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Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI S. JAYARAMAN
आदेश /O R D E R
PER N.R.S. GANESAN, JUDICIAL MEMBER:
This appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeals)- 1, Coimbatore, dated 26.10.2016 and pertains to assessment year 2012-13.
Shri K. Raghu, the Ld. representative for the assessee, submitted that the only issue arises for consideration is with regard to assessment of capital gain on sale of agricultural land. According to the Ld. Representative, the assessee has sold 1 acre 29.480 cents to M/s Vanton Hospitality Pvt. Ltd., New Delhi for a total consideration of ₹2.25 lakhs. According to the Ld. representative, the assessee claimed before the Assessing Officer that the land in question is an agricultural land in the State of Kerala, therefore, exempted from taxation. However, the Assessing Officer disallowed the claim of the assessee on the ground that the assessee could not establish that the land in question is an agricultural land. The Ld. representative submitted that the land in question is registered as ‘Purayidam’ which means it is a dry land. The Revenue authorities classified that the land is a dry land. On a query from the Bench, the Ld. representative clarified that the assessee-company is engaged in the business of real estate and not cultivation.
However, the Ld. representative submitted that the assessee declared agricultural income in the earlier years in the returns of income which was accepted by the Revenue authorities even though cultivation / agriculture is not one of the objects of the company. On a query from the Bench, when the land was classified as dry land, what is the source of irrigation? The Ld. representative submitted that the assessee cultivated coconut trees. In the State of Kerala, coconut trees do not require any irrigation. Hence, the coconut trees were cultivated. It will grow on its own in view of continuous rain fall in the State of Kerala. The Ld. representative placed his reliance on the decision of Cochin Bench of this Tribunal in Shri M.J. Thomas v. DCIT in dated 06.06.2014 and submitted that in the State of Kerala, there was no record for cultivation other than the payment of prescribed tax and agriculture labour welfare tax. According to the Ld. representative, the assessee contributed to the Agricultural Labourdr’s Welfare Fund and also paying revenue tax as agricultural land which is evident from the Basic Tax Register.
On the contrary, Shri AR. Srinivasan, the Ld. Departmental Representative, submitted that the land in question was classified as residential land in the sale deed executed by the assessee itself.
Moreover, the Addl. Tehsildar has confirmed that there was no agricultural activity in the area. According to the Ld. D.R., the assessee has purchased three pieces of land to make it a large extent of 1.29 acres. The earlier owner, from whom the land was purchased by the assessee, was holding the same as residential plot and not as agricultural land. According to the Ld. DR, on the date of purchase of the land by the assessee, it was residential land, therefore, it would continue to be residential land even on the date of sale of land by the assessee. According to the Ld. D.R., there was no agricultural service connection and no water pump set.
There was no well for irrigation. Merely because some coconut trees were planted in the land which is common in the entire Kerala, according to the Ld. representative, the land cannot be classified as agricultural land.
Referring to the decision of Cochin Bench of this Tribunal, the Ld. DR pointed out that no doubt it appears that the State Government was not maintaining any cultivation record in the State of Kerala. However, the Village Administrative Officer has certified that the subject land before the Cochin Bench of this Tribunal was under cultivation. Therefore, this Tribunal found that the certificate given by the VAO, who personally acquainted with land, may be one of the factors to be taken into consideration to determine whether the land was agricultural land or not. In this case, according to the Ld. D.R., the Addl. Tehsildar has categorically certified that the land in question is not subjected to cultivation at all. Therefore, according to the Ld. DR, the assessee has no merit at all.
We have considered the rival submissions on either side and perused the relevant material available on record. In the registered document executed by the assessee, admittedly, the subject land was described as “residential property”. When the assessee itself described the property as residential property in the sale deed, this Tribunal is of the considered opinion that for the purpose of income tax, it cannot be claimed as agricultural land. It is not in dispute that in the sale deed executed by the assessee in favour of M/s Vanton Hospitality Pvt. Ltd., it was shown as residential property. As rightly submitted by the Ld. DR, merely because some coconut trees were planted on the land, it cannot be construed as agricultural property.
As rightly submitted by the Ld. DR, it is very common to have coconut trees around the residential houses in the State of Kerala.
Moreover, rain fall in the State of Kerala is more when compared to other neighbouring States. Therefore, not much of irrigation is required for planting coconut trees around the residential property.
The Addl. Tehsildar has certified that the land in question is dry land and no cultivation was made. In view of the admitted fact by the assessee in the registered sale deed as residential land, this Tribunal is of the considered opinion that the land cannot be now claimed as agricultural land by the assessee. Moreover, the business of the assessee-company is real estate and not cultivation. In such circumstances, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed.