DCIT CENTRAL CIRCLE 2(20, CHENNAI vs. RAMA NARAYANAN (LATE), L/H SHRINARAYANAN RAMASWAMY, CHENNAI

आदेश / O R D E R PER G. MANJUNATHA, AM: This appeal filed by the Revenue is directed against the order of the

Commissioner of Income Tax (Appeals)-18, Chennai, dated 20.07.2018

and pertains to assessment year 2012-13.

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2.1 The learned CIT(A) ought to have appreciated the fact that in the Website of the Registration Department, Tamil Nadu, the land has been classified as 'Residential Area Class- Ill'.

2.2 The learned CIT(A) ought to have appreciated the fact that ITI's report has also described the surrounding circumstances to draw the inference that no agricultural activity had taken place in the said land.

2.3 The Id.CIT(A) failed to note that the Hon' Chennai Tribunal in the case of Pallavaram Kothandaraman Ramesh has held that once a land is classified in the website of the Registration Department as 'residential', it is a vital factor to come to the conclusion that the impugned sale is not agricultural and in such a case, classification in the revenue records is not material.

2.4 The learned CIT(A) ought to have appreciated the fact that the decision of the Hon' Chennai Tribunal in the case of Pallavaram Kothandaraman Ramesh squarely applies to the facts of the instant case.

RELIEF CLAIMED IN APPEAL

The order of the learned CIT(Appeals) may be set aside and that of the Assessing Officer be restored.

was conducted in the case of Mr.N.Ramaswamy on 30.09.2015. During the

course of search proceedings, an incriminating material in the form of

agreement to sale of properties found and as per said agreement, the

assessee has received sale consideration of Rs.6.16 Crs. On verification of

assessment records, it was noticed that the assessee has declared sale

consideration of Rs.1.76 Crs. only. Consequent to search, the case was

centralized and notice u/s.153C of the Act, issued on 18.07.2017. In

response to notice u/s.153C of the Act, the assessee’s legal heir

Mr.N.Ramaswamy filed return of income on behalf of assessee on

11.09.2017, declaring total income of Rs.5,98,640/-. During the course of

assessment proceedings, the AO noticed that the assessee has sold a land

ITA No.3080/Chny/2018 :: 3 ::

at Padappai in Survey No.284/1B for a consideration of Rs.6.16 Crs.

However, he has offered a sum of Rs.1.76 Crs. only. The difference amount

of Rs.4.40 Crs. was not declared to tax. Therefore, called upon the

assessee to file necessary evidences to justify non-declaration of excess

consideration as per agreement. In response, the assessee submitted that

the land sold by him in Survey No.384/1A & 284//1B is an agricultural land

situated beyond 8 kms from the nearby municipal limits and having a

population of less than 10000 and thus, same is outside the scope of

sec.2(14) of the Act, and hence, no capital gains has been offered towards

above said sale. The AO, however, was not convinced with the explanation

offered by the assessee and according to the AO, the land sold by the

assessee at Padappai to M/s.Alwin Public School, is a capital asset in terms

of provisions of Sec.2(14)(iii) of the Act, because, said land is situated

within 8 kms from the jurisdiction of municipality having a population of

more than 10000. The AO further noted that as per the report of Inspector

of Income Tax, the land is situated within radius of 5 kms from the

municipal limits. Further, the assessee did not carried out any agricultural

activities in the said land. The land has been sold for non-agricultural

purpose. Therefore, the AO opined that the impugned land sold by the

assessee is a capital asset and accordingly, consideration received for sale

of land is assessable under the head ‘capital gains’. Therefore, rejected the

arguments of the assessee and assessed excess consideration received

over and above sale consideration shown in Deed amounting to Rs.4.40

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Crs. has been treated as income from other sources and added back to total

income. The relevant findings of the AO are as under:

