ITO, CHENNAI V. Ashok Kumar Rathi, CHENNAI

ITA 763/CHNY/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8960 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2016
• Appeal Filed By: Department
• Bench Allotted: C
• Next Hearing Date: 07-06-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 28-03-2016
• Court: TRIBUNAL
• Department Lawyers: P V SREEKANTHJ
• Assessee Lawyers: D ANAND
• Keywords: Capital asset; Depreciation; Additional depreciation; Cost of acquisition; Onus to prove; Reason to believe
• Section: 148; 63

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI , ! ' . #$ % &' BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ./ I.T.A.NO.763/MDS./2016 / ASSESSMENT YEAR : 2010-11 THE INCOME TAX OFFICER, CORPORATE WARD-5(4), 121,UTHAMAR GANDHI SALAI, CHENNAI 600 034. VS. SHRI ASHOK KUMAR RATHI , 57,P.C.HOSTEL ROAD, CHETPET,CHENNAI 600 008. [PAN AADPR 1880 N ] ( () / APPELLANT) ( *+() /RESPONDENT) / APPELLANT BY : MR.P.V.SREEKANTH,JCIT,DR /RESPONDENT BY : MR.D.ANAND,ADVOCATE / DATE OF HEARING : 07 - 06 - 201 6 / DATE OF PRONOUNCEMENT : 24 - 06 - 2016 , / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-3, CHENNAI DAT ED 22.01.2016 PERTAINING TO ASSESSMENT YEAR 2010-11. 2. THE GRIEVANCE OF THE REVENUE IS WITH REGARD TO TREATMENT OF SALE OF LAND AS AGRICULTURAL LAND, THOUGH ASSESSEE DID N OT PRODUCE ANY ITA NO.763/MDS./2016 :- 2 -: EVIDENCE FOR CARRYING AGRICULTURAL ACTIVITIES IN TH E SAID LAND AND ONLY ` 50,000/- AND ` 65,000/- HAVE BEEN SHOWN AS AGRICULTURAL INCOME FOR ASSESSMENT YEAR 2010-11 FOR SUCH A HUGE EXTENT OF L AND. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE E-FILED RETURN OF INCOME FOR THE A. Y. 2010-11 ON 27.09.2010 ADMITTIN G TOTAL INCOME OF ` 60,67,280/- INCLUDING AGRICULTURE INCOME OF ` 65,300/-. THERE WAS IN FORMATION THAT THE ASSESSEE HAS RECEIVED SALE CONSI DERATION OF ` 5,31,02,160/- TOWARDS SALE OF PROPERTY DURING THE F . Y RELEVANT TO A. Y. 2010-11. IT WAS NOTICED THAT THE ASSESSEE HAD AD MITTED SHORT TERM CAPITAL GAIN OF ` 96,042/- ONLY IN THE RETURN OF INCOME. THUS, AS THE RE WAS REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSES SMENT, NOTICE U/S. 148 DATED 21.01.2014 WAS ISSUED. IT IS NOTICED THAT THE ASSESSEE HAS SOLD LANDS MEASURING 7.38 ACRES LOCATED IN KUNN AM VILLAGE, SRIPERUMPUDUR TALUK, KANCHEEPURAM DISTRICT, CHENNAI ON 26.08.2009 IN HIS INDIVIDUAL CAPACITY AS WELL AS IN THE CAPACI TY OF POWER AGENT OF SMT. SUSHILA KUAMRI. THE TOTAL SALE CONSIDERATION R ECEIVED BY THE ASSESSEE IN RESPECT OF ABOVE SALE PROCEEDS DURING T HE RELEVANT PREVIOUS YEAR IS ` 5,31,02,160/- AND THE ABOVE SALE HAS TAKEN PLACE VIDE DOCUMENT NOS.3614/2009 & 3615/2009 DATED 26.08 .2009 REGISTERED WITH SRO, WALAJAHBAD. THE LANDS HAVE BEE N SOLD TO M/S. GRUNDFOS PUMPS INDIA PVT. LTD. NO.118, OLD MAHABALI PURAM ROAD, ITA NO.763/MDS./2016 :- 3 -: THORAIPAKKAM, CHENNAI- 600097. THE ASSESSEE HAS CLA IMED THE CAPITAL GAINS ARISING ON THE SALE OF THE ABOVE LANDS AS EXE MPT ON THE GROUND THAT THE SAME IS ARISING ON SALE OF AGRICULTURE LAN DS. THE ASSESSEES CLAIM OF EXEMPTION OF THE PROFIT ON SALE LAND IS NO T ACCEPTABLE FOR THE FOLLOWING REASONS BY AO. (A) THE ASSESSEE HAS NOT ADDUCED ANY EVIDENCE FOR CARRYING AGRICULTURE ACTIVITIES IN THE SAID LAND AND THE AGR ICULTURE INCOME HAS BEEN OFFERED ONLY AT ` 50,000/- AND ` 65,300/- FOR SUCH HUGE EXTENT OF LAND RESPECTIVELY FOR A. Y. 201 0-11. (B) THE ASSESSEE HAS PURCHASED THE SAID LAND ON 11. 