Case Law Details

Case Name : Sunil Bansal Vs ACIT (Rajasthan High Court)
Appeal Number : D.B. ITA No. 31/2019
Date of Judgement/Order : 29/05/2019
Related Assessment Year : 2008-09
Courts : All High Courts (6131) Rajasthan High Court (149)

Sunil Bansal Vs ACIT (Rajasthan High Court)

There is no dispute that there are 16 transactions of purchase of the lands during the financial year relevant to the assessment year under consideration and equal number of transactions of sale by the assessee. On careful analysis of these details, it could be noted that some of the lands purchased during the year were also sold during the same year and even within a period of less than one month. It is evident from these details that the land purchased during the year bearing khasra No. 424/5 on 31/5/2007 was sold on 30/6/2007. Therefore, the said sale was within a period of 13 days from the date of purchase. Similarly some of the other transactions of land bearing khasara No. 42 and 65 were also sold within a period of four months from the date of purchase. Thus, it is discernable from the number of transactions carried out by the assessee one after another during the year under consideration and the period of holding is less than month and in some cases within few months which cannot be on the face of it regarded as investments made by the assessee in agricultural lands. The intention of the assessee for purchase of the land is also not in dispute that it was for resale and within a short period of time though the sale is only to the companies of which the assessee is a Director. Thus, it is apparent that the assessee was acting as an interface to purchase the lands from the land owners and then converted in non- agricultural use and sold to these companies who are in the business of real estate. Hence, properties sold were not excluded from the meaning of capital asset, as they were not agricultural land as defined by section 2(14).

FULL TEXT OF THE HIGH COURT ORDER / JUDGEMENT

1. This is an assessee’s appeal under Section 260A of the Income Tax Act, 1961 contends that the Income Tax Appellate Tribunal (ITAT) has fallen into error; in its impugned order. It proposes a question of law i.e. whether the properties sold were to be excluded from the meaning of capital asset as they were agricultural land as defined by Section 2(14) of the Act of 1961.

2. The relevant facts are that the assessee reported, (for the assessment year 2008-2009) certain sale transactions. His return claimed that the transaction in purchase and sale of agricultural land could not be included in taxable income in view of Section 2(14)(iii) of the Act of 1961; in support of his contention the assessee relied upon a certificate issued by the concerned (2 of 6) [ITA-31/2019] Revenue Officer i.e. the Tehsildar to the effect that the land was situated 8 kilometers from any city municipality limits. The AO however, rejected the contention after considering the nature of the transactions. The asessee had contended that the lands initially purchased by him were infact registered and were intended to be maintained by him in their original character as agriculture lands and were in that form transferred to others who later got them converted into purposes other than agriculture, for example toward development etc. It was thus contended that the essential characteristic of the land was agricultural and thus, excluded from the ambit of the Act by virtue of Section 2(14). These contentions however, were negatived by the AO.

3. Aggrieved, the assessee’s appealed successfully to the CIT(A) who accepted his contention and held that having regard to the circumstances, the primary intention was to retain the character of the property as agriculture land. The revenue’s appeal was allowed by ITAT.

4. It is contended on behalf of the assessee that the ITAT fell into error in interfering with the order of the Appellate Commissioner. Learned Counsel emphasised the fact that the assessee primarily derived income from the house properties and other sources and was not engaged in business in any manner whatsoever. The purchases of the agriculture land were made for investment purposes and not with intention to sell them.

5. Relinace was placed upon Raja Bahadur Kamakhya Narain Singh Vs. CIT- (1970) 77 ITR 253 (SC) and certain other judgments in support of the argument that the intention is to be reckoned from the nature of the transactions rather than any other factor. It was also urged that the primary interpretation of the statue should be a liberal one. Thus the ITAT fell nto error by setting aside the findings of the Appellate Commissioner.

6. The ITAT in its impugned order has not only considered the particular transaction, reported by the assessee but also analysed over a period of time, the nature of the sale and (3 of 6) [ITA-31/2019] purchase activities. The ITAT reasoning in this regard is as follows:-

“7. We have considered the rival submissions as well as relevant material on record. The first issue arises for our consideration and adjudication is whether the transaction of purchase and sale carried out by the assessee during the year under consideration are in the nature of trade and consequently the surplus/gain arising from sale of the lands is in the nature of business income or it is capital gain. The details of purchase and sale of the lands are given by the Assessing Officer in para 2 of the assessment order as under:

Sr.  Name of the seller Date of Registration of Purchase deed Amount Description of land purchased
1. Ramniwas, Rampal 17/05/2007 Rs. 21,50,200/- Khasra No. 424/5
2. Rambabu Kasana 04/06/2007 Rs. 6,04,900/- Khasra No. 424/5
3. Ramkaran 11/04/2007 Rs. 4,63,450/- Khasra No. 42/65
4. Shri Raj kishor Gothwal 28/05/2007 Rs. 90,75,000/- Khasra No. 825/1/6/7/8
5. Kirtiraj Handia 25/05/2007 Rs. 9,65,790/- Khasra No. 522/4
6. Rajkishore Gothwal 25/05/2007 Rs. 2,86,180/- Khasra No. 365
7. Dinanath/Sit aram Nagar 31/05/2007 Rs. 57,275/- Khasra No. 542
8. Dinanath/Sit

