW ON THE NATURE OF THE LAND SOLD BY THE ASSESSEES. 12. NOW BEFORE US, LD. AUTHORISED REPRESENTATIVE STRONG LY SUPPORTING THE ORDER OF THE LD. COMMISSIONER OF INC OME TAX (APPEALS) IN THE CASE OF SHRI. MAFAZ MOHAMMED AND OPPOSING TH E ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IN THE CAS E OF SMT. SYED ABDUL KADER AYSTHATH FASLEEN AMINA, SUBMITTED THAT CHITTA AND ADANGAL RECORDS CLEARLY PROVE THE LAND TO BE AGRICU LTURAL IN NATURE. ACCORDING TO HIM, ASSESSEES HAD ACQUIRED THE LAND THROUGH VARIOUS SETTLEMENTS AND ADMITTEDLY THE LAND WAS ACQUIRED D URING A PERIOD PRIOR TO MAY, 1993. AS PER THE LD. AUTHORISED REPRE SENTATIVE, ASSESSEES WERE HOLDING THE LAND FOR MORE THAN A D ECADE. LD. AUTHORISED REPRESENTATIVE LISTED OUT THE REASONS C ITED BY LD. COMMISSIONER OF INCOME TAX (APPEALS) IN THE CASE OF SMT. SYED ABDUL KADER AYSTHATH FASLEEN AMINA, FOR DIFFERING FROM TH E ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IN THE CASE O F SHRI. MAFAZ MOHAMMED. THESE ACCORDING TO HIM WERE AS UNDER:- (I) INTENTION OF THE ASSESSEE WAS TO COMMERCIALLY E XPLOIT THE LAND AND THIS WAS CLEAR FROM THE JDA WITH M/S. SSDPL ENT ERED ON 25 TH JUNE, 2007. ITA NO.2337/16, 284-285, 312 &323/17 :- 24 - : (II) GOVERNMENT OF TAMIL NADU HAD DECLARED THE LA ND T O BE MULTI-STOREYED BUILDING AREA FOR CONSTRUCTION OF C OMMERCIAL BUILDING AND THE APPLICANTS FOR SUCH NOTIFICATION WAS M/S. SSDPL. (III) NO OBJECTION CERTIFICATE GIVEN BY CHENGALPET TEHSILDAR WAS PRIOR TO THE SALE AND THUS THE ASSESSEES WERE AW ARE THAT ENTIRE AREA WAS COMMERCIAL IN NATURE. (IV) M/S. SSDPL ON CANCELLATION OF THE JDA, HAD GI VEN VACANT POSSESSION OF THE PROPERTY TO THE ASSESSEE. (V) THE SALE PRICE RECEIVED WAS HUGE AND NOT OF A N ATURE WHICH AN AGRICULTURAL LAND WOULD FETCH. AS PER THE LD. AUTHORISED REPRESENTATIVE, ALL THE A BOVE REASONS MENTIONED BY THE LD. COMMISSIONER OF INCOME TAX (AP PEALS) WERE IRRELEVANT. ACCORDING TO HIM, LD. COMMISSIONER OF I NCOME TAX (APPEALS) NEVER OPPOSED THE CONTENTION OF THE ASSES SEE THAT NATURE OF THE LAND WAS AGRICULTURAL. FURTHER, ACCORDING TO HI M, THE INTENTION OF THE ASSESSEE WAS TO BE SEEN FROM THE POINT AT WHIC H THEY ACQUIRED THE LAND. 13. CONTINUING HIS SUBMISSIONS, LD. AUTHORISED REPRESEN TATIVE STATED THAT JUDGMENTS OF HONBLE JURISDICTIONAL HIG H COURT IN THE CASE ITA NO.2337/16, 284-285, 312 &323/17 :- 25 - : OF MRS. SAKUNTHALA VEDACHALAM AND MRS. VANITHA MANICKA VASAGAM VS. ACIT, (2014) 369 ITR 558, CIT VS. SMT. SAKUNTHALA R ANGARAJAN, (2016) 389 ITR 103, CIT VS. KRN PRABHAKARAN (HUF) T .C.A. NO.1189/2015, DATED 17.08.2016 AND PCIT VS. MANSI F INANCE LTD, (20160 388 ITR 514, ALL CLEARLY STATED THAT THE BASIC TEST ON THE NATURE OF THE LAND WAS WHAT WAS MENTIONED IN THE REVENUE RECORDS. THIS AS PER THE LD. AUTHORISED REPRESENTATIVE STOOD SATISFIED. ACCORDING TO HIM, THERE WAS NO ACT ON THE PART OF T HE ASSESSEE TO COMMERCIALIZE THE LAND FOR ANY NON AGRICULTURAL U SE. NOTIFICATION BY GOVERNMENT OF TAMIL NADU ON THE ZONE CONVERSION WAS AT THE BEHEST OF M/S. SSDPL AND NOT THE ASSESSEES. SUCH JDA ALR EADY STOOD CANCELLED BY THE ASSESSEE AND THEREFORE ASSESSEES, AS PER THE LD. AUTHORISED REPRESENTATIVE, COULD NOT BE HELD LIAB LE FOR THE ACTS OF M/S. SSDPL. ACCORDING TO HIM, NATURE OF THE LAND R EMAINED AGRICULTURAL ALL THROUGH. LD. AUTHORISED REPRESEN TATIVE ALSO PLACED RELIANCE ON A DECISION OF CO-ORDINATE BENCH IN THE CASE OF ITO VS. AYISHA FATHIMA (ITA NO.1371/MDS/2013 , FOR ASSESSMENT YEAR 2009- 2010 ) DATED 17.08.2016. AS PER THE LD. AUTHORISED REPR ESENTATIVE, LAND CONSIDERED BY THE TRIBUNAL IN THIS CASE WAS I N THE CLOSE NEIGHBOURHOOD OF THE PROPERTY SOLD BY THE ASSESSEES . ACCORDING TO HIM, IN THE SAID DECISION THIS TRIBUNAL HAD HELD THAT THE LAND AT EGATTUR VILLAGE MEASURING 6 ACRES AND 21 CENTS WAS AGRICULTURAL IN ITA NO.2337/16, 284-285, 312 &323/17 :- 26 - : NATURE. THUS, ACCORDING TO HIM, SALE OF THE IMPUGN ED LAND WAS NOT EXIGIBLE TO CAPITAL GAINS. 14. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE STRONG LY SUPPORTING THE ORDER OF THE LD. COMMISSIONER OF INC OME TAX (APPEALS) IN THE CASE OF SMT. SYED ABDUL KADER AYSTHATH FASLE EN AMINA AND OPPOSING THE ORDER OF THE LD. COMMISSIONER OF INCOM E TAX (APPEALS) IN THE CASE OF SHRI. MAFAZ MOHAMMED SUBMITTED THAT THE TESTS TO BE APPLIED FOR DETERMINING THE NATURE OF A LAND WAS LAID DOWN BY HONBLE SUPREME COURT IN THE CASE OF SMT. SARIFABIBI (SUPRA). ACCORDING TO HIM, IF THESE TESTS WERE CORRECTLY APP LIED IT WOULD CLEARLY SHOW THAT THE LAND SOLD BY THE ASSESSEES WAS NOT A GRICULTURAL. AS PER THE LD. DEPARTMENTAL REPRESENTATIVE , ASSESSEES HAD FIRST ENTERED INTO JDA ON 25.06.2007 AND THEREAFTER CANCELLED SUCH JD A AND SOLD THE LAND DIRECTLY TO M/S. IGH AND M/S. ACCENT. THUS, AS PER THE LD. DEPARTMENTAL REPRESENTATIVE, INTENTION OF THE ASSES SEE WAS TO DEVELOP THE LAND FOR COMMERCIAL EXPLOITATION. FURTHER, ACCO RDING TO HIM, THE LAND WAS ALSO NOTIFIED BY GOVERNMENT AS FIT FOR BU ILDING COMMERCIAL ESTABLISHMENT. COPIES OF CHITTA AND ADANGAL FILE D BY THE ASSESSEES, AS PER THE LD. DEPARTMENTAL REPRESENTATIVE, ONLY P ROVED THAT THERE WERE SOME COCONUT AND MANGO TREES IN THE LAND. BUT THIS AS PER THE LD. DEPARTMENTAL REPRESENTATIVE COULD BE SEEN IN ISOLATION. ACCORDING TO THE LD. DEPARTMENTAL REPRESENTATIVE, NOTHING WAS FILED ITA NO.2337/16, 284-285, 312 &323/17 :- 27 - : BY THE ASSESSEES TO PROVE ANY AGRICULTURAL OPERAT ION BEING CARRIED OUT NOR ANY PROOF FOR SALE OF AGRICULTURAL PRODUCE. L AND AS PER THE LD. DEPARTMENTAL REPRESENTATIVE WAS SITUATED IN THE CL OSE SUBURBS OF CHENNAI CITY AND WAS LYING ON THE SIDE OF OMR. ACCO RDING TO HIM, CONSIDERATION RECEIVED WAS 20,27,00,000/- PER ACRE AGAINST THE GUIDELINE VALUE OF 3,00,00,000/- AND THIS BY ITSEL F CLEARLY INDICATED THE COMMERCIAL NATURE OF THE LAND. THUS, ACCORDING TO T HE LD. DEPARTMENTAL REPRESENTATIVE, THE LAND SOLD WAS NON AGRICULTURAL AND COMMERCIAL EXIGIBLE TO CAPITAL GAINS. RELIANCE WAS PLACED ON THE DECISIONS OF CO- ORDINATE BENCH IN THE CASE OF ITO VS. ABOOBUCKER, (2016) 157 ITD 717, ITO VS. VIJAY SHAH, (2017) 165 ITD 348 AND THAT OF COCHIN BENCH IN THE CASE OF ABDUL RAHMIN VS. DCIT, (2011) 30 CCH 555. 15. AD LIBITUM REPLY OF THE LD. AUTHORISED REPRESENTATI VE WAS THAT INABILITY, IF ANY OF THE ASSESSEES, IN PROVIN G AGRICULTURAL ACTIVITY WAS NOT A RELEVANT FACTOR FOR DECIDING ON THE NATUR E OF THE LAND. ACCORDING TO HIM, IT WOULD BE RELEVANT ONLY WHERE T HE STATUTE REQUIRED CARRYING OUT OF AGRICULTURAL OPERATIONS, AS A PRE -REQUISITE FOR CLAIMING ANY DEDUCTION. THE SALE WAS INITIALLY ATTEMPTED THR OUGH JDA, AS PER THE LD. AUTHORISED REPRESENTATIVE, CONSIDERING THE BUYERS INTEREST AND ASSESSEES ACCORDING TO HIM, HAD NO CHOICE. FURTHE R, AS PER THE LD. AUTHORISED REPRESENTATIVE, NOTIFICATION MADE BY THE GOVERNMENT WOULD NOT CHANGE THE INTENTION OF THE ASSESSEE. AS PER THE LD. ITA NO.2337/16, 284-285, 312 &323/17 :- 28 - : AUTHORISED REPRESENTATIVE, THE TESTS LAID DOWN BY H ONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS, SIDDHARTH J. DESAI (1983) 139 ITR 628 APPLIED BY LD. COMMISSIONER OF INCOME TAX (APPEALS) IN THE CASE OF SMT. SYED ABDUL KADER AYSTHATH FASLEEN AMINA, CLEAR LY INDICATED THAT ASSESSEES HAD SATISFIED ATLEAST FOUR OUT OF THE THI RTEEN CONDITIONS. ACCORDING TO HIM, HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF SAKUNTHALA RANGARAJAN (SUPRA) HAD CLEARLY OBSERVED THAT CUMULATIVE SATISFACTION OF ALL THE THIRTEEN CONDITIONS WAS NO T REQUIRED AND WHICH OUT OF THESE WERE TO BE SATISFIED WAS DEPENDENT ON FACTS AND CIRCUMSTANCES OF EACH CASE. AS FOR THE DECISIONS OF CO-ORDINATE IN THE CASES OF ABOOBUCKER (SUPRA) AND THAT OF VIJAY SHAH (SUPRA), LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT SUCH DECIS IONS WERE RENDERED PRIOR TO THE JUDGMENT OF HONBLE JURISDICT IONAL HIGH COURT IN THE CASE OF CIT VS. VENKATESWARA HOSPITAL IN T.C (A) NO.761 OF 2017, DATED 23.01.2018 AND THEREFORE NO MORE GOOD LAW. IN ANY CASE ACCORDING TO HIM, THE CO-ORDINATE BENCH IN THE CASE OF AYISHA FATHIMA (SUPRA) WHERE THE QUESTION WAS EXIGIBLITY TO CAP ITAL GAINS ON SALE OF A PIECE OF LAND IN THE IMMEDIATE NEIGHBOURHOOD, H AD CLEARLY HELD IN FAVOUR OF THE ASSESSEE. THUS, ACCORDING TO HIM, TH E LAND SOLD BY THE ASSESSEE COULD NOT BE CONSIDERED AS NON AGRICULTURA L. 16. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. AS ALREADY MENTIO NED BY US, TWO ITA NO.2337/16, 284-285, 312 &323/17 :- 29 - : DIFFERENT LD. COMMISSIONER OF INCOME TAX (APPEALS), IN THE SPACE OF FIVE MONTHS HAD TAKEN DIAMETRICALLY OPPOSITE VIEW ON THE QUESTION OF THE NATURE OF THE LAND SOLD BY THE ASSESSEES. ONE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAD GIVEN WEIGHTAGE TO THE NA TURE OF THE LAND AS PER REVENUE RECORDS AND ALSO THE FACTUM OF ACCE PTANCE OF THE AGRICULTURAL INCOME SHOWN BY ASSESSEES IN THEIR RESPECTIVE RETURNS FOR THE YEARS PRECEDING THE IMPUGNED ASSESSMENT YE AR. LD. COMMISSIONER OF INCOME TAX (APPEALS) WHO HELD IN FA VOUR OF THE ASSESSEE SHRI. S.A. MAFAZ MOHAMMED ALSO FOUND THAT M/S. IGH AND M/S. ACCENT WERE ONLY NOMINEES OF THE M/S. SSDPL A ND NOT INDEPENDENT BUYERS OF THE PROPERTY. HE ALSO TOOK A VIEW THAT DATE OF REGISTRATION OF THE SALE DEEDS VIZ 05.02.2010 COUL D NOT BE CONSIDERED AS THE DATE OF TRANSFER, BUT ONLY THE DATE OF THE J DA WHICH WAS IN JUNE, 2007. AS AGAINST THIS, LD. COMMISSIONER OF IN COME TAX (APPEALS) WHO WENT AGAINST THE ASSESSEE SMT. SYED ABDUL KAD ER AYSTHATH FASLEEN AMINA, HELD THAT THOUGH OUT OF THE THIRTEE N DETERMINING FACTORS IDENTIFIED BY HONBLE GUJARAT HIGH COURT IN THE CASE IN THE CASE OF SIDDHARTH J. DESAI (SUPRA ), WHICH FOUND ACCEPTANCE FROM THE HONBLE APEX COURT, ASSESSEE HAD SATISFIED FOUR, THE LAND STILL COULD NOT BE CONSIDERED AS AGRICULTURAL. BE THAT AS IT MA Y BE, IT IS NOT DISPUTED THAT THE CO-ORDINATE BENCH IN THE CASE OF AYISHA FATHIMA (SUPRA), WHERE THE QUESTION WAS EXIGIBILITY TO CAPI TAL GAINS ON SALE OF ITA NO.2337/16, 284-285, 312 &323/17 :- 30 - : A PIECE OF LAND MEASURING 6.21 ACRES, IN THE VERY SAME EGATTUR VILLAGE, HAD