The assessee has filed the Original ROI on 13.03.2013. As per this ROI the assessee has sold the lands at Padappai to M/s.Alwin Public School and the sale consideration was admitted as long-term capital gain and claimed the entire amount as exemption stating as Agricultural lands. But while passing the order U/s.143(3) the AO has rejected the assessee claim and computed the same as long term capital gain income. The lands sold during the assessment year and the details of agricultural land as per the sale deed is as follows:

S.No. Date of Document No. Sale consideration Purchase cost document 1 01.06.2011 3112/2011 Rs.38,5000/- (balance Not known 50% for assessee’s wife) 2 08.06.2011 3308/2011 Rs.76,00,000/- Rs.2,00,000/- 3 10.08.2011 4801/2011 Rs.1,00,00,000/- Rs.40,75,465/- (prop cost for 1 acre)

As per the provisions of Sec 2(14)(iii) only the following agricultural lands situated in any of the following areas is considered as a capital asset :

(a) In any area which is comprised within the jurisdiction of a municipality or a Cantonment Board and which has a population of not less than 10,000 according to the latest preceding census of which the figure have been published before the first day of the previous year. OR (b) In any area within such distance, not being more than 8 KMS. From the local limits of any Muncipality or Cantonment Board referred to above as the Central Government may having regard to the extent of and scope for urbanization of that area and other relevant consideration specified in this behalf by Notification in the official gazette.

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Situation of the land, for example, land situated in an urban area within the municipal limits in the proximity of buildings and building sites;

Sale of land to a non-agriculturist for non-agricultural purpose.

Sale of land on a square yard basis at a price comparable to prices fetched by building sites.

Sale at a price at which no bona fide agriculturist would purchase for genuine agricultural operations, and

When the price is such that no prudent owner would sell it at a price worked out on the capitalization method taking into accounts its optimum agricultural yield in the most favorable circumstances.

I4. Applying the above tests to the facts of the present case, clearly the impugned lands have to be held as non-agricultural in nature, for the following reasons:

The land is situated within the radium of 5 KMS from the Municipal limits. Agricultural activities was never undertaken on the land.

The sale consideration of Rs.1 crore per acre is high, which is a price normally obtained in the sale of building sites.

The land has been sold at an astronomical price at which no bona fide agriculturist would purchase nor could afford to purchase for genuine agricultural operations, given other constraints faced by agriculturists in that area like non-availability of assured water supply for irrigation, non-availability of labour for agricultural operations etc.

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relevant factor germane to the determination of the issue. Merely because the land was used for agricultural purposes on the remote past or it continues to be assessed to land revenue as agricultural land is not decisive. In order to ascertain the true character and nature of the land it must be seen whether the land had been put to use for agricultural purposes for a reasonable span of time prior to the relevant date and further as to whether on the date of the transfer the land in question was intended to be put to use by the purchaser for agricultural purposes for a reasonable span of time in future.

when the assessee had purchased the land no single penny was offered as agricultural income. Nothing was brought on record to contradict the findings given by the Assessing Officer. The entire finding of the learned CIT(Appeals) mainly based on the certificate issued by the VAO. When the Tamilnadu Government itself has notified the area in which the land in question is situated as a residential area, the certificate issued by the VAO cannot supersede the classification given by the Tamilnadu Government.

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appeal before the Ld.CIT(A). Before the Ld.CIT(A), the assessee reiterated

his arguments made before the AO. The assessee further contended that

although, all evidences filed before the AO clearly proves that impugned

land sold in Sy.Nos.384/1A & 284/1B is an agricultural land, but the AO

treated the said land as capital asset in terms of sec.2(14)(iii) of the Act,

only on the basis of Inspector Report, which was taken in the year 2017,

when the re-assessment proceedings were taken up. Therefore, on the

basis of report of Inspector, evidences filed by the assessee cannot be

discarded and land in question cannot be treated as capital asset. The

Ld.CIT(A) after considering relevant submissions of the assessee and also

taken note of various facts held that evidences filed by the assessee,

including Patta Adangal and Certificate from Revenue Authorities clearly

shows that land was classified as agricultural land. The Ld.CIT(A) further

observed that the land is situated in a village which is beyond 8 kms from

local Municipality Cantonment Board, which is having a population of less

than 10000 as per latest census. The lands were sold only as agricultural

land which is evidenced by the Sale Deed registered by Sub-Registrar

Office. Therefore, he opined that consideration received for transfer of land

is not taxable, because, said land was not a capital asset in terms of

sec.2(14)(iii) of the Act. The Ld.CIT(A) further noted that once the land in

question sold by the assessee was an agricultural land, any consideration

received for sale of said land, including excess consideration, if any, even

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if such consideration is not reported same partakes the nature of

