RAJ KUMAR YADAV, Jaipur V. ITO, Jaipur

ITA 643/JPR/2016

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 0102 (ITAT-JAIPUR)
• Duration Of Justice: 3 year(s) 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Next Hearing Date: 29-03-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 08-06-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K C GUPTA JCIT DHK
• Keywords: Capital asset; Search and seizure; Earning of tax free income; Set aside; Capital Gains
• Section: 2(14); 13; 63

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCH A, JAIPUR JH JES'K LH- 'KEKZ] YS[KK LNL; ,O A H JH FOT; IKY JKWO] U;KF;D LNL; DS LE{K BEFORE: SHRI RAMESH C. SHARMA, AM & SHRI VIJAY PAL RAO, JM VK;DJ VIHY LA-@ ITA NO. 643/JP/2016 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2010-11. SHRI RAJ KUMAR YADAV, S/O SHRI NARAYAN YADAV, VILLAGE GOKULPURA, POST: MEENAWALA, KALWAR ROAD, JAIPUR. CUKE VS. THE INCOME TAX OFFICER, WARD 3(1), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. ABGPY 6558 A VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI MANISH AGARWAL (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI K.C. GUPTA (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 25.11.2019. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 20/12/2019. VKNS'K@ ORDER PER VIJAY PAL RAO, JM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 16.03.2016 OF LD. CIT (A)-1, JAIPUR FOR THE ASSESSMENT YEAR 2010- 11. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS :- 1. THAT THE LEARNED CIT HAS ERRED IN LAW AND IN F ACTS IN CONFIRMING THE ORDER OF LEARNED INCOME TAX OFFICER OF TREATING THE SOLD OF AGRICULTURAL LAND (AS PER PROVISION OF SECTION 2(14 ) AS CAPITAL ASSET. 2. THAT THE LEARNED CIT WAS WRONG & ILLEGAL IN CONF IRMING ADDITION OF RS. 77,65,000/- TREATING IT AS INCOME FROM CAPIT AL GAIN. 3. THAT THE ASSESSEE RESERVE HIS RIGHT TO ADD, ALTE R OR DELETE ANY GROUNDS OF APPEAL ON, BEFORE AND DURING THE COURSE OF HEARING. 2 ITA NO. 643/JP/2016 SHRI RAJ KUMAR YADAV, JAIPUR. THE ONLY ISSUE ARISES IN THIS APPEAL IS WHETHER THE LAND IN QUESTION SOLD BY THE ASSESSEE WILL FALL IN THE DEFINITION OF CAPITAL ASSET UNDER SECTION 2(14) OF THE IT ACT OR IT WILL FALL IN EXCL USION CLAUSE OF SECTION 2(14). 2. THE ASSESSEE IS AN INDIVIDUAL AND DERIVES INCOME FROM DAIRY BUSINESS. DURING THE ASSESSMENT PROCEEDINGS, THE AO RECEIVED AIR INF ORMATION THAT THE ASSESSEE HAS SOLD PROPERTY SITUATED AT VILLAGE MUNDIA RAMSINGHPU RA, BEGUS, JAIPUR. THE ASSESSEE CONTENDED BEFORE THE AO THAT THE AGRICULTURAL LAND SOLD BY THE ASSESSEE WAS GOT CONVERTED INTO FARM HOUSE SCHEME YOJNA UNDER 90B OF JAIPUR DEVELOPMENT AUTHORITY (JDA) AND, THEREFORE, THE MAIN CHARACTER OF THE LAND REMAINED THE SAME AS AGRICULTURAL PURPOSE. THUS THE ASSESSEE CLAIMED BE FORE THE AO THAT SINCE THE LAND IN QUESTION IS AN AGRICULTURAL LAND EVEN AFTER THE SAM E WAS CONVERTED INTO FARM HOUSE, IT WILL RETAIN THE CHARACTER AS AGRICULTURAL LAND A ND HENCE THE SAME IS NOT CAPITAL ASSET AS PER THE DEFINITION UNDER SECTION 2(14) OF THE IT ACT. ACCORDINGLY, THE AO ASSESSED THE CAPITAL GAIN ARISING FROM SALE OF THE SAID LAND. THE ASSESSEE CHALLENGED THE ACTION OF THE AO BEFORE THE LD. CIT (A) BUT COU LD NOT SUCCEED. 3. BEFORE US, THE LD. A/R OF THE ASSESSEE HAS SUBMI TTED THAT THE LAND IN QUESTION IS AN AGRICULTURAL LAND AND EVEN AFTER CONVERTED UN DER THE SCHEME OF FARM HOUSES, THE LAND REMAINS AS AGRICULTURAL LAND AS IT CAN ONL Y BE USED FOR AGRICULTURAL PURPOSES. HE HAS REFERRED TO THE PATTA ISSUED BY THE JDA AND SUBMITTED THAT AS PER CLAUSE (7) OF THE SAID PATTA, THE BASIC CHARACTER OF THE LAND WILL REMAIN AS ENVIRONMENTAL FRIENDLY AND AGRICULTURE BASED. THUS WHEN THE LAND HAS RETAINED ITS CHARACTER AS AGRICULTURAL LAND THEN IT WILL NOT FALL IN THE DEFI NITION OF CAPITAL ASSET AS PER PROVISIONS 3 ITA NO. 643/JP/2016 SHRI RAJ KUMAR YADAV, JAIPUR. OF SECTION 2(14) OF THE IT ACT. THE LD. A/R HAS FU RTHER SUBMITTED THAT NO OTHER ACTIVITY IS PERMITTED EXCEPT THE AGRICULTURE ON THE SAID LAND. IN SUPPORT OF HIS CONTENTION, HE HAS RELIED UPON THE DECISION OF COOR DINATE BENCH OF THE TRIBUNAL DATED 17.05.2016 IN ITA NO. 235/JP/2012 IN CASE OF ITO VS. SHRI MEGH CHAND MEENA HUF AND SUBMITTED THE TRIBUNAL HAS CONSIDERED AN ID ENTICAL ISSUE AND HELD THAT WHEN THE AGRICULTURAL LAND WAS CONVERTED INTO A FAR M HOUSE, THEN THE BASIC CHARACTER OF THE LAND REMAINED AS AGRICULTURAL LAND AND, THEREFORE, THE SAME WILL NOT FALL IN THE DEFINITION OF CAPITAL ASSET. 