A,C.I.T. CENTRAL CIR.- 2(1), NAGPUR vs. SMT. SONAL BHANGADIA, NAGPUR

650 1 51/NAG{2016 SONAL BHANGADIA IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SHRI P.K: BANSAL, VICE PRESIDENT AND SHRI AMARJIT SINGH, JUDICIAL MEMBER ITA No. 51/NAG/2016 (ASSESSMENT YEAR 2011-12} ACIT CENTRAI. CiR 201}, 3RD FLOOR, ROOM NO.312, AAYAKAR BHAWAN; TELANGKHEDI ROAD, NAGPUR 440 001, 3diaff (Appellant) Vs SONAL BHANGDIYA 26-2 HOUSE NO, 526, NEAR GETWELL HOSPITAL; DHANTOL[ NAGPUR 440012 PAN: AIBPB8670L rreif (Respondent} ITA No. 53/NAG/2016 (ASSESSMENT YEAR 2011-12) CIT CENTRAL CIR 2(1}, 3RD FLOOR,ROOM NO. 312, AAYAKAR KHAWAN; TELANGKHEDI ROAD, NAGPUR 440} 001. 3dlaeif (Appellant) Vs SHRIKANT BHANGDIYA 20-2 HOUSE NO.526,NEAR GETWELL HOSPITAL, DHANTOLI NAGPUR - 440012 PAN; ATCPB13373 (rf (Respondent] ITA No. S4/NAG/2016 (ASSESSMENT YEAR Z011-12) ACIT CENTRAL CIK 2(1}, 3R0 FLOOR, ROOM NO.312, AAYAKAR FHAWAN, TELANGKHEDI ROAD, NAGPUR 440 001, 3dlaireif (Appellant) Vs MEGHA BHANGDIYA 20-2 H[QUSE NO.526,NEAR GETWELL HOSPITAL; DHANTOLI NAGPUR 440012 PAN: AGWPB6234H czaf (Respondent) Appellant by Respoudent by Shri A.R Ninawe (DR) Shri KP. Dewani (AR) Date of Hearing Date of Pronouncement 19.06.2017 28.06.2017 621_ 7 51/NAG/2016 SONAL BHANGADIA HCR[ QRLER PEREK_BANSAL KE: filed by the Revenue against the respective orders Since all these appeals dated 28.01.2016 invulve the common issue therefore, all these ol the CIT(A] decided by this common order; although belonging to the different appeals are Both the parties have agreed that all these appeals be decided on the assessees: case of Srnt; Sonal Bhangdiya: [n all these basis of the facts involved in the appeals the grounds of appeal taken by thc Revenue are common except change Smt; Sonal Bhangdiya, the Revenue has taken in the (igure; In thc Case of following ground of appeal: "I. Whether on the facts and in the circumstances of the case and in law, the Ld CITCA] wos right in deleling the addition of Rs: 64,32,520/- being income earned on sale of ugricultural Iund? Whether on the facts and in the circumstances of the case and in law, in deleting the addition of Rs. 64,32,520/- the LdJ CIT(A) WaS justified without uppreciating the facts and evidences brought on record by the AO that the transactions entered by the assessee were In the form 0f 'adventure in the nature of trade? 2 In the case of Shrikant Bhangdiya and Sml Megha Bhangdiya the figure of no 1 and 2 taken by the Rcvenue be read as Rs. Rs: 64,32,520/. i1 ground and Rs. 92,36,040/- respectively: The brief facts of the case are 1,13,51,850/- that the Assessing Officer during the course of search in the case of Bhangdiya noted that the cash payment has been made by Bhangdiya group for Groups of several agricullural lands. The agricultural lands purchased by Smt purchase Sonal Bhangdiya are detailed as under: 3 S1/NAG/2016 SONAL BHANGADIA Sonal Bhangdiyd, several acres 0f name 0f the ussessee, Smt "In the thereof are produced below" agricultural lands were purchased Details Arrq Cunsideration DE pf sale Name of the Sefler Descriptian 0f Name pfthe in Amt: (Incl uf decd ugrictlturul Land & #h Purchaser No, Hctr SLorp + Rey Expl 544200/- 26.7.2010 Mouza Kawthala Kh, 0.60 Bajiraa T. Manusmare No. 95 0,68 617700/- 26.7,2010 Mouzo Kawthalo Kh Pradipkumar R Mishra No 117 14440 1181090/_ 26.7,2010 Mouza Kawthala Kh Purushottor R Mishro & Nu 60/1 Others 982440/ 30.8.2010 Smt Sonaf Mauza Kawthala Kh. 1.61 Bhangdiya Sandip N Kemaye No 90/2 1.61 982440/ 30.8.2010 Mouza Kawthala Kh, Shekhar N Kemaye Na; 90/3 2,84 2219610/ 29,9_Zu1q Mouzri Kuwthala Kh Nemaji Bohde No 93 8.74 65,27480 Tatol that these agricultural lands have been sold by the It was furthcr noted within a short span ol 30 to 40 days from see to M/s Aparna Infraenergy Jr the date of purchase Thc lands so sold arc detailed as under: Area in Hctr 0,60 0.68 140 164 1.61 2.84 8.74 Date Sale Deed Consideration Amt Description of Land Kh: No. Mouza Kawthala Kh No. 95 Mouza Kawthalo Kh Nc; 117 Mouza Kawthala L Kh Na 60L1 Mouzo Kawthala_ KH No_90/2 Mouz Kawthala_ Kh Ng90/3 Mouza Kawthala / Kh No 93 20.8.2010 39,72,000/- 23.9.2010 23.92010 47,76,000/- 47,12,000/ 1,29,60,0 Doo | The Assessing Officer further noted that M/s Aparna Infraencrgy was a 4. Mitesh G. Bhangdiya was & partner with 65% of share Partnership Firm in which