Amplifying His Contention, Shri. Shankar Argued That This Court In Cit(A) And Another v. M.r. Anandaram[2], After Considering Various Authorities Has Held That What Is Required T

Digitally signedby S P SUDHALocation: HIGHCOURT OFKARNATAKA IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 16 DAY OF AUGUST, 2022 PRESENT THE HON'BLE MR. JUSTICE P.S. DINESH KUMAR AND THE HON'BLE MRS. JUSTICE M.G. UMA INCOME TAX APPEAL NO.517 OF 2017 BETWEEN : SRI. K.M. BOPANNA (HUF) REP BY ITS KARTHA SRI. K.M. BOPANNA SCHOOL ESTATE, SIDDAPUR KODAGU - 571 253. PAN: …APPELLANT (BY SHRI. A. SHANKAR, SENIOR ADVOCATE FOR SHRI. BHAIRAV KUTTAIAH, ADVOCATE) AND: THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1 SRI SHARADA SAMUDAYA BHAVAN SHANKAR MUTT ROAD K.R. PURAM HASSAN - 573 201. …RESPONDENT (BY SHRI. M. DILIP, ADVOCATE FOR SHRI. K.V. ARAVIND, ADVOCATE) . . . . THIS I.T.A IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED:01/03/2017 PASSED IN ITA NO.1083/BANG/2015 AND ITA NO. 1118/BANG/2015, FOR THE ASSESSMENT YEAR 2011-2012, PRAYING TO FORMULATE THE SUBSTANTIAL QUESTION OF LAW AS STATED THEREIN AND ANSWER THE SAME IN FAVOUR OF THE APPELLANT AND ETC. THIS I.T.A COMING ON FOR HEARING, THIS DAY, P.S. DINESH KUMAR J., DELIVERED THE FOLLOWING: JUDGMENT This appeal by the assessee has been admitted to consider following questions of law: 1. Whether the Tribunal was justified in law in holding that the land sold by the appellant is not agricultural land and consequently the sale proceeds are not entitled for exemption on the facts and circumstances of the case. 2. Whether the Tribunal was justified in law in confirming the addition of Rs.76,61,165/- made by the learned Assessing Officer, being exempted income as claimed by the appellant on the facts and circumstances of the case. 3. Whether the Tribunal was justified in law in upholding the order of the learned Commissioner of Income-tax (Appeals) on the conversation pf land into non-agricultural character, the land ceased to be agricultural land and consequently passed a perverse order on the facts and circumstances of the case? 4. Whether the Tribunal was justified in law in reversing the order of the learned Commissioner of Income-tax (Appeals) by allowing the appeal filed by the revenue in respect of direction to the learned Assessing Officer to allow the claim of section 54F of the Act after satisfying the conditions as per law on the facts and circumstances of the case. 5. Whether the Tribunal was justified in law in not adjudicating the ground of the appellant as to cost of acquisition of silver oak trees as on 01.04.1981 at 10% of the sale price as against the 20% claimed by the appellant under the facts and in circumstances of the appellant's case and similarly have not adjudicated the ground in respect of interest levied by the learned Assessing Officer under section 234A, 234B and 234C of the Act on the facts and circumstances of the case. 2. Heard Shri. A.Shankar, learned Senior Advocate for assessee and Shri. M. Dilip, learned Standing Advocate for the Revenue. 3. Brief facts of the case are, assessee is an HUF. On 26.10.2011, return of Income declaring income of Rs.4,51,640/- for the A.Y. 2011-12, apart from agricultural income of Rs.13,14,685/- was filed. On 23.11.2010, assessee sold 3 acres 10 guntas of land situated at Ankanahalli village, Bilikere Hobli, Hunsur Taluk, Jhanjar for Rs.93,75,000/-. 4. The Assessing Officer made an addition of Rs.76,61,165/- on account of the sale of said 3 acres 10 guntas of land. Assessee challenged the same before the CIT(A)[1]. A Remand Report was called by the 1Commissioner of Income Tax (Appeals) 2. Heard Shri. A.Shankar, learned Senior Advocate for assessee and Shri. M. Dilip, learned Standing Advocate for the Revenue. 3. Brief facts of the case are, assessee is an HUF. On 26.10.2011, return of Income declaring income of Rs.4,51,640/- for the A.Y. 2011-12, apart from agricultural income of Rs.13,14,685/- was filed. On 23.11.2010, assessee sold 3 acres 10 guntas of land situated at Ankanahalli village, Bilikere Hobli, Hunsur Taluk, Jhanjar for Rs.93,75,000/-. 4. The Assessing Officer made an addition of Rs.76,61,165/- on account of the sale of said 3 acres 10 guntas of land. Assessee challenged the same before the CIT(A)[1]. A Remand Report was called by the 1Commissioner of Income Tax (Appeals) Commissioner. The Assessing Officer sent his Report dated February 12, 2015. The CIT(A) admitted assessee's claim under Section 54F of the Income Tax Act, 1961 and directed the Assessing Officer to allow the same after satisfying the conditions as per law. Both the Revenue and the assessee challenged CIT(A)'s order passed in ITA No.1083/Bang/2015 and ITA No.1118/Bang/2015 respectively. By the impugned order, the ITAT has allowed Revenue's appeal and dismissed assessee's appeal. 5. Shri. Shankar for the assessee, submitted that the Assessing Officer held the property as Capital Asset on the premise that as per the Revenue records, the land was converted for Industrial purpose. The CIT(A) has confirmed the said finding and admitted assessee's claim under Section 54F of the Act; and remitted the matter to the Assessing Officer to allow the same after satisfying the condition as per law. 6. He further submitted that the ITAT has not only dismissed assessee's claim that the land is agricultural land, but also denied the benefit available under Section 54F of the Act, by allowing Revenue's appeal. Thus, the impugned order is unsustainable on both counts. 7. Amplifying his contention, Shri. Shankar argued that this Court in CIT(A) and another Vs. M.R. Anandaram[2], after considering various authorities has held that what is required to be examined is the actual condition and intended use of the land. He also placed reliance on Commissioner of Wealth Tax Vs. Officer-in-Charge (Court of Wards)[3] and Sarifabibi Mohmed Ibrahim Vs. CIT[4]. 8. Shri. Dilip, learned Standing Counsel for the Revenue, opposing the appeal submitted that the land in question is converted for Industrial purpose and the Assessing Officer has rightly held so. With regard to the relief under Section 54F of the Act, he submitted that the 2ITA No.176/2015 and connected cases decided on 22.07.2022 (para 21) 3 (1976) 105 ITR 133 (SC) (para 20) 4 [1993] 204 ITR 631 (SC) (para 22) CIT(A) could not have granted the relief unless the same was urged before the Assessing Officer. 9. We have carefully considered rival contentions and perused the records. 10. Undisputed facts of the case are, the land in question has been converted for Industrial purpose. In the remand Report called for by the CIT(A), the Assessing Officer has stated thus: "The undersigned visited the land in Ankanahalli village, bilikere hobli, Hunsur taluk. The land continues to be amango orchard & there is no sign of any developmentactivity." (Emphasis Supplied) 11. The ITAT in para 7 of its order has held that the land in question is situated beyond the prescribed limits of Mysore City. 12. Thus, the Remand Report by the Assessing Officer clearly shows that the land continued to be a 'Mango Orchard' and there was no sign of any development. 9. We have carefully considered rival contentions and perused the records. 10. Undisputed facts of the case are, the land in question has been converted for Industrial purpose. In the remand Report called for by the CIT(A), the Assessing Officer has stated thus: "The undersigned visited the land in Ankanahalli village, bilikere hobli, Hunsur taluk. The land continues to be amango orchard & there is no sign of any developmentactivity." (Emphasis Supplied) 11. The ITAT in para 7 of its order has held that the land in question is situated beyond the prescribed limits of Mysore City. 12. Thus, the Remand Report by the Assessing Officer clearly shows that the land continued to be a 'Mango Orchard' and there was no sign of any development. 13. Agricultural land is excluded from the definition of Capital Asset under Section 2(14)(iii) of the Act and land situated beyond 8 kms. is exempted from the definition of Capital Asset. Thus, there is a finding of fact by the ITAT that the land is situated beyond the prescribed limit. This Court, after considering the law on the point in various authorities, has held in M.R.Anandaram(HUF) supra that the actual condition and the intended view is a sina qua non while deciding whether a land in question is an agricultural land or not. 14. In view of the Remand Report and the finding of fact recorded by the ITAT, the first question of law merits consideration and it is answered in favour of the assessee and against the Revenue. 15. In view of our answer to the first question, the other questions are rendered academic in nature and do not call for any answers. 16. In the result, the following: ORDER (a) Appeal is allowed. (b) Question No.1 is answered in favour of the assessee and against the Revenue. No costs. Sd/- JUDGE Sd/- JUDGE SPS List No.: 1 Sl No.: 29