The Commissioner Of Income Tax vs. Chagarlamudi Vijaya Kumari

Whether the Tribunal was justified in law in confirming the addition of Rs.76,61,165/- made by the learned Assessing Officer, being exempted income as claimed by the appellant on the facts and circumstances of the case.

Whether the Tribunal was justified in law in upholding the order of the learned Commissioner of Income-tax (Appeals) on the conversation pf land into non-agricultural character, the land ceased to be agricultural land and consequently passed a perverse order on the facts and circumstances of the case?

Whether the Tribunal was justified in law in reversing the order of the learned Commissioner of Income-tax (Appeals) by allowing the appeal filed by the revenue in respect of direction to the learned Assessing Officer to allow the claim of section 54F of the Act after satisfying the conditions as per law on the facts and circumstances of the case.

Whether the Tribunal was justified in law in not adjudicating the ground of the appellant as to cost of acquisition of silver oak trees as on 01.04.1981 at 10% of the

Heard Shri. A.Shankar, learned Senior Advocate for assessee and Shri. M. Dilip, learned Standing Advocate for the Revenue.

Brief facts of the case are, assessee is an HUF. On 26.10.2011, return of Income declaring income of Rs.4,51,640/- for the A.Y. 2011-12, apart from agricultural income of Rs.13,14,685/- was filed. On 23.11.2010, assessee sold 3 acres 10 guntas of land situated at Ankanahalli village, Bilikere Hobli, Hunsur Taluk, Jhanjar for Rs.93,75,000/-.

The Assessing Officer made an addition of Rs.76,61,165/- on account of the sale of said 3 acres 10 guntas of land. Assessee challenged the same before the CIT(A)1.

Shri. Shankar for the assessee, submitted that the Assessing Officer held the property as Capital Asset on the premise that as per the Revenue records, the land was converted for Industrial purpose. The CIT(A) has confirmed the said finding and admitted assessee's claim under Section 54F of the Act; and remitted the matter to the Assessing Officer to allow the same after satisfying the condition as per law.

He further submitted that the ITAT has not only dismissed assessee's claim that the land is agricultural

Amplifying his contention, Shri. Shankar argued that this Court in CIT(A) and another Vs. M.R. Anandaram2, after considering various authorities has held that what is required to be examined is the actual condition and intended use of the land. He also placed reliance on Commissioner of Wealth Tax Vs. Officer-in-Charge (Court of Wards)3 and Sarifabibi Mohmed Ibrahim Vs. CIT4.

Shri. Dilip, learned Standing Counsel for the Revenue, opposing the appeal submitted that the land in question is converted for Industrial purpose and the Assessing Officer has rightly held so. With regard to the relief under Section 54F of the Act, he submitted that the

We have carefully considered rival contentions and perused the records.

Undisputed facts of the case are, the land in question has been converted for Industrial purpose. In the remand Report called for by the CIT(A), the Assessing Officer has stated thus: "The undersigned visited the land in Ankanahalli village, bilikere hobli, Hunsur taluk. The land continues to be a mango orchard & there is no sign of any development activity." (Emphasis Supplied)

The ITAT in para 7 of its order has held that the land in question is situated beyond the prescribed limits of Mysore City.

Thus, the Remand Report by the Assessing Officer clearly shows that the land continued to be a 'Mango Orchard' and there was no sign of any development.

Agricultural land is excluded from the definition of Capital Asset under Section 2(14)(iii) of the Act and land situated beyond 8 kms. is exempted from the definition of Capital Asset. Thus, there is a finding of fact by the ITAT that the land is situated beyond the prescribed limit. This Court, after considering the law on the point in various authorities, has held in M.R.Anandaram(HUF) supra that the actual condition and the intended view is a sina qua non while deciding whether a land in question is an agricultural land or not.

In view of the Remand Report and the finding of fact recorded by the ITAT, the first question of law merits consideration and it is answered in favour of the assessee and against the Revenue.

In view of our answer to the first question, the other questions are rendered academic in nature and do not call for any answers.

In the result, the following: ORDER