by other 2 partners The said firm was formed and remaining 35% was owned .07.2008 and later on the firm was reconstituted on 24.05.2010 admitting on 11.5 partners brought in capital contribution partners from PIIL Group The incoming reconstituted firm as they agreed to set up and develop towards 5O' stake in the Plant at Mouza Kawthala, Tahsil Chimur: A MOA a coal based Thermal Power the retiring and new persons For dated 24.05.2010 was signed between 4 51/NAG}Z016 SONAC BHANGADIA acquisition of thc firm M/s Aprana Infraenergy, at a consideration of Rs; 40 crores; As per clause 5 of the amcnded MOA, the firm had to purchase 37.02 Hectares of ancestral land of Shri Mitesh Bhangdiya and his family members. Further as per clause 7 of the said MOA, the firm had to purchase 150-200 acres of suitable land; In pursuance ol the MOA, Shri Milesh Bhangdiya and his family had purchased 76.96 Ilectares of agricultural land from the farmers and sold the same within a shorl span uf 10-40 days to firm, in addition to 37.02 Hectares of their ancestral lands; The assessee Smt: Sonal Bhangdiya; who is family members of Bhangdiya group has made transactions of purchase and sale of lands resulting in income of Rs. 64,32,520/- Similarly, other assessecs have al50 made transactions of purchase and sale 0l Iand resulting the income under appeal in their casc, The assessee claimed that since the agricuktural land purchased is not 3 capital asset being beyond 8 kms from thc local Municipal limits u/s. 2(14) of the Income Tax Act; thercfore, It is not chargeablc to tax The Assessing Officer did not agrce but lreated the income so earned by each of the assessees to bc the 'adventure in the nature of trade'. When the tnalter went before the CIT(A); the CIT(A) deleted the said addition by observing as under: "6.0 have carefully considered the submissions of the AR of the appellant, the order of the AO and the material on record 6.1 On careful examination 0f the material facts, it is Seen that the usscssee belongs to family of agriculturists and i5 having various ancestral agricultural lands at Chimur in Chandrapur District The assessee in theyear under consideration acquired agricultural land which has been sold by ussessee during the previous year under consideration The AR has filed the details in respect to purchase of agricultural land and sale of agricultural land along with copy of 7/12 in the paper book The documents of purchase and sale 0f agricultural land clearly indicate that the asset sold by assessee is agricultural lund: The AR has also filed the 7/12 extracts from the revenue records which shows thal the property sold by assessee is agricultural land. 683 68H 5 51/NAG/2016 SONA BHAMGADIA The AO has not disputed the fact that agricultural land sold is located beyond & km from any Municipal Corporation The AR has contended thal the agricultural land suld is not & capital asset within the meaning of section 2(14} Of1T Act 1961. Therefore, the surplus arising on the same being not in the noture 0f surplus on sale of capital asset assessee is not liable ta be assessed under the head capital gain The AR further contended that the surplus arising is in respect t sale of agricullural Iond and thus is in the nature of agricultural income in terms definition of agricultural income u5 pravided under section 2 (1A) 0f LT. Act 1961. 6.2 The assessee during the previous_ year under consideration has sold agricultural lands and surplus arising On same was claimed to be not chargeable to tax as agricultural lands are located beyond 8 kilometers from Municipal Limit and same re not Lupital asset in terms of provisions of section 2(14} 0f [ T Act 1961. The appellant has enclosed copies 0f extracts in Form No. 7/12 which indicute that the agricultural lands sold by assessee are described in revenue record GS agricultural lands The appellant has adduced sufficient evidence during the course of assessment proceedings to demonstrate that agricultural lands owned and held by assessee were used for carrying 0h1 agricultural aclivities and assessee has not applied for permission tq Li5e agricultural Iands for Ftf)/l agricull 'lural purpose: The evidences submitted before AO. are placed in naper book The assessee is agriculturist and Is holding various other agricultural lands apart from agricultural