E Raghavulu, Hyderabad V. Dy.CIT, Central Circle-5, Hyderabad

ITA 706/HYD/2014

• Counselvise Citation: 70622514 RSA 2014
• Duration Of Justice: 8 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 24-12-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 17-04-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITRA
• Assessee Lawyers: GVVS MURTHY
• Keywords: Search and seizure; Additional evidence
• Section: 143(3); 153A

Judgement Text

ITA NOS.706 658 770 AND CO56 OF 2014 E RAGHAVALU & OTHERS HYDERABADITA NO. PAGE 1 OF 10 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SMT.ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO.706/HYD/2014 (ASSESSMENT YEAR: 2007-08) SHRI E. RAGHAVULU, D.NO.16-2-751/A/35/1/3/A ROAD NO.1 TIRUMALA HILLS, ASMANGADH, HYDERABAD 500060 PAN: AADPE 5964 G VS. THE DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 5 HYDERABAD (APPELLANT) (RESPONDENT) ITA NO.658/HYD/2014 (ASSESSMENT YEAR: 2007-08) THE DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 5 HYDERABAD VS. SHRI E. RAGHAVULU, D.NO.16-2-751/A/35/1/3/A ROAD NO.1 TIRUMALA HILLS, ASMANGADH, HYDERABAD 500060 PAN: AADPE 5964 G (APPELLANT) (RESPONDENT) ITA NO.770/HYD/2014 (ASSESSMENT YEAR: 2007-08) THE ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 5 HYDERABAD VS. SHRI E. KOTAIAH D.NO.16-2-751/A/19 ROAD NO.1 AJAMGARH DILSUKHNAGAR, HYDERABAD PAN: AADPE 5963 B (APPELLANT) (RESPONDENT) C.O. NO56/HYD/2014 (ARISING OUT OF ITA NO.770/HYD/2014) (A.Y 2007-08) THE ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 5 HYDERABAD VS. SHRI E. KOTAIAH D.NO.16-2-751/A/19 ROAD NO.1 AJAMGARH DILSUKHNAGAR, HYDERABAD PAN: AADPE 5963 B (CROSS OBJECTOR) (RESPONDENT) ITA NOS.706 658 770 AND CO56 OF 2014 E RAGHAVALU & OTHERS HYDERABADITA NO. PAGE 2 OF 10 ASSESSEE BY: SHRI G.V.V.S.MURTHY,ADVOCATE DEPARTMENT BY: SHRI RAJAT MITRA, (DR) DATE OF HEARING: 24/12/2014 DATE OF PRONOUNCEMENT: 31 /12/2014 O R D E R PER ASHA VIJAYARAGHAVAN, J.M. THESE ARE CROSS APPEALS BY THE ASSESSEE AND THE RE VENUE AGAINST THE ORDER OF THE CIT(A)VII HYDERABAD DATED 18.02.2014 RELATING TO A.Y 2007-08 PASSED U/S 143(3) R.W.S. 15 3A OF THE ACT. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL. DURING THE A.Y, THE ASSESSEE WAS PARTNER IN M/S VEN KATA KANAKA DURGA METAL INDUSTRIES (NEW FIRM PAN: AAFFV 4080 Q) , AND IN ADDITION TO PERSONAL BUILDING MATERIALS BUSINESS IN COME AND AGRICULTURAL INCOME. THE ASSESSEE FILED HIS RETURN OF INCOME ADMITTING AN INCOME OF RS.1,83,980/- AND AGRICULTUR AL INCOME OF RS.1,65,000/- U/S 139 ON 31.07.2007. SEARCH AND SEI ZURE ACTION TOOK PLACE IN THE PREMISES OF THE ASSESSEE ON 7.10. 