Income Tax Appellate Tribunal - Chennai
Syed Abdul Kader Aysthath Fasleen ... vs Ito, Chennai on 18 January, 2019
आयकर अपीलीय अिधकरण, बी'
बी यायपीठ,
अिधकरण 'बी यायपीठ चे ई
IN THE INCOME TAX APPELLATE TRIBUNAL, 'B' BENCH : CHENNAI
ी अ ाहम लेखा सद य एवं
ी धु वु आर.एल
आर एल रे ी, याियक सद य के सम ।
[BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER
AND SHRI DUVVURU RL REDDY, JUDICIAL MEMBER]
आयकर अपील सं./I.T.A. No.2337/CHNY/2016.
& ITA Nos.284 & 285/CHNY/2017
िनधा रण वष /Assessment years : 2010-2011, 2008-09 and 2010-
11.
Income Tax Officer, Vs. Mafaz Mohammed,
International Taxation 1(2) No.4th Floor, Celestial Centre,
Chennai 600 034. South Usman Road,
T. Nagar,
Chennai 600 017.
[PAN AFOPM 1910N]
आयकर अपील सं./I.T.A. Nos.312 and 323/CHNY/2017.
िनधा रण वष /Assessment years : 2012-13 & 2010-2011.
Mrs. Syed Abdul Kader Vs. The Income Tax Officer,
Aysthath Fasleen Amina, Non Corporate Ward 3(1)
No.5, Wallace Garden, Chennai.
2nd Street, Nungambakkam,
Chennai 600 006.
[PAN AAGPF 7986E]
अपीलाथ /Appellant)
अपीलाथ
(अपीलाथ यथ
( यथ /Respondent)
थ
Assessee by : Shri. S. Sridhar, Advocate
Department by : Shri Homi Raj Vansh, CIT.
सुनवाई क तारीख/Date of Hearing : 20-11-2018
घोषणा क तारीख /Date of Pronouncement : 18-01-2019
ITA No.2337/16, 284-285, 312 &323/17
:- 2 -:
आदेश / O R D E R
PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER
Of the above appeals, tax effect in appeal No.284/CHNY/2017 of the Revenue for assessment year 2008-2009 is less than ₹20,00,000/-. Ld. Departmental Representative fairly agreed that the tax effect in the appeal mentioned (supra) was less than ₹20,00,000/- and by virtue of para 13 of CBDT Circular No.3/2018, dated 11.07.2018, appeals below the specified tax limit had to be withdrawn as not pressed. Accordingly, appeal of the Revenue for assessment year 2008-09 stands dismissed.
2. Appeal 2337/Chny/2016 is of the Revenue and relates to the assessee Shri. Mafaz Mohammed and appeal 323/Chny/2017 is an appeal of the assessee Smt. Syed Abdul Kader Aysthath Fasleen Amina. Both these appeals are for the same assessment year 2010- 11, and facts relating thereto lie within very same compass.
3. What can be recapitulated from the assessment orders, is that Smt. Syed Abdul Kader Aysthath Fasleen Amina had purchased 11.37 acres of land at survey Nos. 14/2C, 14/3A and 14/3B2 of Egattur Village, Thiruporur Taluk from one Smt. Saradambal through following documents:-
ITA No.2337/16, 284-285, 312 &323/17 :- 3 -:
(i) Doc. No.3227 of 1998, dated 15.12.1988
(ii) Doc. No.686 of 1989, dated 20.03.1989
(iii) Doc. No.56 of 1992, dated 30.06.1991
(iv) Doc. No.54 of 1992, dated 02.07.1991
(v) Doc. No.55 of 1992, dated 02.07.1991
(vi) Doc. No.1833 of 1992, dated 30.09.1992
(vii) Doc. No.701 of 1993, dated 27.04.1993
All the above documents were registered with Sub- Registrar,
Thiruporur. In addition to the above Smt. Syed Abdul Kader Aysthath Fasleen Amina had also acquired 3 acres and 81 cents of land at survey No.14/3B1 in 1992 through document Nos.114/92 and 115/92. All these land pieces, it seems, were adjacent to eachother and formed a single land parcel. She had thereafter settled 1/3rd undivided share in the above land to her father Shri. S.A. Syed Abdul Kader through a registered settlement deed dated 11.04.2007. The said Shri. S.A. Syed Abdul Kader in turn settled 1/3rd share given to him by Smt. Syed Abdul Kader Aysthath Fasleen Amina, in favour of Shri. S.A.Mafaz Mohammed, who is the other assessee before us, through another settlement deed 16.04.2007. Shri. S.A.Mafaz Mohammed is the brother of Smt. Syed Abdul Kader Aysthath Fasleen ITA No.2337/16, 284-285, 312 &323/17 :- 4 -:
Amina. Out of the balance 2/3rd share, Smt. Syed Abdul Kader Aysthath Fasleen Amina settled 1/3rd share in favour of her mother Mrs. Sithi Sayeedha through a registered document dated 11.04.2007. It seems 1/3rd share given by the assessee to her mother Mrs. Sithi Sayeedha was settled by the latter in favour of Shri. S.A. Nadher Abdul Kareem through another settlement deed dated 16.04.2007. The said Shri. S.A. Nadher Abdul Kareem resettled his 1/3rd undivided share in favour of his wife Smt Aysha through a registered settlement deed dated 15.09.2009. By virtue of the above settlement deeds, assessees Smt. Syed Abdul Kader Aysthath Fasleen Amina, Shri. S.A. Mafaz Mohammed and Smt. Aysha got 1/3rd share in the following :
Area of land
(a) Survey No.14/2CA measuring 5.96 acres
(b) Survey No.14/3A2 measuring 1.53 acres © Survey No.14/3B1B measuring 1.50 acres
(d) Survey No.14/3B2B measuring 0.33 acres 9.23 acres
4. During the previous year relevant to assessment year 2010-
2011, to be precise, on 05.02.2010, both the assessees alongwith Smt. Aysha sold 1.85 acres out of the 9.32 acres to two entities through registered documents numbered as 663 and 664/2010. These ITA No.2337/16, 284-285, 312 &323/17 :- 5 -:
two entities were one M/s. Interglobe Hotels Pvt. Ltd (in short ''IGH'') and one M/s. Accent Hotels Private Limited (in short ''Accent'') and they received 37.61% and 62.39% share, respectively in the land.
Total consideration received by all the three sellers from these two companies came to ₹37,50,00,000/- and accordingly 1/3rd share of each of the co-owners came to ₹12,50,00,000/-. Both the assessees Smt. Syed Abdul Kader Aysthath Fasleen Amina and Shri. S.A. Mafaz Mohammed had claimed gains arising out of such sale as exempt.
Assessees claimed the land sold as agricultural and not a capital asset.
5. Ld. Assessing Officer during the assessment proceedings noted that sale price came to ₹20,27,00,000/- per acre against guideline value of ₹3,00,00,000/- per acre. As per the ld. Assessing Officer, the land was situated in Egattur, which was a suburb of Chennai, in Thiruporur Taluk of Kanchipuram District, lying on the side of Old Mahabalipuram Road. According to the ld. Assessing Officer, Egattur was an upcoming residential area with many flats catering to professionals working in Information Technology companies in and around OMR. Ld. Assessing Officer also noted that Government of Tamil Nadu vide Gazette Notification No.VI(1)/109/2009, dated 09.03.2009 had declared the area of 9.32 acres owned by the assessees alongwith Smt. Aysha, as a multi- storeyed building area for ITA No.2337/16, 284-285, 312 &323/17 :- 6 -:
construction of commercial building. Assessees were put on notice.
Summary of the reply given by the assessees was as under:-
a The land was purchased as agricultural land as per purchase deeds. It is clearly mentioned in the purchase deeds that what was brought was agricultural Punja land and was being cultivated.
b Agricultural income was derived from the land which were being offered year after year in the individual income-tax-returns.
c Copy of the Chitta, Patta, Adangal clearly state that it was agricultural land.
d The land was situated 18.6 kms away from the Municipal limits and the population of the area was below 10,000 as per census.
e The sale deeds dated 5.2.2010 clearly mentioned in Clause no. 2(4), that Land Acquisition Act and Land Reforms Acts were not applicable and this clearly implied that the land sold was agricultural.
f Land was not converted, but was sold as agricultural land.
g The sale deed mentioned in the Schedule that the land sold was "as per Patta". In the patta it was clearly mentioned that the land was agricultural.
ITA No.2337/16, 284-285, 312 &323/17 :- 7 -:
h The buyers after purchasing the land had obtained patta from the authorities, which again classified the land as agricultural land. Hence the intention of the buyer and seller was to purchase and sell agricultural land.
i In the appeals of Mr. Aboobucker and Mrs. Ayisila, ld.
Commissioner of Income Tax (Appeals) had held that the land was not a capital asset and hence the gain arising out of the same was not taxable''.
6. On receipt of the above reply of the assessee, ld. Assessing Officer addressed a letter to the Commissioner, Town and Country Planning, Chennai for identifying the applicants who had applied for zone reclassification of the land. The said authority through a letter dated 11.02.2015 stated that the applicant was one M/s. SSPDL Infrastructure Developers (P) Limited (in short ''SSPDL'') represented by its Director. It seems in the said letter, it was also stated that assessees alongwith Smt. Aysha had given a power of attorney to M/s. SSPDL on 27.06.2007. Thereafter ld. Assessing Officer addressed a letter to M/s. SSPDL seeking details of the transactions it had with assessees. M/s.SSPDL furnished the following records in reply.
(i) Joint Development Agreement (JDA) executed on 25.06.2007 between them and the assessee and two others.
ITA No.2337/16, 284-285, 312 &323/17 :- 8 -:
(ii) Power of Attorney (POA) dated 27.06.2007 executed by the assessee and Shri S A Nadheer Abdul Kareem in favour of M/s.
SSPDL for their 2/3rd share in the property.
(iii) Deed of cancellation of JDA between the assessee and two others and SSPDL.
7. A survey u/s.133A of the Income Tax Act, 1961 (in short ''the Act'') was conducted in the premises of the assessee Shri. Mafaz Mohammed on 09.03.2015, and it seems the Revenue stumbled upon the JDA dated 25.06.2007, and a Power of Attorney dated 27.06.2007, executed by the assessee's in favour of M/s. SSDPL.
Assessees had entered into the JDA with M/s. SSDPL to develop the land for constructing multi-storied building with mall, residential apartments and for commercial use. Through this JDA, parties agreed for 50:50 share in the undivided land. Asessees alongwith Smt. Aysha were entitled to 50% of the total saleable space. Ld. Assessing Officer also noted that M/s. SSDPL had, in turn, entered into agreements with M/s. IGH and M/s. Accent for sale and construction of hotel on 50% of UDS in the land belonging to M/s. SSDPL. M/s.
SSDPL had also received a sum of ₹22,50,00,000/- from M/s. IGH and M/s. Accent, on 11.04.2008. It seems, the joint development agreement entered between assessees and M/s. SSPDL was cancelled on 04.02.2010 and assessees, sold the 1.85 acres of land directly to ITA No.2337/16, 284-285, 312 &323/17 :- 9 -:
M/s. IGH and M/s. Accent. The impugned capital gains arose out of the sale effected by the assessees to M/s. IGH and M/s. Accent.
8. Ld. Assessing Officer after going through the array of transactions came to a conclusion that intention of the assessees were to commercially exploit the land. According to him, such commercial purpose was clear from the JDA entered by the assessees with M/s.
SSPDL in the year 2007. Though the assessees argued that the JDA with M/s. SSPDL was not acted upon and character of the land had not changed, this was not accepted by the ld. Assessing Officer. Ld. Assessing Officer also noted that the agricultural income claimed by Smt. Syed Abdul Kader Aysthath Fasleen Amina came to ₹1,80,000/-
and Shri. Mafaz Mohammed came to ₹75,000/-, but no supporting details were filed, except for chitta and adangal. According to the ld.
Assessing Officer, though the chitta and adangal stated that there were coconut and mango trees cultivated in the land, it did not prove the claim of agricultural income. Relying on the judgment of Hon'ble Supreme Court in the case of Smt. Sarifabibi vs. CIT, (1993) 204 ITR 631, he held that nature of the land mentioned in the Revenue records was not conclusive evidence for proving its character. Ld. Assessing Officer also noted that in the construction agreement entered between M/s. IGH and M/s. Accent with M/s. SSDPL, the property was shown as falling in ''urbanizable zone''. He thus held ITA No.2337/16, 284-285, 312 &323/17 :- 10 -:
that property did not fall within the exclusion given under clause (iii) of Section 2(14) of the Act and held the entire sale consideration as exigible to capital gains tax. Accordingly, an addition of ₹12,47,30,461/- was made in the hands of the assessee Smt. Syed Abdul Kader Aysthath Fasleen Amina and ₹12,49,11,769/- was made in the hands of the assessee Shri. S.A.Mafaz Mohammed. Ld. Assessing Officer also disallowed the claim of agricultural income of ₹1,80,000/-
made by the assessee Smt. Syed Abdul Kader Aysthath Fasleen Amina and ₹75,000/- claimed by the assessee Shri. S.A.Mafaz Mohammed.
9. Apart from the above, in the assessment done on Shri. S.A.Mafaz Mohammed, there were certain other disallowances also.
