Shri Rajesh S Awachat, Nagpur V. Asstt.Commissioner of Income Tax Cirecle-6, Nagpur

ITA 286/NAG/2012

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1398 (ITAT-NAGPUR)
• Duration Of Justice: 4 year(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-08-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 03-05-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 11-07-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A R NINAWE
• Assessee Lawyers: S C THAKAR; C J THAKAR
• Keywords: Capital asset
• Section: 54B; 133(6); 54; 139

Judgement Text

1 ITA NOS . 286 & 287/NAG/2012 IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. (S.M.C.) I.T.A. NO. 286 /NAG/201 2 . ASSESSMENT YEAR : 2006 - 07 SHRI RAJESH S. AWACHAT, ASSTT. COMMISSIONER OF INCOME - TAX, NAGPUR. VS. CIRCLE - 6, NAGPUR. PAN ABJPA 9378F APPELLANT. RESPONDENT. I.T.A. NO. 287/NAG/2012. ASSESSMENT YEAR : 2006 - 07 SHRI RAKESH S. AWACHAT, ASSTT. COMMISSIONER OF INCOME - TAX, NAGPUR. VS . CIRCLE - 6, NAGPUR. PAN ABGPA 3525L APPELLANT. RESPONDENT. APPELLANT BY : SHRI C.J. THAKAR & SHRI S.C. THAKAR. RESPONDENT BY : SHRI A.R. NINAWE. DATE OF HEARING : 18 - 07 - 2016 DATE OF PRONOUNCEMENT : 9 TH AUGUST, 2016 O R D E R THESE ARE THE APPEALS BY TWO SEPARATE ASSESSEES AGAINST THE COMMON ORDER OF LEARNED CIT(APPEALS) - II, NAGPUR DATED 16 - 03 - 2012 AND PERTAIN TO ASSESSMENT YEAR 2006 - 07. THE COMMON GROUNDS OF APPEAL READ AS UNDER : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE TH E LEARNED C.I.T.(A) ERRED IN NOT GRANTING EXEMPTION U/S 54B TO THE ASSESSEE AND HIS BROTHER AMOUNTING TO RS.69,75,808/ - IN RESPECT OF LANDS PURCHASED BY THEM FOR BEING USED FOR AGRICULTURAL PURPOSES, OUT OF THE SALE CONSIDERATION OF 2 ITA NOS . 286 & 287/NAG/2012 RS.86,25,641/ - FOR SALE OF THEIR AGRICULTURAL LAND BEING KHASRA NO. 35/2 AT MOUZA KACHIMET AND ERRED IN CONFIRMING THE INCOME AS PER ASSESSMENT ORDER. 2. LEARNED C.I.T.(A) ERRED IN NOT CONSIDERING THE WRITTEN SUBMISSIONS AND EVIDENCE IN THE CASE IN PROPER PERSPECTIVE AND WAS CARRIE D AWAY BY EXTRANEOUS AND IRRELEVANT SURMISES AND CONJUNCTURES AND HENCE CAME TO AN ERRONEOUS CONCLUSIONS BOTH ON FACTS AND LAW AND WRONGLY DENIED THE CLAIM OF EXEMPTION. 2. BRIEF FACTS OF THE CASE ARE AS UNDER : THE APPELLANT RAJESH AWACHAT ALONG WITH HIS BROTHER RAKESH AWACHAT HAD PURCHASED AGRICULTURAL LAND BEARING KHASRA NO. 35/3 WITH CLASS - I BHUMISWAMY RIGHTS IN MOUZA KACHIMET AT NAGPUR (CITY) TAH AND DIST NAGPUR ADMEASURING 0.17 HECTARES BY REGISTERED SALE DEED DT. 13 - 06 - 1995 FROM JAIKA AUTOMOBILES FO R A CONSIDERATION OF RS.1,69,597/ - , INFLATION INDEXED COST THEREOF IN THE YEAR 2005 WAS RS.3,25,440/ - . SIMILARLY THE DEVELOPMENT CHARGES, BROKERAGE AND SUCH OTHER EXPENSES FOR TRANSFER AMOUNTED TO RS.6,84,369/ - AND THERE IS NO DISPUTE TO THE SAID FACTS. 3. THE APPELLANT AND HIS BROTHER AGREED TO SELL THE SAID LAND BY AGREEMENT DATED 02 - 12 - 2014 TO DHRU CARS PVT. LTD. THROUGH DIRECTOR SHRI HEMAND NATWARLAL DHRU OR ITS NOMINEE FOR A CONSIDERATION OF RS.86,25,641/ - AND RECEIVED PART PAYMENT OF RS.10,00,000/ - (R UPEES TEN LACS) BY TWO CHEQUES OF RS.5,00,000/ - EACH DATED 02 - 12 - 2014 BY CHEQUE NOS. 303678 AND 303680 BOTH DATED 02 - 12 - 2014 IN FAVOUR OF RAJESH AWACHAT AND RAKESH AWACHAT RESPECTIVELY. THE REGISTERED SALE DEED WAS EXECUTED ON 19 - 10 - 2005 AND THE CONSIDERA TION AS AGREED WAS RS.86,25,641/ - . THE SAID CONSIDERATION WAS RECEIVED BY THE SAID TWO CO - OWNERS AS UNDER : RS. 5,00,000 ON 02 - 12 - 2004 BY CHEQUE. RS. 5,00,000 ON 02 - 12 - 2004 BY CHEQUE. RS.10,00,000 ON 18 - 01 - 2005 BY CHEQUE. RS. 5,00,000 ON 24 - 03 - 200 5 BY CHEQUE. 