4. ON THE OTHER HAND, THE LD. D/R HAS SUBMITTED THA T BEFORE THE SALE OF THE LAND IN QUESTION, IT WAS CONVERTED INTO FARM HOUSE. THE ACTIVITY PERMITTED ON THE CONVERTED LAND IS ONLY FARM HOUSE ENVIRONMENTAL FRI ENDLY RESIDENCE AND, THEREFORE, IT IS NO MORE AN AGRICULTURAL LAND ONCE THE RESIDENTIA L HOUSE BEING FIRM HOUSE IS ALLOWED TO BE CONSTRUCTED AFTER CONVERSION OF THE A GRICULTURAL LAND UNDER SECTION 90B OF THE LAND REVENUE ACT. THE LD. D/R HAS RELIED UPO N THE DECISION OF THIS TRIBUNAL IN CASE OF ACIT VS. SUNIL BANSAL IN ITA NO. 523/JP/201 2 DATED 06.11.2018 WHICH HAS BEEN UPHELD BY THE HONBLE JURISDICTIONAL HIGH COUR T REPORTED IN 415 ITR 236 (RAJ.). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. DURING THE YEAR UNDER CONSIDERATION, THE A SSESSEE HAS SOLD VARIOUS LANDS INCLUDING THE LAND IN QUESTION BEARING KHASRA NO. 4 17 MEASURING 7 BIGHA SITUATED AT VILLAGE MUNDIA RAMSINGHPURA, BEGUS, JAIPUR. THERE IS NO DISPUTE THAT THE SAID LAND WAS SOLD BY THE ASSESSEE VIDE SALE DEED DATED 9 TH DECEMBER, 2009 AFTER CONVERSION OF THE SAME TO FARM HOUSE. SUBSEQUENTLY, THE JDA H AS ISSUED PATTA IN FAVOUR OF THE PURCHASER WHEREIN THE LAND USE IS SPECIFIED IN CLAU SE (3) TO (7) AS UNDER :- 4 ITA NO. 643/JP/2016 SHRI RAJ KUMAR YADAV, JAIPUR. 3- MDR HKW[K.M DK MI;KSX DSOY OKRKOJ.K ES=H VKOKL QKEZ GKML CUOKUS ESA GKSXKA HKW[K.M DK VU; FHKUU MI;KSX FDLH HKH HKAKFR UGHA FD;K TK LDSXKA 4- MDR HKW[K.M DS LACA/K ESA JKT; LJDKJ DS VKNSK I - 5 3UFOFO@3@99 FNUKAD 04@10@2002 O FNUKAD 21@07@2003 DS IZKO/KKU Y KXW GKSAXS] FTLDS VUQLKJ OKRKOJ.K ES=H VKOKL QKEZ GKML DK U;WURE VK DKJ 3000 OXZEHVJ RFKK FCYVVI ,FJ;K 5 IZFRKR GH VUQKS; GKSXKA HKW[K. M IJ OKRKOJ.K ES=H VKOKL QKEZ GKML DK FUEKZ.K NKS O'KZ DH VOF/K ESA IW.KZ FD;K TK LDSXKA 5- BL YHT MHM DS VK/KKJ IJ MDR HKW[K.M DKS LJDKJ@TH OU CHEK FUXE@FKM~;WYM CKSAD @LJDKJ _.KNK=H LALFKK@ ,P- MH- ,Q- LH- (HDFC) VFKOK USKUY GKMFLAX CSAD }KJK VF/KD`R _.KNK=H LALF KKVKSA DS IKL OKRKOJ.K ES=H VKOKL QKEZ GKML DKS _.K DS FY, FXJOH J[KK TK LDSXKA 6- VKOAVH }KJK HKW[K.M DK FO; VQDMKSA ESA UGHA FD; K TK LDSXK RFKK VKOAVH }KJK LEIW.KZ HKW[K.M DK FO; DJUS IJ SRK }KJK OKRK OJ.K ES=H VKOKL QKEZ GKML DK GLRKUKURJ.K LO;A DS UKE T;IQJ FODKL IZKF/K DJ.K DS VUQLKJ IZKF/KDJ.K LS DJOKUK GKSXKA 7- BL HKW[K.M] OKRKOJ.K ES=H VKOKL QKEZ GKML ESA VUROZFYR HKWFE DK EWY PFJ= OKRKOJ.K ,OA D`F'K VK/KKFJR GKSXKA THUS AS PER THE TERMS AND CONDITIONS OF THE SAID LE ASE ISSUED BY THE JDA, THE LAND IN QUESTION WAS GIVEN ONLY FOR ENVIRONMENTAL FRIEND LY RESIDENCE/FARM HOUSE. FURTHER AS PER THE CONDITIONS OF CONVERSION OF THE LAND TO FARM HOUSE, THE ACTIVITY PERMITTED IN THE AREA IS ONLY CONSTRUCTION OF LOW COVERAGE, L OW HEIGHT STRUCTURE FOR RESIDENTIAL USE. IN THE ACTIVITIES PERMITTED ON CONVERSION OF THE LAND INTO FARM HOUSE IS RESTRICTED TO THE ENVIRONMENTAL FRIENDLY RESIDENCE. THEREFORE, THE LAND USE WAS CHANGED FROM AGRICULTURE TO ENVIRONMENTAL FRIENDLY RESIDENCE AND NO MORE AN AGRICULTURAL LAND. ONCE THE LAND IN QUESTION WAS NO MORE AN AGRICULTURAL LAND AT THE TIME OF TRANSFER, THEN THE SAME WILL NOT BE CONSIDE RED AS AGRICULTURAL LAND FOR THE PURPOSES OF SECTION 2(14) OF THE ACT. THE SALE DEE D DATED 09.12.2009 CLEARLY 5 ITA NO. 643/JP/2016 SHRI RAJ KUMAR YADAV, JAIPUR. DESCRIBES THE INTENTION OF THE PARTIES NOT FOR AGRI CULTURAL USE. THEREFORE, THE VERY PURPOSE AND OBJECT OF THE INCENTIVE FOR GIVING THE EXEMPTION UNDER SECTION 2(14) OF THE IT ACT AS PER EXCLUSION CLAUSE OF THE SAID SECT ION SHALL NOT BE AVAILABLE ONCE THE ACTUAL USE OF THE LAND IS NO MORE AN AGRICULTURAL. THIS TRIBUNAL IN CASE OF ACIT VS. SUNIL BANSAL VIDE ORDER DATED 06.11.2018 IN ITA NO. 523/JP/2012 HAS HELD IN PARA 7.2 & 7.3 AS UNDER :- 7.2 ON THE ALTERNATIVE PLEA THAT EVEN IF THE ACT IVITY OF THE ASSESSEE CONSIDERED AS BUSINESS, THE INCOME DERIVED FROM SAL E OF THE AGRICULTURAL LAND IS AN AGRICULTURAL INCOME, WE FIND THAT BEFORE GOIN G INTO THE SAID ISSUE WHETHER THE SALE OF AGRICULTURAL LAND RESULTS IN AG RICULTURAL INCOME OR CAPITAL GAIN NOT LIABLE TO TAX U/S 2(14)(III) OF THE ACT, T HE EXPRESSION AGRICULTURAL LAND ITSELF HAS TO BE TAKEN INTO CONSIDERATION. THE QUES TION WHETHER A PARTICULAR LAND IS AGRICULTURAL LAND WAS FIRST CONSIDERED BY T HE CONSTITUTIONAL BENCH OF THE HON'BLE SUPREME COURT IN THE CASE OF COMMISSION ER OF WEALTH TAX VS. OFFICER IN CHARGE (COURT OF WARDS) 105 ITR 133. THE DEFINITION OF AGRICULTURAL LAND WITHIN THE MEANING OF SECTION 2(E) OF WEALTH T AX ACT WAS CONSIDERED AND IT WAS