DCIT-AKOLA-CIRCLE, Akola V. M/S NAVJIVAN FARMS PVT. LTD., RAJKOT

ITA 320/NAG/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3148 (ITAT-NAGPUR)
• Duration Of Justice: 1 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 18-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANITA RUPVATARAM
• Assessee Lawyers: C J THAKAR
• Keywords: Capital asset; Business income
• Section: 2(14); 68

Judgement Text

1 ITA NO. 320/NAG/2014 IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. ITA NO. 320/NAG/2014 ASSESSMENT YEAR : 2010 - 11. DY. COMMISSIONER OF INCOME - TAX, M/S NAV JIVAN FARMS PVT. LTD., AKOLA CIRCLE, AKOLA. VS. RAJKOT. PAN AABCN 8070B APPELLANT. RESPONDENT. APPELLANT BY : SMT. ANITA RUPVATARAM. RESPONDENT BY : SHRI C.J. THAKAR. DATE OF HEARING : 0 2 - 12 - 2015. DATE OF PRONOUNCEMENT : 15 TH JAN., 2016. O R D E R PER SHRI SHAMIN YAHYA, A.M . THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(APPEALS) - I, NAGPUR DATED 27 - 03 - 2014 AND PERTAINS TO ASSESSMENT YEAR 2010 - 11. THE GROUND OF APPEAL READS AS UNDER : ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT(A) ERRED IN NOT APPRECIATING THAT THE LAND SOLD BY THE ASSESSEE CANNOT BE TREATED AS AGRICULTURAL LAND IN VIEW OF VARIOUS FACTS STATED BY TH E A.O. IN ASSESSMENT ORDER. 2. IN THIS CASE THE AO NOTED THAT ON THE BASIS OF THE DETAILS/DOCUMENTS FILED, IT IS FOUND THAT DURING THIS YEAR, THE ASSESSEE HAS RECEIVED AN AWARD OF RS.2,89,605/ - FOR THE LAND COMPULSORILY ACQUIRED BY THE SPECIAL LAND ACQUIS ITION OFFICER, RAJKOT VIDE ORDER DATED 23 - 10 - 2009. AS PER THE DOCUMENTS OF LAND ACQUISITION FILED, THE LAND IS ACQUIRED FOR THE EXPANSION (FOUR LANING) OF 2 ITA NO. 320/NAG/2014 THE RAJKOT JAMNAGAR STATE HIGHWAY. THE ASSESSEE HAS ALSO SOLD THE REMAINING PART OF THE LAND BEARIN G SURVEY NO. 301 PART 1 AND PART 2 AT VILLAGE TARAGHADI TAL. PADDHARI DIST. RAJKOT OF ABOUT 3.46.00 HECTORS FOR A CONSIDERATION OF RS.1,03,80,000/ - AS PER THE REGISTERED DEED OF SALE DATED 16 - 10 - 2009. IT IS THE CONTENTION OF THE ASSESSEE THAT THE LAND TRAN SFERRED IS AGRICULTURAL LAND AND FOR THIS REASON, NO CAPITAL GAIN WAS CHARGEABLE TO TAX. 3. THE ASSESSEE WAS REQUIRED TO EXPLAIN AS TO WHY THE CAPITAL GAIN DERIVES ON TRANSFER OF THE LAND OF RS.1,02,99,905/ - AS PER THE COMPUTATION GIVEN WAS NOT CHARGEABLE TO TAX. THE ASSESSEE WAS ALSO REQUIRED TO GIVE DETAILED EVIDENCE OF THE AGRICULTURAL INCOME/EXPENSES FOR THIS YEAR AS WELL AS FOR ASSESSMENT YEARS 2007 - 08 AND 2008 - 09. 