Paras Jawarilal Raka, Jalgaon V. Assistant Commissioner of Income tax,

ITA 77/PUN/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7598 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-05-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 19-03-2018
• Assessment Year: 2012-2013
• Appeal Filed On: 09-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUKESH JHA
• Keywords: Capital asset; Business income; Cost of acquisition
• Section: 143(3); 2(14)

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI ANIL CHATURVEDI, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.77/PUN/2017 / ASSESSMENT YEAR : 2012-13 SHRI PARAS JAWARILAL RAKA, 180, BANK STREET, NAVI PETH, JALGAON 425 001. PAN : AAKPR8642R. . / APPELLANT V/S THE ADDL.COMMISSIONER OF INCOME TAX, CIRCLE 1, JALGAON. . / RESPONDENT / APPELLANT BY : SHRI RAJIV KHANDELWAL / SHRI NAGIN PAREKH / RESPONDENT BY : SHRI MUKESH JHA, JCIT. / ORDER PER ANIL CHATURVEDI, AM : THIS APPEAL OF THE ASSESSEE IS EMANATING OUT OF THE ORDE R OF COMMISSIONER OF INCOME TAX (A) 2, NASHIK FOR THE ASSESSM ENT YEAR 2012-13. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON R ECORD ARE AS UNDER :- / DATE OF HEARING :19.03.2018 / DATE OF PRONOUNCEMENT: 17.05.2018 2 ITA NO.77/PUN/2017 ASSESSEE IS AN INDIVIDUAL HAVING INCOME FROM PARTNERSHIP FIRM S, HOUSE PROPERTY AND OTHER SOURCES. ASSESSEE FILED HIS RET URN OF INCOME FOR AY 2012-13 ON 30.7.2012 DECLARING TOTAL INCOME OF RS.11,97,500/-. THE CASE WAS SELECTED FROM SCRUTINY AND T HEREAFTER THE ASSESSMENT WAS FRAMED U/S 143(3) VIDE ORDER DATED 23.03.2015 AND THE TOTAL INCOME WAS DETERMINED AT RS.2,53,12,050/-. AG GRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A) WHO VIDE ORDER DATED 26.12.2016 (IN APPEAL NO.NSK/CIT(A)-2/89/ 15016) DISMISSED THE APPEAL OF THE ASSESSEE. AGGRIEVED BY THE O RDER OF LD.CIT(A), ASSESSEE IS NOW BEFORE US AND HAS RAISED THE FO LLOWING GROUNDS: 1. THE COMMISSIONER OF INCOME-TAX (APPEALS) 2, NAS HIK (HEREINAFTER REFERRED TO AS THE CIT(A) ERRED IN UPHOLDING THE AC TION OF THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE - 1, JALGAON (HER EINAFTER REFERRED TO AS THE ASSESSING OFFICER) IN MAKING AN ADDITION OF A SUM OF RS 2,41,14,550, BEING SURPLUS/ PROFIT ON SALE OF RURAL AGRICULTURAL LAND AS INCOME ARISING ON ADVENTURE IN THE NATURE OF TRADE. 2. THE APPELLANT CONTENDS THAT THE CIT(A) AND THE A O HAVE SUO MOTO BY ASSIGNING INSUFFICIENT AND INVALID REASONS, CONSIDE RED THE RURAL AGRICULTURAL LAND AS A BUSINESS ASSET WHICH, IN EFF ECT, IS AN INVESTMENT IN CAPITAL ASSET AND SHOWN AS SUCH BY THE APPELLANT IN THE BALANCE SHEET AS AT 31 51 MARCH, 2011 AND THEREBY BRINGING TO TAX THE SURPLU S/ PROFIT ON SALE OF SUCH AN ASSET TO TAX AS ADVENTURE IN THE NATURE OF TRADE. 3. THE APPELLANT FURTHER CONTENDS THAT THE CIT(A) O UGHT NOT TO HAVE UPHELD THE ACTION OF THE ASSESSING OFFICER IN MAKIN G THE IMPUGNED ADDITION OF RS.2,41,14,550 ALLEGED TO BE ARISING ON AN ADVENTURE IN THE NATURE OF TRADE INASMUCH AS THE SURPLUS/ PROFIT ARI SING ON SALE OF RURAL AGRICULTURAL LAND IS NOT CHARGEABLE T O TAX INASMUCH AS SUCH AN ASSET IS NOT A 'CAPITAL ASSET' WITHIN THE MEANIN G OF SECTION 2(14) OF THE ACT, BEING SPECIFICALLY EXCLUDED FROM THE DEFIN ITION OF CAPITAL ASSET. 