IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCH "A", HYDERABAD
BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER
AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER
ITA No. 265/Hyd/2014
Assessment year 2007-08
The Income Tax Officer vs. Smt. M. Uma Ravinder
Ward-4(1) Reddy, Hyderabad
Hyderabad PAN: ABMPM7563R
Appellant Respondent
C.O. No. 22/Hyd/2014
In ITA No. 265/Hyd/2014
Assessment year 2007-08
Smt. M. Uma Ravinder vs. The Income Tax Officer
Reddy, Hyderabad Ward-4(1)
PAN: ABMPM7563R Hyderabad
Appellant Respondent
Appellant by: Sri R. Mohan Reddy
Respondent by: Sri A.V. Raghu Ram
Date of hearing: 09.07.2014
Date of pronouncement: 31.07.2014
ORDER
PER ASHA VIJAYARAGHAVAN, J.M.:
The above appeal by the Revenue is directed against
the order of the CIT(A)-V, Hyderabad dated 28.10.2013
and the Cross Objection (CO) by the assessee against the
appeal of the Revenue.
2. The assessee is an individual and filed her return of
income on 31.3.2008 for A.Y. 2007-08 declaring income of
Rs. 87,878. The assessment was completed u/s. 143(3)
r.w.s. 147 of the Income-tax Act, 1961 determining the
income at Rs. 2,23,58,107 by making addition of Rs.
2,22,70,229 towards long term capital gains on sale of
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agricultural land for a total sale consideration of Rs.
2,29,75,000.
3. Facts of the case are that a survey u/s. 133A of the
Act was conducted in the case of M/s. Sri Surakshita
Homes, a firm engaged in the business of real estate, by
the ITO, Ward-11(2), Hyderabad certain incriminating
material with regard to sale of lands by the assessee to
the above firm was found and forwarded the same to the
present Assessing Officer. As per that information, the
assessee sold lands at Aushapur village, Ghatkesar
Mandal, Rangareddi District for a consideration of Rs.
2.39 crores including commission of Rs. 3 lakhs per acre
for 7 acres 10 guntas. As per Annexure 1B/SH/06 page
57, the assessee was paid an amount of Rs. 2,17,50,000
for Acres 7.10 guntas @ Rs. 30 lakhs per acre and Rs. 21.
75 lakhs towards commission @ 3 lakhs per acre, totalling
to Rs. 2,39,00,000. The above transaction was executed
through a registered sale deed document No. 18495/06
dated 4-11-2006 in Sub-Registrar's Office, Ghatkesar.
Since the assessee did not declare any capital gains on
sale of the above lands, the AO held that income
chargeable to tax escaped assessment and hence reopened
the assessment u/s 147 of the Act.
4. During the assessment proceedings in reply to
show-cause notice the assessee submitted the following
as to why the sale consideration of Rs. 2.39 crores should
not be brought to tax under the head long term capital
gains:
"At the outset I submit that the land
admeasuring Ac. 7-10 Guntas situated in
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Aushapur Village & Gram Panchayat
Ghatkesar Mandal, R. R. District is agricultural
land as land is not an asset within the
meaning of section 2(14), the gain arising on
sale of such land is exempted from capital
gain. Hence I humbly request your good-selves
not to subject the impugned gains to tax. I
submit that the sale consideration mentioned
Sale Deed is Rs. 65,25,000 only but not Rs.
77,50,000 as stated in your show cause
notice. I also submit that it is not true to say
that I have received Rs. 2.39 crores from the
purchasers. I am herewith enclosing a copy of
the Sale Deed. I further submit that I have
received a sale consideration of Rs. 65,25,000
only from M/s. Sri Surakshita Homes by way
of post dated cheques as under:
Chq.
Dale Bank Amount
No.
Development 20,25,00
10.12.2006 138754
Credit Bank 0
Development 45,00,00
05.01.2007 138755
Credit Bank 0
At this juncture I bring to your kind notice
though it has been mentioned in the sale deed
that the purchasers have paid the sale
consideration no mention has been made
therein the mode of payment. To avoid future
disputes and misunderstandings we have
entered into a Memorandum of Understanding
regarding the mode of payment of sale
consideration on the same day i.e.,
04.11.2006 on which the Sale Deed has been
executed. A copy of the same is enclosed.