UPHELD THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS) ACCEPTING THE CLAIM OF SMT. AYISHA FATHI MA THAT THE LAND WAS AGRICULTURAL IN NATURE. WHAT WAS HELD BY THE CO-ORDINATE AT PARAS 6 TO 8.6 OF ITS ORDER IN SMT. AYISHA FATHIMA CASE I S REPRODUCED HEREUNDER:- 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED TH E MATERIAL ON RECORD. THE ISSUE FOR OUR CONSIDERATION IS WITH REG ARD TO THE YEAR IN WHICH THE CAPITAL GAINS ARISE FOR ASSESSMENT ON TRA NSFER OF LAND BY THE ASSESSEE ALONG WITH OTHER PERSON. WE HAVE CARE FULLY GONE THROUGH JDA DATED 09.07.2005. THE FOLLOWING CLAUSES ARE REPRODUCED FOR REFERENCE:- CLAUSE 1. THE OWNER HAVE AUTHORIZED THE DEVLOPER TO CONST RUCT AT ITS OWN COST OF DEVELOPER A MULTISTORIED COMPLEX OVER T HE LAND CAREFULLY DESCRIBED IN THE SCHEDULE A HEREUNDER. THE OWNERS A ND THE DEVELOPER HAVE AGREED TO PUT UP THE CONSTRUCTION NO T MORE THAN 2 FSI FOR TIME BEING AND IN SUCH A CASE THE OWNER IS ENTITLED TO HAVE 27% BUILTUP P-LINT AREA WHICH SHOULD BE NOT LESS TH AN 1,41,135 SQ.FT. AND THE REMAINING BUILT-UP PUNT AREA THAT IS 73% SH ALL BE RETAINED BY THE DEVELOPER AND IN CONSIDERATION THEREOF THE LAND OWNERS SLAH TRANSFER 73% UNDIVIDED SHARE OVER THE LAND DESCRIBE D IN THE- SCHEDULE A HEREUNDER TO THE DEVELOPER OR TO THEIR N OMINIEES. IF THE DEVELOPER ARE ABLE TO PUT UP CONSTRUCTION MORE THAN 2 FSI, THE LAND OWNER SHALL BE ENTITLED TO GET PROPORTIONATE EXTRA CONSTRUCTED AREA AT 27% FOR THEMSELVES, WHILE THE REMAINING 73% SHALL B E RETAINED BY THE DEVELOPER. 2. THE DEVELOPER SHALL ALLOT THE OWNERS BUILTUP PU NT AREA IN CONSTRUCTION WITH THE OWNERS AND THE SAME WILL BE M ARKED IN THE PLAN RELATING TO THE PROJECT AS PER THE SPECIFICATI ON PRDVIDED IN THE ANNEXURE 1 OF THIS AGREEMENT AND IN ADDITION THE DE VELOPER SHALL PAY REFUNDABLE DEPOSIT OF RS.1,20,00,000/- (ONE CRORE A ND TWENTY LAKHS ONLY) TO THE OWNERS IN THE FOLLOWING MANNER: A) RS.60,00,000/- (RUPEES SIXTY LAKHS ONLY) ON SIGN ING THIS AGREEMENT. - B) RS.60,00,000/- (RUPEES SIXTY LAKHS ONLY) ON THE PLANS BEING APPROVED. ITA NO.2337/16, 284-285, 312 &323/17 :- 31 - : 3. THE DEVELOPER FURTHER AGREES THAT OUT OF THE 73% BUILTUP AREA RETAINED BY THE DEVELOPER, THE DEVELOPER HAVE AGREE D TO SHARE EQUALLY WITH THE OWNERS THE SALE PROCEEDS OVER AND ABOVE AT RS.2,350/- PER SQ.FT. THAT IS, IF FOR EXAMPLE, THE DEVELOPER SELLS OUT OF THEIR 73% BUILTUP PLINT AREA TO ANY PROSPECTIVE BUY ER AT THE RATE OF RS.2500/- PER SQ.FT. THEN THE DEVELOPER SHALL SHARE (2500-2350= 150/2) RS.75/- PER SQ.FT. 4. THE OWNERS AGREE TO EXECUTE AND REGISTER NECESSA RY POWER OF ATTORNEY JOINTLY IN FAVOUR OF THE NOMINEE OF THE DE VELOPER AND THE NOMINEE OF THE OWNER FOR SELLING 73% OF THE UNDIVID ED SHARE OF THE LAND. MOREFULLY DESCRIBED IN THE SCHEDULE A HEREUND ER TO THE NOMINEES OF THE DEVELOPER AND A SEPARATE POWER OF A TTORNEY IN FAVOUR OF THE NOMINEE OF THE DEVELOPER FOR APPLYING AND OBTAINING BUILDING SANCTION PLAN, SERVICE CONNECTION ETC., TH E OWNERS HAVE THIS DAY HANDED OVER POSSESSION OF THE ENTIRE AGRICULTUR AL LANDS, SUBJECT MATTER OF THIS AGREEMENT. 5. THE DEVELOPER SHALL FOR THE PURPOSE OF DEVELOPME NT IMMEDIATELY BE AT LIBERTY AT ITS OWN COST OF SURVEY THE SAID PR OPERTY, TAKE MEASUREMENTS AND TO APPLY FOR SANCTIONING OF A BUIL DING PLAN FROM THE MUNICIPAL AND OTHER AUTHORITIES, STPI, CHENNAI METROPOLITAN THE DEVELOPMENT AUTHORITY AND CORPORATION OF CHENNAI ON SUCH TERMS AND CONDITIONS HAS MAY BE AGREED TO THE DEVELOPER. THE DEVELOPER MAY IN CONSULTATION WITH THE OWNERS, DECIDE ON THE NATU RE OF THE BUILDING TO BE CONSTRUCTED. 6. THE DEVELOPER SHALL COMMENCE CONSTRUCTION OF THE NEW BUILDING WITHIN 30 DAYS OF OBTAINING SANCTIONS FROM AUTHORIT IES CONCERNED OR FROM THE DATE ON WHICH VACANT POSSESSION OF THE SAI D PROPERTY IS HANDED OVER WHICHEVER DATE IS LATER AND COMPLETE TH E CONSTRUCTION WITHIN 36 MONTHS FROM THE DATE OF COMMENCEMENT OF C ONSTRUCTION ON THE SAID PROPERTY IN ONE OR MORE PHASES OR STAGES M AY BE REQUIRED, TAKING INTO CONSIDERATION THE MARKET CONDITION AND SUBJECT ONLY TO FORCE MAJOR CONDITIONS. IF ANY DELAY IN HANDLING OV ER THE BUILDING WITHIN 36 MONTHS, THE DEVELOPER AGREES TO PAY RS,2, 00,000/(RUPEES TWO LACS ONLY) PER MONTH FOR THE DELAYED PERIOD AS COMPENSATION TO THE OWNER TILL DELIVERY OF THE BUILDING. IN THE EVE NT OF ANY UNAVOIDABLE DELAY IN THE COMPLETION OF THE BUILDING DUE TO ANY CA USE OR CAUSES BEYOND THE DEVELOPERS CONTROL THE PARTIES HERETO S HALL BY MUTUAL CONSENT IN WRITING EXTEND THE PERIOD OF PERFORMANCE . 7. IT IS AGREED THAT THE DEVELOPER WILL MEET AND PA Y ALL EXPENSES INCLUDING THE EXPENSES INCURRED FOR OBTAINING THE S ANCTIONED BUILDING PLANS, APPROVALS, FEE TO BE PAID TO VARIOUS AUTHORI TIES AND TO APPLY AND OBTAIN SERVICE CONNECTIONS FOR USE IN THE BUILD ING AND FOR ENGAGING ARCHITECTS, CONSTRUCTION ENGINEERS, CONTRA CTORS, SUB CONTRACTORS, ARTISANS AND TO MEET THE COST OF PURCH ASE OF ALL MATERIALS USED FOR CONSTRUCTION AS PER THE SANCTIONED PLAN WI TH PERMISSIBLE DEVIATIONS AND SHALL BE WHOLLY RESPONSIBLE TO COMPL Y WITH ALL PROVISIONS OF THE LAW WITH REGARD TO INTEREST OF TH E AFORESAID PERSONS. THE CHANGE IN PLANS WILL BE INTIMATED TO THE OWNERS . ITA NO.2337/16, 284-285, 312 &323/17 :- 32 - : 8. THE DEVELOPER SHALL BE RESPONSIBLE TO MAKE PAYME NTS TO ALL WORKERS, WORKMEN, STAFFS, EMPLOYEES AND CONTRACTORS AND SUBCONTRACTORS, FOR THE PURPOSE OF EXECUTING THE WO RK AND DEVELOPMENT OF THE SCHEDULE A MENTIONED PROPERTY. 9. THE DEVELOPER HAS THE RIGHT TO ENTER INTO THE NE CESSARY AGREEMENTS AND DEAL WITH AND SELL ITS PORTION ALLOT TED UNDER THIS AGREEMENT AS AN UNDIVIDED OR DIVIDED SHARE OF LAND OR AS LAND AND BUILDING OR IN ANY OTHER MANNER DEEMED FIT BY THE D EVELOPER, SUBJECT ONLY TO THE CONDITION THAT THE DEVELOPER SHALL CONS TRUCT AND DELIVER TO THE OWNER THE 27% SHARE IN THE BUILT UP AREA. THE A LLOTMENT OF EXACT SPACES FOR THE DEVELOPER AND THE OWNERS WOULD BE MU TUALLY AGREED UPON AFTER THE APPROVED DRAWINGS ARE OBTAINED FROM THE CONCERNED AUTHORITY. 15. THE DEVELOPER SHALL BE ENTITLED TO APPLY TO TH E AUTHORITIES CONCERNED FOR THE NECESSARY APPROVALS, SANCTIONS AN D PERMITS IN RESPECT OF PLANS FOR CONSTRUCTION OF ANY BUILDING W HETHER STOREY3ED OR OTHERWISE, ON THE SAID PROPERTY. 20. THE DEVELOPER SHALL BE ENTITLED TO CORRESPOND W ITH AND RECEIVE ANY CORRESPONDENCE OR OTHER INTIMATION FROM THE AUT HORITIES CONCERNED REGARDING THE PLANS, SANCTIONS, APPROVALS OR PERMITS FOR CONSTRUCTION OF ANY BUILDING ON THE SAID PROPERTY O R FOR THE PROVISION OF ANY AMENITIES OR FACILITIES THERETO. 21. THE DEVELOPER SHALL BE ENTITLED TO PAY SUCH FEE S, CHARGES OR LEVIES AND TO FURNISH SECURITIES/ IN MONEY OR OTHER WISE AS AND WHEN REQUIRED BY THE AUTHORITIES CONCERNED FOR ANY DEMOL ITION OR CONSTRUCTION ACTIVITY TO BE CARRIED OUT ON THE SAID PROPERTY OR FOR THE PROVISION OF AMENITIES OR FACILITIES THERETO. 25. IN THE ALTERNATIVE, THE OWNERS AGREE TO EXECUTE A POWER OF ATTORNEY IN FAVOUR OF THE NOMINEE OF THE DEVELOPER, EMPOWERING THE AGENT TO APPLY, SIGN AND GET DEMOLITION PLAN APPROV AL, RECONSTRUCTION PLAN SANCTIONS, BUILDING PERMIT AND PLANNING PERMIT , SERVICE CONNECTIONS SUCH AS WATER, SEWERAGE, ELECTRICITY ET C., AND ALSO TO DEMOLISH THE OLD BUILDING AND TO DEVELOP THE PROPER TY APART FROM EMPOWERING THE AGENT TO DEAL WITH THE PROPERTY IN S UCH MANNER AS MAY BE REQUIRED FOR THE DEVELOPMENT OF THE SAME. 27. THE DEVELOPER IS ENTITLED TO GET THE CONSTRUCTI ON WORK DONE EITHER BY THEMSELVES OR THROUGH / OTHER WELL KNOWN CONSTR UCTORS OR SUB- CONTRACTORS OR AGENTS AND SHALL BE ENTITLED TO GIVE SUCH CONSTRUCTORS WHOLE OF THE CONSTRUCTION OR ANY PART OR PARTS OF T HE WORK OR CONSTRUCTIONS, PROVIDED THAT THE SAME SHALL NOT REL IEVE THE DEVELOPER FOR THEIR LIABILITY UNDER THIS AGREEMENT OR FROM AC TIVE SUPERVISION WORK DURING ITS PROGRESS. THE DEVELOPER MAY IF IT CHOOSES, ASSIGNS THIS AGREEMENT TO ANY OTHER PARTY ONLY AFTER GETTIN G NECESSARY PRIOR APPROVAL FROM THE OWNERS. ITA NO.2337/16, 284-285, 312 &323/17 :- 33 - : 28. THE DEVELOPER SHALL FINISH THE CONSTRUCTION OF THE BUILDING IN ACCORDANCE WITH THE SPECIFICATIONS THAT ARE SET OUT IN THE ANNEXURE TO THIS AGREEMENT AND AS PER THE GUIDANCE AND INSTRUCT IONS OF THE ARCHITECTS AND CONSTRUCTION ENGINEERS ENGAGED FOR T HIS PURPOSE. 34. THE OWNERS HEREBY UNDERTAKE TO EXECUTE AND REGI STER THE DEEDS OF SALE IN FAVOUR OF THE DEVELOPER AND THEIR NOMINE E CONVEYING TO THEM THE SCHEDULE B MENTIONED PROPERTY OR REGISTER A POWER OF ATTORNEY IN FAVOUR OF THE DEVELOPER FOR THE SAME SU BJECT TO CLAUSE 4 ABOVE. 37. THE OWNER AND THE DEVELOPER AGREES NOT TO CHANG E THE COMMON NAME FOR THE PROJECT AS MAY BE GIVEN BY THE DEVELOP ER. THE DEVELOPER AGREES TO CONSIDER THE SUGGESTION OF THE OWNERS IN THIS REGARD. 40. THE OWNERS AGREE TO REFUND THE SECURITY DEPOSI T OF 120 LAKH TO THE DEVELOPER WITHIN TWO WEEKS OF THE OWNER BEING I NTIMATED ABOUT COMPLETION AND THAT THE RESPECTIVE SPACE ALLOTTED F OR THE OWNERS IS FIT FOR TAKING POSSESSION OF THE PROJECT. 44. THE ORIGINAL TITLE DEED IN RESPECT OF THE SCHED ULE A PROPERTY SHALL BE DEPOSITED WITH THE COMMON PERSON IN FAITH, KNOWN TO BOTH THE PARTIES TILL THE COMPLETION OF THE CONSTRUCTION OF THE PROJECT AND AFTER THE COMPLETION OF CONSTRUCTION, THE SAID ORIGINAL T ITLE DEEDS IN RESPECT OF A SCHEDULE PROPERTY SHALL BE DELIVERED TO THE OWNERS ASSOCIATION TO BE FORMED AFTER THE COMPLETION OF CONSTRUCTION. AS PER ABOVE, THE POSSESSION IS GIVEN BY THE ASSESS EE VIDE THIS JDA DATED 09.07.2005 AND ALSO AUTHORIZED THE DEVELOPER TO GET NECESSARY APPROVALS FOR THE PURPOSE OF CONSTRUCTION. THE ASS ESSEE ALSO RECEIVED SUBSTANTIAL AMOUNT OF ` 120 LAKHS AS REFUNDABLE DEPOSIT. THE TIME IS ESSENCE OF THE CONTRACT WITHIN 30 DAYS FROM THE DATE OF GIVING VACANT POSITION OF THE PROPERTY. THE DEVELOPER HAS TO GET THE PERMISSION FOR CONSTRUCTION OF THE PROPERTY. AFTER GETTING PERMISSION FOR CONSTRUCTION IN THE SAID PROPERTY, THE DEVELOPE R HAS TO COMPLETE THE CONSTRUCTION WITHIN 36 MONTHS HANDED OVER THE A SSESSEES SHARE OF THE CONSTRUCTED PORTION OF BUILDING TO THE ASSES SEE, OTHERWISE IT ATTRACTS DAMAGES, IT SHALL BE TWO LAKHS PER MONTH T ILL THE DELIVERY OF THE BUILDING. THE ASSESSEE HAS ALSO UNDERTAKEN TO R EGISTER THE PROPERTY AT THE COST OF DEVELOPER OR ANLY PERSON O R NOMINATED OF THE DEVELOPER. THEREFORE, IT IS OBIVIOUS THAT THE PHYS ICAL POSSESSION OF THE PROPERTY AS WELL AS MANAGEMENT OF THE PROPERTY WAS NOT IN THE HANDS OF THE ASSESSEE. 