3 ITA NOS . 286 & 287/NAG/2012 RS.10,00,000 ON 04 - 04 - 2005 BY CHEQUE. RS. 5,89,801 ON 20 - 09 - 2005 BY CHEQUE. RS. 27,23,020 ON 01 - 10 - 2005 BY CHEQUE. RS. 18,12,820 ON 01 - 10 - 2005 BY CHEQUE. ----------------------- TOTAL RS.86,25,641 OUT OF THE ABOVE SALE PROCEEDS THE APPELLANT AND HIS BROTHERS UTILIZED RS.69,75,748/ - FOR PURCHASE OF THREE AGRICULTURAL LANDS AT UMARGAON, JAMTHA AND DURGDHAMNA AS UNDER : UMARGAIB RS. 23,67,333 JAMTHA AGRICULTURAL LAND RS. 33,62,600 DURGDHAMNA AGRICULTURAL LAND RS. 12,45,815 ------------------------ TOTAL RS. 69,75,748 -------- ------------------ THE APPELLANT ON ABOVE FACTS COMPUTED TAXABLE CAPITAL GAIN AS UNDER, WHILE THE AO COMPUTED CAPITAL GAIN AS UNDER : CAPITAL GAIN COMPUTED BY ASSESSEE CAPITAL GAIN COMPUTED BY A.O. 1. SALE VALUE OF AGRL. LAND 86,26,641 1) SALE VAL UE 86,25,641 2. INDEXED COST 3,25,440 2) INDEXED COST 3,25,440 OF ACQUISITION 3. EX PENDITURE ON 6,84,369 3) EXPENDITURE 6,84,369 TRANSFER ETC. ON TRANSFER ETC. _____________ __________ 10,09,809 10,09,809 10,09,809 10,09,809 __________ ________ 76,15,832 76,15,832 4 ITA NOS . 286 & 287/NAG/2012 EXEMPTION U/S 54 - B EXEMPTION U/S 54 - B AGRI. LAND 23,67,333 NIL. UMARGAON AGRI. LAND 33,62,660 JAMTHA AGRI. LAND 12,45,815 DURGDHAMNA ___________ 69,75,808 69,75,808 __________ ___________ TAXABLE CAPITAL GAIN 6,40,024 TAXABLE CAPITAL GAIN 76,15,832 SHARE 3,20,010 SHARE 38,07,916 OF RAJESH OF RAJESH SHARE OF 3,20,000 SHARE 38,07,916 RAKESH OF RAKESH. _____________ ____________ 6,40,020 76,15,832 THE MAIN OBJECTION OF THE AO IN NOT GRANTING EXE MPTION UNDER SECTION 54 - B ARE BRIEFLY AS UNDER : 1) THE ASSESSEE HAS NOT PROVED THAT HE HAS CARRIED ON AGRICULTURE ON LAND IN QUESTION FOR TWO YEARS PRIOR TO THE DATE OF SALE OF LAND IN QUESTION I.E. 19 - 10 - 2005 ON WHICH DATE THE LAND BEARING KH. NO. 35/3 AT K ACHIMET SOLD BY REGISTERED SALE DEED. 2) THAT OUT OF THE THREE PIECES OF AGRICULTURAL LAND PURCHASED BY THE ASSESSEE, TWO PIECES VIZ. (I) LAND AT UMARGAON WAS PURCHASED ON 07 - 07 - 2005 AND (II) LAND AT DURGDHAMNA WAS PURCHASED ON 07 - 05 - 2005 I.E. THEY WERE PURCH ASED PRIOR TO THE DATE OF SALE OF KHASRA NO. 35/3 5 ITA NOS . 286 & 287/NAG/2012 KACHIMET LAND SOLD BY REGISTERED SALE DEED DT 19 - 10 - 2005. ACCORDING TO THE A.O. THE REQUIREMENT OF SECTION 54 - B IS THAT PURCHASE OF ANY OTHER LAND USED FOR AGRICULTURAL PURPOSE SHOULD BE WITHIN A PERIOD OF TWO YEARS FROM THE DATE OF TRANSFER AND NOT BEFORE. ONLY THE LAND AT JAMTHA WAS PURCHASED ON 28 - 04 - 2006 I.E. AFTER THE DATE OF SALE OF KACHIMET LAND. 4. UPON ASSESSEES APPEAL, LEARNED CIT(APPEALS) CONSIDERED THE ASSESSEES SUBMISSIONS AND ALSO OBTAINED TH E REMAND REPORT FROM THE AO. THEREAFTER THE LEARNED CIT(APPEALS) ADJUDICATED AS UNDER : 6.1 THE ASSESSEE WAS ASKED TO EXPLAIN THE CLAIM U/S 54B IN RESPONSE TO THIS, THE ASSESSEE SUBMITTED HIS SUBMISSION DT. 14.10.2008 THAT HE HAD SOLD A PIECE OF NON AGRIC ULTURAL LAND BEARING KH. NO. 35/3 SITUATED AT KACHIMET, NAGPUR AND IN TURN HAD PURCHASED AGRICULTURAL LAND AT UMARGAON, JAMTHA AND DRUGDHAMNA DATE OF PURCHASE AS PER THE SALE DEED BEING 07.07.2005, 28.04.2006 & 17.05.2005 RESPECTIVELY. 