Out of the above two payments Chq. No.
138755 to Rs. 45,00,000 was not honoured by
the purchasers. Instead, they made part
payment by way of cheque & part payment by
way of cash, the details of which have already
been at the time of earlier hearing.
I submit that I have not received the various
sums as mentioned in your letter [para 3(b). I
reiterate that I have received only Rs.
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65,25,000 as sale consideration as agreed in
the Sale Deed"
5. During the assessment proceedings, the assessee
also submitted a note on exemption on capital gains,
which is as under:
"During the course of hearing on 22.01.2013
your good-selves have asked me to explain
why the agricultural land sold by me is not a
capital asset. In this regard I submit that the
land which was sold by me is situated in a
gram Panchayat and village known as
Aushapur. There are no notified municipalities
near the village. Your good-selves have
expressed that Ghatkesar is a municipality. I
submit that Ghatkesar is not a municipality
even today. Hence, I humbly submit that the
land which was situated in the village and
gram Panchayat known as Aushapur and the
lands and the land was recorded as
agricultural lands in the village adangal/
pahani. To reinforce my submissions I draw
your kind attention to Notification under
section 2(1A)(c), proviso, clause (ii)(B) and
section 2(14)(iii)(b) - Notification No. 50 Dated
6th January, 1994 wherein the municipalities
are notified for the purpose of section
2(14)[1994] 205 ITR (Stat) 121. It is obvious
that Ghatkesar did not find any place in the
said notification. Even today the said
notification is in force. Accordingly, I humbly
reiterate the fact that the land which was sold
by me and which was situated in Aushapur
village and Gram Panchayat is purely an
agricultural land and the gains derived from
sale of such land are exempted from capital
gains under the provisions of Income-Tax Act
1961"
6. After considering the explanation of the assessee,
the Assessing Officer in order to ascertain whether the
lands in question are agricultural lands or otherwise
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asked the assessee to furnish the details by letter dated
28.1.2013, the details asked by the Assessing Officer were
as under:
(a) Pattadar Passbook
(b) Name of the crops grown for the last three years
in the said land.
(c) Bills/vouchers etc., for expenditure and sale of
agricultural produce.
(d) Proof in support of taxes paid on these
agricultural lands.
7. The Assessing Officer held that the lands were
converted into plots. From the letter which was
addressed to MRO, Ghatkesar Mandal vide letter of even
no, dated 28.01.2013 requesting to furnish the details of
the lands in question along with survey numbers and
requested to confirm whether any agricultural activity was
being carried out in the said lands during the period 2002
to 2006. In response to this, the Tahsildar, Ghatkesar
Mandal vide his letter No. B/84/13 dated Nil.02.2013
furnished the information which is reproduced here as
under:
"I invite your attention to the references cited
and it is to inform that the VRO, Aushapur
village, Ghatkesar have enquired into the
matter and reported the Sy. No. wise details:
S. Sy. Extent
Remarks
No. No. (Ac. Gts)
2. 252 1-21 Covered into plots
3. 257 1-28 Covered into plots and some
extent padava.
4. 262 0-21 Covered into plots.
5. 263 0-07 Covered into plots
6. 352 0-10 Padava
7. 353 0-01 Padava and some extent is
covered into under By-pass
road.
8 260 2-10 Covered into plots.
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The same is furnished for favour of
information"
8. The Assessing Officer held that the lands sold to
M/s. Sri Surakshita Homes are not agricultural lands and
no agricultural activity was carried out in them.
Therefore, he brought to tax the amount of Rs.
2,22,70,229 as long term capital gains.
9. On appeal before the CIT(A), the assessee
submitted the proceedings of the MRO Ghatkesar Mandal
vide No. B/2723/97 dated 8-10-1997, wherein it was
mentioned in Page 3 that all the survey numbers were
recorded plots and the Village Assistant, Aushapur
enquired on the spot and reported that after delivery of
possession by Court Commissioner, the petitioners have
fenced the land and were doing agriculture. The assessee
submitted the submissions in support of her contention
that the lands sold by the assessee are agricultural lands
and hence exempt from assessing the sale consideration
as capital gains u/s 2(14) of the Act.
