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Income Tax Appellate Tribunal, D/“SMC” BENCH, CHENNAI
Before: SHRI CHANDRA POOJARI
आदेश / O R D E R
PER CHANDRA POOJARI, ACCOUNTANT MEMBER:
This appeal is filed by the assessee, aggrieved by the order of the Learned Commissioner of Income Tax(A)-15, Chennai dated 26.10.2016 pertaining to assessment year 2007-08.
The only ground in this appeal is with regard to treating the sale of landed property for non-agricultural purpose and bringing to tax under the head “Capital Gains”.
The facts of the case are that the assessee purchased a property on 06.04.2006 for a consideration of `28.96 lakhs. The same was transferred through a Power of Attorney (PoA) vide registered on 27.12.2006 to one Mr.K.Pari and the assessee received consideration of `30 lakhs vide cheques No.146922 for `20 lakhs and 146923 for `10 lakhs drawn on Tamilnadu Mercantile Bank Ltd.,(TMBL) Chennai-10. On getting this information, the assessment was reopened and the assessment was completed u/s.143(3) r.w.s 147 of the Act, bringing the capital gains of `33,72,384/- on sale of properties situated at survey No.197/3 and 198/3A in sholinganllur village, Tambarum Taluk measuring at 20.75 cents. It was sold by the assessee to Mr.K.Pari, S/o.Mr.Krishnaswamy Reddiar through PoA dated 07.03.2007 for consideration of ` 65 lakhs. The plea of assessee before the lower authorities that it is an agricultural land as
per Village Administrative Officer(VAO) records and the land was situated beyond 8 Km of any a municipal corporation. However, the lower authorities had not agreed with the contention of the assessee and disallowed the claim of assessee to the tune of 65 lakhs as agricultural income. Against the order of Ld.CIT(A), now the Revenue/Assessee is in appeal before us.
Before me, the assessee pleaded that the subject land was agricultural land at the time of purchase and continue to be agricultural land till the date of sale and the land was not converted into any non-agricultural purpose. It was submitted that as per VOA Records, it is an agricultural land only and it was stated by the AO that the land was within 7 Km from the village Panchayat, Uthandi, Chennai-119 and Uthandi is not notified municipality and it cannot be treated as non-agricultural land.
On the other hand, ld.D.R submitted that the land was purchased by the assessee on 06.04.2006 for consideration of `28.96 lakhs and was sold within 11 months for `65 lakhs on 07.03.2007. The property, which was sold, used for construction activity, and is situated within 7 Km from Uthandi Panchayat.
According to him, the impugned land is within 7 Km from Crompet municipality. Hence, the impugned land sold by the assessee is to be treated as non-agricultural land.
We have heard both the parties and perused the material on record. In this case, the assessee is not an agriculturist and has not carried on any agricultural activity in the said land and also not declared any agricultural income from the said land and sold it as it is an agricultural land. There is no evidence brought on record by the assessee with reference to carry out any agricultural operations by the assessee. In my opinion, the impugned land in the case of assessee cannot be considered as agricultural land as there was no agricultural operation carried on by the assessee in the said land.
6.1 Further, the Assessee in the present case is not an Agriculturist. He has no background of agricultural activities. Strictly speaking it may not be necessary to have background of agricultural activates. We are making a reference to this circumstances only to weigh the cumulative circumstances to come to a conclusion whether the property can be regarded as Agricultural Land. No evidence of having spent human labour in the sense of preparing the land, filling, sowing seeds, planting on a regular basis has been produced by the Assessee. The property is situated in fast developing area of Tambaram, Chennai. The property is located in developed/ developing area and has access to all modern amenities/living. There was Real estate activity in the area where the property is situated.
The sale of the property by the Assessee is to a commercial organisation. The sale consideration paid would show that no bona- fide agriculturist would pay such a huge price of Rs.65 lakhs for 20.75 cents.
6.2 Now apply the tests laid down by the Hon'ble Gujarat High Court in the case of Sarifabibi Mohammed Ibrahim (204 ITR 631) which was approved by the Hon'ble Supreme Court, to the facts and circumstances of the case:-
(i) The fact that land is entered as agricultural land in revenue records and is assessed as such under the Land
Revenue Code would be a . circumstance in favour of conclusion that it is an agricultural land. However, this would raise only a prima facie presumption and said presumption can be destroyed by other circumstances pointing to the contrary conclusion.
(ii) The fact that agricultural operations were carried on in the past or are carried on currently is a circumstance in favour of conclusion that land was agricultural land.
However, this is not a decisive factor inasmuch as agricultural crop can be raised even on building site land
(even on desert land as observed by the Supreme Court in said case) and sometimes, a crop is grown in order not to allow the land to remain idle awaiting sale for non- agricultural purposes to a non-agriculturist by way of a stop- gap arrangement or in order to avoid payment of revenue at a higher rate or in order to avoid payment of capital gains tax.
(iii) The fact that land is not converted to non-agricultural user would be a circumstance indicating that it is an agricultural land. However this is subject to same rider as is mentioned in (ii) above.
(iv) The following facts would indicate that land was not agricultural land: (a) The land is situated in an area in the proximity of building sites. (b) The land is sold to a non-agriculturist for non-agricultural purposes.
(c) The land is sold at a price comparable to the price fetched by building sites.
(d) The price is such that no bona fide agriculturist would purchase the same for genuine agricultural operations.
6.3 The property sold is situated in Sholinganallur, Tambaram Taluk, Chennai, which has become a bustling suburban.
Sholinganallur is an upcoming residential area with many number of Flats coming up, mostly professionals from various industries renting and buying apartments. As detailed above, the property sold by the assessee is in the midst of development activities being carried out by builders in promoting housing/ Information Technology corridors, and no agricultural activities were being carried out either by the assesse nor by others in that area, the property is described as a mango grove as per the copy of the sale deed/patta, chitta adangal produced. In view of the same, the sale price received for the property has increased manifold which a normal agricultural land will not fetch. The price is in accordance with the development activities and changes happening in the nature of the land from agricultural to that of housing 6.4 If I consider the above facts and circumstances of the present case as a whole and an overall view is to be taken in deciding whether the land was an agricultural land, I would come to a conclusion that the property cannot be considered as Agricultural land. Though the circumstance that the land is classified as Agricultural in the revenue records and the VAO has certified that the land is away from municipality. In my view, the other circumstances pointed out above outweighs all of the circumstances in favour of the Revenue and on the basis of those circumstances, I am inclined to conclude that the property was not an agricultural land. Accordingly, this ground raised by the assessee is dismissed.
In the result, the appeal of assessee is dismissed. Order pronounced in the open court on 25th July, 2017.