2009. ASSESSEE PROVIDED ALL THE INFORMATION AS REQUIRED BY THE INV ESTIGATING OFFICER DURING THE POST SEARCH AND SEIZURE OPERATIONS. IN RESPONSE TO THE NOTICE U/S 153A SERVED UPON THE ASSESSEE, THE ASSES SEE AGAIN FILED RETURN OF INCOME ADMITTING AN INCOME OF RS.1,83,980 /- AND AGRIL.INCOME OF RS.1,65,000/- ON 29.09.2011. THE CA SE WAS SELECTED FOR SCRUTINY AND A NOTICE U/S 143(2) WAS SERVED. IN RESPONSE TO THE NOTICE, ASSESSEE PROVIDED ALL THE INFORMATION. THE AO MADE AN ADDITION OF RS.1,59,04,900/- ON ACCOUNT OF PROFIT O F SALE OF AGRICULTURAL LANDS. THE ASSESSEE PREFERRED APPEAL B EFORE THE CIT (A) AND SUBMITTED THAT THE AGRICULTURAL LANDS WERE NOT BEING SITUATED IN ANY AREA WITHIN SUCH DISTANCE NOT BEING MORE THAN 8 KMS FROM THE LOCAL LIMITS OF ANY MUNICIPALITY OR CANTONMENT BOAR D AS SPECIFIED BY NOTIFICATION IN OFFICIAL GAZETTE OR IN ANY AREA COM PRISED WITHIN THE ITA NOS.706 658 770 AND CO56 OF 2014 E RAGHAVALU & OTHERS HYDERABADITA NO. PAGE 3 OF 10 JURISDICTION OR A CANTONMENT BOARD WHICH HAS A POPU LATION OF NOT LESS THAN TEN THOUSAND AND MOREOVER NOT A CAPITAL A SSET UNDER SEC.2(14)(III) OF THE I.T.ACT. 3. THE ASSESSEE SUBMITTED BEFORE THE CIT(A) AS FOLL OWS: * LAND ADMEASURING 16.24 ACRES OF DESHMUKH VILLAGE, POCHAMPALLI MANDAL, NALGONDA DISTT. ARE AGRICULTURAL LANDS. COP Y OF PATTADAR PASS BOOK ISSUED BY GOVT. OF AP AND THE EXTRACTS FR OM PAHANI/ADANGAL REGISTER WERE FILED, IN COURSE OF AP PELLATE PROCEEDINGS. * THE LANDS WERE ACQUIRED OVER A PERIOD OF TIME FR OM 1991-92 AND BULK OF THE LAND WAS ACQUIRED BY 1993 ITSELF. * THE LAND IS ASSESSED TO LAND AS AGRICULTURAL LA ND U/S 50 OF HYDERABAD LAND REVENUE ACT. * THE ASSESSEE AND HIS BROTHER CARRIED ON STONE CRU SHER BUSINESS IN THE NAME OF THE FIRM M/S VENKATA KANAKADURGA METAL INDUSTRY BASED ON THE LAND LEASED BY THE DEPARTMENT OF MINES AND GEOLOGY, GOVT. OF AP. THE GOVT. HAD GIVEN ON LEASE 5 HA OF L AND WHICH IS ADJACENT TO APPELLANTS AGRICULTURAL LAND VIDE PROC EEDINGS DATED 12.07.95 AND 05.08.02 IN SURVEY NO.160/P AND 160. C OPIES OF THE SAID LEASE PROCEEDINGS WERE ENCLOSED. THE STONE CRU SHER WAS ALSO CLOSED IN FY 2004-05. THE AO CONFUSED BETWEEN THE L EASED QUARRY LAND AND THE AGRICULTURAL LAND. * THE ASSESSEE UTILISED HIS SHARE OF ACRE 1.20 GUNT AS AND HIS BROTHER E. KOTAIAH UTILIZED ANOTHER ACRE 1.20 GUNTAS (TOTAL ACRE 3.00 GUNTAS) FOR ESTABLISHING THE METAL STONE CRUSHERS AND STOCK ING YARD FOR