DCIT, CC - X, Kolkata, Kolkata V. Smt. Laxmi Singh, Kolkata

ITA 815/KOL/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54485 (ITAT-KOLKATA)
• Duration Of Justice: 2 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 27-05-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A K PRAMANICK
• Assessee Lawyers: S L KOCHAR
• Keywords: Capital asset
• Section: 143(3); 2(14)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA () BEFORE . . , !' # # # # /AND $# , !' ) [BEFORE HONBLE SHRI S. V. MEHROTRA, AM & HONBLE S RI MAHAVIR SINGH, JM] #% #% #% #% / I.T.A NO. 815/KOL/2011 $&' () $&' () $&' () $&' ()/ // / ASSESSMENT YEAR: 2008-09 DEPUTY COMMISSIONER OF INCOME-TAX, VS. SMT. LAXMI SINGH C.C. X, KOLKATA. (PAN-ALXPS 7786 D) (+, /APPELLANT ) (-.+,/ RESPONDENT ) FOR THE APPELLANT: SHRI A. K. PRAMANICK FOR THE RESPONDENT: SHRI S. L. KOCHAR !/ / ORDER PER MAHAVIR SINGH, JM ( $# $# $# $#, , , , !' !' !' !' ) THIS APPEAL BY REVENUE IS ARISING OUT OF THE ORDER OF CIT(A), CENTRAL-II, KOLKATA IN APPEAL NO.178/CC-X.CIT(A)C-II/10-11 VIDE DATED 25.0 3.2011. ASSESSMENT WAS FRAMED BY DCIT, CENTRAL CIRCLE-X, KOLKATA U/S. 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2008-09 VIDE H IS ORDER DATED 30.12.2010. 2. THE SOLE ISSUE IN THIS APPEAL OF THE REVENUE IS AGAINST THE ORDER OF CIT(A) DELETING THE INCOME OF RS.49,59,767/- ON ACCOUNT OF PROFIT ON SA LE OF LAND. FOR THIS, REVENUE HAS RAISED THE FOLLOWING TWO EFFECTIVE GROUNDS: 1) THIS IN THE FACTS AND CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN DELETING THE INCOME OF RS.49,59,767/- ON ACCOUNT OF PROFIT O N SALE OF LAND HOLDING THAT THE LAND SOLD BY THE ASSESSEE WAS AN AGRICULTURAL LAND WITHI N THE MEANING OF SECTION 2(14) OF INCOME TAX ACT AND CANNOT BE CONSIDERED AS A CAPITA L ASSET WITHOUT APPRECIATING THAT THE LAND SOLD BY THE ASSESSEE WAS SAGU (WET LAND) AND S AGU (ABANDONED COFFEE) LAND ON WHICH NO AGRICULTURAL ACTIVITY WAS EVER CARRIED ON BY THE ASSESSEE. 2) THIS IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE INCOME OF RS.49,59,767/- ON ACCOUNT OF PROFIT ON SALE OF LAND WITHOUT CONSIDERING THAT THE ASSESSEE HAD FAILED TO ESTABLI SH THAT THE CONDITIONS STIPULATED IN SEC. 2(14)(III) I.E. WHETHER THE LAND IS SITUATED BEYOND 8 KMS. FROM MUNICIPAL LIMIT OR NOT, WERE FULFILLED IN THIS CASE. 3. WE HAVE HEAR RIVAL CONTENTIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES. WE FIND FACTS THAT ASSESSEE DISCLOSED AN AMOUNT OF RS. 49,59,766/- AS INCOME UNDER 2 ITA 815/K/2011 SMT. LAXMI SINGH A.Y.08-09 THE HEAD PROFIT ON SALE OF AGRICULTURE LAND SITUATE D AT K. BADAGA, VILL. MADIBERI TALUK, BIST. KODAGU. THE AO REQUIRED ASSESSEE TO EX PLAIN WITH EVIDENCES THAT THE SAID PLOT OF LAND WAS AN AGRICULTURE PLOT OF LAND. ASSESSEE STATED THAT SALE TOOK PLACE ON 13.07.2007 FOR A TOTAL CONSIDERATION OF RS.60,00 , 000/- AND AGRICULTURE LANDS WAS ACQUIRED FOR A TOTAL CONSIDERATION OF RS. 15,39,900 /-. IT WAS CLAIMED THAT AS PER PROVISION CONTAINED IN SEC.2 (14)(III) OF THE ACT, GAIN DERIVED WAS NOT CHARGEABLE TO TAX AS IT WAS AN AGRICULTURAL LAND. HE FILED CERTIF ICATE ISSUED BY THE REVENUE INSPECTOR THAT THE LAND IN QUESTION WAS SITUATED IN THE RURAL AREA. HOWEVER, THE AO DID NOT ACCEPT THE EXPLANATION OF ASSESSEE AND STATED THAT THERE WAS NO EVIDENCE TO SHOW THAT AGRICULTURAL ACTIVITIES WERE CARRIED OUT ON THE SAI D LAND AND ALSO NO AGRICULTURAL INCOME WAS SHOWN IN THE PAST YEARS. THEREFORE, HE R EJECTED SUBMISSIONS AND ADDED ENTIRE AMOUNT OF RS.49,59, 767/- AS TAXABLE. AGGRIE VED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO AFTER CONSIDERING SUBMISSIONS OF ASSESSEE, DELETED THE ADDITION BY HOLDING AS UNDER: 4.1 I HAVE GONE THROUGH THE ASSESSMENT ORDER AND SUBMISSIONS OF APPELLANT. THE QUESTION WHETHER IN ABSENCE OF ANY AGRICULTURAL ACT IVITY ON A LAND WHICH IS OTHERWISE CERTIFIED TO BE IN RURAL AREA AND WHICH H AS BEEN CHARACTERIZED AS WET LAND OR ABANDONED COFFEE LAND CAN BE SAID TO BE AN AGRICULTURAL LAND FOR THE PURPOSE OF SECTION 2(14) OF THE IT ACT. THE AGRICU LTURAL LAND HAS NOT BEEN DEFINED IN THE INCOME TAX ACT. HOWEVER, CLAUSE (III) OF SEC TION 2(14) EXCLUDES FROM THE AMBIT OF AGRICULTURAL LAND, SUCH LAND WHICH IS SITUATED W ITHIN THE JURISDICTION OF MUNICIPALITY OR WITHIN 8 KILOMETERS OR ANY OTHER LI MIT PRESCRIBED BY CBDT, FROM THE LOCAL LIMITS OF MUNICIPALITY. THE FACTS OF THE PRES ENT CASE SHOW THAT THE LAND IN QUESTION WAS IN RURAL AREA AND DOES NOT FALL WITHIN THE EXCLUSION SUB CLAUSE (A) OR (B) OF CLAUSE (III) OF SECTION 2(14) OF THE I. T. A CT. 4.2 THE NEXT QUESTION IS WHETHER THE LAND WHICH IS THE SUBJECT MATTER OF SALE IS CLASSIFIED AS AGRICULTURAL OR NON AGRICULTURAL LAND WITHIN THE RECORDS OF THE STATE OF KARNATAKA WHERE THE LAND IS SITUATED. I FIND FROM C LAUSE 5 OF THE PURCHASE DEEDS DATED 24/03/2003 THAT THE LAND WAS PURCHASED AS PL ANTATION AS DEFINED UNDER KARNATAKA LAND REFORM ACT 1961. IT APPEARS FROM THE SALE DEED THAT THE DESCRIPTION OF THE LAND SOLD AS PER SALE AGREEMENT IS SAME AS T HE DESCRIPTION OF LAND PURCHASED AS PER PURCHASE DEEDS. IN THE PURCHASE DEED AS WELL AS IN SALE AGREEMENT, THE LAND WAS DESCRIBED AS 10.62 ACRES OF COFFEE SAGU LAND WITH ANOTHER5.31 ACRES OF WET LAND IN BOTH THE PURCHASE DEEDS DATED 24.03.2003 A S WELL AS SALE AGREEMENT DATED 13.07.2007. THIS LAND WAS REFERRED TO AS PLANTATIO N IN CLAUSE 5 OF THE PURCHASE DEED DATED 24.03.2003. THE PURCHASE DEED OF APPELLA NT DATED 24.03.2003 SHOWS THAT THE APPELLANT PURCHASED THE LAND CLASSIFIED AS PLA NTATION WITHIN THE MEANING OF SECTION 104 OF THE KARNATAKA LAND REFORMS ACT 1961. AS PER THE DEFINITION