09.2007 FOR ` 1,97,61,000/- AND WITHIN A SHORT SPAN OF LESS THAN TWO YEARS I.E. ON 26.08.2009, THE SAME LAND HAS BEEN SOLD FOR ` 5,31,02,160/- THIS CLEARLY INDICATES THAT THE INTEN TION OF THE PURCHASER TO BY A LAND AT SUCH HUGE COST IS CERTAIN LY NOT TO CARRY OUT AGRICULTURAL OPERATIONS. ACCORDING TO AO, BASED ON THE ELABORATE DISCUSSION MADE ABOVE, THE CHARACTER OF LAND SOLD IS SUBSTANTIATE TO BE NON-AG RICULTURAL IN NATURE. THE CASE DOES NOT FALL UNDER THE EXCEPTION PROVIDED U/S. 2(14). THE TRANSACTION IS THEREFORE, TREATED TO BE A TRANSFER RESULTING IN TAXABLE CAPITAL GAINS. THE RESULTANT CAPITAL GAINS IS COMPU TED BY AO AS BELOW: SALES CONSIDERATION RECEIVED ON 26.08.2009 - ` 5,31,02,160 LESS: COST OF ACQUISITION ON 11.09.2007 - ` 2,57,55,000 SHORT TERM CAPITAL GAIN - ` 2,73,47,160 ITA NO.763/MDS./2016 :- 4 -: THUS, A.O HAS BROUGHT TO TAX UNDER THE HEAD CAPITAL GAINS AN AMOUNT OF ` 2,73,47,160. AGGRIEVED BY THE ADDITION ASSESSEE HAD FILED APPEAL BEFORE CIT(A). 3.1 ON APPEAL, THE CIT(A) OBSERVED THAT THE SALE O F SAID LAND IS NOT A CAPITAL ASSET, CHARGEABLE FOR CAPITAL GAINS AND I T IS AN AGRICULTURAL LAND IN TERM OF SEC.2(14)(III) OF THE ACT. AGAINS T THIS, THE REVENUE IS IN APPEAL BEFORE US. 4. THE DEPARTMENTAL REPRESENTATIVE PLACED RELIANCE ON THE ORDER OF TRIBUNAL IN THE CASE OF M.KARTHIK VIDE ORDER DATED 24.03.2016 IN ITA NO.16/MDS./2015 FOR ASSESSMENT YEAR 2011-12 WHEREIN HELD AS FOLLOWS:- 4.1 WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IN HIS CASE THE VACANT LAND SITUATED AT NA VALUR VILLAGE, CHENGALPET TALUK, KANCHIPURAM DISTRICT MEASURING 95 CENTS, THE SAID LAND WAS ACQUIRED BY THE ASSESSEE VIDE SALE DEED DA TED 06.12.2006 FOR A COST OF ` 18,63,900/- AND THE SAID PROPERTY SOLD FOR CONSIDER ATION OF ` 2.14 CRORES TO M/S.OLYMPIA INFRA TECH (P) LTD. ACC ORDING TO THE ASSESSEE, THE PROPERTY IS AN AGRICULTURAL LAND, NOT LIABLE FOR TAX IN VIEW OF THE ORDER OF THE TRIBUNAL IN THE CASE OF ITO VS. SMT.LALITHA IN ITA NO.14/MDS./15 & CO NO.15/MDS./2015 VIDE ORDER DATED 17THJULY, 2015, THE PROPERTY IS NOT LIABLE FOR CAPITAL GAINS TAX. ON THE OTHER HAND, THE LD.D.R RELIED ON THE ORDER OF THE CO-ORDINATE B ENCH IN THE CASE OF ITO VS. SHRI ABOOBUCKER IN ITA NO.1793/MDS./2013 FO R ASSESSMENT YEAR 2006-07VIDE ORDER DATED 31.12.2015 WHEREIN CON SIDERED THE PROPERTY AT NAVALUR VILLAGE AND DECIDE THE CASE AGA INST THE ASSESSEE. HOWEVER, THE AR SUBMITTED THAT THE SALE TRANSACTION EFFECTED BY THE ASSESSEE IN RESPECT OF THE ABOVE LAND CONSTITUTED O NLY SALE OF ITA NO.763/MDS./2016 :- 5 -: AGRICULTURE LAND, AND BY NO STRETCH OF IMAGINATION IT CAN BE TREATED AS TRANSFER OF CAPITAL ASSET AND SO AS TO TREAT THE SA ME AS CAPITAL GAIN FOR THE FOLLOWING REASONS: (I) PURCHASE AND HOLDING OF LAND FOR A LONG PERIOD AND SUBSEQUENT SALE THEREOF ITSELF CANNOT BE AN INDICATOR TO HOLD IT AS NON-AGRICULTURAL LAND, THE ASSESSEE WAS TO CARRY ON BUSINESS WITH THOSE ASSETS . (II) THE ASSESSEE HELD LAND FOR CONSIDERABLE TIME. THE A SSET ACQUIRED WAS AGRICULTURE LAND AS PER THE EVIDENCE BROUGHT ON REC ORD. THUS, THE ASSESSEE HELD THE AGRICULTURE LAND FOR MORE THAN 3 YEARS. DURING THAT PERIOD THE ASSESSEE CARRIED ON REGULAR AGRICULTURAL OPERATIONS. IN THE LIGHT OF FAVOURABLE MARKET CONDITIONS THE ASSESSEE THOUGHT IT GOOD TO SELL THE ASSET TO REALIZE A GOOD AMOUNT. REALIZATION OF BETTER PRICE IN A BOOMING MARKET CANNOT BE CONSIDERED AS AN ADVENTURE IN TRADE (III) REALIZATION OF INVESTMENTS CONSISTING OF PURCHASE O F AGRICULTURAL LAND AND RESALE, THOUGH PROFITABLE ARE CLEARLY OUTSIDE T HE DOMAIN OF CAPITAL GAIN. (IV) THE ASSESSEE TREATED THE ASSETS AS INVESTMENT IN AG RICULTURAL LAND. THEREFORE DISPOSAL OF THE SAME WOULD NOT CONVERT, W HAT WAS A CAPITAL ACCRETION. TO MAKE IT MORE CLEAR, SALE OF AGRICULTU RAL LAND BY THE ASSESSEE AND REALISATION OF GOOD PRICE WOULD NOT AL TER THE BASIC NATURE AND CHARACTERISTIC OF THE TRANSACTION. IN THE CASE OF THE ASSESSEE, LAND WAS ACQUIRED BY THE ASSESSEE AND TREATED AS FIXED-A SSETS. (V) WHETHER A TRANSACTION IN RESPECT OF AN ASSET IS CAP ITAL OR NOT