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Income Tax Appellate Tribunal, “B”, BENCH MUMBAI
Before: SHRI R.C.SHARMA, AM & SHRI PAWAN SINGH, JM
आदेश / O R D E R
PER PAWAN SINGH, JUDICIAL MEMBER,
1. This is an appeal filed by the assessee against the order of CIT (A)-2, Thane dated 30/11/2016 for A.Y.2011-12 in the matter of order passed u/s.143(3) of the IT Act. . The following grounds have been taken by the assessee:-
On facts and in the circumstances of the case and in law learned I.T.O. erred in treating gain from sale of land/s as capital gain and learned CIT (Appeals) also erred in holding that the land/s under consideration are capital assets and gain there from is capital gain. On facts and in the circumstances of the case and in law learned CIT(A) ought to have held that the land/s under consideration are agricultural land/s that stand excluded from the term "capital asset" in view of exception (iii) of section 2 (14) of I.T.Act, 1961 and hence gain there from is not liable to be taxed or assessed as capital gain.
Brief facts of the case are that the assessee filed return of income for assessment year 2011- 12 on 20 June 2011 declaring total taxable income of Rs. 3,82,400/-. The assessment was completed on 28th of February 2014 under section 143(3). During the assessment proceedings the assessing officer noted that the assessee has not offered the profit earned on sale of piece of agriculture land and claimed exemption of Short Term Capital Gain. The assessing officer vide its letter dated 30 September 2013 asked the assessee to furnish detail about the claim in respect of exemption of profit earned on sale of said agriculture land. No detail was furnished; therefore, assessing officer treated the profit earned and treated the short term capital gain as taxable. The assessing officer worked out the short term capital gain of Rs. 76,88,064/-on sale of such piece of land.
Aggrieved, by the order of assessing officer, the assessee filed appeal before Commissioner (Appeals), however no relief was granted to the assessee. Thus, further aggrieved the assessee has filed present appeal before us.
We have heard the learned Authorized Representative (‘AR’) of the assessee and learned Department Representative (‘DR’) for revenue and perused the material available on record. The learned AR of the assessee argued that the agriculture land is not an asset and the same excluded from the term ‘Capital Asset’ in view of exception (iii) of section 2(14) of Bhimrao Janu Jadhav the Income tax Act. The pieces of agricultural land sold by assessee during the relevant period are situated in Rural area and is at the distance of more than 8 km from the local limits of the Municipalities. Therefore, in view of section 2(14)(iii)(b) the same cannot be treated as ‘Capital Asset’. The assessing officer has not given any finding that the said land was not agriculture land or not used for agriculture activities. In support of his submission the learned AR of the assessee relied upon the decision of Indore Tribunal in ITO Vs Ashok Shukla ITA No. 207/ Ind /2012, dated 31.08.2012, Mumbai Tribunal in Vinit Kumar Inder Kumar Gupta versus JCIT, ITA No. 2736/M/2013 dated 16 December 2015 and decision of Hon’ble Bombay High Court in case of CIT Versus PC Joshi and others (202 ITR 1017) (Bombay). On the contrary the learned AR for the revenue supported the findings of authorities below. It was submitted that the land sold by assessee was not agriculture land. No agriculture activities were carried or undertaken by assessee. The land was not used for any agricultural purpose from last two years. The assessee purchased the several piece of land and sold within very short span of time to earn maximum profit. The assessee sold the land to a Land Developer, thus, the agriculture land ceased its characters. The ratio of the decisions relied by learned AR of the assessee are not applicable on the facts of the present case. In all case law relied by ld. AR there is finding of fact that the land in dispute was used for agricultural purpose. 3 ITA No.390/M/2016 Bhimrao Janu Jadhav 3. We have considered the rival submission of the parties and have gone through the orders of authorities below. During the assessment proceedings the assessing officer asked the assessee to furnish the details of land purchased and sold. No details was furnished by assessee, therefore, the assessing officer worked out taxable Short Term Capital Gain at Rs. 76,88,064/- on sale of piece of land. The assessee sold the piece of land to Effect Developer and to Hubert D’souza. Before ld. Commissioner (Appeals) the assessee contended that the assessee officer not granted the opportunity before taxing the short term capital gain. The assessee furnished written submissions containing the details about the purchase and sale of land. The ld. Commissioner (Appeals) forwarded those details and the submissions to the assessing officer for his remand report. During the remand proceedings before the assessing officer contended that the said land is not situated within 8 Kms from the local limits of the Municipality and filed certificate of Public Works Department (‘PWD’) and certificate issued by Talathi certifying that that lands were agriculture land. However, the assessing officer was of the view that the land was not used for agriculture purpose nor the assessee possessed it for last two years. The assessing officer furnished his remand report dated 27.01.2015 on 05.02.2015. The copy of remand report was supplied to the assessee. The assessee filed his objections/ submissions on 25.02.2015. The main objection of the assessee was that period of holding 4 Bhimrao Janu Jadhav is not the decisive factor if the land is agriculture land or not. After considering the submissions of the assessee and the various details of purchases and sale of various piece of land the ld Commissioner (Appeals) concluded that the assessee purchased land admeasuring 3.5.71 hectare of Survey No.50/1A on 11.12.2009 from Prakash Gangadhar Dharap & other for a consideration of Rs. 9,33,000/- and sold on 14.05.2010 to Effect Developer for Rs, 38,97,803/-. Other land of Survey No.13/1 admeasuring 10.5.0 was purchased on 01.07.2010 from Shriram Baban Mahase and sold to Hubert D’souza on 28.09.2010 for Rs. 70,12,500/-. In both the land the assessee shown 1/3 share. It was further concluded that the provisions of section 50C are also attracted in respect of land in Survey No.50/1A as sale consideration was shown less that the Market value. The assessee has not challenged the action of revenue authority in invoking the provision of section 50C.
