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Income Tax Appellate Tribunal, “B”
Before: SHRI S.S.GODARA & DR. DIPAK P. RIPOTE
ORDER
Per S.S.Godara, JM:
This assessee’s appeal for Assessment Year 2011-12 is directed against the Commissioner of Income Tax(Appeals)-3, Pune’s order dated 24.01.2018 passed in case no.PN/CIT(A)-2/Wd 4(3),Pn/130/2014-15/490, in proceedings u/s.143(3) of the Income Tax Act, 1961 [in short “the Act”].
Heard both the parties. Case files perused.
Coming to the assessee’s sole substantive grievance that the CIT(A)’s has erred in law and in facts in partly confirming Assessing Officer’s action making Long Term Capital Gains addition amounting to Rs.90,75,000/- than deleting the same in entirety; we note that the lower appellate discussion to this effect reads as under:
A.Y. 2011-12 (A) Manoj S.Raste Vs. ITO, Ward-4(3), Pune “5.3. DECISION 1 have considered the observation of the AO and submission of the appellant. 5.3.1 Facts in this case are that the appellant had agricultural land at Gat No. 159 at Fullgaon Tal. Haveli Dist Pune. This land was owned by appellant and Rajkumar Jaysing Rajawat in following proportions: A. Manoj Suresh Rast (1 Hector 15R) B. Rajkumar Jaysingh Rajawat (40R) This land was purchase in the year 2007 for which the consideration paid by the appellant for his share was Rs 2,00,000/-. Above mentioned land was sold to one Trust by name Lokseva Pratishtan, Pune in December, 2010 for total consideration of Rs.1,25 crore and total consideration was apportioned in following proportions: Manoj Suresh Raste (Rs. 92.75 lakhs) A. Rajkumar Jaysingh Rajawat (Rs. 32.25 lakhs) B. 5.3.2 However, the AO made the following observations: i) The appellant has not claimed any such exemption in the return of income i.e. the appellant did not disclose the receipts from sale of land in return of income. ii) The appellant has not shown agriculture income either in this year or in earlier assessment years iii) The appellant is basically estate agent and not an agriculturist. iv) The land value was much more than the income it could produce at the time of purchase by the Trust v) In a small period of 3 years, it has fetched ten times of its market value. vi) The purchaser is not an agriculturist and it is not purchased by the Trust for agriculture and it is evident from the rate of purchase which is very high. vii) There are copies of other correspondence filed on record which prove that the land is actively being processed for construction or any other use.
A.Y. 2011-12 (A) Manoj S.Raste Vs. ITO, Ward-4(3), Pune viii) To support the claim of agriculture use, the assessee has filed copies of 7/12 extract and he referred to the mention of crop in the 7/12 extract. This evidence is irrelevant and insufficient. The 7/12 extract may be relied on for the ownership purpose but not for proof of use of the land. 5.3.3 On the other hand, the appellant has mainly argued on the following lines: i) The said agricultural land sold by the appellant is situated beyond 8 kms (i.e.21 kms form PMC Limit) from the limits of Municipal Corporation and population of Fullgaon is 3,000 as per last published census. So the above agricultural and falls within the definition of an agricultural land under section 2(14) and same is not a capital assets. ii) The appellant was selling the land as agricultural land only Till the date of sale, agricultural operations we re carried on by the assessee. The land was put to use only for agricultural purposes and not for anything else. The lands in question were also registered as agricultural lands and assessed to land revenue. The land was being used for agricultural purposes and entries in the record of rights go to show that onion & Bajra crop was being grown on this land, at least for the last Several years preceding 2010. It has further been shown that no permission to convert this land to non- agricultural use was obtained under s. 65 of the Bombay Land revenue code. 5.3.4 From the material on record, it is seen that, AO has not disputed the distance of the land from Municipal limits. It appears that the land is at a distance more than the stipulated distance as per the requirement of the Sec 2(14)(iii). The definition of capital asset, which the appellant has referred to is Sec 2(14)(iii) which is as given below: (14)"capital asset" means property of any kind held by an assessee, whether not connected with his business or profession, but does not include i)……. ii)………. iii) agricultural land in India, not being land situate------ (a) in any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee, or by any other name) or a cantonment board and which has a population of not less than ten thousand —[according A.Y. 2011-12 (A) Manoj S.Raste Vs. ITO, Ward-4(3), Pune to the last preceding census of which the relevant figures have been published before the first day of the previous year]; or (b) in any area within such distance, not being more than eight kilometres, from the local limits of any municipality or cantonment board referred to in item {a), as the Central Government may, having regard to the extent of, and scope for, urbanisation of that area and other relevant considerations, specify in this behalf by notification in the Official Gazette—;] The following item (b) shall be substituted for the existing item (b) of sub-clause (iii) of clause (14) of section 2 by the Finance Act, 2013, w.e.f. 1-4-2014 : (b) in any area within the distance, measured aerially,— (I) not being more than two kilometres, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than ten thousand but not exceeding one lakh; or (II) not being more than six kilometres, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than one lakh but not exceeding ten lakh; or (III) not being more than eight kilometres, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than ten lakh. Explanation.