OF LAND UNDER SECTION 2(18) OF KARNATAKA LAND REFORM S ACT 1961, LAND MEANS AGRICULTURAL LAND, THAT IS TO SAY, LAND WHICH IS US ED OR CAPABLE OF BEING USED FOR AGRICULTURAL PURPOSES OR PURPOSES SUBSERVIENT THERE TO AND INCLUDES HORTICULTURAL LAND, FOREST LAND, GARDEN LAND, PASTURE LAND, PLANT ATION AND TOPE BUT DOES NOT INCLUDE HOUSE-SITE OR LAND USED EXCLUSIVELY FOR NON AGRICULTURAL PURPOSES. THE PLANTATION HAS BEEN INCLUDED IN THE DEFINITION OF AGRICULTURAL LAND AND THEREFORE I 3 ITA 815/K/2011 SMT. LAXMI SINGH A.Y.08-09 FIND THAT THE PLANTATION, WHICH IS THE SUBJECT MA TTER OF SALE AS PER CLAUSE 5 OF PURCHASE DEED DATED 24/03/2003, QUALIFIES AS AGRICU LTURAL LAND IN PRESENT CASE. MOREOVER, AS PER CLAUSE 5 OF THE PURCHASE DEED DA TED 24/03/2003, IT IS APPARENT THAT APPELLANT COULD ACQUIRE THIS LAND ON 24/03/200 3 BECAUSE APPELLANT WAS AN AGRICULTURIST. 4.3 THE NEXT QUESTION IS WHETHER A LAND CAN QUALIF Y AS AGRICULTURAL LAND IF NO PLANTATION OR AGRICULTURAL ACTIVITY WAS CARRIED OUT ON IT SINCE IT WAS PURCHASED AND TILL IT WAS SOLD. THE FACTS OF THE CASE SHOW THAT N EITHER PLANTATION ACTIVITY NOR ANY NON AGRICULTURAL ACTIVITY LIKE CONSTRUCTION, HOUSIN G ETC. WAS CARRIED OUT BY APPELLANT IN THE LAND AT KARAVALEBADAGA VILLAGE, IN MADIKEI TALUK, KODAGU DISTRICT OF KARNATAKA. HOWEVER, THE LAND WAS AN AGRICULTURAL LA ND WITHIN THE RECORDS OF THE STATE OF KARNATAKA BOTH WHEN IT WAS PURCHASED ON 24 /03/2003 AND WHEN IT WAS SOLD ON 13/07/2007. IN CASE OF HINDUSTAN INDUSTRIAL RESO URCES LTD. V. ASSTT. CIT:(2009) 221 CTR 0710, HBLE DELHI HIGH COURT HELD THAT WHEN IN AN AGRICULTURAL LAND, NO NON AGRICULTURAL ACTIVITY HAS BEEN CARRIED OUT AND SUCH LAND HAS NOT BEEN CONVERTED INTO A NON AGRICULTURAL LAND THEN IT CANNOT BE INFE RRED THAT THE NATURE AND CHARACTER OF THE LAND HAD BEEN CHANGED FROM AGRICULTURAL TO N ON AGRICULTURAL. HONBLE HIGH COURT FURTHER HELD THAT THE MERE FACT THAT THE ASSE SSEE DID NOT CARRY OUT ANY AGRICULTURAL OPERATION DID NOT ALTER THE NATURE AND CHARACTER OF THE LAND. HONBLE HIGH COURT FURTHER HELD THAT IF ON THE DATE OF THE PURCHASE AND AS ALSO ON THE DATE OF ACQUISITION, THE LAND IN QUESTION WAS AGRICULTURAL LAND THEN THE INTENTION OF ASSESSEE OR OTHER PERSON IS IRRELEVANT. IN THE PRESENT CASE, THE LAND IN QUESTION IS BASICALLY COFFEE PLANTATION LAND WHICH IS GENERALLY A HILLY A REA WITH SOME WATER BODIES AROUND IT. THE GENERAL PHYSICAL CHARACTERISTICS OF LAND DO NOT ALLOW IT TO BE CONSIDERED AS NON AGRICULTURAL LAND EVEN IF NO AGRICULTURAL ACTIV ITY HAS BEEN CARRIED OUT ON THIS LAND AND MORE IMPORTANTLY THIS LAND HAS BEEN RECORD ED AS PLANTATION WITHIN KARNATAKA LAND REFORM ACT 1961 WHICH IS AN AGRICULT URAL LAND AS DEFINED U/S 2(18) OF THE SAME ACT. THEREFORE, I HOLD THAT THE LAND SO LD BY APPELLANT WAS AN AGRICULTURAL