6.1 WE HAVE GONE THROUGH THE PROVISIONS OF THE SEC TION 2(47) OF THE ACT WHICH DEFINES TRANSFER. UNDER THE COMMON LAW, TRANSFER OF IMMOVABLE PROPERTY VALUING MORE THAN 100 RUPEES WOU LD BE MADE ONLY BY EXECUTING REGISTERED SALE DEED. HOWEVER, UN DER INCOME TAX ITA NO.2337/16, 284-285, 312 &323/17 :- 34 - : ACT, SEC.2(47) DEFINES TRANSFER IN RELATION TO CA PITAL ASSET. FOR THE PURPOSE OF CONVENIENCE WE ARE EXTRACTING SEC.2(47) OF THE ACT. S. 2(47) TRANSFER, IN RELATION TO A CAPITAL ASSET , INCLUDES, (I) THE SALE, EXCHANGE OR RELINQUISHMENT OF THE ASS ET ; OR (II) THE EXTINGUISHMENT OF ANY RIGHTS THEREIN ; OR (III) THE COMPULSORY ACQUISITION THEREOF UNDER ANY LAW ; OR (IV) IN A CASE WHERE THE ASSET IS CONVERTED BY THE OWNER THEREOF INTO, OR IS TREATED BY HIM AS, STOCK-IN-TRADE OF A BUSINE SS CARRIED ON BY HIM, SUCH CONVERSION OR TREATMENT ; OR (IVA) THE MATURITY OR REDEMPTION OF A ZERO COUPON B OND ; OR (V) ANY TRANSACTION INVOLVING THE ALLOWING OF THE P OSSESSION OF ANY IMMOVABLE PROPERTY TO BE TAKEN OR RETAINED IN PART PERFORMANCE OF A CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A O F THE TRANSFER OF PROPERTY ACT, 1882 (4 OF 1882) ; OR (VI) ANY TRANSACTION (WHETHER BY WAY OF BECOMING A MEMBER OF, OR ACQUIRING SHARES IN, A CO-OPERATIVE SOCIETY, COMPAN Y OR OTHER ASSOCIATION OF PERSONS OR BY WAY OF ANY AGREEMENT O R ANY ARRANGEMENT OR IN ANY OTHER MANNER WHATSOEVER) WHIC H HAS THE EFFECT OF TRANSFERRING, OR ENABLING THE ENJOYMENT O F, ANY IMMOVABLE PROPERTY : EXPLANATION 1. FOR THE PURPOSES OF SUB-CLAUSES (V) AND (VI), IMMOVABLE PROPERTY SHALL HAVE THE SAME MEANING AS IN CLAUSE (D) OF SECTION 269UA. EXPLANATION 2. FOR THE REMOVAL OF DOUBTS, IT IS HE REBY CLARIFIED THAT TRANSFER INCLUDES AND SHALL BE DEEMED TO HAVE ALW AYS INCLUDED DISPOSING OF OR PARTING WITH AN ASSET OR ANY INTERE ST THEREIN, OR CREATING ANY INTEREST IN ANY ASSET IN ANY MANNER WH ATSOEVER, DIRECTLY OR INDIRECTLY, ABSOLUTELY OR CONDITIONALLY, VOLUNTA RILY OR INVOLUNTARILY, BY WAY OF AN AGREEMENT (WHETHER ENTERED INTO IN IND IA OR OUTSIDE INDIA) OR OTHERWISE, NOTWITHSTANDING THAT SUCH TRAN SFER OF RIGHTS HAS BEEN CHARACTERISED AS BEING EFFECTED OR DEPENDENT U PON OR FLOWING FROM THE TRANSFER OF A SHARE OR SHARES OF A COMPANY REGISTERED OR INCORPORATED OUTSIDE INDIA ; 6.1 IT IS AN ADMITTED FACT THAT IN THIS CASE FOR A SSESSMENT YEAR 2006-07, ASSESSEE DISCLOSED THE TRANSACTIONS AS A N OTE IN HER RETURN OF INCOME STATING AS FOLLOWS:- NOTE: THE ASSESSEE HAS ENTERED INTO A JOINT DEV ELOPMENT AGREEMENT WITH ALLIED MAGISTIC PROMOTERS DURING THE ASSESSMENT YEAR IN RESPECT OF DEVELOPMENT OF AGRICULTURAL LANDS AT EKATTUR VILLAGE AND HANDED OVER THE POSSESSION OF THE PROPERTY. SHE HA S ALSO EXECUTED A POWER OF ATTORNEY IN FAVOUR OF THE DEVELOPERS THOUG H THE DEEMED ITA NO.2337/16, 284-285, 312 &323/17 :- 35 - : SALE IS COMPLETE DURING THE ASSESSMENT YEAR. AS PER THE PARA IT IS EXEMPTED AS IT IS AN AGRICULTURAL LANDS AND IT IS N OT A CAPITAL ASSET AS PER THE SEC.2(24) OF THE IT ACT. 6.2 AS SEEN FROM THE ABOVE, THERE IS A FAIR DISCLO SURE BY THE ASSESSEE REGARDING THE SALE OF THE IMPUGNED PROPERT Y. IN THAT ASSESSMENT YEAR I.E.2006-07, IT IS SAID TO BE ACCEP TED BY THE DEPARTMENT THAT AS THERE WAS NO TRANSFER OF CAPITAL ASSET AS AN AGRICULTURAL LAND. IT IS NOT THE CASE OF THE DEPAR TMENT THAT IT WAS SUBJECT TO ANY RECTIFICATION OR REVISION SUBSEQUENT LY. UNLESS THE DEPARTMENT DISTURBED THE ASSESSMENT FOR ASSESSMENT YEAR 2006-07, THE DEPARTMENT HAS PRECLUDED FROM TREATING THE TRAN SFER OF SAME LAND AS A TRANSFER IN TERMS OF SEC.2(47)(V) OF THE ACT IN THE ASSESSMENT YEAR 2009-10 FOR WHATEVER REASON STATED BY THE AO. IN OUR OPINION, MERELY BECAUSE AN AGREEMENT OF SALE HA S NOT BEEN REGISTERED, WHICH OTHERWISE IN NATURE OF AGREEMENT REFERRED IN SEC.53A OF THE TRANSFER OF PROPERTY ACT CANNOT BE T AKEN OUT OF AMBIT OF SEC.2(47)(V) OF THE ACT WHEN PARTING OF THE POSS ESSION OF IMMOVABLE PROPERTY HAS ALREADY TAKEN PLACE AS ENUME RATED IN EARLIER PARA OF THIS ORDER. IT IS VERY CLEAR THAT THERE IS GIVING UP OF THE POSSESSION TO THE BUILDER/DEVELOPER AND HE HAS GIVE N THE SUBSTANTIAL AMOUNT TO THE ASSESSEE IN THE FORM OF REFUNDABLE DE POSIT AND HE HAS SHOWN WILLINGNESS TO PERFORM HIS PART OF DUTY TO TH E ASSESSEE AND THERE IS NO QUESTION OF GOING BACK FROM HIS CONSENT TO ACT AS BUILDER. THIS VIEW OF OURS IS FORTIFIED BY THE ORDER OF TRIB UNAL IN THE CASE OF ITO VS. SHRI BAKTHAVATSALAM GOWTHAM IN ITA NO.1614/ MDS./2010 DATED 04.05.2012. THUS, WE DO NOT FIND ANY ERROR I N THE FINDINGS OF THE LD.CIT(A) WHEREIN HE HAS OBSERVED THAT THERE IS NO TRANSFER IN THE ASSESSMENT YEAR 2009-10 AND THE SAME IS UPHELD. 6.3 WITHOUT PREJUDICE TO THE ABOVE, THE REVENUE HA S RAISED ONE MORE GROUND REGARDING FINDINGS OF THE LD.CIT(A) THA T THE LAND WAS AGRICULTURAL LAND, THOUGH AT THE TIME OF TRANSFER O N 01.04.2008, IT WAS NON AGRICULTURAL LAND. 6.4 LD.D.R SUBMITTED THAT THE SAID DEED EXECUTED O N 01.04.2008 MENTIONED THE PROPERTY AS VACANT SITE AND NOT AGRIC ULTURAL LAND. FURTHER LD.D.R SUBMITTED THAT THE NATURE OF LAND CH ANGED SUBSEQUENT TO THE JDA FROM AGRICULTURAL LAND TO VACANT SITE SI NCE NO AGRICULTURAL ACTIVITY WAS CARRIED OUT DURING THE PERIOD FROM THE DATE OF AGREEMENT TO THE EXECUTION OF SALE OF THE PROPERTY BY THE ASS ESSEE. HE RELIED ON THE ORDER OF LD. ASSESSING OFFICER. ON THE OTHER HA ND, LD.A.R RELIED ON THE ORDER OF LD.CIT(A). 6.4 WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. REGARDING NATURE OF LAND WHETHER IT IS AGRI CULTURAL LAND OR NOT. IT IS ALWAYS DEPEND UPON THE FACTS OF THE CASE. IN THE PRESENT CASE, ORIGINALLY THE ASSET WAS ACQUIRED BY THE TRUST CONS ISTING OF ASSESSEE AND HER BROTHER AS A BENEFICIARY. LATER ON REVOCATI ON OF THE TRUST IMPUGNED PROPERTY WAS DEVOLVED ON THE ASSESSEE AND SUBSEQUENTLY THE ASSESSEE ENTERED INTO JDA ON 09.07.2005. NOW TH E QUESTION IS WHETHER THE SAID PROPERTY IS AGRICULTURAL LAND OR N OT IS ESSENTIALLY A ITA NO.2337/16, 284-285, 312 &323/17 :- 36 - : QUESTION OF FACT. THE QUESTION HAS TO BE ANSWERED I N EACH CASE HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THA T CASE. THERE MAY BE FACTORS BOTH FOR AND AGAINST A PARTICULAR POINT OF VIEW. WE HAVE TO ANSWER THE QUESTION ON A CONSIDERATION OF ALL OF TH EM, A PROCESS OF EVALUATION AND THE INFERENCE HAS TO BE DRAWN ON A C UMULATIVE CONSIDERATION OF ALL THE RELEVANT FACTS. IT MAY BE STATED HERE THAT NOT ALL THE FACTORS OR TESTS WOULD BE PRESENT OR ABSENT IN ANY CASE AND THAT IN EACH CASE ONE OR MORE OF THE FACTORS MAY MA KE APPEARANCE AND THAT ULTIMATE DECISION WILL HAVE TO BE REACHED ON A BALANCED CONSIDERATION OF THE TOTALITY OF THE CIRCUMSTANCES. THE EXPRESSION AGRICULTURAL LAND IS NOT DEFINED IN THE ACT, AND NOW, WHETHER IT IS AGRICULTURAL LAND OR NOT HAS GOT TO BE DETERMINED B Y USING THE TESTS OR METHODS LAID DOWN BY THE COURTS FROM TIME TO TIME. 6.5 THE HONBLE SUPREME COURT IN THE CASE OF SMT. SARIFABIBI MOHMED IBRAHIM (204 ITR 631) HAS APPROVED THE DECIS ION OF A DIVISION BENCH OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SIDDHARTH J. DESAI (1982) 28 CTR (GUJ) 148 : (1 983) 139 ITR 628 (GUJ) AND HAS LAID DOWN 13 TESTS OR FACTORS WHICH A RE REQUIRED TO BE CONSIDERED AND UPON CONSIDERATION OF WHICH, THE QUE STION WHETHER THE LAND IS AN AGRICULTURAL LAND OR NOT HAS GOT TO BE DECIDED OR ANSWERED. WE REPRODUCE THE SAID 13 TESTS AS FOLLOWS : 1. WHETHER THE LAND WAS CLASSIFIED IN THE REVENUE R ECORDS AS AGRICULTURAL AND WHETHER IT WAS SUBJECT TO THE PAYM ENT OF LAND REVENUE? 2. WHETHER THE LAND WAS ACTUALLY OR ORDINARILY USED FOR AGRICULTURAL PURPOSES AT OR ABOUT THE RELEVANT TIME? 3. WHETHER SUCH USER OF THE LAND WAS FOR A LONG PER IOD OR WHETHER IT WAS OF A TEMPORARY CHARACTER OR BY ANY OF A STOPGAP ARRANGEMENT? 4. WHETHER THE INCOME DERIVED FROM THE AGRICULTURAL OPERATIONS CARRIED ON IN THE LAND BORE ANY RATIONAL PROPORTION TO THE INVESTMENT MADE IN PURCHASING THE LAND? 5. WHETHER, THE PERMISSION UNDER S. 65 OF THE BOMBA Y LAND REVENUE CODE WAS OBTAINED FOR THE NON-AGRICULTURAL USE OF T HE LAND? IF SO, WHEN AND BY WHOM (THE VENDOR OR THE VENDEE)? WHETHE R SUCH PERMISSION WAS IN RESPECT OF THE WHOLE OR A PORTION OF THE LAND? IF THE PERMISSION WAS IN RESPECT OF A PORTION OF THE L AND AND IF IT WAS OBTAINED IN THE PAST, WHAT WAS THE NATURE OF THE US ER OF THE SAID PORTION OF THE LAND ON THE MATERIAL DATE? 6. WHETHER THE LAND, ON THE RELEVANT DATE, HAD CEAS ED TO BE PUT TO AGRICULTURAL USE? IF SO, WHETHER IT WAS PUT TO AN A LTERNATIVE USE? WHETHER SUCH CESSER AND/ OR ALTERNATIVE USER WAS OF A PERMANENT OR TEMPORARY NATURE? 7. WHETHER THE LAND, THOUGH ENTERED IN REVENUE RECO RDS, HAD NEVER BEEN ACTUALLY USED FOR AGRICULTURE, THAT IS, IT HAD NEVER BEEN PLOUGHED ITA NO.2337/16, 284-285, 312 &323/17 :- 37 - : OR TILLED? WHETHER THE OWNER MEANT OR INTENDED TO U SE IT FOR AGRICULTURAL PURPOSES? 8. WHETHER THE LAND WAS SITUATED IN A DEVELOPED ARE A? WHETHER ITS PHYSICAL CHARACTERISTICS, SURROUNDING SITUATION AND USE OF THE LANDS IN THE ADJOINING AREA WERE SUCH AS WOULD INDICATE THAT THE LAND WAS AGRICULTURAL? 9. WHETHER THE LAND ITSELF WAS DEVELOPED BY PLOTTIN G AND PROVIDING ROADS AND OTHER FACILITIES? 10. WHETHER THERE WERE ANY PREVIOUS SALES OF PORTIO NS OF THE LAND FOR NON-AGRICULTURAL USE? 11. WHETHER PERMISSION UNDER S. 63 OF THE BOMBAY TE NANCY AND AGRICULTURAL LANDS ACT, 1948, WAS OBTAINED BECAUSE THE SALE OR INTENDED SALE WAS IN FAVOUR OF A NON-AGRICULTURIST? IF SO, WHETHER THE SALE OR INTENDED SALE TO SUCH NON-AGRICULTURISTS WA S FOR NON- AGRICULTURAL OR AGRICULTURAL USER? 12. WHETHER THE LAND WAS SOLD ON YARDAGE OR ON ACRE AGE BASIS? 