3. BEFORE US, THE LD AR, AT THE OUTSET, SUBMITTED THAT THE SOLE CONTROVERSY IN THE APPEAL IS OF ADDITION OF RS 2.41 CRORES ON SALE OF AGRICULTURAL LAND AS INCOME FROM BUSINESS. 3 ITA NO.77/PUN/2017 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND ON PERUSING THE DETAILS, AO NOTICED THAT ASSESSEE HAD SOLD LAND AT GA T NO 167/1, 167/2 AND 177 AT DAHEGAON TAL GANGAPUR DIST AURANGABA D ALONGWITH SIX CO-SELLERS AND ASSESSEE HAD RECEIVED HIS SH ARE OF SALE CONSIDERATION OF RS.2,51,67,550/- AND THE PROFIT EARNED FROM ITS SALE WAS NOT OFFERED TO TAX. THE ASSESSEE WAS ASKED THE REA SON FOR NOT OFFERING THE PROFITS TO TAX TO WHICH ASSESSEE INTER-ALIA SUB MITTED THAT THE LAND WAS AN AGRICULTURAL LAND AND SINCE IT WAS NOT A CAPITAL ASSET THEREFORE IN VIEW OF SEC.2(14) OF THE ACT, THE GAIN ON SALE OF AGRICULTURAL LAND WAS NOT LIABLE TO TAX. THE SUBMISSIONS OF T HE ASSESSEE WAS NOT FOUND ACCEPTABLE TO THE AO. AO ON PE RUSING THE BALANCE SHEET OF ASSESSEE FOR A.YS. 2010-11, 2011-12 AND 2012-13 NOTED THAT ASSESSEE WAS HOLDING LAND AT VARIOUS PLACES W HICH ACCORDING TO THE AO SHOWED THAT ASSESSEE WAS PURCHAS ING THE LAND AT VARIOUS PLACES AND THEN IN TURN IT WAS SOLD AT HIGHER PRIC E AND THEREFORE THE PURCHASE AND SALE OF LAND WAS THE BUSINESS OF THE ASSESSEE. HE ALSO NOTED THAT SINCE THE ASSESSEE WAS ST AYING IN JALGAON, THE LAND AT DAHEGAON WHICH WAS MORE THAN 150 K MS FROM HIS RESIDENCE AND IT WAS PURCHASED JOINTLY WITH 7 OTHER PERSONS WHICH ALSO SHOWED THAT THE LAND WAS PURCHASED WITH THE INTENT ION OF MAKING PROFITS AND IT CANNOT BE CONSIDERED AS AGRICULTURAL LAND AN D THEREFORE BEING EXEMPT FROM TAX. ACCORDING TO THE AO, THE MERE FILI NG OF 7/12 EXTRACT SHOWING THE DETAILS OF THE CROP GROWN DOES NOT PROVE THAT THE LAND WAS CULTIVATED. HE THEREAFTER HELD THE TRANSACTION O F SALE OF LAND BY THE ASSESSEE TO BE AN ADVENTURE IN THE NATURE OF T RADE AND HELD THE PROFITS TO BE TAXABLE AS BUSINESS INCOME. HE THEREAFTER GR ANTED CREDIT FOR THE COST OF ACQUISITION OF RS.10,53,000/- AND TAXED TH E BALANCE AMOUNT OF RS.2,41,14,550/- AS INCOME FROM BUSINESS. AGGRIEVE D BY 4 ITA NO.77/PUN/2017 THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD.C IT(A) WHO UPHELD THE ORDER OF AO BY OBSERVING AS UNDER : 8. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CA SE, REMAND REPORT OF THE A.O. AND RIVAL CONTENTIONS. ON PERUSAL OF THE SAME IT HAS BEEN NOTICED AT THE OUTSET THAT THE APPELLANT HAS EARNED INCOME OF RS.2,41,67,550/- IN RESPECT OF HIS SHARE IN THE LAN D PURCHASED OF RS.10,53,000/-, WITHIN A SHORT PERIOD OF 7 MONTHS A ND 12 MONTHS. AT THE OUTSET IT HAS BEEN OBSERVED THAT THE APPELLANT HAD SOLD THE IMPUGNED LANDS FOR A PRICE WHICH IS 25 TIMES OF THE PURCHASE PRICE OF THE IMPUGNED LANDS. THE SAID EXORBITANT SALE CONSI DERATION CLAIMED BY THE APPELLANT APPEARS TO BE IMPOSSIBLE, AS THE SUB- REGISTRAR HAD ESTIMATED THE PRICE OF THE LANDS AT RS.1,30,000/- P ER HECTOR, WHEREAS THE APPELLANT HAD SOLD LANDS WITHIN SHORT PERIOD @ ABOUT RS.77,50,000/- PER HECTOR WITHIN SHORT SPAN OF TIME MENTIONED ABOVE. THEREFORE THE TRANSACTION CLAIMED BY THE APPELLANT BY CLAIMING EXEMPTION OF INCOME OF RS.2,41,67,550/- APPEARS TO BE SUSPICIOUS. 