DEPENDS ON THE FACTS AND CIRCUMSTANCES OF THE CASE. THE MERE F ACT THAT THE PERSON HAS PURCHASED A LAND AND SUBSEQUENTLY SOLD IT, GIVI NG RISE TO A SUBSTANTIAL PROFIT CANNOT CHANGE THE CHARACTER OF T HE TRANSACTION. IT IS THE GENERAL HUMAN TENDENCY TO EARN PROFIT OUT OF CAPITA L ASSET. NO ONE INVESTS TO INCUR A LOSS. IF THE MARKET CONDITION SU DDENLY GOES UP OR DOWN, IT IS ALWAYS THE TENDENCY OF A PERSON TO TAKE A QUI CK DECISION SO THAT THE REALIZATION ON THE INVESTMENT IS MAXIMUM OR THE LOS S IS MINIMUM. HE SUBMITTED THAT IN THE PRESENT CASE THERE IS NO D ISPUTE THAT THE ASSESSEES ACQUIRED AGRICULTURAL LAND. ITA NO.763/MDS./2016 :- 6 -: 4.2 THE DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE AMOUNT RECEIVED ON SALE OF THIS PROPERTY IS NOTHING BUT ON ACCOUNT OF SALE OF CAPITAL ASSET AND THE SAME WAS BROUGHT INTO INCOME FROM CAPITAL GAIN. IN THIS CASE, THE AUTHORISED REPRESENTATIVE SUBMITTED THAT THE LAND A LWAYS TREATED AS INVESTMENT AND NOT AT ALL CONVERTED INTO STOCK-IN-T RADE. THE CHARACTER OF THE LAND IN THE HANDS OF THE ASSESSEES HAS NOT CHANGED. 4.3 NOW THE QUESTION AS TO WHETHER A LAND I S AGRICULTURAL LAND OR NOT IS ESSENTIALLY A QUESTION OF FACT. THE QUESTION HAS TO BE ANSWERED IN EACH CASE HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THA T CASE. THERE MAY BE FACTORS BOTH FOR AND AGAINST A PARTICULAR POINT OF VIEW. WE HAVE TO ANSWER THE QUESTION ON A CONSIDERATION OF ALL OF THEM, A PROCE SS OF EVALUATION AND THE INFERENCE HAS TO BE DRAWN ON A CUMULATIVE CONSIDERA TION OF ALL THE RELEVANT FACTS. IT MAY BE STATED HERE THAT NOT ALL THE FACTO RS OR TESTS WOULD BE PRESENT OR ABSENT IN ANY CASE AND THAT IN EACH CASE ONE OR MOR E OF THE FACTORS MAY MAKE APPEARANCE AND THAT ULTIMATE DECISION WILL HAVE TO BE REACHED ON A BALANCED CONSIDERATION OF THE TOTALITY OF THE CIRCUMSTANCES. 4.4 THE EXPRESSION 'AGRICULTURAL LAND' IS NOT DEFINED IN THE ACT, AND NOW, WHETHER IT IS AGRICULTURAL LAND OR NOT HAS TO BE DE TERMINED BY USING THE TESTS OR METHODS LAID DOWN BY THE COURTS FROM TIME TO TIME. 4.5 THE SUPREME COURT IN THE CASE OF SMT. SARIF ABIBI MOHMED IBRAHIM V. CIT [1993] 204 ITR 631/70 TAXMAN 301 HAS APPROVED THE DECISION OF A DIVISION BENCH OF THE GUJARAT HIGH COURT IN THE CA SE OF SIDDHARTH J. DESAI 139 ITR 628 AND HAS LAID DOWN 13 TESTS OR FACTORS W HICH ARE REQUIRED TO BE CONSIDERED AND UPON CONSIDERATION OF WHICH, THE QUE STION WHETHER THE LAND IS AN AGRICULTURAL LAND OR NOT HAS TO BE DECIDED OR AN SWERED. WE REPRODUCE THE SAID 13 TESTS AS FOLLOWS: '1. WHETHER THE LAND WAS CLASSIFIED IN THE REVENUE RECO RDS AS AGRICULTURAL AND WHETHER IT WAS SUBJECT TO THE PAYMENT OF LAND REVENUE? 2. WHETHER THE LAND WAS ACTUALLY OR ORDINARILY USED FO R AGRICULTURAL PURPOSES AT OR ABOUT THE RELEVANT TIME? 3. WHETHER SUCH USER OF THE LAND WAS FOR A LONG PERIOD OR WHETHER IT WAS OF A TEMPORARY CHARACTER OR BY ANY OF A STOPGAP ARRANGEMENT? ITA NO.763/MDS./2016 :- 7 -: 4. WHETHER THE INCOME DERIVED FROM THE AGRICULTURAL OP ERATIONS CARRIED ON IN THE LAND BORE ANY RATIONAL PROPORTION TO THE INVESTMENT MADE IN PURCH ASING THE LAND? 5. WHETHER, THE PERMISSION UNDER S. 65 OF THE BOMBAY L AND REVENUE CODE WAS OBTAINED FOR THE NON-AGRICULTURAL USE OF THE LAND? IF SO, WHEN A ND BY WHOM (THE VENDOR OR THE VENDEE)? WHETHER SUCH PERMISSION WAS IN RESPECT OF THE WHOLE OR A PORTION OF THE LAND? IF THE PERMISSION WAS IN RESPECT OF A PORTION OF THE LAND AND IF IT WAS OBTAINED IN THE PAST, WHAT WAS THE NATURE OF THE USER OF THE SAID PORTION OF T HE LAND ON THE MATERIAL DATE? 6. WHETHER THE LAND, ON THE RELEVANT DATE, HAD CEASED TO BE PUT TO AGRICULTURAL USE? IF SO, WHETHER IT WAS PUT TO AN ALTERNATIVE USE? WHETHER S UCH LESSER AND/OR ALTERNATIVE USER WAS OF A PERMANENT OR TEMPORARY NATURE? 