Madras High Court
Principal Commissioner Of Income Tax I vs M/S.K.P.R.Developers Ltd on 10 July, 2019
Author: T.S.Sivagnanam
Bench: T.S.Sivagnanam, V.Bhavani Subbaroyan
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IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 10.07.2019
CORAM
THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAM
and
THE HONOURABLE MRS.JUSTICE V.BHAVANI SUBBAROYAN
Tax Case Appeal No.408 of 2019
Principal Commissioner of Income Tax I,
No.63, Race Course Road,
Coimbatore. .. Appellant/Appellant
-vs-
M/s.K.P.R.Developers Ltd.,
5, AKS Nagar, Thadagam Road,
RS Puram, Coimbatore-641 001.
PAN: AADCK4094L .. Respondent/Respondent
Appeal under Section 260A of the Income-tax Act, 1961 against
the order dated 05.05.2017 on the file of the Income Tax Appellate
Tribunal 'B' Bench, Chennai, in I.T.A.No.1564/Mds/2015 for the
assessment year 2011-12.
For Appellant : Mr.T.R.Senthil Kumar,
Senior Standing Counsel
For Respondent : Mr.A.S.Sriraman
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JUDGMENT
(Delivered by T.S.Sivagnanam, J.) This appeal has been filed by the Revenue under Section 260A of the Income-tax Act, 1961 (hereinafter referred to as “the Act”), challenging the order dated 05.05.2017, passed by the Income-tax Appellate Tribunal 'B' Bench, Chennai (Tribunal), in I.T.A.No.1564/Mds/2015, for the assessment year 2011-12.
2.The Revenue has raised the following questions and would submit that there are substantial questions of law arising for consideration in this appeal:-
“i. Whether on the facts and circumstances of the case, the Appellate Tribunal was right in holding that sale of land by the assessee could not be assessed as income from business?
ii. Whether on the facts and circumstances of the case, the Income Tax Appellate Tribunal was right in holding that the lands in question sold by the company are “agricultural” when it is on record and not in dispute that no agricultural activity whatsoever was carried out by the assessee from the Financial Year 2005-06 onwards?” http://www.judis.nic.in 3
3.We have heard Mr.T.R.Senthil Kumar, learned Senior Standing Counsel for the appellant/Revenue; and Mr.A.S.Sriraman, learned counsel for the respondent/assessee.
4.One of the issues which arose in the assessment for the year under consideration is long term capital gain claim as exempt income. The assessee was called upon by the Assessing Officer to submit details in respect of the land which was transferred to M/s.K.P.R.Mills Ltd., in response to which, the assessee submitted details such as Survey Number, Chitta, Adangal, etc.
5.The assessee contended that the lands are agricultural lands and beyond 8 k.m., from the notified cities and it should not be considered as a capital asset under Section 2(14)(iii) of the Act. The assessee has filed written submissions and also produced certificate from the Village Administrative Officer (VAO), Kittampalayam Village, Karumathampatti, Coimbatore District, stating that the lands which were transferred were primarily agricultural lands and as per the original documents maintained in the office of the VAO, it was under
http://www.judis.nic.in 4 cultivation and crops like maize were growing in the said land. Notice was issued by the Assessing Officer to the Tahsildar, Coimbatore, to obtain copies of the records maintained in the office in respect of the lands. The Tahsildar submitted a letter dated 27.01.2014, stating that as per his office records, there was no agricultural activity carried on by the assessee for the year prior to the financial year 2010-11.
6.The Assessing Officer, thereafter, issued summons to the VAO under Section 131 of the Act and the said VAO one Mr.Bhupathy appeared before the Assessing Officer and gave a statement stating that without proper verification of the original records, he had given the extract of the Adangal. The Assessing Officer afforded opportunity to the assessee to cross examine the VAO, who appears to have stated in the cross examination that the earlier certificate given by him should not be relied on. It was pointed out by the assessee that in the registers maintained in the office of the VAO, mutation of entries have not taken place and the registers having not been updated, the same cannot be relied on. The Assessing Officer did not accept the stand taken by the assessee and rejected the claim made by the assessee with regard to the long term capital gain being an exempt income. http://www.judis.nic.in 5
7.The assessee filed appeal before the Commissioner of Income- tax (Appeals)-1, Coimbatore (for brevity, “the CIT(A)”). The CIT(A) examined the factual details in an elaborate manner and after referring to the various decisions, allowed the appeal of the assessee with regard to the said issue. The Revenue preferred appeal before the Tribunal. The Tribunal, for its part, re-examined the factual matrix and agreed with the view taken by the CIT(A).
8.Before us, the Revenue seeks to set aside the order passed by the Tribunal. At the very outset, we need to point out what is now sought to be agitated before us is entirely factual.
9.The endeavour of Mr.T.R.Senthil Kumar, is to establish that the land is not an agricultural land for which purpose, the learned Senior Standing Counsel had taken an adjournment on the earlier hearing to enable him to get the relevant records from the Assessing Officer.
