ACIT, SALEM vs. R.MAHADEVAN, SALEM

the Order of Commissioner of Income Tax (Appeals)-18, Chennai, in dated 27.09.2016 for the AY 2010-11 and CO & CO No.14/Mds/2017 :- 2 -:

Shri Milind Madhukar Bhusari, CIT represented on behalf of the Revenue and Shri G. Baskar, Advocate represented on behalf of the assessee.

In respect of the Revenue’s Appeal, it was submitted by the Ld.CIT/DR that the assessee is an individual proprietor of M/s.Rajamanikam Textiles. It was a submission that there was a search on one Shri K.V.P. Balasubramaniam on 10.01.2012. It was a submission that during the course of the search a copy of Sale Agreement entered into between the assessee and Shri K.V.P. Balasubramaniam was found and seized. As per the Sale Agreement, an area of 4.60 acres of agricultural land was shown to have been sold by the assessee to Shri K.V.P. Balasubramaniam for a sale consideration guideline of which was Rs.1,09,25,000/-. It was a submission that the AO brought to tax the said transaction as giving rise to adventure in the nature of business. It was a submission that the assessee had other agricultural lands also from which agricultural income had been shown and in respect of the said agricultural lands sold no agricultural income was shown. It was a submission that the rate for the land was fixed at per cent basis rather than per acre as done in agricultural transactions. It was a further submission that the transaction was carried out with Shri K.V.P. Balasubramaniam who was a & CO No.14/Mds/2017 :- 3 -:

In reply, the Ld.AR vehemently supported the order of the Ld.CIT(A). He drew our attention to Page No.44 of the Paper Book which was a copy of the Certificate issued by Village Administrative Officer (in short ‘VAO’) that the land sold was agricultural land and was situated about 7 kms from Omlaur and the population of the village in 2009 would have been about 9200. He also drew our attention to Page No.36 to 40 of the Paper Book which was a copies of the detailed land assessment as per the Revenue records which show as agricultural land and which also showed agricultural operations having been done on the same. It was a submission that the verification as done by the Inspector was much after the sale of the land i.e. sometime during 2014, wherein the plots have & CO No.14/Mds/2017 :- 4 -:

We have considered the rival submissions. As the assessee did not desire to press the Cross-Objection, the Cross-Objection filed by the assessee stands dismissed as not pressed.

In respect of the Revenue’s appeal, it is noticed that the assessee is holding other agricultural lands as has been accepted by the AO. Thus, it cannot be said that the assessee is in the business of buying and selling agricultural land. It is also an admitted fact that the assessee has agricultural income and the same has also been disclosed. Just because the assessee was not deriving agricultural income from the lands sold will not alter the character of the land sold. In fact, the land Revenue records clearly show the said lands which have been sold are clearly agricultural lands also. The Certificate issued by the VAO remains undisputed. The VAO has also certified that the said land was used earlier for agricultural activities. This being so, as it is noticed that the conditions required in & CO No.14/Mds/2017 :- 5 -: Sec.2(14)(iii)(a) of the Act which clearly complied with in respect of the land sold, the sale of the said land cannot be held to give rise to capital gains nor can be treated as income chargeable to tax in the hands of the assessee. In these circumstances, the findings of the Ld.CIT(A) on this issue stands confirmed.

In the result, the appeal of the Revenue stands dismissed.