consideration received for transfer of agricultural land, which is outside the

scope of provisions of Sec.2(14) of the Act. Therefore, deleted the

additions made by the AO towards excess consideration received towards

sale of land amounting to Rs.4.40 Crs. under the head ‘income from other

sources’. The relevant findings of the Ld.CIT(A) are as under:

12.1. The said land is entered in the Revenue records as agricultural land right from the time, the assessee has purchased the said land till the time, the appellant has sold such agricultural land to the buyer. The asset acquired was agricultural land as per the evidence brought on record.

12.2. As far as the classification of the land transferred as per the revenue records is agricultural land, irrespective of it users, it would remain an agricultural land even if no agricultural activities are performed on the said land.

12.3. The lands are sold and handed over to the buyer as agricultural lands. 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 appellant has not converted any portion of the land for non-agriculture purpose. sale of agricultural land by the assessee and realization of good price would not alter the basic nature and characteristic of the transaction. In the case of the appellant, land was acquired by the assessee and treated as fixed assets. Whether a transaction in respect of an asset is capital or not depends on the facts and circumstances of the case. The mere fact that the person has purchased a land and subsequently sold it, giving rise to a substantial profit cannot change the character of the transaction. It is the general human tendency to earn profit out of capital asset. No one invests to incur a loss. If the market condition suddenly goes up or down, it is always the tendency of a person to take a quick decision so that the realization on the investment is maximum or the loss is minimum.

12.4. Similarly, what is the purpose of which the lands have been sold also is not of much consequence because the stage to consider for the purpose of capital gain is the day the land is sold; what was the nature of the land on that day and not what it would be in future. The conversion of the land for commercial purpose by the purchaser was not within the control of the assessee and hence no adverse inference can be drawn. Merely because the buyer desired to put the subject land, for non-agricultural use, after the date of transfer, the land does not cease to be agricultural land. The A.O. had placed reliance on two factors. One was the personal visit by the Inspector of Income Tax and the other was the website of Govt.of Tamilnadu, Stamps & Registration Department. As correctly pointed out by the AR, the Inspector of Income-tax had visited the spot much more than 3 ½ years later from the date of sale and therefore any information gathered at that point of time from any one cannot be relied upon. The character of the land also would have undergone major changes. If would be highly unsafe to rely on a spot visit by the Inspector of such circumstances to overrule the initial presumption available from the revenue records that the lands were agricultural lands.

12.5. Report of the departmental inspector vis-a-vis certificates of the revenue authorities, produced before the AO, the latter should be given weightage and accepted unless the contrary is proved.

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12.6. Again, where the land is being assessed as agricultural land, then, normally, although it is not being put to actual agricultural use, it may be presumed that it continues to be agricultural land; unless it can be shown that it has been in fact put to some non-agricultural use.

made towards consideration received for sale of agricultural land under the

head ‘income from other sources’ without appreciating the fact that the

additions made by the AO is in the nature of on-money received for sale of

land, which cannot be considered as consideration received for sale of land.

The Ld.DR further referring to information obtained from the website of

Registration Department, Government of Tamil Nadu, submitted that land

sold by the assessee has been classified as residential area Clause-II right

from 01.08.2007 itself. Further, the assessee never carried out any

agricultural operations on the land. Although, the patta adangal, etc.,

shows that the land in question was an agricultural land, but, fact remains

that said land has been sold for commercial exploitation, which is evidence

from the fact that land has been purchased by M/s.Alwin Public School. The

assessee had sold for huge price, which means, the area in which land

situated comes within urban conglomerate. The AO after considering

relevant facts has rightly treated consideration received over and above

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what was stated in Sale Deed as on-money and assessed under the head

‘income from other sources’, but the Ld.CIT(A) without considering relevant

facts simply held that on-money received for sale of land partakes the

nature of consideration received for sale of land if such land is an

agricultural land.

in the case of Shri Pallavaram Kothandaraman Ramesh in ITA

No.1808/Mds/2011 for the AY 2008-09 dated 17.10.2012, submitted that

the Tribunal had consider an identical issue and held that when the Tamil

Nadu Government itself has classified the area in which the land in question

is situated as a residential area, then Certificate issued by the VAO cannot

supersede the classification given by the government. Since, the facts in

the present case are identical to the facts considered by the Tribunal, the

order of the Ld.CIT(A) should be set aside and additions made by the AO

should be sustained. In this regard, he relied upon the decision of the

Hon’ble Karnataka High Court in the case of B.M.Muniraju v. CIT reported

in [2015] 62 taxmann.com 345 (Karnataka). The Ld.DR had also relied

upon the decision of the Hon’ble Punjab & Haryana High Court in the case

of Kanav Khanna v. CIT-II, Amritsar, reported in [2014] 46 taxmann.com

121 (Punjab & Haryana).

submitted that there is no dispute with regard to the fact that the land sold

by the assessee is an agricultural land, if you go by Revenue records like

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Patta Adangal, etc. Further, as per Sale Deed registered with Office of Sub-

Registrar clearly shows as per schedule of property that said land is an

agricultural land. Further, consideration received by the assessee for sale

of land is also in accordance with guideline value fixed by the authorities

for payment of stamp duty. The Certificate issued by VAO clearly says that

land is an agricultural land which is situated beyond 8 kms from nearest

local municipal limits. The assessee has carried out agricultural operations

in the land which is evident from the Revenue records, as per which, the

land was cultivated with coconut and other planation trees. Therefore, the

Ld.CIT(A) after considering relevant facts has rightly held that the land sold

by the assessee is an agricultural land and consequently consideration

received including additional consideration if any partakes the nature of

consideration received for sale of agricultural land, which is outside the

scope of sec.2(14)(iii) of the Act. As regards, the documents submitted by

the Ld.DR from the website of Registration Department, the Ld.Counsel for

the assessee submitted that no doubt land sold by the assessee may fall

within residential area under Clause-II as classified by the State

Government. But, fact remains that whether impugned land has been

converted into non-agricultural purpose or not, is to be seen. In case, the

land has not been converted into non-agricultural purpose, then the land

continued to be remain in the status of agricultural land, even if such land

falls within the residential area as classified by the State Government.

Therefore, merely for the reason that land sold by the assessee has been

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classified as residential area which does not mean that land held by the

assessee was also converted into residential purpose. The Ld.CIT(A) after

considering relevant facts has rightly deleted the additions made by the AO

and their orders should be upheld.

record and gone through orders of the authorities below. The facts with

regard to the impugned dispute are that during the Financial Year relevant

to the AY 2012-13, the assessee has sold land at Padappai in Sy.

Nos.384/1A & 284/1B, situated in Padappai, Sriperumbudur Village,

Kancheepuram District and claimed that consideration received for transfer

of land is exempt u/s.2(14) of the Act. The AO has assessed consideration

received towards sale of land under the head ‘capital gains’ on the ground

that said land is a capital asset which is exigible to tax. A survey action

u/s.132 of the Act, was conducted in the case of Mr.N.Ramaswamy on

30.09.2015 and during the course of search, an agreement to sale for sale

of property at Padappai was found and seized. As per agreement to sale,

the land at Padappai was proposed to sell to M/s.Alwin Public School for a

consideration of Rs.6.16 Crs. Consequent to search, notice u/s.153C of the

Act, was issued and in response to the notice, legal heir Mr.N.Ramaswamy

filed return of income on 11.09.2017 declaring total income of

Rs.5,98,640/-. In the said return, the assessee has claimed exemption from

tax towards additional consideration received for sale of land at Padappai,

on the ground that said land is an agricultural land which is situated beyond

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8 kms from the limits of local municipality. The AO assessed excess

