Commissioner Of Income Tax (Tds), Ncrb, Status Circle, Jaipur v. Jaipur Development Authority, Jln Marg, Jaipur

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH ATJAIPUR D.B. Income Tax Appeal No. 183 / 2015 Commissioner of Income Tax (TDS), NCRB, Status Circle, Jaipur ----Appellant Versus Jaipur Development Authority, JLN Marg, Jaipur ----Respondent Connected With D.B. Income Tax Appeal No. 184 / 2015 Commissioner of Income Tax (TDS) ----Appellant Versus Jaipur Development Authority, JLN Marg, Jaipur ----Respondent D.B. Income Tax Appeal No. 185 / 2015 Commissioner of Income Tax (TDS), NCRB Statue Circle Jaipur ----Appellant Versus Jaipur Development Authority, JLN Marg, Jaipur ----Respondent D.B. Income Tax Appeal No. 159 / 2017 Pr. Commissioner of Income Tax (TDS), Jaipur ----Appellant Versus Rajasthan Housing Board, Avas Bhawan, Jyoti Nagar, Jan Path, Jaipur ----Respondent _____________________________________________________ For Appellant(s) : Mr. Sameer Jain For Respondent(s) : Mr. Sanjay Jhanwar _____________________________________________________ HON'BLE MR. JUSTICE K.S.JHAVERIHON'BLE MR. JUSTICE INDERJEET SINGHJudgment 03/08/2017 1.Since in all these appeals, common questions of law andfacts are involved, they are decided by this common judgment. 2.By way of these appeals, the appellants have challenged thejudgment and order passed by the tribunal whereby the tribunalhas allowed the appeals preferred by the assessee, modifying theorder of the A.O. and the CIT(A) which has dismissed the appeal. 3. This court while admitting the appeals on 27.09.2016 and on02.06.20107 has framed the following substantial questions oflaw:- (i) Whether the provisions of 194 LA qua theTDS are to be determined only on the basis ofrecords furnished by assessee and no inquiry,investigation,physicalverificationispermissible/desirable at the end of assessingofficer to ascertain the nature of land whether itis agricultural or non agricultural? (ii) Whether General law can override theprovisions of Income Tax Act when the SpecialAct defines agricultural land, Agricultural incomeand provisions of Chapter-XVII and intends toTax the land on which no agricultural operationare carried out as per mandate of Sections 2(1A), 2(14), 2(24), 2(31), 10(1A) and 194 LA?” 4.Counsel for the appellant while arguing the matter has taken us to the material on record and more particularly theobservations made by the AO which reads as under:- “4.6. In order to gather information regarding actualuse of land so acquired, the assessee wasrequested vide this office letter dated 24.10.2013 tosubmit Girdawari reports. Letters were also issuedto Tehsildars (appointed by the state government)vide letters dated 12.09.2013, 14.10.2013,06.12.2013 and 31.12.2013 in whose jurisdiction theland acquired by the assessee, was lying.Information was called for from the Tehsildars ofJaipur, Amer and Sanganer and they were asked tosubmit copies of the Girdawari report for therespective Khasra Numbers. The Girdawari reportswere collected by this office from respectiveTehsildars for the period beginning four years beforethe date of notification for acquisition of lands soacquired by JDS. A Girdawari report gives detailsregarding actual nature and use of land, such ascrops grown, uses for habitation, etc. From theGirdawari reports so obtained from Tehsildars, it wasfound that majority of land acquired by the assesseeon which no TDS was deducted was either barrenland or land unsustainable for cultivation. Further, asper Girdawari no cultivation has been undertaken onsuch land for a period beginning 4 years before thedate of notification for acquisition. This would meanthat these lands have not been cultivated since last 7-8 years. 7-8 years. 5.1.2.The assessee had submitted that landacquisition and payments thereof were done withsufficient proof in hand about the land beingagriculture i.e. certificate of Tehsildar (at JDA) andaffidavit from the owner about agriculture beingpracticed on land and so it being agriculture land. Tobegin with, a cetificate from deductee that the landbeing acquired is agricultural land is not anyevidence. The certificate from Tehsildar that wasproduced by the assessee was of a person who isan employee of the assessee. He is only designatedby the assessee was of a person who is anemployee of the assessee. He is only designated asa Tehsildar for a particular zone and is not the sameas Tehsildar appointed by the State Government.Now for the internal procedure being followed by theassessee of having all ncecessary evidence beforecompensation is