Shri. S.A.Mafaz Mohammed had admitted income of ₹55,70,610/-
from house property against which ₹85,946/- was claimed as municipal taxes. Ld. Assessing Officer disallowed the claim finding that the receipt produced as evidence was in the name of one Smt. K V A M Sithi Sayeeda and not the assessee. Shri. Mafaz Mohammed had also claimed interest of ₹44,38,785/- as deduction from income from house property. Though the assessee submitted that such interest was paid on loans taken to repay the advance received from M/s.
SSDPL, which was used for construction of the building, this was not accepted by the ld. Assessing Officer. Ld. Assessing Officer noted that ITA No.2337/16, 284-285, 312 &323/17 :- 11 -:
a term loan of ₹4,65,00,000/- availed by the assessee from M/s.
Indian Overseas Bank, Gemini Circle, Chennai was for purpose of private investment in immovable property. According to him, it was clear from a letter from Assistant General Manager, Indian Overseas Bank, Chennai that such term loan was preclosed being the surplus fund available with the assessee. Ld. Assessing Officer also relied on answers given by the assessee during the statement taken in the survey. Claim of interest was also thus disallowed.
10. Aggrieved, both the assessees moved in appeal before ld.
Commissioner of Income Tax (Appeals). Whereas assessee Shri. Mafaz Mohammed was successful in his appeal, that of Smt. Syed Abdul Kader Aysthath Fasleen Amina met with a different fate. What was held by the ld. Commissioner of Income Tax (Appeals) in the case of the assessee Shri. Mafaz Mohammed in his order dated 27.05.2016 on the question of nature of the land is reproduced hereunder:-
''I have considered the above submission of the assessing officer and also the submissions of the of the assessee carefully. There are two basic issues involves in the present appeal.
i)Whether the land under consideration are agricultural lands and hence outside the scope of definition of capital asset U/s.2(14) of the LT. Act and
ii) The date (year) of transfer of the land for the purpose of computation of capital gains, if any, ITA No.2337/16, 284-285, 312 &323/17 :- 12 -:
As the claimed by the assessee in his returns of income, the lands are agricultural lands and hence the proceeds are not eligible to capital gains tax. Further the transfer of land had taken place in the Financial year 2007-08 (ie) on 25.6.2007 when the assessee entered into Joint Development agreement with M/s. SSPDL received as advance of Rs.5,00,00,000/ -, handed over the possession of the property to M/s. SSPDL and also executed a Registered Power of Attorney in favour of SSPDL. From the perusal of the records and the assessing officer's order and other details filed by the assessee, the lands under consideration were acquired by the assessee's sister from 1988 to 1992 by different documents from Smt. Saradambal. The assessee's sister settled 1/ 3rd undivided share in the said lands to her father Mr. S.A.Syed Abdul Kader, who in turn had settled the said 1/3rd undivided share in the land in favour of the assessee. As per the revenue records, the lands are agricultural lands. The assessee as well as the previous owners have been showing agricultural income from the said lands in their return of income filed from year to year up to 2010-11. Even the assessing officer has also accepted these facts. The assessee also submitted that he along with other 2 co- owners entered into a Joint Development Agreement with SSPDL on 25.6.2007 based on the said Joint Development Agreement they ( he and other eo owners) received an advance of Rs.5 Crores, handed over the possession of the property to M/s. SSPDL and also executed a Power of Attorney on 27.6.2007 registered as document No.429/2007.
The permission from Commissioner of Town and Country planning for Zone reclassification and getting notification in Gazettee TamilNadu Government in the year 2009 were obtained by the developers using the Power of Attorney executed on 2007, Subsequently, the Joint Development Agreement was cancelled on 4.2.2010 and the Power of Attorney was revoked the developer, SSPDL nominated M/s.Interglobe Hotels Private Limited and M/ s. Accent Hotels Private Limited, for the purpose of registration of 1.85 Acres of land and surrendered the balance land by cancellation of Joint Development Agreement and accordingly the assessee and other co owners had to register the property in the name of M/s. Interglobe Hotels Private Limited and My s. Accent Hotels Private Limited being the nominee of the developer. The deed of cancellation of Joint Development Agreement clearly narrates the nomination made by the SSPDL, the Developer in favour of M/s. Interglobe Hotels Private Limited and M/ s. Accent Hotels Private Limited. Thus the registration of the land in favour of M/s. Interglobe Hotels Private Limited and My s. Accent Hotels Private Limited on 5.2.2010 is not a new transaction, It is only a consequential ITA No.2337/16, 284-285, 312 &323/17 :- 13 -:
act on part of the assessee to register the land as per the requirements of the developers as contained in the Joint Development Agreement cancellation deed dated 4.2.2010. As per sec.2(47)(v) of the IT.Act, transfer in relation to capital asset includes any transaction involving the allowing the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to m Sec.53(A) of the transfer of property Act 1982 (4 of 1882) section 2(47)(v) is reproduced below for ready reference:
Sec.2(47) "transfer" in relation to capital assets includes (v) any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in Sec,53A of the Transfer of property Act 1882 (4 of 1882).
In the instant case, consequent to the Joint Development Agreement on 25.6.2007, the assessee has handed over the possession of the land to the developer executed a , Power of Attorney and received part of the consideration agreed upon. Therefore, in view of the provisions of clause (v) of Sec2(47) of the Act, the transfer of the property has been effected in the Financial year 2007-08 itself, irrespective of the date of registration. Registration is only legal requirements for the buyer and not for the seller. It is also important to see whether registration in the name of M/s. Interglobe l Iotels Private Limited and M/s. Accent Hotels Private Limited is a new transaction, or continuation of the transaction (Joint Development Agreement) already entered with SSPDL.
M/s, SSPDL is a company carrying on business in Chennai had entered into Joint Development Agreement with the assessee and other Co owners on 25.6.2007 consequent to the Joint Development Agreement between the assessee and SSPDL, the assessee executed and power of attorney on 27.6.2007 in favour of SSPDL (vide Registered Document No.429 dated 2007) for obtaining various permissions and to develop the property. In fact based on the said General Power of Attorney, SSPDL obtained various permissions and sanctions from the state Government and local authorities. The latest of such approvals based on the Power of Attorney Document No.4290f 2007 was from Director of Town Planning by notification in Tamilnadu Government Gazette in No.VI(I)/ 109/2009 multi-storey building area.
Clause 5.1.3 of the said Joint Development Agreement states" it is a agreed by the owner that the developer is entitled to enter into agreements for sale, conclude sale transaction and receive advances from prospective customers and appropriate the same in respect of the developer's share of allotment in the developed ITA No.2337/16, 284-285, 312 &323/17 :- 14 -:
property under this agreement."
In pursuance of the said clause the developer viz. SSPDL has entered into .agreements with that M/s. Interglobe Hotels Private Limited and M/s. Accent Hotels Private Limited for sale of undivided portion of land. When the Joint Development Agreement was cancelled on 4.2.2010 between the assessee and SSPDL, it has become necessary to honour the commitment made to that M/s. Interglobe Hotels Private Limited and M/s. Accent Hotels Private Limited and the assessee and other co owners had to register 1.85 Acres of land to them in pursuance of the agreement entered In consequence to Joint Development Agreement.
On 4.2.2010 M/s. SSPDL had nominated M/s. Interglobe Hotels Private Limited and M / s. Accent Hotels Private Limited, as their nominees for the purpose of Registration of 1.85 Acres of land and surrendered the balance land to the assessee and other co owners by cancellation deed of Joint Development Agreement. Thus, the transaction between the assessee and M/s. Interglobe Hotels Private Limited and M/s. Accent Hotels Private Limited is not a new sale transaction but it is only a consequential happening based on the Joint Development Agreement.
In the deed of cancellation of Joint Development Agreement in clause No.3, it was mentioned that "It is also represented that the parties of the Second Part and the Parties of the First Part, represented by the Parties of the Second Part, had entered into Agreements for sale and construction dated 4.4.2008 with M/ s. Interglobe Hotels Private Limited and M/s. Accent Hotels Private Limited for construction of hotels and conveyance of undivided share in the schedule mentioned property in proportion to the constructed area of the hotels.
These agreements of sale and construction were registered as document Nos.2694/2008 and 2695/2008 respectively, at the office of the sub-Registrar, Thiruporur. Since the parties of the First Part and parties of the Second Part have mutually decided to cancel the said Agreement of Joint Development dated 25.06.2007, to protect the interest of M/s. Interglobe Hotels Private Limited and M/ s. Accent Hotels Private Limited, the parties of the First Part have agreed to convey a demarcated extent of land measuring 1.85 acres from the out of the schedule mentioned property directly to M/s. Interglobe Hotels Private Limited and M/s. Accent Hotels Private Limited. On this understanding the parties of the First Part, Second Part, M/s.Interglobe Hotels Private Limited and M/s.Accent Hotels Private Limited, have mutually decided to cancel the agreements of sale and construction registered as Document Nos.2694/08 and 2695/08.
ITA No.2337/16, 284-285, 312 &323/17 :- 15 -:
Thus the above facts clearly prove that M/s. Interglobe Hotels Private Limited and M/ s. Accent Hotels Private Limited only nominees of SSPDL and not a separate of independent buyer of the property from the assessee. Hence the registration deed dated 05.02.2010 cannot be construed as the date of sale of the land by assessee and other co-owners. Since the transfer of property had already taken place in the financial year 2009-10.
In the Present case the assessee and other co owners have been using the said land for agricultural lands till the JDA was entered into with M/S.SSPDL on 25.06.2007, when. the possession of the said lands was handed over to the developer. The assessee has not applied for any permission to convert the land or sought permission to develop the land. On the other hand the developer, using the power of attorney has applied to various authorities for converting of the said land construction of commercial building. But however the said JDA was cancelled on 4.2.2010 without implementing any activities as per the sanction permission obtained. The- land was kept as agricultural land by the SSPDL from the date of entering into JDA till it was cancelled on 4.2.2010. Hence permission obtained was not acted upon. Even in the cancellation deed it was clearly mentioned that only land was handed over back to the assessee and other co-owners without any development.
The decision of ITAT Tribunal Chennai in the case of Ravikumar (HUF) Chennai Vs. Department of Income-tax in ITAT No.l076/MDS/2009, squarely applicable to the cause. It held that mere obtaining permission for the layout does not change the character of the lands from agricultural lands and the permission was never implemented nor acted upon. Even after the JDA, the land was continued to be used for agricultural purposes, up to the sale of the land to M/s.IGH and M/s.Accent .
This is evident from the VAO Certificate, Patta, Chitta, Adangal issued in favour of the buyers viz., M/s.IGH and M/s. Accent. The land was sold to M.s, IGH and M/s. Accent also as agricultural lands only.
Effectively, the ld. Commissioner of Income Tax (Appeals) held that the land sold was agricultural in nature and the transfer was effected in financial year 2007-08 relevant to assessment year 2008-09.
ITA No.2337/16, 284-285, 312 &323/17 :- 16 -:
11. As against the above, what was held by the ld.
Commissioner of Income Tax (Appeals) on 24.10.2016 in the appeal filed by Smt. Syed Abdul Kader Aysthath Fasleen Amina is reproduced hereunder:-
''16. I have gone through the facts of the case and have considered the rival submissions. The written submissions filed by the ld. AR on 19.10.2016 during the applicable of the Hon'ble Jurisdictional ITAT., D Bench, Chennai in the case of Smt. Ayisha Fathima, A.Y. 2009-10, ITA No.1371/Mds/2013, dated 17.08.2016, which has been relied on by the appellant to substantiate her claim that (i) the land sold by her was agricultural land (ii) and even if the same is treated as capital asset, it has to be considered in the A.Y. 2008-09, when the JDA was executed, the PAO was issued and the sale consideration was received and not in the A.Y. 2010-11, as assessed by the ld. Assessing Officer. In the light of these facts of the case, the case is discussed as under:-
17. Whether the impugned land was an agricultural land or otherwise, the observation and the findings made by the ld. Assessing Officer need to be discussed here. Durng the relevant year under consideration, the appellant along with the other two co-owners namely Mr. Mafaz Mohammed and Mrs. Aysha had sold 1.85 acres of acres of M/s. Interglobe Hotels Pvt Limited for a total consideration of ₹14,10,46,875/- on 05.02.2010. The remaining part of 62.39% of the undivided share of land out of 1.85 acres was sold to M/s. Accent Hotels Pvt Ltd for a total consideration of ₹23,39,53,125/- on 05.02.2010. The total sale consideration was ₹37.50 crores and the appellant's one third share worked out to ₹12,50,00,000/- which was claimed by the appellant as exempt in view of the provisions of Section 2(14) of the Act.
18. The sale consideration received by the appellant and the other shareholders was substantially high if the land was treated as agricultural land. The sale price of the land worked out to ₹20.27 crores per acre as against the guideline value of ₹3.00 crore.
19. The impugned land is situated at Egattur which is a suburb of Chennai located south of the Chennai city along the Old Road Mahabalipuram Road(OMR) which is one of the most rapidly developing commercial areas and also is an upcoming residential area as most of. the professionals and information technology companies are renting and buying apartments there.
20. Even the government of Tamilnadu has notified the Survey Nos. in the area as Multi Storied Building area for construction of commercial buildings.