10. The learned AR further submitted that the
agricultural land in question was located in Aushapur
village, comprised in the area within the jurisdiction of
Gram Panchayat of Aushapur and as such it was situated
in an area outside any municipality or cantonment board,
having a population of not less than ten thousand, and
also beyond the distance notified by the Central
Government from the limits of any such municipality or
cantonment board. Thus, the land in question does not
constitute a capital asset, as defined u/s 2(14) of IT Act,
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1961. He further submitted that this position 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'.
11. The AR submitted that even vide Notification u/s
2(1A)(c), proviso, clause (Il) (B) and Section 2(14)(iii)(b)
CBDT Notification No. 164/3/87-ITA-1 dated 6-1-1994,
wherein municipalities were notified for the purpose of
Section 2( 14) (1994) 205 ITR (Stat) 121, and vide
Notification No. 9947 dated 6-1-1994 and Notification No.
SO 1302 dated 28-12-1999 reported in 248 ITR 258,
published in the Gazette of India, Ministry of Finance,
Dept. of Revenue, Ghatkeshar under which the Aushapur
Village in which the lands of the assessee are located, was
not notified as Municipality and even today, the said
notification was in force.
12. The AR submitted that the said land originally
belonged to Mr. Yadagiri and Mrs Bal Laxmamma, who
were declared as pattadars as per a Court decree, in O.S.
No. 23 of 1984, dt. 03.09.1997. Subsequently, the said
owners took possession of the lands and carried out
agricultural operations. As is evident from the orders of
the MRO Ghatkesar Mandal, vide proceedings dt.
08.10.1997 giving effect to the Court Decree, though the
lands in question were reflected as plots in records, the
V.A. of Aushapur conducted a physical inspection of the
spot and reported that the land owners had fenced the
land and were actually doing agriculture. Thus, the
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allegation of the AO that the land in question was in the
nature of plots is factually incorrect.
13. He further submitted that as is evident from the
assessment order itself, the report of the MRO obtained by
the AO suggests that it was based on the enquiry
conducted in 2013 and as such does not reflect the
factual position relevant to 2006 it was pointed out that
the Assessee purchased the said land in 2002 from the
person, who bought from the original owners and
agricultural operations were carried out upon such land
regularly throughout the period of holding till the date of
sale and it was informed to the AO during the assessment
proceedings, that the impugned land was dry land, which
was basically rain-fed without any alternative water
resource, and the crop grown on such land was Maize. It
was stated that unfortunately, as the rain fall during the
period was not sufficient, there was hardly any surplus
from agriculture activity and the fact remains that
agricultural operations were actually carried out by the
Assessee. The learned counsel submitted that the
observation of the AO, that the claim of the Assessee was
unverifiable as she failed to produce Pattadar Passbook, is
not tenable as the pass book proves only ownership of the
land, which, in the case of the Assessee, is proved beyond
doubt by the registered purchase deeds. With regard to
the observation of the AO, that the Assessee failed to
produce bills and vouchers in respect of sale of
agricultural produce, it was submitted that it was clearly
stated during the assessment proceedings that as the
yield from the crops grown was not considerable the same
was sold to the petty traders from the local area and such
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sale of produce at field to the local buyers is a regular
practice in this region.
14. The AR relied on the decision of Vizag Bench of the
Tribunal in the case of M. Narayana Chalamaiah vs ITO, in
ITA No. 343 of 2007 dt. 24.09.2010, wherein the Tribunal
that the claim of the assessee regarding actual cultivation
of lands cannot be lightly rejected unless' some material is
brought on record to reject such claim. He also relied on
decision of the Tribunal, Hyderabad Bench in the case of
Mr. T.C. Reddy, in ITA No. 469/Hyd/2009 and ITA No.
228/Hyd/2010, wherein held that as agriculture in this
country is an unorganised sector and sale of agricultural
produce is also not properly organized, one cannot blame
the assessee for not maintaining the books of account for
the purpose of cultivation and therefore non maintenance
of books of account cannot be a ground to reject the claim
of the assessee. It was submitted that non-production of
tax payment receipts cannot be the basis for denial of the
claim, in view of the fact that the revenue authorities
never raised any tax demand and as such the question of
payment of tax does not arise.
15. The AR relied on the judgement of Hon'ble High Court
of Bombay, in the case of CIT vs. Debbile Alemao (Smt.)