13. WHETHER AN AGRICULTURIST WOULD PURCHASE THE LAN D FOR AGRICULTURAL PURPOSES AT THE PRICE AT WHICH THE LAND WAS SOLD AN D WHETHER THE OWNER WOULD HAVE EVER SOLD THE LAND VALUING IT AS A PROPERTY YIELDING AGRICULTURAL PRODUCE ON THE BASIS OF ITS YIELD?' 6.6 A REFERENCE COULD BE MADE TO THE CASE OF CWT VS. OFFICER- IN- CHARGE (COURT OF WARDS) (105 ITR 138) (SC) WHEREIN THE CONSTITUTION BENCH OF THE HONBLE SUPREME COURT STATED THAT THE TERM AGRICULTURE AND AGRICULTURAL PURPOSE WAS NOT DEFINED IN THE I NDIAN IT ACT AND THAT WE MUST NECESSARILY FALL BACK UPON THE GENERAL SENSE IN WHICH THEY HAVE BEEN UNDERSTOOD IN COMMON PARLANCE. THE H ONBLE SUPREME COURT HAS OBSERVED THAT THE TERM AGRICULTU RE IS THUS UNDERSTOOD AS COMPRISING WITHIN ITS SCOPE THE BASIC AS WELL AS SUBSEQUENT OPERATIONS IN THE PROCESS OF AGRICULTURE AND RAISING ON THE LAND ALL PRODUCTS WHICH HAVE SOME UTILITY EITHE R FOR SOMEONE OR FOR TRADE AND COMMERCE. IT WILL BE SEEN THAT THE TE RM AGRICULTURE RECEIVES A WIDER INTERPRETATION BOTH IN REGARD TO I TS OPERATION AS WELL AS THE RESULT OF THE SAME. NEVERTHELESS THERE IS PR ESENT ALL THROUGHOUT THE BASIC IDEA THAT THERE MUST BE AT THE BOTTOM OF ITS CULTIVATION OF THE LAND IN THE SENSE OF TILLING OF THE LAND, SOWING OF THE SEEDS, PLANTING AND SIMILAR WORK DONE ON THE LAND I TSELF AND THIS BASIC CONCEPTION IS ESSENTIAL SINE QUA NON OF ANY OPERATI ON PERFORMED ON THE LAND CONSTITUTING AGRICULTURAL OPERATION AND IF THE BASIC OPERATIONS ARE THERE, THE REST OF THE OPERATIONS FOUND THEMSEL VES UPON THE SAME, BUT IF THE BASIC OPERATIONS ARE WANTING, THE SUBSEQUENT OPERATIONS DO NOT ACQUIRE THE CHARACTERISTICS OF AG RICULTURAL OPERATIONS. THE CONSTITUTION BENCH OF THE HONBLE S UPREME COURT IN THE AFORESAID CASE OBSERVED THAT THE ENTRIES IN REV ENUE RECORDS WERE CONSIDERED GOOD PRIMA FACIE EVIDENCE. ITA NO.2337/16, 284-285, 312 &323/17 :- 38 - : 6.7 THE HONBLE GUJARAT HIGH COURT IN THE CASE OF D R. MOTIBHAI D. PATEL VS. CIT (1982) 27 CTR (GUJ) 238 : (1981) 127 ITR 671 (GUJ) REFERRING TO THE CONSTITUTION BENCH OF THE HONBLE SUPREME COURT HAD STATED THAT IF AGRICULTURAL OPERATIONS ARE BEING CA RRIED ON IN THE LAND IN QUESTION AT THE TIME WHEN THE LAND IS SOLD AND F URTHER IF THE ENTRIES IN THE REVENUE RECORDS SHOW THAT THE LAND IN QUESTI ON IS AGRICULTURAL LAND, THEN, A PRESUMPTION ARISES THAT THE LAND IS A GRICULTURAL IN CHARACTER AND UNLESS THAT PRESUMPTION IS REBUTTED B Y EVIDENCE LED BY THE REVENUE, IT MUST BE HELD THAT THE LAND WAS AGRI CULTURAL IN CHARACTER AT THE TIME WHEN IT WAS SOLD. THE DIVISIO N BENCH OF THE HONBLE GUJARAT HIGH COURT FURTHER HELD THAT THERE WAS NOTHING ON RECORD TO SHOW THAT THE PRESUMPTION ROSE FROM THE L ONG USER OF THE LAND FOR AGRICULTURAL PURPOSE AND ALSO THE PRESUMPT ION ARISING FROM THE ENTRIES OF THE REVENUE RECORDS ARE REBUTTED. 6.8 THE HONBLE BOMBAY HIGH COURT IN THE CASE OF C WT VS. H. V. MUNGALE (1983) 32 CTR (BOM) 301 : (1984) 145 ITR 20 8 (BOM) HELD THAT THE HONBLE SUPREME COURT HAD POINTED OUT THAT THE ENTRIES RAISED ONLY A REBUTTABLE PRESUMPTION AND SOME EVIDE NCE WOULD, THEREFORE, HAVE TO BE LED BEFORE TAXING AUTHORITIES ON THE QUESTION OF INTENDED USER OF THE LAND UNDER CONSIDERATION BEFOR E THE PRESUMPTION COULD BE REBUTTED. THECOURT FURTHER HELD THAT THE S UPREME COURT HAD CLEARLY POINTED OUT THAT THE BURDEN TO REBUT THE PR ESUMPTION WOULD BE ON THE REVENUE. THE HONBLE BOMBAY HIGH COURT HE LD THAT THE RATIO OF THE DECISION OF THE SUPREME COURT WAS THAT WHAT IS TO BE DETERMINED IS THE CHARACTER OF THE LAND ACCORDING T O THE PURPOSE FOR WHICH IT WAS MEANT OR SET APART AND CAN BE USED. IT IS, THEREFORE, OBVIOUS THAT THE ASSESSEE HAD ABUNDANTLY PROVED THA T THE SUBJECT LAND SOLD BY THEM WAS AGRICULTURAL LAND NOT ONLY AS CLASSIFIED IN THE REVENUE RECORDS, BUT ALSO IT WAS SUBJECTED TO THE P AYMENT OF LAND REVENUE AND THAT IT WAS ACTUALLY AND ORDINARILY USE D FOR AGRICULTURAL PURPOSE AT THE RELEVANT TIME. 6.9 WE MAY ALSO REFER TO THE CASE OF CIT VS. MANIL ALSOMNATH (1977) 106 ITR 917 (GUJ), WHEREIN THE DIVISION BENC H OF THE HONBLE GUJARAT HIGH COURT OBSERVED THAT THE POTENTIAL NON- AGRICULTURAL VALUE OF THE LAND FOR WHICH A PURCHASER MAY BE PREPARED T O PAY A LARGE PRICE WOULD NOT DETRACT FROM ITS CHARACTER AS AGRIC ULTURAL LAND ON THE RELEVANT DATE OF SALE. 7. WE MAY ALSO REFER TO THE CASE OF GOPAL C. SHARM A VS. CIT (1994) 116 CTR (BOM) 377 : (1994) 209 ITR 946 (BOM) , IN WHICH, THE CASE OF SMT. SARIFABIBI MOHAMED IBRAHIM &ORS. V S. CIT (SUPRA) WAS REFERRED TO AND RELIED, AMONGST OTHER CASES. IN THIS CASE, THE DIVISION BENCH OF THE BOMBAY HIGH COURT HAS STATED THAT THE PROFIT MOTIVE OF THE ASSESSEE SELLING THE LAND WITHOUT ANY THING MORE BY ITSELF CAN NEVER BE DECISIVE FOR DETERMINATION OF T HE ISSUE AS TO WHETHER THE TRANSACTION AMOUNTED TO AN ADVENTURE IN THE NATURE OF TRADE. IN OTHER WORDS, THE PRICE PAID IS NOT DECISI VE TO SAY WHETHER THE LAND IS AGRICULTURAL OR NOT. ITA NO.2337/16, 284-285, 312 &323/17 :- 39 - : 7.1 WE MAY REFER TO A JUDGMENT OF THE HONBLE MADRA S HIGH COURT IN THE CASE OF CWT VS. E. UDAYAKUMAR (2006) 284 ITR511 (MAD) WHERE THE HONBLE MADRAS HIGH COURT HAS REFERRED TO THE D ECISION OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. SMT. SAVITA RANI (2004) 186 CTR (P&H) 240 : (2004) 270 I TR 40 (P&H) AND HAS OBSERVED AND HELD AS UNDER : '8. IT IS WELL SETTLED IN THE CASE OF CIT VS. SMT. SAVITA RANI (2004) 186 CTR (P&H) 240 : (2004) 270 ITR 40 (P&H), WHEREI N IT IS HELD THAT THE LAND BEING LOCATED IN A COMMERCIAL AREA OR THE LAND HAVING BEEN PARTIALLY UTILISED FOR NON-AGRICULTURAL PURPOS ES OR THAT THE VENDEES HAD ALSO PURCHASED IT FOR NON- AGRICULTURAL PURPOSES, WERE TOTALLY IRRELEVANT CONSIDERATION FOR THE PURPOSES O F APPLICATION OF S.54B. 9. IN THE ABOVESAID CASE, THE ASSESSEE AN INDIVIDUA L SOLD 15 KARNALS, 18 MARLAS OF LAND OUT OF HER SHARE IN 23 KARNALS, 1 7 MARLAS LAND DURING THE FINANCIAL YEAR 1990-91, RELEVANT TO THE ASST. YR. 1991-92, THE SALE WAS EFFECTED BY THREE REGISTERED SALE DEED S. WHILE FILING HER RETURN OF INCOME, SHE CLAIMED EXEMPTION FROM LEVY O F CAPITAL GAINS UNDER S. 54B OF THE ACT ON THE GROUND THAT THE LAND SOLD BY HER WAS AGRICULTURAL LAND AND THE SALE PROCEEDS WERE INVEST ED IN THE PURCHASE OF AGRICULTURAL LAND WITHIN TWO YEARS. THE AO REJEC TED THE CLAIM OF THE ASSESSEE HOLDING THAT THE LAND SOLD BY THE ASSESSEE WAS NOT AGRICULTURAL LAND AND THIS WAS UPHELD BY THE CIT(A) . ON FURTHER APPEAL, THE TRIBUNAL ACCEPTED THE CLAIM OF THE ASSE SSEE HOLDING THAT THE TRANSACTION IN QUESTION DULY FULFILLED THE COND ITIONS SPECIFIED FOR RELIEF. ON FURTHER APPEAL TO THE HIGH COURT, THE PU NJAB & HARYANA HIGH COURT FOUND THAT THE FINDING THAT THE LAND HAD BEEN USED FOR AGRICULTURAL PURPOSES WAS BASED ON COGENT AND RELEV ANT MATERIAL. THE REVENUE RECORD SUPPORTED THE CLAIM. EVEN THE RECORD S OF THE IT DEPARTMENT SHOWED THAT THE ASSESSEE HAD DECLARED AG RICULTURAL INCOME FROM THIS LAND IN HER RETURNS FOR THE PRECED ING TWO YEARS. THE LAND BEING LOCATED IN COMMERCIAL AREA OR THE LAND H AVING BEEN PARTIALLY UTILISED FOR NON-AGRICULTURAL PURPOSES OR THAT THE VENDEES HAD ALSO PURCHASED IT FOR NONAGRICULTURAL PURPOSES, WER E TOTALLY IRRELEVANT CONSIDERATION FOR THE PURPOSES OF APPLICATION OF S. 54B. 10. IT IS SEEN FROM THE AFORESAID DECISION THAT THE AGRICULTURAL LAND SOLD BY THE ASSESSEE WITH AN INTENT TO PURCHASE ANO THER LAND WITHIN TWO YEARS HAD ALSO BEEN PERMITTED TO CLAIM EXEMPTIO N UNDER S. 54B OF THE IT ACT, 1961. IN THE INSTANT CASE, EVEN THOU GH THERE WAS NO SALE AS SUCH, THE ASSESSEE OWNED AGRICULTURAL LAND WITHIN THE LIMITS OF TIRUNELVELI CORPORATION AND HE HAD NOT PUT UP ANY C ONSTRUCTION THEREON, THE ASSESSEE IS ENTITLED TO CLAIM EXEMPTIO N FROM THE WT ACT FOR THE ASSESSMENT OF WEALTH-TAX.THAT THE LAND IN Q UESTION IS ADJACENT TO THE HOSPITAL IS TOTALLY IRRELEVANT.' 7.2 ADVERTING TO THE FACTS OF THE PRESENT CASE, TH E LAND IN QUESTION IS CLASSIFIED IN THE REVENUE RECORDS AS AGRICULTURA L LAND AND THERE IS ITA NO.2337/16, 284-285, 312 &323/17 :- 40 - : NO DISPUTE REGARDING THIS ISSUE AND ACTUAL CULTIVAT ION HAS BEEN CARRIED ON THIS LAND AND INCOME WAS DECLARED FROM THIS LAND IN THE RETURN OF INCOME FILED BY THE ASSESSEE FOR THE EARLIER YEARS AS AGRICULTURAL INCOME. IT IS ALSO AN ADMITTED FACT THAT THE ASSESS EE HAS NOT APPLIED FOR CONVERSION OF THIS AGRICULTURAL LAND FOR NON-AG RICULTURAL PURPOSES AND THE ASSESSEE HAS NOT PUT THE LAND TO ANY PURPOS ES OTHER THAN AGRICULTURAL PURPOSES. IT IS ALSO AN ADMITTED FACT THAT NEITHER THE IMPUGNED PROPERTY NOR THE SURROUNDING AREAS WERE SU BJECT TO ANY DEVELOPMENTAL ACTIVITIES AT THE RELEVANT POINT OF T IME OF SALE OF THE LAND. 7.3 THE STATE GOVERNMENT ALSO PRESCRIBED THE PROCE DURE FOR CONVERSION OF AGRICULTURAL LAND INTO NON-AGRICULTUR AL LAND. BEING SO, WHENEVER THE AGRICULTURAL LAND TO BE TREATED AS NON -AGRICULTURAL LAND, THE SAME HAS TO BE CONVERTED IN ACCORDANCE WITH THE PROVISIONS OF STATE GOVERNMENT. IF BY A GOVERNMENT NOTIFICATION, THE NATURE AND CHARACTER OF LAND CHANGES FROM AGRICULTURE INTO NON -AGRICULTURE THEN THERE IS NO QUESTION OF CONVERSION OF THIS LAND FOR NON- AGRICULTURAL PURPOSES BY THE REVENUE AUTHORITIES CONCERNED. THE LAND OWNERS ARE REQUIRED TO APPLY TO THE CONCERNED REVENUE AUTHORIT IES FOR THE PURPOSE OF CONVERSION OF THE AGRICULTURAL LAND INTO NON-AGRICULTURAL LAND AND THERE IS NO AUTOMATIC CONVERSION IN THIS C ASE. 7.4 IT IS ALSO AN ADMITTED POSITION THAT MERE IN CLUSION OR PROXIMITY OF LAND TO ANY SPECIAL ZONE WITHOUT ANY INFRASTRUCT URE DEVELOPMENT THEREUPON OR WITHOUT ESTABLISHING AND PROVING THAT THE LAND WAS PUT INTO USE FOR NON-AGRICULTURAL PURPOSES BY THE ASSES SEE DOES NOT AND CANNOT CONVERT THE AGRICULTURAL LAND INTO NON-AGRIC ULTURAL LAND. IN THE INSTANT CASE, AT THE RELEVANT POINT OF SALE OF THE LAND IN QUESTION, THE SURROUNDING AREA WAS TOTALLY UNDEVELOPED AND EXCEPT MERE FUTURE POSSIBILITY TO PUT THE LAND INTO USE FOR NON-AGRICU LTURAL PURPOSES WOULD NOT CHANGE THE CHARACTER OF THE AGRICULTURAL LAND