ACIT, CHENNAI V. M/s. Sherdan Games Park & Holidays P Ltd., CHENNAI

ITA 772/CHNY/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73621 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 8 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 21-11-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 28-04-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SHAJI P JACOBADDL
• Assessee Lawyers: DR ANITA SUMANTH
• Keywords: Business income; Depreciation
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ITA NO.772/MDS/2011 (ASSESSMENT YEAR: 2006-07) THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE-VI(2), NEW BLOCK, 7 TH FLOOR, AAYAKAR BHAVAN CHENNAI-600 034. VS. M/S. SHERDAN GAMES PARK & HOLIDAYS PVT. LTD., 22, IIND LINE BEACH, 1 ST FLOOR, CHENNAI-600 001. PAN: AAECS5095E (APPELLANT) (RESPONDENT) APPELLANT BY : MR. SHAJI P.JACOB, A DDL. CIT RESPONDENT BY : DR. ANITA SUMANTH, ADVOCATE DATE OF HEARING : 21 ST NOVEMBER, 2013 DATE OF PRONOUNCEMENT : 9 TH JANUARY, 2014 O R D E R PER CHALLA NAGENDRA PRASAD, JM : THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-V, CHEN NAI DATED 01.02.2011 FOR THE ASSESSMENT YEAR 2006-07 A RISING OUT OF ASSESSMENT ORDER PASSED UNDER SECTION 143(3) OF THE ACT. 2. THE REVENUE HAS RAISED FOLLOWING GROUNDS IN ITS APPEAL:- ITA NO.772/MDS/2011 2 1. THE ORDER OF THE L E ARN ED C IT (A ) IS CONTR AR Y T O LA W AND FACTS OF THE CASE. 2 . 1 . THE LEARNED CIT(A ) HA S ERRE D IN DIRE C TIN G THE ASSESSING OFFICER TO REWORK LTCG WITH REFERENCE TO 70 CENTS OUT O F 3 1 6 .0 2 CENT S AN D HOLD I N G THE BALANCE LAND AS AGRIC U LTURAL LAND . 2.2 THE LEARNED CIT(A) HA S E RR ED I N DI V I DING T HE LAND INTO 70 CENTS , HOLDING IT AS PERTAINING TO BUSINESS AND CLASSIF Y ING TH E B ALANCE AS AG RI CULTURAL LANDS SINCE T HE ENTIRE LAND AND BUILDING WA S A COMPOSIT E UNIT USED FOR BUSINESS AND THERE WAS NO BASIS TO SEGREGATE THE LAND INTO B USINE SS AND AGRICULTURAL . 2 . 3 THE LEARNED CIT(A ) FAIL E D TO A P PR EC I A T E THAT THE ASSESSEE HAD BEE N U SING THE ENTIR E LAND AND BUILDI NG F OR IT S BUSIN ESS P URPOSES AND DEPRECIATION WAS CLAIMED ON THE BUILDING . 2.4 THE LEARNED CIT(A ) FAIL E D TO AP P RE C I A T E THAT THE ASSESSEE DID NOT CARRY OUT ANY SYSTEMATIC AGRICULTURAL . ACTIVITY IN THE LANDS TRANSFERRED. T H E AGRICULTURAL INCOME CLAIMED TO HAVE BEEN OFFERED W A S ONL Y IN C I D ENTAL AND NOT AS A RESULT OF ANY PLANNED SYSTEMATIC ITA NO.772/MDS/2011 3 AGRI CU LT URA L A C T I V ITY AS COU L D BE SEEN FROM THE MEAGER INCOME EARNED . 2 . 5 THE LEARNED CIT(A ) FA I L ED T O APPRE C IAT E T HAT TH E E VIDENCES IN THE FORM OF THE CERTIFICATE FROM THE TAHSILDAR , DOCUMENTS SUCH AS PATTA , CHITTA AND ADANGAL WERE NOT PRODUCED BEFORE TH E A S S ESSING O F F I C E R DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND IN FACT THE ASSESSEE DID NOT EVEN ADMIT TO THE T R ANSFER OF L ANDS UNTIL IT WAS CONFRONTED WITH AIR INFORMATION F R O M THE SUB-REGISTRAR. 