made. It appears that the evidencein possession of the assessee were only the abovesaid two documents, i.e. the certificate of theirTehsildar and affidavit of the deductee. TheJamabandi was submitted by the assessee to thedepartment after a period of more than threemonths. Further, a Jamabandi is only a statement of ownership of a particular land. All land, whetherbarren,undulating or cultivable is classified asagricultural in a Jamabandi. The Jamabandi reportdoes not give any details as to the actual use ofland. A Girdawari report on the other hand givesdetails of land utilisation. During the course ofverification, the assessee was not found inpossession of any Girdawari report. The assesseehas till date not furnished any Girdawari report forthe land claimed to be agricultural land to thedepartment. In view of above and discussion in thepreceding para, as to what constitutes agriculturalland, the submission of assessee that it hadsufficient evidence in its possession that the landwas agricultural land, before any compensation wasmade is not acceptable.” 5.3.3.Now the contention of the assessee thatdetailed discussion was done with the Income TaxDepartment at various levels and based on thatvarious documents were collected and no TDS wasdeducted on agricultural lands. The department hadasked the assessee to collect all necessaryevidences to be satisfied that it is really agricultureland and produce before the department whenevercalled for. However, as is evident from discussion inpreceding paras, no such evidences were collectedto ensure that land was agriculture and being usedfor agricultural purposes. Further, evidencesgathered by the department from Tehsildars, and onthe basis of physical verification of such land asmentioned in Table 1, it is seen that the land are notagricultural land nor have they been used foragricultural purposes. 5.He has also taken us to the observations made by the CIT(A) which reads as under:- Keeping in view the above mentioned facts andcircumstances of this case, I am of the consideredview that the A.O. was right in holding that oncompensation paid on acquiring of these lands; TDSwas to be deducted as per provisions of sec.194 LAof IT Act. Accordingly, the finding of the AO as alsodemand raised u/s.201(1)/201(1A) of IT Act inrespect of Ays 2012-13, 2013-14, 2014-15 isconfirmed.” 6.He has also taken us to the observations made by theTribunal which reads as under:- “In view thereof, we hold that the assessee hasbeen able to demonstrate from the record thatimpugned agricultural land acquired by theassessee are agricultural land on per records andin terms of Section 194LA, Explanation (I). Thereis no obligation to deduct any TDS thereon. Thus,there is no question of raising demand againstthe assessee u/s 201(1) and 201(1A) of the Actand hold the assessee to be in default.Consequently, the orders of the lower authoritiesare reversed and the demands raised in questionby the Department are quashed.” 7.He has placed reliance on the judgment rendered by the 6.He has also taken us to the observations made by theTribunal which reads as under:- “In view thereof, we hold that the assessee hasbeen able to demonstrate from the record thatimpugned agricultural land acquired by theassessee are agricultural land on per records andin terms of Section 194LA, Explanation (I). Thereis no obligation to deduct any TDS thereon. Thus,there is no question of raising demand againstthe assessee u/s 201(1) and 201(1A) of the Actand hold the assessee to be in default.Consequently, the orders of the lower authoritiesare reversed and the demands raised in questionby the Department are quashed.” 7.He has placed reliance on the judgment rendered by the Supreme Court in the case of Sharifabibi Mohmed Ibrahim andothers Vs. Commissioner of Income Tax, Gujarat 204 IT 631wherein it has been held as under:- 6. The Income-tax Authorities sought to levycapital gains tax on the consideration received bythe appellants treating the said land as non-agricultural land. The appellants contested thesame contending that the land sold is anagricultural land. The Income-tax Officer rejectedthe assessees' claim whereupon they approachedthe Appellate Assistant Commissioner by way ofappeals but without success. The appellants thenapproached the Tribunal. Their appeals were heardby a Bench of two members who differed amongthemselves whereupon the matter was referred tothird member who held that the said extent of landis agricultural land and, therefore, no capital gainstax is leviable thereon. The Revenue then obtaineda reference under Section 