INTO NON- AGRICULTURAL LAND AT THE RELEVANT POINT OF TIME WHE N THE LAND WAS SOLD BY THE ASSESSEE. IT IS ALSO AN ADMITTED POSITION TH AT THE ASSESSEE HAD NOT APPLIED FOR CONVERSION OF THE LAND IN QUESTION INTO NON- AGRICULTURAL PURPOSES AND NO SUCH PERMISSIONS WERE OBTAINED FROM THE CONCERNED AUTHORITY. IN THE REVENUE RECORDS, TH E LAND IS CLASSIFIED AS AGRICULTURAL LAND AND HAS NOT BEEN CH ANGED FROM AGRICULTURAL LAND TO NON-AGRICULTURAL LAND AT THE R ELEVANT POINT OF TIME WHEN THE LAND WAS SOLD BY THE ASSESSEE. IT IS ALSO NOT IN DISPUTE THAT THERE WAS NO ACTIVITY UNDERTAKEN BY THE ASSESSEE OF DEVELOPING THE LAND BY PLOTTING AND PROVIDING ROADS AND OTHER FACI LITIES AND THERE WAS NO INTENTION ALSO ON THE PART OF THE ASSESSEES HEREIN TO PUT THE SAME FOR NON-AGRICULTURAL PURPOSES AT TIME OF THEIR OWNERSHIP THAT LAND. NO SUCH FINDING HAS BEEN GIVEN BY THE DEPARTM ENT. NO MATERIAL OR EVIDENCE IN SUPPORT OF THE FACT THAT THE ASSESSE ES HAVE PUT THE LAND IN USE FOR NON- AGRICULTURAL PURPOSES HAS BEEN BROUGHT ON RECORD. THE NATURE OF THE CROP AND THE PERSON WHO C ULTIVATED THE LAND ARE DULY MENTIONED IN THE ASSESSMENT ORDER SHO WS THAT AT THE RELEVANT POINT OF TIME THE LAND WAS USED FOR AGRICU LTURAL PURPOSES ONLY AND NOTHING IS BROUGHT ON RECORD TO SHOW THAT THE LAND WAS PUT ITA NO.2337/16, 284-285, 312 &323/17 :- 41 - : IN USE FOR NON-AGRICULTURAL PURPOSES BY THE ASSESSE ES. IN VIEW OF THE DECISION OF THE HONBLE HIGH COURT IN THE CASE OF G OPAL C. SHARMA VS. CIT (209 ITR 946) (BOM), IT IS ALSO CLEAR THAT THE PROFIT MOTIVE OF THE ASSESSEE IN SELLING THE LAND WITHOUT ANYTHING MORE BY ITSELF CAN NEVER BE DECISIVE TO SAY THAT THE ASSESSEE USED THE LAND FOR NON-AGRICULTURAL PURPOSES. WE MAY ALSO REFER TO A DECISION OF THE HO NBLE SUPREME COURT IN THE CASE OF N. SRINIVASA RAO VS. SPECIAL C OURT (2006) 4 SCC 214 WHERE IT WAS OBSERVED THAT THE FACT THAT AGRICU LTURAL LAND IN QUESTION IS INCLUDED IN URBAN AREA WITHOUT MORE, HE LD NOT ENOUGH TO CONCLUDE THAT THE USER OF THE SAME HAD BEEN ALTERED WITH PASSAGE OF TIME. THUS, THE FACT THAT THE LAND IN QUESTION IN T HE INSTANT CASE IS BOUGHT BY DEVELOPER CANNOT BE A DETERMINING FACTOR BY ITSELF TO SAY THAT THE LAND WAS CONVERTED INTO USE FOR NON-AGRICU LTURAL PURPOSES. 7.5 RECENTLY THE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. MADHUKUMAR N. (HUF) (2012) 78 DTR (KAR) 391 HELD AS FOLLOWS: '9. AN AGRICULTURAL LAND IN INDIA IS NOT A CAPITAL ASSET BUT BECOMES A CAPITAL ASSET IF IT IS THE LAND LOCATED UNDER SECTI ON 2(14)(III)(A) & (B) OF THE ACT, SECTION 2(14) (III) (A) OF THE ACT COVE RS A SITUATION WHERE THE SUBJECT AGRICULTURAL LAND IS LOCATED WITHIN THE LIMITS OF MUNICIPAL CORPORATION, NOTIFIED AREA COMMITTEE, TOWN AREA COM MITTEE, TOWN COMMITTEE, OR CANTONMENT COMMITTEE AND WHICH HAS A POPULATION OF NOT LESS THAN 10,000. 10. SECTION 2(14)(M)(B) OF THE ACT COVERS THE SITUA TION WHERE THE SUBJECT LAND IS NOT ONLY LOCATED WITHIN THE DISTANC E OF 8 KMS FROM THE LOCAL LIMITS, WHICH IS COVERED BY CLAUSE (A) TO SEC TION 2(14)(III) OF THE ACT, BUT ALSO REQUIRES THE FULFILMENT OF THE CONDIT ION THAT THE CENTRAL GOVERNMENT HAS ISSUED A NOTIFICATION UNDER THIS CLA USE FOR THE PURPOSE OF INCLUDING THE AREA UP TO 8 KMS, FROM THE MUNICIPAL LIMITS, TO RENDER THE LAND AS A CAPITAL ASSET. 11. IN THE PRESENT CASE, IT IS NOT IN DISPUTE THAT THE SUBJECT LAND IS NOT LOCATED WITHIN THE LIMITS OF DASARAHALLI CITY M UNICIPAL COUNCIL THEREFORE, CLAUSE (A) TO SECTION 2(14][III] OF THE ACT IS NOT ATTRACTED. 12. HOWEVER, THOUGH IT IS CONTENDED THAT IT IS LOCA TED WITHIN 8 KNITS,, WITHIN THE MUNICIPAL LIMITS OF DASARAHALLI CITY MUN ICIPAL COUNCIL IN THE ABSENCE OF ANY NOTIFICATION ISSUED UNDER CLAUSE (B) TO SECTION 2(14)(III) OF THE ACT, IT CANNOT BE LOOKED IN AS A CAPITAL ASSET WITHIN THE MEANING OF SECTION 2(14)(III)(B) OF THE ACT ALS O AND THEREFORE THOUGH THE TRIBUNAL MAY NOT HAVE SPELT OUT THE REAS ON AS TO WHY THE SUBJECT LAND CANNOT BE CONSIDERED AS A CAPITAL ASS ET BE GIVING THIS VERY REASON, WE FIND THE CONCLUSION ARRIVED AT BY T HE TRIBUNAL IS NEVERTHELESS THE CORRECT CONCLUSION.' 7.7 FURTHER THE KOLKATA BENCH OF THE TRIBUNAL IN T HE CASE OFDCIT VS. ARIJITMITRA (48 SOT 544) (KOL) HELD AS FOLLOWS: ITA NO.2337/16, 284-285, 312 &323/17 :- 42 - : '7. FROM THE ABOVE, IT IS CLEAR THAT AGRICULTURAL L AND SITUATED IN AREAS LYING WITHIN A DISTANCE NOT EXCEEDING 8 KM FROM THE LOCAL LIMITS OF SUCH MUNICIPALITIES OR CANTONMENT BOARDS ARE COVERE D BY THE AMENDED DEFINITIONS OF CAPITAL ASSET, IF SUCH ARE AS ARE, HAVING REGARD TO THE EXTENT OF AND SCOPE FOR THEIR URBANIZATION A ND OTHER RELEVANT CONSIDERATIONS, IS NOTIFIED BY THE CENTRAL GOVERNME NT IN THIS BEHALF. CENTRAL GOVERNMENT IN EXERCISE OF SUCH POWERS HAS I SSUED THE ABOVE NOTIFICATION, AS AMENDED LATEST BY NOTIFICATION NO. 11186 DATED 28.12.1999 CLEARLY CLARIFIES THAT AGRICULTURAL LAND SITUATION IN RURAL AREAS, AREAS OUTSIDE THE MUNICIPALITY OR CANTONMENT BOARD ETC., HAVING A POPULATION OF NOT LESS THAN 10,000 AND ALS O BEYOND THE DISTANCE NOTIFIED BY CENTRAL GOVERNMENT FROM LOCAL LIMITS I.E. THE OUTER LIMITS OF ANY SUCH MUNICIPALITY OR CANTONMENT BOARD ETC., STILL CONTINUES TO BE EXCLUDED FROM THE DEFINITION OF CA PITAL ASSET. ACCORDINGLY, IN VIEW OF SUB-CLAUSE (B) OF SECTION 2 (14)(III) OF THE ACT EVEN UNDER THE AMENDED DEFINITION OF EXPRESSION CA PITAL ASSET, THE AGRICULTURAL LAND SITUATED IN RURAL AREAS CONTINUES TO BE EXCLUDED FROM THAT DEFINITION. AND AS IN THE PRESENT CASE, ADMITT EDLY, THE AGRICULTURAL LAND OF THE ASSESSEE IS OUTSIDE THE MU NICIPAL LIMITS OF RAJARHAT MUNICIPALITY AND THAT ALSO 2.5 KM AWAY FRO M THE OUTER LIMITS OF THE SAID MUNICIPALITY, ASSESSEES LAND DOES NOT COME WITHIN THE PURVIEW OF SECTION 2(14)(III) EITHER UNDER SUB CLAU SE (A) OR (B) OF THE ACT, HENCE THE SAME CANNOT BE CONSIDERED AS CAPITAL ASSET WITHIN THE MEANING OF THIS SECTION. HENCE, NO CAPITAL GAIN TAX CAN BE CHARGED ON THE SALE TRANSACTION OF THIS LAND ENTERED BY THE AS SESSEE. ACCORDINGLY, WE QUASH THE ASSESSMENT ORDER QUA CHARGING OF CAPIT AL GAINS ON VERY JURISDICTION OF THE ISSUE IS QUASHED. THE CROSS OBJ ECTION OF THE ASSESSEE IS ALLOWED.' 7.8 IT WAS HELD IN THE CASE OF CIT VS. MANILAL SOMN ATH (106ITR 917) AS FOLLOWS: UNDER THE INCOME-TAX ACT OF 1961, AGRICULTURAL LEN D SITUATED IN INDIA WAS EXCLUDED FROM THE DEFINITION OF ' CAPITAL ASSET ' AND ANY GAIN FROM THE SALE THEREOF WAS NOT TO BE INCLUDED IN THE TOTA L INCOME OF AN ASSESSEE TINDER THE HEAD 'CAPITAL GAINS'. IN ORDER TO DETERMINE WHETHER A PARTICULAR LAND IS AGRICULTURAL LAND OR N OT ONE HAS TO FIRST FIND OUT IF IT IS BEING PUT TO ANY USE. IF IT IS US ED FOR AGRICULTURAL PURPOSES THERE IS A PRESUMPTION THAT IT IS AGRICULT URAL LAND. IF IT IS USED FOR NON-AGRICULTURAL PURPOSES THE PRESUMPTION IS THAT IT IS NON- AGRICULTURAL LAND. THIS PRESUMPTION ARISING FROM AC TUAL USE CAN BE REBUTTED BY THE PRESENCE OF OTHER FACTORS. THERE MA Y BE CASES WHERE LAND WHICH IS ADMITTEDLY NON-AGRICULTURAL IS USED T EMPORARILY FOR AGRICULTURAL PURPOSES. THE DETERMINATION OF THE QUE STION WOULD, THEREFORE, DEPEND ON THE FACTS OF EACH CASE. THE ASSESSEE, HINDU, UNDIVIDED FAMILY, HAD OBTAINED SOME LAND ON A PARTITION IN 1939. FROM THAT TIME, UP TO THE TIME O F ITS SALE, AGRICULTURAL OPERATIONS WERE CARRIED ON IN THE LAND . THERE WAS NO REGULAR ROAD TO THE LAND AND IT WAS WITH THE AID OF A TRACTOR THAT AGRICULTURAL OPERATIONS WERE BEING CARRIED ON.THE L AND WAS INCLUDED ITA NO.2337/16, 284-285, 312 &323/17 :- 43 - : WITHIN A DRAFT TOWN PLANNING SCHEME. THE ASSESSEE G OT PERMISSION OF THE COLLECTOR TO SELL THE LAND FOR RESIDENTIAL PURP OSES AND SOLD IT.ON THE QUESTION WHETHER THE LAND WAS AGRICULTURAL LAND : HELD, THAT WHAT HAD TO BE CONSIDERED IS NOT WHAT TH E PURCHASER DID WITH THE LAND OR THE PURCHASER WAS SUPPOSED TO DO W ITH THE LAND, BUT WHAT WAS THE CHARACTER OF THE LAND AT THE TIME WHEN THE SALE TOOK PLACE. THE FACT THAT THE LAND WAS WITHIN MUNICIPAL LIMITS OR THAT IT WAS INCLUDED WITHIN A PROPOSED TOWN PLANNING SCHEME WAS NOT BY ITSELF SUFFICIENT TO REBUT THE PRESUMPTION ARISING FROM AC TUAL USE OF THE LAND.THE LAND HAD BEEN USED FOR AGRICULTURAL PURPOS ES FOR A LONG TIME AND NOTHING HAD HAPPENED TILL THE DATE OF THE SALE TO CHANGE THAT CHARACTER OF THE LAND. THE POTENTIAL NON-AGRICULTUR AL VALUE OF THE LAND FOR WHICH A PURCHASER MAY BE PREPARED TO PAY A LARG E PRICE WOULD NOT DETRACT FROM ITS CHARACTER AS AGRICULTURAL LAND AT THE DATE OF THE SALE. THE LAND IN QUESTION WAS, THEREFORE, AGRICULT URAL LAND. 7.9 FURTHER THE WORD 'CAPITAL ASSET IS DEFINED IN SECTION 2(14) TO MEAN PROPERTY OF ANY KIND HELD BY AN ASSESSEE, WHET HER OR NOT CONNECTED WITH HIS BUSINESS OR PROFESSION, BUT DOES NOT INCLUDE- (III) AGRICULTURAL LAND IN INDIA, NOT BEING LAND SI TUATED- (A) IN ANY AREA WHICH IS COMPRISED WITHIN THE JURIS DICTION OF A MUNICIPALITY (WHETHER KNOWN AS A MUNICIPALITY, MUNI CIPAL CORPORATION, NOTIFIED AREA COMMITTEE, TOWN 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 OF WHICH THE RELEVANT FIGURES HAVE BEEN PUBLISHED BEFORE THE FIRST 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 CENTRAL GOVER NMENT MAY, HAVING REGARD TO THE EXTENT OF, AND SCOPE FOR, URBANIZATIO N OF THAT AREA AND OTHER RELEVANT CONSIDERATIONS, SPECIFY IN THIS BEHA LF BY NOTIFICATION IN THE OFFICIAL GAZETTE; 8. IT IS VERY CLEAR FROM THE ABOVE THAT THE GAIN O N SALE OF AN AGRICULTURAL LAND WOULD BE EXIGIBLE TO TAX ONLY WHE N THE LAND TRANSFERRED IS LOCATED WITHIN THE JURISDICTION OF A MUNICIPALITY. THE FACT THAT ALL THE EXPRESSIONS ENLISTED AFTER THE WORD MU NICIPALITY ARE PLACED WITHIN THE BRACKETS STARTING WITH THE WORDS 'WHETHER KNOWN AS' CLEARLY INDICATES THAT SUCH EXPRESSIONS ARE USED TO DENOTE A MUNICIPALITY ONLY, IRRESPECTIVE OF THE NAME BY WHIC H SUCH MUNICIPALITY IS CALLED. THIS FACT IS FURTHER SUBSTANTIATED BY TH E PROVISIONS CONTAINED UNDER CLAUSE (B) WHEREIN IT HAS BEEN CLEARLY PROVID ED THAT THE AUTHORITY REFERRED TO IN CLAUSE (A) WAS ONLY MUNICI PALITY. 