21. During the financial year 2007 - 08, the appellant and the two other ITA No.2337/16, 284-285, 312 &323/17 :- 17 -:
shareholders had given a Power of Attorney dated 27/06/2007 in respect of the impugned property in favour of M/S SSPDL Infrastructure Developers Private Limited to do various acts, deeds and things like to make and submit necessary applications to the Directorate of Town and Country Planning, CM DA, TNEB, MWSSB, Fire Department, Local Panchayat Union, etc. for obtaining notifications, approvals for demolition of any structure, re - classification of the property, sub - division of the property, re - constitution of the property etc. etc.
22. Based on this POA, M/S SSPDL had applied before the Directorate of Town and Country Planning for notifying the impugned land as 'Multi - Storied Building Area' for construction of commercial buildings and the Directorate of Town and Country Planning by notification declared the impugned land as 'Multi - Storied Building Area' for construction of commercial buildings.
23. The appellant and the other two shareholders had also entered into a Joint Development Agreement with M/S SSPDL on 25/06/2007 to develop the impugned property by construction of the multi storied buildings which would comprise of a Mall, residential apartments and commercial buildings.
24. Meanwhile, M/S SSPDL entered into agreement with M/S Interglobe Hotels Private Limited (IGH) and M/S Accent for sale and construction of the hotels and the impugned land and received a sum of RS.22.50 crores on 11/04/2008 and the sale deed and construction agreement were executed.
25. The above discussed JDA dated 25/06/2007 was cancelled on 04/02/2010 and in view of this cancellation of JDA, M/S SSPDL delivered the vacant possession of the impugned property to the appellant and other two shareholders.
Accordingly, the impugned lands were sold by the appellant and other two shareholders on 05102/2010 to M/S IGH and M/S Accent for a total sale consideration of Rs. 37.50 crores, as discussed already at para 6 of the assessment order and at para 17 of this order.
26. Further, it was also notice from the Construction Agreement dated 05.02.2010 entered into between M/s. IGH and M/s. SSDPL, page 26 para 10.2.3 that the Schedule B property feel in the ''Urbanisable Zone'' as per the existing master plan of the DTCP.
27. From the above discussion, it is evidently clear that the impugned property sold by the appellant was in the midst of commercial development activities being carried out by builders in promoting housing and information technology corridors. In view of this, the sale price fetched by the impugned property was manifold which a normal agricultural land would never get. There is a sharp contrast between the guideline value of the impugned property and the actual sale consideration received by the appellant.
28.ln view of the above facts and circumstances of the case, it is very clear that the intention of the appellant was to commercially exploit the impugned land. This intention was expressed by the appellant way back in the year 2007 when she had executed the JDA with M/S SSDPL to develop the property commercially.
ITA No.2337/16, 284-285, 312 &323/17 :- 18 -:
29.With regard to the agricultural income shown in the return of income for the year under consideration, the appellant was asked by the AO to furnish the relevant details to substantiate that .she had carried out agricultural operations and had obtained agricultural produce. The appellant was also asked to furnish the details of expenses incurred towards the agricultural activities and also to furnish the details of payment received on account of sale of agricultural produce. However, the appellant failed to produce any such a details. She could furnish only copies of Chitta and Adangal which stated that there were coconut and mango trees planted.
30.After considering the above facts of the case and also keeping in view the observations and the findings of the AO, I am of the considered opinion that the impugned land was a long term capital asset only and the appellant was required to pay the capital gains tax on the sale of this long-term capital asset. The facts of the case as referred to by the appellant in the case of Smt. Aysha Fathima, A.Y.2009-10, ITA NO.1371/Mds/2013 of the Hon'ble jurisdictional ITAT, do not apply to the present case of the appellant. In the referred case, the Tribunal has observed that regarding the nature of land whether it is agricultural land or not, it always depends upon the facts of each case. By this observation of the Hon'ble Tribunal, it could very well be inferred that a uniform yardstick cannot be adopted to decide a case when the facts differ from each other. Since in the present case of the appellant, as discussed in detail above, the facts and the circumstances are different from the facts available in the case of Smt. Aysha Fathima, A.Y.2009-10, ITA NO.1371/Mds/2013, the contentions of the appellant are not found tenable.
31.The above observations and the findings can further be substantiated with the following decisions of the Hon'ble Courts. While discussing the case of Sarifabibi Mohammad Ibrahim & Oth vs CIT , reported in 204 ITR 631, the Hon'ble Apex Court has held that to decide "whether a land is an agricultural land or not is essentially a question of fact. Several tests have been evolved in the decisions of the Supreme Court and the High Court, but all of them are more in the nature of guidelines. The question has to be answered in each case having regard to the facts and circumstances of that case. Theree may be factors both for and against the particular point of view. The Court has to answer the question on a consideration of all of them a process of evaluation. The interfere has to be drawn on cumulative consideration of all the relevant facts.
32.In the said decision, the Hon'ble Supreme Court has evolved the following 13 factors/indicators which can be applied to find out whether a particular land falls within the definition of capital asset or not. The 13 factors are the following:
"(1) Whether the land was classified in the revenue records as agricultural and whether it was subject to the payment of land revenue? (2) Whether the land was actually or ordinarily used for agricultural purposes at or about the relevant time?
(3) Whether such user of the land was for a long period or whether it was of a temporary character or by way of a stop-gap arrangement?
ITA No.2337/16, 284-285, 312 &323/17 :- 19 -:
(4) Whether the income derived from the agricultural operations carried on in the land bore any rational proportion to the investment made in purchasing the land?
(5) Whether, the permission under section 65 of the Bombay Land Revenue Code was obtained for the non-agricultural use of the land? If so, when and by whom (the vendor or the vendee)? Whether such permission was in respect of the whole or a portion of the land? If the permission Was in respect of a portion of the land and if it was obtained in the past, what was the nature of the user of the said portion of the land on the material date?
(6) Whether the land, on the relevant date, had ceased to be put to agricultural use? If so, whether it was put to an alternative use? Whether such cesser and/or alternative user was of a permanent or temporary nature?
(7) Whether the land, though entered in revenue records, had never been actually used for agriculture, that is, it had never been ploughed or tilled? Whether the owner meant or intended to use it for agricultural purposes?
(8) Whether the land was situate in a developed area? Whether its physical characteristics, surrounding situation and use of the lands in the adjoining area were such as would indicate that the land was agricultural?
(9) Whether the land itself was developed by plotting and providing roads and other facilities.
-
(10) Whether there were any previous sales of portions of the land for non-
agricultural use?
(11) Whether permission under section 63 of the Bombay Tenancy and Agricultural Lands Act, 1948, was obtained because the sale or intended sale was in favour of a non-agriculturist? If so, whether the sale or intended sale to such non-agriculturist was for non-agricultural or agricultural user?
(12) Whether the land was sold on yardage or on acreage basis? (13) Whether an agriculturist would purchase the land for agricultural purposes at the price at which the land was sold and whether the owner would have ever sold the land valuing it as a property yielding agricultural produce on the. basis of its yield?
Taking into account the above 13 factors, the Hon'ble Apex Court further observed that not all of these factors would be present or absent in any case and that in each case one or more of those factors may make appearance and that. the ultimate decision will have to be reached on a balanced consideration of the totality of circumstances.
34.Therefore, having regard to the facts and circumstances of the present case, it can be inferred that on cumulative consideration of the issues, the impugned land of the appellant fulfils all those relevant conditions which brings it within the ambit ITA No.2337/16, 284-285, 312 &323/17 :- 20 -:
of capital asset. Out of the above 13 factors, almost 9 such reasons exist in the present case of the appellant which would render the impugned land as capital asset. These nine factors are discussed as under:
I. Whether the land was actually or ordinarily used for agricultural purposes at or about the relevant time?
In the present case, the appellant had failed to produce any such evidences which could prove that she was carrying on certain agricultural operations. The appellant had also failed to furnish the details of expenses incurred towards the agricultural activities and had also not produced the details of the sales of agricultural produce. The appellant had not admitted any agricultural income in the earlier assessment year.
ii. Whether such user of the land was for a long period or whether it was of a temporary character or by way of a stop-gap arrangement?
Even if it is admitted that the appellant had actually enjoyed agriculture income during the year under consideration, such income has not accrued to the appellant in the earlier years. It was shown in the year when the land was sold by the appellant. In fact, it was a stop-gap arrangement only.
Ill. Whether the income derived from the agricultural operations carried on in the land bore any rational proportion to the investment made in purchasing the land?
Even if it is admitted that the appellant had actually earned agriculture income, the same was to the tune of Rs.1,80,0001-only which was disproportionate to the land held by the appellant. Moreover, it is not ascertainable from the submissions of the appellant whether the amount of RS.1 ,80,000/-was the gross amount or the net.
IV.Whether, the permission under section 65 of the Bombay Land Revenue Code was obtained for the non-agricultural use of the land? If so, when and by whom (the vendor or the vendee)? Whether such permission was in respect of the whole or a portion of the land? If the permission was in . respect of a portion of the land and if it was obtained in the past, what was the nature of the user of the said portion of the land on the material date?
In the present case, the appellant's POA holder M/S SSDPL had applied before the Directorate of Town and Country Planning for notifying the impugned land as Multi- Storied building area for construction of commercial properties and vide the notification no. VI (1)/109/2009 dated 09/03/2009 the impugned land was declared as multi-storied building area for construction of commercial buildings ITA No.2337/16, 284-285, 312 &323/17 :- 21 -:
v. Whether the land, on the relevant date, had ceased to be put to agricultural use? If so, whether it was put to an alternative use? Whether such cesser and/or alternative user was of a permanent or temporary nature?
As discussed above, during the relevant year under consideration the land use was used for developing multi-storied building area for construction of commercial buildings. This usage of land was permanent in character VI. Whether the land was situate in a developed area? Whether its Physical characteristics, surrounding situation and use of the lands in the adjoining area were such as would indicate that the land was agricultural?
The guideline value of the impugned land was RS.3.00 crores per acre which was sold roughly at the rate of RS.20.27 crores per acre. No agriculturist could purchase agricultural land of such high-value for agricultural purposes. Neither, any agricultural land would ever fetch such a high price.
35.From the perusal of the above facts of the case, the cumulative effect goes to prove that the impugned land was in the character of capital asset only which should have been subjected to capital gains tax by the appellant.
36. In the case of RAJA D. SESHAYYAMMA GARU vs. -CIT, reported in 156 ITR 820, the Hon'ble jurisdictional High Court has held that a mere intention as to the user of land was not conclusive in determining the character of the land as agricultural land.
37. In the case of CIT vs. Gemini Pictures Limited reported in (1996) 85 Taxman 594 (SC) while discussing the case the Hon'ble Court observed that ''The land was situated on Mount Road, Madras which is the most important and the busiest thoroughfare in the city. The land was surrounded on all sides by industrial and commercial buildings. No agricultural operations were being carried on any land nearby,. In the case of the above circumstances, the mere fact that vegetables were being raised thereon at the time of the sale or for some years thereto did not change the nature and character of the land. Obviously, it was only a stopgap activity. It was not a true reflection of the nature and character of the land. One has to take a realistic view and see how are the persons selling and purchasing it understood it.
38. Therefore, after considering all the relevant factors and the prevailing circumstances of the case and also taking into account the observations of the Hon'ble Courts, I am of the considered opinion that the impugned land was a non-agricultural land and fell within the ambit of long term capital asset for the purposes of capital gains tax. Hence, the findings of the AO in this regard are confirmed.
39. The other contention raised by the appellant in the grounds of appeal is with regard to the year of taxability of capital gains. It has been submitted by the appellant that even if the capital gains are taxable, it has to be considered in the ITA No.2337/16, 284-285, 312 &323/17 :- 22 -:
assessment year when the JOA was entered in, i.e. in the AY. 2008-09, POA was issued during the AY. 2008-09 and the consideration was a received as per section 2(47)(v) and not in the AY. 2010-11 as assessed by the AO. In order to substantiate her claim, the appellant has also referred to the decision of the Hon'ble jurisdictional ITAT in the case of Smt. Ayisha Fathima ITA No.. 1371/Mds/2013, AY. 2009-10. In the said case, the Tribunal after considering the relevant facts of the case has observed as under:-
''As per above, the possession is given by the assessee vide this JDA dated 09/07/2005 and also authorised the developer to get necessary approvals for the purpose of construction. The assessee also received substantial amount of Rs. 120 lakhs as refundable deposit. The time is a sense of the contract within 30 days from the date of giving vacant position of the property. The Developer has to get the permission for construction of the property. After getting permission for construction in the said property, the developer has to complete the construction within 36 months handed over the assessee's share of the constructed portion of building to the assessee, otherwise it attracts damages, it shall be 2 lakhs per month till the delivery of the building. The assessee has also undertaken to register the property at the cost of developer or any person or nominated of the developer. Therefore, it is obvious that the physical possession of the property as well as management of the property was not in the hands of assessee''.
