S.Kumaragurubaran, CHENNAI V. ITO, CHENNAI

ITA 3284/CHNY/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4028 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 22-06-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 05-12-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V SREENIVASAN JCIT D R
• Assessee Lawyers: S SRIDHAR
• Section: 143(3)

Judgement Text

, D/ SMC , IN THE INCOME TAX APPELLATE TRIBUNAL D/SMC BENCH, CHENNAI . , BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER I.T.A.NO.3284 /MDS./2016 ( ASSESSMENT YEAR : 2007-08,) SHRI S.KUMARAGURUBARAN , NO.2/307,PLOT NO.78, 5THSTREET, KANDASAMY NAGAR, PALAVAKKAM, CHENNAI 600 041. VS. THE INCOME TAX OFFICER, NON-CORPORATE WARD -15(2), CHENNAI-600 034. PAN AAIPK 6073 H ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : MR.S.SRIDHAR, ADVOCATE / RESPONDENT BY : MR.V.SREENIVASAN, JCIT, D.R ! ' / DATE OF HEARING : 22.06.2017 #$%& ! ' /DATE OF PRONOUNCEMENT : 25.07.2017 / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL IS FILED BY THE ASSESSEE, AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(A)-15, CHENN AI DATED 26.10.2016 PERTAINING TO ASSESSMENT YEAR 2007-08. ITA NO. 3284/MDS/2016 2 2. THE ONLY GROUND IN THIS APPEAL IS WITH REGARD T O TREATING THE SALE OF LANDED PROPERTY FOR NON-AGRICULTURAL PURPOSE AND BRINGING TO TAX UNDER THE HEAD CAPITAL GAINS. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE PUR CHASED A PROPERTY ON 06.04.2006 FOR A CONSIDERATION OF ` 28.96 LAKHS. THE SAME WAS TRANSFERRED THROUGH A POWER OF ATTORNEY (P OA) VIDE REGISTERED ON 27.12.2006 TO ONE MR.K.PARI AND THE A SSESSEE RECEIVED CONSIDERATION OF ` 30 LAKHS VIDE CHEQUES NO.146922 FOR ` 20 LAKHS AND 146923 FOR ` 10 LAKHS DRAWN ON TAMILNADU MERCANTILE BANK LTD.,(TMBL) CHENNAI-10. ON GETTING THIS INFORMATIO N, THE ASSESSMENT WAS REOPENED AND THE ASSESSMENT WAS COMPLETED U/S. 143(3) R.W.S 147 OF THE ACT, BRINGING THE CAPITAL GAINS OF ` 33,72,384/- ON SALE OF PROPERTIES SITUATED AT SURVEY NO.197/3 AND 198/3A IN SHOLINGANLLUR VILLAGE, TAMBARUM TALUK MEASURING AT 20.75 CENTS. IT WAS SOLD BY THE ASSESSEE TO MR.K.PARI, S/O.MR.KRISHNASWAMY REDD IAR THROUGH POA DATED 07.03.2007 FOR CONSIDERATION OF ` 65 LAKHS. THE PLEA OF ASSESSEE BEFORE THE LOWER AUTHORITIES THAT IT IS AN AGRICULTURAL LAND AS PER VILLAGE ADMINISTRATIVE OFFICER(VAO) RECORDS AND THE LAND WAS SITUATED BEYOND 8 KM OF ANY A MUNICIPAL CORPORATION . HOWEVER, THE ITA NO. 3284/MDS/2016 3 LOWER AUTHORITIES HAD NOT AGREED WITH THE CONTENTIO N OF THE ASSESSEE AND DISALLOWED THE CLAIM OF ASSESSEE TO THE TUNE O F 65 LAKHS AS AGRICULTURAL INCOME. AGAINST THE ORDER OF LD.CIT(A ), NOW THE REVENUE/ASSESSEE IS IN APPEAL BEFORE US. 4. BEFORE ME, THE ASSESSEE PLEADED THAT THE SUBJEC T LAND WAS AGRICULTURAL LAND AT THE TIME OF PURCHASE AND CONTI NUE TO BE AGRICULTURAL LAND TILL THE DATE OF SALE AND THE LAN D WAS NOT CONVERTED INTO ANY NON-AGRICULTURAL PURPOSE. IT WAS SUBMITTE D THAT AS PER VOA RECORDS, IT IS AN AGRICULTURAL LAND ONLY AND IT WAS STATED BY THE AO THAT THE LAND WAS WITHIN 7 KM FROM THE VILLAGE PANC HAYAT, UTHANDI, CHENNAI-119 