8.1 WE ALSO PERUSED THE MEANING OF THE TERM LOCAL A UTHORITY AS REFERRED IN SECTION 10(20) OF THE ACT. ITA NO.2337/16, 284-285, 312 &323/17 :- 44 - : (20) THE INCOME OF A LOCAL AUTHORITY WHICH IS CHARG EABLE UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY', 'CAPITAL GAINS' OR 'INCOME FROM OTHER SOURCES' OR FROM A TRADE OR BUSINESS CARRIED ON BY IT WHICH ACCRUES OR ARISES FROM THE SUPPLY OF A COMMODITY OR SERVICE [(NOT BEING WATER OR ELECTRICITY) WITHIN ITS OWN JURISDIC TIONAL AREA OR FROM THE SUPPLY OF WATER OR ELECTRICITY WITHIN OR OUTSID E ITS OWN JURISDICTIONAL AREA]. [EXPLANATION. - FOR THE PURPOSES OF THIS CLAUSE, TH E EXPRESSION 'LOCAL AUTHORITY' MEANS (I) PANCHAYAT AS REFERRED TO IN CLAUSE (D) OF ARTIC LE 243 OF THE CONSTITUTION; OR (II) MUNICIPALITY AS REFERRED TO IN CLAUSE (E) OF A RTICLE 243P OF THE CONSTITUTION; OR (III) MUNICIPAL COMMITTEE AND DISTRICT BOARD,LEGALL Y ENTITLED TO, OR ENTRUSTED BY THE GOVERNMENT WITH, THE CONTROL OR MA NAGEMENT OF A MUNICIPAL OR LOCAL FUND; OR (IV) CANTONMENT BOARD AS DEFINED IN SECTION 3 OF TH E CANTONMENTS ACT, 1924 (2 OF 1924); 8.2 IT IS ALSO EVIDENT FROM THE MEMORANDUM EXPLAIN ING THE PROVISIONS OF FINANCE ACT, 1970, WHEREBY S. 2(14) W AS AMENDED SO AS TO INCLUDE THE AGRICULTURAL LANDS LOCATED WITHIN THE JURISDICTION OF A MUNICIPALITY IN THE DEFINITION OF THE EXPRESSION 'C APITAL ASSET'. THE RELEVANT PORTION OF THE SAID MEMORANDUM IS REPRODUC ED HEREUNDER: '30. ... THE FINANCE ACT, 1970 HAS, ACCORDINGLY, AM ENDED THE RELEVANT PROVISIONS OF THE INCOME-TAX ACT SO AS TO BRING WIT HIN THE SCOPE OF TAXATION CAPITAL GAINS ARISING FROM THE TRANSFER OF AGRICULTURAL LAND SITUATED IN CERTAIN AREAS. FOR THIS PURPOSE, THE DE FINITION OF THE TERM 'CAPITAL ASSET' IN SECTION 2(14) HAS BEEN AMENDED S O AS TO EXCLUDE FROM ITS SCOPE ONLY AGRICULTURAL LAND IN INDIA WHIC H IS NOT SITUATE IN ANY AREA COMPRISED WITHIN THE JURISDICTION OF A MUN ICIPALITY OR CANTONMENT BOARD AND WHICH HAS A POPULATION OF NOT LESS THAN TEN THOUSAND PERSONS ACCORDING TO THE LAST PRECEDING CE NSUS FOR WHICH THE RELEVANT FIGURES HAVE BEEN PUBLISHED BEFORE THE FIRST DAY OF THE PREVIOUS YEAR. THE CENTRAL GOVERNMENT HAS BEEN AUTH ORISED TO NOTIFY IN THE OFFICIAL GAZETTE ANY AREA OUTSIDE THE LIMITS OF ANY MUNICIPALITY OR CANTONMENT BOARD HAVING A POPULATION OF NOT LESS THAN TEN THOUSAND UP TO A MAXIMUM DISTANCE OF 8 KILOMETRES F ROM SUCH LIMITS, FOR THE PURPOSES OF THIS PROVISION. SUCH NOTIFICATI ON WILL BE ISSUED BY THE CENTRAL GOVERNMENT, HAVING REGARD TO THE EXTENT OF, AND SCOPE FOR, URBANISATION OF SUCH AREA, AND, WHEN ANY SUCH AREA IS NOTIFIED BY THE CENTRAL GOVERNMENT, AGRICULTURAL LAND SITUATED WITHIN SUCH AREA WILL STAND INCLUDED WITHIN THE TERM 'CAPITAL ASSET' . AGRICULTURAL LAND SITUATED IN RURAL AREAS, I.E., AREAS OUTSIDE ANY MU NICIPALITY OR CANTONMENT BOARD HAVING A POPULATION OF NOT LESS TH AN TEN THOUSAND ITA NO.2337/16, 284-285, 312 &323/17 :- 45 - : AND ALSO BEYOND THE DISTANCE NOTIFIED BY THE CENTRA L GOVERNMENT FROM THE LIMITS OF ANY SUCH MUNICIPALITY OR CANTONM ENT BOARD, WILL CONTINUE TO BE EXCLUDED FROM THE TERM 'CAPITAL ASSE T'. 8.3 FURTHER IT IS NOBODY'S CASE THAT THE PROPERT Y FALLS WITHIN ANY AREA WHICH IS COMPRISED WITHIN THE JURISDICTION OF A MUNICIPALITY OR CANTONMENT BOARD OR WHICH HAS A POPULATION OF NOT L ESS THAN 10,000 ACCORDING TO THE LAST PRECEDING CENSUS OF WHICH THE RELEVANT FIGURES HAVE BEEN PUBLISHED BEFORE THE FIRST DAY OF THE PRE VIOUS YEAR. IN OTHER WORDS, THE LAND DOES NOT FALL IN SUB-CLAUSE ( A) OF SECTION 2(14)(III) OF THE ACT AS THE LAND IS OUTSIDE OF ANY MUNICIPALITY INCLUDING GHMC. FURTHER WE HAVE TO SEE WHETHER THE LAND FALLS IN CLAUSE (B) OF SECTION 2(14) (III). THIS SECTION PRE SCRIBES THAT ANY AREA WITHIN SUCH DISTANCE, NOT BEING MORE THAN 8 KM FROM THE LOCAL LIMIT OF ANY MUNICIPALITY OR CANTONMENT BOARD AS REFERRED TO IN SUB-CLAUSE (A) OF SECTION 2(14)(III) OF THE ACT, AS THE CENTRAL GO VERNMENT MAY, HAVING REGARD TO THE EXTENT OF, AND SCOPE FOR, URBA NISATION OF THAT AREA AND OTHER RELEVANT CONSIDERATIONS, SPECIFY IN THIS BEHALF BY NOTIFICATION IN THE OFFICIAL GAZETTE. 8.4 WE HAVE CAREFULLY GONE THROUGH THE NOTIFICATIO N ISSUED BY THE CENTRAL GOVERNMENT U/S. 2(1A)(C) PROVISO (II)(B) AN D 2(14)(3B) VIDE NO. 9447 (F. NO. 164/(3)/87/ITA-I) DATED 6 TH JANUARY, 1994 AS AMENDED BY NOTIFICATION NO. 11186 DATED 28 TH DECEMBER, 1999. IN THE SCHEDULE ANNEXED TO THE NOTIFICATION DATED 6.1. 1994, ENTRY IS RELATING TO CHENNAI WHEREIN MENTIONED THAT THE AREA S UP TO A DISTANCE OF 8 KM FROM THE MUNICIPAL LIMITS IN ALL D IRECTIONS. IT IS CLEAR FROM THESE NOTIFICATION THAT AGRICULTURAL LAND SITU ATED IN AREAS LYING WITHIN A DISTANCE NOT EXCEEDING 8 KM FROM THE LOCAL LIMITS OF CHENNAI CORPORATION IS COVERED BY THE AMENDED DEFINITIONS OF 'CAPITAL ASSET'. CENTRAL GOVERNMENT IN EXERCISE OF SUCH POWERS HAS I SSUED THE ABOVE NOTIFICATION, AS AMENDED LATEST BY NOTIFICATION NO. 11186 DATED 28.12.1999 CLEARLY CLARIFIES THAT AGRICULTURAL LAND SITUATION IN RURAL AREAS, AREAS OUTSIDE THE MUNICIPALITY OR CANTONMENT BOARD ETC., HAVING A POPULATION OF NOT LESS THAN 10,000 AND ALS O BEYOND THE DISTANCE NOTIFIED BY CENTRAL GOVERNMENT FROM LOCAL LIMITS I.E. THE OUTER LIMITS OF ANY SUCH MUNICIPALITY OR CANTONMENT BOARD ETC., STILL CONTINUES TO BE EXCLUDED FROM THE DEFINITION OF 'CA PITAL ASSET'. ACCORDINGLY, IN VIEW OF SUB-CLAUSE (B) OF SECTION 2 (14)(III) OF THE ACT EVEN UNDER THE AMENDED DEFINITION OF EXPRESSION 'CA PITAL ASSET', THE AGRICULTURAL LAND SITUATED IN RURAL AREAS CONTINUES TO BE EXCLUDED FROM THAT DEFINITION. AND AS IN THE PRESENT CASE, ADMITT EDLY, THE AGRICULTURAL LAND OF THE ASSESSEE IS OUTSIDE THE MU NICIPAL LIMITS OF CHENNAI AND THAT ALSO 8 KM AWAY FROM THE OUTER LIM ITS OF THIS MUNICIPALITY, ASSESSEE'S LAND DOES NOT COME WITHIN THE PURVIEW OF SECTION 2(14)(III) EITHER UNDER SUB CLAUSE (A) OR ( B) OF THE ACT, HENCE THE SAME CANNOT BE CONSIDERED AS CAPITAL ASSET WITH IN THE MEANING OF THIS SECTION. HENCE, NO CAPITAL GAIN TAX CAN BE CHA RGED ON THE SALE TRANSACTION OF THIS LAND ENTERED BY THE ASSESSEE. T HIS IS SUPPORTED BY THE ORDER OF KOLKATA BENCH OF THIS TRIBUNAL IN THE CASE OF ARIJITMITRA (CITED SUPRA), HARISH V. MILANI (SUPRA) AND M.S. SR INIVASNAICKER VS. ITA NO.2337/16, 284-285, 312 &323/17 :- 46 - : ITO (292 ITR 481) (MAD). BY BORROWING THE MEANING F ROM THE ABOVE SECTION, WE ARE NOT ABLE TO APPRECIATE THAT THE LAN D FALLS WITHIN THE TERRITORIAL LIMIT OF ANY MUNICIPALITY WITHOUT NOTIF ICATION OF CENTRAL GOVERNMENT AS HELD BY THE KARNATAKA HIGH COURT IN T HE CASE OF MADHUKUMAR N. (HUF) (CITED SUPRA). 8.5. FROM THE FACTS AND CIRCUMSTANCES OF THE CASE, AS NARRATED BEFORE US, IT IS IMPORTANT TO NOTE THAT WHAT WAS TH E INTENTION OF THE ASSESSEES AT THE TIME OF ACQUIRING THE LAND OR INTE RVAL ACTION BY THE ASSESSEE BETWEEN THE PERIOD FROM PURCHASE AND SALE OF THE LAND AND THE RELEVANT IMPROVEMENT/DEVELOPMENT TAKEN PLACE DU RING THIS TIME IS RELEVANT FOR DECIDING THE ISSUE WHETHER TRANSACT ION WAS IN THE NATURE OF TRADE. THOUGH INTENTION SUBSEQUENTLY FORM ED MAY BE TAKEN INTO ACCOUNT, IT IS THE INTENTION AT THE INCEPTION IS CRUCIAL. ONE OF THE ESSENTIAL ELEMENTS IN AN ADVENTURE OF THE TRADE IS THE INTENTION TO TRADE; THAT INTENTION MUST BE PRESENT AT THE TIME O F PURCHASE. THE MERE CIRCUMSTANCES, THAT A PROPERTY IS PURCHASED IN THE HOPE THAT WHEN SOLD LATER ON IT WOULD LEAVE A MARGIN OF PROFI T, WOULD NOT BE SUFFICIENT TO SHOW, AN INTENTION TO TRADE AT THE IN CEPTION. IN A CASE WHERE THE PURCHASE HAS BEEN MADE SOLELY AND EXCLUSI VELY WITH THE INTENTION TO RESELL AT A PROFIT AND THE PURCHASER H AS NO INTENTION OF HOLDING THE PROPERTY FOR HIMSELF OR OTHERWISE ENJOY ING OR USING IT, THE PRESENCE OF SUCH AN INTENTION IS A RELEVANT FACTOR AND UNLESS IT IS OFFSET BY THE PRESENCE OF OTHER FACTORS IT WOULD RA ISE AS STRONG PRESUMPTION THAT THE TRANSACTION IS AN ADVENTURE IN THE NATURE OF TRADE. EVEN SO, THE PRESUMPTION IS NOT CONCLUSIVE A ND IT IS CONCEIVABLE THAT, ON CONSIDERING ALL THE FACTS AND CIRCUMSTANCES IN THE CASE, THE COURT MAY, DESPITE THE SAID INITIAL I NTENTION, BE INCLINED TO HOLD THAT THE TRANSACTION WAS NOT AN ADVENTURE I N THE NATURE OF TRADE. THE PRESUMPTION MAY BE REBUTTED. IN THE PRES ENT CASE, CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE IT CANNOT BE CONSIDERED AS AN ADVENTURE IN THE NATURE OF TRADE. THE INTENTION OF THE ASSESSEE FROM THE INCEPTION WAS TO CARRY ON AGR ICULTURAL OPERATIONS AND EVEN THERE WAS NO INTENTION TO SELL THE LAND IN FUTURE AT THAT POINT OF TIME. IT WAS DUE TO CERTAIN COMPEL LING CIRCUMSTANCES CAME INTO PICTURE AT A LATER STAGES, THE ASSESSEES WERE FORCED TO SELL THE LAND. MERELY BECAUSE OF THE FACT THAT THE LAND WAS SOLD IN A SHORT PERIOD OF HOLDING, IT CANNOT BE HELD THAT INCOME AR ISING FROM THE SALE OF LAND WAS TAXABLE AS PROFIT ARISING FROM THE ADVE NTURE IN THE NATURE OF TRADE. THE PERIOD OF HOLDING SHOULD NOT SUGGEST THAT THE ACTIVITY WAS AN ADVENTURE IN THE NATURE OF TRADE. 8.6 FURTHER, WE MAKE IT CLEAR THAT WHEN THE LAND WHICH DOES NOT FALL UNDER THE PROVISIONS OF SECTION 2(14)(III) OF THE IT ACT AND AN ASSESSEE WHO IS ENGAGED IN AGRICULTURAL OPERATIONS IN SUCH AGRICULTURAL LAND AND ALSO BEING SPECIFIED AS AGRIC ULTURAL LAND IN REVENUE RECORDS, THE LAND IS NOT SUBJECTED TO ANY C ONVERSION AS NON- AGRICULTURAL LAND BY THE ASSESSEE OR ANY OTHER CONC ERNED PERSON, TRANSFERS SUCH AGRICULTURAL LAND AS IT IS AND WHERE IT IS BASIS, IN SUCH CIRCUMSTANCES, IN OUR OPINION, SUCH TRANSFER LIKE T HE CASE BEFORE US CANNOT BE CONSIDERED AS A TRANSFER OF CAPITAL ASSET OR THE TRANSACTION ITA NO.2337/16, 284-285, 312 &323/17 :- 47 - : RELATING TO SALE OF LAND WAS NOT AN ADVENTURE IN TH E NATURE OF TRADE SO AS TO TAX THE INCOME ARISING OUT OF THIS TRANSACTIO N AS BUSINESS INCOME. ACCORDINGLY, THE GROUND RAISED BY THE REVEN UE IS DISMISSED. 