Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI A. MOHAN ALANKAMONY
आदेश /O R D E R
PER N.R.S. GANESAN, JUDICIAL MEMBER:
This appeal of the Revenue is directed against the order of the Commissioner of Income Tax (Appeals)-13, Chennai, dated 17.05.2017 pertaining to assessment year 2008-09. The assessee has filed the cross-objection against the same order of the CIT(Appeals). Therefore, we heard both the appeal and the cross- objection together and disposing of the same by this common order.
Shri AR.V. Sreenivasan, the Ld. Departmental Representative, submitted that the assessee sold a land on 21.11.2007 for ₹3,18,60,000/-. According to the Ld. D.R., the sale consideration was invested in shares / mutual funds on 28.03.2008.
The assessee claimed that the profit of sale of land was exempted on the ground that the land in question is agricultural land.
According to the Ld. D.R., the assessee neither used the land for agriculture purpose nor utilised the same for purchasing another asset. Since no agricultural activity was carried on, according to the Ld. D.R., the land in question is not considered to be agricultural land, therefore, the assessee has to pay tax on the capital gain.
According to the Ld. D.R., since the land was sold within a period of 18 months from the date of purchase, the Assessing Officer levied short term capital gain. Moreover, the land was also sold for non- agricultural purpose for exorbitant price. According to the Ld. D.R., when the assessee sold the land for exorbitant price, it cannot be considered to be agricultural land. According to the Ld. D.R., the intention of the assessee at the time of purchase of the property was not to use for agriculture purpose, therefore, the CIT(Appeals) is not justified in holding that the land in question is agricultural land.
On the contrary, Shri G. Baskar, the Ld.counsel for the assessee, submitted that the land in question is an agricultural land.
Referring to adangal extract, a copy of which is available at paper- book and also A-Register of the Village, the Ld.counsel submitted that the land in question is classified as wet land (Nanjai land). In fact, the assessee cultivated paddy which is evident from adangal extract. According to the Ld. counsel, when the land itself is classified as Nanjai land in the Revenue records, it is not correct to say that the land is not agricultural land merely because the assessee was able to sell the land for a good price. According to the Ld. counsel, the assessee at the time of purchase intended to cultivate the land. Since the assessee was able to fetch a good price for the land, it was sold within a period of 18 months.
However, the nature of land continuous to be agricultural land.
Therefore, According to the Ld. counsel, the profit on sale of such land cannot be considered as capital gain. Placing reliance on the judgment of Madras High Court in Mrs. Sakunthala Vedachalam v.
ACIT (2014) 369 ITR 558, the Ld.counsel submitted that when the land is classified as Nanjai land in the Revenue records, merely because the purchaser intended to use the land for some other purpose, it cannot be said that the land in question is not agricultural land. Therefore, according to the Ld. counsel, the CIT(Appeals) has rightly allowed the claim of the assessee.
We have considered the rival submissions on either side and perused the relevant material available on record. A perusal of adangal extract and A-Register of the village clearly indicates that the land in question is classified as Nanjai land (wet land). For the purpose of classifying a land as Nanjai land, there should be natural source of irrigation from the tank belonging to Government or Government agency. Unless there is a natural source of irrigation, the land cannot be classified as Nanjai land. This Tribunal is of the considered opinion that when the land in question is Nanjai land, merely because it was not cultivated due to failure of monsoon for some years, the classification of land will not be changed. The Nanjai land continuous to be Nanjai land in the State Revenue records, therefore, it is an agricultural land for all practical purpose.
It is also necessary to keep in mind that there is a prohibition for conversion of Nanjai land to any other purpose. Therefore, the assessee having purchased a Nanjai land, necessarily has to use the same for cultivation. In fact, the assessee cultivated paddy, which is evident from adangal extract filed before the authorities.
The assessee was able to bargain and sell the land for good price that does not mean that the character of the land would change.
Even in the hands of purchaser, the land in question continuous to be Nanjai land. To use the land for some other purpose, there should be approval of the concerned authorities. Therefore, this Tribunal is of the considered opinion that merely because the assessee was able to sell the land for a good price that alone cannot be a reason for holding the land as non-agricultural land.
Hence, the CIT(Appeals) has rightly placed his reliance on the judgment of Madras High Court in Mrs. Sakunthala Vedachalam (supra). Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed.
5. The assessee has filed cross-objection. In view of the decision taken in the appeal on merit, it may not be necessary to adjudicate the issue raised in the cross-objection.
In the result, both the appeal of the Revenue and the cross- objection of the assessee stand dismissed.
Order pronounced on 28th December, 2017 at Chennai.