consideration received over and above, amount shown in the Sale Deed

amounting to Rs.4.40 Crs. as unexplained income of the assessee on the

ground that land sold by the assessee is a capital asset in terms of

sec.2(14) of the Act, and consequently, on-money received towards sale of

land is assessable under the head ‘income from other sources’. The AO has

given various reasons to come to the conclusion that said land is a capital

asset, but not agricultural land and according to the AO, the land is situated

within 5.5 kms from the limits of local municipality and further, there was

no agricultural operations were carried out in the said land in the impugned

assessment years as well as in the past assessment years. The AO further

noted that the land has been classified as residential area Clause-II by

Stamps & Registration Department, Government of Tamil Nadu, right from

01.08.2007 itself. The AO has taken support from Inspector’s report, which

suggest distance of land is less than 8 km from the limits of local

municipality and also there was no agricultural operations were carried out

in the impugned land.

the AO in light of various arguments advanced by the Ld.Counsel for the

assessee and we ourselves do not subscribe to the reasons given by the AO

to arrive at a conclusion that said land is a capital asset and is liable for

capital gains tax for simple reason that, as per registered Sale Deed

executed by the assessee in favour of buyers, it was clearly stated in the

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Schedule that lands are agricultural lands. Further, various Revenue

records including Chitta, Adangal very clearly says that said lands are

agricultural lands as per Revenue records. The assessee had also produced

certificate from VAO which clearly states that lands are agricultural lands

located beyond 8 kms from nearest Tambaram Municipality. Therefore,

from the documents submitted by the assessee like registered Sale Deed,

Conveyancing Title in favour of the buyers and VAO certificate clearly shows

that lands in question are agricultural lands and situated beyond 8 kms

from the limits of nearest municipality. Therefore, we are of the considered

view that there is no error in the conclusion arrived at by the Ld.CIT(A) that

said lands are agricultural lands which are situated beyond 8 kms from the

nearest municipality.

The Ld.DR has made detailed written submissions on the issue in light of

observations of the AO and argued that the land in question is a capital

asset and also situated within 8 kms from the limits of nearest municipality.

The AO is mainly taking support from the report of Inspector, which was

taken during the course of assessment proceedings nearly 3½ years later

to sale of asset. As per said report, it was stated that lands in question

were situated within 5.5 kms from the limits of nearest municipality. The

AO relied upon the Inspector Report, whereas, the assessee has taken

support from Certificate issued by the VAO. If you consider both the

documents i.e. report of the Inspector and Certificate of VAO, there is no

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doubt, certificate of VAO is given more weightage, because, in our

considered view, Revenue authorities are competent to evaluate and

measure the distance of land from the limits of municipality than the

Inspector of Income Tax Department. This legal position supported by the

decision of the ITAT Cochin Bench in the case of ITO v. Dr.Koshy George

reported in 190 Taxman 4. Therefore, in our considered view, conclusion

arrived at by the AO on the basis of report of Inspector is devoid of merits

and thus, we cannot find fault with the reasons given by the Ld.CIT(A) to

arrive at a conclusion that the land in question is situated beyond 8 kms

from the limits of nearest municipality.

The second observation of the AO is nature of land in light of

agricultural operations carried out by the assessee and according to the

AO, the assessee has not carried out any agricultural operations in the

impugned land and thus, he cannot claim exemption u/s.10(37) of the Act.