7. WHETHER THE LAND, THOUGH ENTERED IN REVENUE RECORDS , HAD NEVER BEEN ACTUALLY USED FOR AGRICULTURE, THAT IS, IT HAD NEVER BEEN PLOUGHED OR TILLED? WHETHER THE OWNER MEANT OR INTENDED TO USE IT FOR AGRICULTURAL PURPOSES? 8. WHETHER THE LAND WAS SITUATED IN A DEVELOPED AREA? WHETHER ITS PHYSICAL CHARACTERISTICS, SURROUNDING SITUATION AND USE OF THE LAND IN THE AD JOINING AREA WERE SUCH AS WOULD INDICATE THAT THE LAND WAS AGRICULTURAL? 9. WHETHER THE LAND ITSELF WAS DEVELOPED BY PLOTTING A ND PROVIDING ROADS AND OTHER FACILITIES? 10. WHETHER THERE WERE ANY PREVIOUS SALES OF PORTIONS O F THE LAND FOR NON-AGRICULTURAL USE? 11. WHETHER PERMISSION UNDER S. 63 OF THE BOMBAY TENANC Y AND AGRICULTURAL LAND ACT, 1948, WAS OBTAINED BECAUSE THE SALE OR INTENDED SALE WAS IN FAVOUR OF A NON-AGRICULTURIST? IF SO, WHETHER THE SALE OR INTENDED SALE TO SUCH NON-AGRIC ULTURISTS WAS FOR NON-AGRICULTURAL OR AGRICULTURAL USER? 12. WHETHER THE LAND WAS SOLD ON YARDAGE OR ON ACREAGE BASIS? 13. WHETHER AN AGRICULTURIST WOULD PURCHASE THE LAND FO R AGRICULTURAL PURPOSES AT THE PRICE AT WHICH THE LAND WAS SOLD AND WHETHER THE OWNER WOULD HAVE EVER SOLD THE LAND VALUING IT AS A PROPERTY YIELDING AGRICULTURAL PRODUCE ON THE BAS IS OF ITS YIELD?' ITA NO.763/MDS./2016 :- 8 -: 4.6 WE WILL THEREFORE PROCEED TO EXAMINE THE QUESTI ON AS TO WHETHER THE PROPERTY CAN BE SAID TO BE AGRICULTURAL LAND OR NOT. IN THE CASE OF CWT VS. OFFICER-IN- CHARGE (COURT OF W ARDS), PAIGAH 105 ITR 133 (SC) IN WHICH QUESTION TO BE DECIDED WA S WHETHER ACRES OF VACANT LAND ENCLOSED IN COMPOUND WALLS OF A PALACE SITUATED BY THE SIDE OF A LAKE AND CLASSIFIED AND A SSESSED TO LAND REVENUE, WHICH WERE NEITHER CULTIVATE NOR HAD BEEN PUT TO NON- AGRICULTURAL USE' IN THE PAST COULD BE REGARDED AS 'AGRICULTURAL LAND' WITHIN THE MEANING OF THAT EXPRESSION WHICH OCCURRE D IN THE DEFINITION OF 'ASSET' IN SECTION 2(E) OF THE WT ACT , 1957. THE HON'BLE SUPREME COURT HELD THAT MUCH WEIGHT CANNOT BE GIVEN TO MERE 'POTENTIALITY' OF THE LAND FOR USE FOR AGRICULTURAL PURPOSES AND WHAT IS REALLY REQUIRED TO BE SHOWN IS THE CONNECTION WITH AN AGRICULTURAL PURPOSE AND USER AND NOT THE MERE POSSIBILITY OF US ER OF THE LAND, BY SOME POSSIBLE FUTURE OWNER OR POSSESSOR, FOR AN AGR ICULTURAL PURPOSE. IT IS NOT MERE POTENTIALITY, BUT ITS ACTUA L CONDITION AND INTENDED USER WHICH HAS TO BE SEEN. ONE OF THE OBJE CTS FOR EXEMPTION IS TO ENCOURAGE CULTIVATION OR ACTUAL UTI LISATION OF LAND FOR AGRICULTURAL PURPOSES AND HENCE IF THERE IS NEITHE R ANYTHING IN ITS CONDITION, NOR ANYTHING IN THE EVIDENCE TO INDICATE THE INTENTION OF ITS OWNERS OR POSSESSORS SO AS TO CONNECT IT WITH AN AG RICULTURAL PURPOSE, THE LAND COULD NOT BE AGRICULTURAL LAN D. 4.7 IN THE CASE BEFORE THE SUPREME COURT THE FOLLOW ING CIRCUMSTANCES WERE EMPHASISED VIZ. (I) AREA WAS VE RY LARGE (108 ACRES) AND WAS ABUTTING A LAKE, (II) THERE WERE TW O WELLS ON IT (III) IT WAS CAPABLE OF BEING USED (THOUGH NOT ACTUALLY USED ) FOR AGRICULTURAL PURPOSES, (IV) IT HAD NOT BEEN PUT TO ANY USE WHICH COULD CHANGE ITS CHARACTER BY MAKING IT UNFIT FOR IMMEDIATE CULTIVAT ION; AND (V) IT WAS CLASSIFIED AND ASSESSED TO LAND REVENUE AS 'AGRICUL TURAL LAND' UNDER THE RELEVANT REVENUE ENACTMENT. THE SUPREME COURT H ELD THAT FIRST FOUR CIRCUMSTANCES RELATING TO ABSENCE OF NON-AGRIC ULTURAL USER WERE NEUTRAL CIRCUMSTANCES AND ONLY FIFTH CIRCUMSTANCE . WAS GOOD PRIMA FACIE EVIDENCE OF LAND BEING AGRICULTURAL LAND BUT PRESUMPTION ITA NO.763/MDS./2016 :- 9 -: ARISING THERE FROM COULD BE REBUTTED BY OTHER CIRC UMSTANCES. IN THAT CASE THE ASSESSEE HAD NOT LED ANY EVIDENCE ABOUT IN TENDED USER BECAUSE ASSESSEE WAS UNDER MISTAKEN IMPRESSION THAT IT WAS NOT NECESSARY TO DO SO IN VIEW OF EXISTENCE OF PRIMA FA CIE