lands sold by assessee during the year under consideration The assessee has been showing agricultural income from the said lands and the same has been ccepted by A.O. during the year under consideration and in past assessment years The assessment order 0f past assessment years are placed in Paper Book. The appellant has enclosed copics of sale deeds of the lands to show that the lands sold were agricultural lands The legal 685 S1/NAGIZOIE SONAL BHANGADIA evidences Submitted by appellant before 4,0, has nat been found to be incorrect 6,3 Thc AR has Submitted that in the cuse of assessee at the relevant point Df time when the lands were Sold the lands were classified in revenue records aS agricultural lands and same has not been changed from agricultural land to non-agricultural land. The AO has not brought uny evidence or material on record to show that the assessee has used the lands for the purpose other than agriculture; The nalure 0f the crop and area under cultivatiun is clearly mentioned in the extract of Form No.7/12 placed in paper book In view of above the observation of A.0, that the lands were purchosed by assessee for non-agricultural purpose without bringing any adverse evidence or material on record is not justified 81 The AO. at para 6 has referred to Memorandum Agreement ated 24/05/2010 being part of seized document In this regard the appellant has suhmitted that perusal of Memorandum would make it evident that it is not relating to assessee and nowhere has it indicated the name of assessee: Therefore, no adverse inference could be drawn 6.5 The appellant is holding various other agricultural lands apart from agricuitural lands sold by assessee during theyear under cansideration The agriculture londs are held aS fixed assets and never held as business assets The assessee has not carried out any activity for development and t0 make the land readily marketable The assessee has not applled for conversion of agricultural lands for non-agricultural purpose S0 05 to suggest intention of assessee to uSe the agricultural land for other than agricultural purposes The A,0. has not brought any legal evidence Or material on record which indicates that assessee is involved in any activity on land sold that constitute adventure in the noture of trade Merely because the agrlcultural lands were sold by assessee in & short period and at higher 686 7 S1/NAG;2016 SONAL BHANGADIA price it cannot be termed that surplus arising on the sale of ugricultural lands is taxable as profit from the business activity in absence any material Qr legal evidence on record tq show that a5sessee is engaged in any systematic business activity in respect to agricultural lands sold. 6.6 In support of his propositiun that when on the date of purchase ond on the dute of sale; if lhe character of asset suld is agricultural land, the surplus arising on Stte is not exigible to tax The appellant has placed reliance on the following decisions: 1 331 ITR 59 (2011} CITvs: Sit Debbie Alemao 217 ITR 333 (Del) DLF United Ltd: vs. CIT iii) 335 ITR 77 (Del) Hindustan Industrial Resources Ltd. VS, ACIT iv) Supreme Court Judgement (SLP} (Civil) CC 1727-1729/98In the case 0f CIT vs M/s DL,F United Ltd. vide order dated 14/09/1995, 6,7 The assessee places reliance un the decision of Hon'ble ITAT; Nagpur Bench; Nagpur in the case of Shri Sanjay Nagorao Paidlewar in ITA No. 11Z/Nag/2012 vide order dated 22/03/2013 wherein agricultural lands owned and held by assessee was held to be not exigible to capital gain tax Or business incame 05 the agricultural land wQS located beyand 8 kilometers of Municipal limit of Nagpur: The Hon 'ble ITAT; Nagpur Bench Nagpur while deciding the issue in favour of ussessee has placed reliance on the decisions of Ion'ble Apex Court Delhi High Cuurt and Bombay High Court _ 687 8 S1/MAG/2016 SONAL BHANGADIA 6.8 The appellant has placed reliance on the decision of Hon'ble Delhi High Court in the case Of Hindustan Industrial Resources Ltd. The relevant observalions made by Hon'ble Court are aS under: Thus, on the date of purchase, the land in question Was agricultural lond and Qn the date of acquisition; the character of the land continued to be agricultural When these two clear findings have been returned, it is apparent that in the transilional period, that 7S, between