40. In the present case of the appellant, the JOA was entered between M/S SSPOL and the appellant and the other shareholders on 25/06/2007 to develop the impugned property for construction of the multi-storied buildings. The POA was issued by the appellant and other to shareholders in favour of M/S SSPOL to get the approvals etc. from the government and other local authorities required for developing the impugned property. However, as per this JDA, the appellant and the other shareholders did not hand over the possession of the impugned property. Most importantly there was no sale consideration either discussed in the JDA or actually passed on the appellant and the two other sharehdolders. The JDA was executed to develop the impugned property jointly by M/s. SSPDL and the appellant & others. It is pertinent to mention here that the JDA was cancelled by the concerned parties on 04.02.2010. Subsequently, on 05.02.2010 the impugned property was sold by the appellant and the others to M/s. IGH and M/S Accent for a total sale consideration of Rs.37.50 crores. From the perusal of the entire relevant facts of the case, it is evident that the transfer of the capital asset took place only on 05/02/2010 i.e. relevant to the AY. 2010- 11 which is the relevant assessment year under consideration. In view of the above, the contention of the appellant that the transfer of the impugned capital asset took place on 25i06/2007, i.e. AY. 2008 - 09, when the JDA was executed with M/S SSPDL, is factually incorrect. Therefore, it is held that the transfer of the impugned capital asset took place on 05/02/2010, during the relevant AY. 2010 - 11 under consideration. Hence, this contention of the assessee is dismissed.
.
ITA No.2337/16, 284-285, 312 &323/17 :- 23 -:
Thus the two different ld. Commissioner of Income Tax (Appeals)'s took a diametrically opposite view on the nature of the land sold by the assessees.
12. Now before us, ld. Authorised Representative strongly supporting the order of the ld. Commissioner of Income Tax (Appeals) in the case of Shri. Mafaz Mohammed and opposing the order of the ld. Commissioner of Income Tax (Appeals) in the case of Smt. Syed Abdul Kader Aysthath Fasleen Amina, submitted that chitta and adangal records clearly prove the land to be agricultural in nature.
According to him, assessees had acquired the land through various settlements and admittedly the land was acquired during a period prior to May, 1993. As per the ld. Authorised Representative, assessees were holding the land for more than a decade. Ld. Authorised Representative listed out the reasons cited by ld.
Commissioner of Income Tax (Appeals) in the case of Smt. Syed Abdul Kader Aysthath Fasleen Amina, for differing from the order of the ld.
Commissioner of Income Tax (Appeals) in the case of Shri. Mafaz Mohammed. These according to him were as under:-
(i) Intention of the assessee was to commercially exploit the land and this was clear from the JDA with M/s. SSDPL entered on 25th June, 2007.
ITA No.2337/16, 284-285, 312 &323/17 :- 24 -:
(ii) Government of Tamil Nadu had declared the land to be multi-storeyed building area for construction of commercial building and the applicants for such notification was M/s.
SSDPL.
(iii) No Objection Certificate given by Chengalpet Tehsildar was prior to the sale and thus the assessees were aware that entire area was commercial in nature.
(iv) M/s. SSDPL on cancellation of the JDA, had given vacant possession of the property to the assessee.
(v) The sale price received was huge and not of a nature which an agricultural land would fetch.
As per the ld. Authorised Representative, all the above reasons mentioned by the ld. Commissioner of Income Tax (Appeals) were irrelevant. According to him, ld. Commissioner of Income Tax (Appeals) never opposed the contention of the assessee that nature of the land was agricultural. Further, according to him, the intention of the assessee was to be seen from the point at which they acquired the land.
13. Continuing his submissions, ld. Authorised Representative stated that judgments of Hon'ble Jurisdictional High Court in the case ITA No.2337/16, 284-285, 312 &323/17 :- 25 -:
of Mrs. Sakunthala Vedachalam and Mrs. Vanitha Manickavasagam vs. ACIT, (2014) 369 ITR 558, CIT vs. Smt. Sakunthala Rangarajan, (2016) 389 ITR 103, CIT vs. KRN Prabhakaran (Huf) T.C.A. No.1189/2015, dated 17.08.2016 and PCIT vs. Mansi Finance Ltd, (20160 388 ITR 514, all clearly stated that the basic test on the nature of the land was what was mentioned in the Revenue records.
This as per the ld. Authorised Representative stood satisfied.
According to him, there was no act on the part of the assessee to commercialize the land for any non agricultural use. Notification by Government of Tamil Nadu on the zone conversion was at the behest of M/s. SSDPL and not the assessees. Such JDA already stood cancelled by the assessee and therefore assessees, as per the ld.
Authorised Representative, could not be held liable for the acts of M/s. SSDPL. According to him, nature of the land remained agricultural all through. Ld. Authorised Representative also placed reliance on a decision of Co-ordinate Bench in the case of ITO vs. Ayisha Fathima (ITA No.1371/Mds/2013, for assessment year 2009- 2010) dated 17.08.2016. As per the ld. Authorised Representative, land considered by the Tribunal in this case was in the close neighbourhood of the property sold by the assessees. According to him, in the said decision this Tribunal had held that the land at Egattur Village measuring 6 acres and 21 cents was agricultural in ITA No.2337/16, 284-285, 312 &323/17 :- 26 -:
nature. Thus, according to him, sale of the impugned land was not exigible to capital gains.
14. Per contra, ld. Departmental Representative strongly supporting the order of the ld. Commissioner of Income Tax (Appeals) in the case of Smt. Syed Abdul Kader Aysthath Fasleen Amina and opposing the order of the ld. Commissioner of Income Tax (Appeals) in the case of Shri. Mafaz Mohammed submitted that the tests to be applied for determining the nature of a land was laid down by Hon'ble Supreme Court in the case of Smt. Sarifabibi (supra).
According to him, if these tests were correctly applied it would clearly show that the land sold by the assessees was not agricultural. As per the ld. Departmental Representative , assessees had first entered into JDA on 25.06.2007 and thereafter cancelled such JDA and sold the land directly to M/s. IGH and M/s. Accent. Thus, as per the ld.
Departmental Representative, intention of the assessee was to develop the land for commercial exploitation. Further, according to him, the land was also notified by Government as fit for building commercial establishment. Copies of chitta and adangal filed by the assessees, as per the ld. Departmental Representative, only proved that there were some coconut and mango trees in the land. But this as per the ld. Departmental Representative could be seen in isolation.
According to the ld. Departmental Representative, nothing was filed ITA No.2337/16, 284-285, 312 &323/17 :- 27 -:
by the assessees to prove any agricultural operation being carried out nor any proof for sale of agricultural produce. Land as per the ld.
Departmental Representative was situated in the close suburbs of Chennai city and was lying on the side of OMR. According to him, consideration received was ₹20,27,00,000/- per acre against the guideline value of ₹3,00,00,000/- and this by itself clearly indicated the commercial nature of the land. Thus, according to the ld. Departmental Representative, the land sold was non agricultural and commercial exigible to capital gains. Reliance was placed on the decisions of Co-
ordinate Bench in the case of ITO vs. Aboobucker, (2016) 157 ITD 717, ITO vs. Vijay Shah, (2017) 165 ITD 348 and that of Cochin Bench in the case of Abdul Rahmin vs. DCIT, (2011) 30 CCH 555.
15. Ad libitum reply of the ld. Authorised Representative was that inability, if any of the assessees, in proving agricultural activity was not a relevant factor for deciding on the nature of the land.
According to him, it would be relevant only where the statute required carrying out of agricultural operations, as a pre-requisite for claiming any deduction. The sale was initially attempted through JDA, as per the ld. Authorised Representative, considering the buyers interest and assessees according to him, had no choice. Further, as per the ld.
Authorised Representative, notification made by the Government would not change the intention of the assessee. As per the ld.
ITA No.2337/16, 284-285, 312 &323/17 :- 28 -:
Authorised Representative, the tests laid down by Hon'ble Gujarat High Court in the case of CIT vs, Siddharth J. Desai (1983) 139 ITR 628 applied by ld. Commissioner of Income Tax (Appeals) in the case of Smt. Syed Abdul Kader Aysthath Fasleen Amina, clearly indicated that assessees had satisfied atleast four out of the thirteen conditions.
According to him, Hon'ble Jurisdictional High Court in the case of Sakunthala Rangarajan (supra) had clearly observed that cumulative satisfaction of all the thirteen conditions was not required and which out of these were to be satisfied was dependent on facts and circumstances of each case. As for the decisions of Co-ordinate in the cases of Aboobucker (supra) and that of Vijay Shah (supra), ld.
Authorised Representative submitted that such decisions were rendered prior to the judgment of Hon'ble Jurisdictional High Court in the case of CIT vs. Venkateswara Hospital in T.C (A) No.761 of 2017, dated 23.01.2018 and therefore no more good law. In any case according to him, the Co-ordinate Bench in the case of Ayisha Fathima (supra) where the question was exigiblity to capital gains on sale of a piece of land in the immediate neighbourhood, had clearly held in favour of the assessee. Thus, according to him, the land sold by the assessee could not be considered as non agricultural.
16. We have considered the rival contentions and perused the orders of the authorities below. As already mentioned by us, two ITA No.2337/16, 284-285, 312 &323/17 :- 29 -:
different ld. Commissioner of Income Tax (Appeals), in the space of five months had taken diametrically opposite view on the question of the nature of the land sold by the assessees. One ld. Commissioner of Income Tax (Appeals) had given weightage to the nature of the land as per revenue records and also the factum of acceptance of the agricultural income shown by assessees in their respective returns for the years preceding the impugned assessment year. Ld. Commissioner of Income Tax (Appeals) who held in favour of the assessee Shri. S.A. Mafaz Mohammed also found that M/s. IGH and M/s. Accent were only nominees of the M/s. SSDPL and not independent buyers of the property. He also took a view that date of registration of the sale deeds viz 05.02.2010 could not be considered as the date of transfer, but only the date of the JDA which was in June, 2007. As against this, ld. Commissioner of Income Tax (Appeals) who went against the assessee Smt. Syed Abdul Kader Aysthath Fasleen Amina, held that though out of the thirteen determining factors identified by Hon'ble Gujarat High Court in the case in the case of Siddharth J. Desai (supra), which found acceptance from the Hon'ble Apex Court, assessee had satisfied four, the land still could not be considered as agricultural. Be that as it may be, it is not disputed that the co-ordinate Bench in the case of Ayisha Fathima (supra), where the question was exigibility to capital gains on sale of ITA No.2337/16, 284-285, 312 &323/17 :- 30 -:
a piece of land measuring 6.21 acres, in the very same Egattur Village, had upheld the order of ld. Commissioner of Income Tax (Appeals) accepting the claim of Smt. Ayisha Fathima that the land was agricultural in nature. What was held by the Co-ordinate at paras 6 to 8.6 of its order in Smt. Ayisha Fathima case is reproduced hereunder:-
''6. We have heard both the parties and perused the material on record. The issue for our consideration is with regard to the year in which the capital gains arise for assessment on transfer of land by the assessee along with other person. We have carefully gone through JDA dated 09.07.2005. The following clauses are reproduced for reference:-
Clause
1. The Owner have authorized the Devloper to construct at its own cost of Developer a multistoried complex over the land carefully described in the Schedule A hereunder. The Owners and the Developer have agreed to put up the construction not more than 2 FSI for time being and in such a case the owner is entitled to have 27% builtup p-lint area which should be not less than 1,41,135 sq.ft.
and the remaining built-up punt area that is 73% shall be retained by the Developer and in consideration thereof the land owners slaH transfer 73% undivided share over the land described in the- Schedule A hereunder to the Developer or to their Nominiees. If the Developer are able to put up construction more than 2 FSI, the land Owner shall be entitled to get proportionate extra constructed area at 27% for themselves, while the remaining 73% shall be retained by the Developer.
2. The Developer shall allot the Owner's builtup punt area in construction with the Owners and the same will be marked in the plan relating to the project as per the specification prdvided in the Annexure 1 of this agreement and in addition the Developer shall pay refundable deposit of Rs.1,20,00,000/- (One Crore and Twenty Lakhs only) to the Owners in the following manner:
a) Rs.60,00,000/- (Rupees Sixty Lakhs only) on signing this agreement. -
b) Rs.60,00,000/- (Rupees Sixty Lakhs only) on the plans being approved.
ITA No.2337/16, 284-285, 312 &323/17 :- 31 -:
3. The Developer further agrees that out of the 73% builtup area retained by the Developer, the Developer have agreed to share equally with the Owners the sale proceeds over and above at Rs.2,350/- per sq.ft. That is, if for example, the Developer sells out of their 73% builtup plint area to any prospective buyer at the rate of Rs.2500/- per sq.ft. then the Developer shall share (2500-2350= 150/2) Rs.75/- per sq.ft.
4. The owners agree to execute and register necessary Power of Attorney Jointly in favour of the Nominee of the Developer and the Nominee of the Owner for selling 73% of the Undivided share of the land. morefully described in the Schedule A hereunder to the Nominees of the Developer and a separate Power of Attorney in favour of the Nominee of the Developer for applying and obtaining Building sanction plan, Service connection etc., The Owners have this day handed over possession of the entire agricultural lands, subject matter of this agreement.
5. The Developer shall for the purpose of Development immediately be at liberty at its own cost of survey the said property, take measurements and to apply for sanctioning of a building plan from the municipal and other authorities, STPI, Chennai metropolitan The development authority and corporation of Chennai on such terms and conditions has may be agreed to the developer. The developer may in consultation with the owners, decide on the nature of the building to be constructed.