SPALLS, METAL, METAL DUST, LABOUR QUARTERS ETC. THI S IS EVIDENCED BY THE ENTRIES OF LAND TRANSFER OF 1 ACRE 20 GUNTAS TO THE FIRM AND BACK (ON CLOSURE OF STONE CRUSHER) IN THE APPELLANT S BOOKS. THE REMAINING AGRICULTURAL LAND OF ACRES 15.04 GUNTAS H AD BEEN UTILISED FOR CARRYING AGRICULTURAL ACTIVITY TILL THE SALE TO OK PLACE. THE STONE CRUSHER WAS CLOSED IN 2004 AND THE TOTAL LAND WAS U NDER CULTIVATION. ITA NOS.706 658 770 AND CO56 OF 2014 E RAGHAVALU & OTHERS HYDERABADITA NO. PAGE 4 OF 10 * THE AGRICULTURAL LANDS SOLD BY THE APPELLANT WERE FREE HOLD AGRICULTURAL LANDS AND THE APPELLANT CANNOT CHANGE THE CHARACTER OF THE SAID LAND AS QUARRY LAND WITHOUT EXPRESS PERMIS SION FROM THE MINES AND GEOLOGY DEPTT.FOR CARRYING OUT CRUSHING A CTIVITY AND STORAGE, LABOUR QUARTERS ETC. ACRE 1.20 GUNTAS WERE UTILISED AND BALANCE LAND WAS TOTALLY UTILISED FOR CARRYING OUT AGRICULTURAL ACTIVITY. * IF THERE WAS MINING ACTIVITY IN THIS LAND, THE AP PELLANT WOULD HAVE CARRIED ON MINING AS THIS IS MORE BENEFICIARY. FURT HER THE ACTUAL LEASED LAND FOR QUARRYING WAS THEGOVT. LAND WHICH W AS DISTINCT AND SEPARATE. THE APPELLANT CANNOT SELL QUARRYING LANDS WHICH ARE GOVT. OWNED LANDS AND WHICH ARE ONLY LEASED TO HIM. FURTH ER, AS PER THE PROVISIONS OF MINES AND MINERALS (REGULATIONS AND D EVELOPMENT) ACT, 1957 AND THE RULES MADE THEREUNDER, IF ANY ARE A IS IDENTIFIED AS CONTAINING MINES OR MINERAL RESOURCES, EVEN IN PRIV ATEPATTA LANDS, MINING IS PROHIBITED WITHOUT TAKING/OBTAINING MININ G LEASE RIGHTS FROM THE DIRECTORATE OF MINES AND GEOLOGY. ROYALTY AND SEIONERAGE HAVE TO BE PAID TO THE DEPTT. FOR EACH CUBIC METRE OF METAL EXCAVATED/EXPLOITED. * THE PURPOSE FOR WHICH THE LAND WAS PUT TO USE BY THE BYUER AFTER THE SALE IS IMMATERIAL. THE BUYER WOULD TAKE APPROV ALS FOR CONVERSION OF LAND AND DO PLOTTING. THIS WOULD NOT CHANGE THE CHARACTER OF THE LAND AT THE TIME OF SALE. * THE TOTAL LAND IS FAR AWAY AROUND 18 KMS FROM T HE MUNICIPAL LIMITS AND EVEN THE COST OF RS.10 LAKHS PER ACRE IS NOT AS TRONOMICAL OR REAL ESTATE RATE. * THE ASSESSEE ALSO CITED THE FOLLOWING CASE LAWS I N SUPPORT OF HIS CONTENTIONS: (A) OFFICER INCHARGE, COURT OF WARDS VS. COMMISSION ER OF WEALTH TAX (72 ITR 552) (AP) (B) CIT VS. SIDDHARTH J DESAI (139 ITR 628 (GUJ.) (C) CIT VS. MADHUKUMAR N (HUF) KARNATAKA HIGH C OURT (D) CIT VS. JITENDER RAM MITTAL (162 ITR 371) (E) HON'BLE ITAT DELHI ORDER DATED 13.04.2012 IN T HE CASE OF CHAND PRABHA JAIN (F) MANIBHAI MOTIBHAI PATEL VS.CIT (132 ITR 120) ( GUJ.) ITA NOS.706 658 770 