10.Today, the learned Senior Standing Counsel has placed a bunch of papers, which is the letter of the Chartered Accountant of the Assessee dated 23.01.2014, along with annexures. http://www.judis.nic.in 6
11.It is pointed out by the learned Senior Counsel that the Adangal extract for the fasli year 1418 (2009) and fasli year 1419 (2010) shows that cultivation was done in the land, but subsequently, when the VAO was summoned under Section 131 of the Act, he stated that the certificates which were issued by him stating that the lands were being cultivated, were issued without proper verification of the original records due to oversight and requested to treat the certificates issued previously containing false information as cancelled and consider the fresh certificates produced before the Assessing Officer as true certificates as on date.
12.It is noteworthy to mention, at this juncture, that the VAO while issuing the Adangal extract is expected to re-produce the entries which are maintained in the Adangal register. Similarly, in the Chitta register. In other words, the Adangal extract is a true copy of the Adangal register. Therefore, if he has given false certificates contrary to the entries in the Adangal register, the VAO has to be proceeded departmentally as well as criminal action has to be initiated against him. However, that would not arise in the instant case because, the Tahsildar who submitted a report to the Assessing Officer on http://www.judis.nic.in 7 27.01.2014, has enclosed the copies of the Patta which clearly show that the lands are wet lands. Patta is a document which proves possession and classification of the land. The copy of the patta issued is a computerised patta.
13.There is a presumption to the validity of such official document and if a party states that the entry is incorrect or the document is false, the onus is on the party to prove the same. There is no allegation made by the Assessing Officer that the patta, copy of which was furnished by the Tahsildar, is a bogus patta. Even going by the Adangal extracts, which were furnished by the VAO, on being summoned under Section 131 of the Act, we find that in column no.19 of the Adangal extract, the land has been described as “Tharisu”. Therefore, even going by the subsequent records, the character of the land is not stated to be non agriculture. A land, which is an agricultural land, at many at times, cannot be put to use for agricultural purposes. Merely because an agriculture activity could not be carried on for various reasons including natural causes, it will not cease to be an agricultural land. In the instant case, the CIT(A) and the Tribunal have done an elaborate exercise, assessed the documents placed before it and given a categorical finding that the land continues http://www.judis.nic.in 8 to remain as an agricultural land. Apart from that, the land in question upon being transferred to the purchaser, still continues to remain as agricultural land. Therefore, we cannot be called upon to examine the factual findings recorded by the Tribunal while affirming the factual findings rendered by the CIT(A) as if we are third appellate authority. A similar view was taken in the case of CIT(A) vs. P.Ashok Kumar, in T.C.A.No.268 of 2011, dated 02.01.2019.
14.Mr.T.R.Senthil Kumar, learned Senior Standing Counsel referred to the decision in the case of PCIT vs. A.Lalichan reported in [2019] 104 taxmann.com 30 (Madras). We find that the said decision cannot be of any assistance to the case of the Revenue because the finding given by the Division Bench in paragraph 9 clearly shows that the land though was mentioned as an agricultural land in the sale deed, in the agreement for sale entered much prior to the sale, it was not described as an agricultural land and the agreement clearly shows that the land was being sold to a promoter, who has paid the entire sale consideration and the vendors are also executed an irrevocable power of attorney in favour of the purchaser to enable him to sell the property upon development.
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15.In the said decision, reference was made to the decision of the Hon'ble Supreme Court in the case of Sarifabibi Mohmed Ibrahim vs. CIT reported in [1993] 204 ITR 631 (SC), which decision was relied on by the Revenue to state that the burden of proof to show that the land is an agricultural land is always on the assessee, who seeks exemption under Section 3 of the Act because, the Revenue cannot be expected to produce negative evidence. This decision cannot be applied to the facts of the present case, as the assessee has produced statutory records/revenue records to establish the character of the land.
16.The statement given by the VAO pursuant to summons issued under Section 131 of the Act by deposing before the Assessing Officer cannot improve or delete the entries maintained in the registers. The VAO would have no jurisdiction to make any changes in the register. Apart from that, the extracts which were given by the VAO, during the course of cross examination pursuant to summons under Section 131 of the Act also shows the land as 'Tharisu'. Above all, the Tahsildar while submitting the report to the Assessing Officer has enclosed the copies of the computerised patta, which shows that the lands are http://www.judis.nic.in 10 Panchami lands and deemed to be agriculture. Therefore, the Revenue having miserably failed to establish the factual matrix before the CIT(A) and the Tribunal, cannot call upon this Court to embark upon a fact finding exercise. Therefore, the assessee has discharged the onus caused upon him to establish that the lands are agricultural lands. The revenue record, via., the patta issued, shows that the land is an agricultural land. Thus, the assessee having discharged the onus caused upon him, it is for the Department to prove that the entries in the revenue records and the patta were false or bogus. The two authorities have concurrently found that the Revenue has not been able to make any headway in this regard.
17.Thus, for all the above reasons, this tax case appeal is dismissed and no substantial question of law arises for consideration. No costs.
(T.S.S., J.) (V.B.S., J.)
10.07.2019
Index : Yes/No
Speaking/Non-Speaking Order
abr
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To
1.The Assistant Commissioner of Income Tax,
Company Circle-IV(2), (i/c), Coimbatore.
2.The Commissioner of Income Tax (Appeals)-1, Coimbatore.
3.The Income Tax Appellate Tribunal 'B' Bench, Chennai. http://www.judis.nic.in 12 T.S.Sivagnanam, J.
and V.Bhavani Subbaroyan, J.
(abr) T.C.A.No.408 of 2019 10.07.2019 http://www.judis.nic.in