DCIT-CIRCLE-1, Nagpur V. SMT. ALKA PRAKASH AGRAWAL, Nagpur

ITA 365/NAG/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2202 (ITAT-NAGPUR)
• Duration Of Justice: 1 year(s) 10 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 07-04-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 21-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NARENDRA KANE
• Keywords: Capital asset; Business income
• Section: 2(14); 32

Judgement Text

IN TH E INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH: NAGPUR BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. I.T.A. NO. 365 /NAG/20 1 4 ASSESSMENT YEAR: 20 10 - 11 THE DY. COMMISSIONER OF INCOME TAX, CIRCLE - 1, 5 TH FLOOR, MEC L BLDG., SEMINARY HILLS, NAGPUR - 06 VS. SMT. ALKA PRAKASH AGRAWAL A - 6, GANGA SAGAR APTS, 83 - 84, CANAL ROAD, RAMDASPETH, NAGPUR - 10 PAN : - AAUPA9123E (APPELLANT) (RESPONDENT) APPELLANT BY SHRI NARENDRA KANE , DR RESPONDENT BY SHRI K.P.DEWANI, AR DATE OF HEARING: 0 7 - 0 4 - 201 6 DATE OF PRONOUNCEMENT: - 31 / 05 /2016 O R D E R PER SHAMIM YAHYA , A .M. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF CIT (APPEALS) DATED 0 2 .0 4 .201 4 AND PERTAINS TO ASSESSMENT YEAR 2010 - 11 . THE GROUND S OF APPEAL RE AD AS UNDER : - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN BOTH LAW AND FACT BY DELETING THE ADDITION OF RS.9,08,12,003/ - UNDER THE HEAD LONG TERM CAPITAL GAINS; 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS FAILE D TO APPRECIATE THE FACT THAT AS PER THE 7/12 EXTRACT THE LAND WAS LAYING FALLOW, NO AGRICULTURAL ACTIVITY WAS CARRIED OUT ON THE LAND AND NO AGRICULTURE INCOME WAS SHOWN IN THE EARLIER YEARS AND THUS ERRED IN HOLDING TH AT THE LAND AS AGRICULTURE LAND 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN BOTH LAW AND FACT BY DELETING THE ADDITION OF RS.6,500/ - UNDER THE HEAD INCOME FROM OTHER SOURCES WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAS FAILED TO DISCHARGE THE ONUS CASE UPO N HER TO PROVE THE AGRICULTURAL OPERATIONS ON THE LAND; 2 ITA NO. 365 /NAG/201 4 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN RELYING ON THE DECISION OF ITAT IN THE CASE OF RUKSANA BEGUM, ITA NO.1/NAG/2008 DATED 26.06.2009, IGNORING THAT THE ISSUE IN TH E CASE IS NOT THAT OF THE EXTENT OF AGRICULTURAL INCOME BUT THAT OF THE VERY EXISTENCE OF THE AGRICULTURAL INCOME. 2. APROPOS GROUND NO.1 & 2: - DURING THE ASSESSMENT PROCEEDINGS, THE AO FOUND THAT THE ASSESSEE AS SOLD LAND OF 2.63 HECTARES AT MOUZA BORK HEDI VIDE SALE DEED DATED 16.10.2009 FOR TOTAL SALE CONSIDERATION OF RS.9,11,00,000/ - IN THE RELEVANT FINANCIAL YEAR. THE ASSESSEE HAD PURCHASED THE LAND IN 1990 FOR RS.78,379/ - . THE ASSESSEE HAS CLAIMED THE CAPITAL GAINS ARISING ON THE TRANSACTION OF SALE OF AGRICULTURAL LAND AS EXEMPT U/S.2(14) OF THE INCOME TAX ACT,1961 ON THE GROUND THAT THE LAND WAS AN AGRICULTURAL LAND, WHICH IS EXCLUDED FROM THE DEFINITION OF SEC.2(14) OF THE ACT. THE A.O. HAD ASKED THE ASSESSEE TO SUBMIT 7/12 EXTRACT FOR FY 2006 - 07 TO FY 2009 - 10. HOWEVER, THE ASSESSEE SUBMITTED 7/12 EXTRACT OF LAND FOR FY.2008 - 09 AND CLAIMED THAT IT IS A SUFFICIENT PROOF TO SHOW THAT THE LAND IN QUESTION IS AN AGRICULTURAL LAND. THE AO, HOWEVER, OBSERVED THAT THE ASSESSEE HAS NOT SHOWN ANY AGRICULTUR AL LAND IN EARLIER FINANCIAL