OBSERVED BY THE HON'BLE SUPREME COURT TH AT TO DETERMINE THE CHARACTER OF LAND ACCORDING TO THE PURPOSE FOR WHIC H IT IS MEANT OR SET APART AND CAN BE USED, IS A MATTER WHICH OUGHT TO BE DETE RMINED ON THE FACTS OF EACH PARTICULAR CASE. WHAT IS REALLY REQUIRED TO BE SHOWN IS THE CONNECTION WITH AN AGRICULTURAL PURPOSE AND USER AND NOT THE M ERE POSSIBILITY OF USER OF LAND, BY SOME POSSIBLE FUTURE OWNER OR POSSESSOR, F OR AN AGRICULTURAL PURPOSE. IT IS NOT THE MERE POTENTIALITY, WHICH WILL ONLY AF FECT ITS VALUATION AS PART OF 'ASSETS', BUT ITS ACTUAL CONDITION AND INTENDED USE R WHICH HAS TO BE SEEN FOR PURPOSES OF EXEMPTION FROM WEALTH-TAX. THE HON'BLE SUPREME COURT IN A SUBSEQUENT DECISION IN THE CASE OF SMT. SARIFABIBI MOHMED IBRAHIM V. COMMISSIONER OF INCOME-TAX 204 ITR 631 HAS REFERRED TO THE DECISION OF THE CONSTITUTION BENCH IN THE CASE OF COMMISSIONER OF W EALTH TAX VS. OFFICER IN CHARGE (COURT OF WARDS) (SUPRA) AT PAGE 637 AND 638 AS UNDER: 6 ITA NO. 643/JP/2016 SHRI RAJ KUMAR YADAV, JAIPUR. WHETHER A LAND IS AN AGRICULTURAL LAND OR NOT IS E SSENTIALLY A QUESTION OF FACT. SEVERAL TESTS HAVE BEEN EVOLVED IN THE DECISIONS OF THIS CO URT AND THE HIGH COURTS, BUT ALL OF THEM ARE MORE IN THE NATURE OF GUIDELINES. THE QUES TION HAS TO BE ANSWERED IN EACH CASE HAVING REGARD TO THE FACTS AND CIRCUMSTANCES O F THAT CASE. THERE MAY BE FACTORS BOTH FOR AND AGAINST A PARTICULAR POINT OF VIEW. TH E COURT HAS TO ANSWER THE QUESTION ON A CONSIDERATION OF ALL OF THEMA PROCESS OF EVAL UATION. THE INFERENCE HAS TO BE DRAWN ON A CUMULATIVE CONSIDERATION OF ALL THE RELE VANT FACTS. THE FIRST DECISION OF THIS COURT WHICH CONSIDERED T HE MEANING OF THE EXPRESSION 'AGRICULTURAL LAND' IS IN CIT V . RAJA BENOY KUMAR SAHAS ROY [1957] 32 ITR 466 . BUT THE QUESTION THERE WAS WHETHER THE INCOME FROM FORE ST LAND DERIVED FROM SAL AND PIYASAL TREES, 'NOT GROWN BY HUMAN SKILL AND LABOUR ' CONSTITUTES AGRICULTURAL INCOME? THE DECISION THAT DIRECTLY CONSIDERED THE ISSUE, TH OUGH UNDER THE WEALTH-TAX ACT, 1957 IS IN CWT V. OFFICER-IN-CHARGE ( COURT OF WARDS ) [1976] 105 ITR 133 (SC) (HEREINAFTER REFERRED TO AS THE BEGUMPET PALACE CASE). IT WAS AN APPEAL FROM A FULL BENCH DECISION OF THE ANDHRA PRADESH HIGH COUR T. THE HIGH COURT HAD TAKEN THE VIEW, FOLLOWING A DECISION OF THE MADRAS HIGH COURT IN T. SAROJINI DEVI V. T. SRI KRISHNA AIR 1944 MAD. 401, THAT THE EXPRESSION 'AGRICULTURA L LAND' SHOULD BE GIVEN THE WIDEST MEANING. IT HELD THAT THE FACT THAT THE LAND IS ASSESSED TO LAND REVENUE AS AGRICULTURAL LAND UNDER THE STATE REVENUE LAW IS A STRONG PIECE OF EVIDENCE OF ITS CHARACTER AS AN AGRICULTURAL LAND. ON APPEAL, A CON STITUTION BENCH OF THIS COURT HELD THAT; ( A ) INASMUCH AS AGRICULTURAL LAND IS EXEMPTED FROM TH E PURVIEW OF THE DEFINITION OF THE EXPRESSION 'ASSETS', IT IS 'IMPOSSIBLE TO AD OPT SO WIDE A TEST AS WOULD OBVIOUSLY DEFEAT THE PURPOSE OF THE EXEMPTION GIVEN'. THE IDE A BEHIND EXEMPTING THE AGRICULTURAL LAND IS TO ENCOURAGE CULTIVATION OF LA ND AND THE AGRICULTURAL OPERATIONS. 'IN OTHER WORDS THIS EXEMPTION HAD TO BE NECESSARIL Y GIVEN A MORE RESTRICTED MEANING THAN THE VERY WIDE AMBIT GIVEN TO IT BY THE FULL BE NCH OF THE ANDHRA PRADESH HIGH COURT', ( B ) WHAT IS REALLY REQUIRED TO BE SHOWN IS THE CONNEC TION WITH AN AGRICULTURAL PURPOSE AND USER AND NOT THE MERE POSSIBILITY OF USER OF LAND BY SOME POSSIBLE FUTURE OWNER OR POSSESSOR, FOR AN AGRICULTURAL PURPOSE. IT IS NOT THE MERE POTENTIALITY BUT ITS ACTUAL CONDITION AND INTENDED USER WHICH HAS TO BE SEEN FOR PURPOSES OF EXEMPTION, (EMPHASIS SUPPLIED) ( C ) 'THE PERSON CLAIMING AN EXEMPTION OF ANY PROPERTY OF HIS FROM THE SCOPE OF HIS ASSETS MUST SATISFY THE CONDI TIONS OF THE EXEMPTION', ( D ) 'THE DETERMINATION OF THE CHARACTER OF LAND, ACCORDING T O THE PURPOSE FOR WHICH IT IS MEANT OR SET APART AND CAN BE USED, IS A MATTER WHICH OUG HT TO BE DETERMINED ON THE FACTS OF EACH PARTICULAR CASE', ( E ) THE FACT THAT THE LAND IS ASSESSED TO THE LAND RE VENUE AS AGRICULTURAL LAND UNDER THE STATE REVENUE LAW IS CE RTAINLY A RELEVANT FACT BUT IT IS NOT CONCLUSIVE. WHETHER A LAND IS AN AGRICULTURAL LAND OR NOR IS ES SENTIALLY A QUESTION OF FACT AND SEVERAL TESTS HAS TO BE APPLIED AS LAID DOWN BY THE HON'BLE SUPREME COURT AND HON'BLE HIGH COURTS THOUGH ALL OF THEM AR E MERE IN THE NATURE OF GUIDANCE. THE QUESTION HAS TO BE ANSWERED IN EACH C ASE HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE. AS IT IS CLEAR THAT THE HON'BLE SUPREME COURT