EVIDENCE IN THE FORM OF ENTRIES IN THE REVENUE RECORD AND THERE FORE THE SUPREME COURT RESTORED THE MATTER TO TRIBUNAL TO R ECORD A FINDING ON THE QUESTION OF INTENDED USER AND THEN DECIDE TH E POINT WHETHER THE LAND IN QUESTION WAS AGRICULTURAL LAND. THE SUP REME COURT DISAPPROVED THE VIEW THAT THAT LAND WHICH IS LEFT B ARREN BUT WHICH IS CAPABLE OF BEING CULTIVATED CAN ALSO BE AGRICULTURA L LAND UNLESS THE. SAID LAND IS ACTUALLY PUT TO SOME OTHER NON- AGRICU LTURAL PURPOSE LIKE CONSTRUCTION OF BUILDINGS, OR AN AERODROME RUNWAY, ETC. THEREON WHICH ALTERS THE PHYSICAL CHARACTER OF THE LAND REN DERING IT UNFIT FOR IMMEDIATE CULTIVATION AND OBSERVED THAT MINIMAL TES T OF AGRICULTURAL LAND WAS CREDIBLE EVIDENCE OF AT LEAST APPROPRIATIO N OR SETTING A PART OF THE LAND FOR A PURPOSE WHICH COULD BE REGARDED A S AGRICULTURAL AND FOR WHICH LAND WAS USED WITHOUT AN ALTERATION O F ITS CHARACTER. 4. 8 THE DECISION OF SUPREME COURT IN THE CASE O F OFFICER-IN- CHARGE (COURT OF WARDS ) WAS ANALYSED BY THE GUJARA T HIGH COURT IN CIT VS. SARIFABIBI MOHAMMED IBRAHIM 136 ITR 621(GUJ ) AND THE LEGAL POSITION WAS SUMMED UP AS FOLLOWS:- (I) THE FACT THAT LAND IS ENTERED AS AGRICULTURAL LAND IN REVENUE RECORDS AND IS ASSESSED AS SUCH UNDER TH E LAND REVENUE CODE WOULD BE A CIRCUMSTANCE IN FAVOUR OF CONCLUSION THAT IT IS AN AGRICULTURAL LAND. HOWE VER, THIS WOULD RAISE ONLY A PRIMA FACIE PRESUMPTION AND SAID PRESUMPTION CAN BE DESTROYED BY OTHER CIRCUMSTANCES POINTING TO THE CONTRARY CONCLUSION (II) THE FACT THAT AGRICULTURAL OPERATIONS WERE CARRIED ON IN THE PAST OR ARC CARRIED ON CURRENTLY IS A CIRCUMSTANCE IN FAVOUR OF CONCLUSION THAT LAND WAS AGRICULTURAL LAND. HOWEVER, THIS IS NOT A DECISIVE FACTOR INASMUCH AS AGRICULTURAL CROP CAN BE RAISED EVEN ON BUILDING SITE LAND (EVEN ON DESERT LAND AS OBSERVE D BY ITA NO.763/MDS./2016 :- 10 - : THE SUPREME COURT IN SAID CASE) AND SOMETIMES, A CROP IS GROWN IN ORDER NOT TO ALLOW THE LAND TO REMAIN IDLE AWAITING SALE FOR NON - AGRICULTURAL PURPOSES TO A NON- AGRICULTURIST BY WA Y OF A STOP-GAP ARRANGEMENT OR IN ORDER TO AVOID PAYMENT OF REVENUE AT A HIGHER RATE OR IN ORDER TO AVOID PAYMENT OF CAPITAL GAINS TAX. (III) THE FACT THAT LAND IS NOT CONVERTED TO NON- AGRICULTURAL USER WOULD BE A CIRCUMSTANCE INDIC ATING THAT IT IS AN AGRICULTURAL LAND. HOWEVER THIS IS SUBJECT TO SAME RIDER AS IS MENTIONED IN (II) ABOVE. (IV) THE FOLLOWING FACTS WOULD INDICATE THAT LAND WAS NOT AGRICULTURAL LAND: (A) THE LAND IS SITUATED (EVEN IN THE YEAR PRIOR TO ASST. YEAR 1970-71 WHEN AMENDMENT CAME IN FORCE) IN AN URBAN AREA IN THE PROXIMITY OF BUILDING SITES. (FROM ASST. YEAR 1970-71, AGRICULTURAL LANDS SITUATE WITHIN MUNICIPAL LIMITS ARE NOT OUTSIDE THE AMBIT OF 'CAPITAL ASSETS'). (B) THE LAND IS SOLD TO A NON-AGRICULTURIST FOR NON- AGRICULTURAL PURPOSE. (C) THE LAND IS SOLD ON A PER SQUARE YARD BASIS AT A COMPARABLE TO THE PRICE FETCHED BY BUILDING SITES. (D) THE PRICE IS SUCH THAT NO BONA FIDE AGRICULTURIST PURCHASE THE SAME FOR GENUINE AGRICULTURAL OPERATIONS. (E) WHEN THE PRICE IS SUCH THAT NO PRUDENT OWNERIT AT A PRICE WORKED OUT ON THE CAPITALISATION TAKING INTO ACCOUNT ITS OPTIMUM YIELD IN THE FAVOURABLE CIRCUMSTANCES. 