—For the purposes of this sub-clause, "population" means the population according to the last preceding census of which the relevant figures have been published before the first day of the previous year; It can be noticed from the above definition that "capital asset" means property of any kind held by an assessee, but does not include— agricultural land in India, not being land situate within a specified area of limit. There is no dispute over distance as the AO has not denied the submission of the appellant that the lands under consideration did not come within 10 Kms from any Municipal Authority. 5.3.5 It is noteworthy that the definition starts with the phrase “ agricultural land in India, not being land situate…..”. Thus the first condition for a land not to be capital asset is that it should be agricultural land. Once it is established that a land under consideration is agricultural land, only then it is to be wseen whether it falls under 2(14)(iii)(a) or 2(14)(iii)(b). A land to be A.Y. 2011-12 (A) Manoj S.Raste Vs. ITO, Ward-4(3), Pune claimed as agricultural land, it should be established that agricultural operations were carried out on it over the years in regular course and that it falls under the conditions stipulated u/s 2(14)(iii)(a) or 2(14)(iii)(b). All other facts like The appellant has not claimed any such exemption in the return of income i.e. the appellant did not disclose the receipts from sale of land in return of income. The appellant has not shown agriculture income either in this year or in earlier assessment years. The appellant is basically estate agent and not an agriculturist. The land value was much more than the income it could produce at the time of purchase by the Trust. In a small period of 3 years, it has fetched ten times of its market value. The purchaser is not an agriculturist and it is not purchased by the Trust for agriculture. the rate of purchase is very high. After the sale, the land is being processed for construction or any other use will not alter the nature of the land i.e. whether it is agricultural or not. The appellant furnished copies of 7/12 extract before the AO to show that agricultural operations were carried out on the said land. However, the AO discarded the 7/12 extract saying that such records may be relied on for the ownership purpose but not for proof of use of the land. In my opinion, 7/12 extract is a government record and contents of such document cannot be discarded unless some contrary evidence is brought on record to show that the contents of 7/12 extract are not true 5.3.6 Further, the contents of the 7/12 extract furnished by the appellant, are as given below: Total area of land = 6 Hectare 88 R (6H 88 R)
Cultivator Means of Fin Year Area Under Cultivation Irrigation 2009-10 Sugar Cane 0 H 80 R, Bajari, Pad 1.80 ) Self Bore well Sugar Cane 3 H 00 R, Bajari 1 H 00 R, 2010-11 Self Bore well Wheat 1 H 08 R Pad 1.80 The 7/12 extract showed status of FY 2009-10 onwards i.e. after sale. To find out whether agriculture operations were carried out on the land sold, 7/12 extract showing status of FY 2006-07, 2007- A.Y. 2011-12 (A) Manoj S.Raste Vs. ITO, Ward-4(3), Pune 08 and 2008-09 was called for from the appellant. The contents of the 7/12 extract furnished, are as given below: Total area of land = 6 Hectare 88 R (6H 88 R) Fin Year Area Under Cultivation Cultivator Means of Irrigation 2006-07 Bajari, Pad 1.80 Self Bore well 2007-08 Bajari, Pad 1.80, Kanda 1.55 Self Bore well 2008-09 ................. Pad 1.80 Self Bore well However, the copy of 7/12 extracts for the land show that out of 6.88 Hectare, an area of 1.80 was of the nature of pad i.e. not cultivable. So, 27.32% area of the land sold was not cultivable and was not cultivated over a period of time and balance 72.68% was agricultural land. Thus, it is held that only 72.68% of sale consideration can be held to be received from sale of agricultural land. So, out of ale consideration of Rs 92,75,000/- an amount of Rs 67,41,070/- should be treated as received from sale of agricultural land. The balance amount of Rs 25,33,930/- should be treated as sale consideration of a Long Term capital asset and capital gains should be calculated for this consideration. The cost of acquisition of the land should also be apportioned in the same ratio and thereafter the same should be indexed. Accordingly, Ground No 1 & 2 of the appellant are PARTLY ALLOWED.”
Mr.Kulakarani vehemently argued during the course of hearing that the assessee’s land in issue sold/transferred in the relevant previous year was very much agricultural and therefore, it was never covered under section 2(14) of the defining a “capital asset”. He also quoted [2020] 425 ITR 134 (B.) PCIT Vs. A.J.Perera that their lordships have rejected the Revenue’s identical argument in case of the agricultural land sold by the concerned assessee.
A.Y. 2011-12 (A) Manoj S.Raste Vs. ITO, Ward-4(3), Pune
We have given our thoughtful consideration to assessee’s foregoing arguments and find no merit therein. This is for the clinching reason that the assessee’s land in issue has been found to be “pad” only as per the corresponding revenue records to the extent of 1.80 units in issue. We observe in this factual backdrop that it was incumbent on the assessee only to prove to the contrary before the learned lower authorities. Learned counsel submitted that the assessee had adopted “crop rotation” from one portion of the land to another which is not supported by any evidence. We further find that their lordships detailed discussion dealt with the concerned assessee’s land which was indeed agricultural which is not the case before us. We also wish to reiterate that the CIT(A) has already granted the necessary proportionate relief to the assessee’s qua the land which was found agricultural as per revenue records. We thus find merit in Revenue’s vehement contentions supporting the CIT(A) findings under challenge. The assessee fails in his sole substantive ground.
This assessee’s appeal is dismissed.
Order pronounced in the open Court on 4th August, 2022. (DR. DIPAK P. RIPOTE ACCOUNTANT MEMBER पुणे / Pune; "दनांक / Dated : 4th Aug, 2022/ SGR*