The ITO, Ward-2, Bhuj V. Shri Ramesh Gangji Pindoria, Bhuj

ITA 301/RJT/2014

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5729 (ITAT-RAJKOT)
• Duration Of Justice: 4 year(s) 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 02-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MJ RANPURA
• Keywords: Capital asset; Business income; Corroborative evidences; Capital Gains
• Section: 2(14); 63

Judgement Text

ITO WD-2-BHUJ-KUTCH V. RAMESH GANGARAM RAMANI /I.T.A. NO.301/RJT/2014/A.Y.09-10 PAGE 1 OF 21 INCOME TAX APPELLATE TRIBUNAL-RAJKOT-BENCH-RAJKOT BEFORE C .M. GARG, JUDICIAL MEMBER AND O. P. MEENA, ACCOUNTANT MEMBER I.T.A NO.301/RJT/2014: ASSESSMENT YEAR:2009-10 APPELLANT V. RESPONDENT INCOME TAX OFFICER, WARD-2 BHUJ SHRI RAMESH GANGARAM RAMANI C/O M/S. GAYATRI HARDWARE STORE, STATION ROAD, BHUJ-KUTCH PAN:ABPPR7998L ASSESSEE BY SHRI M. J. RANPURA, CA REVENUE BY SHRI PRAVEEN VERMA, SR. D.R. DATE OF HEARING 30.11.2018 DATE OF PRONOUNCEMENT 11.12.2018 ORDER PER O. P. MEENA, AM 1. THIS APPEAL AT THE INSTANCE OF THE REVENUE IS DIRECTED AGAINST AN ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-II, RAJKOT [IN SHORT CIT(A)] DATED 21.02.2014 FOR THE ASSESSMENT YEAR 2009-10. 2. GROUND NO. I) TO III) STATES THAT THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ENTIRE ADDITION OF RS.1,87,20,336 MADE BY THE AO ON ACCOUNT OF SALE OF AGRICULTURAL LAND TREATED AS BUSINESS INCOME BEING PROFIT FROM SALE OF LAND. THEREFORE, ORDER OF LD. CIT (A) BE SET-ASIDE AND THE AO BE RESTORED. ITO WD-2-BHUJ-KUTCH V. RAMESH GANGARAM RAMANI /I.T.A. NO.301/RJT/2014/A.Y.09-10 PAGE 2 OF 21 3. SUCCINCTLY, FACTS AS CULLED OUT FROM THE ORDERS OF LOWER AUTHORITIES ARE THAT THE ASSESSEE IS INDIVIDUAL AND IS ENGAGED IN RETAIL TRADING OF HARDWARE AND STEEL. THE ASSESSEE HAS SOLD AGRICULTURAL LAND SITUATED AT VILLAGE PADDHAR, TALUKA- BHUJ BEING SURVEY NO. 559/1, 562/1 AND 563/1 ON WHICH PROFIT OF RS.1,87,20,336 WAS SHOWN. THIS PROFIT HAS BEEN CLAIMED AS EXEMPT ON THE GROUND THAT THE SAID LAND WAS NOT A CAPITAL ASSET WITHIN THE MEANING OF SECTION 2(14) OF THE ACT. HOWEVER, THE AO NOTICED THAT THE LAND WHICH WAS PURCHASED ON 29.04.2005 FOR RS.86,000, AND HAD FETCHED SALE PRICE OF RS. 1,03,10,288 + RS. 47,79,000+ 37,17,048 TOTALING TO RS. 1,88,06,336 ON DATE OF SALE ON 29.07.2008. THE AO VIEWED THAT THERE HAS TO BE A NEXUS BETWEEN AGRICULTURAL LAND, AGRICULTURAL OPERATIONS, AND AGRICULTURAL INCOME FOR SUFFICIENTLY LONG DURATION BEFORE IT CAN BE ACCEPTED THAT THE LAND WAS ACTUALLY USED FOR AGRICULTURAL PURPOSE. THE AO FURTHER, VIEWED THAT MERELY BECAUSE THE LAND IS CLASSIFIED IN REVENUE RECORDS AS AGRICULTURAL LAND AND IS SUBJECT TO PAYMENT OF LN REVENUE, IT CANNOT BE SAID THAT THE ASSESSEE WAS OWNER OF AGRICULTURAL LAND ON THE DATE OF TRANSFER UNLESS IT IS PROVED THAT THE ASSESSEE WAS HOLDING SAME AS AGRICULTURIST I.E. WHO PLOUGHED OR TILLED THE LAND FOR SUFFICIENTLY LONG DURATION. THE AO FURTHER, HELD THAT INTENTION OF THE ITO WD-2-BHUJ-KUTCH V. RAMESH GANGARAM RAMANI /I.T.A. NO.301/RJT/2014/A.Y.09-10 PAGE 3 OF 21 ASSESSEE WAS NOT TO USE LAND FOR DERIVING AGRICULTURAL INCOME BUT TO EARN HUGE PROFIT BY SELLING THE SAME, HENCE, THE ASSESSEE WAS HELD TO BE A TRADER IN LAND. THE AO, THEREFORE, TREATED THE TRANSACTION AS ADVENTURE IN NATURE OF TRADE AND MADE ADDITION OF RS.1,87,20,336. 4. BEING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT (A). DURING THE COURSE OF APPELLATE PROCEEDINGS, THE ASSESSEE HAS MADE DETAILED SUBMISSIONS WHICH HAS BEEN REPRODUCED BY THE CIT (A) IN HIS APPELLATE ORDER. ON CONSIDERATION OF ASSESSMENT ORDER , SUBMISSIONS AND CASE LAWS RELIED BY THE ASSESSEE, THE CIT (A) OBSERVED THAT THE LAND IN QUESTION IS SITUATED AT VILLAGE PADDHAR, TAL- BHUJ-KUTCH, WHICH IS APPROXIMATELY 19 KMS FROM BHUJ. THE POPULATION OF PADDHAR IS 2195. THUS, THE LAND IS APPARENTLY SATISFIED THE PARAMETERS LAID DOWN IN SECTION 2(14)(III) OF THE ACT. HOWEVER, APART FROM THESE PARAMETERS, THERE ARE CERTAIN OTHER FACETS THAT ARE REQUIRED TO BE CONSIDERED AS PER VARIOUS JUDICIAL PRONOUNCEMENTS. THE CIT (A) OBSERVED THAT THE ISSUE