17. NO DOUBT DECISION OF CO-ORDINATE BENCH IN THE CASE OF AYISHA FATHIMA (SUPRA) WAS FOR ASSESSMENT YEAR 2009-2010. HOWEVER NOTHING HAS BEEN BROUGHT ON RECORD BY THE REVENUE W HICH WOULD SHOW THAT THERE WAS ANY MATERIAL CHANGE IN THE NATU RE OF LAND IN THE PREVIOUS YEAR RELEVANT TO IMPUGNED ASSESSMENT YEAR. PARA 8.5 OF THE ORDER OF THE TRIBUNAL IN THIS CASE, REPRODUCED ABO VE, IS IN OUR OPINION VERY APPOSITE. THE CRUCIAL FACTOR IS THE INTENTION OF THE ASSESSEE AT THE TIME OF ACQUIRING THE LAND, THOUGH SUBSEQUENT EVENT S CAN ALSO BE RELEVANT. IN OTHER WORDS, HAPPENINGS BETWEEN DAT E OF PURCHASE AND DATE WILL BE OF RELEVANCE ONLY IF SUCH EVENTS CLEA RLY PROVE CONVERSION OF THE LAND BY THE ASSESSEE FOR A DIFFERENT USE OTH ER THAN AGRICULTURAL. IN OTHER WORDS, WHAT WAS IN THE MIND OF THE ASSESSE E AT THE TIME OF ACQUISITION IS THE MOST IMPORTANT ASPECT WHICH IS T O BE SEEN. THE LAND IN QUESTION WAS ACQUIRED BY THE ASSESSEE DURING THE PERIOD 1988 TO 1993 AND ALL ALONG, THE ASSESSEES HAD CLAIMED AG RICULTURAL INCOME THEREFROM. IT WAS CLASSIFIED IN THE REVENUE RECORD S AS AGRICULTURAL LAND WITH COCONUT AND MANGO CULTIVATION. IN OUR OPI NION, GAZETTE NOTIFICATION BY THE TAMIL NADU GOVERNMENT ON 18 TH MARCH, 2009 BY ITSELF WOULD NOT CHANGE THE INTENTION OF THE ASSESS EES, SINCE SUCH ITA NO.2337/16, 284-285, 312 &323/17 :- 48 - : NOTIFICATION WAS ISSUED ON THE APPLICATION OF M/S. SSDPL, WITH WHOM ASSESSEE HAD ENTERED INTO JDA ON 25.06.2007. SUCH A PPLICATION WAS NOT MADE BY THE ASSESSEES. IT MAY BE TRUE THAT ASSE SSEES HAD GIVEN POWER OF ATTORNEY (PAO) TO M/S. SSDPL ON 27.06.2007 BASED ON THE JDA ENTERED ON 25.06.2007. BUT AS NOTED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DEALING WITH THE APPEAL OF SH RI. S.A. MAFAZ MOHAMMED, THE ULTIMATE SALE OF THE PROPERTY WAS MAD E BY THE ASSESSEE TO M/S. IGH AND M/S. ACCENT, WITH WHICH M/ S. SSDPL HAD AGREED TO CONSTRUCT A HOTEL IN THE SAME LAND. LD. C OMMISSIONER OF INCOME TAX (APPEALS) IN THE APPEAL OF SHRI. S.A. MA FAZ MOHAMMED, HAS CLEARLY NOTED THAT THE POA DATED 27.06.2007 WAS A REGISTERED ONE. IT IS ALSO NOT DISPUTED THAT THE POSSESSION WAS GI VEN BY THE ASSESSEE TO M/S. SSDPL ON THE SAID DATE. NO DOUBT THE JDA WAS CANCELLED ON 04.02.2010 AND IT WAS THE ASSESSEES WHO CONVEYED TH E PROPERTY TO M/S. IGH AND M/S. ACCENT. WE CANNOT FAULT THE FIND ING OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IN THE APPEAL OF SHRI. S.A. MAFAZ MOHAMMED THAT SUCH CANCELLATION WAS ONLY AN A CT OF CONVENIENCE AND THE ACTUAL TRANSFER HAD HAPPENED ON 25.06.2007. 18. COMING TO THE DECISION OF LD. COMMISSIONER OF INCO ME TAX (APPEALS) IN THE APPEAL OF SMT. SYED ABDUL KADER A YSTHATH FASLEEN AMINA, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) TOOK A VIEW THAT ASSESSEES COULD NOT PROVE THE AGRICULTURAL INCOME. IN OUR OPINION, ITA NO.2337/16, 284-285, 312 &323/17 :- 49 - : REVENUE, HAVING ACCEPTED AGRICULTURAL INCOME SHOWN BY THE ASSESSEES IN ATLEAST SOME OF THE EARLIER YEARS CANN OT TURN BACK AND SAY THAT SUCH AGRICULTURAL INCOME WAS NEVER PROVED WI TH RECEIPTS FOR SALE OF AGRICULTURAL PRODUCE AND COULD NOT BE BELIEVED. IT WILL BE APPOSITE TO HAVE A LOOK AT THE JUDGMENT OF JURISDICTIONAL HI GH COURT IN THE CASE OF SAKUNTHALA VEDACHALAM (SUPRA). PARA 12 TO 14 OF THE SAID JUDGMENT ARE REPRODUCED HEREUNDER:- 12. HENCE, THE ONLY POINT THAT HAS TO BE CONSIDER ED IS THAT WHETHER THE TEST AS LAID DOWN IN THE DECISION REPOR TED IN CIT V. SIDDHARTH J. DESAI [1983] 139 ITR 628 (GUJ) HAS BEEN SATISFIED BY THE ASSESSEES. IN THE SAID DECISION, IN PARAGRAP H 11, IT IS HELD AS FOLLOWS (PAGE 638) : 'ON A CONSPECTUS OF THESE CASES, SEVERAL FACTORS AR E DISCERNIBLE WHICH WERE CONSIDERED AS RELEVANT AND WHICH WERE WEIGHED AGAINST EACH OTHER WHILE DETERMINING THE TRUE NATURE AND CHARACTER OF THE LA ND. IT MAY BE USEFUL TO EXTRACT FROM THOSE DECISIONS SO ME OF THE MAJOR FACTORS WHICH WERE CONSIDERED AS HAVIN G A BEARING ON THE DETERMINATION OF THE QUESTION. THOSE FACTORS ARE : (1) WHETHER THE LAND WAS CLASSIFIED IN THE REVENUE RECORDS AS AGRICULTURAL AND WHETHER IT WAS SUBJECT TO THE PAYMENT OF LAND REVENUE? (2) WHETHER THE LAND WAS ACTUALLY OR ORDINARILY USE D FOR AGRICULTURAL PURPOSES AT OR ABOUT THE RELEVANT TIME ? (3) WHETHER SUCH USER OF THE LAND WAS FOR A LONG PE RIOD OR WHETHER IT WAS OF A TEMPORARY CHARACTER OR BY WA Y OF A STOP-GAP ARRANGEMENT ? (4) WHETHER THE INCOME DERIVED FROM THE AGRICULTURA L OPERATIONS CARRIED ON IN THE LAND BORE ANY RATIONAL PROPORTION TO THE INVESTMENT MADE IN PURCHASING THE LAND ? ITA NO.2337/16, 284-285, 312 &323/17 :- 50 - : (5) WHETHER, THE PERMISSION UNDER SECTION 65 OF THE BOMBAY LAND REVENUE CODE WAS OBTAINED FOR THE NON- AGRICULTURAL USE OF THE LAND ? IF SO, WHEN AND, BY WHOM (THE VENDOR OR THE VENDEE) ? WHETHER SUCH PERMISSIO N WAS IN RESPECT OF THE WHOLE OR A PORTION OF THE LAN D ? IF THE PERMISSION WAS IN RESPECT OF A PORTION OF THE L AND AND IF IT WAS OBTAINED IN THE PAST, WHAT WAS THE NA TURE OF THE USER OF THE SAID PORTION OF THE LAND ON THE MATERIAL DATE ? (6) WHETHER THE LAND, ON THE RELEVANT DATE, HAD CEA SED TO BE PUT TO AGRICULTURAL USE ? IF SO, WHETHER IT W AS PUT TO AN ALTERNATIVE USE ? WHETHER SUCH CESSER AND/OR ALTERNATIVE USER WAS OF A PERMANENT, OR TEMPORARY NATURE ? (7) WHETHER THE LAND, THOUGH ENTERED IN REVENUE RECORDS, HAD NEVER BEEN ACTUALLY USED FOR AGRICULTU RE, THAT IS, IT HAD NEVER BEEN PLOUGHED OR TILLED ? WHE THER THE OWNER MEANT OR INTENDED TO USE IT FOR AGRICULTU RAL PURPOSES ? (8) WHETHER THE LAND WAS SITUATE IN A DEVELOPED ARE A ? WHETHER ITS PHYSICAL CHARACTERISTICS, SURROUNDING SITUATION AND USE OF THE LANDS IN THE ADJOINING ARE A WERE SUCH AS WOULD INDICATE THAT THE LAND WAS AGRI CULTURAL ? (9) WHETHER THE LAND ITSELF WAS DEVELOPED BY PLOTTI NG AND PROVIDING ROADS AND OTHER FACILITIES ? (10) WHETHER THERE WERE ANY PREVIOUS SALES OF PORTI ONS OF THE LAND FOR NON-AGRICULTURAL USE ? (11) WHETHER PERMISSION UNDER SECTION 63 OF THE BOMBAY TENANCY AND AGRICULTURAL LANDS ACT, 1948, WA S OBTAINED BECAUSE THE SALE OR INTENDED SALE WAS IN FAVOUR OF A NON-AGRICULTURIST ? IF SO, WHETHER THE SALE OR INTENDED SALE TO SUCH NON-AGRICULTURIST WAS FOR NON - AGRICULTURAL OR AGRICULTURAL USER ? (12) WHETHER THE LAND WAS SOLD ON YARDAGE OR ON ACREAGE BASIS ? (13) WHETHER AN AGRICULTURIST WOULD PURCHASE THE LA ND FOR AGRICULTURAL PURPOSES AT THE PRICE AT WHICH THE LAND WAS SOLD AND WHETHER THE OWNER WOULD HAVE EVER SOLD ITA NO.2337/16, 284-285, 312 &323/17 :- 51 - : THE LAND VALUING IT AS A PROPERTY YIELDING AGRICULT URAL PRODUCE ON THE BASIS OF ITS YIELD ? AT THE RISK OF REPETITION, WE MAY MENTION THAT NOT ALL OF THESE FACTORS WOULD BE PRESENT OR ABSENT IN ANY CAS E AND THAT IN EACH CASE ONE OR MORE OF THOSE FACTORS MAY MAKE APPEARANCE AND THAT THE ULTIMATE DECISION WILL HAVE TO BE REACHED ON A BALANCED CONSIDERATION OF T HE TOTALITY OF CIRCUMSTANCES.' 13. ACCORDING TO THE TRIBUNAL, THAT IF THE ABOVE TE STS ARE APPLIED, THE ASSESSEES COULD NOT SATISFY ANY OF THE CONDITIONS EXCEPT CONDITIONS NOS. 1, 5, 11 AND 12. THE TRIBUNA L HELD THAT THE ASSESSEES COULD NOT PROVE THAT THE LANDS W AS ACTUALLY OR ORDINARILY USED FOR AGRICULTURAL PURPOS ES. THIS REASONING DOES NOT APPEAR TO BE CORRECT IN VIEW OF THE ABOVE SAID DECISION OF THE GUJARAT HIGH COURT, WHEREIN IT WAS CLEARLY HELD IN CLAUSE (1) IN PARAGRAPH 11 THAT WHETHER THE LAND WAS CLASSIFIED IN THE REVENUE RECORDS AS AGRICULTURAL A ND WHETHER IT WAS SUBJECT TO THE PAYMENT OF LAND REVENUE HAS T O BE CONSIDERED FOR GRANT OF EXEMPTION. 14. THUS, IT IS EVIDENT FROM THE ABOVE, WHICH CLEAR LY STATES THAT ANY ONE OF THE ABOVE FACTORS CAN BE PRESENT IN A CASE TO QUALIFY FOR THE BENEFIT OF CLASSIFICATION AS AGRICU LTURAL LANDS. IN THIS CASE, THE ASSESSEES HAVE QUALIFIED UNDER CLAUS E 11(1) SINCE AS PER THE ADANGAL RECORDS, THESE LANDS WERE CLASSIFIED AS AGRICULTURAL LANDS AND THE ASSESSEES HAVE ALSO P AID REVENUE KIST, NAMELY, REVENUE PAYMENT. THEREFORE, T HE TRIBUNAL HAS MISCONSTRUED THE JUDGMENT OF THE GUJAR AT HIGH COURT (SUPRA) THAT ALL CONDITIONS LAID DOWN IN PARA GRAPH 11 SHOULD BE SATISFIED, WHICH IS NOT A CORRECT INTERPR ETATION. A READING OF THE PARA 14 OF THE JUDGMENT CLEARLY IN DICATE THAT PRIMARY REQUIREMENT IS CLASSIFICATION OF LAND AS AGRICULTUR AL IN ADANGAL RECORDS. THEIR LORDSHIPS CLEARLY HELD THAT IT WAS NOT NECESS ARY TO CUMULATIVELY SATISFY ALL THE CONDITIONS SET OUT BY HONBLE GUJA RAT HIGH COURT IN THE CASE OF CIT VS. SIDDHARTH J. DESAI, (1983) 139 ITR 628 . AS TO THE RELEVANCE OF THE INTENTION OF THE PURCHASER, IN DEC IDING ON THE NATURE ITA NO.2337/16, 284-285, 312 &323/17 :- 52 - : OF THE LAND SOLD, LD. COMMISSIONER OF INCOME TAX (A PPEALS) WHO WENT ADVERSE TO THE ASSESSEE SMT. SYED ABDUL KADER AYST HATH FASLEEN AMINA, HAD HIMSELF STATED AT PARA 34 OF HIS ORDER T HAT OUT OF 13 CONDITIONS SET OUT IN THIS JUDGMENT, ASSESSEE HAD S ATISFIED ATLEAST FOUR. JUST BECAUSE ASSESSEE RECEIVED AN AMOUNT HIGHER THA N THE GUIDELINE VALUE WOULD NOT SHOW THAT THE LAND WAS NON AGRICULT URAL. AGRICULTURAL LAND CANNOT BECOME NON AGRICULTURAL ONLY FOR A REA SON THAT WERE DEVELOPMENT OF A COMMERCIAL NATURE IN THE NEARBY AR EAS. AS ALREADY NOTED BY US, CO-ORDINATE BENCH IN THE CASE OF SMT. AYISHA FATHIMA (SUPRA) HAD HELD THAT A PIECE OF LAND IN THE IMME DIATE NEIGHBOURHOOD IN VERY SAME VILLAGE WAS AGRICULTURAL . HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF M.S. SRINIVASA NAICKER AND OTHERS VS. ITO, (2007) 292 ITR 481 HAS CLEARLY HELD THAT DEVELOPMENT IN NEARBY AREAS WAS NOT RELEVANT. COMING TO THE D ECISIONS IN THE CASE OF CO-ORDINATE BENCH IN THE CASE OF ABOOKUCKER (SUPRA ), VIJAY SHAH (SUPRA) AND THAT OF COCHIN BENCH IN THE CASE OF ABDUL RAHMIN (SUPRA ) IN OUR OPINION THESE DECISIONS PALE INTO INSIGNIFIC ANCE, CONSIDERING THE SUBSEQUENT JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF MANSI FINANCE LIMITED (SUPRA ) WHICH FOLLOWED THE EARLIER JUDGMENTS OF THE VERY SAME COURT. IN THE CIRCUMSTANCES, WE ARE INCLINED TO FOLLOW THE DECISION OF LD. COMMISSIONER OF INCOME T AX (APPEALS) IN THE CASE OF SHRI. S.A. MAFAZ MOHAMMED AND UPHOLD THE VI EW THAT THE LAND ITA NO.2337/16, 284-285, 312 &323/17 :- 53 - : SOLD BY THE ASSESSEES, IN SO FAR ASSESSMENT YEAR 2 010-2011 IS CONCERNED WAS AGRICULTURAL AND NOT A CAPITAL ASSET COMING WITHIN THE MEANING OF SECTION 2(14) OF THE ACT. THE GAINS ON SALE THEREOF WAS NOT EXIGIBLE TO TAX. 19. IN THE DEPARTMENT APPEAL IN THE CASE OF SHRI. S.A . MAFAZ MOHAMMED, FOR ASSESSMENT YEAR 2010-2011, THERE ARE THREE OTHERS GROUNDS, ONE ASSAILING DELETION OF AN ADDITION OF 75,000/- CLAIMED AS AGRICULTURAL INCOME, SECOND ASSAILING DELETION OF CLAIM OF INTEREST ON TERM LOANS AND THIRD ASSAILING DELETION OF THE DIS ALLOWANCE OF MUNICIPAL TAX PAID. LATTER TWO DISALLOWANCE WERE U NDER THE HEAD INCOME FROM HOUSE PROPERTY. 