AND CO56 OF 2014 E RAGHAVALU & OTHERS HYDERABADITA NO. PAGE 5 OF 10 THE ASSESSEE WAS ADMITTING AGRICULTURAL INCOME TO T AX FROM THESE LANDS ALL THESE YEARS. FURTHER EXCEPT 0.33 GUNTAS PURCHASED IN 2004-05, TH E REST OF THE LAND WAS PURCHASED BEFORE 31.03.1999 (IN FACT THE B ULK OF LAND 12.2 ACRES WAS PURCHASED BY 1993 ITSELF). THE LAND WAS A LWAYS SHOWN AS FIXED ASSET IN THE BALANCE SHEET AND IT WAS NEVER S HOWN NORM TREATED AS STOCK IN TRADE. HENCE IT CANNOT BE SAID THAT SALE OF LAND IS AKIN TO BUSINESS ACTIVITY. THERE WAS ALSO NO SUB-DI VISION, ALTERATION OR CONVERSION BEFORE SALE. THE ASSESSEE ALSO CITED THE FOLLOWING CASE LAWS: (I) P.M. MOHD. MEERA KHAN VS. CIT )73 ITR 735) (SC) (II) KHAN BAHADUR AHMED ALLADDIN AND SONS VS. CIT (68 ITR 573) (SC) (III) JANAKIRAM BAHADURRAM VS. CIT (578 ITR 21)(SC) (IV) RAJPUTANA TEXTILES (AGENCIES) LTD VS. CIT 42 ITR 74 3 (SC) (V) CIT VS. SUTLEJ COTTON MILLS SUPPLY AGENCY LTD (100 I TR 706) (SC) ASSESSEE ALSO CITED THE DECISIONS OF ITAT HYDERABAD IN THE CASE OF KAPIL CHIT FUNDS VS. INCOME TAX OFFICER WARD-1 KARI MNAGAR, ITAT VISAKHAPATNAM IN TADAVARTHI KANAKAVALLI VS. INCOME TAX OFFICER, WARD-1 TENALI AND ITAT JODHPUR BENCH IN THE CASE OF INCOME TAX OFFICER WARD 3(3) VS. SMT. USHA CHHAJER. IN THE REMAND REPORT THE AO STATED THAT THE ASSESSE E DID NOT FURNISH ANY EVIDENCE FOR THE AGRICULTURAL ACTIVITIE S UNDERTAKEN. A STATEMENT WAS ALSO RECORDED FROM HIM ON 29.01.2013 AND IN THIS STATEMENT THE ASSESSEE STATED THAT HE DOES NOT HAVE ANY EVIDENCE. AS REGARD THE ADDITIONAL EVIDENCE OF LEASE DEEDS GR ANTED BY THE DEPTT. OF MINES AND GEOLOGY, THE AO STATED THAT THE QUARRY LANDS TOTALLYING 5 HECTARES OWNED BY THE GOVT. OF AP AND NOT BY THE ASSESSEE. THE AO ALSO STATED THAT THIS SURVEY NUMBE R DO NOT FORM PART OF THE LAND SOLD BY THE ASSESSEE. FINALLY, THE AO REQUESTED THAT THE CLAIM OF THE ASSESSEE THAT THE LAND IS AGRICULT URAL LAND MAY NOT BE CONSIDERED. ITA NOS.706 658 770 AND CO56 OF 2014 E RAGHAVALU & OTHERS HYDERABADITA NO. PAGE 6 OF 10 THE COPY OF THE REMAND REPORT WAS GIVEN TO THE ASSE SSEE AND HIS OBJECTIONS WERE CALLED FOR. THE ASSESSEE VIDE HIS L ETTER DATED 24.01.2013 OBJECTED TO THE CONCLUSION DRAWN BY THE AO AND STATED THAT: THE LANDS ARE AGRICULTURAL LANDS AND THEY ARE SO CL ASSIFIED IN THE REVENUE RECORDS AND WERE ALSO SUBJECTED TO PAYMENT OF LAND REVENUE AS PARE PATTADAR PASS BOOKS AND PAHANIS WHI CH CLASSIFIED THEM AS AGRICULTURAL LAND. IN THE PAHANIS OF THE LA ND ISSUED BY THE DY. TAHALSIDAR POCHAMPALLY MANDAL, NALGONDA