256(1) of the Act whichwas answered in its favour by a Bench of GujaratHigh Court. The High court set out the followingfacts militating against the appellants plea that thesaid land was an agricultural land on the date ofsale : (1) The land is situated a distance of 1 km. fromSurat Railway Station. (2) It is within municipal limits and within a TownPlanning Scheme. (3) It has been sold to a non-agriculturist for anon-agricultural purpose. It is sold to a co-operative housing society for constructing houseand buildings. (4) It is sold at a per sq. yds. basis at Rs. 23 persq.yd. on May 30, 1969. (5) No agricultural operations such as growing ofwheat, Bajra, Juwar, rice, groundnuts or cotton crophave been carried on for the last 4 years. Onlygrass for fodder is grown in the last year. (6) An application for permission to sell the land toa housing society under Section 63 of the LandRevenue Code was made in August 1968 some ninemonths before the actual sale effected in May 1969,and it was granted on February 24,1969, about amonth prior to the actual sale. (2) It is within municipal limits and within a TownPlanning Scheme. (3) It has been sold to a non-agriculturist for anon-agricultural purpose. It is sold to a co-operative housing society for constructing houseand buildings. (4) It is sold at a per sq. yds. basis at Rs. 23 persq.yd. on May 30, 1969. (5) No agricultural operations such as growing ofwheat, Bajra, Juwar, rice, groundnuts or cotton crophave been carried on for the last 4 years. Onlygrass for fodder is grown in the last year. (6) An application for permission to sell the land toa housing society under Section 63 of the LandRevenue Code was made in August 1968 some ninemonths before the actual sale effected in May 1969,and it was granted on February 24,1969, about amonth prior to the actual sale. 13. The first decision of this Court which consideredthe meaning of the expression "agricultural land" isin Commissioner of Income Tax v. Raja Benoy KumarSahas Roy 32 I.T.R. 466. But the question there waswhether the income from forest land derived fromsal and piyasal trees, 'not grown by human skill andlabour' constitutes agricultural income? The decisionthat directly considered the issue, though underthe Wealth Tax Act, is in C.W.T., Andhra Pradesh v.Officer-in-charge (CourtofWards),Paigah(hereinafter referred to as to 'Begumpet Place case')reported in (105 I.T.R. 133). It was an appeal from aFull Bench decision of the Andhra Pradesh HighCourt. The High Court had taken the view, followinga decision of the Madras High Court in Sarojini Deviv. Sri Krishna that the expression "agricultural land "should be given the widest meaning. It held that thefact that the land is assessed to land revenue asagricultural land under the State Revenue Law is astrong piece of evidence of its character as anagricultural land. On Appeal, a Constitution Bench ofthis Court held that; (a) inasmuch as agriculturalland is exempted from the purview of the definitionof the expression "assets", it is "impossible to adoptso wide a test as would obviously defeat the purposeof the exemption given". The idea behind exemptingthe agricultural land is to encourage cultivation ofland and the agricultural operations. "In other wordsthis exemption had to be necessarily given a morerestricted meaning than the very wide ambit givento it by the Full Bench of the Andhra Pradesh HighCourt", (b) What is really required to be shown is the connection with an agricultural purpose and userand not the mere possibility of user of land by somepossible further owner or possessor, for anagricultural purpose. It is not the mere potentialitybut its actual condition and intended user which hasto be seen for purposes of exemption, (emphasisadded), (c) "The person claiming an exemption ofany property of his from the scope of his assetsmust satisfy the conditions of the exemption." (d)"The determination of the character of land,according to the purpose for which it is meant or setapart and can he used, is a matter which ought tobe determined on the facts of each particular case."(e) The fact that the land is assessed to the LandRevenue as agr icultural land under the StateRevenue Law is certainly a relevant fact but if is notconclusive. 