LAND WITHIN THE MEANING OF SECTION 2(14) OF THE INC OME TAX ACT AND CANNOT BE CONSIDERED AS A CAPITAL ASSET FROM WHOSE TRANSFER A NY CAPITAL GAIN MAY ARISE U/S 45 OF THE 1.T.ACT. I THEREFORE DIRECT THE ASSESSING OF FICER TO DELETE THE INCOME OF RS. 49,59,767/- ADDED BY HIM TO THE TOTAL INCOME OF APP ELLANT ON ACCOUNT OF PROFIT ON SALE OF AGRICULTURAL LAND. AGGRIEVED, NOW REVENUE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. THE FACTS RELATING TO THIS CASE ARE THAT ASS ESSEE SOLD A LAND SITUATED AT K. BADAGA VILLAGE MADIBERI TALIK, DISTRICT KODAGU IN KARNATAK ON 13/07/2007 FOR A CONSIDERATION OF RS. 60 LAKH WHICH WAS ACQUIRED ON 24/03/2003 FOR A CONSIDERATION OF RS. 5,87,400. ASSESSEE SUBMITTED EVIDENCES OF PURCHASE DEED, SALE AGREEMEN T, CERTIFICATE OF REVENUE INSPECTOR SPECIFYING LAND IN QUESTION SITUATED IN RURAL AREA. HOWEVER, ASSESSING OFFICER FOUND THAT ASSESSEE COULD NOT ESTABLISH OR FURNISH ANY EVIDENC E TO SHOW THAT AGRICULTURAL ACTIVITIES WERE CARRIED OUT IN THIS LAND FOR IT TO QUALIFY AS AGRIC ULTURAL LAND AND UNABLE TO SHOW ANY AGRICULTURAL INCOME FROM THIS LAND IN ANY PRECEDING YEAR AND THEREFORE FOUND THAT IN ABSENCE OF ANY AGRICULTURAL ACTIVITY IT CANNOT BE CALLED AN AGRICULTURAL LAND. ASSESSING OFFICER REJECTED THE CLAIM OF APPELLANT THAT PROFIT OF RS. 49,59,767/- ON SALE OF THIS LAND COULD BE 4 ITA 815/K/2011 SMT. LAXMI SINGH A.Y.08-09 CLAIMED AS EXEMPT FROM TAXATION AS IT WAS NOT AN AG RICULTURAL LAND. WE FIND FROM RECORDS THAT NO DOUBT THERE IS ABSENCE OF ANY AGRICULTURAL ACTIVITY ON THE LAND BUT THE SAME IS CHARACTERIZED AS WET LAND OR ABANDONED COFFEE LAN D. WE FIND FROM SALE DEED THAT THIS LAND IS CLASSIFIED AS PLANTATION LAND AS DEFINED UNDER K ARNATAKA LAND REFORMS ACT, 1961 AND WHICH CLEARLY REVEALED FROM SALE DEED. THE DESCRIP TION OF LAND IN SALE DEED IS AS 10.62 ACRES OF COFFEE SAGU LAND WITH ANOTHER 5.31 ACRES OF W ET LAND IN BOTH THE PURCHASE DEED AS WELL AS AGREEMENT FOR SALE. ONCE IT IS NOT REBUTTED THA T THIS IS NOT WET LAND OR COFFEE LAND THE INITIAL ONUS BY ASSESSEE IS DISCHARGED AND THIS IS TO BE TREATED AS AGRICULTURAL LAND. ACCORDINGLY, WE CONFIRM THE ORDER OF CIT(A) AND THI S ISSUE OF REVENUES APPEAL IS DISMISSED. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. 6. ORDER PRONOUNCED IN OPEN COURT. SD/- SD/- . . , !' $# $# $# $# , !' (S. V. MEHROTRA) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( 0 0 0 0 ) )) ) DATED 12TH AUGUST, 2011 12 $&34 $5 JD.(SR.P.S.) !/ 6 -$$ 7(8- COPY OF THE ORDER FORWARDED TO: 1 . +, / APPELLANT DCIT, CC-X, KOLKATA. 2 -.+, / RESPONDENT, SMT. LAXMI SINGH, 36B, SHAKESPEARE SA RANI, KOLKATA- 700 017. 3 . $/& ( )/ THE CIT(A), KOLKATA 4. $/& / CIT, KOLKATA 5 . $> -$& / DR, KOLKATA BENCHES, KOLKATA . -$/ TRUE COPY, !/&?/ BY ORDER, #4 /ASSTT. REGISTRAR .