6.2 ASSESSEE WAS ASKED TO PROVE THAT AGRICULTURAL ACTIVITY WERE CARRIED OUT IN THE ORIGINAL PIECE OF LAND SOLD, SITUATED AT KACHIMET, NAGPUR. HE WAS ASKED TO PROVE THAT AGRICULTURAL ACTIVITY WAS BEING CARRIED OUT IN THE PIECE OF LAND AT KACHIMET IN THE PRECEEDING 2 YEARS F ROM THE DATE DOF TRANSFER OF THIS LAND, I.E. 2 YEARS IN RELATION TO 19.10.2005 (WHICH IS THE DATE OF TRANSFER OF KACHIMET LAND AS PER THE SALE DEED) WHICH IS ONE OF THE CONDITION LAID DOWN BY SECTION 54B OF I.T. ACT. 6.3 IN ORDER TO PROVE THAT AGRICULTURAL ACTIVITY WAS CARRIED OUT AT KACHIMET, THE ASSESSEE SUBMITTED THE PURCHASE BILLS OF MANGO PLANTS DT. 27.12.2005, PURCHASE BILL OF THE SEEDS DT. 24.12.2005 THESE DATES ARE AFTER THE DATE OF SALE OF KACHIMET LAND HENCE PROVING THAT THESE BILLS WERE NOT FOR THE AGRICULTURAL ACTIVITY CARRIED OUT AT KACHIMET. 6.4 THE SALE DEED OF THE KACHIMET LAND CLEARLY SPECIFIES THAT IT IS A PIECE AND PARCEL OF NON AGRICULTURAL LAND - MAKING IT CRYSTAL CLEAR THAT NO AGRICULTURAL ACTIVITY WAS EVEN CARRIED OUT IN THIS LAND. 6.5 THE ADJOINING LANDS SURROUNDING THE KACHIMET LAND ARE OCCUPIED BY COMMERCIAL, INDUSTRIAL SECTORS LIKE KETAN HUNDAI, SEVA MOTORS PROVING THAT THIS LAND IS A MORE IN COMMERCIAL NATURE RATHER THAN AGRICULTURAL IN NATURE. 6.6 THE ASSESSEES INC OME TAX RETURNS FOR THE PRECEDING TWO YEARS DO NOT REFLECT ANY AGRICULTURAL INCOME WHICH GOES TO SHOW THAT THE ASSESSEE HAD NEVER CARRIED OUT AGRICULTURE. 6 ITA NOS . 286 & 287/NAG/2012 6.7 DURING THE COURSE OF ASSESSMENT PROCEEDINGS , ASSESSEE WAS CONFRONTED WITH THE DATES OF PURCHASE O F THE NEW LANDS AS PER THE SALE DEEDS OF THE PURCHASED LANDS. THE SALE DEED OF MOUZA KACHIMET LAND GIVES THE DATE OF TRANSFER AS 19.10.2005. THE SALE DEED OF THE UMARGAON LAND MENTIONS THE DATE OF PURCHASE AS ON 07.07.2005. THE SALE DEED OF DRUGDHAMNA LAN D MENTIONS THE DATE OF PURCHASE AS 17.05.2005. AS PER SECTION 54B OF I.T. ACT THE ASSESSEE SHOULD HAVE PURCHASED NEW LANDS WITHIN 2 YEARS FROM THE DATE OF TRANSFER OF THE ORIGINAL ASSET (KACHIMET LAND DATE OF TRANSFER 19.10.2005). THE ASSESSEE HAS PURCH ASED THE NEW LANDS AT DRUGDHAMNA & UMARGAON PRIOR TO THE DATE OF TRANSFER OF THE ORIGINAL ASSET. 6.8 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, PHOTOGRAPHS OF THE NEW LANDS PURCHASED WERE TAKEN AND ARE PLACED ON RECORD WHICH CLEARLY INDICATE THAT NO AGRI CULTURAL ACTIVITY COULD EVER HAVE BEEN CARRIED OUT IN THESE LANDS AND THE INTENTION OF THE ASSESSEE OF CARRYING OUT AGRICULTURE IN THESE LANDS IS NOT PROVED BEYOND DOUBT. 6.9 THE 7/12 EXTRACT OF THE NEW LANDS PURCHASED BY THE ASSESSEE CLEARLY READS THAT TH ESE ARE BARREN LANDS (PADIT IN MARATHI). INFORMATION U/S 133(6) OF I.T. ACT WAS CALLED FROM THE PATWARI OF UMARGAON VILLAGE WHICH ALSO REFLECTS THAT THE LAND PURCHASED BY THE ASSESSEE HAS BEEN CONVERTED TO NON AGRICULTURAL LAND FOR BEING USED FOR INDUSTRI AL PURPOSES. 6.10 AS PER THE ORDER SHEET ENTRY DT. 15.12.2008, DRUGDHAMNA LAND IS NOT IN THE POSSESSION OF THE ASSESSEE AND IS DISPUTED. 6.11 IN SUPPORT OF HIS CLAIM THAT THE TRANSFER TOOK PLACE ON 02.04.2005, THE ASSESSEE SUBMITTED AN AGREEMENT OF SALE DT . 02.12.2004 HIS AGREEMENT OF SALE IS NEITHER NOTORISED NOR REGISTERED. 