In our view the land was not an agricultural land when it was sold to M/s Effect Developer and to Hobert Josheph D’souza. The assessee had not filed any documentary evidence before us, to prove his intention to prove that the piece of land was purchased for cultivation or soon after purchases it from its previous owner or during the period it remained under his ownership it was used for cultivation. Even otherwise in our view merely showing the land as agriculture in the land record and the use for agriculture purpose in remote past are not the decisive factors. 5 ITA No.390/M/2016 Bhimrao Janu Jadhav The use of the land for non-agricultural purpose at the time of sale would change the character of the land from agriculture to non-agricultural. As observe earlier the assessee has not shown any such document to prove his bonafide claim for exemption. In our view the scheme and object of exempting agricultural land from the definition of capital asset is give incentive to the person who are using the agriculture land for cultivation operations. Therefore, for the purpose of granting exemption, a restricted meaning has to be given to the expression 'agricultural land' as contemplated under section 2(14)(iii)(b). Further, to ascertain the true character and the nature of the land, it must be seen whether it has been put to use for agricultural purposes for a reasonable span of time prior to the relevant date of sale and purchase and further whether on the relevant date the land was intended to be put to use for agricultural purposes in the future.
The Hon'ble Bombay High Court in Gopal C. Sharma v. CIT [1994] 209 ITR 946/72 Taxman 353 while considering the issue related with agricultural land held as under; “The expression “agricultural land" is not defined under the Income Tax Act, 1961. The question as to whether the land in question was liable to be considered as agricultural land for purposes of income-tax is liable to be decided with reference to the criteria laid down by judicial decisions of the Supreme Court and High Courts. The underlying object of the Act to exempt "agricultural income" from income-tax is to encourage actual cultivation or de facto agricultural operations. Actual user of the land for agricultural ITA No.390/M/2016 Bhimrao Janu Jadhav purposes or absence thereof at the relevant time is undoubtedly one of the crucial tests for the determination of the issue. It is well settled that the nature and character of the land may undergo a change depending upon its situation, growth of the locality or zone in which it is situated and its potentiality. According to recent decisions of the Supreme Court, the fact that the land is sold or transferred to a non-agriculturist for a non- agricultural purposes or that it is likely to be used for non-agricultural purposes in the remote past or it continues to be assessed to land revenue on the footing of agricultural land is not decisive.' The Hon'ble High Court has decided the issue of agricultural land at pages 963 and 964 as under; 'In our opinion, the principles laid down by the Supreme Court in the case of Smt. Sarifabibi Mohamed Ibrahim v. CIT (1993) 204 ITR 631 and by this court in Trivedi's case (1988) 172 ITR 95 do emphasize the factor of non- user of the land for cultivation for a reasonable span of time prior to the date of transfer as a crucial factor for determination of the issue. Applying the ratio of the Supreme Court judgment in Sarifabibi's Case (1993) 204 ITR 631 to the facts of the case, we hold that the reference lands could not be considered as "agricultural lands" on the date of transfer. The Appellant Assistant Commissioner and the Tribunal were more than justified in highlighting the fact that the reference lands were situate in a heavy industrial zone and that the said lands were not in fact used or intended to be used for agricultural purposes at the relevant time since several years. The Appellate Assistant Commissioner also recorded a finding of fact based on relevant evidence that at least 10 acres of the land out of 25 acres was in fact used for non-agricultural purposes by Larsen and Toubro Limited since the year 1960, i.e., for seven years prior to the date of transfer of the land. If the relevant tests laid down by the Supreme Court in Sarifabibi's case (1988) 172 ITR 95 are to be applied to this case as they ought to be, it would become obvious that the finding of fact arrived at by the Income-tax Officer, the Appellate Assistant Commissioner and the Tribunal cannot be characterized as perverse or unsupported by evidence or erroneous in law. It is not possible to accept the submission made by learned counsel for the assessee that the authorities below did not apply the correct 7 Bhimrao Janu Jadhav test or misdirected themselves in law or that the finding of fact arrived by the Tribunal was not supported by evidence. In view of the above discussion we do not think it necessary to refer to the other authorities cited at the Bar. We uphold the finding of the Income-tax Appellate Tribunal to the effect that the reference lands were not agricultural lands.”
The decisions relied by ld. AR for the assessee is not helpful to him as the facts of the present case are at variance. In Ashok Shukla Vs ITO (supra) the agriculture land was inherited by the assessee and his brother was carrying out agriculture operation. In Vanit Kumar Inderkumar Vs JCIT (supra) there was no dispute that land under sale was agriculture land and remained same at the time of sale. Similarly, in CIT Vs Debbie Alemao (supra) the land was shown in revenue record for use of agriculture purpose and no permission was ever obtained for non-agriculture purpose under Land Revenue Code. Finally, in CIT Vs P.C.Joshi & Others (supra) the land in question in sale deed was described as agriculture land and there was no material on record to suggest that the land was put to non- agriculture land. Thus, we do not find any infirmity in the impugned order passed by ld. Commissioner (Appeals).