ITO-WARD-5(4), Nagpur V. Shri Vinod Raghunath Lohkhare, Nagpur

ITA 414/NAG/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1655 (ITAT-NAGPUR)
• Duration Of Justice: 1 year(s) 9 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 25-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NARENDRA KANE
• Assessee Lawyers: AMIT SAOJI
• Keywords: Capital asset; Business income
• Section: 2(14)

Judgement Text

1 ITA NO. 414/NAG/2013 IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. I.T. A. NO.414/NAG/2013 ASSESSMENT YEAR : 2009 - 10. THE INCOME - TAX OFFICER, VINOD RAGHUNATH LO HKHARE , WARD - 5(4), NAGPUR. VS. PURUSHOTTAM KHAPARDE VIDYALAYA, BUTIBORI, NAGPUR - 441108 (APPELLANT) RESPONDENT. APPELLANT BY : SHRI NARENDRA KANE. RESPONDENT BY : SHRI AMIT SAOJI. DATE OF HEARING : 02 - 09 - 2015. DATE OF PRONOUNCEMENT : 24 TH SEPT., 2015. 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) - II, NAGPUR DATED 10 - 09 - 2013 AND PERTAINS TO ASSESSMENT YEAR 2009 - 10. THE GROUNDS OF APPEAL READ AS UNDER : 1. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW WHETHER THE LEARNED CIT(A) - II, NAGPUR HAS ERRED IN DELETING THE ADDITION OF ` 24,57,700/ - AS SALE OF LAND AS ADVENTURE IN TRADE & TREATING THE SAME AS AGRICULTURAL IN COME. 2. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW WHETHER THE LEARNED CIT(A) HAS ERRED IN NOT APPRECIATING THAT FACTS IN THE CASE OF 2 ITA NO. 414/NAG/2013 VENKATASWAMI NAIDU & CO. VS. CIT (351 ITR 594) ARE SQUARELY APPLICABLE IN THIS CASE. 3. CONSIDERING THE F ACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW WHETHER THE LEARNED CIT(A) FAILED IN APPRECIATING THAT THE APPELLANT HAS NOT BEEN ABLE TO PROVE HIS AGRICULTURAL ACTIVITY, NEITHER HE HAS CLAIMED ANY AGRICULTURE INCOME IN THE RETURN OF INCOME FOR THE A.Y. 2009 - 10. 2. THE BRIEF FACTS OF THE CASE ARE AS UNDER : DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS NOTED BY THE LD.AO THAT THE APPELLANT HAD SOLD TWO AGRICULTURAL LANDS SITUATED AT VILLAGE RAMA, TAHASIL& DISTRICT NAGPUR AND CORRESPONDING CAPITAL GAI N HAD NOT BEEN OFFERED TO TAX. IT WAS EXPLAINED BY THE APPELLANT THAT HE HAD SOLD RURAL AGRICULTURAL LAND THAT IS ABOUT 40 KMS AWAY FROM THE NAGPUR MUNICIPAL CORPORATION LIMITS AND THE POPULATION OF THE GRAMPANCHAYAT WAS 1401 AND THAT THE SAID AGRICULTURAL LAND WAS USED FOR AGRICULTURAL ACTIVITY OF THE APPELLANT. COPY OF 7/12 EXTRACT SHOWING DETAILS OF CULTIVATION WAS SUBMITTED ALONGWITH SALE DEED BEFORE THE LD.AO. IT WAS SUBMITTED THAT THE SAID SALE TRANSACTION OF RURAL AGRICULTURAL LAND WAS EXEMPT AS PROV IDED UNDER SECTION 2(14) OF THE ACT AND HENCE THERE IS NO CAPITAL GAIN IN THE SAID TRANSACTION. THE APPELLANT ALSO EXPLAINED THAT THE AGRICULTURAL LAND WAS .CULTLVATED BY THE APPELLANT DURING THE COURSE OF HOLDING BUT SINCE THERE WAS NO APPROACH ROAD THE A PPELLANT REALIZED THAT THE LAND WAS NOT FIT AS PER HIS REQUIREMENT AND WAS THEREFORE SOLD DURING THE YEAR UNDER CONSIDERATION. THE DETAILS OF PURCHAS E AND SALE OF IMMOVABLE PROPERTY ARE AS UNDER : 3 ITA NO. 414/NAG/2013 3. UPON ASSESSEES APPEAL, LEARNED