2 . 6 IT IS SUBMITTED THAT THE CIT ( A ) HAS ADM I TT E D FRE S H EVIDENCES WITH REGARD TO THE ABOVE WHICH WERE NOT PRODU C ED BEFOR E TH E A O AND BY NOT GIVING THE AO A REASONABLE OPPORTUNITY TO E X AMIN E TH E SAM E H A S CONT R AVENED THE PROVISIONS OF RU L E 46A OF I . T. RULES. 2.7 THE LEARNED CIT(A) FAILED TO APPRE C I A T E THAT TH E DEPARTMENT OF TOWN P L ANNING AUTHORITY ,C HENGALPATTU MUNICIPALIT Y HA S CLARIFIED THAT THE SAID LAND CAME UNDER URBANIZATION L A ND DURING TH E R E LE VA NT P E RIOD AND NO CONVERSION CERT I FICATE FROM AGRICUL T URAL T O N ON- AG R ICU LTU RAL L AND WAS RE Q UIRED FOR THESE LANDS. ITA NO.772/MDS/2011 4 2 . 8 TH E LEARNED C IT ( A ) F A I LED T O A P P R E CIA T E THAT TH E HON ' BLE SUPREME COURT IN THE CASE OF IN CWT V. OFFICE R- IN- CH ARG E ( C OU RT O F W A RDS) [1976] (105 ITR 133 ) (SC) HELD THAT THE FACT THAT THE LAND IS ASSESSED TO THE LAND REVENUE AS AGRICULTURAL LAND UNDER THE STATE REVENUE LAW IS CERTAINLY A RELEVANT FACT BUT IT IS NOT CONCLUSIVE. 2.9 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO APPRECIATE THAT WITH REGARD TO HIS DISCUSSIONS ON THE TESTS LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF SARIFABIBI MOHAMED IBRAHIM VS. CIT (204 ITR 631) THE ASSESSEE MISERABLY FAILS ON ALL COUNTS. 2.10 THE COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO APPRECIATE THAT THE ASSESSEES LAND WAS GIVEN FOR DEVELOPMENT TO M/S. CITYLIGHTS PROPERTIES P.LTD. 2.11 HAVING REGARD TO THE DECISION OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. V.A. TRIVEDI (172 ITR 95) THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE UPHELD THE ACTION OF THE ASSESSING OFFICER. 3. BRIEF FACTS ARE THAT ASSESSEE IS ENGAGED IN THE ITA NO.772/MDS/2011 5 ENTERTAINMENT BUSINESS AND IS RUNNING GO-KART DRIVI NG FACILITY IN THE NAME OF DANNYS KARTING. THE ASSES SEE FILED ITS RETURN OF INCOME ON 29.11.2006 SHOWING NET LOS S OF ` 6,42,600/- . THE ASSESSMENT WAS COMPLETED UNDER SEC TION 143(3) OF THE ACT ON 29.12.2008 DETERMINING THE TOT AL INCOME AT ` 1,30,99,310/-. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER FOUND THAT ASSES SEE SOLD IMMOVABLE PROPERTY FOR ` 1,70,93,600/- AND NO CAPITAL GAINS WAS OFFERED BY THE ASSESSEE ON SALE OF SUCH PROPERTY. THE ASSESSEE CONTENDED THAT THE LAND SOLD BY IT IS AGRICULTURAL LAND AND SALE PROCEEDS ARE NOT LIAB LE TO CAPITAL GAINS TAX. THIS CONTENTION OF THE ASSESSEE WAS REJECTED BY THE ASSESSING OFFICER STATING THAT ASSE SSEE CONSTRUCTED A BUILDING ON THE SAID LAND, THE BUILDI NG WAS USED BY THE ASSESSEE FOR THE PURPOSE OF BUSINESS AN D DEPRECIATION WAS ALSO CLAIMED ON SUCH BUILDING. THE ASSESSEE USED LAND AND BUILDING FOR THE PURPOSE OF BUSINESS AND NO AGRICULTURAL ACTIVITY WAS CARRIED O N BY THE ASSESSEE ON THE SAID LAND AND AN ENQUIRY THROUGH AN INSPECTOR FROM THE DEPARTMENT OF TOWN PLANNING AUTH ORITY, ITA NO.772/MDS/2011 6 CHENGALPATTU MUNICIPALITY CONFIRMED THAT THE SAID L AND COMES UNDER URBANIZATION LAND DURING THE RELEVANT P ERIOD AND NO PERMISSION IS REQUIRED FOR CONSTRUCTION OF P ROPERTY ON THE SAID LAND. IN VIEW OF THE ABOVE, THE ASSESSI NG OFFICER HELD THAT PROFIT ARISING ON SALE OF 74% OF THE LAND (ASSESSEES SHARE OF LAND) IS TO BE TREATED AS LONG TERM CAPITAL GAINS AND COMPUTED LONG TERM CAPITAL GAINS ACCORDINGLY. ON APPEAL, THE COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT THE LAND IN QUESTION WAS AGRICU LTURAL LAND. HOWEVER, THE COMMISSIONER OF INCOME TAX (APPE ALS) HELD THAT A PORTION OF LAND TO THE EXTENT OF 70 CEN TS OUT OF THE TOTAL AREA OF 316 CENTS WAS USED FOR NON-AGRICU LTURAL PURPOSES I.E. FOR GO-KART BUSINESS BY THE ASSESSEE AND THEREFORE DIRECTED THE ASSESSING OFFICER TO REWORK THE LONG TERM CAPITAL GAINS WITH REGARD TO SALE CONSIDERATIO N IN RESPECT OF 70 CENTS OF THE AREA USED FOR COMMERCIA L PURPOSES FOR COMPUTATION OF CAPITAL GAINS. THE REV ENUE IS IN APPEAL BEFORE US. ITA NO.772/MDS/2011 7 4. THE DEPARTMENTAL REPRESENTATIVE SHRI SHAJI P.JAC OB SUBMITS THAT ASSESSEE IS INTO BUSINESS OF GO-KARTIN G IN THE NAME OF DANNYS KARTING FROM THE YEAR 2000 ONWARDS . ON 14.02.2005 ASSESSEE ENTERED INTO A DEVELOPMENT AGRE EMENT WITH M/S. CITYLIGHTS PROPERTIES PVT. LTD. IN RESPEC T OF 316 CENTS OF LAND HELD BY IT FOR TRANSFERRING ITS INTEREST IN 74% OF LAND AND IN TURN THE ASSESSEE WILL GET 26% INTEREST IN THE C ONSTRUCTED AREA. POSSESSION OF THE PROPERTY WAS HANDED OVER ON 31.4.2005. A POWER OF ATTORNEY WAS EXECUTED ON 16.8 .2005. THE LAND WAS REGISTERED ON 23.1.2006. THE DEPARTME NTAL REPRESENTATIVE SUBMITS THAT ASSESSEES RECORD SHOWS THAT ASSESSEE IS DOING BUSINESS IN THE SAID LAND BY CONS TRUCTING BUILDING AND DEPRECIATION WAS ALSO CLAIMED BY THE A SSESSEE ON SUCH BUILDING. THE BUSINESS WAS WORKING FULL-FL EDGED FROM 2000 ONWARDS AND THE BUSINESS MAINLY REQUIRED OPEN LAND. THE DEPARTMENTAL REPRESENTATIVE REFERRED TO A COLUM N PUBLISHED IN BUSINESS LINE ON 15.6.2000, WHEREIN A REPORT WAS PUBLISHED BY BUSINESS LINE ON THE OCCASION OF T HE OPENING OF GO-KART TRACK BY THE ASSESSEE. REFERRING TO THE NEWS REPORT, THE DEPARTMENTAL REPRESENTATIVE SUBMIT S THAT ITA NO.772/MDS/2011 8 MR. IRFAN SHERIFF, DIRECTOR OF THE ASSESSEE STATED THAT ASPHALT TRACK SURFACE WOULD BE 700 METRES LONG. THE TRACK W OULD HAVE 7 RIGHT HAND BENDS, 4 LEFT HAND BENDS AND 6 STADIU M LIGHT TOWERS OF 6000 WATTS EACH. THE DEPARTMENTAL REPRES ENTATIVE SUBMITS THAT IT IS QUITE IMPOSSIBLE TO SET UP 700 M ETERS LONG TRACK FOR GO-KARTING IN 70 CENTS OF LAND AS THE AS SESSEE IS CLAIMING THAT IT USED ONLY 70 CENTS OF LAND OUT OF 316 CENTS FOR GO-KARTING BUSINESS. THE DEPARTMENTAL REPRESENTATI VE SUBMITS THAT SIZE OF A HOCKEY COURT IS 91 X 55 SQ.M ETERS AND TENNIS COURT IS 70 X 40 SQ.METERS. THE DEPARTMENTAL REPRESENTATIVE SUBMITS THAT EVEN IF WE ACCEPT THE A SSESSEES CONTENTION THAT IT HAS USED ONLY 70 CENTS FOR THE P URPOSE OF GO-KARTING, THE AREA USED FOR SUCH PURPOSE WOULD BE FAR LESS THAN A HOCKEY OR TENNIS COURT, WHICH IS HIGHLY IMPR OBABLE. 