HAS HELD THAT THE LAND IS ASSESSED TO LAND RE VENUE AS AN AGRICULTURAL 7 ITA NO. 643/JP/2016 SHRI RAJ KUMAR YADAV, JAIPUR. LAND IS NOT A CONCLUSIVE FACT AND THE QUESTION IS T O BE DECIDED BY CONSIDERING VARIOUS FACTORS INCLUDING WHETHER THE LAND IS USED FOR CULTIVATION AND AGRICULTURE OPERATIONS ARE CARRIED OUT. THUS WHAT I S REALLY REQUIRED TO BE SEEN IN CONNECTION WITH AN AGRICULTURAL LAND IS THE CONN ECTION WITH AGRICULTURAL PURPOSE AND USER AND NOT THE MERE POSSIBLE OF USER OF LAND BY SOME POSSIBLE FUTURE OWNER. THE HON'BLE SUPREME COURT IN THE CASE OF SMT. SARIFABIBI MOHMED IBRAHIM V. COMMISSIONER OF INCOME-TAX (SUPRA ) HAS ALSO CONSIDERED THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CA SE OF CIT VS. V.A. TRIVEDI 172 ITR 95 AND OBSERVED AT PAGE 641 AS UNDER: THE BENCH OBSERVED THAT TO ASCERTAIN THE TRUE CHA RACTER AND THE NATURE OF THE LAND, IT MUST BE SEEN WHETHER IT HAS BEEN PUT TO USE FOR AGRICULTURAL PURPOSES FOR A REASONABLE SPAN OF TIME PRIOR TO THE RELEVANT DATE AND FURTHER WHETHER ON THE RELEVANT DATE THE LAND WAS INTENDED TO BE PUT TO US E FOR AGRICULTURAL PURPOSES FOR A REASONABLE SPAN OF TIME IN THE FUTURE. EXAMINING TH E FACTS OF THE CASE FROM THE SAID POINT OF VIEW, THE BENCH HELD THAT THE AGREEMENT EN TERED INTO BY THE ASSESSEE WITH THE HOUSING SOCIETY IS THE CRUCIAL CIRCUMSTANCE SIN CE IT SHOWED THAT THE ASSESSEE AGREED TO SELL THE LAND TO HOUSING SOCIETY ADMITTED LY FOR UTILISATION FOR NON- AGRICULTURAL PURPOSES. THE SALE-DEEDS WERE EXECUTED FOUR MONTHS AFTER THE AGREEMENT OF SALE AND EVEN IF ANY AGRICULTURAL OPER ATIONS WERE CARRIED ON WITHIN THE SAID SPAN OF FOUR MONTHS, - THE BENCH HELD - IT WAS EVIDENTLY IN THE NATURE OF A STOP- GAP ARRANGEMENT. ON THE DATE THE LAND WAS SOLD, THE BENCH HELD, THE LAND WAS NO LONGER AGRICULTURAL LAND WHICH IS EVIDENT FROM THE FACT THAT THE ASSESSEE HAD OBTAINED PERMISSION EVEN IN AUGUST 1966 TO CONVERT THE SAID LAND TO NON-AGRICULTURAL PURPOSES. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS . V.A. TRIVEDI (SUPRA) HAS LAID DOWN THE PRINCIPLE FOR ASCERTAINING THE TR UE CHARACTER AND NATURE OF THE LAND THAT IT MUST BE SEEN WHETHER IT HAS BEEN P UT TO USE FOR AGRICULTURAL PURPOSES FOR A REASONABLE SPAN OF TIME PRIOR TO REL EVANT DATE AND FURTHER THE LAND WAS INTENDED TO BE PUT TO USE FOR AGRICULTURAL PURPOSE FOR A REASONABLE TIME PERIOD IN FUTURE. IF THE PRINCIPLES LAID DOWN BY THE HON'BLE SUPREME COURT AS WELL AS THE HON'BLE HIGH COURT ARE TO BE A PPLIED IN THE FACTS OF THE PRESENT CASE THEN ONE CAN SAFELY SAY THAT THE LAND PURCHASED BY THE ASSESSEE, WHO IS NOT AN AGRICULTURIST FOR THE INTEN TION TO RESALE IT TO THE 8 ITA NO. 643/JP/2016 SHRI RAJ KUMAR YADAV, JAIPUR. COMPANY AS PER THEIR PREDETERMINED PLAN LOSES ITS C HARACTER THE MOMENT THE ASSESSEE PURCHASED THE LANDS WITH THE INTENTION TO BE USED IN FUTURE FOR NON- AGRICULTURAL PURPOSES. HENCE, THE LAND WAS NO LONGE R AGRICULTURAL LAND WHEN THE ASSESSEE PURCHASED IT FOR RESALE AND WAS CONVER TED TO NON-AGRICULTURAL USE AT THE TIME OF SALE TO THE COMPANY. THE HON'BLE SUPREME COURT AFTER CONSIDERING THE VARIOUS DECISIONS ON THE POINT AS W ELL AS THE FACTS AS HELD AT PAGE 642 AND 643 AS UNDER: NOW, WE MAY CONSIDER THE VARIOUS CIRCUMSTANCES AP PEARING FOR AND AGAINST THE APPELLANT'S CASE. THE FACTS IN THEIR FAVOUR ARE: LA ND BEING REGISTERED AS AGRICULTURAL LAND IN THE REVENUE RECORDS; PAYMENT OF LAND REVENU E IN RESPECT THEREOF TILL THE YEAR 1968-69; ABSENCE OF ANY EVIDENCE THAT IT WAS PUT TO ANY NON-AGRICULTURAL USE BY THE APPELLANTS; THAT THE LAND WAS ACTUALLY CULTIVATED T ILL AND INCLUDING THE AGRICULTURAL YEAR 1964-65; THAT THERE WERE AGRICULTURAL LANDS ABUTTIN G THE SAID LAND AND THAT THE APPELLANTS HAD NO OTHER SOURCE OF INCOME EXCEPT THE INCOME FROM THE SAID LAND. AS AGAINST THE ABOVE FACTS, THE FACTS APPEARING AGAINS T THEIR CASE ARE: THE LAND WAS SITUATED WITHIN THE MUNICIPAL LIMITS - IT WAS SITUA TED AT A DISTANCE OF ONE KILOMETER FROM THE SURAT RAILWAY STATION; THE LAND WAS NOT BE ING CULTIVATED FROM THE YEAR 1965- 66 UNTIL IT WAS SOLD IN 1969; THE APPELLANTS HAD EN TERED INTO AN AGREEMENT SALE WITH A HOUSING CO-OPERATIVE SOCIETY TO SELL THE SAID LAND FOR AN AVOWED NON-AGRICULTURAL PURPOSE, NAMELY, CONSTRUCTION OF HOUSES; THEY HAD A PPLIED IN JUNE 1968 AND MARCH 1969 FOR PERMISSION TO SELL THE SAID LAND FOR NON-A GRICULTURAL PURPOSES UNDER SECTION 63 OF THE BOMBAY TENANCY AND AGRICULTURAL LANDS ACT AND OBTAINED THE SAME ON 22- 4-1969; SOON AFTER