18. The Bench observed that to ascertain the truecharacter and the nature of the land, it must be seenwhether it has been put to use for agriculturalpurposes for a reasonable span of time prior to therelevant date and further whether on the relevantdate the land was intended to be put to use foragricultural purposes for a reasonable span of timethe future. Examining the facts of the case from thesaid point of view, the Bench held that theagreement entered into by the assessee with theHousing Society is the crucial circumstance since itshowed that the asses-see agreed to sell the land toHousing Society admittedly for utilisation for non-agricultural purposes. The sale-deeds were executedfour months after the agreement of sale and even ifany agricultural operations were carried on withinthe said span of four months, - the Bench held - itwas evidently in the nature of a stop-gaparrangement. On the date the land was sold, theBench held, the land was no longer agricultural landwhich is evident from the fact that the assessee hadobtained permission even in August 1966 to convertthe said land to non-agricultural purposes. 20. Now, we may consider the various circumstancesappearing for and against the appellant's case. Thefacts in their favour are: land being registered asagricultural land in the Revenue records; payment ofland revenue in respect thereof till the year 1968-69;absence of any evidence that it was put to any non-agricultural use by the appellants; that the land wasactually cultivated till and including the agriculturalyear 1964-65; that there were agricultural landsabutting the said land and that the appellants had noother source of income except the income from the said land. As against the above facts, the factappearing against their case: the land was situatedwithin the municipal limits - it was situated at adistance of one kilometer from the Surat railwaystation; the land was not being cultivated from theyear 1965-66 until it was sold in 1969; the appellantshad entered into an agreement sale with a HousingCooperative Society to sell the said land for anavowednon-agriculturalpurposesnamelyconstruction of houses; they had applied in June,1968 and March, 1969 for permission to sell the saidland for non-agricultural purposes under Section 63 ofthe Bombay Tenancy and Agricultural lands Act andobtained the same on 22nd April; soon after obtainingthe said permission they executed sale-deeds in thefollowing month i.e., in May 1969; the land was soldat the rate of Rs. 23 per sq. yd. and the purchaser-society commenced construction operations withinthree days of purchase. What is the inference thatflows from a cumulative consideration of all theaforesaid contending facts? This question has to beanswered keeping the criteria evolved in BequmpetPalace case set out hereinbefore. In our opinion, theentering into the agreement to sell the land forhousing purposes, the applying and obtaining thepermission to sell the land for non-agriculturalpurposes under Section 63 of the Bombay Tenancyand Agricultural Lands Act an its sale soon thereafterand the fact that the land was not cultivated for aperiod of four years prior to its sale coupled with itslocation, the price at which it was sold do outweighthe circumstances appearing in favour of theappellants' case. The aforesaid facts do establish thatthe land was not an agricultural land when it wassold. The appellants had no intention to bring it undercultivation at any time after 1965-66 - certainly notafter they entered into the agreement to sell thesame to a Housing Cooperative Society. Though aformal permission under Section 65 of the LandRevenue Court was not obtained by the appellants,yet their intention is clear from the fact of theirapplication for permission to sell it for a non-agricultural purpose under Section 63 of the BombayTenancy and Agricultural Land Act.” 8.He contended that the respondents assessee was required todeduct TDS as it is an agriculture land. 9.Counsel for the appellant has also relied on the judgment rendered by the Constitutional Bench of Supreme Court in thecase of Commissioner of Wealth Tax, Andhra Pradesh Vs.--OfficerInCharge (Court of Wards) Paigah reported in 1976 SCC(3) 864which reads as under:- “We also think that the Full Bench was not correct inadopting view expressed in Sarojini Devi's case(supra) by the Madras High Court where it was heldthat it was enough to show that the land underconsideration was capable of being used foragricultural purpose This erroneous view also seemsto us to have affected the conclusion of the Full Benchon what was essentially a question of fact. It has ledthe Full Bench into giving excessive weight toconsider- ations which had a bearing only onpotentialities of the land for use for agriculturepurposes. For the reasons already given, we do notthink that the term "agr cultural land" had such awide scope as the Full Bench appears have given it