6.12 ASSESSEES COUNSEL PLACED HIS RELIANCE ON CIRCULAR NO. 359 DT. 10.05.1983 FOR SECTION 54E ASSUMING THAT SECTION 54B & 54E ARE INTERCHANGEALE. IT WAS MADE EXPLICITLY CLEAR TO T HE ASSESSEES COUNSEL THAT SECTION 54B & 54E ARE NOT THE SAME. 7. SOLD LAND OF 18000 SQ.FT. ON WHICH NO MEANINGFUL AGRICULTURAL OPERATIONS WERE POSSIBLE NOR BEING DONE BY THE APPELLANT NOR ANY AGRICULTURAL INCOME SHOWN IN TWO YEARS 0.17 HECTOR NEARLY EQUAL TO 18000 SQ.FT. WHICH IS A VERY SMALL PLOT TO CARRY OUT ANY AGRICULTURAL ACTIVITY ONLY PROOF SUBMITTED BY THE APPELLANT IS; PAYMENT MADE FOR BOREWELL DUGE IN 1997 FOR RS. 12,600/ - PAYMENT OF AGRICULTURE IMPLANT BILL 1047 7 ITA NOS . 286 & 287/NAG/2012 TWO BILLS FOR PURCHASE OF VEG ETABLE SEEDS PURCHASE AFTER SALE OF LAND A LAND REVENUE WAS PAID AT RS.1 I.E. UNDER AGRICULTURAL LAND REVENUE. IT IS SETTLED LAW THAT MERE PRODUCING SOME VEGETABLE OR SOME PRODUCE OUT OF LAND AND GETTING SMALL SUM OF MONEY OUT OF IT OR VEGETABLE OUT OF IT IS NOT AGRICULTURAL ACTIVITY OUT OF LAND WHOSE VALUE IS IN FAR EXCESS OF SUCH INCOME. 7.1 ADMITTEDLY THE SAID 18000 SQ. FT. OF LAND WAS NEXT TO HONDA SHOW ROOM OWNERS OF WHICH PURCHASED THE LAND FOR EXPANDING THEE BUSINESS AND APPELLANT SOLD THIS PLOT OF LAND TO THEM. NO EVIDENCE OF ANY OF THESE ACTIVITY RELATABLE TO AGRICULTURAL WAS AVAILABLE WITH THE APPELLANT I.E. NO TILLING OF LAND NO SOWING OF CROP NO PURCHASE OF SEEDS WAS DONE NO PESTICIDE / FERTILI9ZER / PURCHASED OR WERE USED. NO HARVESTING WAS DONE NO TRANSPORTING OF PRODUCE WAS DONE NO ELECTRIC /DIESEL CONSUMPTION FOR AGRICULTURAL ACTIVITY WAS DONE FOR WHICH A FARMER ONLY KNOWN THAT IT IS A MAJOR COMPONENT FOR WATERING/HARVESTING ETC. NO SALE BILL ETC. WERE AVAILABLE WITH THE APPELLANT AND ONLY CLAIM OF SOME VEGETABLE BEING GROWN FOR SELF CONSUMPTION / OUT OF SUCH A SMALL PIECE OF LAND. CLAIM OF APPELLANT THAT TILLING ETC. WAS DONE BY EMPLOYEES OF THE APPELLANT IT IS REALLY HIGHLY IMPROBABLE TO SAY THAT APPELLANT SENT HIS EMPLOYEES TO TILLING/PLANTING/WATERING AND GUARDING THE PRODUCE FROM A DISTANCE TO THIS PLOT OF LAND TO GET SOME VEGETABLE JUST TO MAINTAIN THE AGRICULTURAL NATURE OF LAND AS VEGETABLE OUT OPF 18000 SQ.FT. CANNOT GIVE YOU SO MUCH OF VALUE TO SEND EMPLOYEES TO DO THIS WORK OF VEGETABLE GROWING WHICH COULD OTHERWISE BE AVAILABLE AT APPELLANTS PLACE OF RESIDENCE FOR A MUCH LESSER OF THIS COST. THE CLAIM OF APPELLANT IS WITHOUT ANY PROOF AND BEYOND ANY HUMAN PROBABILITY THAT A REASONAB LE AND PRUDENT MAN WILL TAKE SO MUCH PAIN AND INCUR COST AS PER APPELLANTS POSITION OF SENDING 8 ITA NOS . 286 & 287/NAG/2012 EMPLOYEES TO DO THIS WORK TO GET VEGETABLE OUT OF 18000 SQ.FT. OF PLOT SITUATED AT SUCH A DISTANCE FROM THE PLACE OF RESIDENCE AND WORK. IT IS CLEAR THAT NO AG RICULTURAL ACTIVITY OF ANY SORT WAS CARRIED OUT BY THE APPELLANT AT THE SAID PLOT OF LAND. 7.2 DURING ASSESSMENT APPELLANT PRODUCED LETTERS : AGREEMENT TO SALE DT. 24.12.2004 DT. 01.04.2005 02.04.2005 AND TRIED TO PROVE THAT POSSESSION WAS DELIVERE D ON 02.04.2005 AND HENCE PURCHASED LAND AT UMARGAON ON 17.07.2005 AT DURGDHAMNA ON 17.05.2005 AT JAMTHA ON 28.09.2006 TOOK AFTER SELL. THOUGH THE LAND SALE WAS REGISTERED ON 19.10.2005 AND APPELLANT HAD GOT ONLY RS. 25 LAKHS FOR POSSESSION WAS HANDED OVER OUT OF RS. 86,25,641/ - RS. 5,00,000 ON 02.12.2004 BY CHEQUE RS. 5,00,000 ON 02.12.2004 BY CHEQUE RS. 10,00,000 ON 18.01.2005 BY CHEQUE RS. 5,00,000 ON 24.03.2005 