6. The developer shall commence construction of the new building within 30 days of obtaining sanctions from authorities concerned or from the date on which vacant possession of the said property is handed over whichever date is later and complete the construction within 36 months from the date of commencement of construction on the said property in one or more phases or stages may be required, taking into consideration the market condition and subject only to force major conditions. If any delay in handling over the building within 36 months, the developer agrees to pay Rs,2,00,000/(Rupees Two Lacs Only) per month for the delayed period as compensation to the owner till delivery of the building. In the event of any unavoidable delay in the completion of the building due to any ca use or causes beyond the developer's control the parties hereto shall by mutual consent in writing extend the period of performance.
7. It is agreed that the developer will meet and pay all expenses including the expenses incurred for obtaining the sanctioned building plans, approvals, fee to be paid to various authorities and to apply and obtain service connections for use in the building and for engaging architects, construction engineers, contractors, sub contractors, artisans and to meet the cost of pUrchase of all materials used for construction as per the sanctioned plan with permissible deviations and shall be wholly responsible to comply with all provisions of the law with regard to interest of the aforesaid persons. The change in plans will be intimated to the owners.
ITA No.2337/16, 284-285, 312 &323/17 :- 32 -:
8. The developer shall be responsible to make payments to all workers, workmen, staffs, employees and contractors and subcontractors, for the purpose of executing the work and development of the schedule A mentioned property.
9. The developer has the right to enter into the necessary agreements and deal with and sell its portion allotted under this agreement as an undivided or divided share of land or as land and building or in any other manner deemed fit by the developer, Subject only to the condition that the developer shall construct and deliver to the owner the 27% share in the built up area. The allotment of exact spaces for the developer and the owners would be mutually agreed upon after the approved drawings are obtained from the concerned authority.
15. The Developer shall be entitled to apply to the authorities concerned for the necessary approvals, sanctions and permits in respect of plans for construction of any building whether storey3ed or otherwise, on the said property.
20. The Developer shall be entitled to correspond with and receive any correspondence or other intimation from the authorities concerned regarding the plans, sanctions, approvals or permits for construction of any building on the said property or for the provision of any amenities or facilities thereto.
21. The Developer shall be entitled to pay such fees, charges or levies and to furnish securities/ in money or otherwise as and when required by the authorities concerned for any demolition or construction activity to be carried out on the said property or for the provision of amenities or facilities thereto.
25. In the alternative, the Owners agree to execute a Power of Attorney in favour of the Nominee of the Developer, empowering the agent to apply, sign and get demolition plan approval, reconstruction plan sanctions, building permit and planning permit, service connections such as water, sewerage, electricity etc., and also to demolish the old building and to develop the property apart from empowering the agent to deal with the property in such manner as may be required for the development of the same.
27. The Developer is entitled to get the construction work done either by themselves or through /' other well known constructors or sub- contractors or agents and shall be entitled to give such constructors whole of the construction or any part or parts of the work or constructions, provided that the same shall not relieve the Developer for their liability under this Agreement or from active supervision work during its progress. The developer may if it chooses, assigns this agreement to any other party only after getting necessary prior approval from the owners.
ITA No.2337/16, 284-285, 312 &323/17 :- 33 -:
28. The Developer shall finish the construction of the building in accordance with the specifications that are set out in the Annexure to this agreement and as per the guidance and instructions of the architects and construction engineers engaged for this purpose.
34. The owners hereby undertake to execute and register the deeds of sale in favour of the Developer and their Nominee conveying to them the Schedule B mentioned property or register a Power of Attorney in favour of the Developer for the same subject to clause 4 above.
37. The Owner and the Developer agrees not to change the common name for the project as may be given by the Developer. The Developer agrees to consider the suggestion of the Owners in this regard.
40. The Owners agree to refund the security deposit of 120 lakh to the Developer within two weeks of the Owner being intimated about completion and that the respective space allotted for the owners is fit for taking possession of the project.
44. The original title deed in respect of the Schedule A property shall be deposited with the common person in faith, known to both the parties till the completion of the construction of the project and after the completion of construction, the said original title deeds in respect of 'A' schedule property shall be delivered to The Owner's Association to be formed after the completion of construction.
As per above, the possession is given by the assessee vide this JDA dated 09.07.2005 and also authorized the developer to get necessary approvals for the purpose of construction. The assessee also received substantial amount of `120 lakhs as refundable deposit. The time is essence of the contract within 30 days from the date of giving vacant position of the property. The Developer has to get the permission for construction of the property. After getting permission for construction in the said property, the developer has to complete the construction within 36 months handed over the assessee's share of the constructed portion of building to the assessee, otherwise it attracts damages, it shall be two lakhs per month till the delivery of the building. The assessee has also undertaken to register the property at the cost of developer or anly person or nominated of the developer. Therefore, it is obivious that the physical possession of the property as well as management of the property was not in the hands of the assessee.
6.1 We have gone through the provisions of the section 2(47) of the Act which defines 'transfer'. Under the common law, Transfer of immovable property valuing more than 100 rupees would be made only by executing registered sale deed. However, under Income Tax ITA No.2337/16, 284-285, 312 &323/17 :- 34 -:
Act, Sec.2(47) defines 'Transfer" in relation to capital asset. For the purpose of convenience we are extracting Sec.2(47) of the Act. S. 2(47) "transfer", in relation to a capital asset, includes,--
(i) the sale, exchange or relinquishment of the asset ; or
(ii) the extinguishment of any rights therein ; or
(iii) the compulsory acquisition thereof under any law ; or
(iv) in a case where the asset is converted by the owner thereof into, or is treated by him as, stock-in-trade of a business carried on by him, such conversion or treatment ; or (iva) the maturity or redemption of a zero coupon bond ; or
(v) any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882 (4 of 1882) ; or
(vi) any transaction (whether by way of becoming a member of, or acquiring shares in, a co-operative society, company or other association of persons or by way of any agreement or any arrangement or in any other manner whatsoever) which has the effect of transferring, or enabling the enjoyment of, any immovable property :
Explanation 1.-- For the purposes of sub-clauses (v) and (vi), "immovable property" shall have the same meaning as in clause (d) of section 269UA.
Explanation 2.-- For the removal of doubts, it is hereby clarified that "transfer" includes and shall be deemed to have always included disposing of or parting with an asset or any interest therein, or creating any interest in any asset in any manner whatsoever, directly or indirectly, absolutely or conditionally, voluntarily or involuntarily, by way of an agreement (whether entered into in India or outside India) or otherwise, notwithstanding that such transfer of rights has been characterised as being effected or dependent upon or flowing from the transfer of a share or shares of a company registered or incorporated outside India ;
6.1 It is an admitted fact that in this case for assessment year 2006-07, assessee disclosed the transactions as a Note in her return of income stating as follows:-
'Note: The assessee has entered into a joint development agreement with Allied Magistic Promoters during the assessment year in respect of Development of agricultural lands at Ekattur Village and handed over the possession of the property. She has also executed a Power of Attorney in favour of the Developers though the deemed ITA No.2337/16, 284-285, 312 &323/17 :- 35 -:
sale is complete during the assessment year. As per the para it is exempted as it is an agricultural lands and it is not a capital asset as per the sec.2(24) of the IT Act."
6.2 As seen from the above, there is a fair disclosure by the assessee regarding the sale of the impugned property. In that assessment year i.e.2006-07, it is said to be accepted by the Department that as there was no transfer of capital asset as an agricultural land. It is not the case of the Department that it was subject to any rectification or revision subsequently. Unless the Department disturbed the assessment for assessment year 2006-07, the Department has precluded from treating the transfer of same land as a transfer in terms of Sec.2(47)(v) of the Act in the assessment year 2009-10 for whatever reason stated by the AO. In our opinion, merely because an agreement of sale has not been registered, which otherwise in nature of agreement referred in Sec.53A of the Transfer of Property Act cannot be taken out of ambit of Sec.2(47)(v) of the Act when parting of the possession of immovable property has already taken place as enumerated in earlier para of this order. It is very clear that there is giving up of the possession to the builder/developer and he has given the substantial amount to the assessee in the form of refundable deposit and he has shown willingness to perform his part of duty to the assessee and there is no question of going back from his consent to act as builder.
This view of ours is fortified by the order of Tribunal in the case of ITO Vs. Shri Bakthavatsalam Gowtham in ITA No.1614/Mds./2010 dated 04.05.2012. Thus, we do not find any error in the findings of the Ld.CIT(A) wherein he has observed that there is no transfer in the assessment year 2009-10 and the same is upheld.
6.3 Without prejudice to the above, the Revenue has raised one more ground regarding findings of the Ld.CIT(A) that the land was agricultural land, though at the time of transfer on 01.04.2008, it was non agricultural land.
6.4 Ld.D.R submitted that the said deed executed on 01.04.2008 mentioned the property as vacant site and not agricultural land. Further ld.D.R submitted that the nature of land changed subsequent to the JDA from agricultural land to vacant site since no agricultural activity was carried out during the period from the date of agreement to the execution of sale of the property by the assessee. He relied on the order of ld. Assessing Officer. On the other hand, ld.A.R relied on the order of Ld.CIT(A).
6.4 We have heard both the parties and perused the material on record. Regarding nature of land whether it is agricultural land or not. It is always depend upon the facts of the case. In the present case, originally the asset was acquired by the trust consisting of assessee and her brother as a beneficiary. Later on revocation of the Trust impugned property was devolved on the assessee and subsequently the assessee entered into JDA on 09.07.2005. Now the question is whether the said property is agricultural land or not is essentially a ITA No.2337/16, 284-285, 312 &323/17 :- 36 -:
question of fact. The question has to be answered in each case having regard to the facts and circumstances of that case. There may be factors both for and against a particular point of view. We have to answer the question on a consideration of all of them, a process of evaluation and the inference has to be drawn on a cumulative consideration of all the relevant facts. It may be stated here that not all the factors or tests would be present or absent in any case and that in each case one or more of the factors may make appearance and that ultimate decision will have to be reached on a balanced consideration of the totality of the circumstances. The expression 'agricultural land' is not defined in the Act, and now, whether it is agricultural land or not has got to be determined by using the tests or methods laid down by the Courts from time to time.
6.5 The Hon'ble Supreme Court in the case of Smt. Sarifabibi Mohmed Ibrahim (204 ITR 631) has approved the decision of a Division Bench of the Hon'ble Gujarat High Court in the case of CIT vs. Siddharth J. Desai (1982) 28 CTR (Guj) 148 : (1983) 139 ITR 628 (Guj) and has laid down 13 tests or factors which are required to be considered and upon consideration of which, the question whether the land is an agricultural land or not has got to be decided or answered. We reproduce the said 13 tests as follows:
1. Whether the land was classified in the Revenue records as agricultural and whether it was subject to the payment of land revenue?
2. Whether the land was actually or ordinarily used for agricultural purposes at or about the relevant time?
3. Whether such user of the land was for a long period or whether it was of a temporary character or by any of a stopgap arrangement?
4. Whether the income derived from the agricultural operations carried on in the land bore any rational proportion to the investment made in purchasing the land?
5. Whether, the permission under s. 65 of the Bombay Land Revenue Code was obtained for the non-agricultural use of the land? If so, when and by whom (the vendor or the vendee)? Whether such permission was in respect of the whole or a portion of the land? If the permission was in respect of a portion of the land and if it was obtained in the past, what was the nature of the user of the said portion of the land on the material date?
6. Whether the land, on the relevant date, had ceased to be put to agricultural use? If so, whether it was put to an alternative use?
Whether such cesser and/ or alternative user was of a permanent or temporary nature?
7. Whether the land, though entered in Revenue records, had never been actually used for agriculture, that is, it had never been ploughed ITA No.2337/16, 284-285, 312 &323/17 :- 37 -:
or tilled? Whether the owner meant or intended to use it for agricultural purposes?
8. Whether the land was situated in a developed area? Whether its physical characteristics, surrounding situation and use of the lands in the adjoining area were such as would indicate that the land was agricultural?
9. Whether the land itself was developed by plotting and providing roads and other facilities?
10. Whether there were any previous sales of portions of the land for non-agricultural use?
11. Whether permission under s. 63 of the Bombay Tenancy and Agricultural Lands Act, 1948, was obtained because the sale or intended sale was in favour of a non-agriculturist? If so, whether the sale or intended sale to such non-agriculturists was for non- agricultural or agricultural user?
12. Whether the land was sold on yardage or on acreage basis?
13. Whether an agriculturist would purchase the land for agricultural purposes at the price at which the land was sold and whether the owner would have ever sold the land valuing it as a property yielding agricultural produce on the basis of its yield?"
6.6 A reference could be made to the case of CWT vs. Officer- in- charge (Court of Wards) (105 ITR 138) (SC) wherein the Constitution Bench of the Hon'ble Supreme Court stated that the term 'agriculture' and 'agricultural purpose' was not defined in the Indian IT Act and that we must necessarily fall back upon the general sense in which they have been understood in common parlance. The Hon'ble Supreme Court has observed that the term 'agriculture' is thus understood as comprising within its scope the basic as well as subsequent operations in the process of agriculture and raising on the land all products which have some utility either for someone or for trade and commerce. It will be seen that the term 'agriculture' receives a wider interpretation both in regard to its operation as well as the result of the same. Nevertheless there is present all throughout the basic idea that there must be at the bottom of its cultivation of the land in the sense of tilling of the land, sowing of the seeds, planting and similar work done on the land itself and this basic conception is essential sine qua non of any operation performed on the land constituting agricultural operation and if the basic operations are there, the rest of the operations found themselves upon the same, but if the basic operations are wanting, the subsequent operations do not acquire the characteristics of agricultural operations. The Constitution Bench of the Hon'ble Supreme Court in the aforesaid case observed that the entries in Revenue records were considered good prima facie evidence.