purchase and acquisition, the nature und choracter %f the land did not change, The fact that the appellant]assessee intended to use the land for industrial purpuses did not in any way alter the nature and character of the land The frther fct thot the_eppellantLossesseg did not corrk {ut QK ggriculturgl operatians did_notalo result in (ny couersion_ofthe agriculturullondinto anindustriollund It is nobody'$ case that the appellunt/assessee carried out ny operations for setting Dp any plant or machinery 0r Uf the like nature s0 as to lead to an inference that the nature and character of the land had been changed from agricultural to industriak The mere fact_ that the gppellont_ossessee didnot carry out anyagriculuruloperation did not olter phe_nature_and character_pf the_lam In any event; this discussion is not relevant in the backdrop 0f the clear finding given by the Tribunal that 0n the date of the purchase and aS also on the date of acquisition; the land in question was agricultural land. Having come to) such & conclusion, the Tribunal ought not to have gone into question 0f intentiun of the appellantf assesses and definitely not into the question of intention of the land acquiring quthority, the latter being a wholly irrelevant consideration The ratio Iaid down Syuarely supports the submission Of appellant; therefore, assessment of surplus on sale of agricultural land Qs business income is unjustified. 6.9 The agricultural income has been defined under the provisions of Income Tax Act 1961 in section 2(1A} of LT Act 1961. The perusal of 688 9 S1/NAG(2016 SONAL BHANGADIA definition of agricultural income in cluuse (u) wOnld indicate that che agricultural income would include rent Or revenite derived from the ogricultural land. The meaning Of revenue derived from the agricul 'turat land would include the surplus arising on the sale of agricultural land The submission made by appellant is in line with the decision of Hon 'ble Bombay High Court in the case of Shri Manubhai Seth reported at 128 ITR 87 (Bom:} The surplus &n sale of agricultural lond being in the nature of revenue derived from land would constitute agricultural income and thus it is not exigible to tax considering the provisions of section 10{1} of LT. Act 1961. [n the case Of appellant; sale 0f lands are in respect to sale of agricultural lands is not in dispute from the side of lhe A0. The surplus arising 0h the sale of lands in the case of assessee being sale of agricultural land, it would constitule agricultural income in terms of 3 definition of agricultural income given in section 2 (1A) 0f LT, Act 1961 and shall be exempt u/s 10 (1} of [T. Act 1961. The assessee for this proposition places reliance on the decision of Hon"ble ITAT, Jodhpur Bench, Jodhpur (Third Member) in the casc of Smt Supriya Kanwar in ITA No. 362/JU/2010 vide judgement duted 13/05/2014. The Hon'ble ITAT after considering the legal position in detail has concluded that on sale of agricultural land surplus arising in the case 0f assessee is agricultural income and is not exigible to tax under the head capital gain or adventure in the nature %f trade: The ratio Iaid down by the decision of Hon 'ble ITAT Jodhpur Bench; Jodhpur squarely applies to the facts in the case of assessee and considering the same the assessment of surplus on sale of 'agricultural land 0S adventure in the nature of trade at the hands of assessee is not sustainable 6.10 The AR has also submitted that the decision 0f Third Member is in the nature 0f 'binding precedent as decision of Special Bench of ITAT: The AR; in this regard has placed reliance on the decision of Special Bench 0f Gpur 10 51/NAG/2016 SONAL BHANGAOIA ITAT; Mumbai in the case of Oman International Bank Ltd reported at 110 ITD 285 (Mum} (SB} 6.11 The appellant has also placed reliance on the decision of Hon 'ble ITAT; Pune Bench in the case of Haresh V. Milani reported at (2008) 114 ITD 428 vide order doted 7/9/2006 wherein it hos been held that' "Extracts of records maintained by authority for ogricultural land record and Iand revenue, showing that Iand was subjected to lund revenue; was classified as cultivable Iand, nature 0f crop produced was rice and animal feed grass and land waS cultivated by assessee himself;, mere inclusion of land in the industrial zone without @ny