IS ELABORATELY DISCUSSED BY THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT V. SIDDARATH DESAI [1982] 139 ITR 628 (GUJARAT)/ 10 TAXMAN 1 (GUJARAT) IN WHICH TESTS WERE LAID DOWN TO DECIDE WHETHER LAND IS AGRICULTURAL LAND OR NOT. THE LD. CIT (A) HAS CONSIDERED THE REPLY GIVEN BY THE ASSESSEE AS TO ITO WD-2-BHUJ-KUTCH V. RAMESH GANGARAM RAMANI /I.T.A. NO.301/RJT/2014/A.Y.09-10 PAGE 4 OF 21 HOW HIS TRANSACTIONS DO NOT FALL WITHIN THE AMBIT OF AN ADVENTURE IN THE NATURE OF TRADE. THE LD. CIT (A) TOOK A NOTE OF THOSE TESTS AS WELL AS THE REPLY GIVEN BY THE ASSESSEE, WHICH HAS BEEN REPRODUCED BY THE LD. CIT (A) IN THE IMPUGNED ORDER ON PAGE 19 AS UNDER: 'A . WHETHER THE LAND WAS CLASSIFIED IN THE REVENUE RECORDS AS AGRICULTURAL AND WHETHER IT WAS SUBJECT TO THE PAYMENT OF LAND REVENUE? IN THE APPELLANT`S CASE, T HE LAND WAS CLASSIFIED AS AGRICULTURAL LAND IN IN THE REVENUE RECORDS. B . WHETHER THE LAND WAS ACTUALLY OR ORDINARILY USED FOR AGRICULTURAL PURPOSES AT OR ABOUT THE RELEVANT TIME? IN THE APPELLANT`S CASE, THE LAND WAS ACTUALLY USED FOR AGRICULTURAL PURPOSE AT THE TIME OF PURCHASE AS WELL AS SALE. C . WHETHER SUCH USER OF THE LAND WAS FOR LONG PERIOD OR WHETHER IT WAS OF A TEMPORARY CHARACTER OR BY ANY OR A STOPGAP ARRANGEMENT? IN THE APPELLANT`S CASE, THE LAND WAS HELD FOR MORE THAN THREE YEARS. IT IS THEREFORE, DIFFICULT TO SAY THAT THIS WAS BY WAY OF STOP-GAP ARRANGEMENT. D . 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? THE APPELLANT HAS SHOWN AGRICULTURAL INCOME DURING THE YEAR. HOWEVER, THE LAND WAS PURCHASED IN 2005 AND THUS, THE INCOME APPEARS TO BE PROPORTIONATE TO THE INVESTMENT MADE. ITO WD-2-BHUJ-KUTCH V. RAMESH GANGARAM RAMANI /I.T.A. NO.301/RJT/2014/A.Y.09-10 PAGE 5 OF 21 E . 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 ? WHETHER 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 APPELLANT`S , THIS IS NOT APPLICABLE AS THE LAND WAS CONVERTED INTO NA AND WAS SOLD AS AGRICULTURAL LAND ONLY. F . WHETHER THE LAND, ON THE RELEVANT DATE, HAD CEASED TO BE PUT TO AGRICULTURAL USE? IF SO, WHETHER IT WAS PUT TO AN ALTERNATIVE USE? WHETHER SUCH A ALTERNATIVE USER WAS OF A PERMANENT OR TEMPORARY NATURE? IN THE APPELLANT`S CASE , THIS IS NOT APPLICABLE AS THE LAND WAS CONVERTED INTO NA AND WAS SOLD AS AGRICULTURAL LAND ONLY. G . WHETH ER THE LAND, THOUGH ENTERE D IN REVENUE RECORD , 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? IN THE APPELLANT`S CASE , THE LAND HAS BEEN USED AS AGRICULTURAL LAND TILL THE DATE OF SALE. H . WHETHER THE LAND WAS SITUATE IN A DEVELOPED AREA? 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? IN APPELLANT`S CASE , THE AREA HAD THE POTENTIAL OF BEING DEVELOPED . HOWEVER, THERE ARE NO FACTORS REGARDING THE LAND UNDER CONSIDERATION TO HOLD THEM AS NON-AGRICULTURAL LAND ITO WD-2-BHUJ-KUTCH V. RAMESH GANGARAM RAMANI /I.T.A. NO.301/RJT/2014/A.Y.09-10 PAGE 6 OF 21 5. IN THE LIGHT OF ABOVE FACTS AND CIRCUMSTANCES, THE CIT (A) OBSERVED THAT THE APPELLANT WAS SHOWN AS AN AGRICULTURIST IN THE PURCHASE AS WELL AS SALE DEED WHICH SAYS DHANDHO KHETI ( PROFESSION AGRICULTURE). THE LAND IS SITUATED BEYOND 8 KMS OF A TOWN COMMITTEE AND WAS PURCHASED BY A PERSON WHO HAS BEEN SHOWN AS AGRICULTURIST IN THE PURCHASE DEED. DURING THE OCCUPANCY, AGRICULTURAL I. WHETHER THE LAND ITSELF WAS DEVELOPED BY PLOTTING AND PROVIDING ROADS AND OTHER FACILITIES? IN THE APPELLANT`S CASE , THE LAND WAS USED AS AGRICULTURAL LAND TILL THE DATE OF SALE AND NO PLOTTING OR OTHER DEVELOPMENTAL ACTIVITIES WERE DONE. J . WHETHER THERE WERE ANY PREVIOUS SALES OF PORTIONS OF THE LAND FOR NON- AGRICULTURAL USE? IN THE APPELLANT`S CASE THIS IS NOT APPLICABLE. K . WHETHER PERMISSION UNDER SECTION 63 OF THE BOMBAY TENANCY 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 WAS FOR NON- AGRICULTURAL OR AGRICULTURAL USER? THIS POINT IS NOT APPLICABLE IN THE APPELLANT`S CASE . ITO WD-2-BHUJ-KUTCH V. RAMESH GANGARAM RAMANI /I.T.A. NO.301/RJT/2014/A.Y.09-10 PAGE 7 OF 21 OPERATIONS WERE CARRIED OUT ON THE LAND AND AGRICULTURAL INCOME HAS BEEN SHOWN IN THE RETURN OF INCOME. THE LAND