×Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India
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10-01-2019, Jagdish Nandkishor Khandelwal, Tribunal Pune
These separate appeals preferred by assessees emanates from the different orders of the Ld. CIT(Appeals), Pune-6 for assessment year 2010-11 dated 21.04.2015 as per grounds of appeal on record.
2. These cases were heard together and since issues common, facts similar, they are disposed of vide this consolidated order. For the sake of convenience, we would take ITA No 1005/PUN/2015 as lead case. We find that though the assessee in both the appeals have taken multiple grounds, the crux of the grievance in both the appeals is whether the gain arising on the sale of land is to be taxed as ‘business income’ in the hands of the assessee.
3. The facts in ITA No.1005/PUN/2015 are that the assessee deals in sale and purchase of land and is a partner in M/s. Shrihari Builders and Developers derives income from other sources as well as claims income from agricultural activities. Return of income for assessment year 2010-11 was filed on 25.09.2010 at the total income of Rs.7,47,270/- apart from agricultural income of Rs.79,600/-. Subsequently, the case was selected for scrutiny and assessment order u/s.143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) was completed on 08.03.2013 at the total income of Rs.2,25,02,890/- in which addition of Rs.2,17,55,620/- was made in respect of profit on sale of land claimed to be agricultural and therefore, exempt by the assessee.
4. The case of the assessee before the Revenue Authorities is that the land in question continues to be agricultural land and situated beyond 8 Kms. of the municipal limits of Lonavala Municipal Corporation. With regard to the condition that the land to be an agricultural one, argument on record by assessee is that the said land is subject to the Land Revenue by the State Government. Crops are grown on the land as can be seen from the 7/12 extract filed by assessee. In the return of income also, the assessee has shown substantial agricultural income in the relevant assessment year 2010- 11. The agricultural income shown by assessee is at Rs.79,600/-. Regarding the contention that the said land is agricultural in nature, the assessee placed reliance on the decision of Hon'ble Gujarat High Court in the case of CIT Vs. Siddharth J. Desai (1982) 10 Taxman 1 which plays guiding factors to be considered while determining the nature and character of the land. Another case relied on the issue is the ratio laid down by the Hon'ble Madras High Court in the case of Mrs. Shakunthala Vedachalam Vs.
ACIT, 369 ITR 558 (Mad.).
The second contention of the assessee is that land situated beyond 8 Kms. from local limits of Lonavala Municipal Corporation. In support of this contention, the assessee has placed reliance on the decision of the Hon'ble Bombay High Court in the case of CIT Vs. Minguel Chandra Pais & ANR, reported as 282 ITR 618.
5. The Ld. CIT(Appeal) on this issue analyzed the facts and circumstances which has given rise to this particular dispute. It is on record that the Assessing Officer during the course of assessment proceedings noticed that the assessee who is partner in the Firm M/s.Shrihari Builders and Developers, had shown profits from his proprietary business which was dealing in purchase & sale of land apart from income from other sources had shown capital gain of Rs.2,17,55,620/- as exempt on account of the same being agricultural land and shown as investment in the books of accounts.
The Assessing Officer further noticed that the assessee was having 1/3rd share in the property and Capital gain was calculated by adopting 1/3rd part of sale consideration and cost of acquisition. Since the same was claimed as exempt being agricultural land, the Assessing Officer confronted the assessee on the issue and asked the assessee to provide various details like copies of purchase/sale deed. Copies of 7/12 extract as well as certificate from Talathi etc. The Assessing Officer, thereby, examined the issue in detail and after applying aerial distance, held that the plot was 7.4 km. from the limits of Lonavala Municipal Corporation as against the claim of the assessee being 13 Kms by road distance. The Ld. CIT(Appeal) in his order has not accepted the view of the Assessing Officer as it has been held by the various Tribunals that aerial distance cannot be adopted for measurement of distance. The amendment in the Act regarding aerial distance to be adopted is applicable from A.Y.2014-15 vide Finance Act 2013 and therefore, the same cannot be applied in the present assessment year i.e. A.Y.2010-11. To this aspect, Ld. CIT(Appeal) has agreed with the contention of the assessee that it is road distance to be calculated while determining the limits from Municipal Limits and not aerial distance. However, main issue remains whether land can be termed as ‘investment’ as shown in the books of account of the assessee and