20. ON THE QUESTION OF AGRICULTURAL INCOME, ASSESSEE H AD REGISTERED THE CONVEYANCE DEED IN FAVOUR OR M/S. I GH AND M/S. ACCENT ON 05.02.2010. HOWEVER, ASSESSEES HAD ABOUT 7.5 AC RES LEFT WITH THEM. NEVERTHELESS, JUST BECAUSE CLAIM OF AGRICULT URAL INCOME WAS ACCEPTED IN THE EARLIER YEARS, WOULD NOT MEAN THAT ASSESSEE SHOULD BE PERPETUALLY ALLOWED THE CLAIM. ASSESSEE COULD NOT B RING IN EVIDENCE TO PROVE THE EARNING OF THE AGRICULTURAL INCOME DESPI TE BEING REQUIRED BY THE LD. ASSESSING OFFICER. HAVING NOT DONE SO, LD. COMMISSIONER OF INCOME TAX (APPEALS) IN OUR OPINION, ERRED IN DELET ING THE ADDITION MADE FOR THE CLAIM OF AGRICULTURAL INCOME OF 75, 000/-. WE SET ASIDE ITA NO.2337/16, 284-285, 312 &323/17 :- 54 - : THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (AP PEALS) ON THIS ASPECT AND RE-INSTATE THE ADDITION. 21. COMING TO THE QUESTION OF TERM LOAN INTEREST OF 43 ,87,541/- AND 51,244/-, AGGREGATING TO 44,38,785/-, LD. COM MISSIONER OF INCOME TAX (APPEALS) CLEARLY OBSERVED THAT LOAN OF 1,50,00,000/- WERE USED FOR CONSTRUCTION OF USMAN ROAD PROPERTY AND THIS WAS CLEARLY INDICATED IN THE SANCTION LETTER. VIZ-A-VI Z LOAN OF 4,75,00,000/- FROM M/S.BOBL, LD. COMMISSIONER OF INCOME TAX (APPE ALS) HAD ACCEPTED THE CLAIM OF THE ASSESSEE WITH A FINDING THAT IT WAS UTILIZED FOR REPAYMENT OF AN ADVANCE RECEIVED FROM M/S. SSP DL, WHICH WAS EARLIER USED FOR REPAYING A LOAN TAKEN FROM M/S. BO BL FOR CONSTRUCTION OF THE BUILDING. NOTHING HAS BEEN BROUGHT ON RECOR D BY THE LD. DEPARTMENTAL REPRESENTATIVE TO SHOW THAT THE FINDI NGS OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) WERE INCORRECT OR NOT BASED ON RECORDS. 22. COMING TO ISSUE OF CORPORATION TAX OF 85,966/-, W HICH WAS ALLOWED BY LD. COMMISSIONER OF INCOME TAX (APPEALS) , ADMITTEDLY, THE RECEIPT WAS IN THE NAME OF SMT. SITHI SAYEEDHA, WHO WAS THE MOTHER OF SHRI. MAFAZ MOHAMMED. IT IS NOT DISPUTED OF 1/3 RD OF THE PROPERTY WAS GIFTED BY HER TO THE ASSESSEE ON 30.03.1994 THR OUGH A REGISTERED RELEASE DEED. HENCE, THE CORPORATION TAX OF 85,966 /- PAID IN THE ITA NO.2337/16, 284-285, 312 &323/17 :- 55 - : NAME OF PREVIOUS OWNER SMT. SITHI SAYEEDHA IN OUR OPINION WAS RIGHTLY CONSIDERED BY THE LD. COMMISSIONER OF INCOM E TAX (APPEALS) AS ALLOWABLE. 23. ACCORDINGLY APPEAL OF THE ASSESSEE SMT. SYED ABDUL KADER AYSTHATH FASLEEN AMINA IN ITA NO. 323/CHNY/2017, FO R ASSESSMENT YEAR 2010-2011 IS ALLOWED. IN SO FAR AS APPEAL OF THE REVENUE IN THE CASE OF SHRI. MAFAZ MOHAMMEDIN ITA NO.2337/CHNY/201 6 IS CONCERNED, ITS GROUNDS 2, 4 AND 5 ARE DISMISSED WH EREAS ITS GROUND NO.3 IS ALLOWED. GROUNDS NO.1 & 6 OF THE LATTER APP EAL ARE GENERAL NEEDING NO SPECIFIC ADJUDICATION. 24. NOW, WE TAKE UP THE APPEAL OF THE ASSESSEE SMT. SY ED ABDUL KADER AYSTHATH FASLEEN AMINA FOR ASSESSMENT Y EAR 2012-2013 IN ITA NO.312/CHNY/2017. 25. ASSESSEE IS AGGRIEVED ON COMPENSATION OF 76,46,280 /- RECEIVED ON ACQUISITION OF 666 SQ. MTRS LAND AT SU RVEY NO.14/3A2B, BEING TREATED AS EXIGIBLE TO CAPITAL GAINS. LD. CO UNSEL FOR THE ASSESSEE SUBMITTED THAT THIS WAS PART OF THE PROPERTY CONSID ERED BY THE TRIBUNAL IN APPEAL OF THE REVENUE AND ASSESSEES IN ITA NO.23 37/CHNY/2016 AND ITA NO.323/CHNY/2017 FOR ASSESSMENT YEAR 2010-2 011. ACCORDING TO HIM, IF THE LAND WAS HELD AS AGRICULTU RAL, THE COMPENSATION RECEIVED WOULD NOT BE EXIGIBLE TO TAX . NO DOUBT, WE ITA NO.2337/16, 284-285, 312 &323/17 :- 56 - : HAVE ALREADY UPHELD THE VIEW OF THE LD. COMMISSIONE R OF INCOME TAX (APPEALS) IN THE CASE OF SHRI. SHRI. MAFAZ MOHAMMED FOR ASSESSMENT YEAR 2010-11, THAT THE LAND WAS AGRICULTURAL AND SALE THEREOF WAS NOT EXIGIBLE TO TAX. HOWEVER, NATURE OF THE LAND WHICH WAS TRANSFERRED IN A SUBSEQUENT YEAR CANNOT BE CONSIDERED AS AGRICULTU RAL ONLY FOR A REASON THAT ANOTHER PART OF THE SAME LAND WAS TREAT ED SO, IN AN EARLIER YEARS. AS ALREADY MENTIONED BY US, THOUGH THE INTENTION AT THE TIME OF PURCHASE OF THE LAND INITIALLY WAS CRUCIAL, SUBSEQUENT EVENTS, IF THEY SHOW STRONG INDICATION OF A CHANGE OF SUCH INT ENTION, SUCH EVENTS NEED TO BE CONSIDERED. ONCE ASSESSEES SOLD 1.85 AC RES OUT OF 9.32 ACRES, THEY BECAME FULLY AWARE THAT THE LAND SOLD W AS BEING COMMERCIALLY EXPLOITED. WHEN THEY SOLD THE FIRST P ARCEL OF LAND, THE INITIAL INTENTION AT THE TIME OF PURCHASE WAS VERY RELEVANT. HOWEVER, WE CANNOT SAY ASSESSEES HAD THE SAME INTENTION IN H OLDING THE BALANCE LAND AS THEY HAD INITIALLY. NO DOUBT, THEY CAN BRING IN EVIDENCE TO SHOW THE AGRICULTURAL USE IN SUBSEQUENT YEARS, IF THEY ARE CONVINCED ON THE CONTINUING AGRICULTURAL NATURE OF THE LAND. HOWEVER ON QUESTION LIKE NATURE OF LAND SOLD, THERE CAN BE NO RULE OF RES- JUDICATE. LOWER AUTHORITIES HAD SIMPLY FOLLOWED TH EIR DECISION FOR ASSESSMENT YEAR 2010-11 AND HELD THE LAND ACQUIRED BY GOVERNMENT AS NON-AGRICULTURAL, FOR ASSESSMENT YEAR 2012-2013 ALSO. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE OPINION THAT THE ITA NO.2337/16, 284-285, 312 &323/17 :- 57 - : QUESTION REGARDING NATURE OF THE LAND, WHICH WAS SU BJECT TO ACQUISITION DURING THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEA R 2012-2013 REQUIRES RE-VISIT BY THE LD. ASSESSING OFFICER. WE THEREFORE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES BELOW AND REMIT THI S ISSUE BACK TO THE FILE OF LD. ASSESSING OFFICER FOR CONSIDERATION AFR ESH AS PER LAW. ACCORDINGLY APPEAL OF THE ASSESSEE SMT. SYED ABDUL KADER AYSTHATH FASLEEN AMINA FOR ASSESSMENT YEAR 2012-2013 IS ALLO WED FOR STASTICAL PURPOSE. 26. NOW, WE ARE LEFT WITH AN APPEAL OF THE DEPARTMENT IN ITA NO.285/CHNY/2017 IN THE CASE OF SHRI. MAFAZ MOHAMME D FOR ASSESSMENT YEAR 2010-2011. IN THIS APPEAL, DEPARTME NT ASSAILS THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL S) QUASHING AN ORDER PASSED BY THE LD. ASSESSING OFFICER U/S.154 OF THE ACT. 27. LD. ASSESSING OFFICER HAD PASSED AN ORDER U/S.154 O F THE ACT NOTING THAT INTEREST U/S.234A OF THE ACT WAS OMITTE D TO BE CHARGED THOUGH THE RETURN WAS FILED BY THE ASSESSEE BELATED LY ON 27.03.2012. AS PER THE LD. ASSESSING OFFICER BY VIRTUE OF EXPLA NATION (3) OF SECTION 234A(1) OF THE ACT WHERE AN ASSESSMENT WAS DONE FOR THE FIRST TIME SUCH ASSESSMENT WAS TO BE CONSIDERED AS A REGULAR ASSESSMENT. ACCORDING TO THE LD. ASSESSING OFFICER, RETURN WAS FILED BY THE ASSESSEE ON 27.03.2012, PURSUANT TO THE ISSUE OF A NOTICE U/ S.148 OF THE ACT. ITA NO.2337/16, 284-285, 312 &323/17 :- 58 - : HENCE, ACCORDING TO HIM, ASSESSEE WAS LIABLE FOR IN TEREST U/S.234A OF THE ACT. 28. LD. COMMISSIONER OF INCOME TAX (APPEALS) ON ASSESSE ES APPEAL AFTER GOING THROUGH SECTION 234A OF THE ACT HELD THAT INTIMATION ISSUED U/S.143(1) (A) OF THE ACT COULD NOT BE IGNOR ED AND ORDER PASSED SUBSEQUENTLY U/S.143(3) R.W.S147 OF THE ACT COULD N OT BE CONSIDERED AS AN ASSESSMENT DONE FOR THE FIRST TIME. ACCORDING LY, HE HELD THE RECTIFICATION ORDER UNDER SECTION 154 OF THE ACT IN VALID. 29. NOW BEFORE US, LD. DEPARTMENTAL REPRESENTATIVE SU BMITTED THAT THERE WAS A CLEAR MISTAKE IN THE ORIGINAL ASSE SSMENT DONE U/S.143(3) R.W.S. 147 OF THE ACT, WHEREIN INTEREST WAS NOT CALCULATED CORRECTLY. ACCORDING TO HIM, THIS WAS EXIGIBLE TO A RECTIFICATION. 30. PER CONTRA, LD. AUTHORISED REPRESENTATIVE STRONGLY SUPPORTED THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (AP PEALS). 31. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. QUESTION HERE IS INTERPRETATION OF EXPLANATION (3) OF SECTION 234A(1) OF THE ACT. THE SAID EXPLANATION IS REPRODUCED HEREUNDER:- EXPLANATION 3. WHERE, IN RELATION TO AN ASSESSME NT YEAR, AN ASSESSMENT IS MADE FOR THE FIRST TIME 2UND ER SECTION 147 OR SECTION 153A, THE ASSESSMENT SO MADE ITA NO.2337/16, 284-285, 312 &323/17 :- 59 - : SHALL BE REGARDED AS A REGULAR ASSESSMENT FOR THE PURPOSES OF THIS SECTION. AS PER THE LD. ASSESSING OFFICER INTIMATION U/S.143 (1) OF THE ACT COULD NOT BE CONSIDERED AS AN ASSESSMENT AND THEREFORE THE ASSESSMENT DONE PURSUANT TO THE NOTICE UNDER SECTION 148 OF TH E ACT COULD BE CONSIDERED AS THE FIRST REGULAR ASSESSMENT. ACCORDI NG TO HIM, THE ASSESSMENT DONE UNDER SECTION 147 OF THE ACT HAD T O BE CONSTRUED AS A REGULAR ASSESSMENT FOR APPLICATION OF SECTION 234 A OF THE ACT. IN OUR OPINION, THE QUESTION OF INTERPRETATION OF EXPLANAT ION (3) TO SECTION 234A(1) IS NOT SOMETHING BEYOND DEBATE. WHAT CAN BE RECTIFIED U/S.154 OF THE ACT IS ONLY A GLARING AND APPARENT M ISTAKE AND NOT ONE WHICH REQUIRES LONG DEBATES AND INTERPRETATION OF L AW. IN TAKING THIS VIEW, WE ARE FORTIFIED BY THE JUDGMENT OF HONBLE APEX COURT IN THE CASE OF ITO VS VOLKHART BROS (1971) 81 ITR 50 . WE ARE THEREFORE OF THE OPINION THAT LD. COMMISSIONER OF INCOME TAX (AP PEALS) WAS JUSTIFIED IN QUASHING THE ORDER OF THE LD. ASSESSIN G OFFICER. WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS). APPEAL OF THE DEPARTMENT IN ITA NO.285/CHNY/2017 STANDS DISMISSED. 32. TO SUMMARIZE THE RESULTS, THE APPEAL OF THE REVENUE IN 2337/CHNY/2016 IS PARTLY ALLOWED, APPEALS OF THE AS SESSEE IN ITA ITA NO.2337/16, 284-285, 312 &323/17 :- 60 - : NO.323/CHNY/2017 IS ALLOWED, APPEAL OF THE ASSESSE E IN ITA NO.312/CHNY/2017 IS ALLOWED FOR STATISTICAL PURPOSE AND APPEALS OF THE REVENUE IN ITA NOS.284 AN 285/CHNY/2017 ARE DIS MISSED. ORDER PRONOUNCED ON FRIDAY, THE 18 TH DAY OF JANUARY, 2019, AT CHENNAI. SD/- ( DUVVURU RL REDDY ) / JUDICIAL MEMBER SD/- (ABRAHAM P. GEORGE) / ACCOUNTANT MEMBER / CHENNAI / DATED:18 TH JANUARY, 2019. KV / COPY TO: 1 . / APPELLANT 3. ( ) / CIT(A) 5. / DR 2. / RESPONDENT 4. / CIT 6. / GF