In this case, the assessee has claimed consideration received towards sale

of land is exempt as per provisions of Sec.2(14) of the Act, on the ground

that the land is an agricultural land, which is situated beyond 8 kms from

the limits of local municipality. Therefore, to decide taxability in receipt

from sale of land, whether the assessee has carried out agricultural

operations or not, is really not relevant. Be that as it may. The assessee

claimed that the land in question was agricultural land and he was carried

out agricultural operations before selling the lands. Further, in order to

decide the nature of land whether it is agricultural land or capital asset, the

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first and foremost condition is whether such land is capable to carry out

agricultural operations or not, but it is not relevant whether any agricultural

operations or cultivation or tilling of the land is carried out and this legal

proposition is supported by the decision of the Hon’ble Calcutta High Court

in the case of CIT v. Borhat Tea Co. Ltd., reported in [1982] 138 ITR 783

(Cal). In so far as the third observation of the AO with regard to subsequent

land held by the purchaser, the AO observed that the assessee has sold

land to M/s.Alwin Public School, for non-agricultural purpose to arrive at

conclusion that impugned lands are not agricultural lands. In our

considered view, once again, the findings of the AO are devoid of merits for

the simple reason that what was relevant to decide the nature of land is

whether on the date of sale, it was an agricultural land or not? but, lands

used for other than agricultural purpose by the buyer would not alter the

character of the agricultural land as held by the Hon’ble Gujarat High Court

in the case of Gordhanbhai Kahandas Dalwadi v. CIT reported in [1981]

127 ITR 664 (Guj). Therefore, in our considered view, the observations

made by the AO to arrive at conclusion that said lands are non-agricultural

lands, is not supported well reason.

by the Chennai Metropolitan Development Authority (in short “CMDA”) as

residential area Clause-II, we find that no doubt, CMDA has classified the

area where the land of the assessee is situated comes under residential

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area Clause-II. But, fact remains that whether the impugned lands have

been converted into non-agricultural purpose or not, has to be seen. No

doubt, CMDA is an authorized agency to notify the particular area into

residential zone, industrial zone, agricultural zone and other zones, taken

into account over all developments of the city and after considering relevant

facts, said agency will classify various areas into different zones. That

means, once a particular agency notifies a particular area into different

zones, land situated in that zones should be used only for that purpose. In

case, any person wants to change his land use from agricultural to non-

agricultural purpose, then, he/she needs to convert land into non-

agricultural purpose. But, it cannot alter the nature of land from agricultural

to non-agricultural purpose, when such land has not been converted into

non-agricultural purpose by an official order by the competent authority.

As long as a person keeps his land as agricultural land without there being

any change in land use by an official order from the concerned authority,

then said lands remain continued to be agricultural land, even though, said

land falls within the territorial jurisdiction of classification made by the

authority. In this case, the AO is harping upon classification made by one

authority without considering the fact that the land in question was never

converted into non-agricultural purpose by the another competent

authority by an official order. Therefore, in our considered view, merely for

the reason that impugned land is situated in a residential zone, it does not

mean that said land has been converted into non-agricultural purpose and

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it is a residential land liable for capital gains tax. Therefore, we are of the

considered view that reasons given by the AO to arrive at a conclusion that

impugned land is a capital asset fails in all aspects and the Ld.CIT(A) has

negated observations of the AO by a valid reason and thus, we are inclined

to uphold the reasoning given by the Ld.CIT(A) to delete the additions made

towards consideration received for sale of land.

Pallavaram Kothandraman Ramesh in ITA No.1808/Mds/2011 dated

17.10.2012, we find that, the facts of said case are different to the facts of

the present case. The Tribunal has recorded categorical findings that the

assessee has never carried out any agricultural operations and never

admitted agricultural income. In the present case, facts are entirely

different and thus, the case law relied upon by the Ld.DR is not applicable

to the facts of the present case. The Ld.DR was also relied upon by the

decision of the Hon’ble Karnataka High Court in the case of B.M.Muniraju

v. CIT(A)-V, Bangalore, reported in [2015] 62 taxmann.com 345, when it

was held that carrying agricultural operations is necessary to classify land

as agricultural land to entitle the benefit u/s.10(37) of the Act. In our

considered view, said case law is not applicable to the facts of the present

case. In this case, the assessee never claimed deduction u/s.10(37) of the

Act, but in fact claimed exemption u/s.2(14) of the Act itself. The other

case laws relied upon by the Ld.DR is also not applicable, because, it goes

on record that to treat a particular land as agricultural land, it is necessary

ITA No.3080/Chny/2018 :: 19 ::