BY CHEQUE RS. 10,00,000 ON 04.04.2005 BY CHEQUE RS. 5,89,801 ON 20.09.20 05 BY CHEQUE RS. 27,23,020 ON 01.10.2005 BY CHEQUE RS. 18,12,820 ON 01.10.2005 BY CHEQUE ____________________ TOTAL RS.86,25,641 ____________________ AGAIN TO PROVE THAT BEFORE TOOK PLACE EVEN BEFORE 1/3 RD OF CONSIDERATION WAS RECEIVED IS BEYOND PRACTICE OF ANY SALE OF LAND IN INDIA. NOBODY, I REPEAT NOBODY WHO HAS DONE TRANSACTION IN IMMOVABLE PROPERTY WILL EVER AGREE TO GIVE POSSESSION OF PROPERTY EVEN BEFORE REGISTRATION OF DEED IS DONE AND THAT TO WH EN AND 1/3 RD OF AMOUNT OF CONSIDERATION IS RECEIVED BY HIM. THESE LETTERS ASKING FOR GIVING OF POSSESSION SELF SERVING DOCUMENT PRODUCED TO SATISFY AO WHEN THE FACT 9 ITA NOS . 286 & 287/NAG/2012 THAT THE PURCHASE OF LANDS WAS DONE BEFORE SALE OF LAND (WHEREAS CAPITAL GAIN WAS SOUGHT TO BE EXEMPT) AND AO RAISED THIS QUERY. A. PURCHASED LAND AT UMARGAON : DT. OF TRANSFER 07.07.2005 AMOUNT RS.23,67,333/ - I) 7/12 SHOWS LAND AS PADIT. II) CONVERTED INTO NON AGRICULTURAL LAND FOR NON AGRICULTURAL PURPOSE. III) INSPECTION CONDUCTED ON 20.04.200 8 ON HIGHWAY COOLER FACTORY RAM COOLER, DURGDHAMNA. B. JAMTHA VISITED ON 20.04.2008 DT. OF TRANSFER 28.04.2006 AMOUNT RS. 33,62,600/ - I) ON MAIN ROAD ADJOINING LAND CONVERTED INTO LAY OUT OF PLOTS. II) SURROUNDED BY SAHARA CITY & VIDARBHA CRICKET ASSOCIATION. LAND IS LYING BARREN. NO AGRICULTURAL ACTIVITY ROCK AND HOLDERS. C. DURGDHAMNA DT. OF TRANSFER 17.05.2005 AMOUNT RS. 12,45,815/ - . I) NO 7/12 II) NOT EVEN IN POSSESSION OF THE APPELLANT III) NO BENEFIT OF 54B. HENCE IT IS CLEAR THAT NONE OF THE LAND PURCHASED BY THE APPELLANT I.E. UMARGAON, DURGDHAMNA & JAMTHA WERE INTENDED TO BE FOR AGRICULTURAL PURPOSE NOR THEY WERE EVER PUT TO SUCH USE. I) PLOT OF UMARGAON : LAND HAS BEEN LYING BARREN AND IS RIGHT NEXT TO HIGHWAY AND IT IS OCCUPIED BY THE APPE LLANT COOLER FACTORY AND HAS ALSO BEEN CONVERTED FOR INDUSTRIAL USE HENCE, THIS PLOT CANNOT BE SAID TO BE AGRICULTURAL LAND FOR PURPOSE OF SECTION 54B. APPELLANT NEVER EVEN DID ANY AGRICULTURAL ACTIVITY NOR EARNED ANY AGRICULTURAL INCOME AND THIS LAND EVE N AFTER PURCHASE, IN FACT, APPELLANT APPLIED FOR CONVERTING LAND TO NON AGRICULTURAL USE AND GOT IT CONVERTED INTO INDUSTRIAL PLOT. 10 ITA NOS . 286 & 287/NAG/2012 II) JAMTHA PLOT : LAND HAS BEEN LYING BARREN AS PER 7/12 EXTRACT PRODUCED. IT IS RIGHT NEXT TO VIDARBHA CRICKET ASSOCIATIO N AND SAHARA CITY AND ENTIRE ONE IS WELL DEVELOPED. NO AGRICULTURE ACTIVITY HAS BEEN DONE IN THAT LAND. NO AGRICULTURAL INCOME FROM LAND. III) PLOT AT DURGDHAMNA NEVER COME TO THE POSSESSION OF THE APPELLANT HENCE THE QUESTION OF EXEMPTION ON SUCH LAND DOE S NOT ARISE. MAKE APPELLANT ELIGIBLE FOR EXEMPTION U/S 54B. HENCE WE SEE THAT APPELLANTS CASE FOR EXEMPTION U/S 54B FAILING ON ALL ACCOUNT I.E. A) ON LAND SOLD, NO AGRICULTURAL ACTIVITY WAS DONE BY THE APPELLANT. B) IN CASE OF TWO PLOT OF UMARGAON AND DURGDHAMNA WERE PURCHASED BEFORE SALE OF LAND BY THE APPELLANT. HENCE, CONDITION OF SECTION 54B NOT SATISFIED. I) LAND HAS BEEN LYING BARREN. NO AGRICULTURAL ACTIVITY WAS CARRIED OUT BY THE APPELLANT ON THE PLOTS PURCHASED AND APPELLANT CONVERTED IT INTO INDUSTRIAL PLOT AND STARTED USING IT FOR COOLER FACTORY RAM COOLER AT UMARGAON. II) LAND AT JAMTHA LYING BARREN. NO AGRICULTURAL ACTIVITY ONLY ROCK AND BOLDERS, A DEVELOPED AREA SURROUNDED