8.1 THE APPELLANT HAD PURCHASED THE IMPUGNED LANDS ALONGWITH OTHER CO-OWNERS AND SOLD THE SAME. THE DETAILS OF PURCHA SES OF LAND AS PER DEEDS SUBMITTED BY THE APPELLANT ARE AS UNDER : PARTICULARS OF LAND AREA OF LAND DATE OF PURCHASE PURCHASE CONSIDERATION REMARK 1) AGRICULTURAL LAND AT GUT NO.167/1 (JIRYAT I.E, NOT IRRIGATED) AT VILLAGE DAHEGAON DIST. AURANGABAD 01 H - 97R 16.12.2010 6,88,712 SEVEN PURCHASERS INCLUDING APPELLANT AND TWO SELLERS FROM AURANGABAD AND SIKANDARABAD (AP) 2) AGRICULTURAL LAND AT GAT NO.167/1 (JIRAYAT I.E NOT IRRIGATED) AT VILLAGE DAHEGAON TAL. GANGAPUR DIST. AURANGABAD 03 H - 72R 16.12.2010 13,00,512 SEVE N PURCHASERS INCLUDING APPELLANT AND TWO SELLERS AND FROM SIKANDARABAD (AP) 3) AGRICULTURAL LAND AT GAT NO.167/1 (JIRAYAT I.E NOT IRRIGATED) AT VILLAGE DAHEGAON TAL. GANGAPUR DIST. AURANGABAD 0 2 H - 72R 10.05.2011 5,11,000 SEVE N PURCHASERS INCLUDING APPLICANT AND ONE FROM SELLER FROM AURANGABAD 4) AGRICULTURAL LAND AT GAT NO.167/1 (JIRAYAT I.E NOT IRRIGATED) AT VILLAGE DAHEGAON TAL. GANGAPUR DIST. AURANGABAD 03 H - 99 R 16.12.2010 13, 94,904 SEVE N PURCHASERS INCLUDING APPELLANT AND TWO SELLERS AND FROM SIKANDARABAD (AP) 5) AGRICULTURAL LAND AT GAT NO.167/2 (JIRAYAT I.E NOT IRRIGATED) AT VILLAGE DAHEGAON TAL. GANGAPUR DIST. AURANGABAD 03 H - 72R 16.12.2010 9,61,400 SEVE N PURCHASERS INCLUDING APPELLANT AND TWO SELLERS FROM AURANGABAD 6) AGRICULTURAL LAND AT GAT NO.167/2 (JIRAYAT I.E NOT IRRIGATED) AT 0 2 H - 7 8 R 16.12.2010 9,71,888 SEVE N PURCHASERS INCLUDING APPELLANT AND TWO SELLERS FROM 5 ITA NO.77/PUN/2017 VILLAGE DAHEGAON TAL. GANGAPUR DIST. AURANGABAD AURANGABAD AND SIKANDARABAD (AP) 7) AGRICULTURAL LAND AT GAT NO.177 (JIRAYAT I.E NOT IRRIGATED) AT VILLAGE DAHEGAON TAL. GANGAPUR DIST. AURANGABAD 01 H - 09 R 16.12.2010 3,81,064 SEVEN PURCHASERS INCLUDING APPELLANT AND ONE SELLER FROM AURANGABAD. THE DETAILS OF SALE OF LAND MADE BY THE APPELLANT ALONGWITH 6 CO- OWNERS ARE AS UNDER : PARTICULARS OF LAND AREA OF LAND DATE OF SALE SALE CONSIDERATION REMARK 1) AGRICULTURAL L AND AT GUT NO.167/1 (JIRYAT I.E., NOT IRRIGATED) AT VILLAGE DAHEGAON DIST. AURANGABAD 16 H - 12 R 1 7 .12.201 1 12,48.79,238/ - SEVEN SELLERS INCLUDING APPELLANT AND TWO PURCHASERS FROM AURANGABAD 2) AGRICULTURAL LAND AT GAT NO.167/2 (JIRAYAT I.E NOT IRRIGATED) AT VILLAGE DAHEGAON TAL. GANGAPUR DIST. AURANGABAD 05 H - 53R 17.12.2011 4,28,59,633 SEVEN SELLERS INCLUDING APPELLANT AND TWO PURCHASERS FROM AURANGABAD 3 ) AGRICULTURAL LAND AT GAT NO.177 (JIRAYAT I.E NOT IRRIGATED) AT VILLAGE DAHEGAON TAL. GANGAPUR DIST. AURANGABAD 01 H - 09R 17.12.2011 84,33,973 SEVEN SELLERS INCLUDING APPELLANT AND TWO PURCHASERS FROM AURANGABAD 8.2. FROM THE ABOVE FACTS, IT HAS BEEN NOTICED THAT THE 7 CO-OWNERS INCLUDING THE APPELLANT HAVE PURCHASED AGRICULTURAL LANDS AT VILLAGE DAHEGAON ON 16.12.2010 AND 10.05.2011. THE ABOVE M ENTIONED LANDS ARE PURCHASED BY THE ABOVE 7 CO-OWNERS WITH THE INT ENTION TO EARN PROFIT BY MAKING IMMEDIATE SALE. ONCE OF THE LANDS WAS PURCHASED ON 10.05.2011 AND THE SAME WAS SOLD WITHIN ABOUT 7 MON THS. THE OTHER LANDS WERE SOLD AFTER 12 MONTHS. 