OBTAINING THE SAID PERMISSION TH EY EXECUTED SALE-DEEDS IN THE FOLLOWING MONTH, I.E., IN MAY 1969; THE LAND WAS SOLD AT THE RATE OF RS. 2 3 PER SQ. YD. AND THE PURCHASER-SOCIETY COMMENCED CONSTRUCTION OP ERATIONS WITHIN THREE DAYS OF PURCHASE. WHAT IS THE INFERENCE THAT FLOWS FROM A C UMULATIVE CONSIDERATION OF ALL THE AFORESAID CONTENDING FACTS? THIS QUESTION HAS TO BE ANSWERED KEEPING THE CRITERIA EVOLVED IN BEGUMPET PALACE'S CASE ( SUPRA ) SET OUT HEREINBEFORE. IN OUR OPINION, THE ENTERING INTO THE AGREEMENT TO SELL THE LAND FOR HO USING PURPOSES, THE APPLYING AND OBTAINING THE PERMISSION TO SELL THE LAND FOR NON-A GRICULTURAL PURPOSES UNDER SECTION 63 AND ITS SALE SOON THEREAFTER AND THE FACT THAT T HE LAND WAS NOT CULTIVATED FOR A PERIOD OF FOUR YEARS PRIOR TO ITS SALE COUPLED WITH ITS LO CATION, THE PRICE AT WHICH IT WAS SOLD DO OUTWEIGH THE CIRCUMSTANCES APPEARING IN FAVOUR O F THE APPELLANTS' CASE. THE AFORESAID FACTS DO ESTABLISH THAT THE LAND WAS NOT AN AGRICULTURAL LAND WHEN IT WAS SOLD. THE APPELLANTS HAD NO INTENTION TO BRING IT UNDER C ULTIVATION AT ANY TIME AFTER 1965-66 CERTAINLY NOT AFTER THEY ENTERED INTO THE AGREEMENT TO SELL THE SAME TO A HOUSING CO- OPERATIVE SOCIETY. THOUGH A FORMAL PERMISSION UNDER SECTION 65 OF THE BOMBAY LAND REVENUE CODE WAS NOT OBTAINED BY THE APPELLANTS, YE T THEIR INTENTION IS CLEAR FROM THE FACT OF THEIR APPLICATION FOR PERMISSION TO SELL IT FOR A NON-AGRICULTURAL PURPOSE UNDER SECTION 63 OF THE BOMBAY TENANCY AGRICULTURAL LANDS ACT. WE ARE, THEREFORE, OF THE OPINION THAT THE HIGH COU RT WAS RIGHT IN HOLDING THAT THE SAID LAND WAS NOT AN AGRICULTURAL LAND AT THE TIME OF IT S SALE AND THAT THE INCOME ARISING FROM ITS SALE WAS NOT EXEMPT FROM THE CAPITAL GAINS TAX. THE APPEALS, ACCORDINGLY, FAIL AND ARE DISMISSED. NO COSTS. 9 ITA NO. 643/JP/2016 SHRI RAJ KUMAR YADAV, JAIPUR. IT WAS CONSIDERED BY THE HON'BLE SUPREME COURT THAT THE ASSESSEE ENTERED INTO AN AGREEMENT TO SELL THE LAND FOR HOUSING PURP OSE AFTER APPLYING AND OBTAINING THE PERMISSION TO SELL THE LAND FOR NON-A GRICULTURAL PURPOSE AND THEREFORE, WHEN THE LAND WAS NEITHER CULTIVATED PRI OR TO THE SALE NOR TO BE CULTIVATED IN FUTURE COUPLED WITH THE FACTORS OF IT S LOCATIONS AND PRICES ESTABLISHED THAT THE LAND WAS NOT AN AGRICULTURAL L AND WHEN IT WAS SOLD. THIS ISSUE WAS AGAIN CONSIDERED BY THE HONBLE BOMBAY HI GH COURT IN THE CASE OF GOPAL C SHARMA VS CIT 209 ITR 946 AND BY FOLLOWING THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF SMT. SARIFABIBI MOHMED IBRAHIM V. COMMISSIONER OF INCOME-TAX (SUPRA), THE HON'BLE HIG H COURT HAS OBSERVED AND HELD IN PARA 13, 24 TO 26 AS UNDER: 13. THE EXPRESSION 'AGRICULTURAL LAND' IS NOT DEFINED UNDER THE ACT. THE QUESTION AS TO WHETHER THE LAND IN QUESTION WAS LIABLE TO BE CO NSIDERED AS AGRICULTURAL LAND FOR PURPOSE OF INCOME-TAX IS LIABLE TO BE DECI DED WITH REFERENCE TO THE CRITERIA LAID DOWN BY JUDICIAL DECISIONS OF THE SUP REME COURT AND HIGH COURTS. THE UNDERLYING OBJECT OF THE ACT TO EXEMPT 'AGRICUL TURAL INCOME' FROM INCOME- TAX IS TO ENCOURAGE ACTUAL CULTIVATION OR DE FACTOA GRICULTURAL OPERATIONS. ACTUAL USER OF THE LAND FOR AGRICULTURAL PURPOSE OR ABSENCE THEREOF AT THE RELEVANT TIME IS UNDOUBTEDLY ONE OF THE CRUCIAL TES TS FOR DETERMINATION OF THE ISSUE. IT IS WELL SETTLED THAT THE NATURE AND CHARA CTER OF LAND MAY UNDERGO A CHANGE DEPENDING UPON ITS SITUATION, GROWTH OF LOCA LITY, ZONE IN WHICH IT IS SITUATE AND ITS POTENTIALITY. ACCORDING TO RECENT D ECISIONS OF THE SUPREME COURT, THE FACT THAT THE LAND IS SOLD OR TRANSFERRE D TO A NON-AGRICULTURIST FOR A NON-AGRICULTURAL PURPOSE OR THAT IT IS LIKELY TO BE USED FOR NON-AGRICULTURAL PURPOSE SOON AFTER ITS TRANSFER IS ALSO A RELEVANT FACTOR GERMANE TO THE DETERMINATION OF THE ISSUE. MERELY BECAUSE THE LAND WAS USED FOR AGRICULTURAL PURPOSE IS REMOTE PAST OR IT CONTINUE TO BE ASSESSE D TO LAND REVENUE ON THE FOOTING OF AGRICULTURAL LAND IS NOT DECISIVE. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXX 24. THE LEARNED COUNSEL FOR THE ASSESSEE MAINLY RELIE D UPON THE DIVISION BENCH JUDGMENT OF THIS COURT IN THE CASE OF CWT V. H.V. M UNGALE [19841145ITR 208, RATIO OF JUDGMENT OF THE DIVISION BENCH OF THIS COU RT IN THE CASE OF WEALTH-TAX REFERENCE NO. 5 OF 1964 DECIDED ON 4-12-1973 AND TH E JUDGMENT OF THIS COURT IN CIT V. P.C. JOSHI AND B.C. JOSHI [1993] 202 ITR 1017 . THE THRUST OF THE ARGUMENT OF THE LEARNED COUNSEL FOR THE ASSESSEE IS THAT THE FACT THAT THE LAND 10 ITA NO. 643/JP/2016 SHRI RAJ KUMAR YADAV, JAIPUR. WAS LYING VACANT AND NOT USED FOR CULTIVATION FOR S EVERAL YEARS WAS NOT OF ANY LEGAL CONSEQUENCE. THE LEARNED COUNSEL FOR THE ASSE SSEE SUBMITTED THAT THE COURT MUST PRESUME THAT THE VACANT LAND CONTINUED T O BE 'AGRICULTURAL LAND' IN NATURE AND CHARACTER ONCE IT WAS SHOWN THAT THE LAN D WAS ASSESSED TO LAND REVENUE AS AN AGRICULTURAL LAND. THE LEARNED COUNSE L FOR THE ASSESSEE RELIED UPON THE LAST TWO PARAGRAPHS FROM THE JUDGMENT OF C HANDURKAR, J. AS HIS LORDSHIP THEN WAS FROM H.V. MUNGALE'S CASE (SUPRA) WHEREIN IT WAS OBSERVED THAT UNLESS THE LAND WAS ALLOWED TO BE CONVERTED FO R NON-AGRICULTURAL PURPOSE BY THE ORDER OF COLLECTOR UNDER THE PROVISIONS OF T HE LAND REVENUE ACT, THE INITIAL PRESUMPTION TO THE EFFECT THAT THE LAND WAS AGRICULTURAL IN NATURE WOULD CONTINUE TO OPERATE. TO SOME EXTENT, SOME OF THE OBSERVATIONS APPEAR TO BE IN CONFLICT WITH THE VIEW NOW TAKEN BY THE SU PREME COURT IN SMT. SARIFABIBI MOHMED IBRAHIM'S CASE (SUPRA). IT IS FAR TOO OBVIOUS TO US THAT THE VIEW TAKEN BY THE SUPREME COURT INSARIFABIBI MOHMED IBRAHIM'S CASE (SUPRA) WOULD PREVAIL. IN OUR OPINION, THE PRINCIPL ES LAID DOWN BY THE SUPREME COURT IN THE CASE OF SMT. SARIFABIBI MOHMED IBRAHIM (SUPRA) AND BY THIS COURT IN V.A. TRIVEDI'S CASE (SUPRA) DO EMPHASISE THE FAC TOR OF NON-USER OF THE LAND FOR CULTIVATION FOR REASONABLE SPAN OF TIME PRIOR T O THE DATE OF TRANSFER AS A CRUCIAL FACTOR FOR DETERMINATION OF THE ISSUE. APPL YING THE RATIO OF THE SUPREME COURT JUDGMENT IN SMT. SARIFABIBI MOHMED IB RAHIM'S CASE (SUPRA) TO THE FACTS OF THE CASE, WE HOLD THAT THE REFERENCE L ANDS COULD NOT BE CONSIDERED AS 'AGRICULTURAL LANDS' ON THE DATE OF TRANSFER. 25. THE AAC AND THE TRIBUNAL WERE MORE THAN JUSTIFIED IN HIGHLIGHTING THE FACT THAT THE REFERENCE LANDS WERE SITUATE IN HEAVY INDU STRIAL ZONE AND THAT THE SAID LANDS WERE NOT IN FACT USED OR INTENDED TO BE USED FOR AGRICULTURAL PURPOSE AT THE RELEVANT TIME SINCE SEVERAL YEARS. T HE AAC ALSO RECORDED FINDING OF FACT BASED ON RELEVANT EVIDENCE THAT AT LEAST 10 ACRES OF THE LAND OUT OF 25 ACRES WAS IN FACT USED FOR NON-AGRICULTUR AL PURPOSES BY LARSEN & TOUBRO LTD. SINCE THE YEAR 1960, I.E., FOR 7 YEARS PRIOR TO THE DATE OF TRANSFER OF THE LAND. IF THE RELEVANT TESTS LAID DOWN BY THE SU PREME COURT IN SMT SARIFABIBI MOHMED IBRAHIM'S CASE (SUPRA) AND THE TE ST LAID DOWN BY THIS COURT IN V.A. TRIVEDI'S CASE (SUPRA) ARE TO BE APPLIED TO THIS CASE AS THEY OUGHT TO BE, IT WOULD BECOME OBVIOUS THAT THE FINDING OF FACT AR RIVED AT BY THE ITO, THE AAC AND THE TRIBUNAL CANNOT BE CHARACTERISED AS PER VERSE OR UNSUPPORTED BY EVIDENCE OR ERRONEOUS IN LAW. IT IS NOT POSSIBLE TO ACCEPT THE SUBMISSION MADE BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE AU THORITIES BELOW DID NOT APPLY THE CORRECT TEST OR MISDIRECTED THEMSELVES IN LAW OR THAT THE FINDING OF FACT ARRIVED BY THE TRIBUNAL WAS NOT SUPPORTED BY E VIDENCE. 11 ITA NO. 643/JP/2016 SHRI RAJ KUMAR YADAV, JAIPUR. 26. IN VIEW OF THE ABOVE DISCUSSION WE DO NOT THINK I T NECESSARY TO REFER TO THE OTHER AUTHORITIES CITED AT THE BAR. WE UPHOLD THE F INDING OF THE TRIBUNAL TO THE EFFECT THAT THE REFERENCE LANDS WERE NOT AGRICULTUR AL LANDS. IT IS HELD BY THE HONBLE BOMBAY HIGH COURT THAT TH E FUTURE USE OF LAND WAS NON-AGRICULTURAL PURPOSE AND THEREFORE, THE SAME CA NNOT BE CATEGORIZED AS AGRICULTURAL LAND AT THE TIME OF SALE. THIS FACT OF FUTURE USE OF LAND IS NOT IN DISPUTE IN THE CASE BEFORE US EVEN THE ASSESSEE NOT AN AGRICULTURIST AND HAS NO INTENTION TO CARRY OUT THE AGRICULTURAL OPERATIONS ON THE LANDS IN QUESTION CLEARLY ESTABLISHED THE INTENDED FUTURE USE FOR NON-AGRICUL TURAL PURPOSE. THEREFORE, IN FACTS AND CIRCUMSTANCES OF THE PRESENT CASE AND APP LYING THE TEST AS LAID DOWN BY THE HON'BLE SUPREME COURT AND THE HON'BLE BOMBAY HIGH COURT WE HAVE NO HESITATION TO HOLD THAT THE LAND IN QUESTIONS DOES NOT FALL UNDER THE EXCLUSION CLAUSE (III) OF SECTION 2(14) OF THE ACT BEING THE AGRICULTURAL LAND. ACCORDINGLY, THE PROFIT EARNED BY THE ASSESSEE OF SALE OF SUCH L AND CANNOT BE REGARDED AS EXEMPT INCOME U/S 2(14) OR AS AN AGRICULTURAL INCOM E IN TERMS OF DEFINITION U/S 2(1A) OF THE ACT. THE LD AR OF THE ASSESSEE HAS GIV EN MUCH EMPHASIS ON THE EXPLANATION TO SECTION 2(1A) OF THE ACT AND ALSO RE LIED UPON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF MANUBHAI A . SETH VS N.D. NIRGUDKAR, SECOND ITO AS WELL AS DECISION OF HONBLE ANDHRA PR ADESH HIGH COURT