BY CRICKET STADIUM AND SAHARA CITY AND SURROUNDING AREA CONVERTED INT O PLOTS. C) LAND AT DURGDHAMNA WAS NEVER PASSED BY ASSESSEE DUE TO DISPUTE POSSESSED BY THE APPELLANT NEVER DISPUTED PROPERTY, HENCE NO AGRICULTURAL ACTIVITY, NOT ELIGIBLE FOR EXEMPTION U/S. 54B 5. AGAINST THE ABOVE ORDER, BOTH THE ASSESSEES ARE IN APPEAL BEFORE THE ITAT. 6. I HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS SOLD AGRICULTURAL LANDS AND PURCHASED AGRICULTURAL LANDS. HENCE THE ASSESSEE IS ENTITLED TO DEDUCTION U/S 54B OF I.T. ACT. LEARNED COUNSEL S TATED THAT TO PROVE AGRICULTURAL USE OF LAND ASSESSEE HAS SUBMITTED THE EVIDENCE FOR THE PURCHASE OF SEEDS OF BRINJAL AND ANKUR BHINDI. HENCE VEGETABLE WAS GROWN AND USED FOR SELF CONSUMPTION. THE 11 ITA NOS . 286 & 287/NAG/2012 SAME WERE NOT MARKETED. HENCE NO AG RICULTURAL INCOME HAS BEEN SHOWN. LEARNED COUNSEL FURTHER SUBMITTED THAT SECTION 54B ENVISAGES THE UTILIZATION OF CONSIDERATION RECEIVED ON SALE OF LAND FOR PURCHASE OF NEW ASSET. THAT MERE FACT THAT THE DATE OF PURCHASE OF NEW ASSET WAS JUST A FEW MONTHS BEFORE THE DATE OF TRANSFER DID NOT DISENTITLE THE ASSESSEE FROM EXEMPTION AVA ILABLE U/S 54B. LEARNED COUNSEL FURTHER SUBMITTED THAT 7/12 EXTRACT SHOWS THAT BRINJAL AND BHINDI WERE GROWN IN 2003 - 04 AND 2004 - 05. LEARNED COUNSEL FURTHER SUBMITTED THAT SALE DEED SHOWS THE LAND AS AGRICULTURAL LAND. HENCE LEARNED COUNSEL PLEADED THAT THE ASSESSEE IS ENTITLED TO CLAIM OF DEDUCTION U/S 54B. TO SUPPORT THE PROPOSITION THAT PURCHASE OF PROPERTY OUT OF ADVANCE MONEY RECEIVED FROM SALE IS JUSTIFIED, LEARNED COUNSEL PLACED RELIANCE UPON THE DECISION OF ITAT, NAGPUR BENCH IN THE CASE OF BHIKULAL CHANDAK (HUF) VS. ITO 126 TTJ 0545 WHERE EXEMPTION U/S 54E C WAS GRANTED IN SIMILAR SITUATION. 7. LEARNED D.R., ON THE OTHER HAND, RELIED UPON THE ORDERS OF THE AUTHORITIES BEL OW. LEARNED D.R. SUBMITTED THAT THERE IS NO EVIDENCE WHATSOEVER THAT THE SAID LANDS WERE AGRICULTURAL LANDS OR ANY AGRICULTURAL ACTIVITY WAS BEING PERFORMED ON THE SAME. LEARNED D.R. SUBMITTED THAT JUST PRODUCING SOME PURCHASE VOUCHERS FOR VEGETABLE SEEDS CANNOT SUPPORT THE ASSESSEES PLEA THAT AGRICULTURAL ACTIVITY WAS BEING DONE ON THE SAID LAND. LEARNED D.R. SUBMITTED THAT ADJOINING LANDS SURROUNDING THE KACHIMET LAND WHICH HAS BEEN SOLD ARE OCCUPIED BY COMMERCIAL, INDUSTRIAL SECTORS LIKE KETAN HUNDAI, SEVA MOTORS. HENCE THE NATURE OF THESE LANDS IS COMMERCIAL AND NOT AGRICULTURAL. LEARNED D.R. FURTHER REFERRED TO THE LEARNED CIT(APPEALS) FINDING THAT ON ALL THE LANDS PURCHASED WHERE IT HAS BEEN CLEARLY SHOWN THAT NO AGRICULTURAL ACTIVITY WAS BEING DONE ON THESE LANDS AND THEY WERE LYING IN SURROUNDING OF COMMERCIAL ACTIVITY CENTRES. HENCE THE LEARNED D.R. PLEADED THAT THE ORDER OF THE LEARNED CIT(APPEALS) SHOULD BE AFF IRMED. 12 ITA NOS . 286 & 287/NAG/2012 8. UPON CAREFUL CONSIDERATION I FIND THAT PROVISIONS OF SECTION 54B MAY BE GAINFULLY REFERRED HEREUNDER : ' 39 54B. 40 [(1)] 41 [SUBJECT TO THE PROVISIONS OF SUB - SECTION (2), WHERE THE CAPITAL GAIN ARISES] FROM THE TRANSFER OF A CAPITAL ASSET BEING LAND WHICH, IN THE TWO YEARS IMMEDIATELY PRECEDING THE DATE ON WHICH THE TRANSFER TOOK PLACE, WAS BEING USED BY 42 [THE ASSESSEE BEING AN INDIVIDUAL OR HIS PARENT, OR A HINDU UNDIVIDED FAMILY] FOR AGRICULTURAL PURPOSES 43 [(HEREINAFTER REFERRED TO AS THE ORIGINAL ASSET)], AND