YEARS. FURTHER, THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS HAS CLAIMED THAT SHE HAS EARNED AG RICULTURAL INCOME OF RS.6,500/ - IN THE RELEVANT FINANCIAL YEAR UNDER APPEAL. WHEN THE DETAILS OF THE AGRICULTURAL INCOME SUCH AS S ALE BILLS ETC. WERE CALLED BY THE AO, THE COUNSEL SUBMITTED THAT THE ASSESSEE HAS GIVEN THE LAND ON CONTRACT BASIS TO ANOTHER AGRICULTURIST. THE ASSESSEE HAD RAISED STRONG OBJECTION TO THE OBSERVATION OF THE AO THAT THE 7/12 EXTRACTS OF FY 2008 - 09 INDICATE S AGRICULTURAL OPERATIONS BUT IN THE SUBSEQUENT FINANCIAL YEAR 2009 - 10 RELEVANT TO THE AY UNDER APPEAL NO AGRICULTURAL OPERATIONS HAVE BEEN PROVED BY WAY OF FILING 7/12 EXTRACT BY THE ASSESSEE. THE CONTENTION OF THE AR IS THAT ONCE THE 7/12 EXTRACT FOR THE FINANCIAL YEAR 2008 - 09 HAS BEEN PRODUCED IN RESPECT OF THE LAND IN QUESTION AND AO IS SATISFIED THAT THE LAND IN QUESTION IS AN AGRICULTURAL LAND, THEN THE CHARACTER OF THE LAND IN QUESTION WILL NOT CHANGE AUTOMATICALLY IN THE SUBSEQUENT FINANCIAL YEAR. T HE AO, HOWEVER, DECLINED TO AGREE WITH THE 3 ITA NO. 365 /NAG/201 4 VERSION OF THE ASSESSEE AND PROCEEDED TO ASSESS THE SUM OF RS.9,08,72,003/ - AS LONG TERM CAPITAL GAINS IN THE HANDS OF THE ASSESSEE. HOWEVER, THE AR REITERA TED THAT THE AO HAS MIS CONSTRUED THAT THE LAND IN QUESTIO N IS A CAPITAL ASSET, WITHIN THE MEANING OF SEC.2(14) OF THE IT ACT,1961. THE AO HAS ALSO CALLED INFORMATION FROM THE TEHSILDAR, NAGPUR(RURAL) U/S133(6) OF THE I.T. ACT,1961. FROM THE 7/12 EXTRACTS RECEIVED FROM THE TEHSILDAR THE AO NOTICED THAT NO AGRICU LTURAL ACTIVITY WAS CARRIED OUT ON THE LAND IN THE EARLIER YEARS. HOWEVER, THE AO IS PARA 5 OF THE ASSESSMENT ORDER HAS RECORDED A FINDING THAT IN FINANCIAL YEAR 2008 - 09 THERE WAS SOME AGRICULTURAL ACTIVITY AS PER 7/12 EXTRACTS. THE AO, THEREFORE, ISSUED A SHOW - CAUSE NOTICE TO THE ASSESSEE WHICH HAS BEEN REPRODUCED IN PARA NO.5 OF THE ASSESSMENT ORDER. THE AO IN HIS SHOW CAUSE NOTICE HAD STATED THAT ON PERUSAL OF THE 7/12 EXTRACTS FOR FINANCIAL YEAR 2006 - 07, 2007 - 08 & 2009 - 10, IT IS SEEN THAT THE LAND WAS B ARREN AND ALSO THAT IN EARLIER YEARS THE ASSESSEE HAS NOT SHOWN ANY AGRICULTURAL INCOME. IN RESPONSE TO THE SHOW CAUSE NOTICE THE ASSESSEE FILED A WRITTEN SUBMISSION DATED 24.03.2013, WHICH HAS BEEN REPRODUCED IN PARA 6 OF THE ASSESSMENT ORDER. THE RELEVA NT PORTION OF THE REPLY IS REPRODUCED BELOW FOR BETTER APPRECIATION OF FACTS: - THE ASSESSEE HAS SOLD DURING THE PREVIOUS YEAR UNDER CONSIDERATION AGRICULTURAL LAND AND IT IS SUBMITTED THAT THE SURPLUS ARISI NG ON THE SAME IS NOT EXIGIBLE T O TAX, EXTRACT IN FORM NO.7/12 INDICATING AGRICULTURAL ACTIVITY IN FINANCIAL YEAR 2008 - 09 HAS BEEN SUBMITTED BY THE ASSESSEE. 1. THE ASSESSEE HAS BEEN PROVIDED WITH COPY OF 7/12 EXTRACT ALONG WITH THE COMMUNICATION DATED 21.03.2013 WHEREIN IN FINANCIAL YEAR 2008 - 09 AGRICULTUR AL ACTIVITY IS INDICATED. THE LAND SOLD BY THE ASSESSEE IS AGRICULTURAL LAND AS IS EVIDENT FROM THE 7/12 EXTRACT AS ANNEXED WITH THE COMMUNICATION DATED 21.03.2013. AGRICULTURAL LAND WAS UNDER CULTIVATION WHEN HELD BY ASSESSEE AND IT CANNOT BE TREATED AS N ON - AGRICULTURAL LAND. 2. IT IS RESPECTFULLY SUBMITTED THAT THE AGRICULTURAL LAND OWNED BY THE ASSESSEE WAS NEVER PUT TO ANY OTHER USE THAN AGRICULTURAL ACTIVITY. THE NON MENTION OF AGRICULTURAL PRODUCE IN EXTRACT 7/12 COULD BE POSSIBLY ON ACCOUNT OF MISTAKE O F NOTING OF PATWANI. 