5. THE DEPARTMENTAL REPRESENTATIVE FURTHER SUBMITS THAT AS PER THE RETURN OF INCOME FILED BY THE ASSESSEE F OR THE EARLIER YEARS I.E. ASSESSMENT YEAR 2002-03 AND 2003 -04 LAND WAS APPEARING IN THE BALANCE SHEET OF THE ASSESSEE, SUCH LAND CONTINUED TO APPEAR AS BUSINESS ASSET IN THE S UBSEQUENT ITA NO.772/MDS/2011 9 YEARS ALSO. DEPRECIATION WAS CLAIMED ON THE BUILDIN G SITUATED ON THE SAID LAND AND DEPRECIATION WAS CLAIMED FROM BUSINESS INCOME IN THESE YEARS. THE DEPARTMENTAL REPRESENTA TIVE SUBMITS THAT THE ENTIRE LAND WAS USED FOR THE PURPO SE OF BUSINESS OF THE ASSESSEE AND THERE IS NO SCOPE FOR THE COMMISSIONER OF INCOME TAX (APPEALS) TO DIVIDE IT I NTO AGRICULTURAL AND NON-AGRICULTURAL LAND. THE DEPARTM ENTAL REPRESENTATIVE SUBMITS THAT IN THE ASSESSMENT YEARS 2002-03 AND 2003-04 THE ASSESSEE DID NOT EARN ANY AGRICULTU RAL INCOME. REFERRING TO THE RETURN FILED BY THE ASSESS EE FOR THE ASSESSMENT YEARS 2002-03 AND 2003-04, HE SUBMITS TH AT THE ASSESSEE HAS NOT RETURNED ANY AGRICULTURAL INCOME I N THESE YEARS. HE FURTHER SUBMITS THAT FOR THE ASSESSMENT YEAR 2005-06 A SUM OF ` 65,936/- WAS SHOWN AS SALE PROCEEDS OF MANGO, COCONUT AND WOOD. FOR THE ASSESSMENT YEAR 2006- 07 AN AMOUNT OF ` 47,350/- WAS SHOWN AS SALE PROCEEDS FROM TREE / THARCHED /COCONUT / WOOD / GOAT SALES. THE DEPARTMENTAL REPRESENTATIVE SUBMITS THAT THERE IS N O EVIDENCE FOR CARRYING OUT ANY SYSTEMATIC AGRICULTUR AL ACTIVITIES ON THE SAID LAND. THE BOOKS OF ACCOUNTS AND THE PR OFIT AND ITA NO.772/MDS/2011 10 LOSS ACCOUNT ALSO DO NOT SHOW INCURRING OF ANY EXPE NDITURE BY THE ASSESSEE ON AGRICULTURE. 6. THE DEPARTMENTAL REPRESENTATIVE RELIES ON THE FO LLOWING DECISIONS FOR THE PROPOSITION THAT INCOME FROM BASI C OPERATIONS OF CULTIVATING LAND AND REQUIRING EXPEND ITURE OF HUMAN SKILL AND LABOUR ON LAND IS AGRICULTURAL INCO ME:- 1. CIT VS. RAJA BENOY KUMAR SAHAR ROY (32 ITR 466) 2. CIT VS. MADDI VENKATASUBBAYYA & ANOTHER (20 ITR 151) 3. PAPAYA FARMS PVT. LTD., VS. DCIT (325 ITR 60) FOR THE PROPOSITION THAT INCOME FROM COCONUT THOPE IS NON- AGRICULTURAL IN NATURE, HE PLACES RELIANCE ON THE D ECISION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF ARUNACHALA NADAR VS. CIT (252 ITR 734). THE DEPARTMENTAL REPRESENTAT IVE PLACES RELIANCE ON THE FOLLOWING DECISIONS FOR THE PROPOSITION THAT LAND NOT AGRICULTURAL THOUGH ENTERED IN THE RE VENUE RECORDS AS AGRICULTURAL:- 1. SARIFABIBI MOHAMMED IBRAHIM VS. CIT (204 ITR 631 ) 2. CHEMMANCHERRY ESTATES CO. VS. ITO (118 TTJ 691) ITA NO.772/MDS/2011 11 3. ACIT VS. SUBRAMANIAN