infrastructure development thereupon or without proving thot land was put to non- agricultural use cannot convert the agricultural land into non- ogricultural land and no capital = gains arose on the sale thereof: #agp The ratio laid down by the aforesaid decision squarely applies to the facts in the case of appellant 6,12 The Hon ble ITAT; Delhi Bench; Delhi in the recent decision in the cose of Marigold Merchandise (P) Ltd. vs, DCIT reported at 38 CCH 0S0 (Del;) (Trib:) has held that: "Where nothing was bought on record to show that assessee was engaged in adventure in nature 0f trade; then assessee's gains from sale of specified agriculture land was exempt income and not business income" The ratio laid down by aforesaid decision also supports the submission of the appellant 681 11 51/NAG/2016 SONAL BHANGADIA 6.13 The Id. A.0, at pura 6 has Observed that appellant had sold the land to MJs. Aparna Infraenergy In this regard, the AR has submitted that the person to whom land is sold is of no relevance in determining the nature and character of the land The land remained agricultural Iand till the date it was sold. The future use by the purchaser is also not relevant for the purpose of determination 0f true character and nature %f land The land sold by assessee at the relevant point 0f time of sale was agriculture lands and thus gqin oh arising on sale of agriculture land is not chargeable to tax The AR has placed reliance 0n the following decisions: (1981} 127 ITR 664 (Guj ) Gordhanbhai Kahandas Dalwadi vs. CIT GPur ii) (1981) 127 ITR 671 (Guj } Dr; Motibhai D. Pate/ vS. CIT iii) (2007} 288 ITR 319 (Guj ) Commissioner 0f Wealth Tax VS. Shashiben 6.14 The appellant also places reliance on the decision of Hon'ble Gujorat High Court in the case of CIT vs Manilal Somnath reparted at 106 ITR 917 where in it has been held by Hon ble Court that: 'In 0 sale of plot of land, to decide whether the land is agricultural or nol what has to be considered is what was the character of land at the time when the sale took place and not what the purchaser did or was supposed to do with the land" The ratio Iaid down by the aforesaid decision also supports the case of the appellant The observation of A.0. with regard to the purchaser 0f land and subsequent use of land is Of no relevance 6.15 In view f the above; and taking into consideration the judicial decisions on the issue, the addition made by the A0 of Rs; 64, 32, 520/- treating the Lransactions in lands us adventure in nature is directed to be deleted' 140 64/ 12 S1/NAG/2016 SONAL BHANGADIA Similar findings have been given by the CIT (^) in the case of other assessee; 5. We have heard the rival submission and carefully considered the same along with the erders 0f the Tax Authorities below. The only issue involved in thesc appcals before US relates to whcthcr thc profit carned by the assessee on the agricultural land situatcd outside k.in. of thc Municipal Limits is chargeable to tax a5 capital gain or income from business It is not disputed that the land which were purchased and sold by the respective assessees are outside 8 km from the Municipal Limit The provision of Section 45 is implicit clear and states a5 under: "45 [1] Any profits or gains arising from the transfer 0f a capital asset effected in Lhe previous year shall, save a5 otherwise provided in sections [54, 54B, 54D, 54E, 54EB;] 54F [546 and 54H] be chargeable to income-tax under the head "Capital gains', ald shall be deemed to be the income 0f the previousyear in which the transfer took place DELL NaaPU' 6 From the aforesaid section; it is apparcnt that any profit arising from thc capital assets shall bc chargcable to Income Tax undcr thc head capital gain and shall be deemed to be the income of the previoLts year in which the transfer took place: In view of the specific provision, the assets on the transfer of which the assessee derives any profit Or gain ntust be capilal assel; Capital Asset is defined u/s. 2(14} of the Income Tax Act; Section 2(14} defincs the capital assct as was in existence in the impugned assessment year to mean property of any kind held by an assessee, whether or not connected with his business or profession but does notinclude: ii) "Iii) Agricultural land in India; not being land situate (93 13 S1/NAG/2016 SONAL BHARGADIA (a} ih any Dreq