4 ITA NO. 365 /NAG/201 4 3. ON PERUSAL OF EVIDENCE OF RECORD IT CLEARLY INDICATES THAT THE PROPERTY TRANSFERRED WAS AGRICULTURAL LAND AT THE TIME OF PURCHASE AS WELL AS AT THE TIME OF SALE. IN VIEW OF ABOVE, IT IS PRAYED THAT THE SURPLUS ARISING ON THE AGRICULTUR AL LAND IS NOT ASSESSABLE TO TAX AS AGRICULTURAL LAND HELD BY THE ASSESSEE AND IS NOT CAPITAL ASSET IN TERMS OF SECTION 2(14) OF THE I.T. ACT,1961. HOWEVER, THE A.O. DECLINED TO AGREE WITH THE CONTENTIONS OF THE ASSESSEE. THE AO OBSERVED THAT IN THE 7/12 EXTRACTS AGRICULTURAL ACTIVITY HAS NOT BEEN SHOWN ON LAND FOR FY 2009 - 10, RELEVANT TO THE YEAR UNDER APPEAL. THE A.O. ALSO FOUND THAT THE ASSESSEE HAS NOT SHOWN AGRICULTURAL INCOME IN ANY OF THE EARLIER YEARS. THUS, THE ONUS IS ON THE ASSESSEE TO ESTABLIS H THAT THE LAND WAS AGRICULTURAL. THE AO PLACED RELIANCE ON THE DECISION IN GEMINI PICTURES (P) LTD. VS. CIT(1981 130 ITR 686 MAD.) IN WHICH THE MADRAS HIGH COURT HELD THAT IT WAS FOR THE ASSESSEE TO PROVE THAT THE LAND WAS AGRICULTURAL IN NATURE. 3. AGAI NST THE ABOVE ORDER ASSESSEE BEFORE THE LD. CIT ( A). THE LD. CIT ( A) ELABORATELY CONSIDERED THE SUBMISSION OF THE ASSESSEE AND CASE LAWS REFERRED. THE LD.CIT ( A) CONCLUDED AS UNDER: - IT IS UNDISPUTED THAT THE LAND IN QUESTION WAS PURCHASED AS AN AGRICULTU RAL LAND IN THE YEAR 1990 I.E. 20 YEARS BACK BY THE APPELLANT. THE APPELLANT HAS FILED A COPY OF REGISTERED SALE DEED DATED 06.03.1990 ANNEXED AT PAGE NO.14 TO 21 OF THE PAPER BOOK. ON PERUSAL OF THE SALE DEED, IT IS SEEN THAT THE LAND PUR CHASED BY THE APP ELLANT IN THE YEAR 1990 WAS AN AGRICULTURAL LAND WHICH WAS PURCHASED RS.75,000/ - . IT IS THUS UNDISPUTED THAT THE LAND SOLD BY THE APPELLANT IN THE RELEVANT FINANCIAL YEAR WAS ORIGINALLY PURCHASED AS AN AGRICULTURAL AND THE LAND WAS DULY RECORDED IN THE REV ENUE RECORDS AS AN AGRICULTURAL LAND. THIS FACT IS ALSO FOUND IN CONFORMITY TO THE CERTIFICATE DATED 25.11.2009 FILED BY THE APPELLANT FROM THE GRAM PANCHAYAT, BOTHLI, WHICH IS ANNEXED AT PAGE NO.13 OF THE PAPER BOOK. IT IS THUS SEEN THAT THE LAND IN QUEST ION HAS BEEN HELD BY THE APPELLANT AS AN AGRICULTURAL LAND SINCE IT WAS PURCHASED IN THE YEAR 1990 AND SOLD IN THE RELEVANT FINANCIAL YEAR. THE FINDING RECORDED BY THE AO IN PARA 5 OF THE ASSESSMENT ORDER THAT THE 7/12 EXTRACTS OF THE LAND PRODUCED BY THE APPELLANT SHOWS THAT THE 5 ITA NO. 365 /NAG/201 4 AGRICULTURAL OPERATIONS HAVE BEEN CARRIED OUT BY THE APPELLANT IN THE FINANCIAL YEAR 2008 - 09, ALSO SUPPORTS THE CASE OF THE APPELLANT IN AS MUCH AS THAT ONCE THE AO IS SATISFIED THAT THE LAND IN QUESTION WAS AN AGRICULTURAL LAND IN THE EARLIER ASSESSMENT YEAR AY 2009 - 10 RELEVANT TO THE FINANCIAL YEAR 2008 - 09, THE CHARACTER OF LAND WILL NOT CHANGE AUTOMATICALLY IN SUBSEQUENT YEAR UNLESS IT IS ACTUALLY USED FOR THE PURPOSES OTHER THAN THE AGRICULTURAL. THE APPELLANT 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 CONVERSION OF AGRICULTURAL LAND INTO NON - AGRICULTURAL LAND IN THE STATE OF MAHARASHTRA. THERE IS NOTHING ON RECORD TO SHOW THAT THE APPELLANT HAS EVER CONTEMPLATED OR APPLIED FOR SUCH CONVERSION OF LAND FOR THE PURPOSES OF USE OTHER THAN THE AGRICULTURE. BESIDES, THE APPELLANT HAS ALSO S HOWN THE AGRICULTURAL INCOME OF RS.6,500/ - 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 QUESTION IS AN AGRICULTURAL LA ND 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 THE 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. THIS GROUND IS ALLOWED. 