4. CONSIDERING THE SUBMISSIONS OF THE ASSESSEE IN THIS REGARD THE AO OBSERVED THAT THE ASSESSEE HAS FABRICAT E D THE EVIDENCES TO SUBSTANTIATE THAT SOME AGRICULTURAL ACTIVITIES WAS CARRIED OUT AND THE SAID AGRICULTURAL INCOME WAS CREDITED TO THE PROFIT AND LOSS ACCOUNT. THE AO OBSERVED THAT THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCE FOR PURCHA SE OF SEE D S, FERTILIZERS ETC. THE AO FURTHER NOTED THAT 7/12 EXTRACTS WERE OBTAINED ON 28 - 04 - 2008. IT WAS NOTED THEREIN THAT FOR THE YEAR 2007 - 08 THE DETAILS OF AGRICULTURAL ACTIVITIES CARRIED ON WERE NOT AVAILABLE . HENCE THE AO CONCLUDED THAT THERE IS NO EVIDENCE THAT AGRICULTURAL OPERATIONS WERE EVER CARRIED OUT ON THIS LAND AFTER 2007 - 08. REGARDING RECEIPT OF AGRICULTURAL INCOME, THE AO OBSERVED THAT THE SAME WERE SELF MADE VOUCHERS. THE AO ALSO REJECTED THE CERTIFICATE GIVEN BY GRAM PANCHAYAT. HE HELD HAT NO RELIANCE CAN BE PLACED ON THIS CERTIFICATE. HENCE THE AO CONCLUDED THAT THE ASSESSEE HAS NOT CARRIED OUT ANY AGRICULTURAL ACTIVITIES IN THE SAID LAND. HE HELD THAT AGRICULTURAL INCOME CREDITED TO THE PROFIT AND LOSS ACCOUNT OF RS.1,84,113/ - WAS INCOME FROM OTHER SOURCES U/S 68 OF THE I.T. ACT. 3 ITA NO. 320/NAG/2014 5. THE AO FURTHER HELD THAT SINCE THE LAND TRANSFERRED BY THE ASSESSEE WAS NOT AGRICULTURAL LAND , IT WAS NOT ELIGIBLE FOR EXEMPTION. ACCORDINGLY THE AO HELD THAT THE CAPITAL GAIN DERIVED ON TRANSFER OF LAND OF RS.1,02,99,905/ - WAS BROUGHT TO TAX AS LONG TERM CAPITAL GAIN. 6. THE ASSESSEE MADE ELABORATE SUBMISSIONS BEFORE THE LEARNED CIT(APPEALS) . CONSIDERING THE SAME, LEARNED CIT(APPEALS) OBSERVED AS UNDER : ON CAREFUL EXAMINATION OF THE FACTS, IT IS SEEN THAT THE AO IN HIS ASSESSMENT ORDER HAS RE CORDED A FINDING THAT THE APPELLANT HAS FILED 7/12 EXTRACTS FOR THE YEAR 2005 - 06 TO 2007 - 08 IN SUPPORT OF HIS CLAIM FOR LAND IN QUESTION BEING AN AGRICULTURAL LAND. FURTHER, IT IS SEEN THAT THE AGRICULTURAL LAND OF OF 3.46 HECTORS IN QUESTION BEARING SURVEY NO. 301 PART 1 AND 2 AT VILLAGE TARAGHADI, TAL. PADDHARI, DIST. RAJKOT WAS SOLD FOR A TOTAL CONSIDERATION OF RS.1,03,80,000/ - WHICH IS LOCATED 18 KMS. FROM MUNICIPAL LIMITS OF RAJKOT. THE CONTENTION OF THE AR THAT THE ASSESSEE HAS NEVER APPLIED FOR CHANGE OF USE OF P ROPERTY FROM AGRICULTURAL LAND TO ANY OTHER PURPOSES, OTHER THAN THE AGRICULTURAL LAND IS ALSO NOT DISPUTED. IT IS A FACT WHICH THE AR CONTENDS THAT THE STATE LAWS OF GUJARAT, WHERE THE AGRICULTURE LAND IS LOCATED PROHIBITS CARRYING OUT ANY OTHER ACTIVITY OTHER THAN AGRICULTURE WITHOUT PRIOR PERMISSION AND NO SUCH CHANGE WAS EVER CONTEMPLATED OR CARRIED OUT BY THE APPELLANT. THE AR OF THE APPELLANT IN THE COURSE OF APPELLATE PROCEEDINGS HAS SUBMITTED A CERTIFICATE FROM SARPANCH, GRAM PANCHAYAT TARAGHARI, W HICH STATES THAT THE LAND IN QUESTION IS AN AGRICULTURAL LAND SITUATED IN REMOTE VILLAGE TARAGHADI BEYOND THE LIMITS OF RAJKOT