which Is comprised within lhe jurisdictian 0f a municipality (whether known C5 0 municipalily, nz unicipal corporation, notified areu committee; town area committee; town committee, or by any Other name} 0r & cantonment board and which hos & population Ofnot less than ten thousand; (b) in any area within the distance; measured uerially (I) not heing more than two kilometers, from the luca} limits of any municipality 0r cantonment board referred t in item (a) and which has & population 0f more than ten thousand but not exceeding one lakh; or (I) not being more than six kilometers, from the local limits Of ony municipality or cantonment board referred to in item [a) and which has & population 0f more than one lakh but not exceeding ten Iakh; or (III) not being more than eight kilometers; from the locol limits of any municipality or cantonment hoard referred to in item (a) and which has 0 population of more than ten lakh Explanation For the purposes of this sub-clause, "population megns the population according to the last preceeding census of which the relevant figures have been published before the first day Qf the previousyear 7 From the aforesaid provision of Section 2(14)(iii}; it is clear that agricultural land which comply with the condition stipulated therein cannot be regarded to be capital asset; If the agricultural land is situated in any area more than 8 kms from the local limits of any municipality or cantonment board and which has a population of more than 10 lakhs, such agricultural land situated in India cannot be regarded to be capital asset: In the instant case, it is hot disputed that the impugned land which were purchased and sold by the assessee were located beyond 8 km of the Municipal Limit of Nagpur The Nagpur NaGrud 14 51/NAG/2016 SONAL BHANGADIA Tribunal, ITAT Nagpur in the case 0l Shri Sanjay Nagorao Paidlewar in ITA No 112/Ngp/2012 vide its order dated 22/03/2013 has also takcn the same view. Hon"ble Delhi High Court in the case of Hindustan Industrial Resources Limited u/s. ACIT 335 ITR 77 has held as under: "Thus; on the date 0f purchase, the land in question was agricultural land and un the date of acquisition, the character of the land continued to be ugricultural When these two clear findings have bcen returned, it is apparent that in the trunsitional periud, that is, between purchase and acquisition; the nature and character of the land did not chunge: The fuct that the appellant/assessee intended to use the land for industrial purposes did not in any way alter the nature and character of the land. Dhefurther Tact_ thot Lhe appellant/ussessee did not CHIIY QU Qy_ugricultural erations did ngt_glsoresult iLgny conversigu ufthe agriculturaL landinto industridl oud: It is nobody's case that the appellant/assessee carried out MAspur any operations fur setting up 4ny plant or machinery &r of the like nature SO as to lead ta un inference that the nature and character of the land had been chonged from agricultural to industrial The_ mere_ fct that the oppellontassessge did Wlcry out eny ogriculturoLeperation_did not alter tlg_Wture_and_churucter_ef the_lnd In any event; this discussion is not relevant in the backdrop of the clear finding given by the Tribunal that on the date of the purchase and as also on the date 0f acquisition, the land in question was agricultural land Having come to such & conclusion, the Tribunal ought not ta have gone into question of intention of the appellant/ assesses and definitely not into the question nf intention of" the land acquiring authority, the latter being a wholly irrelevant consideration 8 It i5 not disputcd by the Revenue before Us, that the land purchascd by the assessce WaS #n agricultural land and has been sold a5 such: The land sold by the assessee was chargeable to land Revenue. We are not couccrned the purpose for which the buyer has purchased the land. The nature of Lhe land has to be decided 633 64k 15 S1/NAG{ZDI6 SONAL BHANGADIA a5 il exists on the date of transfer of the land, The buyer may put the land to some other purpose does not mean the nature Of the land in the hands of the assessec, lill he was the owner get changed. Similar view has been taken by Tlon'ble ITAT, Pune Bench in the case cf Harish V, Milani 114 ITD 428 in which vide order dated 07/09/2006 this tribunal held a5 