THE ASSESSEE HAS, WITHIN A PERIOD OF TWO YEARS AFTER THAT DATE, PURCHASED ANY OTHER LAND FOR BEING USED FOR AGRICULTURAL PURPOSES, THEN, INSTEAD OF THE CAPITAL GAIN BEING CHARGED TO INCOM E - TAX AS INCOME OF THE PREVIOUS YEAR IN WHICH THE TRANSFER TOOK PLACE, IT SHALL BE DEALT WITH IN ACCORDANCE WITH THE FOLLOWING PROVISIONS OF THIS SECTION, THAT IS TO SAY, ( I ) IF THE AMOUNT OF THE CAPITAL GAIN IS GREATER THAN THE COST OF THE LAND SO PURCHA SED (HEREINAFTER REFERRED TO AS THE NEW ASSET), THE DIFFERENCE BETWEEN THE AMOUNT OF THE CAPITAL GAIN AND THE COST OF THE NEW ASSET SHALL BE CHARGED UNDER SECTION 45 AS THE INCOME OF THE PREVIOUS YEAR; AND FOR THE PURPOSE OF COMPUTING IN RESPECT OF THE NEW ASSET ANY CAPITAL GAIN ARISING FROM ITS TRANSFER WITHIN A PERIOD OF THREE YEARS OF ITS PURCHASE, THE COST SHALL BE NIL ; OR ( II ) IF THE AMOUNT OF THE CAPITAL GAIN IS EQUAL TO OR LESS THAN THE COST OF THE NEW ASSET, THE CAPITAL GAIN SHALL NOT BE CHARGED UNDER SECTION 45 ; AND FOR THE PURPOSE OF COMPUTING IN RESPECT OF THE NEW ASSET ANY CAPITAL GAIN ARISING FROM ITS TRANSFER WITHIN A PERIOD OF THREE YEARS OF ITS PURCHASE, THE COST SHALL BE REDUCED, BY THE AMOUNT OF THE CAPITAL GAIN.] 44 [(2) THE AMOUNT OF THE CAPITAL GAIN WHICH IS NOT UTILISED BY THE ASSESSEE FOR THE PURCHASE OF THE NEW ASSET BEFORE THE DATE OF FURNISHING THE RETURN OF INCOME UNDER SECTION 139 , SHALL BE DEPOSITED BY HIM BEF ORE FURNISHING SUCH RETURN [SUCH DEPOSIT BEING MADE IN ANY CASE NOT LATER THAN THE DUE DATE APPLICABLE IN THE CASE OF THE ASSESSEE FOR FURNISHING THE RETURN OF INCOME UNDER SUB - SECTION (1) OF SECTION 139 ] IN AN ACCOUNT IN ANY SUCH BANK OR INSTITUTION AS MAY BE SPECIFIED IN, AND UTILISED IN ACCORDANCE WITH, ANY SCHEME 45 WHICH THE CENTRAL GOVERNMENT MAY, BY NOTIFICATION IN THE OFFICIAL GAZETTE, FRAME IN THIS BEHALF AND SUCH RETURN SHALL BE ACCOMPANIED BY PROOF OF SUCH DEPOSIT; AND, FOR THE PURPOSES OF SUB - SECTION (1), THE AMOUNT, IF ANY, ALREADY UTILISED BY THE ASSESSEE F OR THE PURCHASE OF THE NEW ASSET TOGETHER WITH THE AMOUNT SO DEPOSITED SHALL BE DEEMED TO BE THE COST OF THE NEW ASSET : PROVIDED THAT IF THE AMOUNT DEPOSITED UNDER THIS SUB - SECTION IS NOT UTILISED WHOLLY OR PARTLY FOR THE PURCHASE OF THE NEW ASSET WITHIN THE PERIOD SPECIFIED IN SUB - SECTION (1), THEN, ( I ) THE AMOUNT NOT SO UTILISED SHALL BE CHARGED UNDER SECTION 45 AS THE INCOME OF THE PREVIOUS YEAR IN WHICH THE PERIO D OF TWO YEARS FROM THE DATE OF THE TRANSFER OF THE ORIGINAL ASSET EXPIRES; AND ( II ) THE ASSESSEE SHALL BE ENTITLED TO WITHDRAW SUCH AMOUNT IN ACCORDANCE WITH THE SCHEME AFORESAID. 13 ITA NOS . 286 & 287/NAG/2012 THE MANDATE OF ABOVE SECTION CLEARLY SHOWS THAT THE SECTIO N APPLIES TO TRANSFER OF LAND USED FOR AGRICULTURAL PURPOSES. THE BENEFIT IS GRANTED FOR PURCHASE OF LAND FOR BEING USED FOR AGRICULTURAL PURPOSES. IN THIS REGARD I FIND T HAT LEARNED CIT(APPEALS) ORDER REPRODUCED HEREIN ABOVE CLEARLY AND COGENTLY BRINGS TO THE FORE THAT THE LAND WHICH HAS BEEN S OLD WAS NOT USED FOR AGRICULTURAL PURPOSES, THAT THE SAME WAS SURROUNDED BY COMMERCIAL, INDUSTRIAL SECTORS. THAT NO AGRICULTURAL ACTIVITY WAS DONE ON THE LANDS P URCHASED. HENCE THE ASSESSEES CASE F ALLS OUT OF THE AMBIT OF PROVISIONS OF SECTION 54B. I FIND THAT LEARNED CIT(APPEALS) ORDER IS ELABORATE AND REASONABLE. 