DISTT. IT WAS ENDORSED ON THEPAHANIS THAT THE LANDS WERE IN SAAGU (MEANI NG UNDER CULTIVATION) UP TO 18.10.2006 I.E. THE DATE OF SALE . THE LANDS WERE ORDINARILY USED FOR AGRICULTURAL PUR POSES AND THE AGRICULTURAL INCOME HAS BEEN ADMITTED YEAR AFTER YE AR SINCE THEIR PURCHASE WHICH GOES BACK TO 1990-91. COPIES OF IT R ETURN FOR A.Y 2000-01 TO A.Y 2007-08 WERE ENCLOSED. THE MERE FACT THAT THE ASSESSEE COULD NOT PRODUCE A NY EVIDENCE IN SUPPORT OF HAVING CONDUCTED AGRICULTURAL OPERATION DO NOT MAKE THE LANDS NON-AGRICULTURAL. ON THS ISSUE, THE HON'BLE I TAT HYDERABAD A BENCH IN THE CASE OF ALAPATI MADHAVI & OTHERS VS. D CIT, CENTRAL CIRCLE -6 HYDERABAD STATED THAT IT IS UNCOMMON TO K EEP ANY DOCUMENTARY EVIDENCE FOR AGRICULTURAL EXPENDITURE OR FOR SALE OF THE AGRICULTURAL PRODUCE. IN THE STATEMENT RECORDED BY THE AO ON 29.10.2013, THE ASSESSEE IN RESPONSE TO Q.NO.4 HAS STATED AS FOLLOWS: Q.NO.4 CONSIDERING THE ABSENCE OF THE DETAILS OF A GRICULTURAL OPERATION IN THE DOCUMENTS SUBMITTED BY YOU, HOW DO YOU JUSTIFY YOUR CLAIM? ANS: I DONT HAVE ANY EVIDENCE. HOWEVER, I HAVE CAR RIED ON AGRICULTURAL OPERATIONS ON THIS LAND AND I HAVE SHO WN THE AGRICULTURAL INCOME. THE LAND ON THE RELEVANT DATE HAS NOT CEASED TO BE PUT TO AGRICULTURAL USE NOR WAS IT PUT TO ANY ALTERNATIVE USE. OUT OF THE TOTAL, A SMALL BIT OF ACRE 1.20 GUNTAS WAS USED FOR STOCKING METAL AND THE SAME WAS DISCONTINUED IN 2004-05 ON SHIFTIN G THE STONE ITA NOS.706 658 770 AND CO56 OF 2014 E RAGHAVALU & OTHERS HYDERABADITA NO. PAGE 7 OF 10 CRUSHER. SINCE THEN, EVEN THIS ACRE 1.20 GUNTAS WAS PUT TO USE FOR AGRICULTURAL PURPOSES. THE LAND IS NOT IN A DEVELOPED AREA. IT IS ABOUT 18 KMS FROM THE OLD LB NAGAR MUNICIPALITY WHICH IS THE NEAREST MUNICIPA LITY. IT WAS ALSO NOT DEVELOPED BY PLOTTING OR ANY MODIFICATION. THE ASSESSEE SOLD THE LAND ALONG WITH HIS BROTHERS FAMILY ON 18.10.2006 AS A SINGLE BIT IN ACREAGE IN A SINGLE DOCUMENT TOTALLY ADMEASURING AC RES 57.11 GUNTAS. THE AO HAD STATED IN THE REMAND REPORT THAT THESE L ANDS WERE DIFFERENT FROM THE LANDS USED FOR QUARRYING AND TAK EN ON LEASE. THIS SHOWS THAT THE CONTENTS OF PARA 3, 3.1 AND 3.2 OF T HE ASSESSMENT ORDER FORMING THE VERY BASIS FOR ADDITION IS FACTUA LLY INCORRECT AND UNJUSTIFIED. 4. THE LD CIT (A) ACCEPTED AT PARA 11.5 THAT THE AS SESSEE WAS CARRYING OUT AGRICULTURAL OPERATIONS AND AGRICULTUR AL INCOME WAS BEING RETURNED CONSISTENTLY OVER THE PAST SEVERAL Y EARS. AT PARA 11.6 THE CIT (A) OBSERVED THAT THE ASSESSEE FOR EST ABLISHING THE METAL STONE CRUSHERS AND STOCKING YARD FOR SPALLS, METAL, METAL DUST, LABOUR QUARTERS ETC. AND THE ASSESSEE HAD STA TED THAT THE QUARRY WAS CLOSED IN THE YEAR 2006 AND WAS SHIFTED. THE CIT EXPRESSED HIS DOUBT THAT THE LAND WHICH WAS PUT INT O USE AS QUARRY LAND FOR STORAGE OF METAL STONE CRUSHERS AND STOCKI NG YARD FOR SPALLS ETC.,CANNOT BE REUSED FOR AGRICULTURE. THE OBSERVAT IONS WERE MADE BY THE LD CIT AT PARA 11.7. 5. FINALLY, THE LD CIT (A) CONCLUDED THAT IT WAS RE ASONABLE TO HOLD THAT OUT OF THE ASSESSEES 16 ACRES 24 GUNTAS LAND, 3 ACRES CAN BE HELD AS NON AGRICULTURAL LAND AND THE BALANCE 13 AC RES CAN BE TREATED AS AGRICULTURAL LAND. THE CIT, THEREFORE HE LD THAT SALE PROCEEDS OF 3 ACRES OF LAND AMOUNTING TO RS.30.00 L AKHS ARE TAXABLE, WHILE THE REST ARE EXEMPT AS THEY ARE COVE RED UNDER THE ITA NOS.706 658 770 AND CO56 OF 2014 E RAGHAVALU & OTHERS HYDERABADITA NO. PAGE 8 OF 10 PROVISIONS OF SECTION 2(14)(III) OF THE I.T. ACT, 1 961. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. 6. THE MAIN POINT FOR CONSIDERATION AS RAISED BY TH E ASSESSEE IS THAT 3 ACRES HAVE BEEN HELD BY BOTH THE BROTHERS TO GETHER I.E. 1 ACRE 20 GUNTAS BY SHRI E. KOTAIAH 50% AND E.RAGHAV ALU 50%, HENCE IT WAS PLEADED BY THE LD COUNSEL SHRI G.V.V.S . MURTHY THAT THE LD CIT (A) HAD WRONGLY PRESUMED AS FOLLOWS: 11.7 METAL STORAGE, ROCK DUST AND WASTE AND THE M ACHINE MOVEMENT AND TRUCK MOVEMENT TO DUMP OR REMOVE METAL WOULD HAVE MADE AGRICULTURE IMPOSSIBLE FOR AT LEAST ANOTHER 1 ACRE 20 GUNTAS APART FROM THE 1 ACRE 20 GUNTAS SE T ASIDE BY THE APPELLANT. ALSO, AFTER SUCH USAGE, CULTIVATI ON OF LAND AND GROWING OF CROPS ALMOST IMMEDIATELY IS ALSO NOT PROBABLE. 7. IT WAS SUBMITTED THAT 1 ACRE 20 GUNTAS COULD BE TAKEN AS LAND PUT TO USE BY EACH OF THE BROTHERS AND NOT 3 ACRES IN THE CASE OF RAGHAVALU ALONE. WE FIND MERIT IN THE ARGUMENTS OF THE LD COUNSEL. THE CIT (A) CANNOT PRESUME THAT ANOTHER 1 ACRE 20 G UNTAS ARE TO BE SET APART BY THE ASSESSEE OVER THE ABOVE 1 ACRE 20 GUNTAS USED BY THE ASSESSEE FOR STORAGE OF METAL STONE CRUSHERS AN D STOCKING YARD FOR SPALLS, METAL, METAL DUST, LABOUR QUARTERS ETC. THE EXCESS OF 1 ACRE 20 GUNTAS WRONGLY LOOKED BY THE CIT (A) TOWARD S METAL STONE CRUSHERS AND STOCKING YARD FOR SPALLS, METAL, METAL DUST, LABOUR QUARTERS ETC.COULD BE KEPT FOR THE PURPOSE OF CULTI VATION OF LAND AND GROWING OF CROPS. IT SEEMS THAT THE LD CIT (A) HAS GOT CONFUSED ABOUT THE EXTENT OF 3 ACRES BEING JOINTLY HELD BY T HE BROTHERS AND HENCE OBSERVATION. THEREFORE, WE CLEARLY CONCLUDE THAT