P.R.Ramasamy, Chennai vs Department Of Income Tax

IN THE INCOME TAX APPELLATE TRIBUNAL "C" BENCH, CHENNAI ी ए. मोहन अलंकामणी, लेखा सद य एवं ी वी. दग ु ा# राव, या$यक सद य केसम%

BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER

आयकर अपील सं./ITA No.1271/Mds/2013 $नधा#रण वष# /Assessment Year : 2008-09

The Deputy Commissioner of Shri P.R. Ramasamy, Income Tax, v. No.18, L.G.N. Street, Business Circle VII, Mount Road, Chennai - 600 002. Chennai - 600 034. PAN : AABPR 3090 C (अपीलाथ*/Appellant) (+,यथ*/Respondent)

अपीलाथ* क- ओर से/Appellant by : Shri A.V. Sreekanth, JCIT +,यथ* क- ओर से/Respondent by : Shri Philip George. Advocate

सन ु वाई क- तार ख/Date of Hearing : 12.01.2015 घोषणा क- तार ख/Date of Pronouncement: 25.02.2015

आदे श /O R D E R

PER V. DURGA RAO, JUDICIAL MEMBER:

This appeal filed by the Revenue is directed against the

order of the Commissioner of Income Tax (Appeals)-IX, Chennai,

dated 19.02.2013 relevant to the assessment year 2008-09. 2

2. Facts in brief are that the assessee is an individual involved

in the business of manufacture of fasteners. The assessee has filed

a return of income by admitting a total income of ` 5,37,30,760/-.

During the course of assessment proceedings, the A.O. has

observed that the assessee has sold a land (long term capital asset)

for a consideration of ` 1,08,00,000/- and claimed the above as

agricultural land which is situated at No.50, Kanathoor

Reddykuppam Village, Kancheepuram District. The A.O. has

sought explanation from the assessee by issuing show cause notice

on 27.12.2010. In reply, the assessee has submitted that he had

purchased the agricultural land vide sale deed dated 18.01.1990

measuring 1.015 acres comprised in Survey No.6/1 (Part) at No.35,

Kanathoor Reddikuppam Village, Chengalpattu Taluk,

Kancheepuram District. The said land is situated adjacent to

Buckingham Canal. In the said land, the assessee had cultivated

cucumber, watermelon and casuarina besides greens and

vegetables. Some of them were locally sold and some of them

were consumed by the assessee's family. He submitted that he did

not make any gain from the agricultural operations. The said land

was sold on 12.04.2007, which was relevant to assessment year

2008-09 for a total consideration of ` 1,08,00,000/- in acreage as

agricultural land, which is apparent from the sale deed. The land is 3

situated beyond 8 Kilometers from local Municipal limits. He further

submitted that any gain arising out of sale of the agricultural land,

which will not fall within the meaning of capital asset under Section

2(14)(iii) of the Income-tax Act, 1961, was not liable to capital gains

tax. The A.O., after considering the explanation of the assessee,

came to a conclusion as under:-

"3. The assessee has purchased the land during the financial year 1999-2000. From the date of purchase the assessee has not carried out any agricultural activities. I have visited the land at Kanathoor reddykuppam village, Kancheepuram district with the help of village administrative officer Shri Mahendra Babu, I have not find out any traces of agricultural activities carried out in kanathoor reddykuppam village land. I have found out bushes in the kanathoor reddykuppam village land. There is massive construction activities is going on in and around the above said land. Two multistoried apartments has been constructed near to kanathoor reddykuppam village land. The calling for information u/s 133(6) has been sent to the Tashildar, Chingalpet taluk . The Tashildar has certified that there was no agricultural activities has not been carried out before and after the silling of land. The assessee also asked furnished the return of income filed for the assessment years 2004-05, 05-06, 06-07 and 2007-08 in which the assessee has not offered any agricultural income. If the assessee has carried out any agricultural activities, the agricultural income should be offered in the return of income filed. In the revenue land records also there is no evidence for the agricultural activities carried out. If the assessee has carried out any agricultural activities, the usage of land should be entered in the revenue land records. As per the revenue land records, the land has not been used for the agricultural activities from the date of purchase to till date. The assessee has divided the land into three plots and sold to the three parties. The three persons who are buying the land is going to construct the farm house. Therefore the kanathoor reddykuppam village land has not be used for the purpose of agriculture before and after the selling of the land. The assessee could not produce even single evidence that the kanathoor reddykuppam village land has been used for the purpose of agricultural land. The kanathoor reddykuppam village land is not used for the agricultural purpose in the past and present time also. The assessee's claim of agricultural land is not correct for the following reasons. 4

i. The land is not used for the purpose of agricultural activities.