MUNICIPAL CORPORATION. THE CERTIFICATE FURTHER STIPULATES THAT THE POPULATION OF THE VILLAGE IS ONLY 3,271. THEREFORE, THE LAND BEING AGRICULTURAL LAND AND STIPULATED BEYOND 8 KMS. OF MUNICIPAL LIMITS OF RAJKOT IS OUTSIDE THE AMBIT OF SECTION 2(14) OF THE ACT, HENCE IS EXEMPT FROM THE CAPITAL GAINS. THEREAFTER THE LEARNED CIT(APPEALS) DISCUSSED SEVERAL CASE LAWS ON THE ISSUE AND FURTHER HELD AS UNDER : 9.0 IT IS UNDISPUTED THAT THE LAND IN QUESTION WAS AN AGRICULTURAL LAND. THE APPELLANT HAS FILED A COPY OF REGISTERED SALE DEED DATED 23.10.2009. 4 ITA NO. 320/NAG/2014 ON PERUSAL OF THE SALE DEED, IT IS SEEN THAT THE LAND PURCHASED BY THE APPELLANT WAS AN AGRICULTURAL LAND. IT IS THUS UNDISPUTED THAT THE LAND SOLD BY THE APPELLANT IN THE RELEVANT FINANCIAL YEAR WAS ORIGINALLY PURCHASED AS AN AGRICULTURAL LAND AND THE LAND WAS DULY RECORDED IN REVENUE RECORDS AS AN AGRICULTURAL LAND. THIS FACT IS ALSO FOU ND IN CONFORMITY TO THE CERTIFICATE DATED 23.10.2009 FILED BY THE APPELLANT FROM THE GRAM PANCHAYAT, TARAGHADI. IT IS THUS SEEN THAT THE LAND IN QUESTION HAS BEEN HELD BY THE APPELLANT AS AN AGRICULTURAL LAND SINCE IT WAS PURCHASED AND SOLD IN THE RELEVANT FINANCIAL YEAR. THE FINDING RE CORDED BY THE AO IN PARA 4.4 OF THE ASSESSMENT ORDER THAT THE 7/12 EXTRACTS OF THE LAND WERE PRODUCED FOR THE YEAR 2005 - 06 TO 2007 - 08 BY THE APPELLANT ALSO SUPPORTS THE CASE DOF THE APPELLANT IN AS MUCH AS THAT ONCE THE APPE LLANT HAS DEMONSTRATED THAT THE LAND IN QUESTION WAS AN AGRICULTURAL LAND IN THE EARLIER ASSESSMENT YEARS, THE CHARACTER OF LAND WILL NOT CHANGE AUTOMATICALLY IN SUBSEQUENT YEAR UNLESS IT IS ACTUALLY USED FOR THE PURPOSES OTHER THAN THE AGRICULTURAL. THE A PPELLANT HAS USED THE LAND FOR THE PURPOSE OF AGRICULTURAL ONLY. THERE IS NOTHING ON RECORD TO SHOW THAT THE LAND IN QUESTION HAS BEEN USED FOR THE PURPOSES OTHER THAN THE AGRICULTURAL. IN FACT, PERMISSION OF THE GOVERNMENT AUTHORITY IS MANDATORY FOR CONVE RSION OF AGRICULTURAL LAND INTO NON - AGRICULTURAL LAND IN THE STATE OF GUJARAT. THERE IS NOTHING ON RECORD TO SHOW THAT THE APPELLANT HAS NEVER CONTEMPLATED OR APPLIED FOR SUCH CONVERSION OF LAND FOR THE PURPOSES OF USE OTHER THAN THE AGRICULTURE. BESIDES, THE APPELLANT HAS ALSO SHOWN THE AGRICULTURAL INCOME OF RS.1,84,113/ - IN THE RELEVANT FINANCIAL YEAR UNDER APPEAL. THE LAND IN QUESTION IS RECORDED AS AGRICULTURAL LAND IN REVENUE RECORDS AT THE TIME OF PURCHASE AND SALE OF THE SAME. SINCE, THE LAND IN QUE STION IS AN AGRICULTURAL LAND SITUATED BEYOND 8 KMS. OF MUNICIPAL LIMITS, THEREFORE, THE TRANSACTION OF SALE IN LAND BY THE APPELLANT CANNOT BE REGARDED AS CAPITAL ASSET WITHIN THE MEANING OF SECTION 2(14) OF THE