IN THE CASE OF J. RAGHOTTAMA REDDY VS ITO (SUPRA). SINCE T HESE DECISIONS WERE BASED ON THE FACT THAT THE LANDS WERE UNDISPUTEDLY AGRICU LTURAL LANDS, THEREFORE, ONCE WE HOLD THAT THE LAND IN QUESTIONS CANNOT BE REGARD ED AS AGRICULTURAL LAND AS THE SAME LOSES ITS CHARACTER OF AGRICULTURAL LAND T HE MOMENT THE ASSESSEE PURCHASED THE LANDS FOR THE SOLE PURPOSE OF RESELLI NG TO THE COMPANIES IN WHICH THE ASSESSEE IS A DIRECTOR AND TO BE USED FOR NON-A GRICULTURAL PURPOSES. THEREFORE, THESE DECISIONS CANNOT BE APPLIED IN THI S CASE. SECONDLY THOSE DECISIONS WERE CHALLENGED BY THE REVENUE BEFORE THE HON'BLE SUPREME COURT AND THE HON'BLE SUPREME COURT IN THE CASE OF UNION OF INDIA VS. S. MUTHYAM REDDY (SUPRA) HAS HELD AS UNDER: 12 ITA NO. 643/JP/2016 SHRI RAJ KUMAR YADAV, JAIPUR. 1. THIS APPEAL IS BY SPECIAL LEAVE AGAINST AN ORDE R PASSED BY THE HIGH COURT OF ANDHRA PRADESH IN A BATCH OF CASES. BY THA T ORDER, THE HIGH COURT CONSIDERED THE EFFECT OF A COMBINED READING O F SECTIONS 2( 1A ) AND 2( 14 ) OF THE INCOME-TAX ACT, 1961 ('THE ACT') AND HAS HELD THAT ( I ) CAPITAL GAINS ARISING FROM SALE OF LAND USED FOR AG RICULTURAL PURPOSES WOULD BE REVENUE DERIVED FROM SUCH LAND AND, THEREF ORE, 'AGRICULTURAL INCOME' WITHIN THE DEFINITION UNDER SECTION 2( 1A ) WITH THE RESULT THAT PARLIAMENT WOULD HAVE NO LEGISLATIVE COMPETENCE TO TAX SUCH AGRICULTURAL INCOME; AND ( II ) AMENDED SECTION 2( 14 )( III ) SHOULD BE READ DOWN TO PRESERVE ITS CONSTITUTIONALITY. ALL LAND US ED FOR AGRICULTURAL PURPOSES WHETHER SITUATED IN AREAS MENTIONED IN SEC TION 2( 14 )( III )( A ) AND ( B ) SHOULD BE HELD TO BE EXCLUDED FROM THE DEFINITION OF 'CAPITAL ASSET'. THUS SECTION 2( 14 )( III ) SHOULD READ AS EXCLUDING FROM CAPITAL ASSET AGRICULTURAL LAND IN INDIA, NOT BEING LAND SI TUATED IN THE AREAS MENTIONED THEREIN. UPON SUCH INTERPRETATION, SECTIO N 2( 14 )( III ) DOES NOT ENABLE LEVY OF TAX ON CAPITAL GAINS ARISING FRO M TRANSFER OF LAND WHICH IS USED FOR AGRICULTURAL PURPOSES WHEREVER IT MAY BE SITUATED. 2. IN THIS APPEAL, CHALLENGE TO THIS ORDER IS BASED ON MANY GROUNDS AND OUR ATTENTION HAS BEEN DRAWN TO SEVERAL DECISIONS N OT ONLY TAKING SIMILAR BUT ALSO A CONTRARY VIEW. THE RESPONDENTS H AVING REMAINED EX PARTE , WE REQUESTED SHRI DHRUV MEHTA, THE LEARNED ADVOCA TE, TO ASSIST THE COURT AS AMICUS CURIAE . WE ARE BEHOLDEN FOR THE VALUABLE ASSISTANCE RENDERED BY HIM TO THE COURT. 3. BY THE FINANCE ACT, 1989, EXPLANATION TO SECTION 2( 1A ) IS INSERTED WITH EFFECT FROM 1-4-1970 TO SUPERSEDE THE VIEW EXP RESSED IN THE ORDER UNDER APPEAL AND SEVERAL DECISIONS SETTING OUT SIMI LAR RATIO. THIS DECLARATORY AMENDMENT HAVING RETROSPECTIVE OPERATIO N THOUGH COMING INTO FORCE DURING THE PENDENCY OF THIS APPEAL MUST BE GIVEN EFFECT TO. THE SAID EXPLANATION CLEARLY DECLARES THAT THE REVENUE DERIVED FROM LAND SHALL NOT INCLUDE AND SHALL BE DEEMED NEVER TO HAVE INCLUDED ANY INCOME ARISING FROM THE TRANSFER OF ANY LAND REFERR ED TO IN SECTION 2( 14 )( III )( A ) OR ( B ). THE UPSHOT OF THE SAME IS THAT INCOME DERIVED FROM SALE OF SUCH AGRICULTURAL LANDS CANNOT BE TREA TED AS 'AGRICULTURAL INCOME'. THUS, THE WHOLE BASIS OF THE DECISION HAS BEEN LOST AND, THEREFORE, THE ORDER UNDER APPEAL CANNOT BE SUSTAIN ED AND DESERVES TO BE SET ASIDE. 4. SHRI DHRUV MEHTA POINTED OUT THAT BY AN ARTIFICIA L DEFINITION INTRODUCED INTO THE ACT WHAT IS AGRICULTURAL INCOME CANNOT BE TREATED OTHERWISE. HE ALSO SOUGHT TO EXPLAIN THE SCHEME OF THE ENTRIES IN THE DIFFERENT LISTS OF THE CONSTITUTION IN SUPPORT OF HIS CONTENTION. 5. THE LEARNED COUNSEL FOR THE APPELLANTS POINTED OU T THAT UNDER ARTICLE 366(1) OF THE CONSTITUTION 'AGRICULTURAL INCOME' HA S THE SAME MEANING AS DEFINED UNDER ENACTMENTS RELATING TO INCOME-TAX. THERE IS DIVERGENCE OF OPINION AMONGST THE HIGH COU RTS AS TO THE EFFECT OF SECTION 2( 14 )( III ) AS AMENDED BY THE FINANCE ACT, 1970, AND HENCE THE PARLIAMENT INTRODUCED THE EXPLANATION BY THE FINANCE ACT, 13 ITA NO. 643/JP/2016 SHRI RAJ KUMAR YADAV, JAIPUR. 1989 STATING THE MEANING THERETO WHICH IS IN CONFOR MITY WITH THE VIEW EXPRESSED BY SOME HIGH COURTS. HE SUBMITTED, THEREF ORE, DOUBTS ARISING AS TO INTERPRETATION BY REASON OF CONFLICT OF DECISIONS OF THE HIGH COURTS IS RESOLVED BY LAW AND SUCH A PROVISION CANNOT BE INVALID. 6. INASMUCH AS THERE IS NO CHALLENGE TO THE VALIDITY OF THE EXPLANATION TO SECTION 2( 1A ) INSERTED INTO THE ACT BY THE FINANCE ACT, 1989, W E ARE AFRAID, WE CANNOT EXAMINE THE CORRECTNESS OF THE SA ID SUBMISSION. WE LEAVE OPEN THIS QUESTION TO BE RAISED FOR CONSIDERA TION IN AN APPROPRIATE PROCEEDING. 