forthe purposes of the Act we have before us. We agreethat the determination of the character of land,according to the purpose for which it is meant or setapart and can be used, is a matter which ought to bedetermined on the facts of each particular case Whatis really required to be shown is the connection withan agricultural rural purpose and user and not themere possibility of user of land by some possiblefuture owner or possessor, for an agricultural purpose.It is not the mere potentiality, which will only affectits valuation as part of "assets", but its actualcondition and intended use which has to be seen forpurposes of exemption from wealth tax.On the objectsof the exemption seemed to be to encouragecultivation actual utilisation of land for agriculturalpurposes. If there is neither anything in its condition,nor anything in evidence to indicate the intention ofits owners or possessors, so as to connect it with anagriculal pur- pose, the land could not be "agriculturalland" for the purses of earning an exemption underthe Act. Entries in revenue ords are, however, goodprima facie evidence. We do not think that all theseconsiderations were kept in view by the taxing authorities deciding the question of fact which wasreally for the assessing authorities to determinehaving regard to all the relevant evidence and law laiddown by this Court. The High Court should have sentthe case to the assessing authorities for deciding thequestion of it after stating the law correctly. We think that this is a fit case in which we should setaside the judgment of the Full Bench of the HighCourt and hold that the tribute should determineafresh, from a correct angle, the question of factether any of the lands under consideration were"agricultural" or t for the purposes of the Act before it.Accordingly, we allow these peals, set aside thejudgment and order of the Full Bench and send thecases to the Tribunal for appropriate orders for givingopporpriate both sides to lead further evidence, ifthey so desire, and the decision of the cases inaccordance with the law as declared w by this Court.The parties will bear their own costs throughout.” 10.He has also relied on Single Bench judgment of Kerala HighCourt in the case of Nalini Vs. Deputy Collector, LandAcquisition reported in (2007) 294 ITR 423 (Ker) wherein the High Court has observed as under:- 10.He has also relied on Single Bench judgment of Kerala HighCourt in the case of Nalini Vs. Deputy Collector, LandAcquisition reported in (2007) 294 ITR 423 (Ker) wherein the High Court has observed as under:- 6. Whether a particular land is an agricultural land ornot is to be determined with reference to the definitiongiven in Section 2(14)(iii)(a) and (b) of the IncomeTax Act and not with reference to the tenure of theland shown in the land revenue records. A combinedreading of Section 194LA and the definition ofagricultural land given under Section 2(14)(iii)(a) and(b) makes it abundantly clear that the competentauthority to decide whether any compensationawarded is exigible to income tax is the Income taxofficer. So it is clear that the remedy available to theparty is either to approach the competent authorityunder Section 197 of the Income Tax Act or pay theincome tax and get it refunded. 7.. The learned Counsel appearing for the petitionerhas argued that at present there is no practice of giving notice to the party regarding his liability to payincome tax from the amount of compensationawarded by the Land Acquisition Officer. It is arguedthat the parties are not even aware of any suchdeduction and there is no practice of issuing TaxDeduction Certificate by the Land Acquisition Officerunder the relevant rules. It is argued that even whenthe enhanced compensation is awarded by the courtthe parties are not informed about the quantum ofincome tax deducted and also no certificate is issued.It is not disputed by the learned Senior GovernmentPleader that at present no notice is issued by the LandAcquisition Officer to the claimant informing himabout the liability to pay income tax, I am of the viewthat it is only just and proper that the parties aregiven advance notice regarding the liability to payincome-tax. The Land Acquisition Officer can note thisfact also, in the notice issued to the claimantunder Section 9 of the Land Acquisition Act. Theclaimant shall be informed about this fact duringaward enquiry stage. In the award, the income taxdeducted shall be separately shown. 11.It is submitted that a mandatory duty is cast onevery deductor to apply for TAN within the specifiedtime. 13.. It is submitted that the failure to pay taxdeducted at source is an offence punishable withrigorous imprisonment for a minimum period of threemonths and maximum seven years. So, the LandAcquisition Officers who are liable to deduct tax atsource would follow the provisions of Income TaxAct strictly and deposit the amount collected withinone week from the last day of the month in which thededuction is made. Regarding the present practice of collecting tax ShriMohan C. Menon, learned Senior Government Pleaderhas submitted that at present the income tax deductedare deposited to the Central Government Account byusing treasury chalans (in triplicate) presented toconcerned treasuries under head of account 8658-00-112-IT. It is further submitted that one copy of thechalan is being forwarded to the Accounts Officer ofthe Income Tax Department and details of amountcollected and furnished to the Accountant General,Kerala. It is further submitted that intra Governmentalsettlement of the income tax amount are done inbetween Accountant General, Kerala and concernedCentral Government Department. It is also submittedthat one copy of the treasury chalan in each and every remittances made under the Income Tax Act are beingfurnished to the Income Tax Zonal Office by theTreasury Branches. The learned senior GovernmentPleader has made available a circular issued by theThrissur District Collector to the Land AcquisitionOfficers working under him regarding the procedure tobe followed regarding deduction of tax at source. remittances made under the Income Tax Act are beingfurnished to the Income Tax Zonal Office by theTreasury Branches. The learned senior GovernmentPleader has made available a circular issued by theThrissur District Collector to the Land AcquisitionOfficers working under him regarding the procedure tobe followed regarding deduction of tax at source. 18. Rule 30 of the Income-tax Rules deals with timeand mode of payment to Government account of taxdeducted at source. Rule 31 of the Income-tax Rulesdeals with certificate of tax deducted at source or taxpaid under Sub-section (1A) of Section 192. Rule 31 ofthe Income-tax Rules reads as follows: (1) The certificate of deduction of tax at source or, thecertificate of payment of tax by the employer on behalfof the employee, under Section 203 to be furnished byany person deducting tax in accordance with theprovisions of- (a) ... (b) Sections 193, 194, 194A, 194B, 194BB, 194C, 194D, 194E, 194EE, 194F, 194G, 194I, 194J, 194K, 194LA, 195, 196A, 196B, 196C and 196D shall be in Form No. 16A. (2)... (3) The certificate mentioned in Sub-rule (1) shall befurnished within a period of one month from the endof the month during which the credit has been givenor the sums have been paid or, as the case may be, acheque or warrant for payment of any dividend hasbeen issued to a shareholder. 20 In the case at hand, the petitioner claimsexemption from the liability to pay income tax on theground that as per the revenue records, the landacquired was agricultural land. The Land AcquisitionCourt has no jurisdiction to decide that issue and thatis a matter to be decided by the Income-tax Officer.So the order passed by the court below is correct. Theremedy available to the petitioner is to get the TDCfrom the Land Acquisition Officer and claim refundfrom the Income Tax Officer.” 11.In view of the above, counsel for the appellant contended that the appeals deserve to be allowed and order of the Tribunal isrequired to be quashed and set aside. 12.Counsel for the respondent Mr. Sanjay Jhanwar has taken usto the judgment rendered by the Supreme Court in Sarifabibi(supra) more particularly para 12 of the judgment which reads as under:- “12. Whether a land is an agricultural land or not isessentially a question of fact. Several tests have beenevolved in the decisions of this Court and the HighCourts, but all of them are more in the nature ofguidelines. The question has to be answered in eachcase having regard to the facts and circumstances ofthat case. There may be factors both for and againsta particular point of view. The court has to answer thequestion on a consideration of all of them- a processof evaluation. The interference has to be drawn on acumulative consideration of all the relevant facts.” 