AND UTHANDI IS NOT NOTIFIED MUNICIPAL ITY AND IT CANNOT BE TREATED AS NON-AGRICULTURAL LAND. 5. ON THE OTHER HAND, LD.D.R SUBMITTED THAT THE LAN D WAS PURCHASED BY THE ASSESSEE ON 06.04.2006 FOR CONSIDE RATION OF ` 28.96 LAKHS AND WAS SOLD WITHIN 11 MONTHS FOR ` 65 LAKHS ON 07.03.2007. THE PROPERTY, WHICH WAS SOLD, USED FOR CONSTRUCTION ACTIVITY, AND IS SITUATED WITHIN 7 KM FROM UTHANDI PANCHAYAT. ACCORDING TO HIM, THE IMPUGNED LAND IS WITHIN 7 KM FROM CROMPET ITA NO. 3284/MDS/2016 4 MUNICIPALITY. HENCE, THE IMPUGNED LAND SOLD BY THE ASSESSEE IS TO BE TREATED AS NON-AGRICULTURAL LAND. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IN THIS CASE, THE ASSESSEE IS NOT AN AGRIC ULTURIST AND HAS NOT CARRIED ON ANY AGRICULTURAL ACTIVITY IN THE SAID LA ND AND ALSO NOT DECLARED ANY AGRICULTURAL INCOME FROM THE SAID LAND AND SOLD IT AS IT IS AN AGRICULTURAL LAND. THERE IS NO EVIDENCE BROUGHT ON RECORD BY THE ASSESSEE WITH REFERENCE TO CARRY OUT ANY AGRICULTUR AL OPERATIONS BY THE ASSESSEE. IN MY OPINION, THE IMPUGNED LAND IN THE CASE OF ASSESSEE CANNOT BE CONSIDERED AS AGRICULTURAL LAND AS THERE WAS NO AGRICULTURAL OPERATION CARRIED ON BY THE ASSESSEE I N THE SAID LAND. 6.1 FURTHER, THE ASSESSEE IN THE PRESENT CASE IS N OT AN AGRICULTURIST. HE HAS NO BACKGROUND OF AGRICULTURAL ACTIVITIES. STRICTLY SPEAKING IT MAY NOT BE NECESSARY TO HAVE BACKGROUND OF AGRICULTURAL ACTIVATES. WE ARE MAKING A REFERENCE TO THIS CIRCUM STANCES ONLY TO WEIGH THE CUMULATIVE CIRCUMSTANCES TO COME TO A CON CLUSION WHETHER THE PROPERTY CAN BE REGARDED AS AGRICULTURAL LAND. NO EVIDENCE OF HAVING SPENT HUMAN LABOUR IN THE SENSE OF PREPARING THE LAND, FILLING, ITA NO. 3284/MDS/2016 5 SOWING SEEDS, PLANTING ON A REGULAR BASIS HAS BEEN PRODUCED BY THE ASSESSEE. THE PROPERTY IS SITUATED IN FAST DEVELOPI NG AREA OF TAMBARAM, CHENNAI. THE PROPERTY IS LOCATED IN DEVEL OPED/ DEVELOPING AREA AND HAS ACCESS TO ALL MODERN AMENIT IES/LIVING. THERE WAS REAL ESTATE ACTIVITY IN THE AREA WHERE THE PROP ERTY IS SITUATED. THE SALE OF THE PROPERTY BY THE ASSESSEE IS TO A CO MMERCIAL ORGANISATION. THE SALE CONSIDERATION PAID WOULD SHO W THAT NO BONA- FIDE AGRICULTURIST WOULD PAY SUCH A HUGE PRICE OF R S.65 LAKHS FOR 20.75 CENTS. 6.2 NOW APPLY THE TESTS LAID DOWN BY THE HON'BLE GU JARAT HIGH COURT IN THE CASE OF SARIFABIBI MOHAMMED IBRAHIM (204 I TR 631) WHICH WAS APPROVED BY THE HON'BLE SUPREME COURT, TO THE F ACTS AND CIRCUMSTANCES OF THE CASE:- ( I) THE FACT THAT LAND IS ENTERED AS AGRICULTURAL LA ND IN REVENUE RECORDS AND IS ASSESSED AS SUCH UNDER THE L AND REVENUE CODE WOULD BE A . CIRCUMSTANCE IN FAVOUR OF CONCLUSION THAT IT IS AN AGRICULTURAL LAND. HOWEVER , THIS WOULD RAISE ONLY A PRIMA FACIE PRESUMPTION AND SAID PRESU MPTION ITA NO. 3284/MDS/2016 6 CAN BE DESTROYED BY OTHER CIRCUMSTANCES POINTING TO THE CONTRARY CONCLUSION. (II) THE FACT THAT AGRICULTURAL OPERATIONS WERE CAR RIED ON IN THE PAST OR ARE CARRIED ON CURRENTLY IS A CIRCUMSTA NCE IN FAVOUR OF CONCLUSION THAT LAND WAS AGRICULTURAL LAN D. HOWEVER, THIS IS NOT A DECISIVE FACTOR INASMUCH AS AGRICULTURAL CROP CAN BE RAISED EVEN