VADIVEL IN ITA NO.2118/MDS/2012 DATED 20.12.2013 THE DEPARTMENTAL REPRESENTATIVE PLACES RELIANCE ON THE DECISION IN THE CASE OF FAZALBHOY INVESTMENT CO. LT D. VS. CIT (176 ITR 523) (BOM) FOR THE PROPOSITION THAT EVIDE NCE SHOWING THAT NO AGRICULTURAL OPERATIONS WERE CARRIE D OUT ON LAND, LAND NOT AGRICULTURAL AND LIABLE FOR CAPITAL GAINS. THE DEPARTMENTAL REPRESENTATIVE PLEADS FOR ALLOWING APP EAL OF THE REVENUE CONSIDERING THE PRINCIPLES LAID DOWN IN THESE DECISIONS AND IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 7. THE COUNSEL FOR THE ASSESSEE MRS. ANITA SUMANTH REITERATED THE SUBMISSIONS MADE BEFORE THE COMMISSI ONER OF INCOME TAX (APPEALS). SHE SUBMITS THAT ASSESSEE DEC LARED AGRICULTURAL INCOME FROM THE SAID LAND IN THE PREVI OUS ASSESSMENT YEARS OUT OF SALE PROCEEDS OF RAGI, PULS ES ETC. SHE SUBMITS THAT AS PER THE CERTIFICATE DATED 22.7. 2009 ISSUED BY TAHSILDAR, CHENGALPATTU THE LANDS IN QUESTION A RE CLASSIFIED AS AGRICULTURAL LANDS AS PER REVENUE REC ORDS DURING THE RELEVANT PERIOD. SHE SUBMITS THAT TOTAL AREA O F LAND HELD ITA NO.772/MDS/2011 12 BY THE ASSESSEE WAS 3.16 ACRES AND THE COMPANY HAD BUILT A KATCHA ASBESTOS COVERED SHED AND AN ASPHALT ROAD IN AN AREA OF ABOUT 70 CENTS AND THE INVESTMENT IN THE CONSTR UCTION AND EQUIPMENTS LIKE GO-KARTS AND SPARES HAVE BEEN ADMIT TED IN THE RETURNS FILED. SHE SUBMITS THAT AREA OCCUPIED B Y THE BUILDING AND GO-KART AREA IS HARDLY 22% OF THE TOTA L LAND. SHE SUBMITS THAT A MAP SHOWING LOCATION OF THE LAND OWN ED BY THE ASSESSEE AND THAT OF THE ADJACENT LAND OWNED BY ONE OF THE DIRECTORS OF THE ASSESSEE COMPANY SHOWS THAT BUILDI NGS REFERRED TO BY THE ASSESSING OFFICER ARE GARAGE AND OFFICE MARKED SEPARATELY IN THE MAP AND THEY ARE INSIDE TH E 70 CENTS OF LAND AND THEREFORE ASSESSING OFFICERS FI NDING THAT ENTIRE LAND WAS NON-AGRICULTURAL IN CHARACTER IS IN CORRECT. SHE SUBMITS THAT LAND IN QUESTION FINDS A PLACE IN PATT A, CHITTA AND ADANGAL ISSUED BY THE REVENUE AUTHORITIES INDICATES THAT LANDS ARE ONLY AGRICULTURAL IN CHARACTER AND NOT COMMERCI AL. SHE FURTHER SUBMITS THAT SHRI SHERIF DYAN, ONE OF THE D IRECTORS OF THE ASSESSEE COMPANY HAD SOLD LANDS OWNED BY HIM IN THE VERY SAME NAVALUR VILLAGE ADJACENT TO THE LAND OWNE D BY THE ASSESSEE COMPANY AND THIS TRIBUNAL HELD THAT LAND SOLD BY ITA NO.772/MDS/2011 13 MR. SHERIF DYAN IS AGRICULTURAL LAND AND NOT EXIGIB LE TO CAPITAL GAINS IN ITA NO.2088/MDS/ 2010 BY ORDER DATED 24.06 .2011. SHE SUBMITS THAT CASE LAWS RELIED ON BY THE REVENUE ARE DISTINGUISHABLE ON FACTS AND THEREFORE PRAYS THAT O RDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) BE SUSTAINED. 8. HEARD BOTH SIDES. PERUSED THE ORDERS OF LOWER AUTHORITIES AND THE CASE LAWS RELIED ON BY BOTH PAR TIES. THE ASSESSING OFFICER HELD THAT THE LAND GIVEN FOR DEVE LOPMENT AND SOLD BY THE ASSESSEE IS NOT AGRICULTURAL LAND I N VIEW OF THE FACT THAT LAND WAS USED BY THE ASSESSEE FOR ITS GO- KARTING BUSINESS. THE ASSESSEE HAS CLAIMED DEPRECIATION ON THE BUILDINGS USED FOR SUCH BUSINESS. NO AGRICULTURAL A CTIVITY WAS CARRIED ON BY THE ASSESSEE AND AS PER THE CHIEF ENG INEER, DEPARTMENT OF TOWN PLANNING AUTHORITY, CHENGALPATTU MUNICIPALITY, LAND IN QUESTION COMES UNDER URBANIZA TION LAND DURING THE RELEVANT PERIOD AND NO PERMISSION IS RE QUIRED FOR CONSTRUCTION OF PROPERTY ON THE SAID LAND. IN SUCH CIRCUMSTANCES, THE ASSESSING OFFICER HELD THAT LAND IN QUESTION IS NON-AGRICULTURAL LAND AND LIABLE FOR CA PITAL GAINS ITA NO.772/MDS/2011 14 TAX. THE COMMISSIONER OF INCOME TAX (APPEALS) WAS O F THE VIEW THAT LAND IN QUESTION WAS SHOWN AS AGRICULTURA L LAND IN REVENUE RECORDS, THE ASSESSEE HAS SHOWN AGRICULTUR AL INCOME, THE LAND WHEN PURCHASED BY THE ASSESSEE WAS AGRICULTURAL LAND AS PER NARRATION IN PURCHASE DEED AND THE ASSESSEE HAS BEEN PAYING KIST AND THE LANDS HAVE NOT BEEN CONVERTED INTO NON-AGRICULTURAL PURPOSES TILL THE D ATE OF TRANSFER. THEREFORE, ACCORDING TO HIM, THE LAND IS AGRICULTURAL LAND EXCEPT TO THE EXTENT OF 70 CENTS OUT OF 316 CE NTS WHERE THE ASSESSEE HIMSELF ADMITS THAT 70 CENTS HAVE BEEN USED FOR THE PURPOSE OF GO-KARTING BUSINESS. 9. WE FIND FROM THE RECORDS THAT ASSESSEE IS DOING BUSINESS RIGHT FROM THE YEAR 2000 BY SETTING UP GO- KARTING TRACK. IT IS CLEARLY EVIDENT FROM THE REPORT PUBLIS HED IN BUSINESS LINE AT THE TIME OF SETTING UP OF GO-KAR T TRACK FACILITY BY THE ASSESSEE THAT ASPHALT TRACK SURFACE WOULD BE 700 METRES LONG WITH SEVEN RIGHT HAND BENDS, FOUR LEFT HAND BENDS. INITIALLY THERE WILL BE TEN KARTS IMPORTED F ROM JAPAN AND ITALY. IT IS NOT IN DISPUTE THAT LAND AND BUILDING WAS USED FOR ITA NO.772/MDS/2011 15 BUSINESS BY THE ASSESSEE IN ALL THESE YEARS RIGHT F ROM THE YEAR 2000. THE ASSESSEE HAS CLAIMED DEPRECIATION ON THE BUILDING. THE ASSESSEE HAS SHOWN VALUE OF LAND AS O N 31.3.2001 AT ` 36,73,903/-. ALL THESE FACTS GO TO SHOW THAT ASSESSEE IS USING THE LAND FOR THE PURPOSE OF BUSIN ESS. HOWEVER, THE QUESTION IS WHETHER ASSESSEE USED THE ENTIRE LAND OR PART OF LAND FOR THE PURPOSE OF ITS BUSINES S. NOWHERE IN THE RECORDS SUGGEST THAT ASSESSEE IS USING ONLY TO THE EXTENT OF 70 CENTS FOR ITS BUSINESS PURPOSES, EXCEP T THE ASSESSEES WRITTEN SUBMISSION AND A MAP SUBMITTED B Y THE ASSESSEE BEFORE THE COMMISSIONER OF INCOME TAX (APP EALS) . WE ALSO FIND FROM THE RECORDS THAT NO SUCH CLAIM WA S MADE BEFORE THE ASSESSING OFFICER THAT ASSESSEE HAS BEEN USING ONLY 70 CENTS FOR ITS GO-KARTING BUSINESS OUT OF 31 6 CENTS. THE ASSESSEE ALSO DID NOT PROVE WITH EVIDENCE THAT SOME AGRICULTURAL OPERATIONS WERE CARRIED ON IN THE LAND OTHER THAN THE LAND USED FOR GO-KARTING. IN SUCH CIRCUMSTANCES IT IS HARD TO BELIEVE THAT THE ASSESSEE USED ONLY 70 CENTS FOR ITS GO- KARTING BUSINESS OUT OF 316 CENTS. ITA NO.772/MDS/2011 16 10. WE ALSO AGREE WITH THE SUBMISSION OF THE DEPART MENTAL REPRESENTATIVE THAT IT IS QUITE IMPOSSIBLE TO SET U P 700 METRES LONG TRACK FOR GO-KARTING IN 70 CENTS OF LAND. AS SUBMITTED BY THE DEPARTMENTAL REPRESENTATIVE EVEN FOR HOCKEY OR TENNIS COURT, THE AREA REQUIRED WOULD BE MORE THAN 70 CENT S AND IN SUCH A CASE, IT IS HIGHLY IMPROBABLE THAT ASSESSEE WOULD HAVE USED ONLY 70 CENTS FOR ITS BUSINESS OF GO-KARTING. IT IS ALSO A FACT THAT ASSESSEE HAS NOT REPORTED ANY AGRICULTURA L INCOME TILL THE ASSESSMENT YEAR 2005-06 AND 2006-07. THE ASSESS EE HAS REPORTED AGRICULTURAL INCOME OF ` 65,936/- IN THE ASSESSMENT YEAR 2005-06 ON ACCOUNT OF SALE OF MANGO , COCONUT AND WOOD. FOR THE ASSESSMENT YEAR 2006-07, THE ASSESSEE REPORTED AGRICULTURAL INCOME OF ` 47,350/- BEING SALE PROCEEDS OF TREE / THARCHED / COCONUT / WOOD / GOAT SALES. THERE IS NO EVIDENCE ON RECORD TO SUGGEST THAT ASSE SSEE HAS CARRIED OUT ANY PRIMARY AGRICULTURAL OPERATIONS ON THOSE LANDS. THE HONBLE MADRAS HIGH COURT IN THE CASE OF S.ARUN ACHALA NADAR VS. CIT (SUPRA) HELD THAT INCOME FROM COCONUT THOPE IS NON-AGRICULTURAL INCOME. IN THE ABSENCE OF ANY EVI DENCE ON RECORD TO SHOW THAT ASSESSEE HAS PERFORMED ANY AGRI CULTURAL ITA NO.772/MDS/2011 17 OPERATIONS ESPECIALLY WHEN THE ASSESSEE WAS USING T HE LAND FOR ITS BUSINESS PURPOSES I.E. FOR GO-KARTING, IT C ANNOT BE HELD THAT THE LAND IN QUESTION IS AGRICULTURAL LAND. 11. THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE C ASE OF SHRI SUBRAMANIAN VADIVEL, IN ITA NO.2118/MDS/2012 & C.O.NOS. 1 & 19/MDS/2013 VIDE ORDER DATED 20 TH FEBRUARY, 2013 OBSERVED AS UNDER:- 13. THE LEARNED CHARTERED ACCOUNTANT FURTHER EXPLAINED THAT EVEN AT THE TIME OF SALE, THE PROPERTIES WERE USED FOR AGRICULTURAL OPERATIONS, AS THE ASSESSEE HAD PLANTED CASUARINA TREES AS PART OF ITS AGRICULTURAL OPERATIONS. HE SUBMITTED THAT THE COMMISSIONER OF INCOME-TAX(APPEALS) HAS EXAMINED ALL THESE ASPECTS IN A DETAILED MANNER AND, THEREFORE, THE APPEAL FILED BY THE REVENUE BE DISMISSED. 14. THE REVENUE HAS RELIED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF SARIFABIBI MOHAMED IBRAHIM VS. CIT (204 ITR 631) TO HOLD THAT THE PROPERTIES SOLD BY THE ASSESSEE WERE NOT AGRICULTURAL IN NATURE. THE COMMISSIONER HAS ALSO PLACED RELIANCE ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RAJA BENOY KUMAR SAHAS ROY (32 ITR 466). HE HAS ALSO RELIED ON THE DECISION OF THE INCOME-TAX APPELLATE TRIBUNAL B BENCH, CHENNAI RENDERED IN THE CASE OF M/S. PALLAVA ITA NO.772/MDS/2011 18 RESORTS P. LTD. IN ITA NO.794/MDS/2011DATED 11.10.2012. 15. THE ASSESSEE HAS RELIED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. ALL INDIA TEA & TRADING CO. LTD. (219 ITR 544), THE DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF M.S.SRINIVASA NAICKER (291 ITR 481) AND ALSO THE ORDER OF THE TRIBUNAL, CHENNAI B BENCH IN THE CASE OF ACIT VS. SHRI SHERIT DYAN IN ITA NO.2088/MDS/2010 DATED 24.6.2011. THE COMMISSIONER OF INCOME- TAX(APPEALS) HAS ALSO RELIED ON A NUMBER OF JUDICIAL PRONOUNCEMENTS IN HIS ORDER FOR COMING TO THIS CONCLUSION. 