WAS SOLD TO AN AGRICULTURIST. CONSIDERING THESE FACTS, IT WAS HELD THAT THE LAND WAS AGRICULTURAL LAND AS DEFINED IN SECTION 2(14) OF THE ACT. WITH RESPECT TO ADVENTURE IN NATURE OF TRADE, THE CIT (A) HAS RELIED ON THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT V. REVA SHANKAR KOTHARI (2006) 283 ITR 338 (GUJARAT) AND HELD THAT THERE IS SINGLE TRANSACTION IN THE APPELLANT`S CASE OF SALE AND IT HAS BEEN ALSO SUBMITTED THAT LAND PURCHASED SUBSEQUENTLY WERE NOT SOLD AND ARE STILL IN POSSESSION OF THE ASSESSEE AND THEREFORE, THERE WAS NO INTENTION ON THE PART OF THE APPELLANT OF DOING BUSINESS IN LAND.. THE CASE LAWS RELIED BY THE AO WERE DISTINGUISHED BY THE CIT (A). THE CIT (A) FURTHER OBSERVED THAT THE LAND HAS BEEN SOLD AFTER A PERIOD OF THREE YEARS. THERE HAS BEEN MASSIVE INCREASE OF ABOUT 800% IN THE PRICE OF LAND WITHIN THIS SPAN OF TIME. THERE ARE TWO POSSIBILITIES EITHER THE PURCHASE PRICE HAS BEEN DOCTORED OR THERE WERE SOME EXCEPTIONAL CIRCUMSTANCES LEADING TO SUCH ABNORMAL INCREASE IN PRICE. THE FIRST POSSIBILITY CANNOT BE COMMENCED UPON AS NO EFFORTS HAVE BEEN DONE BY THE AO IN THIS REGARD. AS REGARDS SECOND PROBABILITY OF THERE BEING A BIG CHANGE IN THE ENVIRONMENT AND THE ITO WD-2-BHUJ-KUTCH V. RAMESH GANGARAM RAMANI /I.T.A. NO.301/RJT/2014/A.Y.09-10 PAGE 8 OF 21 LOCATION OF THE LAND IS CONSIDERED, THERE IS LARGE ELEMENT OF TRUTH IN IT. THE AREA OF KUTCH HAS SEEN RAPID STRIDES IN THE DEVELOPMENT ESPECIALLY AFTER THE FUNCTIONING OF THE KANDLA & MUNDRA PORT TRUST SETTING UP OF ULTRA MEGHA POWER PLANTS (UPPPS) AND OVERALL GROWTH IN INDUSTRY. CONSIDERING THESE FACTS AND AS THE APPELLANT HAS HELD THE AGRICULTURAL LAND FOR THREE YEARS AND SOLD IT, AS AGRICULTURAL LAND DOES NOT ATTRIBUTE A CHARACTER OF ADVENTURE IN NATURE OF TRADE TO THE TRANSACTION IN SPITE OF SUBSTANTIAL DIFFERENCE IN THE PURCHASE PRICE AND SALE PRICE. THE ACTION OF THE AO IN TREATING THIS TRANSACTION AS ADVENTURE IN NATURE OF TRADE WAS THEREFORE, DELETED AND LAND WAS TREATED AS AGRICULTURAL LAND WITHIN THE MEANING OF SECTION 2(14) OF THE ACT AND HENCE, THE GAINS ON SAME WAS HELD TO BE BEYOND THE CAPITAL GAINS. HENCE, ADDITION MADE BY THE AO WAS DIRECTED TO BE DELETED AND THE APPEAL OF THE ASSESSEE WAS ALLOWED. 6. BEING AGGRIEVED, THE REVENUE HAS FILED THIS APPEAL BEFORE THE TRIBUNAL. THE LD. SR. D.R. SUBMITTED THAT THE ASSESSEE HAS PURCHASED LAND IN 2005 AND SOLD THE SAME IN AUGUST 2008 FOR RS. 1.88 CRORES. THEREFORE, THE LAND WAS PURCHASED FOR MAKING INVESTMENT, WHICH WAS SITUATED IN KUTCH. THE INTENTION OF THE ASSESSEE WAS NOT FOR AGRICULTURAL OPERATIONS BUT TO EARN PROFIT. THE ASSESSEE HAS NEVER ITO WD-2-BHUJ-KUTCH V. RAMESH GANGARAM RAMANI /I.T.A. NO.301/RJT/2014/A.Y.09-10 PAGE 9 OF 21 USED THIS LAND AS AGRICULTURAL PURPOSE. THE CIT (A) HAS DELETED THE ADDITION AS THE LAND WAS HELD FOR MORE THAN 3 YEARS. THE LD. SR. D.R. FURTHER, VEHEMENTLY SUPPORTED THE ORDER OF THE AO. 7. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE ASSESSEE SUPPORTING THE ORDER OF CIT (A) SUBMITTED THAT THE AGRICULTURAL LAND WAS PURCHASED IN APRIL 2005 AND IT WAS SOLD AFTER THE PERIOD OF THREE YEARS FOR RS.1.88 CRORES. THE LAND WAS PURCHASED BY THE THREE PERSON NAMELY NARU KHERAJ GADHVI, RANA PARBAT GADHVI AND HASUR KHERAJ GADHVI WHO ARE AGRICULTURIST. THE LAND IN QUESTION WAS AGRICULTURAL LAND ON WHICH AGRICULTURAL ACTIVITIES WERE CARRIED OUT AND IT WAS SITUATED ABOUT 20 KM FROM BHUJ. THE LEARNED COUNSEL FOR THE ASSESSEE REFERRED SITE PLAN OF LAND PLACED AT PAPER BOOK PAGE NO. 13 WHICH SHOWS THAT THE LAND IS SURROUNDED BY NUMBER OF SMALL AND MEDIUM SIZE OF FIELDS. HENCE, THE LAND IS NOT SITUATED IN PRIME LOCATION. THE ASSESSEE IS AGRICULTURIST BY INHERITANCE . THE LEARNED COUNSEL FOR THE ASSESSEE REFERRED 7/12 EXTRACT (PB-18) IN WHICH CROPS OF JUWAR AND COTTON ARE GROWN. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO FILED COPY OF SALES BILLS OF COTTON FOR RS.1,88,121 SOLD O 16.10.2006 (PB-19) AND COPY OF AGRICULTURAL INCOME ACCOUNT (PB-20). THEREFORE, IT WAS CONTENDED THAT THE LAND WAS USED FOR AGRICULTURAL PURPOSE TILL THE ITO WD-2-BHUJ-KUTCH V. RAMESH GANGARAM RAMANI /I.T.A. NO.301/RJT/2014/A.Y.09-10 PAGE 10 OF 21 SALE OF LAND. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER, PLACED RELIANCE IN THE CASE OF CIT V. SIDDHARTH J. DESAI [1983] 139 ITR 628/ 10 TAXMAN 1 (GUJARAT) AND ITAT HYDERABAD IN THE CASE OF TULA VEERENDER V. ACIT 36 TAXMANN.COM 545 (HYDERABAD). THE LEARNED COUNSEL FURTHER, SUBMITTED THAT THE ISSUE IS ALSO COVERED BY DECISION OF TRIBUNAL RAJKOT IN THE CASE OF SHRI SHAILESH GANGARAM RAMANI V. ITO IN I.T.A.NO. 260 & 294/RJT/2014 DTD. 04.12.2017 WHERE ON SIMILAR FACTS AND CIRCUMSTANCES AND AGRICULTURAL LAND SITUATED, THE TRIBUNAL HAS ALLOWED THE APPEAL OF THE ASSESSEE. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER RELIED IN THE CASE OF RAJKOT ITAT IN THE CASE OF SMT. HEENABEN B. MEHTA V. ITO WD-1 BHUJ IN I.T.A.NO.99/RJT/2016 DTD. 06.12.2017 IN WHICH SIMILAR CIRCUMSTANCES , THE LAND SITUATED IN SAME AREA WAS TREATED AS AGRICULTURAL LAND AND APPEAL OF THE ASSESSEE WAS ALLOWED. THEREFORE, IT WAS URGED BEFORE US THAT THE CIT (A) HAS RIGHTLY ALLOWED THE APPEAL OF THE ASSESSEE. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT THE ASSESSEE IS AN AGRICULTURALIST BY INHERITANCE. HE PURCHASED AGRICULTURAL LAND COMPRISED IN SURVEY NO. 559/1, 562/1 AND 563/1 FOR CONSIDERATION OF RS.86,000 IN APRIL 2005 AND HIS BROTHER SHRI SHAILESH GANGARAM RAMANI HAS ALSO PURCHASED ITO WD-2-BHUJ-KUTCH V. RAMESH GANGARAM RAMANI /I.T.A. NO.301/RJT/2014/A.Y.09-10 PAGE 11 OF 21 AGRICULTURAL LAND AT SURVEY NO. 563/2 AND 564 ADMEASURING 10.18 ACRE AT VILLAGE PADDHAR TAL. BHUJ IN KUTCH DISTRICT IN THE MONTH OF APRIL 2005 FOR CONSIDERATION OF RS.84,000/-. THE ASSESSEE HAS SOLD THE LAND IN JULY-AUGUST 2008 FOR CONSIDERATION OF RS. 1.88 CRORES. ACCORDING TO THE ASSESSEE, LANDS HAVE BEEN MENTIONED AS AGRICULTURAL LAND IN THE LAND REVENUE RECORD. AGRICULTURE OPERATIONS WERE CARRIED ON AND THEY WERE SITUATED ABOUT 19 KM FROM BHUJ. THE GAIN REALIZED ON SALE OF SUCH LAND WAS CLAIMED EXEMPT UNDER SECTION 2(14) OF THE I.T. ACT. WE FIND THAT THAT THE APPELLANT WAS SHOWN AS AN AGRICULTURIST IN THE PURCHASE AS WELL AS SALE DEED WHICH SAYS DHANDHO KHETI ( PROFESSION AGRICULTURE). THE LAND IS SITUATED BEYOND 8 KMS OF A TOWN COMMITTEE AND WAS PURCHASED BY A PERSON WHO HAS BEEN SHOWN AS AGRICULTURIST IN THE PURCHASE DEED. DURING THE OCCUPANCY, AGRICULTURAL OPERATIONS WERE CARRIED OUT ON THE LAND AND AGRICULTURAL INCOME HAS BEEN SHOWN IN THE RETURN OF INCOME. THE LAND WAS SOLD TO AN AGRICULTURIST. CONSIDERING THESE FACTS, IT IS HELD THAT THE LAND WAS AGRICULTURAL LAND AS DEFINED IN SECTION 2(14) OF THE ACT. WITH REGARD TO ADVENTURE IN NATURE OF TRADE, THE CIT (A) RELIED ON THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT V. REVA SHANKAR KOTHARI (2006) 283 ITR 338 (GUJARAT) AND HELD THAT THERE IS SINGLE TRANSACTION IN THE ITO WD-2-BHUJ-KUTCH V. RAMESH GANGARAM RAMANI /I.T.A. NO.301/RJT/2014/A.Y.09-10 PAGE 12 OF 21 APPELLANT`S CASE OF SALE AND IT HAS BEEN ALSO SUBMITTED THAT LAND PURCHASED SUBSEQUENTLY WERE NOT SOLD AND ARE STILL IN POSSESSION OF THE ASSESSEE AND THEREFORE, THERE WAS NO INTENTION ON THE PART OF THE APPELLANT OF DOING BUSINESS IN LAND.. THE CASE LAWS RELIED BY THE AO WERE DISTINGUISHED BY THE CIT (A). THE CIT (A) FURTHER, OBSERVED THAT THE LAND HAS BEEN SOLD AFTER A PERIOD OF THREE YEARS. THERE HAS BEEN MASSIVE INCREASE OF ABOUT 800% IN THE PRICE OF LAND WITHIN THIS SPAN OF TIME. THERE ARE TWO POSSIBILITIES EITHER THE PURCHASE PRICE HAS BEEN DOCTORED OR THERE WERE SOME EXCEPTIONAL CIRCUMSTANCES LEADING TO SUCH ABNORMAL INCREASE IN PRICE. THE FIRST POSSIBILITY CANNOT BE COMMENCED UPON AS NO EFFORTS HAVE BEEN DONE BY THE AO IN THIS REGARD. AS REGARDS SECOND PROBABILITY OF THERE BEING A BIG CHANGE IN THE ENVIRONMENT AND THE LOCATION OF THE LAND IS CONSIDERED, THERE IS LARGE ELEMENT OF TRUTH IN IT. THE AREA OF KUTCH HAS SEEN RAPID STRIDES IN THE DEVELOPMENT ESPECIALLY AFTER THE FUNCTIONING OF THE KANDLA & MUNDRA PORT TRUST SETTING UP OF ULTRA MEGHA POWER PLANTS (UPPPS) AND OVERALL GROWTH IN INDUSTRY. CONSIDERING THESE FACTS AND