8.3. THE APPELLANT HAD CONTENDED THAT THE SAID LAND S WERE PURCHASED BY THE 7 CO-OWNERS WITH THE INTENTION OF DEVELOPING A FRUIT ORCHARD. IN THIS REGARD IT HAS BEEN NOTICED THAT T HE 7 CO-OWNERS ARE RESIDING AT DIFFERENT PLACES, THE 4 CO-OWNERS ARE R ESIDING AT AURANGABAD, 2 CO-OWNERS ARE RESIDING AT JALGAON AND 1 CO-OWNERS IS RESIDING AT NANDURBAR. ALL THE ABOVE 3 PLACES ARE LOCATED FAR AWAY FROM EACH OTHER. THEREFORE IT IS NOT LIKELY THAT T HE SAID CO-OWNERS COULD HAVE COME TOGETHER AND HAVE PURCHASED AGRICULTURAL LANDS AT VILLAGE DAHEGAON, FOR CARRYING OUT AGRICULTURAL ACTIVITY. IN SUPPORT OF THE CONTENTION THAT THE LANDS WERE PURCHASED BY 7 CO-OW NERS WITH THE INTENTION OF DEVELOPING A FRUIT ORCHARD, THE APPELL ANT HAD FILED PROJECT REPORT OF 6 PAGES. THE SAID PROJECT IS NOT SIGNED BY ANY PERSON. THE SAID PROJECT WAS ALSO NOT FILED WITH ANY FINANCIAL INSTITUTION AND APPEARS TO BE TYPED ONLY TO SUPPORT THE CONTENTION. FROM THE SO CALLED 6 ITA NO.77/PUN/2017 PROJECT REPORT, IT HAS BEEN NOTICED THAT THE NAME O F THE LAND HOLDER HAS BEEN MENTIONED AS MR. PARAS JAWRILAL RAKA AND OTHER 6 PARTNERS. THEREFORE, IT IS APPARENT THAT THE REPORT WAS TYPED TO SUIT THE CONTENTION OF THE APPELLANT IN APPEAL. THIS IS NOT THE WAY IN WHICH THE PROJECT REPORT IS PREPARED. 8.4 THE APPELLANT HAS FURTHER CLAIMED THAT FUNDS WE RE REQUIRED TO BE CONTRIBUTED BY THE CO-OWNERS FOR DEVELOPING A FRUIT ORCHARD IN ADDITION TO LOAN FROM FINANCIAL INSTITUTION AND AS THE CO-OW NERS WERE NOT READY TO CONTRIBUTE THE FUNDS, THE FRUIT ORCHARD WAS NOT DEVELOPED. THIS CONTENTION OF THE APPELLANT IS ALSO NOT TRUE AS, AS PER THE APPELLANTS CONTENTION 7 CO-OWNERS HAVE PURCHASED VARIOUS LANDS AT DAHEGAON WITH THE INTENTION OF DEVELOPING FRUIT ORCHARD AT D AHEGAON. IF SUCH WAS THE INTENTION, THEN THE CO-OWNERS WOULD HAVE CERTAI NLY MADE ALL THE ENQUIRIES ABOUT THE FUND REQUIREMENT AND SOURCES FO R THE SAME FOR DEVELOPING A FRUIT ORCHARD ON THE SUBSTANTIAL LAND BEFORE PURCHASING THE SAID LANDS. IN THAT CASE THE 7 CO-OWNERS WOULD HAV E UNDERSTOOD THAT FURTHER FUNDS WOULD BE REQUIRED TO BE CONTRIBUTED F OR DEVELOPING A FRUIT ORCHARD ON THE SUBSTANTIAL AREA OF LAND AND WOULD H AVE CERTAINLY ARRANGED FUNDS FOR THE SAID PURPOSE. THEREFORE, IT IS EVIDENT THAT THE SAID LANDS WERE PURCHASED WITH THE INTENTION TO EAR N PROFIT WITHIN SHORT SPAN OF TIME AND HENCE THE TRANSACTION IS CERTAINLY ADVENTURE IN THE NATURE OF TRADE. 8.5 THE APPELLANT HAS CLAIMED THAT HE HAD CARRIED OUT AGRICULTURAL OPERATIONS ON VARIOUS LANDS AND SHOWN AGRICULTURAL INCOME SINCE THE LAST MANY YEARS WHICH WAS ACCEPTED BY THE DEPARTMEN T AND HENCE THE IMPUGNED LANDS SOLD USED FOR AGRICULTURAL OPERATION S ARE CAPITAL ASSETS AND NOT STOCK IN TRADE AND HENCE THE TRANSACTION CA NNOT BE ADVENTURE IN THE NATURE OF TRADE. IN THIS REGARD IT IS PERTI NENT TO NOTE HERE THAT THE OTHER LANDS TO BE HELD BY THE APPELLANT WITH THE IN TENTION OF HOLDING THE SAME FOR SUBSTANTIAL PERIOD AND ALSO FOR CARRYING O UT AGRICULTURAL