16. WE HEARD BOTH SIDES IN DETAIL AND GONE THROUGH THE ORDERS OF THE LOWER AUTHORITIES, THE ARGUMENTS OF THE PARTIES AS WELL AS THE VARIOUS DECISIONS RELIED ON BY THEM. 17. THE ANCHOR OF THE ARGUMENTS ADVANCED BY THE ASSESSEE IN THE PRESENT CASE IS THAT THE LANDS SOLD BY HIM WERE SHOWN AS AGRICULTURAL LAND IN REVENUE RECORDS. THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SARIFABIBI MOHAMED IBRAHIM (136 ITR 621) HAS HELD THAT, THE FACT THAT THE 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 A AN AGRICULTURAL LAND. HOWEVER, THIS WOULD RAISE ONLY A PRIMA FACIE PRESUMPTION AND THE SAID PRESUMPTION CAN BE DESTROYED BY OTHER CIRCUMSTANCES POINTING TO THE CONTRARY CONCLUSION. THIS LEGAL PROPOSITION HIGHLIGHTED BY THE HONBLE GUJARAT HIGH COURT HAS BEEN LATER UPHELD BY THE HONBLE SUPREME COURT IN THE CASE OF SARIFABIBI MOHAMED IBRAHIM VS. CIT ITA NO.772/MDS/2011 19 (204 ITR 631). IT IS ALSO TO BE SEEN THAT THE QUESTION, WHETHER A PARTICULAR LAND IS AGRICULTURAL OR NOT, IS BASICALLY A QUESTION OF FACT. AS LAID DOWN BY VARIOUS HIGH COURTS IN DIFFERENT JUDGMENTS, A SERIES OF TESTS ARE APPLIED TO DECIDE, WHETHER A LAND IS AGRICULTURAL OR NOT. IT IS ALSO TO BE UNDERSTOOD THAT ALL THESE TESTS ARE IN THE NATURE OF GUIDELINES AND HAVE TO BE APPLIED, DEPENDING UPON THE FACTS AND CIRCUMSTANCES OF EACH CASE. 12. THE QUESTION WHETHER THE LAND IS AGRICULTURAL O R NON- AGRICULTURAL IS A QUESTION OF FACT. THE MAIN CONTE NTION OF THE ASSESSEE IS THAT LAND IN QUESTION IS CLASSIFIED AS AGRICULTURAL LAND IN REVENUE RECORDS, BUT THAT ALONE IS NOT CONC LUSIVE TO HOLD THAT THE NATURE OF THE LAND SOLD BY THE ASSESS EE IS AGRICULTURAL LAND WHEN OTHER EVIDENCES SHOW THAT T HE ASSESSEE USED SUCH LAND FOR BUSINESS AND HAS NOT PE RFORMED ANY AGRICULTURAL OPERATIONS IN THE SAID LAND. THE DECISION OF THIS TRIBUNAL RELIED ON BY THE COUNSEL FOR THE ASSE SSEE IN THE CASE OF SHRI SHERIF DYAN IN ITA NO.2088/MDS/2010 DA TED 24.06.2011 HAS NO APPLICATION TO THE FACTS OF THE P RESENT CASE AS THE FACTS ARE DISTINGUISHABLE. IN THE ABOVE FACT S AND CIRCUMSTANCES OF THE CASE, WE HOLD THAT THE LAND IN QUESTION CANNOT BE HELD TO BE AGRICULTURAL LAND. THEREFORE, WE REVERSE ITA NO.772/MDS/2011 20 THE IMPUGNED ORDER OF THE COMMISSIONER OF INCOME TA X (APPEALS) AND RESTORE THAT OF THE ASSESSING OFFICER . 13. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON THURSDAY , THE 9 TH DAY OF JANUARY, 2014 AT CHENNAI. SD/- SD/- (A. MOHAN ALANKAMONY ) (CHALLA NAGENDRA PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI. DATED THE 9 TH JANUARY, 2014. SOMU COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT (4) CIT(A) (5) D.R. (6) G.F.