CIT(APPEALS) CONSIDERED THE ASSESSEES SUBMISSION. LEARNED CIT(APPEALS) NOTED THAT IT IS AN ACCEPTED FACT THAT THE ASSESSEE IS AN AGRICULTURIST. THE CIT(APPEALS) OBSERVED THAT THE MAIN CONTENTION OF THE AO, WHILE HOLDING SAL E OF LAND AS ADVENTURE IN THE NATURE OF TRADE, IS THAT THE ASSESSEE HAS MADE A NUMBER OF PURCHASES OF THE LAND AND SOLD THE LAND AND HELD THE 4 ITA NO. 414/NAG/2013 PROPERTY FOR A SHORT TIME AND THAT HE SOLD THE PROPERTY FOR MAKING A PROFIT. LEARNED CIT(APPEALS) FURTHER NOTED T HAT I N THE CASE OF SHRI SATYANARAYAN O. AGRAWAL VS. ADDL. CIT IN ITA NO.169/NAG/12 THE HONBLE ITAT, NAGPUR BENCH HAS COMPREHENSIVELY ADDRESSED THE ISSUE OF TREATING THE SURPLUS ARISING ON THE SALE OF AGRICULTURAL LAND AS BUSINESS INCOME WHEREIN FREQUENT PURCHASE AND SALE OF LAND TRANSACTIONS IN ONE YEAR HAVE TAKEN PLACE AND CAME TO THE CONCLUSION THAT THE INCOME DERIVED BY THE ASSESSEE FROM THE SALE OF AGRICULTURAL LAND IS NOT ADVENTURE IN THE NATURE OF TRADE. LEARNED CIT(APPEALS) FURTHER REFERRED TO THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. SMT. DEBBIE ALEMAO REPORTED IN 331 ITR 59 FOR THE FOLLOWING PROPOSITION : HENCE, NO AGRICULTURAL INCOME WAS SHOWN FROM THIS LAND. IN OUR OPINION IF AN AGRICULTURAL OPERATION DOES NOT RESULT IN GENERATION OF SURPLUS THAT CANNOT BE A 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 AGRICULTURAL PURPOSE AND NO PERMISSION WAS EVER OBTAINED FOR NON - A GRICULTURAL USE BY THE RESPONDENTS. 4. LEARNED CIT(APPEALS) FURTHER REFERRED TO HONBLE DELHI HIGH COURT DECISION IN THE CASE OF HINDUSTAN INDUSTRIAL RESOURCES LIMITED VS. ACIT AND CONCLUDED AS UNDER : THUS IT HAS BEEN HELD THAT EVEN IF NO AGRICULTURAL OPERATION WAS CARRIED OUT BY THE APPELLANT OR THE FACT THAT THE APPELLANT/ASSESSEE INTENDED TO USE THE LAND FOR INDUSTRIAL PURPOSES, THIS DID NOT IN ANY WAY ALTER THE NATURE AND CHARACTER OF THE LAND. CONSIDERING THE AFORESAID CIRCUMSTANCES, THERE WAS NO R EASON TO COME TO THE CONCLUSION THAT THE APPELLANT IS A TRADER IN AGRICULTURAL LAND SO AS TO TREAT THE PROFIT ARISING ON THE SALE OF THE SAID AGRICULTURAL LANDS AS AN ADVENTURE IN THE NATURE OF TRADE OR AS BUSINESS INCOME. THE IMPUGNED LANDS SQUARELY FALLS WITHIN THE DEFINITION OF CAPITAL ASSET U/S 2(14) OF THE ACT BEING AGRICULTURAL LAND AND EVIDENTLY AGRICULTURAL OPERATIONS HAVE BEEN 5 ITA NO. 414/NAG/2013 CARRIED OUT ON THE SAID LANDS IN THE CURRENT YEAR AND THEREFORE, QUA THE IMPUGNED LANDS, THE APPELLANT CANNOT BE TREATED AS A TRADER. THUS THE CRUCIAL QUESTION IS TO DETERMINE WHETHER THE CHARACTER OF THE LAND IS AGRICULTURAL OR NOT AND IF THE LAND IS AGRICULTURAL, SALE CONSIDERATION HAS TO BE HELD TO BE NOT TAXABLE. IN THE CASE OF THE APPELLANT IT IS AN UNDISPUTED FACT THAT W HAT HAS BEEN SOLD BY THE APPELLANT IS AGRICULTURAL LAND. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE APPELLANT HAS SUBMITTED REGISTERED PURCHASE DEEDS THAT EVIDENCE THE FACT THAT THE SAID LAND IS AGRICULTURAL. ALSO, THE APPELLANT SUBMITTED SALE DEEDS ALONG WITH CORRESPONDING 7/12 EXTRACTS WHEREIN THE NAME OF THE APPELLANT IS MENTIONED AS OWNER. THE LD. AO HAS ALSO NOT DISPUTED THE FACT THAT THE LAND IS AGRICULTURAL. THUS CLEARLY, AT THE TIME OF PURCHASE AND AT THE TIME OF SALE, THE SAID LAND WAS CLASSI FIED AS AGRICULTURAL LAND IN THE REVENUE RECORDS. IT IS ALSO AN ADMITTED FACT THAT NEITHER THE APPELLANT NOR ANY EARLIER OWNER EVEN SOUGHT ANY CONVERSION OF THE SAID LANDS FOR ANY NON - AGRICULTURAL USE. THE PERUSAL OF 7/12 EXTRACTS CLEARLY ESTABLISHES THAT AGRICULTURAL ACTIVITY HAS BEEN CARRIED OUT IN THE SAID LANDS. IN THE SAID 7/12 EXTRACTS, THE CROPS, WHICH HAVE BEEN GROWN DURING THE YEAR UNDER CONSIDERATION, ARE CLEARLY MENTIONED THEREIN. IT IS ALSO AN ADMITTED FACT THAT THE SAID LANDS ARE BEYOND 8 KMS FROM THE MUNICIPAL LIMITS OF NAGPUR. THUS IT IS A FACT THAT THE APPELLANT IS AN AGRICULTURIST WHO WAS ENGAGED IN AGRICULTURAL ACTIVITIES IN THE SAID AGRICULTURAL LANDS THAT ARE BEYOND 8 KMS FROM THE MUNICIPAL LIMITS OF NAGPUR. RESPECTFULLY FOLLOWING THE DE CISIONS QUOTED ABOVE IT IS HELD HAT THE GAIN OUR OF THE SALE OF THE AGRICULTURAL LANDS HAS WRONGLY BEEN TREATED AS BUSINESS INCOME BY THE LD. AO AND THE ADDITION MADE IN THIS RESPECT IS DIRECTED TO BE DELETED. THIS GROUND IS THEREFORE ALLOWED. 5. AGAINST THE ABOVE ORDER, REVENUE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. LEARNED D.R. SHRI NARENDRA KANE SUBMITTED THAT THE PURCHASE CONSIDERATION REALIZE D ON AGRICULTURAL LAND IN THIS CASE CANNOT BE TREATED AS EXEMPT AS PURCHASE AND SALE OF LAND IS THE ASSESSEES ADVENTURE IN NATURE OF TRADE. FURTHER SHRI KANE RELIED UPON THE ORDERS OF THE AO. 6 ITA NO. 414/NAG/2013 7. LEARNED COUNSEL OF THE ASSESSEE, SHRI AMIT SAOJI, ON THE OTHER HAND, RELIED UPON THE ORDERS OF THE LEARNED CIT(APPEALS). LEARNED COUNSEL SUBMITTED THAT IT IS UNDISPUTED THAT THE SAID LAND IS AGRICULTURAL. HE SUBMITTED THAT THE ASSESSEE HAS OPERATED AGRICULTURAL ACTIVITIES IN THE SAID LAND. THIS IS EVID ENT BY THE 7/12 EXTRACT OF THE AGRICULTURAL LAND, FROM THE CERTIFICATE OF GRAM ADHIKARI (PATWARI) AND THE COPY OF GRAM PANCHAYAT.. LEARNED COUNSEL SUBMITTED THAT NO ADVERSE INFERENCE COULD BE DRAWN THAT NO AGRICULTURAL INCOME HAS BEEN RETURNED BY THE ASSE SSEE. LEARNED COUNSEL SUBMITTED THAT THE ASSESSEE WAS DOING SOME AGRICULTURAL ACTIVITIES AND THE NECESSARY EVIDENCE IN THIS REGARD WAS MENTIONED IN THE WRITTEN SUBMISSION BEFORE THE LEARNED CIT(APPEALS). LEARNED COUNSEL PLEADED THAT UNLESS THE AGRICULTURAL OPERATIONS RESULT IN ANY PROFIT THERE IS NO QUESTION OF SHOWING INCOME FROM AGRICULTURE IN THE RETURN OF INCOME. LEARNED COUNSEL SUBMITTED THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF ITAT, NAGPUR BENCH IN THE CASE OF ACIT VS. SHRI BHOPINDERSINGH R. ARNEJA AND THE HONBLE BOMBAY HIGH COURT DECISION IN THE CASE OF CIT, PANJI, GOA VS. SMT. DEBBIE ALEMAO (SUPRA). 8. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS. WE FIND THAT IT IS NOT DENIED THAT THE SAID LAND WAS AGRICULTURAL LAND. IT IS SO REFLECTED IN THE 7/12 EXTRACT OF THE AGRICULTURAL LAND. THAT THE ASSESSEE WAS CARRYING ON AGRICULTURAL ACTIVITY ON THE SAID LAND IS EVIDENT FROM THE EXTRACT OF REVENUE LAND RECORD AND OTHER RELEVANT CERTIFICATES PRODUCED BY THE ASSESSEE. IT IS ALSO NOT THE CASE TH AT THE ASSESSEE HAS APPLIED FOR CONVERSION OF THE LAND INTO NON - AGRICULTURAL PURPOSES. THE ASSESSEE HAS BEEN OWNING THE AGRICULTURAL LAND IN THE PAST ALSO. THERE IS NO PRESUMPTION THAT ONLY A WHOLE TIME AGRICULTURIST CAN OWN AGRICULTURAL LAND. FURTHER MORE AS STATED BY THE LEARNED COUNSEL OF THE ASSESSEE AND NOTED BY THE LEARNED CIT(APPEALS), AGRICULTURAL OPERATIONS HAVE BEEN CARRIED OUT ON THE SAID LAND IN THE CURRENT YEAR. 7 ITA NO. 414/NAG/2013 ANY ADVERSE INFERENCE IN THIS REGARD CANNOT BE DRAWN SIMPLY ON THE BASIS THAT NO AG RICULTURAL INCOME HAS BEEN SHOWN IN THE RETURN OF INCOME AS UNLESS THE AGRICULTURAL OPERATIONS RESULT IN PROFIT OR NET INCOME THERE IS NO QUESTION OF SHOWING AGRICULTURAL INCOME IN THE RETURN OF INCOME. THE ISSUE INVOLVED IS ALSO COVERED BY SEVERAL DECIS IONS OF THE ITAT, NAGPUR BENCH. 9. FURTHER MORE THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. DEBBIE ALEMAO (SUPRA) IS ALSO APPLICABLE ON THE FACTS OF THE CASE. IN THIS CASE BEFORE THE HONBLE HIGH COURT THE FACTS WERE AS UNDE R: T HE ASSESSING OFFICER HAD NOTED THAT THE SAID LAND WAS ENTERED IN THE REVENUE RECORDS AS AN AGRICULTURAL LAND. THIS WAS NOT DISPUTED BY THE REVENUE. IT WAS, HOWEVER, CONTENDED THAT THE LAND WAS NOT ACTUALLY USED FOR AGRICULTURAL PURPOSES INASMUCH AS N O AGRICULTURAL INCOME WAS DERIVED FROM THIS LAND AND WAS NOT SHOWN BY THE ASSESSEE IN THEIR INCOME - TAX RETURNS. THIS WAS EXPLAINED BY THE ASSESSEE, BY SAYING THAT THERE WAS CCONUT TREES IN THE LAND BUT THE AGRICULTURAL INCOME DERIVED BY SALE OF THE COCONU TS 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 A GROUND TO SAY THAT THE LAND WAS NOT USED FOR THE AGRICULTURAL PURPOSE. IT WAS NOT DISPUTED THAT THE LAND WAS SHOWN IN THE REVENUE RECORDS TO BE USED FOR AGRICULTURAL PURPOSE AND NO PERMISSION WAS EVER OBTAINED FOR NON - AGRICULTURAL USE BY THE ASSESSEE. IN THESE CIRCUMSTANCES HONBLE HIGH COURT HAD HELD THAT ASSESSEES CLAIM WAS CORRECTLY ALLOWED BY THE AUTHORITIES BELOW. 8 ITA NO. 414/NAG/2013 10. WE FIND THAT AS PER DISCUSSION ABOVE AND THE FACTS OF THE CASE, THE ABOVE CASE ALSO APPLIES TO THE PRESENT CASE. THE LAND HERE IS ALSO REFLECTED IN THE REVENUE RECORDS A S AGRICULTURAL LAND. NOT SHOWING AGRICULTURAL INCOME IN RETURN OF INCOME HAS BEEN HELD TO BE N O CONCLUSIVE PROOF THAT NO AGRICULTURAL OPERATIO N WAS DONE, IF THE FACTS OF THE CASE ARE APPRECIATED PROPERLY. H ENCE WE FIND THAT THE ABOVE RATIO IS APPLICABL E HERE TOO. ACCORDINGLY RESPECTFULLY FOLLOWING THE PRECEDENT, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LEARNED CIT(APPEALS). ACCORDINGLY WE UPHOLD THE SAME. 11 . IN THE RESULT, THIS APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 24 TH DAY OF SEPT. , 2015. SD/ SD/ (MUKUL K. SHRAWAT) ( SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER. NAGPUR, DATED: 24 TH SEPT. , 2015. COPY OF ORDER FORWARDED TO : 1. THE ASSESSEE. 2. REVENUE. 3. THE CIT(A) 4. THE CIT, NAGPUR. 5. THE D.R., ITAT, NAGPUR. 6. GUARD FILE. TRUE COPY. BY ORDER WAKODE ASS ISTANT REGISTRAR, ITAT, NAGPUR .