OPERATIONS. WHEREAS, THE IMPUGNED LANDS WERE PURCH ASED ALONGWITH 6 OTHER CO-OWNERS RESIDING IN DIFFERENT DISTRICTS WIT H THE INTENTION OF SELLING THE SAME AT PROFIT WITHIN SHORT PERIOD AND NOT FOR HOLDING THE SAME FOR LONG PERIOD FOR CARRYING OUT AGRICULTURAL OPERATIONS. IT IS ALSO SETTLED POSITION OF LAW THAT AN ASSESSEE CAN HOLD S OME OF THE PROPERTIES AS STOCK IN TRADE AND SOME OF THE PROPERTIES AS INV ESTMENT. FROM THE FACTS OF THE CASE IT IS EVIDENT THAT THE IMPUGNED L ANDS PURCHASED AT DAHEGAON TAL. GANGAPUR DIST, AURANGABAD, ALONGWITH 6 CO-OWNERS BY THE APPELLANT, RESIDING AT JALGAON AGRICULTURAL OPE RATIONS. THEREFORE THE ABOVE CONTENTION OF THE APPELLANT IS REJECTED. 8.6 THE APPELLANT HAS ALSO CLAIMED THAT IN THE BO OKS OF ACCOUNTS AND BALANCE SHEET, HE HAD SHOWN THE IMPUGNED AGRICULTU RAL LANDS UNDER THE HEAD FIXED ASSETS. IT IS SETTLED POSITION O F LAW THAT THE ENTRIES MADE IN THE BOOKS OF ACCOUNTS AND BALANCE SHEET ARE NOT DECISIVE BUT THE ACTUAL FACTS AND TRANSACTIONS ARE TO BE CONSIDE RED FOR DECIDING THE ISSUE UNDER INCOME TAX ACT. THIS PROPOSITION OF LA W IS SUPPORTED BY FOLLOWING DECISIONS. I. KEDARNATH JUTE MFG. CO. LTD., 82 ITR 363 (SC). II. CIT VS. PADMAVATI RAJE COTTON MILLS LTD. (1993) 203 ITR 37 (KOL). III. STAR PAPER MILLS VS. CIT (2001) 252 ITR 337 (KOL) IV. ASSOCIATED BANKING CORPORATION OF INDIA VS. CIT (19 65) 56 ITR-1 (SC) V. CIT VS. HIRALAL MITTAL & SONS (1972) 86 ITR 463 (AL LA) THE CONTENTION OF THE APPELLANT THAT HE HAD SHOWN T HE IMPUGNED AGRICULTURAL LANDS UNDER THE HEAD FIXED ASSETS IN THE BALANCE SHEET AS ON 31.03.2011 IS NOT CORRECT, AS IT IS SEEN FROM TH E BALANCE SHEET AS ON 7 ITA NO.77/PUN/2017 31.03.2011 THAT THE ASSESSEE HAS NOT SHOWN THIS LAN D UNDER THE HEAD FIXED ASSETS, BUT HAS SHOWN THE SAME UNDER THE HE AD INVESTMENT. ONCE THE LAND IS NOT SHOWN IN THE FIXED ASSETS, IT MEANS THE INTENTION OF THE APPELLANT WAS VERY CLEAR THAT THE SAID LAND WAS NOT PURCHASED FOR AGRICULTURAL PURPOSES BUT FOR BOOKING THE PROFIT BY SELLING THE SAME WITHIN A SHORT SPAN OF TIME. 8.7 THE APPELLANT HAS FURTHER CONTENDED THAT HE HAD NOT CARRIED OUT ANY COMMERCIAL ACTIVITY ON THE IMPUGNED AGRICULTURA L LANDS SOLD AND HAS NOT CONVERTED THE SAID LAND INTO NON AGRICULTUR AL LAND AND HENCE THE LANDS WERE CAPITAL ASSETS AND NOT STOCK IN TRAD E AND THEREFORE NO ADVENTURE IN THE NATURE OF TRADE RESULTED ON SALE O F THE IMPUGNED LANDS. THIS CONTENTION OF THE APPELLANT CANNOT BE ACCEPTED IN VIEW OF THE FACTS OF THE CASE, AS THE ADVENTURE IN THE NATU RE OF TRADE OR BUSINESS TRANSACTION CAN BE RESULTED ON PURCHASE AN D SALE OF AGRICULTURAL LANDS IN THE CASES WHERE THE LANDS WER E PURCHASED WITH THE INTENTION TO EARN PROFIT. THEREFORE THE ABOVE CONTENTION OF THE APPELLANT IS ALSO REJECTED. 8.8. THE APPELLANT HAS ALSO CLAIMED THAT THERE ARE NO OTHER TRANSACTIONS OF SELLING AND PURCHASING AGRICULTURAL LANDS AND HENCE THE IMPUGNED TRANSACTION CANNOT BE TREATED AS ADVENTURE IN THE NATURE OF TRADE. IN THIS REGARD IT HAS BEEN NOTICED THAT IT IS SETTLED POSITION OF LAW THAT EVEN ON ISOLATED TRANSACTION OF PURCHASE AND S ELL OF PROPERTY, IN THE CASES WHERE PURCHASE WAS MADE WITH THE INTENTIO N TO EARN PROFIT WITHIN SHORT SPAN OF TIME IS TO BE REGARDED AS ADVE NTURE IN THE NATURE OF TRADE. 