7. IN THE RESULT, WE ALLOW THIS APPEAL AND SET ASIDE THE ORDER OF THE HIGH COURT. NO ORDER AS TO COSTS. THUS, THE DECISIONS WERE SET ASIDE BY THE HON'BLE S UPREME COURT AS IT IS HELD IN PARA 3 OF THE HON'BLE SUPREME COURTS ORDER (SUP RA). ACCORDINGLY, THE DECISIONS RELIED UPON BY THE LD AR WOULD NOT HELP T HE CASE OF THE ASSESSEE. THE LD AR HAS ALSO RELIED UPON THE VARIOUS DECISION S OF THIS TRIBUNAL ON THIS POINT, HOWEVER, ALL THOSE DECISIONS WERE ON DIFFERE NT SET OF FACTS AND WERE PASSED WITHOUT CONSIDERING THE DECISION OF THE HON' BLE SUPREME COURT IN THE CASE OF UNION OF INDIA VS. S. MUTHYAM REDDY (SUPRA) . ACCORDINGLY, THOSE DECISIONS ARE NO MORE A BINDING PRECEDENT. 7.3 IT IS PERTINENT TO NOTE THAT INCENTIVE OF EXEMP TING THE AGRICULTURAL LAND FROM DEFINITION OF CAPITAL ASSET AND CONSEQUENTLY F ROM CHARGEABILITY OF INCOME TAX IS TO ENCOURAGE THE CULTIVATION OF LAND AND PRE SERVE THE CHARACTER OF AGRICULTURAL LAND TO BE USED FOR CULTIVATION AND AG RICULTURAL OPERATIONS. THEREFORE, THE SCHEME AND THE OBJECT OF PROVIDING T HESE INCENTIVES TO KEEP THE INCOME ARISING FROM AGRICULTURAL LAND EXEMPT FR OM TAX IS TO PROMOTE MORE AND MORE AGRICULTURAL OPERATIONS BY THE AGRICULTURI STS AND THE SOLE OBJECT OF THIS INCENTIVE IS NOT TO TAX THE AGRICULTURISTS WHO IS DEALING, CULTIVATING AND CARRYING OUT THE AGRICULTURAL OPERATIONS ON THE AGR ICULTURAL LAND AND THEN IN CASE IF THE SAID LAND IS SOLD THE SAME IS EXCLUDED FROM THE PURVIEW OF INCOME TAX EITHER ON CAPITAL GAIN OR AGRICULTURAL INCOME. THEREFORE, CLAIMING THE SAID EXEMPTION BY BUSINESS PERSON MERELY BECAUSE HE HAS PURCHASED THE LAND AND 14 ITA NO. 643/JP/2016 SHRI RAJ KUMAR YADAV, JAIPUR. THEN SOLD IT WOULD BE DEFEATING THE VERY PURPOSE OF THE INCENTIVE WHICH IS ONLY FOR THE GENUINE CULTIVATOR OF THE LAND. HENCE, IN V IEW OF THE ABOVE DISCUSSION, VARIOUS DECISIONS AND FACTS AND CIRCUMSTANCES OF TH E CASE, WE HOLD THAT THE INCOME ARISING ON SALE OF THE LANDS IN QUESTION IS NOT EXEMPT FROM INCOME TAX EITHER AS A CAPITAL GAIN U/S 2(14)(III) OR AS AN AG RICULTURAL INCOME U/S 2(1A) OF THE ACT. THIS ISSUE IS DECIDED AGAINST THE ASSESSEE AND IN FAVOUR OF THE REVENUE. THE SAID DECISION OF THE TRIBUNAL HAS BEEN UPHELD B Y THE HONBLE JURISDICTIONAL HIGH COURT IN CASE REPORTED IN 415 ITR 236. AS REGARDS THE DECISION OF THE COORDINATE BENCH RELIED UPON BY THE LD. A/R OF THE ASSESSEE IN CASE OF ITO VS. SHRI MEGH CHAND MEENA HUF (SUPRA), THE TRIBUNAL HAS HELD IN PARA 2. 33 AS UNDER :- 2.33. IN LIGHT OF ABOVE, IT IS CLEAR THAT THE A PPELLANT HAS MOVED AN APPLICATION FOR LAND CONVERSION UNDER SECTION 90-B OF LAND REVENUE ACT FOR CONVERSION OF AGRICULTURAL LAND INTO FARM HOUSE S AND AS PER THE ORDERS OF THE JDA, CONSTRUCTING FARM HOUSES IS PERM ISSIBLE ON AGRICULTURE LAND AND THERE IS NO NEED FOR LAND CONV ERSION. GIVEN THAT THERE IS NO CONVERSION OF AGRICULTURE LAND AS CONFI RMED BY JDA, BEING THE APPROPRIATE AUTHORITY UNDER LAND REVENUE ACT, W HAT HAS BEEN TRANSFERRED BY THE APPELLANT CONTINUES TO BE THE AG RICULTURE LAND. THE TRIBUNAL HAS CLEARLY GIVEN THE FINDING ON THE A SSUMPTION OF FACT THAT THERE IS NO CONVERSION OF THE LAND AS CONFIRMED BY THE JDA BEIN G THE APPROPRIATE AUTHORITY UNDER LAND REVENUE ACT. WHAT HAS BEEN TRANSFERRED B Y THE ASSESSEE IN THE SAID CASE CONTINUED TO BE AGRICULTURAL LAND WHEREAS IN T HE FACTS OF THE PRESENT CASE AS WE HAVE NARRATED AND DISCUSSED, IT IS CLEAR THAT AFTER CONVERSION OF THE LAND, THE LAND 15 ITA NO. 643/JP/2016 SHRI RAJ KUMAR YADAV, JAIPUR. USE WAS RESTRICTED WAS ONLY FOR CONSTRUCTION OF ENV IRONMENTAL FRIENDLY RESIDENCE (FARM HOUSE). ACCORDINGLY, IN THE FACTS AND CIRCUM STANCES OF THE CASE AND IN VIEW OF THE ORDER OF THIS TRIBUNAL IN CASE OF ACIT VS. SUNI L BANSAL (SUPRA) UPHELD BY THE HONBLE JURISDICTIONAL HIGH COURT, WE DO NOT FIND A NY ERROR OR ILLEGALITY IN THE IMPUGNED ORDER OF THE LD. CIT (A). 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISS ED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 20/12/ 2019. SD/- SD/- ( JES'K LH- 'KEKZ ) ( FOT; IKY JKWO (RAMESH C. SHARMA ) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 20/12/2019. DAS/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- SHRI RAJ KUMAR YADAV, JAIPUR. 2. THE RESPONDENT THE ITO WARD 3(1), JAIPUR. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 643/JP/2016) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR