Tuesday, 25 August 2015

Whether, to prove point that land was used for agricultural purposes, assessee is required to furnish some accounts of expenses incurred for sowing crops and also revenue generated by selling agri produce - YES: HC

THE issue before the Bench is - Whether, to prove that certain land has been used for agricultural purposes in the last two years, the assessee is required to present some accounts with regard to expenditure made by the assessee for sowing the crops and also revenue generated by selling the agricultural produce. YES is the answer.
Facts of the case
The assessee is a Class-IV employee in the postal department. He purchased certain land in village Dummannahalli on 27.7.2006. The said land was notified for acquisition under the provisions of Karnataka Industrial Area Development Act, 1966. The final notification was published on 17.05.2007. Thereafter, on the basis of an agreement entered into on 07.10.2008, the assessee was paid a compensation of Rs.1,47,48,750/- for the compulsory acquisition of his land which he had purchased on 27.07.2006. For the said AY 2009-10, assessee filed his return of income declaring a total income of Rs.5,33,780/-. In his return, the assessee had disclosed receipt of compensation of Rs.1,47,48,750/- in pursuance of the agreement dated 07.10.2008 but claimed benefit of Section 10(37), as it was the case of the assessee that said land which was acquired was an agricultural land and no capital gains would be leviable. A sum of Rs.1,47,48,750/- claiming exemption u/s 10(37) being compensation received on compulsory acquisition of agricultural land was denied by AO on the ground that assessee had not fulfilled the second condition laid down under said provision for availing exemption. Hence, it was held that amount of compensation received by the assessee was taxable as short term capital gains and thereby assessed the total income at Rs.1,35,18,640/- and imposed tax liability of Rs.59,10,180/-. On appeal, CIT(A) dismissed the appeal. On further appeal, Tribunal also dismissed the same.
Held that,
++ plantation of Eucalyptus would be plantation of trees which would not be for agricultural purpose as it does not give any agricultural produce. Thus, such contention of counsel for the assessee is not worthy of acceptance. Even otherwise, we notice from the records that subsequently certain certificates came to be issued by the revenue authorities in the year 2012 to indicate that there was agricultural crop of Jowar on the plot in the year 2005-06 as well as 2006-07 and in the year 2007-08. The revenue records produced by the assessee before the authorities also indicated that there was plantation of Eucalyptus saplings. Thus, even on facts, records are inconsistent or contrary to each other that there was plantation of Eucalyptus saplings. What is to be considered is that for being granted benefit u/s 10(37), the land in question should have been put to agricultural use by the assessee for the preceding two years. Even if we accept the contention of the appellant that he was in possession of the land for two years from 27.07.2006 to 07.10.2008, then too, from the records it is not at all clear that for both the years the appellant was carrying out agricultural activity in the land in question;
++ the Tribunal has further examined the issue and held that if at all there was any agricultural activity being carried on by the appellant in the previous two years, some accounts with regard to expenditure made by the appellant for sowing the crops and also revenue generated by selling the agricultural produce would have been submitted by the assessee, which has not been done by him. The same is also a strong ground for not accepting that the appellant was carrying on agricultural activity on the plot in question. Clear findings of fact have been recorded by all the three authorities, which in our view, do not require to be interfered with by this Court in appeal. As such, we are of the view that since the finding of fact has been given by all the authorities that the appellant was not carrying on any agricultural activity in the plot in question in preceding two years prior to 07.10.2008, the appellant would not be entitled to the benefit of Section 10(37). In view of the aforesaid, we are of the view that no substantial question of law arises for determination by this Court. The appeal is accordingly dismissed. No order as to costs. All pending applications stands consigned to file.

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