4.9 THE ABOVE DECISION OF GUJARAT HIGH COURT HAS BEEN AFFIRMED IN APPEAL BY THE SUPREME COURT IN SARIFABI BI MOHMED IBRAHIM VS. CIT 204 ITR 631 (SC) IN WHICH THE SUPRE ME COURT EMPHASISED THAT ALL THE CIRCUMSTANCES WERE REQUIRED TO BE WEIGHTED AND THAT HIGH COURT HAS REACHED A CORRECT CONCLUSION. ITA NO.763/MDS./2016 :- 11 - : 4.1 THE CLAIM OF THE ASSESSEE THAT AGRICULTURAL OP ERATIONS WERE CARRIED OUT OVER THE PROPERTY AND THE PROPERTY WAS ACTUALLY USED FOR AGRICULTURAL PURPOSE WAS SOUGHT TO BE ESTA BLISHED BY RELYING ON THE CLASSIFICATION OF THE PROPERTY AS AG RICULTURAL LAND IN THE REVENUE RECORDS, EXISTENCE OF COCONUT TREES FOR AGRICULTURAL PURPOSE. THE REVENUE CONTENDS THAT THERE IS NO EVID ENCE OF THE ASSESSEE HAVING CARRIED OUT ACTUAL AGRICULTURAL ACTIVITIES OVER THE PROPERTY. THE ASSESSEE HAS NOT CLAIMED ANY EXPENSES INCURRED IN CARRYING OUT AGRICULTURAL OPER ATIONS OR DECLARED ANY AGRICULTURAL INCOME FROM THIS LANDED P ROPERTY. THERE IS NO EVIDENCE OF THE AGRICULTURAL PRODUCE HA VING BEEN SOLD. THE HON'BLE KERALA HIGH COURT IN THE CASE OF KALPET TA ESTATES LTD. 185 ITR 318 (KER) IT HAS BEEN HELD BY THE HON 'BLE KERALA HIGH COURT THAT T HE BURDEN OF PROOF THAT THE LAND IN QUESTION WAS AGRICULTURAL LAND AT THE TIME OF TRANSFER TO CLAIM EXEMPTION WAS ON THE ASSESSEE. AS ALREADY OBSERVED THE QUESTION WHETHER THE LAND WAS AGRICULTURAL LAND HAS TO BE DECIDED ON FACTS OF EACH CASE AND DECIDED CASES ARE ONLY GUIDELINES TO BE KEPT IN MIND. FACTS AND ALL THE CIRCUMSTANCES ARE TO BE CONSIDERE D AS A WHOLE AND AN OVERALL VIEW IS TO BE TAKEN IN DECIDIN G WHETHER THE LAND WAS AN AGRICULTURAL LAND. IN A GIVEN CASE LARGE NUMBER OF CIRCUMSTANCES MAY BE INDICATIVE OF AGRICU LTURAL CHARACTER BUT ONE CIRCUMSTANCE MAY OUTWEIGH ALL OF THEM AND ON ITS BASIS THE LAND WOULD BE HELD TO BE A NON-AGR ICULTURAL LAND. THE CASE LAWS CITED BY THE ASSESSEE AS WELL AS THE REVENUE DEAL WITH SITUATIONS WHERE ONE OR TWO FACT ORS WAS CONSIDERED AS THE BASIS ON WHICH THE CONCLUSION THA T PROPERTY WAS AGRICULTURAL LAND OR WAS NOT AGRICULTURAL LAND HAD BEEN ARRIVED AT. 4.11 THE ASSESSEE IN THE PRESENT CASE IS NOT AN AGRICULTURIST. HE HAS NO BACKGROUND OF AGRICULTURAL ACTIVITIES. STRICTLY SPEAKING IT MAY NOT BE NECESSARY TO HAVE B ACKGROUND OF AGRICULTURAL ACTIVATES. WE ARE MAKING A REFERENC E TO THESE CIRCUMSTANCES ONLY TO WEIGH THE CUMULATIVE CIRCUMST ANCES TO ITA NO.763/MDS./2016 :- 12 - : COME TO A CONCLUSION WHETHER THE PROPERTY CAN BE RE GARDED AS AGRICULTURAL LAND. NO EVIDENCE OF HAVING SPENT HUM AN LABOUR IN THE SENSE OF PREPARING THE LAND, FILLING, SOWIN G SEEDS, PLANTING ON A REGULAR BASIS HAS BEEN PRODUCED BY TH E ASSESSEE. THE PROPERTY IS SITUATED IN FAST DEVELOP ING AREA OF CHENNAI. THE PROPERTY IS LOCATED IN DEVELOPED/ DEVE LOPING AREA AND HAS ACCESS TO ALL MODERN AMENITIES/LIVING. THERE WAS REAL ESTATE ACTIVITY IN THE AREA WHERE THE PROPERTY IS SITUATED. THE SALE OF THE PROPERTY BY THE ASSESSEE IS TO A CO MMERCIAL ORGANISATION. THE SALE CONSIDERATION PAID WOULD SHO W THAT NO BONA-FIDE AGRICULTURIST WOULD PAY SUCH A HUGE PRICE OF 2.14 CRORES FOR 95 CENTS FOR ACQUIRING OF LAND WHICH WOR KS OUT 2.25 CRORES PER ACRE.. 4.12 WE WILL NOW APPLY THE TESTS LAID DOWN BY THE HON'B LE GUJARAT HIGH COURT IN THE CASE OF SARIFABIBI MOHAMM ED IBRAHIM (SUPRA) WHICH WAS APPROVED BY THE HON'BLE S UPREME COURT, TO THE FACTS AND CIRCUMSTANCES OF THE CASE:- . (I) THE FACT THAT LAND IS ENTERED AS AGRICULTURAL LAND IN REVENUE RECORDS AND IS ASSESSED AS SUCH UNDER THE LAND REVENUE CODE WOULD BE A . CIRCUMSTANCE IN FAVOUR OF CONCLUSION THAT IT IS AN AGRICULTURAL LAND. HOWEVER, THIS WOULD RAISE ONLY A PRIMA FACIE PRESUMPTION AND SAID PRESUMPTION CAN BE DESTROYED BY OTHER CIRCUMSTANCES POINTING TO THE CONTRARY CONCLUSION. (II) THE FACT THAT AGRICULTURAL OPERATIONS WERE CARRIED ON IN THE PAST OR ARE CARRIED ON CURRENTLY IS A CIRCUMSTANCE IN FAVOUR OF CONCLUSION THAT LAND WAS AGRICULTURAL LAND. HOWEVER, THIS IS NOT A DECISIVE FACTOR INASMUCH AS AGRICULTURAL CROP CAN BE RAISED EVEN ON BUILDING SITE LAND (EVEN ON DESERT LAND AS OBSERVED BY THE SUPREME COURT IN SAID CASE) AND SOMETIMES, A CROP IS GROWN IN ORDER NOT TO ALLOW THE LAND TO REMAIN IDLE AWAITING SALE FOR NON-AGRICULTURAL PURPOSES TO A NON- AGRICULTURIST BY WAY OF A STOP-GAP ARRANGEMENT OR IN ORDER TO AVOID