under: 'Extracts of records maintained by authurity for agricultural land record nd land revenue, showing that land wos Subjected tn land revenue; waS classified &s cultivable land, nature Of crop produced wos rice ond animal feed grass and land was cultivated by assessee himself; mere inclusion land in the induslrial zone without any infrastructure development ereupon Or without proving that lund was put to non-agricultural use nnot convert the agricultural land into non-agricultural land and no capital gains arose on the sale thereof 9 Wc also noted that; the Hon'ble Gujarat High Court in the case of CIT VS Manilal Somnath 106 ITR 917 held as under: 'In a sale of plot of land, to decide whether the land is agricultural or not; what has to be considered is what waS the character of Iand at the time when the sale took place and not what the purchaser did or Was supposed to do with the land ' 10, In view of this fact; while deciding the nature of the Iand, it has to be decided on the basis that what was thc nature af the land at the time when the land was sold. In the impugned case, it is not disputed that the land was an agricultural land a5 it Wa5 being capable of cultivation The Revenue record shows the land to be agricultural land: Therefore; We do not find any illegality or infirinity in the order of the CIT(A) when he held that the assessee i5 not chargcable to tax as capital gain, YAGPue 6.45 16 51/NAGI ZDI6 SONAL BHANGADIA 11 Coming to the question, whether the surplus so arising can be taxed under the head income from business being 'adventure in the nature of trade'. The assessee is not carrying on any business The assessee has simply purchased and suld the land Merely the land purchascd by thc assessee has been sold within 10-40 days does not mean; in our view that lhe assessec is carrying on 'adventure in the nalurc of the trade: No doubt the word business has been defined u/s. 2(13) to include any trade; commerce or manufacture or any adventure or concern in the nature of trade, commerce Or manufacture; Thc assessce is not carrying on the business of purchasc and sale of agricultural land regularly, He has simply purchased the land and thercaftcr sold the same; Mere this land was sold by the assessce in a short period and at higher price, it cannot Eibe termed that the surplus _ arising Qn the Sale of agricultural land is taxable @nder income from business For engaging ivn the business activity: The must be engaged in any systematic business activity. There i5 no 14 iity of the activities carried on by the assessee Thc activitics s0 carried on by the assessee cannot be regarded, in Our view, to be the business activities The onus, in our upinion, lies on the Revenue to prove that the assessee was engaged in 'adventure in nature oftrade'. The transaction of purchase ald Sale of the Iand cannot be assumed without more to be 'adventurc in the nature of lrade' . The man may purchase land with a view to resale it at a profit that does not mean the assessee is engaged in the nature of a trade lt is not the normal business of the assessee; The mcre earning of Lhe surplus or realization of the profit is not equivalent to embarking upon advcnture in the nature of thc trade In our opinion it Is nOL sufficient for the Revenuc to succced by merely showing that the transaction was entered in to having in mind the possibilities of making a profit; In addition to this aspect of the matter, it must bear the indicia of the trade In view the extraction 'adventure of nature in the trade' postulates the existence of certain etement In the adventure which in law would invest it with thc character of trade or business No such evidence has been brought on record on behalf of the Revenue Iit view 0f' this fact, we do not find any illegality in the 17 51/NAG/2016 SONAL BHANGADIA ordler of the CIT(A) 0n Lhis issue and we accordingly confirm the order of the CITA): 12. In the result all the appeals filed by the Revenue stand dismissed. @rder pronounced in the open court on 28.06.2017 /- (AMARJIT SINGH) JUDICIAL MEMBER (P.K. BANSAL) VICE PRESIDENT Nagpur Date; 2&mh [une, 2017 R Dhoke, P.S, Copy tox 1} The Appellant; 2) The Respondent; 3) The CIT(A}; 4} The CIT, Nagpur City Concerned; 5) The DR, ITAT, Nagplr; Guard File By Order Sltt Registrar) AIBuYhi PNagpur ^4_PUr 6.96