ACT. THEREFORE, TAKING INTO CONSIDERATION T HE FACTS AND CIRCUMSTANCES AND THE MATERIAL EVIDENCES FILED BY THE APPELLANT DURING THE ASSESSMENT AS WELL AS APPELLATE PROCEEDINGS AND THE JUDICIAL DECISIONS RELIED UPON BY THE AR, I DECLINE TO AGREE WITH THE VERSION OF THE AO AND THE LAND IN QUESTION IS HELD TO BE AN AGRICULTURAL LAND, WHICH IS OUTSIDE THE AMBIT OF TAXABILITY, HENCE IS NOT LIABLE FOR CHARGING OF CAPITAL GAINS. ACCORDINGLY, THE ADDITION MADE BY THE AO IS DIRECTED TO BE DELETED. THESE GROUNDS ARE ALLOWED. 5 ITA NO. 320/NAG/2014 10.0 GROUND NO.4 : THE AO, IN THE C OURSE OF ASSESSMENT PROCEEDINGS HAS DECLINED TO ACCEPT THE AGRICULTURAL INCOME OF RS.1,84,113/ - , DECLARED BY THE APPELLANT IN THE RETURN OF INCOME FILED FOR THE YEAR UNDER APPEAL ON THE GROUND THAT THE ASSESSEE COULD NOT ADDUCE ANY PROOF AS REGARDS TO THE AGRICULTURAL ACTIVITY CARRIED OUT ON THE AGRICULTURAL LAND. THIS ISSUE HAS ELABORATELY BEEN DEALT WITH IN THE FOREGOING PARA NOS. 4 TO 8 OF THIS ORDER WHEREIN THE CLAIM OF THE ASSESSEE HAS BEEN ALLOWED. THE AR OF THE ASSESSEE CONTENDED BEFORE THE AO THAT T HE ASSESSEE, DURING THE RELEVANT FINANCIAL YEAR HAS GIVEN THE AGRICULTURAL LAND IN QUESTION FOR FARMING ON CONTRACT BASIS. THE AO, HOWEVER, DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE FOR WANT OF FURNISHING OF ANY PROOF REGARDING CULTIVATION. THE AGRICUL TURAL LAND HOLDING BY THE APPELLANT IS NOT IN DISPUTE. THE AR OF THE APPELLANT IN THIS REGARD HAS RELIED ON THE DECISION OF HONBLE ITAT BENCH, NAGPUR IN THE CASE SMT. RUKHSANA BEGUM IN ITA NO. 1/NAG/2008 VIDE ORDER DATED 26/06/2009; WHEREIN THE ITAT HAS HELD THAT IN THE ABSENCE OF DETAILS AVAILABLE WITH THE ASSESSEE AS REGARDS TO THE AGRICULTURAL INCOME, RS.30,500/ - PER ACRE WAS HELD TO BE CONSIDERED AS REASONABLE AGRICULTURAL INCOME DERIVED FROM AGRICULTURAL LAND OWNED BY THE ASSESSEE. HAVING REGARD TO THE FACTS OF THE PRESENT CASE OF THE APPELLANT, THE AGRICULTURAL INCOME DECLARED AT RS.1,84,113/ - IS QUITE REASONABLE AND NO ADVERSE INFERENCE CAN BE DRAWN IN THE ABSENCE OF EVIDENCE CONTRARY TO THE RECORDS AND FOR WANT OF DETAILS OF SUCH AGRICULTURAL ACT IVITIES. FURTHER, THAT HAVING REGARDS TO THE FACTS AND CIRCUMSTANCES OF THE CASE, MORE PARTICULARLY WHEN THE LAND IN QUESTION ITSELF HAS BEEN HELD TO BE AN AGRICULTURAL LAND, THE ADDITION MADE BY THE AO IN RESPECT OF AGRICULTURAL INCOME OF RS.1,84,113/ - TR EATING THE SAME AS INCOME FROM OTHER SOURCES IS NOT JUSTIFIED AND THE SAME IS DIRECTED TO BE TREATED AS AN AGRICULTURAL INCOME IN THE HANDS OF THE APPELLANT AS AN EXEMPT AGRICULTURAL INCOME. HENCE, THIS GROUND IS ALLOWED. 7. AGAINST THE ABOVE ORDER, REVENUE IS IN APPEAL BEFORE US. 8. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. WE FIND THAT IT IS UNDISPUTED THAT THE ASSESSEE IS HOLDING LAND WHICH IS SITUATED BEYOND 8 KMS. FROM THE LOCAL MUNICIPAL LIMITS. HENCE THIS IS THE ASSESSEES CLAIM THAT IT IS CLEARLY AGRICULTURAL LAND IN TERMS OF SECTION 2(14)(III)(B) OF THE ACT. THE ASSESSEE HAS CARRIED OUT AGRICULTURAL ACTIVITIES ON THE SAID LAND AND HAS ALSO SHOWN 6 ITA NO. 320/NAG/2014 AGRICULTURAL INCOME. THE ASSESSEE HAS ALSO SUBMITTED THE CERTIFICATE OF THE SARPANCH OF THE GRAM PANCHAYAT WHICH STATES THAT THE LAND IN QUESTION IS AN AGRICULTURAL LAND SITUATED IN REMOTE VILLAGE TARAGHADI BEYOND THE LIMITS OF RAJKOT MUNICIPAL CORPORATION. THE PURCHASE AND SALE DEED OF THE LAND ALSO SHOWS T HAT THE LAND WAS TRANSACTED AS AGRICULTURAL LAND. IT IS UNDISPUTED THAT NO PERMISSION OF CONVERSION OF AGRICULTURAL LAND INTO NON - AGRICULTURAL LAND WAS EVER SOUGHT. THIS HAS BEEN FOUND BY THE LEARNED CIT(APPEALS) TO BE MANDATORY FOR CONVERSION OF AGRICULTU RAL LAND INTO NON - AGRICULTURAL LAND IN THE STATE OF GUJARAT. THE ASSESSEE HAS SUBMITTED 7/12 EXTRACTS OF THE LAND WHICH SHOWED THAT THE LAND WAS AGRICULTURAL LAND. THE ASSESSEE HAS ALSO FURNISHED EVIDENCE FOR SALE OF AGRICULTURAL PRODUCTS WHICH THE AO HAS DISMISSED WITHOUT ANY COGENT REASON AS SELF SERVING DOCUMENT. THE AGRICULTURAL INCOME RETURNED BY THE ASSESSEE IN THE PRECEDING ASSESSMENT YEARS IS AS UNDER : A.Y. 2005 - 06 LOSS RS. 23,533/ - A.Y. 2006 - 07 RS. 74,811/ - A.Y. 2007 - 08 R S. 47,900/ - A.Y. 2008 - 09 RS. 29,874/ - A.Y. 2009 - 10 RS. 1,84,113/ - THE ABOVE AGRICULTURAL INCOME HAVE BEEN ACCEPTED BY THE REVENUE FOR ALL THE YEARS EXCEPT FOR THE PRESENT ASSESSMENT YEAR. LEARNED COUNSEL OF THE ASSESSEE HAS STATED T HAT THE ASSESSEE HAS FILED CROP STATEMENT FROM REVENUE RECORD OF THE S TATE GOVERNMENT FOR ASSESSMENT YEARS 2005 - 06 T0 2010 - 11 CERTIFYING THAT THE AGRICULTURAL CROP WAS GROWN ON THE SAID AGRICULTURAL LAND. IT IS ALSO UNDISPUTED THAT THE ASSESSEE HAS BEEN PA YING LAND REVENUE IN THE SAID AGRICULTURAL LAND AND THE SAID LAND IS CLASSIFIED AS AGRICULTURAL LAND IN REVENUE RECORD. EVEN IN RESPECT OF PORTION OF LAND ACQUIRED FROM SURVEY NO. 301 PART 1 AND 301 PART 2 BY THE STATE GOVERNMENT THE SAID LAND IS CLASSIFIE D AS AGRICULTURAL LAND AND THE 7 ITA NO. 320/NAG/2014 COMPENSATION IS GIVEN ON THAT BASIS I.E. IT IS AN AGRICULTURAL LAND. THE ASSESSEE HAD ALSO FURNISHED 7/12 EXTRACT DATED 2 0 - 08 - 2012 FOR THE YEARS 2007 - 08 TO 2008 - 09 AND 2009 - 10 IN WHICH THE DETAILS OF CROP GROWN YEAR - WISE WAS SHOWN. FROM THE ABOVE IT IS EVIDENT THAT THE ASSESSEE HAS SUBMITTED ALL THE RELEVANT DOCUMENT TO ESTABLISH THAT THE AGRICULTURAL ACTIVITY WAS BEING CARRIED OUT