ON BUILDING SI TE LAND (EVEN ON DESERT LAND AS OBSERVED BY THE SUPREME COU RT IN SAID CASE) AND SOMETIMES, A CROP IS GROWN IN ORDER NOT TO ALLOW THE LAND TO REMAIN IDLE AWAITING SALE FOR NON - AGRICULTURAL PURPOSES TO A NON-AGRICULTURIST BY WAY OF A STOP- GAP ARRANGEMENT OR IN ORDER TO AVOID PAYMENT OF REV ENUE AT A HIGHER RATE OR IN ORDER TO AVOID PAYMENT OF CAPIT AL GAINS TAX. (III) THE FACT THAT LAND IS NOT CONVERTED TO NON-AG RICULTURAL USER WOULD BE A CIRCUMSTANCE INDICATING THAT IT IS AN AGRICULTURAL LAND. HOWEVER THIS IS SUBJECT TO SAME RIDER AS IS MENTIONED IN (II) ABOVE. ITA NO. 3284/MDS/2016 7 (IV) THE FOLLOWING FACTS WOULD INDICATE THAT LAND W AS NOT AGRICULTURAL LAND: ( A) THE LAND IS SITUATED IN AN AREA IN THE PROXIMITY OF BUILDING SITES. (B) THE LAND IS SOLD TO A NON-AGRICULTURIST FOR NON -AGRICULTURAL PURPOSES. (C) THE LAND IS SOLD AT A PRICE COMPARABLE TO THE P RICE FETCHED BY BUILDING SITES. (D) THE PRICE IS SUCH THAT NO BONA FIDE AGRICULTURI ST WOULD PURCHASE THE SAME FOR GENUINE AGRICULTURAL OPERATIO NS. 6.3 THE PROPERTY SOLD IS SITUATED IN SHOLINGANALL UR, TAMBARAM TALUK, CHENNAI, WHICH HAS BECOME A BUSTLING SUBURBA N. SHOLINGANALLUR IS AN UPCOMING RESIDENTIAL AREA WITH MANY NUMBER OF FLATS COMING UP, MOSTLY PROFESSIONALS FROM VARIOUS INDUSTRIES RENTING AND BUYING APARTMENTS. AS DETAILED ABOVE, THE PROPE RTY SOLD BY THE ASSESSEE IS IN THE MIDST OF DEVELOPMENT ACTIVITIES BEING CARRIED OUT BY BUILDERS IN PROMOTING HOUSING/ INFORMATION TECHN OLOGY CORRIDORS, ITA NO. 3284/MDS/2016 8 AND NO AGRICULTURAL ACTIVITIES WERE BEING CARRIED O UT EITHER BY THE ASSESSE NOR BY OTHERS IN THAT AREA, THE PROPERTY IS DESCRIBED AS A MANGO GROVE AS PER THE COPY OF THE SALE DEED/PATTA, CHITTA ADANGAL PRODUCED. IN VIEW OF THE SAME, THE SALE PRICE RECEI VED FOR THE PROPERTY HAS INCREASED MANIFOLD WHICH A NORMAL AGRI CULTURAL LAND WILL NOT FETCH. THE PRICE IS IN ACCORDANCE WITH THE DEVE LOPMENT ACTIVITIES AND CHANGES HAPPENING IN THE NATURE OF THE LAND FRO M AGRICULTURAL TO THAT OF HOUSING 6.4 IF I CONSIDER THE ABOVE FACTS AND CIRCUMSTANCE S OF THE PRESENT CASE AS A WHOLE AND AN OVERALL VIEW IS TO BE TAKEN IN DECIDING WHETHER THE LAND WAS AN AGRICULTURAL LAND, I WOULD COME TO A CONCLUSION THAT THE PROPERTY CANNOT BE CONSIDERED A S AGRICULTURAL LAND. THOUGH THE CIRCUMSTANCE THAT THE LAND IS CLAS SIFIED AS AGRICULTURAL IN THE REVENUE RECORDS AND THE VAO HA S CERTIFIED THAT THE LAND IS AWAY FROM MUNICIPALITY. IN MY VIEW, THE OTH ER CIRCUMSTANCES POINTED OUT ABOVE OUTWEIGHS ALL OF THE CIRCUMSTANCE S IN FAVOUR OF THE REVENUE AND ON THE BASIS OF THOSE CIRCUMSTANCES, I AM INCLINED TO ITA NO. 3284/MDS/2016 9 CONCLUDE THAT THE PROPERTY WAS NOT AN AGRICULTURAL LAND. ACCORDINGLY, THIS GROUND RAISED BY THE ASSESSEE IS DISMISSED. 7. IN THE RESULT, THE APPEAL OF ASSESSEE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH JULY , 2017. SD/- ( ) ( CHANDRA POOJARI ) /ACCOUNTANT MEMBER CHENNAI, DATED THE 25 TH JULY, 2017 . K S SUNDARAM. ' ( )!*+ ,+%! / COPY TO: 1 . / APPELLANT 3. ' ' -! () / CIT(A) 5. +0 1 )!)23 / DR 2. / RESPONDENT 4. ' ' -! / CIT 6. 1 45 6 / GF