ITA No.2337/16, 284-285, 312 &323/17 :- 38 -:
6.7 The Hon'ble Gujarat High Court in the case of Dr. Motibhai D. Patel vs. CIT (1982) 27 CTR (Guj) 238 : (1981) 127 ITR 671 (Guj) referring to the Constitution Bench of the Hon'ble Supreme Court had stated that if agricultural operations are being carried on in the land in question at the time when the land is sold and further if the entries in the Revenue records show that the land in question is agricultural land, then, a presumption arises that the land is agricultural in character and unless that presumption is rebutted by evidence led by the Revenue, it must be held that the land was agricultural in character at the time when it was sold. The Division Bench of the Hon'ble Gujarat High Court further held that there was nothing on record to show that the presumption rose from the long user of the land for agricultural purpose and also the presumption arising from the entries of the Revenue records are rebutted.
6.8 The Hon'ble Bombay High Court in the case of CWT vs. H. V. Mungale (1983) 32 CTR (Bom) 301 : (1984) 145 ITR 208 (Bom) held that the Hon'ble Supreme Court had pointed out that the entries raised only a rebuttable presumption and some evidence would, therefore, have to be led before taxing authorities on the question of intended user of the land under consideration before the presumption could be rebutted. TheCourt further held that the Supreme Court had clearly pointed out that the burden to rebut the presumption would be on the Revenue. The Hon'ble Bombay High Court held that the ratio of the decision of the Supreme Court was that what is to be determined is the character of the land according to the purpose for which it was meant or set apart and can be used. It is, therefore, obvious that the assessee had abundantly proved that the subject land sold by them was agricultural land not only as classified in the Revenue records, but also it was subjected to the payment of land revenue and that it was actually and ordinarily used for agricultural purpose at the relevant time.
6.9 We may also refer to the case of CIT vs. ManilalSomnath (1977) 106 ITR 917 (Guj), wherein the Division Bench of the Hon'ble Gujarat High Court observed that the potential non- agricultural value of the land for which a purchaser may be prepared to pay a large price would not detract from its character as agricultural land on the relevant date of sale.
7. We may also refer to the case of Gopal C. Sharma vs. CIT (1994) 116 CTR (Bom) 377 : (1994) 209 ITR 946 (Bom), in which, the case of Smt. Sarifabibi Mohamed Ibrahim &Ors. vs. CIT (supra) was referred to and relied, amongst other cases. In this case, the Division Bench of the Bombay High Court has stated that the profit motive of the assessee selling the land without anything more by itself can never be decisive for determination of the issue as to whether the transaction amounted to an adventure in the nature of trade. In other words, the price paid is not decisive to say whether the land is agricultural or not.
ITA No.2337/16, 284-285, 312 &323/17 :- 39 -:
7.1 We may refer to a judgment of the Hon'ble Madras High Court in the case of CWT vs. E. Udayakumar (2006) 284 ITR511 (Mad) where the Hon'ble Madras High Court has referred to the decision of the Hon'ble Punjab & Haryana High Court in the case of CIT vs. Smt. Savita Rani (2004) 186 CTR (P&H) 240 : (2004) 270 ITR 40 (P&H) and has observed and held as under :
"8. It is well settled in the case of CIT vs. Smt. Savita Rani (2004) 186 CTR (P&H) 240 : (2004) 270 ITR 40 (P&H), wherein it is held that the land being located in a commercial area or the land having been partially utilised for non-agricultural purposes or that the vendees had also purchased it for non- agricultural purposes, were totally irrelevant consideration for the purposes of application of s.54B.
9. In the abovesaid case, the assessee an individual sold 15 karnals, 18 marlas of land out of her share in 23 karnals, 17 marlas land during the financial year 1990-91, relevant to the asst. yr. 1991-92, the sale was effected by three registered sale deeds. While filing her return of income, she claimed exemption from levy of capital gains under s. 54B of the Act on the ground that the land sold by her was agricultural land and the sale proceeds were invested in the purchase of agricultural land within two years. The AO rejected the claim of the assessee holding that the land sold by the assessee was not agricultural land and this was upheld by the CIT(A). On further appeal, the Tribunal accepted the claim of the assessee holding that the transaction in question duly fulfilled the conditions specified for relief. On further appeal to the High Court, the Punjab & Haryana High Court found that the finding that the land had been used for agricultural purposes was based on cogent and relevant material. The Revenue record supported the claim. Even the records of the IT Department showed that the assessee had declared agricultural income from this land in her returns for the preceding two years. The land being located in commercial area or the land having been partially utilised for non-agricultural purposes or that the vendees had also purchased it for nonagricultural purposes, were totally irrelevant consideration for the purposes of application of s. 54B.
10. It is seen from the aforesaid decision that the agricultural land sold by the assessee with an intent to purchase another land within two years had also been permitted to claim exemption under s. 54B of the IT Act, 1961. In the instant case, even though there was no sale as such, the assessee owned agricultural land within the limits of Tirunelveli Corporation and he had not put up any construction thereon, the assessee is entitled to claim exemption from the WT Act for the assessment of wealth-tax.That the land in question is adjacent to the hospital is totally irrelevant."
7.2 Adverting to the facts of the present case, the land in question is classified in the Revenue records as agricultural land and there is ITA No.2337/16, 284-285, 312 &323/17 :- 40 -:
no dispute regarding this issue and actual cultivation has been carried on this land and income was declared from this land in the return of income filed by the assessee for the earlier years as agricultural income. It is also an admitted fact that the assessee has not applied for conversion of this agricultural land for non-agricultural purposes and the assessee has not put the land to any purposes other than agricultural purposes. It is also an admitted fact that neither the impugned property nor the surrounding areas were subject to any developmental activities at the relevant point of time of sale of the land.
7.3 The State Government also prescribed the procedure for conversion of agricultural land into non-agricultural land. Being so, whenever the agricultural land to be treated as non-agricultural land, the same has to be converted in accordance with the provisions of State Government. If by a Government Notification, the nature and character of land changes from agriculture into non-agriculture then there is no question of conversion of this land for non- agricultural purposes by the Revenue authorities concerned. The land owners are required to apply to the concerned Revenue authorities for the purpose of conversion of the agricultural land into non-agricultural land and there is no automatic conversion in this case.
7.4 It is also an admitted position that mere inclusion or proximity of land to any Special zone without any infrastructure development thereupon or without establishing and proving that the land was put into use for non-agricultural purposes by the assessee does not and cannot convert the agricultural land into non-agricultural land. In the instant case, at the relevant point of sale of the land in question, the surrounding area was totally undeveloped and except mere future possibility to put the land into use for non-agricultural purposes would not change the character of the agricultural land into non-
agricultural land at the relevant point of time when the land was sold by the assessee. It is also an admitted position that the assessee had not applied for conversion of the land in question into non- agricultural purposes and no such permissions were obtained from the concerned authority. In the Revenue records, the land is classified as agricultural land and has not been changed from agricultural land to non-agricultural land at the relevant point of time when the land was sold by the assessee. It is also not in dispute that there was no activity undertaken by the assessee of developing the land by plotting and providing roads and other facilities and there was no intention also on the part of the assessees herein to put the same for non-agricultural purposes at time of their ownership that land. No such finding has been given by the Department. No material or evidence in support of the fact that the assessees have put the land in use for non- agricultural purposes has been brought on record. The nature of the crop and the person who cultivated the land are duly mentioned in the assessment order shows that at the relevant point of time the land was used for agricultural purposes only and nothing is brought on record to show that the land was put ITA No.2337/16, 284-285, 312 &323/17 :- 41 -:
in use for non-agricultural purposes by the assessees. In view of the decision of the Hon'ble High Court in the case of Gopal C. Sharma vs. CIT (209 ITR 946) (Bom), it is also clear that the profit motive of the assessee in selling the land without anything more by itself can never be decisive to say that the assessee used the land for non-agricultural purposes. We may also refer to a decision of the Hon'ble Supreme Court in the case of N. Srinivasa Rao vs. Special Court (2006) 4 SCC 214 where it was observed that the fact that agricultural land in question is included in urban area without more, held not enough to conclude that the user of the same had been altered with passage of time. Thus, the fact that the land in question in the instant case is bought by Developer cannot be a determining factor by itself to say that the land was converted into use for non-agricultural purposes.
7.5 Recently the Karnataka High Court in the case of CIT vs. Madhukumar N. (HUF) (2012) 78 DTR (Kar) 391 held as follows:
"9. An agricultural land in India is not a capital asset but becomes a capital asset if it is the land located under Section 2(14)(iii)(a) & (b) of the Act, Section 2(14) (iii) (a) of the Act covers a situation where the subject agricultural land is located within the limits of municipal corporation, notified area committee, town area committee, town committee, or cantonment committee and which has a population of not less than 10,000.
10. Section 2(14)(m)(b) of the Act covers the situation where the subject land is not only located within the distance of 8 kms from the local limits, which is covered by Clause (a) to section 2(14)(iii) of the Act, but also requires the fulfilment of the condition that the Central Government has issued a notification under this Clause for the purpose of including the area up to 8 kms, from the municipal limits, to render the land as a "Capital Asset.
11. In the present case, it is not in dispute that the subject land is not located within the limits of Dasarahalli City Municipal Council therefore, Clause (a) to section 2(14][iii] of the Act is not attracted.
12. However, though it is contended that it is located within 8 knits,, within the municipal limits of Dasarahalli City Municipal Council in the absence of any notification issued under Clause (b) to section 2(14)(iii) of the Act, it cannot be looked in as a capital asset within the meaning of Section 2(14)(iii)(b) of the Act also and therefore though the Tribunal may not have spelt out the reason as to why the subject land cannot be considered as a 'capital asset' be giving this very reason, we find the conclusion arrived at by the Tribunal is nevertheless the correct conclusion."
7.7 Further the Kolkata Bench of the Tribunal in the case ofDCIT vs. ArijitMitra (48 SOT 544) (Kol) held as follows:
ITA No.2337/16, 284-285, 312 &323/17 :- 42 -:
"7. From the above, it is clear that agricultural land situated in areas lying within a distance not exceeding 8 km from the local limits of such Municipalities or Cantonment Boards are covered by the amended definitions of 'capital asset', if such areas are, having regard to the extent of and scope for their urbanization and other relevant considerations, is notified by the Central Government in this behalf. Central Government in exercise of such powers has issued the above notification, as amended latest by Notification No. 11186 dated 28.12.1999 clearly clarifies that agricultural land situation in rural areas, areas outside the Municipality or cantonment board etc., having a population of not less than 10,000 and also beyond the distance notified by Central Government from local limits i.e. the outer limits of any such municipality or cantonment board etc., still continues to be excluded from the definition of 'capital asset'. Accordingly, in view of sub-clause (b) of section 2(14)(iii) of the Act even under the amended definition of expression 'capital asset', the agricultural land situated in rural areas continues to be excluded from that definition. And as in the present case, admittedly, the agricultural land of the assessee is outside the Municipal Limits of Rajarhat Municipality and that also 2.5 KM away from the outer limits of the said Municipality, assessee's land does not come within the purview of section 2(14)(iii) either under sub clause (a) or (b) of the Act, hence the same cannot be considered as capital asset within the meaning of this section. Hence, no capital gain tax can be charged on the sale transaction of this land entered by the assessee. Accordingly, we quash the assessment order qua charging of capital gains on very jurisdiction of the issue is quashed. The cross objection of the assessee is allowed."
7.8 It was held in the case of CIT vs. Manilal Somnath (106ITR 917) as follows:
"Under the Income-tax Act of 1961, agricultural lend situated in India was excluded from the definition of " capital asset" and any gain from the sale thereof was not to be included in the total income of an assessee tinder the head "capital gains". In order to determine whether a particular land is agricultural land or not one has to first find out if it is being put to any use. If it is used for agricultural purposes there is a presumption that it is agricultural land. If it is used for non-agricultural purposes the presumption is that it is non- agricultural land. This presumption arising from actual use can be rebutted by the presence of other factors. There may be cases where land which is admittedly non-agricultural is used temporarily for agricultural purposes. The determination of the question would, therefore, depend on the facts of each case.
The assessee, Hindu, undivided family, had obtained some land on a partition in 1939. From that time, up to the time of its sale, agricultural operations were carried on in the land. There was no regular road to the land and it was with the aid of a tractor that agricultural operations were being carried on.The land was included ITA No.2337/16, 284-285, 312 &323/17 :- 43 -:
within a draft town planning scheme. The assessee got permission of the Collector to sell the land for residential purposes and sold it.On the question whether the land was agricultural land:
Held, that what had to be considered is not what the purchaser did with the land or the purchaser was supposed to do with the land, but what was the character of the land at the time when the sale took place. The fact that the land was within municipal limits or that it was included within a proposed town planning scheme was not by itself sufficient to rebut the presumption arising from actual use of the land.The land had been used for agricultural purposes for a long time and nothing had happened till the date of the sale to change that character of the land. The potential non-agricultural value of the land for which a purchaser may be prepared to pay a large price would not detract from its character as agricultural land at the date of the sale. The land in question was, therefore, agricultural land.