aram Nagar

31/05/2007 Rs. 1,93,455/- Khasra No. 553
9. Tej Singh 13/08/2007 Rs. 1,08,040/- Khasra No. 1504
10. Bhagwat 24/10/2007 Rs. 1,40,200/- Khasra No. 1505
11. Rajkishore Gothwal 28/05/2007 Rs. 32,30,025/- Khasra No. 825/1/6
12. Rajkishore Gothwal 28/05/2007 Rs. 32,30,025/- Khasra No. 825/1/7
13. Rajkishore Gothwal 28/05/2007 Rs. 32,30,030/- Khasra No. 825/1/8
14. Ramniwas/Rampal 31/05/2007 Rs. 21,50,200/- Khasra No. 424/5
15. Rambabu 04/06/2007 Rs. 6,04,900/- Khasra No. 424/5
16. Ladi & Chittar 09/06/2005 Rs. 10,04,990/- Khasra No. 825/1/3

Sr. Name of the purchaser Date of registration of sale deed Amount Description of land sold
1. M/s Grass Field Fire Capital Developers Pvt. Ltd. 13/06/2007 Rs. 70,50,000/- Khasra No. 424/5
2. M/s Grass Field Fire Capital Developers Pvt. Ltd. 13/06/2007 Rs. 24,46,362/- Khasra No. 47
3. M/s Grass Field Fire Capital Developers Pvt. Ltd. 13/06/2007 Rs. 11,04,808/- Khasra No. 52
4. M/s Grass Field Fire Capital Developers Pvt. Ltd. 13/07/2007 Rs. 18,18,832/- Khasra No. 520/-
5. M/s Grass Field Fire Capital Developers Pvt. Ltd. 13/07/2007 Rs. 6,21,477/- Khasra No. 501
6. M/s Grass Field Fire Capital Developers Pvt. Ltd. 13/07/2007 Rs.1168151/- Khasra No. 504
7. M/s Grass Field Fire Capital Developers Pvt. Ltd. 13/07/2007 Rs.973459 Khasra No. 446
8. M/s Grass Field Fire Capital Developers Pvt. Ltd. 13/07/2007 Rs.973459/- Khasra No. 446
9. M/s Grass Field Fire Capital Developers Pvt. Ltd. 13/07/2007 Rs.614816/- Khasra No. 448
10. M/s Grass Field Fire Capital Developers Pvt. Ltd. 13/07/2007 Rs.6,14,816/ Khasra No. 448
11. M/s Grass Field Fire Capital Developers Pvt. Ltd. 13/07/2007 Rs.6,66,250/ Khasra No. 73
12. M/s Grass Field Fire Capital Developers Pvt. Ltd. 13/07/2007 Rs.21,05,350/- Khasra No. 74
13. M/s Grass Field Fire Capital Developers Pvt. Ltd. 13/07/2007 Rs.1,33,250/- Khasra No. 75
14. M/s Grass Field Fire Capital Developers Pvt. Ltd. 17/08/2007 Rs.14,58,571/- Khasra No. 42
15. M/s Grass Field Fire Capital Developers Pvt. Ltd. 17/08/2007 Rs.11,51,504/- Khasra No. 65
16. M/s Grass Field Fire Capital Developers Pvt. Ltd. 30/05/2007 Rs.40,83,750/- Khasra No. 825/1/3

There is no dispute that there are 16 transactions of purchase of the lands during the financial year relevant to the assessment year under consideration and equal number of transactions of sale by the assessee. On careful analysis of these details, it could be noted that some of the lands purchased during the year were also sold during the same year and even within a period of less than one month. It is evident from these details that the land purchased during the year bearing khasra No. 424/5 on 31/5/2007 was sold on 30/6/2007. Therefore, the said sale was within a period of 13 days from the date of purchase. Similarly some of the other transactions of land bearing khasara No. 42 and 65 were also sold within a period of four months from the date of purchase. Thus, it is discernable from the number of transactions carried out by the assessee one after another during the year under consideration and the period of holding is less than month and in some cases within few months which cannot be on the face of it regarded as investments made by the assessee in agricultural lands. The intention of the assessee for purchase of the land is also not in dispute that it was for resale and within a short period of time though the sale is only to the companies of which the assessee is a Director. Thus, it is apparent that the assessee was acting as an interface to purchase the lands from the land owners and then converted in non- agricultural use and sold to these companies who are in the business of real estate.”

7. In all cases, the Court’s conclusions with respect to the intention of assessee with regard to the specific transactions is to be ganged not merely from what he or the concerned entity contends but rather on an appreciation of the overall facts and circumstances presented to the Court at the time of proceeding.

8. This Court is of the opinion that the ITAT’s conclusions with rejecting the assessee’s arguments that the intention was always to retain the properties acquired, as agricultural land and not treat them as capital assets for the purposes of business, cannot be characterised as unreasonable or unsound. Moreover, the analysis of facts and application of mind by the ITAT, is with respect to the facts; the findings are essentially on an application mind based upon the factual material. In the opinion of the Court, no substantial question of law is involved, which calls for interpretation.

9. For the above reasons the appeal is dismissed.

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