(2010) 46 DTR 341 (Born.), that agricultural land which
was never sought to be used for non agricultural purpose
by the assessee till it was sold has to be treated as
agricultural land, even though no agricultural income was
shown by the assessee from this land, and therefore, no
capital gain was taxable on the sale of the said land.
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16. The AR submitted that the land had never been used
by the assessee for non-agricultural purpose any time
before the date of sale. It was pointed out that nothing
has been brought on record by the AO that it was used for
non-agricultural purpose and the Assessee did not seek
any permission from the relevant authorities to put it to
non-agricultural use. The Assessee submitted that as per
the Andhra Pradesh Agricultural Land (Conversion for
Non-Agricultural Purposes) Act, 2006, conversion of
agricultural lands for any other purpose is prohibited
except with specific permission by the authority under
that Act. It was further submitted that the Hon'ble High
Court of Karnataka, in the case of CIT v. Smt. K.
Leelavathy 341 ITR 287, approved the order of the ITAT
wherein it was held that the land sold by the Assessee
retained its agricultural character till the date of the order
permitting non-agricultural use and could be treated as a
capital asset only thereafter. It was pointed out that the
impugned land was sold on acreage basis and had it been
converted into plots, as alleged by the AO, the registering
authorities would not have permitted the transfer of land
on acreage basis.
17. The AR submitted with regard to the decision in the
case of Sarifabibi Mohmed Ibrahim v. CIT 204 ITR 631,
relied on by the AO, the Hon'ble Supreme Court approved
as many as 13 tests laid down by the High Court in CIT v.
Siddharth J. Desai 139 ITR 628 (Guj) for ascertaining the
character of land at the time of sale. At the same time, the
Supreme Court held that whether a land is an
agricultural land or not is essentially a question of fact,
which has to be answered in each case having regard to
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the facts and circumstances of that case. It was further
observed that there may be factors both for and against a
particular point of view and the court has to answer the
question on a consideration of all of them by a process of
evaluation and inference has to be drawn on a cumulative
consideration of all the relevant facts, The Supreme Court
has further stated that not all these factors or tests 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 the circumstances.
Accordingly, on a cumulative consideration of all the facts
as existing in that case, the land in question was held to
be non-agricultural.
18. The AR further submitted that the Hon'ble High
Court of Bombay, after elaborately discussing the decision
in the cases of Sarifabibi Mohmed Ibrahim cited above,
held the land in question to be agricultural land in a later
case i.e., CIT v. Minguel Chandra Pais 282 ITR 618 (Born),
wherein the land under reference was adjacent to 4 five
star hotels and the person to whom the land was sold,
was said to be a sister concern of one of those hotels.
While coming to the conclusion, the High Court made a
cumulative consideration of the facts vis-a-vis the tests
laid down and the facts which weighed in favour of the
assessee were asunder:
(i) the subject land was situated in a village and at
a distance of about 15 km from the municipal
limits.
(ii) All documents produced by the Appellants
showed that the said land was agricultural.
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(iii) The Appellants had neither converted nor made
any plans nor taken any steps towards the
conversion of the said land into non-agriculture.
(iv) The subject land had continued to be put to
agricultural use and that it was
always used for agricultural purpose.
The Hon'ble High Court observed that as the
appellants had satisfied most of the tests which were
laid down by the Hon'ble Supreme Court in the case of
Sarifabibi, the lands in question were agricultural in
nature.
(i) The AR further submitted that inflation or
escalation in price of the agricultural land would
not change the basic character of the land. This
view was also upheld by the Hon'ble High Court
of Bombay, in the case of CIT v: Minguel
Chandra Pais 282 ITR 618 (Born), wherein it was
held that the price paid is not decisive to say
whether the land is agricultural or not. Further,
it was held in the case of CIT v. Smt. Debbie
Alemao 331 ITR 59 (supra), that the use to
which the purchaser would put could not be a
factor for the inference that the land is not
agricultural in the hands of the Assessee at the
time of transfer. Reliance is also placed on the
decision of the Hon'ble High Court of Madras in
the case of M.S. Srinivasa Naicker Vs ITO
(supra).
19. The CIT(A) after considering the submissions of the
assessee agreed that the land in question does not
constitute capital asset as defined u/s. 2(14) of the IT Act,
1961.