PAYMENT OF REVENUE AT A HIGHER RATE OR IN ORDER TO AVOID PAYMENT OF CAPITAL GAINS TAX. ITA NO.763/MDS./2016 :- 13 - : (III) THE FACT THAT LAND IS NOT CONVERTED TO NO AGRICULTURAL USER WOULD BE A CIRCUMSTANCE INDICATIN G THAT IT IS AN AGRICULTURAL LAND. HOWEVER THIS IS SUBJECT TO SAME RIDER AS IS MENTIONED IN(II) ABOVE. (IV) THE FOLLOWING FACTS WOULD INDICATE THAT LAND W AS NOT AGRICULTURAL LAND: (A) THE LAND IS SITUATED IN AN AREA IN THE PROXIMITY OF BUILDING SITES. (B) THE LAND IS SOLD TO A NON-AGRICULTURIST FOR NON-AGRICULTURAL PURPOSES. (C)THE LAND IS SOLD AT A PRICE COMPARABLE TO THE PRICE FETCHED BY BUILDING SITES. (D) THE PRICE IS SUCH THAT NO BONA FIDE AGRICULTURIST WOULD PURCHASE THE SAME FOR GENUINE AGRICULTURAL OPERATIONS. 4.13 IN THE PRESENT CASE, THE PURCHASER OF THE PROP ERTY WAS A COMPANY BY NAME M/S. OLYMPIA INFRA TECH (P) LIMITED WHICH IS A REGISTERED COMPANY UNDER THE COMPANIES ACT, 1956. THE PROPERTY SOLD IS SITUATED IN NAVALUR WHICH IS A SUBURB IN CH ENNAI, IT IS SITUATED IN KANCHIPURAM DISTRICTT, TAMIL NADU, LOCA TED SOUTH OF THE CITY OF CHENNAI, ALONG THE OLD MAHABALIPURAM ROAD. NAVALUR IS LOCATED BETWEEN SHOLINGANALLUR AND SIRUSERI AND IS AROUND 6 KMS. FROM SHOLINGANALLUR AND COMES UNDER THIRPORUR TALUK . THE PLACE WAS ONCE A VILLAGE BUT WITH THE ADVENT OF INFORMATI ON TECHNOLOGY COMPANIES AND THE RAPID DEVELOPMENT OF THE OLD MAHA BALIPURAM, IT HAS BECOME A BUSTLING SUBURBAN. NAVALUR IS AN UP COMING RESIDENTIAL AREA WITH MANY NUMBER OF FLATS COMING U P, MOSTLY PROFESSIONALS FROM INFORMATION TECHNOLOGY COMPANIES RENTING AND BUYING APARTMENTS. AS DETAILED ABOVE, THE PROPERTY SOLD BY THE ASSESSEE IS IN THE MIDST OF DEVELOPMENT ACTIVITIES BEING CARRIED OUT BY BUILDERS IN PROMOTING HOUSING/ INFORMATION TECHN OLOGY CORRIDORS, AND NO AGRICULTURAL ACTIVITIES WERE BEIN G CARRIED OUT EITHER BY THE ASSESSE NOR BY OTHERS IN THAT AREA, THE PROP ERTY IS DESCRIBED AS A MANGO GROVE AS PER THE COPY OF THE SALE DEED/P ATTA, CHITTA ADANGAL PRODUCED. IN VIEW OF THE SAME, THE SALE PRI CE RECEIVED FOR THE PROPERTY HAS INCREASED MANIFOLD WHICH A NORMAL AGRICULTURAL ITA NO.763/MDS./2016 :- 14 - : LAND WILL NOT FETCH. THE PRICE IS IN ACCORDANCE WIT H THE DEVELOPMENT ACTIVITIES AND CHANGES HAPPENING IN THE NATURE OF T HE LAND FROM AGRICULTURAL TO THAT OF HOUSING. 4.14 IF WE CONSIDER THE ABOVE FACTS AND CIRCUMSTANC ES OF THE PRESENT CASE AS A WHOLE AND AN OVERALL VIEW IS TO B E TAKEN IN DECIDING WHETHER THE LAND WAS AN AGRICULTURAL LAND, WE WOULD COME TO A CONCLUSION THAT THE PROPERTY CANNOT BE CONSIDE RED AS AGRICULTURAL LAND, THOUGH THE CIRCUMSTANCE THAT THE LAND IS CLASSIFIED AS AGRICULTURAL IN THE REVENUE RECORDS A ND THE VILLAGE PANCHAYAT PRESIDENT, NAVALLUR, HAS CERTIFIED THAT THE LAND IS AWAY FROM MUNICIPALITY. IN OUR VIEW THE OTHER CIRCUMSTAN CES POINTED OUT ABOVE OUTWEIGHS ALL OF THE CIRCUMSTANCES IN FAVOUR OF THE REVENUE AND ON THE BASIS OF THOSE CIRCUMSTANCES, WE ARE INC LINED TO CONCLUDE THAT THE PROPERTY WAS NOT AN AGRICULTURAL LAND AS THERE IS NO PROOF CARRYING ON AGRICULTURAL ACTIVITIES IN TH E SAID LAND. 5.1 FURHTER, JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. HI TECH ARAI LTD. REPORTED IN [2010] 321 ITR 477(MAD.) WHER EIN HELD THAT:- 3. WE ARE NOT IN A POSITION TO APPRECIATE EITHER O F THE CONTENTIONS OF THE LEARNED COUNSEL FOR THE PETITION ER. AS FAR AS THE FIRST CONTENTION IS CONCERNED, WHEN T HE TRIBUNAL BY THE IMPUGNED ORDER HAS APPLIED SECTION 32(1)(IIA) OF THE ACT, TO THE FACTS INVOLVED IN THE CASE OF THE ASSESSEE AND HAS FOUND THAT THE ASSESSEE IS ENTITLED FOR THE ADDITIONAL DEPRECIATION CLAIMED UN DER THE SAID PROVISION, IT CANNOT BE HELD THAT SIMPLY BECAUSE A CO-ORDINATE BENCH OF THE TRIBUNAL HAD EARLIER TAKEN A DIFFERENT VIEW, THE TRIBUNAL