Sri. K. Mohammed Althaf, Mangalore vs Department Of Income Tax

Asst. Commissioner of Income-tax, Circle 1(1), Mangalore. ... Appellant

Vs.

Shri K.Mohammed Althaf, Partner: Mukka Sea Foods Industries, Trinity Complex, Attavar, Mangalore. ... Respondent

Appellant by: None. Respondent by: Dr.P.K.Srihari, Addl. CIT(DR)

Date of hearing : 20/05/2015 Date of pronouncement: 02/06/2015

Per Smt.P.MADHAVI DEVI, JM:

This appeal by the revenue is directed against the order

of the CIT(A), Mysore, dated 14/11/2014 for the assessment

year 2010-11. The grounds raised by the revenue are as under:

1) The order of the ld.CIT(A) is opposed to law and facts of the case.

2) The ld.CIT(A) failed to appreciate the fact that the agricultural land does not fall within the ambit of a capital asset defined u/s 2(14) and therefore, the provisions of section 2(47)(v) and section 53A of the Transfer of Property Act cannot be brought to bear ITA No.43/Bang/2015 Shri K.Mohammed Althaf

Page 2 of 5 on the sale of an agricultural land.

3) For these and such other grounds that may be urged at the time of hearing, the orders of ld.CIT(A) may be set aside and that of assessing officer may be restored.

2. Brief facts of the case are that the assessee, an

individual, filed his return of income on 31/1/2011 for the

relevant assessment year declaring total income of

Rs.19,08,370/-. During the assessment proceedings u/s 143(3)

of the Income-tax Act, 1961 [hereinafter referred to as 'the Act'

for short], various details were called for and the assessee

furnished the same. The Assessing Officer (AO) had information

that during the financial year 2009-10 relevant to assessment

year 2010-11, the assessee had sold a property. On verification

of the return of income, the AO noticed that the assessee had

not disclosed any income under the head 'capital gains'.

Therefore, information was called for from the Sub Registrar,

Moodabirdri vide office letter dated 12/10/2012 in response to

which the Sub Registrar vide letter dated 26/10/2012 furnished

the copy of the Sale Deed. On verification of the same, the AO

noticed that the assessee had, along with Shri K.Abdul Razak,

sold a non-agricultural property for a total consideration of

Rs.13,08,000/- vide Sale Deed executed on 21/01/2010 at

Moodabidri. In this connection, the assessee was required to

furnish the explanation as to why no capital gains was reflected

in his return of income. Vide reply dated 11/12/2012, assessee ITA No.43/Bang/2015 Shri K.Mohammed Althaf

Page 3 of 5 submitted that he, along with his father, have sold agricultural

property jointly owned by them in Kilenjur village in Moodabidri

which was purchased by them vide Sale Deed dated 15/3/2007.

Copy of the purchase deed was also enclosed with the reply. It

was submitted that the entire property of 10.66 acres was

transferred by them to the purchaser as per Agreement dated

05/11/2009 and the total sale consideration for sale was

Rs.50,08,000/- of which Rs.20 lakhs was paid by the purchaser

on the same day i.e. 05/11/2009 and the purchaser had taken

full possession of the property and registered 8.28 acres of the

agricultural property vide sale deed dated 19/11/2009.

Subsequently, the purchaser, on his own accord and as per

terms of the agreement converted 1.88 acres of agricultural

land for non-agricultural purpose on 07/01/2010 which was

registered on 21/01/2010. Therefore, according to the

assessee, property sold by them was agricultural property and

therefore no taxable capital gain has arisen there-from. The AO

was, however not convinced with the arguments of the assessee

and held that the assessee has converted agricultural land to

non-agricultural use before sale and therefore it ceases to

agricultural land and is liable to pay tax on capital gains.

3. Aggrieved, assessee preferred an appeal before the

CIT(A) who, after considering the issue at length, has observed

that the agreement of sale entered into by the assessee was for ITA No.43/Bang/2015 Shri K.Mohammed Althaf

Page 4 of 5 sale of agricultural property and substantial sale consideration

was received on the same date. Possession was also handed

over of the entire land as per the agreement. He further

observed that the agreement dated 15/11/2009 cannot be

doubted because the payment was received through cheque and

therefore there was transfer of property by virtue of sec.53A of

the Act and hence there was no capital gain liable in his hands.

4. Aggrieved by the relief given by the CIT(A), Revenue

is in appeal before us.

5. The learned Departmental Representative supported

the order of the AO. None appeared for the assessee in spite of

service of notice on the assessee. Therefore, after hearing the

learned Departmental Representative ex-parte qua the

assessee, we proceed to dispose of the appeal as under on the

basis of the material on record:

There is no doubt that the assessee, along with his father,

had entered into an agreement of sale dated 05/11/2009 and

the property on such date was agricultural land. It is also not

disputed that substantial portion of the sale consideration was

paid on the same date and possession of the entire property

was handed over. It is also not in dispute that 8.28 acres of

land was registered as agricultural property vide sale deed

dated 19/11/2009 and 1.88 acres of land was converted for

non-agricultural purposes on 07/01/2010 which was registered ITA No.43/Bang/2015 Shri K.Mohammed Althaf

Page 5 of 5 on 21/01/2010. Therefore, the agreement of sale is for

agricultural land and conversion of agricultural to non-

agricultural land of a portion of the above land is at the behest

of the purchaser. Therefore, in the hands of the assessee, it

was agricultural property and sale had been completed by virtue

of receipt of substantial sale consideration as well as handing

over of possession. The learned Departmental Representative

has not been able to rebut the above finding of the CIT(A) with

any evidence to the contrary. Therefore, we see no reason to

interfere with the order of the CIT(A).

6. In the result, the revenue's appeal is dismissed.

Pronounced in the open court on the 2nd June, 2015.

sd/- sd/- (Jason P Boaz) (Smt. P.Madhavi Devi) ACCOUNTANT MEMBER JUDICIAL MEMBER eksrinivasulu

Copy to:

1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR, ITAT, Bangalore. 6. Guard file

By order

Assistant Registrar Income-tax Appellate Tribunal Bangalore