to carry out agricultural operations. As we have already stated in earlier

part of this order in light of certain judicial precedents that what is

important to see is whether the land is capable to carry out any agricultural

operations or not? in order to classify said land as agricultural land, but not

carry out real agricultural operations. Therefore, we find that said case

laws have no application to the facts of the present case.

George reported in 190 Taxman 4 (Cochin), we find that the Ld.CIT(A)

relied upon said judgment and held that once consideration received for

transfer of any land is treated as capital receipt, which is not liable for

capital gains tax, then on-money, if any, received for transfer of said land

and also partakes the nature of capital receipt not liable for tax. The Ld.DR

tried to distinguish the case law relied upon by the Ld.CIT(A) on the ground

that in the said case, the assessee has disclosed consideration received for

transfer of land in the return of income, but does not disclose on-money

received for transfer of land. Under these facts, the Tribunal came to

conclusion that once the land in question has been treated as agricultural

land, consideration received towards transfer of said land including on-

money, if any, will also be in the nature of consideration received for

transfer of land, is exempt from tax. But in the present case, the assessee

has admitted the fact that on-money received towards sale of land is

undisclosed investment in ‘capital gains’ and the same was assessed under

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the head ‘income from other sources’ and thus, said case law has no

application. We find no merit in the arguments of the Ld.DR for the simple

reason that facts of present case are squarely covered by the decision of

the ITAT Cochin Bench. In the present case, the assessee has disclosed

consideration received for transfer of land in the return of income for the

relevant assessment year and claimed exemption from tax. The AO has

assessed consideration under the head ‘capital gains’, but the Ld.CIT(A)

has deleted the additions made by the AO on the ground that the land

transferred by the assessee is an agricultural land. If you consider the facts

of the present case with that of facts of ITAT Cochin Bench in the case of

Dr. Koshy George, we find that facts are identical and in both cases, the

assessee’s have declared consideration received as per Sale Deed in the

return of income, but on-money received for transfer of land has not been

declared. Further, on-money received for transfer of land has been held to

be taxable by the AO in the present case, whereas before the Tribunal in

the case of Dr. Koshy George was also the AO has held that on-money

received towards sale of land is taxable under the head ‘income from other

sources’. The Tribunal held that once consideration received towards

transfer of land has been held to be consideration received for transfer of

agricultural land, then on money, if any, received towards transfer of said

land will also partake the nature of consideration received for agricultural

land and is exempt from tax. Therefore, we are of the considered view that

ITA No.3080/Chny/2018 :: 21 ::

the case law relied upon Ld.CIT(A) is squarely applicable to the facts of the

present case and thus, we reject the arguments taken by the Ld.DR.

circumstances of the case, we are of the considered view that there is no

error in the reasons given by the Ld.CIT(A) to delete the addition towards

computation of capital gains towards consideration received for sale of

agricultural land and thus, we are inclined to uphold the findings of the

Ld.CIT(A) and dismiss the appeal filed by the Revenue.

Order pronounced on the 08th day of February, 2023, in Chennai. Sd/- Sd/- (वी. दुगा� राव) (जी. मंजूनाथा) (G. MANJUNATHA) (V. DURGA RAO) लेखा सद�य/ACCOUNTANT MEMBER �याियक सद�य/JUDICIAL MEMBER चे�ई/Chennai, �दनांक/Dated: 08th February, 2023. TLN आदेश क� �ितिलिप अ�ेिषत/Copy to: 1. अपीलाथ�/Appellant 4. आयकर आयु�/CIT 2. ��यथ�/Respondent 5. िवभागीय �ितिनिध/DR 3. आयकर आयु� (अपील)/CIT(A) 6. गाड� फाईल/GF