IN OUR OPINION, 1 ACRE AND 20 GUNTAS OF LAND ARE TAXABLE I N THE CASE OF SHRI RAGHAVALU, WHILE THE REST ARE EXEMPT AS THEY ARE CO VERED BY THE PROVISIONS OF SECTION 2(14)(III) OF THE I.T. ACT. WE DIRECT THE AO TO REWORK THE RELIEF TO THE ASSESSEE ACCORDINGLY. ITA NOS.706 658 770 AND CO56 OF 2014 E RAGHAVALU & OTHERS HYDERABADITA NO. PAGE 9 OF 10 8. IN THE RESULT, APPEAL IN ITA NO.706/HYD/2014 IS PARTLY ALLOWED. ITA NO.658/HYD/2014 9. WITH RESPECT TO THE REVENUES APPEAL IN ITA NO.658/HYD/2014, THE DEPT. HAS FILED APPEAL AGAINST THE RELIEF GIVEN TO THE ASSESSEE BY CIT(A). THE CONCLUSIONS DRAWN I N ITA NO.706/HYD/2014 SHALL BE FOLLOWED IN THE REVENUE AP PEAL ALSO. HENCE, THE REVENUES APPEAL IS DISMISSED. 10. IN THE CASE OF SHRI E. KOTAIAH IN ITA NO.770/HY D/2014, THE FACTS ARE IDENTICAL TO THAT OF HIS BROTHER SHRI E. RAGHAVALU. HENCE 1 ACRE 20 GUNTAS OF LAND ARE TAXABLE IN THE CASE OF S HRI E. KOTAIAH WHILE THE REST ARE EXEMPT AS THEY ARE COVERED BY TH E PROVISIONS OF SEC.2(14)(III) OF THE I.T.ACT. C.O. NO.56/HYD/2014 THE GROUND OF CROSS OBJECTION ARE AS FOLLOWS: 1. THE LD.CIT(A) ERRED IN LAW AND ON FACTS WHILE REDUC ING THE EXTENT OF AGRICULTURAL LAND TO AC.13.02 GUNTAS AS AGAINST ACTUAL EXTENT OF AC.14.22 GUNTAS [AFTER REDUCING THE AREA OF AC.1.20 GUNTAS COVERED FOR CRUSHING MACHINERY ETC. FALLING TO APPELLANTS SHAR E] FOR PURPOSES OF WORKING OUT CAPITAL GAINS THAT WAS EXEMPT U/S.2(1 4)(III) OF THE INCOME- TAX ACT 1961 OUT OF TOTAL SALE PROCEEDS OF AC.16.02 GUNTAS AGRICULTURAL LANDS ON MERE SURMISES AND ASSUMPTIONS. 2. THE LD.CIT(A) ERRED IN DETERMINING THE TAXABLE CAPI TAL GAINS AT RS.30,00,000/- BEING SALE PROCEEDS OF 3 ACRES, AS A GAINST AC 1.20 GUNTAS ITA NOS.706 658 770 AND CO56 OF 2014 E RAGHAVALU & OTHERS HYDERABADITA NO. PAGE 10 OF 10 SET APART BY APPELLANT HIMSELF, FALLING TO APPELLAN TS SHARE AS WAS NOT COVERED WITHIN THE DEFINITION OF AGRICULTURAL LAND UNDER SECTION 2(14)(III) OF INCOME-TAX ACT 1961 HOLDING THE SAME AS COVERED FOR MACHINERY AND CRUSHING ACTIVITIES WITHOUT ANY BIAS. 3. ANY OTHER GROUND OR GROUNDS OF CROSS OBJECTION THAT MAY BE URGED AT THE TIME OF HEARING. CONSEQUENT TO OUR DECISION IN ITA NO.706/HYD/2014 T HE CROSS-OBJECTION RAISED BY SHRI E.KOTAIAH, IN C.O.NO .56/HYD/2014 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST DECEMBER, 2014. SD/- SD/- (P.M. JAGTAP) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 31 ST DECEMBER, 2014. VNODAN/SPS COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, ITAT, HYDERABAD 6. GUARD FILE BY ORDER