7.9 Further the word "Capital Asset" is defined in Section 2(14) to mean property of any kind held by an assessee, whether or not connected with his business or profession, but does not include-
(iii) agricultural land in India, not being land situated-
(a) in any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee, or by any other name) or a cantonment board and which has a population of not less than ten thousand according to the last preceding census of which the relevant figures have been published before the first day of the previous year; or
(b) in any area within such distance, not being more than eight kilometres, from the local limits of any municipality or cantonment board referred to in item (a), as the Central Government may, having regard to the extent of, and scope for, urbanization of that area and other relevant considerations, specify in this behalf by notification in the Official Gazette;
8. It is very clear from the above that the gain on sale of an agricultural land would be exigible to tax only when the land transferred is located within the jurisdiction of a municipality. The fact that all the expressions enlisted after the word municipality are placed within the brackets starting with the words 'whether known as' clearly indicates that such expressions are used to denote a municipality only, irrespective of the name by which such municipality is called. This fact is further substantiated by the provisions contained under clause (b) wherein it has been clearly provided that the authority referred to in clause (a) was only municipality.
8.1 We also perused the meaning of the term local authority as referred in section 10(20) of the Act.
ITA No.2337/16, 284-285, 312 &323/17 :- 44 -:
(20) the income of a local authority which is chargeable under the head "Income from house property", "Capital gains" or "Income from other sources" or from a trade or business carried on by it which accrues or arises from the supply of a commodity or service [(not being water or electricity) within its own jurisdictional area or from the supply of water or electricity within or outside its own jurisdictional area].
[Explanation. - For the purposes of this clause, the expression "local authority" means -
(i) Panchayat as referred to in clause (d) of article 243 of the Constitution; or
(ii) Municipality as referred to in clause (e) of article 243P of the Constitution; or
(iii) Municipal Committee and District Board,legally entitled to, or entrusted by the Government with, the control or management of a Municipal or local fund; or
(iv) Cantonment Board as defined in section 3 of the Cantonments Act, 1924 (2 of 1924);
8.2 It is also evident from the Memorandum explaining the provisions of Finance Act, 1970, whereby s. 2(14) was amended so as to include the agricultural lands located within the jurisdiction of a municipality in the definition of the expression 'Capital Asset'. The relevant portion of the said memorandum is reproduced hereunder:
"30. ... The Finance Act, 1970 has, accordingly, amended the relevant provisions of the Income-tax Act so as to bring within the scope of taxation capital gains arising from the transfer of agricultural land situated in certain areas. For this purpose, the definition of the term "capital asset" in section 2(14) has been amended so as to exclude from its scope only agricultural land in India which is not situate in any area comprised within the jurisdiction of a municipality or cantonment board and which has a population of not less than ten thousand persons according to the last preceding census for which the relevant figures have been published before the first day of the previous year. The Central Government has been authorised to notify in the Official Gazette any area outside the limits of any municipality or cantonment board having a population of not less than ten thousand up to a maximum distance of 8 kilometres from such limits, for the purposes of this provision. Such notification will be issued by the Central Government, having regard to the extent of, and scope for, urbanisation of such area, and, when any such area is notified by the Central Government, agricultural land situated within such area will stand included within the term "capital asset". Agricultural land situated in rural areas, i.e., areas outside any municipality or cantonment board having a population of not less than ten thousand ITA No.2337/16, 284-285, 312 &323/17 :- 45 -:
and also beyond the distance notified by the Central Government from the limits of any such municipality or cantonment board, will continue to be excluded from the term "capital asset".
8.3 Further it is nobody's case that the property falls within any area which is comprised within the jurisdiction of a municipality or cantonment board or which has a population of not less than 10,000 according to the last preceding Census of which the relevant figures have been published before the first day of the previous year. In other words, the land does not fall in sub-clause (a) of section 2(14)(iii) of the Act as the land is outside of any municipality including GHMC. Further we have to see whether the land falls in clause (b) of section 2(14) (iii). This section prescribes that any area within such distance, not being more than 8 km from the local limit of any municipality or cantonment board as referred to in sub-clause (a) of section 2(14)(iii) of the Act, as the Central Government may, having regard to the extent of, and scope for, urbanisation of that area and other relevant considerations, specify in this behalf by notification in the Official Gazette.
8.4 We have carefully gone through the notification issued by the Central Government u/s. 2(1A)(c) proviso (ii)(B) and 2(14)(3b) vide No. 9447 (F. No. 164/(3)/87/ITA-I) dated 6th January, 1994 as amended by notification No. 11186 dated 28th December, 1999. In the schedule annexed to the notification dated 6.1.1994, entry is relating to Chennai wherein mentioned that the areas up to a distance of 8 km from the municipal limits in all directions. It is clear from these notification that agricultural land situated in areas lying within a distance not exceeding 8 km from the local limits of Chennai Corporation is covered by the amended definitions of 'capital asset'. Central Government in exercise of such powers has issued the above notification, as amended latest by Notification No. 11186 dated 28.12.1999 clearly clarifies that agricultural land situation in rural areas, areas outside the Municipality or cantonment board etc., having a population of not less than 10,000 and also beyond the distance notified by Central Government from local limits i.e. the outer limits of any such municipality or cantonment board etc., still continues to be excluded from the definition of 'capital asset'. Accordingly, in view of sub-clause (b) of section 2(14)(iii) of the Act even under the amended definition of expression 'capital asset', the agricultural land situated in rural areas continues to be excluded from that definition. And as in the present case, admittedly, the agricultural land of the assessee is outside the Municipal Limits of Chennai and that also 8 km away from the outer limits of this Municipality, assessee's land does not come within the purview of section 2(14)(iii) either under sub clause (a) or (b) of the Act, hence the same cannot be considered as capital asset within the meaning of this section. Hence, no capital gain tax can be charged on the sale transaction of this land entered by the assessee. This is supported by the order of Kolkata Bench of this Tribunal in the case of ArijitMitra (cited supra), Harish V. Milani (supra) and M.S. SrinivasNaicker vs. ITA No.2337/16, 284-285, 312 &323/17 :- 46 -:
ITO (292 ITR 481) (Mad). By borrowing the meaning from the above section, we are not able to appreciate that the land falls within the territorial limit of any municipality without notification of Central Government as held by the Karnataka High Court in the case of Madhukumar N. (HUF) (cited supra).
8.5. From the facts and circumstances of the case, as narrated before us, it is important to note that what was the intention of the assessees at the time of acquiring the land or interval action by the assessee between the period from purchase and sale of the land and the relevant improvement/development taken place during this time is relevant for deciding the issue whether transaction was in the nature of trade. Though intention subsequently formed may be taken into account, it is the intention at the inception is crucial. One of the essential elements in an adventure of the trade is the intention to trade; that intention must be present at the time of purchase. The mere circumstances, that a property is purchased in the hope that when sold later on it would leave a margin of profit, would not be sufficient to show, an intention to trade at the inception. In a case where the purchase has been made solely and exclusively with the intention to resell at a profit and the purchaser has no intention of holding the property for himself or otherwise enjoying or using it, the presence of such an intention is a relevant factor and unless it is offset by the presence of other factors it would raise as strong presumption that the transaction is an adventure in the nature of trade. Even so, the presumption is not conclusive and it is conceivable that, on considering all the facts and circumstances in the case, the court may, despite the said initial intention, be inclined to hold that the transaction was not an adventure in the nature of trade. The presumption may be rebutted. In the present case, considering the facts and circumstances of the case it cannot be considered as an adventure in the nature of trade. The intention of the assessee from the inception was to carry on agricultural operations and even there was no intention to sell the land in future at that point of time. It was due to certain compelling circumstances came into picture at a later stages, the assessees were forced to sell the land. Merely because of the fact that the land was sold in a short period of holding, it cannot be held that income arising from the sale of land was taxable as profit arising from the adventure in the nature of trade. The period of holding should not suggest that the activity was an adventure in the nature of trade.
8.6 Further, we make it clear that when the land which does not fall under the provisions of section 2(14)(iii) of the IT Act and an assessee who is engaged in agricultural operations in such agricultural land and also being specified as agricultural land in Revenue records, the land is not subjected to any conversion as non-
agricultural land by the assessee or any other concerned person, transfers such agricultural land as it is and where it is basis, in such circumstances, in our opinion, such transfer like the case before us cannot be considered as a transfer of capital asset or the transaction ITA No.2337/16, 284-285, 312 &323/17 :- 47 -:
relating to sale of land was not an adventure in the nature of trade so as to tax the income arising out of this transaction as business income. Accordingly, the ground raised by the Revenue is dismissed''.
17. No doubt decision of Co-ordinate Bench in the case of Ayisha Fathima (supra) was for assessment year 2009-2010. However nothing has been brought on record by the Revenue which would show that there was any material change in the nature of land in the previous year relevant to impugned assessment year. Para 8.5 of the order of the Tribunal in this case, reproduced above, is in our opinion very apposite. The crucial factor is the intention of the assessee at the time of acquiring the land, though subsequent events can also be relevant. In other words, happenings between date of purchase and date will be of relevance only if such events clearly prove conversion of the land by the assessee for a different use other than agricultural.
In other words, what was in the mind of the assessee at the time of acquisition is the most important aspect which is to be seen. The land in question was acquired by the assessee during the period 1988 to 1993 and all along, the assessees had claimed agricultural income therefrom. It was classified in the Revenue records as agricultural land with coconut and mango cultivation. In our opinion, Gazette notification by the Tamil Nadu Government on 18th March, 2009 by itself would not change the intention of the assessees, since such ITA No.2337/16, 284-285, 312 &323/17 :- 48 -:
notification was issued on the application of M/s. SSDPL, with whom assessee had entered into JDA on 25.06.2007. Such application was not made by the assessees. It may be true that assessees had given Power of Attorney (PAO) to M/s. SSDPL on 27.06.2007 based on the JDA entered on 25.06.2007. But as noted by the ld. Commissioner of Income Tax (Appeals) dealing with the appeal of Shri. S.A. Mafaz Mohammed, the ultimate sale of the property was made by the assessee to M/s. IGH and M/s. Accent, with which M/s. SSDPL had agreed to construct a hotel in the same land. Ld. Commissioner of Income Tax (Appeals) in the appeal of Shri. S.A. Mafaz Mohammed, has clearly noted that the POA dated 27.06.2007 was a registered one.
It is also not disputed that the possession was given by the assessee to M/s. SSDPL on the said date. No doubt the JDA was cancelled on 04.02.2010 and it was the assessees who conveyed the property to M/s. IGH and M/s. Accent. We cannot fault the finding of the ld.
Commissioner of Income Tax (Appeals) in the appeal of Shri. S.A. Mafaz Mohammed that such cancellation was only an act of convenience and the actual transfer had happened on 25.06.2007.
18. Coming to the decision of ld. Commissioner of Income Tax (Appeals) in the appeal of Smt. Syed Abdul Kader Aysthath Fasleen Amina, the ld. Commissioner of Income Tax (Appeals) took a view that assessees could not prove the agricultural income. In our opinion, ITA No.2337/16, 284-285, 312 &323/17 :- 49 -:
Revenue, having accepted agricultural income shown by the assessees in atleast some of the earlier years cannot turn back and say that such agricultural income was never proved with receipts for sale of agricultural produce and could not be believed. It will be apposite to have a look at the judgment of Jurisdictional High Court in the case of Sakunthala Vedachalam (supra). Para 12 to 14 of the said judgment are reproduced hereunder:-
''12. Hence, the only point that has to be considered is that whether the test as laid down in the decision reported in CIT v. Siddharth J. Desai [1983] 139 ITR 628 (Guj) has been satisfied by the assessees. In the said decision, in paragraph 11, it is held as follows (page 638) :
"On a conspectus of these cases, several factors are discernible which were considered as relevant and which were weighed against each other while determining the true nature and character of the land. It may be useful to extract from those decisions some of the major factors which were considered as having a bearing on the determination of the question. Those factors are :
(1) Whether the land was classified in the revenue records as agricultural and whether it was subject to the payment of land revenue?
(2) Whether the land was actually or ordinarily used for agricultural purposes at or about the relevant time ?
(3) Whether such user of the land was for a long period or whether it was of a temporary character or by way of a stop-gap arrangement ?
(4) Whether the income derived from the agricultural operations carried on in the land bore any rational proportion to the investment made in purchasing the land ?
ITA No.2337/16, 284-285, 312 &323/17 :- 50 -:
(5) Whether, the permission under section 65 of the Bombay Land Revenue Code was obtained for the non-
agricultural use of the land ? If so, when and, by whom (the vendor or the vendee) ? Whether such permission was in respect of the whole or a portion of the land ? If the permission was in respect of a portion of the land and if it was obtained in the past, what was the nature of the user of the said portion of the land on the material date ?
(6) Whether the land, on the relevant date, had ceased to be put to agricultural use ? If so, whether it was put to an alternative use ? Whether such cesser and/or alternative user was of a permanent, or temporary nature ?
(7) Whether the land, though entered in revenue records, had never been actually used for agriculture, that is, it had never been ploughed or tilled ? Whether the owner meant or intended to use it for agricultural purposes ?
(8) Whether the land was situate in a developed area ? Whether its physical characteristics, surrounding situation and use of the lands in the adjoining area were such as would indicate that the land was agri cultural ?
(9) Whether the land itself was developed by plotting and providing roads and other facilities ?