AS THE ASSESSEE HAS HELD THE AGRICULTURAL LAND FOR THREE YEARS AND SOLD IT AS AGRICULTURAL LAND DOES NOT ATTRIBUTE A CHARACTER OF ADVENTURE IN NATURE OF TRADE TO THE TRANSACTION IN SPITE OF SUBSTANTIAL DIFFERENCE ITO WD-2-BHUJ-KUTCH V. RAMESH GANGARAM RAMANI /I.T.A. NO.301/RJT/2014/A.Y.09-10 PAGE 13 OF 21 IN THE PURCHASE PRICE AND SALE PRICE. THE ACTION OF THE AO IN TREATING THIS TRANSACTION AS ADVENTURE IN NATURE OF TRADE WAS THEREFORE, DELETED BY TREATING IT AS AGRICULTURAL LAND WITHIN THE MEANING OF SECTION 2(14) OF THE ACT AND HENCE, THE GAINS ON SAME WAS HELD TO BE BEYOND THE CAPITAL GAINS IS FOUND IN ORDER. 9. WE FURTHER NOTE THAT THE ISSUE IS SQUARELY COVERED BY DECISION OF TRIBUNAL RAJKOT IN THE CASE OF BROTHER OF THE ASSESSEE, SHRI SHAILESH GANGARAM RAMANI IN I.T.A.NO. 260 & 294 /RJT/2014 A.Y. 2009-10 DTD. 04.12.2017 . THE RELEVANT PORT OF SAID ORDER IS REPRODUCED AS UNDER: 14. IT IS PERTINENT TO OBSERVE THAT ITAT LUCKNOW BENCH IN THE CASE OF SARNATH INFRASTRUCTURE (P.) LTD. V. ASSTT. CIT [2010] 124 ITD 71 HAS ALSO CONSIDERED ISSUE WHETHER AN ASSESSEE DESERVES TO BE TREATED AS A 'TRADER' OR 'INVESTOR'. THOUGH THE ISSUE INVOLVED IN THAT CASE RELATES TO INVESTMENT/TRADING IN SHARES, BUT BROAD PRINCIPLE CARVED OUT BY THE ITAT IS APPLICABLE ON ALL SORTS OF TRANSACTIONS, WHERE ADJUDICATOR IS REQUIRED TO FIND OUT WHETHER TRANSACTION WAS ENTERED INTO BY THE ASSESSEE WITH A PRE-DOMINANT INTENTION OF TRADING OR INVESTMENT. THE FOLLOWING TESTS ARE WORTH TO NOTE: '13. AFTER CONSIDERING ABOVE RULINGS WE CULL OUT FOLLOWING PRINCIPLES, WHICH CAN BE APPLIED ON THE FACTS OF A CASE TO FIND OUT WHETHER TRANSACTION(S) IN QUESTION ARE IN THE NATURE OF TRADE OR ARE MERELY FOR INVESTMENT PURPOSES: (1) WHAT IS THE INTENTION OF THE ASSESSEE AT THE TIME OF PURCHASE OF THE SHARES (OR ANY OTHER ITEM). THIS CAN BE FOUND OUT FROM THE TREATMENT IT GIVES TO SUCH PURCHASE IN ITS BOOKS OF ACCOUNT. WHETHER IT IS TREATED STOCK-IN- TRADE OR INVESTMENT. ITO WD-2-BHUJ-KUTCH V. RAMESH GANGARAM RAMANI /I.T.A. NO.301/RJT/2014/A.Y.09-10 PAGE 14 OF 21 WHETHER SHOWN IN OPENING/CLOSING STOCK OR SHOWN SEPARATELY AS INVESTMENT OR NON-TRADING ASSET. (2) WHETHER ASSESSEE HAS BORROWED MONEY TO PURCHASE AND PAID INTEREST THEREON? NORMALLY, MONEY IS BORROWED TO PURCHASE GOODS FOR THE PURPOSE OF TRADE AND NOT FOR INVESTING IN AN ASSET FOR RETAINING. (3) WHAT IS THE FREQUENCY OF SUCH PURCHASE AND DISPOSAL IN THAT PA RTICULAR ITEM? IF PURCHASE AND SALE ARE FREQUENT, OR THERE ARE SUBSTANTIAL TRANSACTION IN THAT ITEM, IF WOULD INDICATE TRADE. HABITUAL DEALING IN THAT PARTICULAR ITEM IS INDICATIVE OF INTENTION OF TRADE. SIMILARLY, RATIO BETWEEN THE PURCHASES AND SALES AND THE HOLDINGS MAY SHOW WHETHER THE ASSESSEE IS TRADING OR INVESTING (HIGH TRANSACTIONS AND LOW HOLDINGS INDICATE TRADE WHEREAS LOW TRANSACTIONS AND HIGH HOLDINGS INDICATE INVESTMENT). (4) WHETHER PURCHASE AND SALE IS FOR REALIZING PROFIT OR PURCHASES AR E MADE FOR RETENTION AND APPRECIATION ITS VALUE? FORMER WILL INDICATE INTENTION OF TRADES AND LATTER, AN INVESTMENT. IN THE CASE OF SHARES WHETHER INTENTION WAS TO ENJOY DIVIDEND AND NOT MERELY EARN PROFIT ON SALE AND PURCHASE OF SHARES. A COMMERCIAL MOTIV E IS AN ESSENTIAL INGREDIENT OF TRADE. (5) HOW THE VALUE OF THE ITEMS HAS BEEN TAKEN IN THE BALANCE SHEET? IF THE ITEMS IN QUESTION ARE VALUED AT COST, IT WOULD INDICATE THAT THEY ARE INVESTMENTS OR WHERE THEY ARE VALUED AT COST OR MARKET VALUE OR NET R EALIZABLE VALUE (WHICHEVER IS LESS), IT WILL INDICATE THAT ITEMS IN QUESTION ARE TREATED AS STOCK-IN-TRADE. (6) HOW THE COMPANY (ASSESSEE) IS AUTHORIZED IN MEMORANDUM OF ASSOCIATION/ARTICLES OF ASSOCIATION? WHETHER FOR TRADE OR FOR INVESTMENT? IF AUTHORIZED ONLY FOR TRADE, THEN WHETHER THERE ARE SEPARATE RESOLUTIONS OF THE BOARD OF DIRECTORS TO CARRY OUT INVESTMENTS IN THAT COMMODITY? AND VICE VERSE. ITO WD-2-BHUJ-KUTCH V. RAMESH GANGARAM RAMANI /I.T.A. NO.301/RJT/2014/A.Y.09-10 PAGE 15 OF 21 7. IT IS FOR THE ASSESSEE TO ADDUCE EVIDENCE TO SHOW THAT HIS HOLDING IS FOR INVESTMENT OR FOR TRADING AND WHAT DISTINCTION HE HAS KEPT IN THE RECORDS OR OTHERWISE, BETWEEN TWO TYPES OF HOLDINGS. IF THE ASSESSEE IS AB LE TO DISCHARGE THE PRIMARY ONUS AND COULD PRIMA FACIE SHOW THAT PARTICULAR ITEM IS HELD AS INVESTMENT (OR SAY, STOCK-IN- TRADE) THEN ONUS WOULD SHIFT TO REVENUE TO PROVE THAT APPARENT IS NOT REAL. 8. THE MERE FACT OF CREDIT OF SALE PROCEEDS OF SHARES ( OR FOR THAT MATTER ANY OTHER ITEM IN QUESTION) IN A PARTICULAR ACCOUNT OR NOT SO MUCH FREQUENCY OF SALE AND PURCHASE WILL ALONE WILL NOT BE SUFFICIENT TO SAY THAT ASSESSEE WAS HOLDING THE SHARES (OR THE ITEMS IN QUESTION) FOR INVESTMENT. 