THE PRINCIPAL COMMISSIONER OF INCOME vs. SMT.SEENA JOJY

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE ASHOK MENON MONDAY, THE 11TH DAY OF DECEMBER 2017/20TH AGRAHAYANA, 1939 ITA.No. 118 of 2016 () ----------------------- AGAINST THE ORDER/JUDGMENT IN ITA 496/COCH/2015 of I.T.A.TRIBUNAL,COCHIN BENCH DATED 01-06-2016 APPELLANT(S)/RESPONDENT/RESPONDENT/REVENUE : ------------------------------------------- THE PRINCIPAL COMMISSIONER OF INCOME TAX, KOCHI-2, C.R.BUILDINGS, I.S.PRESS ROAD, KOCHI-682 018.

BY ADVS.SRI.CHRISTOPHER ABRAHAM, INCOME TAX DEPARTMENT SRI.K.M.V.PANDALAI, INCOME TAX DEPARTMENT RESPONDENT(S)/APPELLANT/APPELLANT/ASSESSEE : -------------------------------------------- SMT.SEENA JOJY 1ST FLOOR, KADAVIL BUILDING, PANAMPILLY NAGAR, KOCHI-682 036.

R1 BY ADV. SRI.SAJI VARGHESE THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 11-12- 2017, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

ITA 118/16 -2- K.VINOD CHANDRAN & ASHOK MENON, JJ. ------------------------------------------- ITA No.118 of 2016 ------------------------------------------- Dated this the 11th day of December, 2017 J U D G M E N T Ashok Menon, J. The Revenue is in appeal against the findings of the Income Tax Appellate Tribunal, Cochin Bench in ITA No.496/Coch/2015 dated 1.6.2016. The assessee filed her return for the assessment year 2007-08 on 20.10.2007 disclosing income of Rs.95,87,403/- and admitting long term capital gain of Rs.1,00,59,554/- on a sale of 53 ares of land in Kakkanad Village. Subsequently, she filed a revised return stating that the land is agricultural land and that she is entitled to get exemption and hence her income is 'nil'. The Assessing Officer vide Annexure-A assessment order treated the land transfer as capital asset within the meaning of Section 2(14) of the Income Tax Act, 1961 ('the Act' for brevity). Aggrieved by that the assessee filed an appeal before the Commissioner of Income Tax (Appeals), which was allowed vide Annexure-B order, holding that the property could not be treated as capital asset as the same was actually agricultural land situated in Thrikkakkara Panchayat.

ITA 118/16 -3- The Department filed a second appeal against the order of the first appellate authority before the Tribunal and Annexure-B order was confirmed vide Annexure-C order, which is now under challenge before us. 2. We have heard the learned Counsel appearing for the Department and the learned counsel appearing for the respondent- assessee. 3. The only question that arises for consideration in this appeal is as to whether the first appellate authority as well as the Tribunal were justified in holding that the land in question was agricultural land liable for exemption on payment of tax by the assessee. 4. The learned Counsel for the Revenue submits that the provision for exemption for agricultural income from tax was granted with an intention to encourage cultivation. If the true character and the nature of the land is to be ascertained, it must be seen whether it has been put to use for agricultural purposes for a reasonable span of time prior to the date of sale, and further, whether after the date of sale also, the land was intended to be put to use for agricultural purposes for a reasonable span of time in

ITA 118/16 -4- future. The learned Counsel relies on the decision of the Bombay High Court in Gopal C.Sharma v. Commissioner of Income Tax ([1994] 209 ITR 946 (Bom)) and the decision of the Honourable Supreme Court of India in Commissioner of Income Tax v. Gemini Pictures Circuit Private Ltd. ([1996] 220 ITR 43 (SC)) to substantiate his argument. 5. The learned counsel for the respondent-assessee, on the other hand, argues that the land in question is situated in Kakkanad Village in Thrikkakkara Panchayat of Ernakulam District. Thrikkakkara Panchayat was a notified area for the purpose of Section 2(14) of the Act, till 1993. However, according to a revised notification, Thrikkakkara Panchayat was excluded with effect from 1993. The very purpose for denotifying the area was to extend the benefit of agricultural land to the properties situated therein. In the decision in Gemini Pictures Circuit Private Ltd. cited above, it was held that the question whether a particular land is agricultural land or not, is to be decided on the totality of relevant facts and circumstances. The circumstances for and against have to be weighed together and a reasonable decision arrived at. In the decision in Gopal C.Sharma's case cited above, what was held by the

ITA 118/16 -5- Bombay High Court is that when lands used for agricultural purposes situated in an industrial area are not intended for agricultural purposes in future, that would give rise to capital gains. In the decision in Commissioner of Income Tax v. V.A.Trivedi ([1988] 172 ITR 95 (Bom)), it is held that the character and the nature of land are relevant in determining whether the land is agricultural land or whether the land is put to use for agricultural purposes on the relevant date. In the decision in Sarifabibi Mohmed Ibrahim and Others v. Commissioner of Income Tax ([1993] 204 ITR 631 (SC)), it is held that the question whether a particular piece of land is agricultural or not is essentially a question of fact, to be decided after a consideration of circumstances appearing for and against the assessee. In the decision in Smt Asha George vs. Income Tax Officer [2013] 351 ITR 123 (Ker), a Division Bench of this Court held thus: “The crucial question is whether the land was actually being used for agricultural purpose during the two years prior to the date of transfer. We do not think that we can overturn a finding on fact, at any rate, based on our reappreciating the material which was considered by the Tribunal which is the final fact finding authority.” 6. In the instant case, there is a concurrent finding by the

ITA 118/16 -6- two appellate authorities on appreciation of facts, that the land of the assessee situated in Thrikkakkara Panchayat is agricultural land and that it is situated in Kakkanad Village, which is not a notified area and is more than eight kilometres away from Kochi. The appellate authorities have also relied on the fact that the adjoining property of one M.J.Thomas was found to be agricultural land and that the subject land could not be treated as capital asset within the meaning of Section 2(14) of the Act. Being a decision based on facts, we are not inclined to upset the decision of both the appellate authorities and therefore, there is no merit in the arguments advanced for the Department. We find no merit in this appeal and the appeal will stand dismissed finding no question of law arsing from the impugned order. No costs. Sd/-

K.VINOD CHANDRAN Judge

Sd/-

ASHOK MENON Judge jg

ITA 118/16 -7- APPENDIX APPELLANT'S EXHIBITS ANNEXURE-A : COPY OF ASSESSMENT ORDER DATED 11.12.2009. ANNEXURE-B : COPY OF APPELLATE ORDER DATED 29.7.2011 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) ANNEXURE-C : COPY OF ORDER DATED 01.06.2016 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL. //TRUE COPY// PS TO JUDGE. jg-21/12