9. AS REGARDS THE PROOF OF AGRICULTURAL ACTIVITY ON THE IMPUGNED LANDS, LEARNED COUNSEL OF THE ASS ESSEE HAS REFERRED TO PRODUCTION OF BILLS FOR PURCHASE OF VEGETABLE SEEDS AND HAS ALSO CLAIMED THAT VEGETABLES WERE GROWN FOR SELF CONSUMPTION. HENCE THERE WAS NO SALE. IN MY CONSIDERED OPINION, PRODUCTION OF SOME VEGETABLES IN LARGE AREA OF LAND CANNOT BE SAID TO BE PROOF THAT THE LAND WAS BEING USED FOR AGRICULTURAL PURPOSES. WHEN THIS IS COUPLED WITH THE FACT THAT THE LANDS WERE SURROUNDED BY COMMERCIAL AND INDUSTRIAL SECTORS, THE ASSESSEES CLAIM THAT THE IMPUGNED LANDS WERE USED FOR AGRICULTURAL PURPO SES CANNOT BE ACCEPTED. IN IDENTICAL SITUATION HONBLE APEX COURT IN CIT VS. GEMINI PICTURES CIRCUIT PRIVATE LTD. 220 ITR 43 HAS EXPOUNDED THAT WHEN THE LAND WAS SURROUNDED ON ALL SIDES BY INDUSTRIAL AND COMMERCIAL BUILDINGS, NO AGRICULTURAL OPERATIONS WER E BEING CARRIED OUT ON ANY LAND NEARBY. THAT I N THE FACE OF ABOVE CIRCUMSTANCES THE MERE FACT THAT VEGETABLES WERE BEING GROWN THEREON AT THE TIME OF THE SALE FOR SOME YEARS PRIOR THERETO DID NOT CHANGE THE N ATURE AND CHARACTER OF THE LAND. THAT O BVIOUSL Y IT WAS ONLY A STOP GAP ACTIVITY. THAT I T WAS NOT A TRUE REFLECTION OF NATURE AND CHARACTER OF THE LAND. HENCE HONBLE APEX COURT HELD THAT THE LAND IN QUESTION WAS NOT AGRICULTURAL LAND. I FIND THAT THE 14 ITA NOS . 286 & 287/NAG/2012 FACTS OF THE PRESENT CASE FALL ON ALL FOURS ON THE CASE LAW FROM THE HONBLE APEX COURT CITED ABOVE. 10. AS REGARDS THE LAND PURCHASED IS CONCERNED, LEARNED CIT(APPEALS) FINDING HEREIN ABOVE CLEARLY SHOW THAT THE SAID LAND S CANNOT BE SAID TO BE LAND USED FOR AGRICULTURAL PURPOSES. THE LAND PURCHASED AT UMA RGAON AND JAMTHA HAVE CLEARLY BEEN SHOWN IN SURROUNDING OF INDUSTRIAL AND COMMERCIAL SECTORS. IN THE CASE OF UMARGAON EVEN THE 7/12 EXTRACT SHOWS THE LAND AS PADIT. THE PLOT AT UMARGAON HAS BEEN FOUND TO BE BARREN LAND, NEXT TO HIGHWAY AND OCCUPIED BY ASSE SSEES COOLER FACTORY AND HAS BEEN CONVERTED FOR INDUSTRIAL USE. JAMTHA LAND HAS ALSO BEEN FOUND TO BE BARREN. THAT DURGDHAMNA LAND IS NOT EVEN IN THE POSSESSION OF THE ASSESSEE. IN THESE CIRCUMSTANCES I AM OF THE CONSIDERED OPINION THAT THE LANDS PURCHASE D CANNOT BE SAID TO LANDS USED FOR AGRICULTURAL PURPOSES. 11. HENCE IN THESE CIRCUMSTANCES AND IN THE BACKGROUND OF AFORESAID DISCUSSION AND PRECEDENT, I DO NOT FIND ANY INFIRMITY IN THE ORDER OF LEARNED CIT(APPEALS) IN THIS REGARD . ACCORDINGLY I UPHOLD THE FINDING OF LEARNED CIT(APPEALS) THAT NEITHER THE LANDS SOLD NOR THE LANDS PURCHASED CAN BE SAID TO BE THE LANDS USED FOR AGRICULTURAL ACTIVITY FALLING WITHIN THE AMBIT OF SECTION 54B OF THE I.T. ACT. HENCE I UPHOLD THE DENIAL OF EXEMPTION U/S 54B OF I. T. ACT. 1 2 . IN THE RESULT, THESE APPEALS FILED BY THE ASSESSEES STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 9 TH DAY OF AUGUST,2016. SD/ - ( SHAMIM YAHYA) ACCOUNTANT MEMBER. NAGPUR, DATED: 9 TH AUGUST, 2016. 15 ITA NOS . 286 & 287/NAG/2012 COPY FORWARDED TO : 1. SHRI RAJESH S. AWACHAT, PROP. M/S SUNSTAR SALES CORPORATION, NEW SHUKRAWARI ROAD, PHAWARA SQUARE, NAGPUR - 440002. 2. SHRI RAKESH S. AWACHAT, PROP. M/S RAM HI RAM MARKETING, NEW SHUKRAWARI ROAD, PHAWARA SQUARE, NAGPUR - 440002. 3. A.C.I.T., CIRCLE - 6 , NAGPUR. 4. C.I.T. - III, NAGPUR. 5. CIT(APPEALS), - II, NAGPUR. 6. D.R., ITAT, NAGPUR. 7. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR. WAKODE.