ii. In the revenue land records the certificate received from the Tashildar office chengalpet stated that as per the revenue land records the above said land never has been used for the agricultural activities.

iii. The assessee has not offered any agricultural income in the return of income filed.

iv. The assessee does not have any borewell. Since the irrigation facilities are not available, there is no chance to agricultural activities has been carried out. v. The people who are residing near to the land said that the land is never used for the purpose of agricultural activities. vi. Massive construction activities is going on near to the kannathur reddykuppam village land. Therefore the above said land is located in the residential area. vii. The assessee has divided land into three plots and sold to three parties (real estate).

viii. It is very near to maayajal multiplex theatre (commercial area).

ix. The assessee has submitted that he had cultivated cucumber, watermelon and casurina. At the same time the revenue land records shows that there was no agricultural activities has been carried out.

Therefore the kanathoor reddykuppam village land is considered as capital asset and capital gains calculated on sale proceeds of the kanathoor reddykuppam village land."

3. On being aggrieved, the assessee carried the matter in

appeal before the Ld. CIT(Appeals). The Ld. CIT(Appeals) has

given a finding that as per the sale deed, the land is classified as

agricultural land. The assessee has produced basic evidences that

the land is agricultural land by furnishing copies of adangal. When

there is an evidence produced by the assessee that the land is an

agricultural one, the burden is on the A.O. to prove that the land is a

non-agricultural one. In the absence of any finding contrary to the

evidence submitted by the assessee, the A.O. is not justified in 5

treating the land as non-agricultural land. The Ld. CIT(Appeals) has

further given a finding that as per the adangal, the assessee has

made casuarina cultivation. Accordingly, he held that the land is an

agricultural land and hence not to be considered as capital asset

under Section 2(14) of the Act. He thus allowed the assessee's

appeal.

4. On being aggrieved, Revenue carried the matter in appeal

before the Tribunal. The Ld. D.R. has submitted that the assessee

has not carried any agricultural operations. Therefore the gain

arising out of the sale of capital asset is taxable as capital gains.

He further submitted that the assessee has not produced any

revenue records before the A.O. Therefore, according to the Ld.

D.R., the finding given by the Ld. CIT(Appeals) based on adangal

has to be verified.

5. On the other hand, the Ld.counsel for the assessee

submitted that the assessee had purchased the land as agricultural

land and sold the same without converting as non-agricultural in

nature. Therefore the land is to be treated as agricultural land and it

is exempt from the capital gains tax. He relied on the decision of

the Hon'ble jurisdictional High Court in the case of Mrs. Sakunthala

Vedachalam v. ACIT in TC(A) No.566/2013 dated 06.08.2014. 6

6. We have heard both sides and perused the records and

gone through the orders of the authorities below. The Assessing

Officer, after considering the submissions of the assessee, has

come to a conclusion that the land which is in dispute not at all used

for agricultural activities. The A.O. gave a specific finding that the

certificate issued by Tehsildar, Chingalpet Taluk, stated that as per

the revenue land records, the above said land never was used for

agricultural activities. However, the Ld. CIT(Appeals) has given a

finding that as per the adangal issued by the Tehsildra, the

assessee carried the casuarina cultivation. The findings of the A.O.

and Ld. CIT(Appeals) contradict each other. Under these facts and

circumstances of the case, we are of the opinion that to decide the

issue whether it is agricultural land or capital asset, it is necessary

to examine all the details. Therefore we set aside the order passed

by the Ld. CIT(Appeals) and remit the matter back to A.O. to decide

the issue afresh keeping in view the judgment of the Hon'ble

jurisdictional High Court in the case of Mrs. Sakunthala Vedachalam

v. ACIT (supra) and also the judgment of Hon'ble Supreme Court in

the case of CWT v. Office-In-Charge (Court of Wards), Paigah (105

ITR 133) (SC) after giving reasonable opportunity of being heard to

the assessee.

7

7. In the result, the appeal filed by the Revenue is allowed for

statistical purposes.

Order pronounced on Wednesday, the 25th of February,

2015 at Chennai.

Sd/- sd/- (ए. मोहन अलंकामणी) (वी. दग ु ा# राव) (A. Mohan Alankamony) (V. Durga Rao) लेखा सद य/Accountant Member या$यक सद य/Judicial Member

चे नई/Chennai, th =दनांक/Dated, the 25 February, 2015.

Kri.

आदे श क- +$त?ल@प अAे@षत/Copy to: 1. अपीलाथ*/Appellant 2. +,यथ*/Respondent

3. आयकर आयुBत (अपील)/CIT(A)-IX, Chennai-34

4. आयकर आयुBत/CIT-VII, Chennai-34

5. @वभागीय +$त$न ध/DR

6. गाड# फाईल/GF.