9. ONE HAS TO F IND OUT WHAT ARE THE LEGAL REQUISITES FOR DEALING AS A TRADER IN THE ITEMS IN QUESTION AND WHETHER THE ASSESSEE IS COMPLYING WITH THEM. WHETHER IT IS THE ARGUMENT OF THE ASSESSEE THAT IT IS VIOLATING THOSE LEGAL REQUIREMENTS, IF IT IS CLAIMED THAT IT IS DE ALING AS A TRADER IN THAT ITEM? WHETHER IT HAD SUCH AN INTENTION (TO CARRY ON ILLEGAL BUSINESS IN THAT ITEM) SINCE BEGINNING OR WHEN PURCHASES WERE MADE? 10. IT IS PERMISSIBLE AS PER CBDT'S CIRCULAR NO. 4 OF 2007 OF 15TH JUNE, 2007 THAT AN ASSESSEE CAN HAVE BOTH PORTFOLIOS, ONE FOR TRADING AND OTHER FOR INVESTMENT PROVIDED IT IS MAINTAINING SEPARATE ACCOUNT FOR EACH TYPE, THERE ARE DISTINCTIVE FEATURES FOR BOTH AND THERE IS NO INTERMINGLING OF HOLDINGS IN THE TWO PORTFOLIOS. 11. NOT ONE OR TWO FACTORS OUT OF ABOVE ALONE WILL BE SUFFICIENT TO COME TO A DEFINITE CONCLUSION BUT THE CUMULATIVE EFFECT OF SEVERAL FACTORS HAS TO BE SEEN.' 15. THE HON'BLE GUJARAT HIGH COURT HAD ALSO AN OCCASION TO CONSIDER THIS ISSUE IN THE CASE OF CIT V. REWA SHARKAR A KOTHARI [2006] 283 ITR 338/155 TAXMAN 214 . HON'BLE COURT HAS MADE REFERENCE TO THE TEST LAID BY IT IN ITS EARLIER DECISION RENDERED IN THE CASE OF PARI MANGALDAS GIRDHARDAS V. CIT [1977] 6 CTR 647 (GUJ.). THESE TESTS READ AS UNDER: ITO WD-2-BHUJ-KUTCH V. RAMESH GANGARAM RAMANI /I.T.A. NO.301/RJT/2014/A.Y.09-10 PAGE 16 OF 21 'AFTER ANALYZING VARIOUS DECISIONS OF THE APEX COURT, THIS COURT HAS FORMULATED CERTAIN TESTS TO DETERMINE AS TO WHETHER AN ASSESSEE CAN BE SAID TO BE CARRYING ON BUSINESS. (A) THE FIRST TEST IS WHETHER THE INITIAL ACQUISITION OF THE SUBJECT- MATTER OF TRANSACTION WAS WITH THE INTENTION OF DEALING IN THE ITEM, OR WITH A VIEW TO FINDING AN INVESTMENT. IF THE TRANSACTION, SINCE THE INCEPTION, APPEARS TO BE IMPRESSED WITH THE CHARACTER OF A CO MMERCIAL TRANSACTION ENTERED INTO WITH A VIEW TO EARN PROFIT, IT WOULD FURNISH A VALUABLE GUIDELINE. (B) THE SECOND TEST THAT IS OFTEN APPLIED IS AS TO WHY AND HOW AND FOR WHAT PURPOSE THE SALE WAS EFFECTED SUBSEQUENTLY. (C) THE THIRD TEST, WHICH IS FREQUENTLY APPLIED, IS AS TO HOW THE ASSESSEE DEALT WITH THE SUBJECT- MATTER OF TRANSACTION DURING THE TIME THE ASSET WAS THE ASSESSEE. HAS IT BEEN TREATED AS STOCK-IN- TRADE, OR HAS IT BEEN SHOWN IN THE BOOKS OF ACCOUNT AND BALANCE SHEET AS AN INVESTMENT. T HIS INQUIRY, THOUGH RELEVANT, IS NOT CONCLUSIVE. (D) THE FOURTH TEST IS AS TO HOW THE ASSESSEE HIMSELF HAS RETURNED THE INCOME FROM SUCH ACTIVITIES AND HOW THE DEPARTMENT HAS DEALT WITH THE SAME IN THE COURSE OF PRECEDING AND SUCCEEDING ASSESSMENTS. THI S FACTOR, THOUGH NOT CONCLUSIVE, CAN AFFORD GOOD AND COGENT EVIDENCE TO JUDGE THE NATURE OF THE TRANSACTION AND WOULD BE A RELEVANT CIRCUMSTANCE TO BE CONSIDERED IN THE ABSENCE OF ANY SATISFACTORY EXPLANATION. (E) THE FIFTH TEST, NORMALLY APPLIED IN CASE OF PARTNERSHIP FIRMS AND COMPANIES, IS WHETHER THE DEED OF PARTNERSHIP OR THE MEMORANDUM OF ASSOCIATION, AS THE CASE MAY BE, AUTHORIZES SUCH AN ACTIVITY. (F) THE LAST BUT NOT THE LEAST, RATHER THE MOST IMPORTANT TEST, IS AS TO THE VOLUME, FREQUENCY, CONTINUITY AND REGULARITY OF TRANSACTION OF PURCHASE AND SALE OF THE GOODS CONCERNED. IN ITO WD-2-BHUJ-KUTCH V. RAMESH GANGARAM RAMANI /I.T.A. NO.301/RJT/2014/A.Y.09-10 PAGE 17 OF 21 A CASE WHERE THERE IS REPETITION AND CONTINUITY, COUPLED WITH THE MAGNITUDE OF THE TRANSACTION, BEARING REASONABLE PROPOSITION TO THE STRENGTH OF HOLDING THEN AN INFERENCE CAN READILY BE DRAWN THAT THE ACTIVITY IS IN THE NATURE OF BUSINESS.' 