AND THE SAID LAND WAS AGRICULTURAL IN NATURE. THE AO WITHOUT BRINGING ANY COGENT MATERIAL HAD C ONSIDERED THE ASSESSEES CASE AS CASE OF FABRICATION. THIS IS NOT AT ALL SUSTAINABLE IN LAW. 9. IN THIS REGARD, WE MAY ALSO REFER TO THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF D.L.F UNITED LTD. VS. CIT 217 ITR 33 3 . SLP AGAINST THIS CASE WAS D ISMISSED BY THE HONBLE APEX COURT ALSO. IN THIS CASE IT WAS HELD THAT AGRICULTURAL LAND REMAINED AGRICULTURAL LAND UNTIL IT IS URBANIZED OR CONVERTED INTO PLOTS. WE FURTHER FIND THAT HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. NITESH RAMESHC HANDRA CHORDIA AND OTHERS IN INCOME TAX APPEAL NO. 120 OF 2013 AND OTHERS VIDE ORDER DATED 30 - 03 - 2015, IN PARA 10 HAS OBSERVED AS UNDER : WE RECORD OUR CONCURRENCE WITH THE ABOVE VIEW AS IT IS JUST AND REASONABLE. INCOME TAX EXEMPTIONS FOR AGRICULTURAL INCOME ARE BOUND TO PROMOTE AGRICULTURE IN THE COUNTRY . IT IS IN OUR NATIONAL INTEREST TO MEET THE INCREASING NEEDS OF FOODSTUFFS FOR GROWING POPULATION AND WOULD SERVE INTEREST OF JUSTICE. AGRICULTURAL LANDS ARE ALREADY SUBJECTED TO LAND REV ENUES AND OTH ER LOCAL TAXES NEED NOT BE OVERBURDENED. THE REVENUE CAN TAP OTHER ALTERNATIVE RESOURCES TO MEET THE REVENUE REQUIREMENTS. FURTHER MORE IN PARA 13 AND 14 THE HONBLE JURISDICTIONAL HAS HELD AS UNDER : 13. IN THE RULING IN THE CASE OF DLF UNITED LTD. VS. COMMISSIONER OF INCOME TAX (1995) 129 CTR (DEL) 33 , THE HONBLE DELHI HIGH COURT REFERRED TO EXPLANATION 2(1)(A) RELIED UPON BY THE COUNSEL FOR THE REVENUE AND HELD THAT SURPLUS OF THE COMPENSATION AMOUNT ARISING AS A RESULT OF ACQUISITION OF AGRICULTURAL LAND IN QUESTION WAS CAPITAL ASSET AND NOT THE INCOME AT ALL. THE QUESTION OF CHANGE IN THE DEFINITION OF AGRICULTURAL INCOME BECAUSE OF INSERTION OF THE EXPLANATION HAS NO RELEVANCE. THUS, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WHEN M/S 8 ITA NO. 320/NAG/2014 DLF UNITED L TD. WAS CARRYING ON BUSINESS AS COLONISERS BY PURCHASE, DEVELOPMENT AND SELLING THE PLOTS OF LANDS IN THE AROUND DELHI IN THE COURSE OF ITS BUSINESS AND THE COMPANY HAD ACQUIRED CERTAIN AGRICULTURAL LAND IN CERTAIN VILLAGES AROUND DELHI, OUT OF WHICH SOME LAND WAS ACQUIRED BY THE GOVERNMENT THROUGH A NOTIFICATION ISSUED U/S. 4 OF THE LAND ACQUISITION ACT FOLLOWED BY DECLARATION ISSUED UNDER SECTION 6 OF THE LAND ACQUISITION ACT AND THE COMPANY RECEIVED COMPENSATION FOR THE LAND AFTER ASSESSMENT UNDER THE LA ND ACQUISITION ACT, THE INCOME TAX OFFICER, WHILE ASSESSING THAT THE COMPANY WAS A DEALER IN LANDS, HAD HELD THAT THE ACQUIRED LAND CONSTITUTED THE COMPANYS STOCK - IN - TRADE AND COMPENSATION RECEIVED BY THE COMPANY WAS LIABLE TO BE TAXED AS AN INCOME IN THR EE ASSESSMENT YEARS UNDER CONSIDERATION. THE QUESTION WHICH WAS RAISED WAS ANSWERED BY THE DELHI COURT IN PARAGRAPH 9 OF THE RULING UNDER CONSIDERATION, WHICH READS THUS : .....THIS COURT FURTHER HELD THAT IN OTHER WORDS THE AGRICULTURAL LANDS PURCHASED O RIGINALLY BY THE ASSESSEE FOR URBANISATION OR CONVERSION INTO BUILDING PLOTS REMAINED AGRICULTURAL LAND TILL THE ACQUISITION AND PAYMENT OF COMPENSATION, AND IN VIEW OF THE SAID FINDING THIS COURT HELD THAT THE FIRST QUESTION HAS TO BE ANSWERED IN THE NEGA TIVE, I.E. THE PROFITS WERE NOT BUSINESS PROFITS. WITH REGARD TO THE SECOND QUESTION THIS COURT FOUND THAT AS THE COMPENSATION HAD BEEN PAID FOR THE ACQUISITION OF AGRICULTURAL LAND, THE QUESTION REALLY INVOLVED A DETERMINATION AS TO WHETHER THE PRICE PAID FOR THE LAND BY WAY OF COMPENSATION COULD BE INCLUDED WITHIN THE DEFINITION OF AGRICULTURAL INCOME. IT WAS FURTHER HELD THAT AGRICULTURAL LAND WAS EXCLUDED FROM THE DEFINITION OF CAPITAL ASSET OCCURRING IN S. 2(14)(III) AND ACCORDINGLY ANY GAIN RESULTI NG FROM THE ACQUISITION OF AGRICULTURAL LAND WAS NOT INCOME, AND ACCORDINGLY THE ANSWER TO THE SAID QUESTION WAS THAT THE COMPENSATION AMOUNT WAS NOT INCOME. 14. THUS, THE INCOME OUT OF TRANSACTIONS OF IMMOVABLE PROPERTY IN THE NATURE OF AGRICULTURAL LA ND IS HELD AS CAPITAL GAIN EXEMPTED UNDER THE INCOME TAX AS ARISING FROM THE AGRICULTURAL LAND. WE FIND THE RULING IN THE CASE OF DLF UNITED LTD. WAS CHALLENGED IN S.L.P. (CIVIL) NO..CC 1727 - 1729/98 AND THE HONBLE APEX COURT FOUND THAT THERE WAS NO MERIT IN THE S.L.P. AND IT WAS ACCORDINGLY DISMISSED ON MERITS. THUS, CAPITAL GAIN ARISING FROM THE TRANSACTION IN RESPECT OF AGRICULTURAL LAND CANNOT BE CONSIDERED AS BUSINESS INCOME. THE RULING IS SQUARELY APPLICABLE TO THE FACTS AND CIRCUMSTANCES UNDER OUR CO NSIDERATION IN THE PRESENT CASE AS WELL. 9 ITA NO. 320/NAG/2014 9. IN THE BACKGROUND OF AFORESAID DISCUSSION AND PRECEDENTS, WE ARE OF THE CONSIDERED OPINION THAT THE LEARNED CIT(APPEALS) IS CORRECT IN HOLDING THAT THE LAND SOLD BY THE ASSESSEE WAS AGRICULTURAL LAND. 10. IN THE RESULT, THIS APPEAL BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 15 TH DAY OF JAN.,2016 SD/ - SD/ - (MUKUL K. SHRAWAT) ( SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER. NAGPUR, DATED: 15 TH JANUARY, 2016. COPY FORWARDED TO : 1. M/S NAVJ IVAN FARMS PVT. LTD., SHYAMLAL ROAD, BULDHANA (MS), MANEK COMM. CENTRE, NEAR LODHAVAD POLICE CHOWK, SVP ROAD, RAJKOT - 360002(GUJ.). 2. D .C.I.T., AKOLA CIRCLE , AKOLA. 3. COMMISSIONER OF INCOME - TAX - , NAGPUR. 4. CIT(APPEALS) - I, NAGPUR. 5. D.R., ITAT, NAGPUR. 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR, ITAT, NAGPUR WAKODE.