8.9. THE DECISIONS RELIED ON BY THE APPELLANT ARE D ISTINGUISHABLE ON FACTS AS IN THE CASE OF THE APPELLANT, FOLLOWING FA CTS EXISTED : I) THE VARIOUS LANDS AT DAHEGAON WERE PURCHASED BY 7 C O-OWNERS, WHO ARE RESIDING IN 3 DIFFERENT DISTRICTS WHICH ARE LOCATED FAR AWAY FROM EACH OTHER. II) THE CONTENTION OF THE APPELLANT THAT THE LANDS WERE PURCHASED FOR CARRYING OUT AGRICULTURAL ACTIVITY FOR LONGER PERIOD WAS FOUND TO BE INCORRECT AND FALSE. III) THE CONTENTION OF THE APPELLANT THAT THE LANDS PURC HASED WERE WITH THE INTENTION TO DEVELOP FRUIT ORCHARD IS ALSO FOUND TO BE INCORRECT AND FALSE. IV) THE LANDS WERE SOLD WITHIN 7 MONTHS AND 12 MONTHS A FTER PURCHASING THE SAME. V) THE APPELLANT ALONGWITH OTHER CO-OWNERS HAVE SOLD T HE IMPUGNED LANDS AT A PRICE WHICH IS 25 TIMES OF THE P URCHASE PRICE OF THE SAID LANDS. THEREFORE IT IS EVIDENT THAT THE FACTS OF THE CASE OF THE APPELLANT ARE DISTINGUISHABLE FROM THE FACTS OF THE CASES REL IED ON BY THE APPELLANT. 8.10. FROM ALL THE RELEVANT FACTS AND CIRCUMSTANCES OF THE CASE AS DISCUSSED ABOVE, I AM OF THE CONSIDERED VIEW THAT T HE PARTICULAR TRANSACTIONS ENTERED INTO BY THE APPELLANT IN RESPE CT OF IMPUGNED LANDS AT DAHEGAON, IS ADVENTURE IN THE NATURE OF TRADE. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US. 8 ITA NO.77/PUN/2017 5. BEFORE US, LD AR REITERATED THE SUBMISSIONS MADE BEFO RE THE LOWER AUTHORITIES AND FURTHER SUBMITTED THAT THE ASSESSE E HAS DECLARED AGRICULTURE INCOME SINCE LAST MANY YEARS AND THE SAME HAS BEEN ACCEPTED BY THE REVENUE. HE FURTHER SUBMITTED TH AT THE LAND AT DAHEGAON IS SITUATED BEYOND 8 KMS FROM ANY MUNICIPALITY. TH E LAND WAS PURCHASED BY THE ASSESSEE WITH 6 OTHER CO-OWNERS WITH THE INTENTION TO DEVELOP FRUIT ORCHARD AND FOR WHICH THE ASSE SSEE AND THE CO-OWNERS APPROACHED VARIOUS FINANCIAL INSTITUTIONS FOR FINA NCE BUT SINCE ALL THE INSTITUTIONS INSISTED ON FURTHER INFUSION OF MONEY BY THE PROMOTERS AND SINCE MANY OF THE CO-OWNERS WERE NOT WILLIN G TO INVEST MORE MONEY AND CONSIDERING THE FAVOURABLE MARKET CONDITIO NS, THE LAND WAS SOLD. HE FURTHER SUBMITTED THAT THE ASSESSEE NEVER GOT THE LAND PLOTTED/SUB-PLOTTED FOR SALE OR SOUGHT CONVERSION OF LAND FROM AGRICULTURE TO NON-AGRICULTURE USE AND NEVER CARRIED OUT ANY ACTIVITY TO COMMERCIALLY EXPLOIT THE LAND AND THAT THE AFORESAID LAN D TILL DATE CONTINUES TO BE AGRICULTURAL LAND AND IN SUPPORT OF WHIC H HE POINTED TO THE COPIES OF 7/12 EXTRACT OF THE LAND. HE FURTHER SU BMITTED THAT DURING THE PERIOD UNDER CONSIDERATION THE LAND WAS PUT T O AGRICULTURAL USE AND THE PRODUCE CULTIVATED FROM THE LAND WAS SOLD AN D THE SALE PROCEEDS ARE DISCLOSED IN THE RETURN OF INCOME. HE FURTHE R SUBMITTED THAT THE LAND WAS NOT REFLECTED IN ASSESSEES BALANCE AS STOCK IN TRADE BUT AS INVESTMENT. HE FURTHER SUBMITTED THAT THE HONBLE SUPREME COURT IN THE CASE OF SARIFABIBI MOHAMED IBRAHIM VS. CIT R EPORTED IN (1993) 204 ITR 631 (SC) HAS LAID DOWN 13 TESTS/FACTORS WHIC H ARE REQUIRED TO BE CONSIDERED TO DETERMINE WHETHER THE SALE OF LAND IS AGRICULTURE LAND OR NOT. HE POINTED TO THE TABLE OF AFORESA ID TESTS AS LAID DOWN BY HONBLE SUPREME COURT AND ASSESSEES PO SITION VIS-A-VIS THOSE TESTS AT PAGE 11 OF THE PAPER BOOK AND POINTING TO THE SAME, HE 9 ITA NO.77/PUN/2017 SUBMITTED THAT AFTER CONSIDERING THOSE TESTS, ASSESSEES CASE CANNOT BE CONSIDERED TO BE IN THE ADVENTURE IN THE NATURE OF TRAD E. HE FURTHER POINTED TO THE TABLE REPRODUCED BY THE LD.CIT(A) AT PAG E 9 AND 10 OF THE ORDER AND POINTED OUT THAT OUT OF 6 CO-OWNERS, IN THE CASE OF 2 CO- OWNERS, THE SALE OF LAND HAS BEEN ACCEPTED TO BE EXEMP T IN THE ORDER PASSED U/S 143(3) OF THE ACT BY THEIR RESPECTIVE A.OS. HE FURTHER PLACED RELIANCE ON THE DECISION OF HONBLE BOMBAY HIGH COUR T IN THE CASE OF CIT VS. DHABLE, BOBDE, PAROSE, KALE, LUTE & CHOUDHA RI REPORTED IN (1993) 202 ITR 98 (BOM) WHEREIN THE LAND SOLD W ITHIN A SHORT PERIOD OF PURCHASE WAS HELD TO BE EXEMPT. HE ALSO RELIED ON THE DECISION IN THE CASE OF BHOGILAL H. PATEL VS. CIT REPORTED IN (1969) 74 ITR 692 (BOM) FOR THE PROPOSITION THAT INTENTION AT THE INC EPTION IS CRUCIAL AND THAT THE MERE CIRCUMSTANCE THAT A PROPERT Y IS PURCHASED IN THE HOPE THAT WHEN SOLD LATER ON, IT WOULD LEAVE A MARG IN OF PROFIT WILL NOT BE SUFFICIENT TO SHOW THAT THE INTENTION WAS TO TRA DE AT INCEPTION. HE FURTHER RELIED ON THE DECISION OF HONBLE BOMB AY HIGH COURT IN THE CASE OF GOPAL C. SHARMA VS. CIT REPORTED IN (1994) 209 ITR 946 (BOM) FOR THE PROPOSITION THAT THE PROFIT MOTIVE WIT HOUT ANYTHING MORE BY ITSELF CAN NEVER BE DECISIVE FOR DETERMINA TION OF THE ISSUE AS TO WHETHER THE TRANSACTION AMOUNTED TO ADVEN TURE IN THE NATURE OF TRADE. HE THEREFORE SUBMITTED THAT THE ORDER OF LD.CIT(A) UPHOLDING THE ORDER OF AO BE SET ASIDE. LD DR ON THE OTH ER HAND TOOK US THROUGH THE FINDINGS OF AO AND LD.CIT(A) AND SUPPORTED THEIR ORDER. HE FURTHER SUBMITTED THAT ASSESSEE HAD NOT PRO DUCED ANY EVIDENCE TO DEMONSTRATE OF HAVING INDULGED INTO ANY AGRICU LTURAL ACTIVITY ON THE LAND. HE THUS SUPPORT THE ORDER OF LD.CIT(A). 10 ITA NO.77/PUN/2017 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS ABOUT THE TAXABILITY OF PROFITS EARNED ON SALE OF LAND. IT IS ASSESSEES CONTENTION THAT PROFITS ARE EXEMPT FROM TAX AS THE LAND IS AGRICULTURE LAND WHERE AS THE REVENUES STAND IS THAT THE SALE OF LAND IS ADVENTURE IN THE NATURE OF TRADE AND THEREFORE BUSINESS INCOME. IT IS AN UNDISPUTED FACT THAT ASSESSEE ALONG WITH 6 CO-OWNERS HAD PURCHASED LAND AT DAHEGAON, WHICH IS LOCATED BEYOND 8 KMS FROM ANY MUNICIPALITY AND THE SAME WAS SOLD DURING THE YEAR UNDER CONSIDERATION. THE DISCLOSU RE OF THE LAND IN ASSESSEES BALANCE SHEET AS INVESTMENTS IS NOT IN DISPUTE. THE SUBMISSION OF THE ASSESSEE THAT THE LAND HAS BEEN CLASSIFIE D IN THE REVENUE RECORDS AS AGRICULTURAL LAND, NO PERMISSION FROM T HE CONCERNED AUTHORITIES HAS BEEN OBTAINED FOR TRANSFER FOR NON- AGRICULTURAL USE, NO PLOTTING/SUB PLOTTING OF THE LAND HAS BE EN UNDERTAKEN BY THE ASSESSEE HAS NOT BEEN CONTROVERTE D BY REVENUE. FURTHER THE SUBMISSION OF THE ASSESSEE THAT THE PRODUC E FROM THE SALE OF CULTIVATION WAS DISCLOSED BY THE ASSESSEE, THAT THE AS SESSEE WANTED TO START HORTICULTURE ACTIVITIES AND FOR WHICH THE ASSESSE E HAD APPROACHED BANK FOR FINANCIAL ASSISTANCE HAS NOT BEEN PRO VED TO BE FALSE. WE FURTHER FIND THAT THE ASSESSEES CONTENTION OF HA VING SATISFIED OF THE VARIOUS PARAMETERS SPELT OUT BY HONBLE APEX COU RT IN THE CASE SARIFABIBI (SUPRA) TO HOLD THE LAND AS AGRICULTURAL LAND HAS BE EN MET AND THE CONTENTION OF THE ASSESSEE HAS NOT BEEN FOUND TO BE INCORRE CT. 7. WE FURTHER FIND THAT IN CASE OF 2 CO-OWNERS (NAMELY, SHRI DHARMENDRA RAMNANI AND VIKAS AGNIHOTRI) THEIR CLAIM OF SHAR E OF PROFIT ON SALE OF THE SAME LAND BEING EXEMPT, DUE TO LAND BEING AGRICULTURAL LAND HAS BEEN ACCEPTED BY THE REVENUE IN TH EIR 11 ITA NO.77/PUN/2017 ASSESSMENTS FRAMED U/S 143(3) OF THE ACT. THUS, WHEN TH E SHARE OF PROFIT ARISING OUT OF SALE OF SAME LAND IN CASE OF 2 CO-OWNER S HAS BEEN ACCEPTED BY REVENUE IN THE SCRUTINY PROCEEDINGS, THEN O N THE SOME SET OF FACTS TAKING A DIFFERENT VIEW BY THE REVENUE DEPART MENT IN THE CASE OF ASSESSEE CANNOT BE ACCEPTED. ONE OF THE OBJEC TION OF REVENUE IN TREATING THE PROFITS AS CAPITAL GAINS IS THAT THE LAND WA S SOLD WITHIN A PERIOD OF 7 MONTHS FROM ITS DATE OF PURCHASE AND THE S ALE PRICE WAS MORE THAN 25 TIMES TO THE PURCHASE PRICE. WE FIND THAT IN THE CASE OF CIT VS. DHABLE, BOBDE AND OTHERS (SUPRA), THE ASSESSEE, A N ASSOCIATION OF PERSONS, HAD PURCHASED AGRICULTURAL LAND IN O CTOBER, 1966 AND SOLD IN JANUARY, 1967 AND HAD CLAIMED IT TO BE E XEMPT. REVENUE TREATED THE TRANSACTION TO BE ON ADVENTURE IN THE NATURE OF TRADE AND HELD IT AS TAXABLE BUSINESS COME. THE HONBLE HIGH COURT WHILE DECIDING THE ISSUE IN FAVOUR OF ASSESSEE HAS HELD THA T THE ONUS OF PROVING THAT THE LAND FORMED PART OF BUSINESS ASSET O F THE ASSESSEE WAS ON REVENUE AND IN THE ABSENCE OF EVIDENCE TO THAT EFFECT, THE PRESUMPTION WAS THAT LAND WAS HELD AS CAPITAL ASSET AND THEREFORE INCOME ON ITS TRANSFER WAS NOT INCOME FROM BUSINESS. WAS HELD AS CAPITAL ASSET AND THEREFORE INCOME ON ITS TRANSFER WAS NOT INCOME FROM BUSINESS. BEFORE US, REVENUE HAS NOT PLACED ANY MATERIAL T O PROVE THAT THE LAND FORMED PART OF BUSINESS ASSET OF THE ASSES SEE. FURTHER THE CONTENTIONS OF THE LD AR HAVE NOT BEEN CONTROVERT ED BY REVENUE. IN SUCH A SITUATION, WE ARE OF THE VIEW THAT THE RATIO OF THE DECISION IN THE CASE OF DHOBLE, BOBDE AND OTHERS (SUPRA) WOULD BE APP LICABLE TO THE PRESENT CASE. WE THEREFORE AFTER RELYING ON THE VA RIOUS DECISIONS CITED BY THE ASSESSEE, ARE OF THE VIEW THAT THE AO AN D LD.CIT(A) WERE NOT JUSTIFIED IN TREATING THE PROFITS FROM SALE OF LAND AS BUS INESS 12 ITA NO.77/PUN/2017 INCOME. WE THEREFORE SET ASIDE THE ORDER OF LD.CIT(A) AND THUS THE GROUND OF THE ASSESSEE ARE ALLOWED. 8. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THE 17 TH DAY OF MAY, 2018. SD/- SD/- ( VIKAS AWASTHY ) ( ANIL CHATURVEDI ) / JUDICIAL MEMBER ! / ACCOUNTANT MEMBER PUNE; ! DATED : 17 TH DAY OF MAY, 2018. YAMINI '#$%&'&$ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3 . 4. 5 6. CIT(A)-2, NASHIK. PR.CIT-2, NASHIK. #$% &&'(, * '(, / DR, ITAT, B PUNE; %+, - / GUARD FILE. / BY ORDER , // TRUE COPY // ./0 &1 '2 / SR. PRIVATE SECRETARY * '( , / ITAT, PUNE.