16. IN THE LIGHT OF THE ABOVE, LET US EXAMINE ORDER OF THE LD. CIT (A). A PERUSAL OF THE IMPUGNED ORDER WOULD INDICATE THAT THE LD. CIT (A) HAS DEVOTED MUCH ENERGY TOWARDS HIGHLIGHTING POSITION OF LAW LAID DOWN IN VARIOUS JUDGMENT VIZ. G. VENKATASWAMI NAIDU & CO. V. CIT [1959] 35 ITR 594 (SC) AND JANKI RAM BAHADUR RAM V. CIT [1965] 57 ITR 21 (SC) . CONCLUSIONS BRIEFLY DRAWN BY THE CIT (A) ARE ON PAGE NO.35 OF THE IMPUGNED ORDER. IT READS AS UNDER: '1. THE APPELLANT'S CASE IS REQUIRED TO BE BROKEN INTO TWO PARTS TO GET THE CORRECT PERSPECTIVE. 2. THE APPELLANT HAD PURCHASED EIGHT PIECES OF LAND. TWO PIECES WERE HELD FOR MORE THAN THREE YEARS WHILE THE REMAINING SIX PIECES WERE HELD FOR LESS THAN TEN TO FIFTEEN MONTHS. THERE HAS BEEN A MASSIVE INCREASE OF ABOUT 800% IN THE PRICE OF THE LAND WITHIN A VERY SHORT SPAN OF TIME. THERE ARE TWO POSSIBILITIES. EITHER THE PURCHASE PRICE HAS BEEN DOCTORED OR THERE ARE SOME EXCE PTIONAL CIRCUMSTANCES LEADING TO SUCH AN ABNORMAL INCREASE IN PRICE. THE FIRST POSSIBILITY CANNOT BE COMMENTED UPON AS NO EFFORTS HAVE BEEN DONE BY THE A.O. IN THIS REGARD. ALSO, WHAT EXACTLY HAS BROUGHT ABOUT THE MASSIVE INCREASE IN THE PRICE OF THE LANDS IS NOT CLEAR. HOWEVER, IT CAN BE SAID WITH CERTAINTY THAT THE APPELLANT WAS VERY MUCH AWARE OF THE DEVELOPMENTS IN THAT AREA AND IN RESPECT OF THE SIX PIECES OF LANDS WHICH HAVE BEEN HELD FOR LESS THAN TEN TO FIFTEEN MONTHS, HE HAS SENSED THE BUSINESS OPP ORTUNITY OF MAKING A KILL AND HAS THEREFORE PURCHASED THESE LANDS AND SOLD THEM AFTER A SHORT PERIOD. THIS CONDUCT ON THE PART OF THE APPELLANT CAN DEFINITELY POINT TO THESE TRANSACTIONS BEING IN THE NATURE OF BUSINESS ACTIVITY OR ADVENTURE IN THE NATURE OF TRADE. ITO WD-2-BHUJ-KUTCH V. RAMESH GANGARAM RAMANI /I.T.A. NO.301/RJT/2014/A.Y.09-10 PAGE 18 OF 21 7.19 HOWEVER, THE ABOVE LOGIC CANNOT BE APPLIED IN ENTIRETY TO ALL PIECES OF LAND. THIS CAN HE APPLIED ONLY TO THE SIX PIECES OF LAND WHICH HAVE BEEN HELD FOR LESS THAN TEN TO FIFTEEN MONTHS. THE PROFIT FROM SALE OF THESE SIX LANDS, ARE TREATE D AS BUSINESS PROFIT ARISING OUT OF TRANSACTIONS BY WAY OF ADVENTURE IN THE NATURE OF TRADE. IN RESPECT OF THE OTHER TWO LANDS WHICH HAVE BEEN HELD FOR MORE THAN THREE YEARS, IT CANNOT BE SAID THAT THEIR SALE AMOUNTS TO ADVENTURE IN THE NATURE OF TRADE. TH US, THE AO IS DIRECTED TO RECOMPUTE THE BUSINESS PROFITS AS ABOVE.' 17. THUS, AN ANALYSIS OF COMPLETE RECORD WOULD INDICATE THAT BASIC POINT WHICH WEIGH WITH THE LD. CIT (A) FOR TREATING THE ASSESSEE PARTLY AS TRADER IS THE FACT THAT THE INCREASE IN SALE PRICE IS 800%. IN OTHER WORDS, VOLUME OF PROFIT RESULTED TO THE ASSESSEE PERSUADED THE LD. CIT (A) TO HABOUR A BELIEF THAT THE LAND PURCHASED IN THE YEAR OF 2007 AND SOLD AFTER 15-16 MONTHS IS TO BE TREATED AS A TRADE ASSET. NO DOUBT THE PROFIT ON TRANSFER OF ALLEGED AGRICULTURE LAND WAS QUITE HIGH. BUT THIS IS ONE OF THE CORROBORATIVE EVIDENCES, AMONGST OTHER, PROPOUNDED IN VARIOUS CASE LAWS NOTICED BY US. MERELY IF AN ASSESSEE IS GETTING A HIGHER VOLUME OF SALE CONSIDERATION, THEN IT COULD NOT BE CONSTRUED THAT TRANSACTION WOULD TAKE COLOUR OF A BUSINESS TRANSACTION. THE ASSESSEE IS BASICALLY AN AGRICULTURIST; PURCHASES LAND AT A DISTANCE OF MORE THAN 20 KMS. AWAY FROM MUNICIPALITY AND CLOSE TO HIS NATIVE VILLAGE. AFTER SALE OF THIS LAND, HE HAS AGAIN PURCHASES AGRICULTURE LAND. HE HAS NOT ENTERED INTO ANY SALE/PURCHASE OF LAND IN EARLIER PERIOD OF TIME OR IN SUBSEQUENT PERIOD OF TIME. HE HAS NOT BORROWED MONEY FOR PURCHASE OF LAND AND INCURRED INTEREST EXPENDITURE. THERE MIGHT BE REASONS FOR ALL OF A SUDDEN SPURT IN THE PRICE OF LAND IN THE AREA. THERE COULD BE CHANGE OF POLICY OF GOVERNMENT LEVEL; INTRODUCTION OF SOME PROJECT, BUT THAT TYPE OF CHANGE IN THE POLICY, WHETHER, WAS IN THE NOTICE OF THE ASSESSEE. NO SUCH FACTORS HAVE BEEN BROUGHT ON RECORD BY THE AO. IT IS ALSO PERTINENT TO OBSERVE THAT WHETHER THE ASSESSEE COULD ANTICIPATE SUCH SUBSTANTIAL INCREASE IN THE SALE PRICE OF THE LAND BECAUSE OF ANY POLICY INTRODUCED BY THE GOVERNMENT, NO SUCH FACTORS HAVE BEEN BROUGHT ON RECORD. FACTS ARE TO BE ITO