(10) Whether there were any previous sales of portions of the land for non-agricultural use ?
(11) Whether permission under section 63 of the Bombay Tenancy and Agricultural Lands Act, 1948, was obtained because the sale or intended sale was in favour of a non-agriculturist ? If so, whether the sale or intended sale to such non-agriculturist was for non- agricultural or agricultural user ?
(12) Whether the land was sold on yardage or on acreage basis ?
(13) Whether an agriculturist would purchase the land for agricultural purposes at the price at which the land was sold and whether the owner would have ever sold ITA No.2337/16, 284-285, 312 &323/17 :- 51 -:
the land valuing it as a property yielding agricultural produce on the basis of its yield ?
At the risk of repetition, we may mention that not all of these factors would be present or absent in any case and that in each case one or more of those factors may make appearance and that the ultimate decision will have to be reached on a balanced consideration of the totality of circumstances."
13. According to the Tribunal, that if the above tests are applied, the assessees could not satisfy any of the conditions except conditions Nos. 1, 5, 11 and 12. The Tribunal held that the assessees could not prove that the lands was actually or ordinarily used for agricultural purposes. This reasoning does not appear to be correct in view of the above said decision of the Gujarat High Court, wherein it was clearly held in clause (1) in paragraph 11 that whether the land was classified in the revenue records as agricultural and whether it was subject to the payment of land revenue has to be considered for grant of exemption.
14. Thus, it is evident from the above, which clearly states that any one of the above factors can be present in a case to qualify for the benefit of classification as agricultural lands. In this case, the assessees have qualified under clause 11(1) since as per the adangal records, these lands were classified as agricultural lands and the assessees have also paid revenue kist, namely, revenue payment. Therefore, the Tribunal has misconstrued the judgment of the Gujarat High Court (supra) that all conditions laid down in paragraph 11 should be satisfied, which is not a correct interpretation''.
A reading of the para 14 of the judgment clearly indicate that primary requirement is classification of land as agricultural in adangal records.
Their lordships clearly held that it was not necessary to cumulatively satisfy all the conditions set out by Hon'ble Gujarat High Court in the case of CIT vs. Siddharth J. Desai, (1983) 139 ITR 628. As to the relevance of the intention of the purchaser, in deciding on the nature ITA No.2337/16, 284-285, 312 &323/17 :- 52 -:
of the land sold, ld. Commissioner of Income Tax (Appeals) who went adverse to the assessee Smt. Syed Abdul Kader Aysthath Fasleen Amina, had himself stated at para 34 of his order that out of 13 conditions set out in this judgment, assessee had satisfied atleast four.
Just because assessee received an amount higher than the guideline value would not show that the land was non agricultural. Agricultural land cannot become non agricultural only for a reason that were development of a commercial nature in the nearby areas. As already noted by us, Co-ordinate Bench in the case of Smt. Ayisha Fathima (supra) had held that a piece of land in the immediate neighbourhood in very same village was agricultural. Hon'ble Jurisdictional High Court in the case of M.S. Srinivasa Naicker and Others vs. ITO, (2007) 292 ITR 481 has clearly held that development in nearby areas was not relevant. Coming to the decisions in the case of Co-ordinate Bench in the case of Abookucker (supra), Vijay Shah (supra) and that of Cochin Bench in the case of Abdul Rahmin (supra) in our opinion these decisions pale into insignificance, considering the subsequent judgment of Hon'ble Jurisdictional High Court in the case of Mansi Finance Limited (supra) which followed the earlier judgments of the very same court. In the circumstances, we are inclined to follow the decision of ld. Commissioner of Income Tax (Appeals) in the case of Shri. S.A. Mafaz Mohammed and uphold the view that the land ITA No.2337/16, 284-285, 312 &323/17 :- 53 -:
sold by the assessees, in so far assessment year 2010-2011 is concerned was agricultural and not a capital asset coming within the meaning of Section 2(14) of the Act. The gains on sale thereof was not exigible to tax.
19. In the Department appeal in the case of Shri. S.A. Mafaz Mohammed, for assessment year 2010-2011, there are three others grounds, one assailing deletion of an addition of ₹75,000/- claimed as agricultural income, second assailing deletion of claim of interest on term loans and third assailing deletion of the disallowance of municipal tax paid. Latter two disallowance were under the head ''income from house property''.
20. On the question of agricultural income, assessee had registered the conveyance deed in favour or M/s. IGH and M/s. Accent on 05.02.2010. However, assessees had about 7.5 acres left with them. Nevertheless, just because claim of agricultural income was accepted in the earlier years, would not mean that assessee should be perpetually allowed the claim. Assessee could not bring in evidence to prove the earning of the agricultural income despite being required by the ld. Assessing Officer. Having not done so, ld. Commissioner of Income Tax (Appeals) in our opinion, erred in deleting the addition made for the claim of agricultural income of ₹75,000/-. We set aside ITA No.2337/16, 284-285, 312 &323/17 :- 54 -:
the order of the ld. Commissioner of Income Tax (Appeals) on this aspect and re-instate the addition.
21. Coming to the question of term loan interest of ₹43,87,541/-
and ₹51,244/-, aggregating to ₹44,38,785/-, ld. Commissioner of Income Tax (Appeals) clearly observed that loan of ₹1,50,00,000/-
were used for construction of Usman Road property and this was clearly indicated in the sanction letter. Viz-a-viz loan of ₹4,75,00,000/-
from M/s.BOBL, ld. Commissioner of Income Tax (Appeals) had accepted the claim of the assessee with a finding that it was utilized for repayment of an advance received from M/s. SSPDL, which was earlier used for repaying a loan taken from M/s. BOBL for construction of the building. Nothing has been brought on record by the ld.
Departmental Representative to show that the findings of the ld.
Commissioner of Income Tax (Appeals) were incorrect or not based on records.
22. Coming to issue of Corporation Tax of ₹85,966/-, which was allowed by ld. Commissioner of Income Tax (Appeals), admittedly, the receipt was in the name of Smt. Sithi Sayeedha, who was the mother of Shri. Mafaz Mohammed. It is not disputed of 1/3rd of the property was gifted by her to the assessee on 30.03.1994 through a registered release deed. Hence, the corporation tax of ₹85,966/- paid in the ITA No.2337/16, 284-285, 312 &323/17 :- 55 -:
name of previous owner Smt. Sithi Sayeedha in our opinion was rightly considered by the ld. Commissioner of Income Tax (Appeals) as allowable.
23. Accordingly appeal of the assessee Smt. Syed Abdul Kader Aysthath Fasleen Amina in ITA No. 323/CHNY/2017, for assessment year 2010-2011 is allowed. In so far as appeal of the Revenue in the case of Shri. Mafaz Mohammedin ITA No.2337/CHNY/2016 is concerned, its grounds 2, 4 and 5 are dismissed whereas its ground No.3 is allowed. Grounds No.1 & 6 of the latter appeal are general needing no specific adjudication.
24. Now, we take up the appeal of the assessee Smt. Syed Abdul Kader Aysthath Fasleen Amina for assessment year 2012-2013 in ITA No.312/CHNY/2017.
25. Assessee is aggrieved on compensation of ₹76,46,280/-
received on acquisition of 666 sq. mtrs land at survey No.14/3A2B, being treated as exigible to capital gains. Ld. Counsel for the assessee submitted that this was part of the property considered by the Tribunal in appeal of the Revenue and assessees in ITA No.2337/CHNY/2016 and ITA No.323/CHNY/2017 for assessment year 2010-2011.
According to him, if the land was held as agricultural, the compensation received would not be exigible to tax. No doubt, We ITA No.2337/16, 284-285, 312 &323/17 :- 56 -:
have already upheld the view of the ld. Commissioner of Income Tax (Appeals) in the case of Shri. Shri. Mafaz Mohammed for assessment year 2010-11, that the land was agricultural and sale thereof was not exigible to tax. However, nature of the land which was transferred in a subsequent year cannot be considered as agricultural only for a reason that another part of the same land was treated so, in an earlier years. As already mentioned by us, though the intention at the time of purchase of the land initially was crucial, subsequent events, if they show strong indication of a change of such intention, such events need to be considered. Once assessees sold 1.85 acres out of 9.32 acres, they became fully aware that the land sold was being commercially exploited. When they sold the first parcel of land, the initial intention at the time of purchase was very relevant. However, we cannot say assessees had the same intention in holding the balance land as they had initially. No doubt, they can bring in evidence to show the agricultural use in subsequent years, if they are convinced on the continuing agricultural nature of the land. However on question like nature of land sold, there can be no rule of res-
judicate. Lower authorities had simply followed their decision for assessment year 2010-11 and held the land acquired by Government as non-agricultural, for assessment year 2012-2013 also. Considering the facts and circumstances of the case, we are of the opinion that the ITA No.2337/16, 284-285, 312 &323/17 :- 57 -:
question regarding nature of the land, which was subject to acquisition during the previous year relevant to assessment year 2012-2013 requires re-visit by the ld. Assessing Officer. We therefore set aside the orders of the lower authorities below and remit this issue back to the file of ld. Assessing Officer for consideration afresh as per law.
Accordingly appeal of the assessee Smt. Syed Abdul Kader Aysthath Fasleen Amina for assessment year 2012-2013 is allowed for stastical purpose.
26. Now, we are left with an appeal of the Department in ITA No.285/CHNY/2017 in the case of Shri. Mafaz Mohammed for assessment year 2010-2011. In this appeal, Department assails the order of the ld. Commissioner of Income Tax (Appeals) quashing an order passed by the ld. Assessing Officer u/s.154 of the Act.
27. Ld. Assessing Officer had passed an order u/s.154 of the Act noting that interest u/s.234A of the Act was omitted to be charged though the return was filed by the assessee belatedly on 27.03.2012.
As per the ld. Assessing Officer by virtue of Explanation (3) of Section 234A(1) of the Act where an assessment was done for the first time such assessment was to be considered as a regular assessment.
According to the ld. Assessing Officer, return was filed by the assessee on 27.03.2012, pursuant to the issue of a notice u/s.148 of the Act.
ITA No.2337/16, 284-285, 312 &323/17 :- 58 -:
Hence, according to him, assessee was liable for interest u/s.234A of the Act.
28. Ld. Commissioner of Income Tax (Appeals) on assessee's appeal after going through Section 234A of the Act held that intimation issued u/s.143(1) (a) of the Act could not be ignored and order passed subsequently u/s.143(3) r.w.s147 of the Act could not be considered as an assessment done for the first time. Accordingly, he held the rectification order under Section 154 of the Act invalid.
29. Now before us, ld. Departmental Representative submitted that there was a clear mistake in the original assessment done u/s.143(3) r.w.s. 147 of the Act, wherein interest was not calculated correctly. According to him, this was exigible to a rectification.
30. Per contra, ld. Authorised Representative strongly supported the order of the ld. Commissioner of Income Tax (Appeals).
31. We have considered the rival contentions and perused the orders of the authorities below. Question here is interpretation of Explanation (3) of Section 234A(1) of the Act. The said Explanation is reproduced hereunder:-
''Explanation 3.-- Where, in relation to an assessment year, an assessment is made for the first time 2under section 147 or section 153A, the assessment so made ITA No.2337/16, 284-285, 312 &323/17 :- 59 -:
shall be regarded as a regular assessment for the purposes of this section.
As per the ld. Assessing Officer intimation u/s.143(1) of the Act could not be considered as an assessment and therefore the assessment done pursuant to the notice under Section 148 of the Act could be considered as the first regular assessment. According to him, the assessment done under Section 147 of the Act had to be construed as a regular assessment for application of Section 234A of the Act. In our opinion, the question of interpretation of Explanation (3) to Section 234A(1) is not something beyond debate. What can be rectified u/s.154 of the Act is only a glaring and apparent mistake and not one which requires long debates and interpretation of law. In taking this view, we are fortified by the judgment of Hon'ble Apex Court in the case of ITO vs Volkhart Bros (1971) 81 ITR 50. We are therefore of the opinion that ld. Commissioner of Income Tax (Appeals) was justified in quashing the order of the ld. Assessing Officer. We do not find any reason to interfere with the order of the ld. Commissioner of Income Tax (Appeals). Appeal of the Department in ITA No.285/CHNY/2017 stands dismissed.
32. To summarize the results, the appeal of the Revenue in 2337/CHNY/2016 is partly allowed, appeals of the assessee in ITA ITA No.2337/16, 284-285, 312 &323/17 :- 60 -:
No.323/CHNY/2017 is allowed, appeal of the assessee in ITA No.312/CHNY/2017 is allowed for statistical purpose and appeals of the Revenue in ITA Nos.284 an 285/CHNY/2017 are dismissed.
Order pronounced on Friday, the 18th day of January, 2019, at Chennai.
Sd/- Sd/-
(DUVVURU RL REDDY) (ABRAHAM P. GEORGE)
याियक सद य/
सद य JUDICIAL MEMBER लेखा सद य /ACCOUNTANT MEMBER
चे ई/Chennai
दनांक/Dated:18th January, 2019.
KV
आदेश क ितिलिप अ ेिषत/Copy to:
1. अपीलाथ /Appellant 3. आयकर आयु (अपील)/CIT(A) 5. िवभागीय ितिनिध/DR
2. यथ /Respondent 4. आयकर आयु /CIT 6. गाड फाईल/GF