20. Regarding the report called for from the MRO,
Ghatkesar Mandal on 28.1.2013 and received in
February, 2013 reporting the status of the land falling in
various Sy. Nos. "as covered into plot" and covered with
weaker section colony and plots etc., the CIT(A) was of the
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opinion that the report cannot be given credence since the
factual position reported pertains to the year 2013 and
not before 5 years i.e., 2006 which is the year in which
the assessee sold the land. The CIT(A) observed that the
Assessing Officer did not given any opportunity to the
assessee to rebut the contents of the report and cross
examine the authorities who has received the report. The
CIT(A) further agreed that the ratio laid down in the case
of CIT vs. Sashiben (280 ITR 319) (Guj) wherein it has
been held that the fact of non-agricultural user by the
buyer will not alter the character of land in the case of
seller. The CIT(A) held that the assessee satisfied the
various steps laid down in the case of Sarifabibi Mohd.
Ibrahim & Ors (204 ITR 631) for considering the land was
agricultural land and, therefore, directed the Assessing
Officer to delete the addition of Rs. 2,22,70,229 under the
head long term capital gains and accepted the income
returned by the assessee.
21. With respect to the ground No. 4 of the assessee
against the determination of the sale consideration of Rs.
2,29,75,000 as against Rs. 77,50,000 claimed by the
assessee he did not go into the merits of the sale
consideration of Rs. 2,29,75,000 determined by the
Assessing Officer as against sale consideration of Rs.
77,50,000 as claimed by the assessee and held the same
to be redundant. Aggrieved, the Revenue is in appeal
before us and raised the following grounds:
(1) The order of the learned CIT(A) is
erroneous both in law and on facts of the
case;
(2) The Learned CIT(A) ought to have
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appreciated the action taken by the
Assessing
Officer treating that the lands sold by the
assessee are not agricultural lands;
(3) The learned CIT(A) ought to have
considered that the assessee failed to
declare agricultural income either in the
Asst. Year under consideration or in
earlier years and should have treated that
the lands sold by the assessee are non-
agricultural lands;
(4) The learned CIT(A) ought to have
considered that the assessee failed to
produce any material evidence to prove
that there is agricultural activity (Basic
and subsequent operations) in the lands
under consideration and should have
treated that the lands as non-agricultural
lands;
(5) The learned CIT(A) ought to have
considered that the assessee failed to
furnish any proof that she has paid Land
Revenue and accordingly treated that the
lands as non-agricultural;
(6) The learned CIT(A) ought to have
appreciated that the lands sold by others
adjacent to the lands in question declared
the income on sale of the said lands and
paid the taxes for the A.Y. 2007-08.
Accordingly the learned CIT(A) should have
treated the lands in question are also
taxable under the head Long Term Capital
gains as admitted by other sellers in the
same project;
(7) The learned CIT(A) ought to have
considered that the assessee failed to fulfil
all the 13 characters (Except Character
No. 12) as approved by the supreme Court
in the case of Sarifabibi Mohamed Ibrahim
Vs. CIT 204 ITR 631 for ascertaining the
status of the land at the time of sale and
should have treated the land in question
as non-agricultural land;
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22. The learned DR relied on the order of the Assessing
Officer and submitted that the AO mainly treated the
lands as non-agricultural in nature for the following
reasons:
(i) The Assessee did not produce pattadar pass
book, bills in respect of sale of agricultural
proceeds and receipts of taxes paid.
(ii) As per the information gathered from MRO,
Ghatkesar, the lands were converted into plots.
(iii) In the case of Sarifabibi Mohd Ibrahim & Others
204 ITR 631, the Hon'ble Supreme Court held
that the land sold for non-agricultural purpose is
assessable to Capital Gains.
23. The learned counsel for the assessee Sri A.V.
Raghu Ram reiterated the submissions as made before
the CIT(A). He produced the registered sale deed
pertaining to the purchase and sale of agricultural land
by way of Paper Book. He further pointed out to page 23
of the Paper Book wherein it has been stated by order of
the MRO, Ghatkesar Mandal as follows:
"Verified the Form-1 of RO, wherein except the
Sy. Nos. 351 to 354, all the survey numbers
are recorded as plots."
The MRO in his report has reported that the petitioners
are in possession of the land and were doing agriculture
operations.