WD-2-BHUJ-KUTCH V. RAMESH GANGARAM RAMANI /I.T.A. NO.301/RJT/2014/A.Y.09-10 PAGE 19 OF 21 VIEW KEEPING IN VIEW PERSPECTIVE THE ASSESSEE, I.E. FROM WHERE HE BELONGS; WHETHER HE HAS VENTURED IN ANY TRADING ACTIVITIES OF SIMILAR NATURE; HIS EDUCATIONAL BACKGROUND ETC. EVEN THE ENTIRE TRANSACTION IS BEING LOOKED INTO WITH THAT ANGLE, THEN IT WOULD REVEAL THAT HE HAS NOT TRADED IN THE LAND, RATHER IT WAS A SIMPLICITOR INVESTMENT FOR AGRICULTURE OPERATION, BUT ON ACCOUNT OF GETTING GOOD PRICE LAND HAS BEEN SOLD, AND HIGHER VOLUME OF LAND PURCHASED AT DIFFERENT PLACES. EVERY AGRICULTURIST WOULD LIKE TO ENHANCE HIS LAND HOLDING, IF SIMILAR TYPE OF SALE OF LAND CAN RESULT INTO A PRICE, WHICH CAN ENABLE HIM TO BUY HIGHER VOLUME OF OTHER AGRICULTURE LAND. IN VIEW OF THE ABOVE DISCUSSION, WE ALLOW APPEAL OF THE ASSESSEE AND DIRECT THE AO TO TREAT THE ASSESSEE AS AN INVESTOR IN THE AGRICULTURE LAND. ENTIRE LAND SOLD TO BE TREATED AS AGRICULTURE LAND AND GAIN ON SALE OF THIS LAND IS BEYOND THE PURVIEW OF THE CAPITAL GAIN UNDER SECTION 2(14) OF THE INCOME TAX ACT, 1961. THE EXEMPTION CLAIMED BY THE ASSESSEE BE GRANTED. 18. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED, AND THAT OF THE REVENUE DISMISSED. 10. IN THE INSTANT CASE, THE AGRICULTURAL LAND OF THE ASSESSEE IS SITUATED JUST ADJACENT TO THE AGRICULTURAL LAND OF HIS BROTHER, SHRI SHAILESH G RAMANI HENCE, THE ABOVE DECISION IS SQUARELY APPLICABLE ON FACTS AND IN LAW AND THEREFORE, IS COVERED BY ABOVE DECISION OF TRIBUNAL. FURTHER, THE ISSUE IS ALSO COVERED BY DECISION OF TRIBUNAL RAJKOT IN THE CASE OF SMT. HEENABEN B. MEHTA V. ITO I.T.A.NO. 99/RJT/2016 DTD. 06.12.2017. WE FURTHER OBSERVE THAT THE ASSESSEE IS AN AGRICULTURALIST BY INHERITANCE AND HE PURCHASED AGRICULTURAL LAND IN APRIL 2005 FOR RS. 86,000 AT VILLAGE PADDHAR TAL. BHUJ IN KUTCH ITO WD-2-BHUJ-KUTCH V. RAMESH GANGARAM RAMANI /I.T.A. NO.301/RJT/2014/A.Y.09-10 PAGE 20 OF 21 DISTRICT AND SOLD THE LAND IN JULY-AUGUST 2008 FOR CONSIDERATION OF RS. 1.88 CRORES. THE LAND HAS BEEN MENTIONED AS AGRICULTURAL LAND IN THE LAND REVENUE RECORD. AGRICULTURE OPERATIONS WERE CARRIED ON AND THEY WERE SITUATED ABOUT 19 KM FROM BHUJ. THE ASSESSEE HAS SHOWN AGRICULTURAL INCOME FROM THIS LAND. THEREFORE, THE GAIN REALIZED ON SALE OF SUCH LAND WAS CLAIMED EXEMPT UNDER SECTION 2(14) OF THE I.T. ACT. WE FIND THAT THAT THE ASSESSEE LAND IS SITUATED BEYOND 8 KMS OF A TOWN COMMITTEE AND WAS PURCHASED BY A PERSON WHO HAS BEEN SHOWN AS AGRICULTURIST IN THE PURCHASE DEED. DURING THE OCCUPANCY, AGRICULTURAL OPERATIONS WERE CARRIED OUT ON THE LAND AND AGRICULTURAL INCOME HAS BEEN SHOWN IN THE RETURN OF INCOME. THE LAND WAS SOLD TO AN AGRICULTURIST. CONSIDERING THESE FACTS, IT IS HELD THAT THE LAND WAS AGRICULTURAL LAND AS DEFINED IN SECTION 2(14) OF THE ACT. WITH REGARD TO ADVENTURE IN NATURE OF TRADE, THE CIT (A) RELIED ON THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT V. REVA SHANKAR KOTHARI (2006) 283 ITR 338 (GUJARAT) AND HELD THAT THERE IS SINGLE TRANSACTION IN THE APPELLANT`S CASE OF SALE AND IT HAS BEEN ALSO SUBMITTED THAT LAND PURCHASED SUBSEQUENTLY WERE NOT SOLD AND ARE STILL IN POSSESSION OF THE ASSESSEE AND THEREFORE, THERE WAS NO INTENTION ON THE PART OF THE ASSESSEE OF DOING BUSINESS IN RESPECT OF THIS LAND. THEREFORE, THE ITO WD-2-BHUJ-KUTCH V. RAMESH GANGARAM RAMANI /I.T.A. NO.301/RJT/2014/A.Y.09-10 PAGE 21 OF 21 ASSESSEE`S CASE IS SQUARELY COVERED BY THE DECISION. IN VIEW OF THIS MATTER, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT (A), ACCORDINGLY, SAME IS UPHELD, THEREFORE, RESPECTFULLY FOLLOWING THE AFORESAID JUDICIAL DECISIONS OF HON`BLE HIGH COURT AND CO-ORDINATE BENCH OF TRIBUNAL, THE GROUNDS OF APPEAL I) TO III) OF REVENUE ARE DISMISSED. 11. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. 12. THE ORDER PRONOUNCED ON 11.12.2018. SD/- SD/- (C.M. GARG) (O. P. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER RAJKOT: DATED: 11 TH DECEMBER 2018 /OPM COPY OF ORDER SENT TO - ASSESSEE/AO/PR. CIT/ CIT (A)/ ITAT (DR)/GUARD FILE OF ITAT. BY ORDER / / TRUE COPY / / ASSISTANT REGISTRAR, RAJKOT