4. AGAINST ABOVE ORDER THE REVENUE IS IN APPEAL BEFORE US. WE HA VE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. THE LD. COUNSEL OF THE ASSESSEE SUBMITTED BEFORE US , THE FOLLOWING IN THE SHAPE OF PAPER BOOKS: - 1. COPY OF SALE DEED DATED 16/10/2009 2. COPY OF PURCHASE DEED DATED 06/03/1990 3. EXTRACT OF FORM NO.7/12 4. GRAM PANCH AYAT CERTIFICATE 6 ITA NO. 365 /NAG/201 4 5. THEREAFTER, THE LD. COUNSEL OF THE ASSESSEE MADE THE FOLLOWING SUBMISSION : - A) THE ASSESSEE HAS ACQUIRED AGRICULTURAL LAND IN THE YEAR 1990. THE AFORESAID AGRICULTURAL LAND WAS HELD BY ASSESSEE FOR SUBSTANTIAL PERIOD OF 19 YEARS TILL IT WAS SOLD ON 19/10/2009. B) THE REVENUE RECORD BEING EXTRACTS IN FORM NO.7/12 SUBMITTED BEFORE A.O. INDICATE THAT THE AGRICULTURAL LAND HELD BY ASSESSEE DESCRIBED IN REVENUE RECORD AS AGRICULTURAL LAND AND AGRICULTURAL ACTIVITIES WERE CARRIED ON SUCH AGRICULT URAL LAND. C) THE ASSESSEE HAS NEVER APPLIED FOR PERMISSION TO USE AGRICULTURAL LANDS FOR NON - AGRICULTURAL PURPOSE NOR WAS IT CONVERTED FOR NON AGRICULTURAL USE BY ANY AUTHORITY TILL DATE OF SALE. THE AFORESAID FACT IS UNDISPUTED FACT ON RECORD. D) THE AGRICU LTURAL LAND WAS USED FOR AGRICULTURAL ACTIVITIES AND THERE IS NO EVIDENCE ON RECORD TO SHOW THAT AGRICULTURAL LAND OWNED BY THE ASSESSEE WAS PUT TO USE FOR ANY PURPOSE OTHER THAN AGRICULTURAL ACTIVITY. E) THE PERUSAL OF EVIDENCE ON RECORD CLEARLY DEMONSTRATE S THAT THE PROPERTY PURCHASED AND SOLD IS AGRICULTURAL LAND. THE LAND IS ALSO SURROUNDED BY LARGE AGRICULTURAL FIELDS. I) PURHCASE DEED II) SALE DEED F) THE AGRICULTURAL LAND IS ABOUT 15 TO 16 KMS AWAY FROM NAGPUR MUNICIPAL LIMIT AS EVIDENT FROM GRAM PANCHAYAT CE RTIFICATE ON RECORD. G) UNDISPUTED FACT ON RECORD IS THAT AGRICULTURAL LAND SOLD BY ASSESSEE IS LOCATED BEYOND 8 KMS FROM MUNICIPAL LIMIT OF NAGPUR AND SAME IS NOT WITHIN THE RADIUS OF 8 KMS OF ANY MUNICIPAL CORPORATION. THE AGRICULTURAL LAND SOLD BY ASSESS EE BEING NOT A CAPITAL ASSET IN TERMS OF PROVISIONS OF SECTION 2(14) OF I.T. ACT, 1961 SURPLUS ARISING ON SALE OF SAME IS NOT EXIGIBLE TO TAX UNDER LTCG. H) IT IS SETTLED PROPOSITION OF LAW THAT WHEN ON THE DATE OF PURCHASE AND ON THE DATE OF SALE IF THE CHA RACTER OF ASSET SOLD IS AGRICULTURAL LAND, THE SURPLUS ARISING ON SAME IS NOT EXIGIBLE TO TAX. 7 ITA NO. 365 /NAG/201 4 RELIANCE ON: - I) ITAT ORDER IN ITA NO.46/NAG/2013 IN THE CASE OF M/S. MUTUAL TRUST VIDE ORDER DATED 31/07/2015 II) ITAT ORDER IN ITA NO.112/NAG/2012 IN THE CASE OF SA NJAY NAGORAO PAIDELWAR VIDE ORDER DATED 22/03/2013. III) HONBLE BOMBAY HIGH COURT (NAGPUR BENCH) ORDER IN ITA NO.120 OF 2013 IN THE CASE OF NITISH RAMESH CHANDRA CHORDIA VIDE ORDER DATED 30/03/2015. IV) (1996) 217 ITR 333(DEL.) DLF UNITED LTD. VS. CIT V) SUPREME COUR T JUDGMENT (SLP)(CIVIL)CC 1727 - 1729/98 IN THE CASE OF CIT VS M/S. D.L.F. UNITED LTD. VI) (2011) 335 ITR 77 HINDUSTAN INDUSTRIAL RESOURCES LTD. VS ACIT VII) (2011) 331 ITR 59 CIT VS SMT. DEBBIE ALEMAO I) IT IS RESPECT FULLY SUBMITTED THAT SURPLUS ARISING ON SALE O F AGRICULTURAL LAND IS IN THE NATURE OF AGRICULTURAL INCOME IN TERMS OF PROVISIONS OF SECTION 2(1A) OF I.T. ACT 1961 AND THUS IS NOT EXIGIBLE TO TAX. RELIANCE ON : - I) ITAT ORDER IN ITA NO.362/JU/2010 IN THE CASE OF SMT. SUPRIYA KANWAR VIDE ORDER DATED 13/ 05/2014 II) (2001) 247 ITR 150 (SC) SINGHAI RAKESH KUMAR VS UNION OF INDIA & ORS. III) (1981) 128 ITR 0087 (BOM) MANUBAI A. SHETH & ORS. VS. N.D.NIRGUDKAR ITO & ANR. 8 ITA NO. 365 /NAG/201 4 PER CONTRA THE LD. DR RELIED UPON ORDER OF THE ASSESSING OFFICER. 