ON THI S OCCASION ALSO OUGHT TO HAVE FOLLOWED THE SAME. WHEN WE FIND THAT THE TRIBUNAL HAS APPLIED THE LAW CORRE CTLY IN THE IMPUGNED ORDER, THERE IS NO GAINSAYING THAT THERE WAS AN EARLIER ORDER BY THE CO-ORDINATE BENCH AND THEREFORE, FOR THAT REASON, THIS TIME ALSO THE ITA NO.763/MDS./2016 :- 15 - : TRIBUNAL SHOULD HAVE BLINDLY FOLLOWED ITS OWN EARLI ER DECISION EVEN IF SUCH EARLIER DECISION DID NOT REFL ECT THE CORRECT POSITION OF THE LAW. AS SUCH, WE ARE NOT IN A POSITION TO FOLLOW THE ORD ER OF THE TRIBUNAL IN THE CASE OF SMT.LALITHA (SUPRA) RATHER WE ARE INCLI NED TO FOLLOW THE DECISION OF CO-ORDINATE BENCH IN THE CASE OF ITO V S. SHRI ABOOBUCKER CITED SUPRA. ACCORDINGLY, THIS GROUND R AISED BY THE REVENUE IS ALLOWED . 5. ON THE OTHER HAND, LD.A.R RELIED ON THE ORDER O F CO-ORDINATE BENCH IN THE CASE OF MR.N.JAYAMURUGAN, VIDE ORDER D ATED 27.04.2016 IN ITA NOS.2356 TO 2362/MDS./2015. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. WE HAVE GONE THROUGH BOTH THE ORDERS OF TH E TRIBUNAL CITED BY THE COUNSELS. IN THE PRESENT CASE, IT IS AN ADMI TTED FACT THAT THE IMPUGNED LAND PROPERTY IS SITUATED BEYOND 8 KMS OF THE MUNICIPAL CORPORATION LIMIT OF CHENNAI. THE LAND IS SITUATED IN A DISTANCE OF 15 KMS FROM THE NEAREST MUNICIPALITY/PANCHAYAT I.E. SR IPERUMPUDUR TALUK, KANCHEEPURAM DISTRICT, CHENNAI AND POPULATIO N OF THE VILLAGE IS AROUND 3,000 AS PER THE RELEVANT CENSUS. THE ASSES SEE ALSO DECLARED AGRICULTURAL INCOME FROM THE SAID PROPERTY AND THE SAME WAS ASSESSED AS AGRICULTURAL INCOME MORE SPECIFICALLY IN ASSESSM ENT UNDER CONSIDERATION ALSO. THE AO ACCEPTED THE AGRICULTUR AL INCOME DECLARED FROM SAID PROPERTY AT ` 65,300/- FOR ASSESSMENT YEAR 2010-11. FURTHER, THE LAND WAS CLASSIFIED AS AGRICULTURAL LAND IN THE REVENUE RECORDS ALSO. ITA NO.763/MDS./2016 :- 16 - : THE PROPERTY WAS ALSO SOLD BY THE ASSESSEE AS AGRIC ULTURAL LAND ONLY AND THE IMPUGNED LAND WAS NEVER CONVERTED BY ASSESS EE FOR ANY NON- AGRICULTURAL PURPOSE. THE LAND RETAINED CHARACTER OF AGRICULTURAL LAND ONLY. BEING SO, IN OUR OPINION THE ABOVE LAND IS T O BE TREATED AS AGRICULTURAL LAND ONLY AND SALE OF SAID LAND CANNO T GO RISE TO ANY TAXABLE CAPITAL GAINS AND IT IS TO BE CONSIDERED AS AGRICULTURAL LAND IN TERMS OF SEC.2(14)(III)(B) OF THE ACT AND LD.CIT(A) HAS TAKEN A CORRECT VIEW TO HOLD THAT THE SAID LAND IS AN AGRICULTURAL LAND AND IN OUR OPINION THAT THE JUDGEMENT RELIED UPON BY LD.A.R IN THE CASE OF MR.N.JAYAMURUGAN (SUPRA) IS SQUARELY APPLICABLE TO THE FACTS OF THE CASE AND WE HAVE NO HESITATION IN CONFIRMING THE OR DER OF CIT(A). REGARDING RELIANCE PLACED BY THE DEPARTMENTAL REPRE SENTATIVE ON THE JUDGMENT OF THE TRIBUNAL IN THE CASE OF M.KARTHIK C ITED SUPRA, IN THAT CASE, THE TRIBUNAL HELD THAT CAPITAL GAINS EARNED F ROM SALE OF LANDED PROPERTY WOULD BE TAXABLE UNDER THE HEAD CAPITAL G AINS, SINCE THERE WAS NO AGRICULTURAL OPERATIONS CARRIED ON BY THE AS SESSEE AND ALSO NO AGRICULTURAL INCOME EARNED BY THE ASSESSEE FROM THE SAID LAND. HOWEVER, IN THE PRESENT CASE, THE ASSESSEE CARRIED ON THE AGRICULTURAL OPERATIONS AND EARNED AGRICULTURAL INCOME, THE SAME WAS ALSO DISCLOSED TO THE DEPARTMENT IN HIS RETURN OF INCOME . BEING SO, THE ORDER OF TRIBUNAL IN THE CASE OF M.KARTHIK CANNOT B E APPLIED TO THE ITA NO.763/MDS./2016 :- 17 - : FACTS OF THE PRESENT CASE. ACCORDINGLY, WE REJECT THE GROUNDS RAISED BY THE REVENUE. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH JUNE, 2016, AT CHENNAI. SD/ - SD/ - ! ' # . $ %& ' ( DUVVURU RL REDDY ) ) % / JUDICIAL MEMBER ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER () / CHENNAI *+ / DATED: 24 TH JUNE, 2016 K S SUNDARAM +,-- ./-0/ / COPY TO: - 1 . / APPELLANT 3. - 1-!' / CIT(A) 5. /23- 4 / DR 2. / RESPONDENT 4. - 1 / CIT 6. 3&-5 / GF