24. The learned counsel for the assessee relied on the
ITAT Cochin Bench in the case of M.K. Abdul Rehiman vs.
DCIT (16 Taxman 406).
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25. We have heard both the parties. We shall draw our
opinion based on the following points:
(a) The agricultural land in question is located in
Aushapur village and is situated in an area
outside any notified municipal and cantonment
board both having population of less than 10000
and also beyond distance notified by the Central
Government from the limits of any such
municipality or cantonment board. Thus the
land in question does not constitute capital asset
as stipulated u/s. 2(14) of the IT Act, 1961.
(b) The land originally belongs to M. Yadaiah and
Mrs. Balalaxmamma who were declared as
Pattadar as per the court decree. The said
persons seems to have taken possession of the
land and have carried out agriculture operations,
according to the order of the MRO, Ghatkesar
Mandal which was passed to give effect to the
court decree. From this, the land in question
seems to be agricultural land.
(c) The report of the MRO obtained by the AO is
based on the enquiry conducted in 2013 and not
in the year 2006 as observed by the CIT(A).
(d) The land happens to be rain fed and the
argument of the assessee that there might not be
much surplus from agricultural activity and,
therefore, non disclosure of market income can
be excused.
(e) The production of Pattadar passbook as insisted
by the Assessing Officer does not serve much
purpose since the passbook proves the
ownership of land and does not throw much
light on agricultural operations.
(f) The crops having been grown not being
considerable, sale of agriculture produce has
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been accounted as the same might have sold to
the local buyers.
(g) That the land was sold in acreage and not in
square yards also shows that the registering
authority was aware that the same was
agriculture land.
(h) The assessee has not obtained any permission
from the appropriate authorities for non-
agriculture use of land or for development into
plots i.e., the assessee has not put the land into
alternate use other than agriculture.
(i) Both purchase and sale deeds when perused say
that the land is specified as agriculture in the
schedule.
26. We are of the opinion that the lands sold by the
assessee are agricultural lands and the assessee satisfied
most of the tests which are laid down by the Hon'ble
Supreme Court in the case of Sarifabibi Md. Ibrahim &
Others (supra).
27. The following picture emerges when the facts of the
assessee's case are tested on the touchstone of the guidelines,
approved by the Apex Court in the case of Sarifabibi Mohmed
Ibrahim:
(i) The impugned land was situated in a village
comprised in the area within the jurisdiction of a
Gram Panchayat and as such it was situated in
an area outside any municipality or cantonment
board, having a population of not less than ten
thousand, and also beyond the distance notified
by the Central Government from the limits of
any such municipality or cantonment board.
(ii) As can be seen from the proceedings of the MRO
dt. 08.10.1997, the land in question was
actually agricultural in nature.
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CO No. 22/Hyd./2014
Smt. M. Uma Ravinder Reddy
=======================
(iii) The land was actually used for agricultural
purposes throughout the period of holding till
the date of sale and the AO has not brought any
concrete evidence on record to suggest that it
was not put to agricultural use at the relevant
point of time.
(iv) With regard to the observation of the A.O. that
the land was sold for non-agricultural use, the
assessee submitted that the Hon'ble High Court
of Delhi observed, in the case of Hindustan
Industrial Resources Ltd. v. Asst. CIT 335 ITR
77, held that whether the Assessee intended to
use the land for industrial purpose or that the
Assessee had not carried out any agricultural
operation did not in any way alter the nature
and character of the agricultural land. The
intention of the land acquiring authority was a
wholly irrelevant consideration for determining
the character of land at the time of sale. It was
observed that where the nature of the land both
at the time of purchase and sale/compulsory
acquisition was agricultural, it cannot be held
that its character had undergone any change
during the transitional period i.e., between the
date of purchase and the date of sale/
compulsory acquisition and as such the said
land retained the character of agricultural land
at the time of sale. For coming to the conclusion,
it relied upon the decisions of the Delhi High
Court in D. L. F. Housing and Construction (P.)
Ltd. v. CIT 141 ITR 806 (Delhi), D. L. F. United
Limited v. CIT 161 ITR 714 (Delhi) and D. L. F.
United Limited v. CIT 217 ITR 333 (Delhi).
28. Further a plethora of decisions support our view
some of them are as under:
(j) On almost identical facts, the land was held to
be. agricultural in the following cases:
(a) Surjeet Kaur Vs CIT 74 TTJ 722 (Hyd)
(b) Harish V. Milani Vs ]CIT 111 TTJ 310 (Pune)
19
ITA No. 265/Hyd/2014 &
CO No. 22/Hyd./2014
Smt. M. Uma Ravinder Reddy
=======================
(c) M.S.Srinivasa Naicker Vs ITO 292 ITR 481
(Mad)
(d) Tulla Veerender and Vijayender (Hyd ITAT)
vide order dt. 04.07.2013 in ITA Nos. 550
and 551/2012.
(e) Further, it was held by the Hon'ble High
Court of Gujarat, in the case of CIT v.
Shashiben 288 ITR 319 (Guj), that the fact
of non-agricultural user by the buyer will
not alter the character of land in the case
of the seller. The relevant portion of the
decision is extracted hereunder:
"If somebody, thinking that the said land
can be put to some other purpose,
purchases the land for a higher price and
thereafter, changes the use, for the first
holder, the property would not change its
character so long as he himself does not
change the use or put the land to some
other use after getting the conversion of
use from the competent authority/officer."
29. However, we would like to point out that the CIT(A)
has observed that the Assessing Officer had not given
opportunity to the assessee to rebut the contents of the
report called for from the MRO, Ghatkesar Mandal on
28.1.2013. Further, no opportunity of cross examination
of the authorities who had issued the report was given to
the assessee. The CIT(A) was constrained in giving a
direction to the Assessing Officer inasmuch as many
years have lapsed from the time the transaction taken
place which was in the year 2006-07 and also the case
was heard by the CIT(A) which was on 4.10.2013. Hence
giving the benefit of doubt to the assessee, we are of the
opinion that the MRO, Ghatkesar had given a report
evidencing the correct status of the land at page 33 of the
Paper Book wherein he has mentioned that agriculture
20
ITA No. 265/Hyd/2014 &
CO No. 22/Hyd./2014
Smt. M. Uma Ravinder Reddy
=======================
operations were being carried on the said land. Based on
the above points, from which we gather that the lands
sold by the assessee are agricultural lands, and the CIT(A)
has rightly allowed the assessee's appeal on this issue.
Accordingly, we confirm the order of the CIT(A) and
dismiss the grounds taken by the Revenue.
30. In the result, appeal of the Department is
dismissed.
C.O. No. 22/Hyd/2014
31. In the Cross Objection by the assessee the assessee
raised the ground that the CIT(A) erred by not
adjudicating on the ground relating to the actual sale
consideration of the land sold by the assessee and the
CIT(A) ought to have decided the issue based on merits of
the case.
32. With regard to this ground the CIT(A) held that the
lands sold by the assessee are agricultural lands and
covered by s. 2(14)(iii)(a)(b) of the Act and not as a capital
asset and exempt from capital gains and directed the AO
to delete the addition of Rs. 2,22,70,229 made under the
head 'long term capital gains', the question of going into
the merits of sale consideration of Rs. 2,29,75,000 as
opined by the AO, as against the sale consideration of Rs.
77,50,000 as claimed by the assessee, does not arise.
33. As we have decided the appeal of the Revenue
against the Department and confirmed the order of the
CIT(A), this ground needs no adjudication and becomes
21
ITA No. 265/Hyd/2014 &
CO No. 22/Hyd./2014
Smt. M. Uma Ravinder Reddy
=======================
infructuous. Accordingly, this ground is dismissed as
infructuous.
Pronounced in the open court on 31st July, 2014
Sd/- Sd/-
(B. RAMAKOTAIAH) (ASHA VIJAYARAGHAVAN)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Hyderabad, dated the 31st July, 2014
tprao
Copy to:
1. The Income Tax Officer, Ward-4(1), 5th Floor,
Aayakar Bhavan, Basheerbagh, Hyderabad.
2. Smt. M. Uma Ravinder Reddy, # 1-1-648/3/B&C,
Plot No. 505, Tapani Ratna Towers, Gandhinagar,
Hyderabad.
3. The CIT(A)-V, Hyderabad.
4. The CIT-IV, Hyderabad.
5. The DR, A-Bench, ITAT, Hyderabad.
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