6. UPON CAREFUL CONSIDERAT ION WE FIND THAT IN THIS CASE THE ASSESSEE HAD ACQUIRED AGRICULTURAL LAND IN THE YEAR 1990. THE ASSESSEE HAD HELD THE SAID AGRICULTURAL LAND FOR A PERIOD OF 19 YEARS WHICH H AS BEEN THEREAFTER SOLD. IT IS ALSO UNDISPUTED THAT THE ASSESSEE HAD NEVER APPLIED FOR PERMISSION TO USE THE AGRICULTURAL LAND FOR NON AGRICULTURAL PURPOSE, NOR WAS AT EVER CONVERTED FOR NON AGRICULTURAL USE BY ANY AUTHORIT Y . THERE IS ALSO NO EVIDENCE ON RECORD TO SHOW THAT THE AGRICULTURAL LAND OWNED BY THE ASSESSEE WAS PUT TO USE FOR A NY PURPOSE OTHER THAN AGRICULTURAL ACTIVITY . IT IS ALSO UNDISPUTED THAT THE AGRICULTURAL LAND FALLS MUCH BEYOND 8 KILO - METERS AWAY FROM NAGPUR MUNICIPAL LIMIT. THE SALE DEED DULY DEMONSTRATES THAT THE LAND SOLD WAS AGRICULTURAL LAND. THE REVENUE RECORDS BE ING EXTRACTS IN FORM OF FORM NO. 7/12 INDICATES THAT AGRICULTURAL LAND HELD BY THE ASSESSEE WERE DESCRIBED IN REVE NUE RECORD AS AGRICULTURAL LAND AN D AGRICULTURAL ACTIVITIES WAS CARRIED ON SUCH AGRICULTURAL LAND. THE AO HAS ALSO ADMITTED THAT IN FINANCIAL YEAR 2008 - 09 , THERE WAS S O ME AGRICULTURAL ACTIVITY SHOWN ON THE 7/12 EXTRACT. HENCE THE AO IS NOT DISPUTING THAT AS PER REVENUE RECORDS THE LAND WAS NOT AGRICULTURAL . THE AO HAS TAKEN ADVERSE INFERENCE ON THE GROUND THAT AGRICULTURAL INCOME WAS NOT SHOWN IN EARLIER YEAR. IN THIS REGARD, WE NOTE THAT THERE IS NO PRESUMPTION THAT PERSON S HAVING AGRICULTURAL LAND WILL ALWAYS HAVE EXCESS OF AGRICULTURAL INCOME OVER THE EXPENDITURE. UNLESS THERE IS A SURPLUS OF AGRICULTURAL INCOME OVER THE EXPENDITURE, THERE CA NNOT BE ANY QUESTION OF AGRICULTURAL INCOME BEING SHOWN. HENCE IN OUR CONSIDERED OPINION THERE IS NO INFIRMITY IN THE ORD ER OF LD. CIT ( A) . 7. IN THIS REGARD W E MAY ALSO REFER TO THE DECISION OF HONBLE HIGH COURT OF BOMBAY AT GOA IN THE CASE OF CIT V/S. SM T. DEBBIE ALEMAO 331 ITR 59, WHEREIN IT WAS HELD AS UNDER : - UNDER S. 260A, IT IS NOT OPEN TO THE HIGH COURT TO INTERFERE IN THE FINDING OF THE FACT. THE FINDING OF FACT THAT COULD BE INTERFERED ONLY IF IT WAS ARRIVED AT BY APPLICATION OF WRONG PRINCI PLES OF LAW OR WAS PERVERSE THAT IS TO SAY THAT NO PRUDENT MAN VERSED IN LAW WOULD COME TO THE SAID FINDING. THE FINDING IS NEITHER PERVERSE NOR IS IT ARRIVED AT BY WRONG 9 ITA NO. 365 /NAG/201 4 APPLICATION OF ANY PRINCIPLE OF LAW AND IT IS NOT OPEN FOR THE COURT TO INTERFERE IN THE POSSIBLE FINDING OF FACT IN AN APPEAL UNDER S. 260A. THE AO HAS NOTED THAT THE LAND WAS ENTERED IN THE REVENUE RECORD AS AN AGRICULTURA L LAND I.E. GARDEN OR ORCHARD. THE TRIBUNAL ALSO HELD THAT THE LAND WAS RECORDED IN THE REVENUE RECORDS AS AN AGRICU LTURAL LAND. THIS IS NOT DISPUTED BY THE REVENUE. IT IS HOWEVER CONTENDED THAT THE LAND WAS NOT ACTUALLY USED FOR AGRICULTURE IN AS MUCH AS NO AGRICULTURAL INCOME WAS DERIVED FROM THIS LAND AND WAS NOT SHOWN BY THE RESPONDENTS IN THEIR IT RETURN. THIS WAS EXPLAINED BY THE RESPONDENTS BY SAYING THAT THERE WERE COCONUT TREES IN THE LAND BUT THE AGRICULTURAL INCOME DERIVED BY SALE OF THE COCONUTS WAS JUST ENOUGH TO MAINTAIN THE LAND AND THERE WAS NO ACTUAL SURPLUS. HENCE, NO AGRICULTURAL INCOME WAS SHOWN FROM THIS LAND. IF AN AGRICULTURAL OPERATION DOES NOT RESULT IN GENERATION OF SURPLUS THAT CANNOT BE GROUND TO SAY THAT THE LAND WAS NOT USED FOR THE AGRICULTURAL PURPOSE. IT IS NOT DISPUTED THAT THE LAND WAS SHOWN IN THE REVENUE RECORD TO BE USED FOR AGRICUL TURAL PURPOSE AND NO PERMISSION WAS EVER OBTAINED FOR NON - AGRICULTURAL USE BY THE RESPONDENTS. SEC. 30 OF THE GOA, DAMAN AND DIU LAND REVENUE CODE, 1968 PROVIDES THAT NO LAND USED FOR AGRICULTURE SHALL BE USED FOR ANY NON - AGRICULTURAL PURPOSE EXCEPT WITH T HE PERMISSION OF THE COLLECTOR. SEC. 32 OF THE GOA, DAMAN AND DIU LAND REVENUE CODE PRESCRIBES THE PROCEDURE FOR CONVERSION OF USE OF LAND FROM ONE PURPOSE TO ANOTHER INCLUDING CONVERSION FROM AGRICULTURAL PURPOSE TO NON - AGRICULTURAL PURPOSE. THE PERMISSIO N FOR NON - AGRICULTURAL USE WAS OBTAINED FOR THE FIRST TIME BY THE PURCHASER AFTER IT PURCHASED THE LAND. THUS, THE FINDING RECORDED BY THE TWO AUTHORITIES BELOW THAT THE LAND WAS USED FOR THE PURPOSE OF AGRICULTURE IS BASED ON APPRECIATION OF EVIDENCE AN D BY APPLICATION OF CORRECT PRINCIPLES OF LAW CIT V/S. MINGUEL CHANDRA PAIS & ANR. (2006) 200 CTR (BOM . ) 1523 FOLLOWED. THE DEPARTMENTS OBSERVATION THAT THE LAND WAS NOT ACTUALLY USED FOR AGRICULTURAL PURPOSES IN AS MUCH AS NO AGRICULTURAL INCOME WAS DERIVED FROM THIS LAND AND WAS NOT SHOWN BY THE ASSESSEE IN THEIR INCOME - TAX RETURNS WAS EXPLAINED SAYING THAT THERE WERE COCONUT TREES IN THE LAND BUT THE AGRICULTURAL INCOME DERIVED BY SALE OF THE COCONUTS WAS JUST ENOUGH TO MAINTAIN THE LAND AND THERE WAS NO ACTUAL SURPLUS. IF ANY AGR I C ULTURAL OPERATION DOES NOT RESULT IN GENERATION OF SURPLUS THAT CANNOT BE A GROUND TO SAY THAT THE LAND WAS NOT USED FOR AGRICULTURAL PURPOSE. ADMITTEDLY THE LAND WAS SHOWN IN THE REVENUE RECORD AS USED FOR AGRICULTURAL P URPOSE AND NO PERMISSION WAS EVER OBTAINED FRO M NON - A GR I CU L T UR AL USE BY THE AS S E S S E E. PERMISSION FOR NON - AGRICULTURAL USE WAS OBTAINED FOR THE FIRST TIME BY THE PURCHASER AFTER IT HAD PURCHASED THE LAND. THUS, THE FINDING 10 ITA NO. 365 /NAG/201 4 THAT THE LAND WAS USED FOR THE PUR POSE OF AGRICULTURE WAS BASED ON APPRECIATION OF EVIDENCE AND BY APPLICATION OF CORRECT PRINCIPLES OF LAW. NO INTERFERENCE IN THE ORDER OF THE TRIBUNAL WAS WARRANTED. 8. IN THIS REGARD WE MAY ALSO GAINFULLY REFER TO HONBLE BOMBAY HIGH COURT NAGPUR BENCH OR DER IN INCOME TAX APPEAL NO. 120 OF 2013 IN THE CASE OF NITISH RAMESHCHANDRA CHORDIA VIDE ORDER DATED 30 - 03 - 2015 IN A BATCH OF APPEALS RELATING TO SALE OF LAND. IN THIS CASE HONBLE BOMBAY HIGH COURT HAD ALSO REFERRED TO HONBLE DELHI HIGH COURT DECISION I N THE CASE OF DLF UNITED LTD. V/S. CIT AND NOTED THAT HONBLE APEX COURT HAD ALSO DISMISSED THE SLP BY THE DEPARTMENT AGAINST THE HONBLE DELHI HIGH COURT ORDER. WE MAY REFER TO PARA NO. 12 TO 14 OF THE ABOVE REFERRED ORDER OF THE HONBLE J URISDICTIONAL H IGH COURT AS UNDER : 12. WE HAVE CAREFULLY CONSIDERED AND APPLIED OUR MIND TO THE RIVAL SUBMISSIONS AND THE RULINGS CITED AT THE BAR. WE AGREE WITH THE SUBMISSION THAT THE AMENDMENTS IN THE TAXING STATUTE, UNLESS A DIFFERENT LEGISLATIVE INTENTION IS CLEA RLY EXPRESSED, SHALL OPERATE PROSPECTIVELY. IN OUR VIEW, IF THE ASSESSEE HAS EARNED BUSINESS INCOME AND NOT THE AGRICULTURAL INCOME, SECTION 11 OF THE GENERAL CLAUSES ACT WILL PREVAIL UNLESS A DIFFERENT INTENTION APPEARS TO THE CONTRARY. THE IMPUGNED ORDER APPEARS WELL REASONED IN THE FACTS AND CIRCUMSTANCES TO CLEARLY INDICATE THAT ANY CONSIDERATION RECEIVED OUT OF SALE OF THE AGRICULTURAL LAND CANNOT BE TREATED AS BUSINESS INCOME FOR THE PURPOSE OF INCOME TAX. THE DISTANCE BETWEEN THE MUNICIPAL LIMITS AND ASSESSED PROPERTY/ASSET IS TO BE MEASURED HAVING REGARD TO THE SHORTEST ROAD DISTANCE AND NOT AS PER THE CROWS FLIES I.E. A STRAIGHT LINE DISTANCE AS CANVASSED BY THE REVENUE. THE LEAR NED COUNSEL FOR THE RESPONDENT H AS CONTENDED IN THIS REGARD THAT THE DECISION HAS BEEN RENDERED BY THE MUMBAI BENCH IN THE CASE OF LAUKIK DEVELOPERS (SUPRA) IN THE CONTEXT OF THE PROVISIONS OF SECTION 80IB(10) AND NOT IN CONNECTION WITH THE ISSUE OF DETERMINING A CAPITAL ASSET WITHIN THE MEANING OF SECTION 2(14). IT IS NOT IN DISPUTE THAT THE VIEW TAKEN IN THE CASE OF LAUKIK DEVELOPERS (SUPRA) WAS NOT CHALLENGED BY THE REVENUE. 13. IN THE RULING IN THE CASE OF DLF UN ITED LTD. V/S. COMMISSIONER OF INCOME TAX, (1995) 129 CTR (DEL) 33 , THE HONBLE DELHI HIGH COURT REFERRE D TO EXPLANATION 2(1)(A) RELIED UPON BY THE COUNSEL FOR THE REVENUE AND HELD THAT SURPLUS OF THE COMPENSATION AMOUNT ARISING AS A 11 ITA NO. 365 /NAG/201 4 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 DLF UNITED LTD. WAS CARRYING ON BUSINESS AS COLONIZERS BY PURCHASE, DEVELOPMENT AND SELLING THE PLOTS OF LANDS IN AND 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 AC QUISITION 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 LAND ACQUISITION ACT, THE INCOME TAX OFFICER, WHILE ASSESSING THAT THE COMPANY WAS A DEAL ER 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 THREE ASSESSMENT YEARS UNDER CONSIDERATION. THE QUESTION WHICH WAS RAISED WAS ANSWERED BY THE DELHI HIGH COURT IN PARAGRAPH 9 OF THE RULING UNDER CONSIDERATION, WHICH READS THUS: THIS COURT, FURTHER HELD THAT IN OTHER WORDS THE AGRICULTURAL LANDS P URCHASED ORIGINALLY BY THE ASSESSEE FOR URBANIZATION OR CONVERSION INTO BUILDING PLOTS REMA INED AGRICULTURAL LAND TILL THE ACQUISITION AND PAYMENT OF COMPENSATION, AND IN VIEW OF THE SAID FINDING THIS COURT HELD THAT THE FIRST QUE STION HAS TO BE ANSWERED IN THE NEGATIVE, I.E. THE PROFITS WERE NOT BUSINESS PROFITS. WITH REGARD TO THE SECOND QUEST ION 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 RESULTING FROM THE ACQUISITION OF AGRICULTURAL LAND WAS NOT INCOME, AND ACCORDINGLY T HE 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 LAND IS HELD AS CAPITAL GAIN EXEMPTED UNDER THE INCOME TAX AS ARISING FROM THE AG RICULTURAL LAND. WE FIND THE RULING IN THE CASE OF DLF UNITED LTD. WAS CHALLENGED IN S.L.P. (CIVIL) 12 ITA NO. 365 /NAG/201 4 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 AR ISING 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 CONSIDERATION IN THE PRESENT CASE AS WELL. IN THE BACKGROUND OF AFORESAID DISCU SSION AND PRECEDENTS, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD. CIT (A). HENCE WE UPHOLD THE SAME. 9. APROPOS GROUND NO. 3 & 4 : - IN THIS CASE, THE AO HAS ALSO REJECTED THE ASSESSEE CLAIM OF AGRICULTURAL INCOME. THE AO HAS HELD AS UNDER: - TH E ASSESSEE HAS CLAIMED THAT SHE HAS EARNED AGRICULTURAL INCOME OF RS.6,500/ - . HOWEVER, NO DETAILS REGARDING THE AGRICULTURAL INCOME HAVE BEEN SUBMITTED. NO ADDRESS AND NAME OF THE PERSON WHO HAD CARRIED OUT THE AGRICULTURAL ACTIVITY HAD BEEN SUBMITTED. THE 7/12 EXTRACT OF THE LAND FOR F.Y.2009 - 10 IS SHOWING THAT NO AGRICULTURAL ACTIVITY HAS BEEN CARRIED OUT ON THE LAND. THUS, THE ONUS OF ESTABLISHING THAT RS.6,500/ - WAS THE AGRICULTURAL INCOME HAS NOT BEEN DISCHARGED BY THE ASSESSEE. HENCE, RS.6,500/ - IS TR EATED AS THE INCOME FROM OTHER SOURCES OF THE ASSESSEE AND ADDED TO TH E TOTAL INCOME OF THE ASSESSEE. 10. UPON ASSESSEES APPEAL THE LD. CIT(A) DECIDED THE ISSUE IN ASSESSEE FAVOUR BY HELD AS UNDER: - THE AGRICULTURAL LAND HOLDING BY THE APPELLANT IS NOT I N DISPUTE. THE AR OF THE APPELLANT IN THIS REGARD HAS RELIED ON THE DECISION OF HONBLE ITAT BENCH, NAGPUR IN THE CASE OF 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 AVAILAB LE 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 APPELLA NT, THE AGRICULTURAL INCOME DECLARED AT RS.6,500/ - 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 ACTIVITIES. EVEN OTHERWISE, IT IS NOT CONSIDERED NE CESSARY TO 13 ITA NO. 365 /NAG/201 4 MAINTAIN RECORDS FOR AGRICULTURAL ACTIVITIES CARRIED OUT ON SUCH A SMALL SCALE. THEREFORE, THE ADDITIONAL GROUND RAISED BY THE AR OF THE APPELLANT, IS ADMISSIBLE, HENCE ALLOWED. 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.6,500/ - TREATING 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 . 11. AGAINST ABOVE ORDER THE REVENUE S APPEAL IS IN BEFORE US. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORD. THE LD. DR RELIED UPON THE AO ORDER. ON THE OTHER HAND THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT, THERE IS NO DISPUTE REGARDING THE AREA OF AGRICULTURAL LAND HOLD BY THE ASSESSEE. IN THIS REGARD THE LD. COUNSEL OF THE ASSESSEE PLACED RELIANCE UPON ORDER OF THIS TRIBUNAL IN IT A NO.1/NAG/2008 IN THE CASE OF SMT. RUKHSANA BEGUM IN ITA NO.1/NAG/2008 VIDE ORDER DATED 26/06/2009. 12. UPON CAREFUL CONSIDERATION WE FIND THAT, ON THE FACTS AND CIRCUMSTANCES OF THE CASE , CONSIDER ING THE QUANTUM OF LAND HOLDING, AND THE FACT THAT, REVENUE R ECORDS ACKNOWLEDGED AGRICUL TURAL ACTIVITY IN THE SAID LAND, T HE SMALL AMOUNT OF AGRICULTURAL INCOME DISCLOSED HAS RIGHTLY BEE N CONSIDERED TO BE FAIR BY THE LD. CIT(A) . H ENCE WE UPHOLD THE ORDER OF LD. CIT(A). 13. I N THE RESULT , T HIS APPEAL FILED BY THE R EVENUE IS STANDS DISMISSED . ORDER PRONOU NCED IN THE OPEN COURT ON THIS 31 ST DAY OF MAY , 2016 SD/ - SD/ - (MUKUL K. SHRAWAT) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER NAGPUR, DATED: 31 / 05 /2016 M.B.BODKHE/SR.P.S./A.M. SIR 14 ITA NO. 365 /NAG/201 4 COPY FORWARDED TO : 1. SMT. ALKA PRAKASH AGRAWAL A - 6, GANGA SAGAR APTS, 83 - 84, CANAL ROAD, RAMDASPETH, NAGPUR - 10 2. THE DY. COMMISSIONER OF INCOME TAX, CIRCLE - 1, 5 TH FLOOR, MEC L BLDG., SEMINARY HILLS, NAGPUR - 06 3. C.I.T. - I, NAGPUR 4. CIT ( APPEALS) - I, NAGPUR. 5. D.R., ITAT, NAGPUR. 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR M.B.BODKHE/SR.P.S./A.M. SIR