13.He has also relied on the judgment rendered by the Bombay High Court in the case of Shankar Dalal Vs. Commissioner ofIncome tax, Goa reported in 247 Taxman 170 (Bombay) wherein the court has observed as under:- under:- “12. Whether a land is an agricultural land or not isessentially a question of fact. Several tests have beenevolved in the decisions of this Court and the HighCourts, but all of them are more in the nature ofguidelines. The question has to be answered in eachcase having regard to the facts and circumstances ofthat case. There may be factors both for and againsta particular point of view. The court has to answer thequestion on a consideration of all of them- a processof evaluation. The interference has to be drawn on acumulative consideration of all the relevant facts.” 13.He has also relied on the judgment rendered by the Bombay High Court in the case of Shankar Dalal Vs. Commissioner ofIncome tax, Goa reported in 247 Taxman 170 (Bombay) wherein the court has observed as under:- 12. For the purposes of such transfer of land, in ourview, we have to consider the provisions of the Code inquestion and so also the definition so provided to dealwith the concept of "agricultural land". There is noissue that the land owners require to transfer theproperty within the framework of laws. Under theCode, there is no bar that an agriculturist and/or onewho possesses agricultural land cannot transfer suchland to any third party who is not agriculturist. Nothingcontrary has been pointed out and/or placed on recordthat any permission and/or formalities are required tobe completed before transfer of such lands. Under theCode, a transfer could be made to a non-agriculturistand/or to a person whose activities are not related toagricultural project or purpose. There is no question ofraising any objection by third party, if the owner ofsuch land decides to transfer the ancestral agriculturalproperty/land to a third party by a common sale deed.The assessee had received the consideration.Admittedly, the property was not divided and/or sub-divided. Admittedly, before transfer of the property,the parties were fully aware about the nature of theland which includes rocky area, use and usable area for agricultural, purpose number of trees, plantsgrowing or in existence for so many years, apart fromcertain plantations. Being the ancestral agriculturalproperty, the families were using the agriculturalproduce for their own consumption. for agricultural, purpose number of trees, plantsgrowing or in existence for so many years, apart fromcertain plantations. Being the ancestral agriculturalproperty, the families were using the agriculturalproduce for their own consumption. 13. Here, at this stage, it is relevant to note thedefinition of the term "agriculture" as reproducedabove. This definition, in our view, ought not to havebeen overlooked, while taking any action against theassessees. The definition itself provides thatexpression "agriculture" means raising of useful orvaluable products which derive nutriment from the soilwith the aid of human labour. This inclusive definition,no where provides and/or takes away rights of theassessee to treat such land as an agricultural landwhich they had been using before transfer and/or tillthe date it came to be transferred as an "agriculturalland". There is nothing to prevent them from usingsuch land for deriving nutriment from the soil with theaid of human labour and skill, which also includes theappellants' own labour and/or skill. Whatever numberof trees which are developed and/or grown wereplanted, developed and grown by the assessees for somany years and/or have been maintaining the samefor various activities as, even reported by theDepartment, through the respective reports. This alsois sufficient to support their claim that the landthroughout has been used as an "agricultural land".The various trees planted and the fruit productsderived from it are being consumed for their privatepurposes, in no way, can be or should have been thefoundation against them to held that it was never usedand/or unusable or remained unused for anyagricultural activities. The definition of "agriculture"itself permitted, such unused land to be used andutilized even for grazing, horticulture, dairy farming,stock breeding. This is clear terms of the law and soalso the intent of the Code which governs suchagriculture land and its transfer. The report sosubmitted and/or referred to by the Departmentagainst the assessee, in our view, is unsustainable,unacceptable and contrary to the specific provisions ofthe Code. All the "agriculture" activities so definedcovers the agriculture land in question. Therefore,exemption from the capital gain is the only option, onfact and the law. 15. This Court further requires to consider that aperson who wants to use such agricultural land for anynon-agricultural purpose, requires to submit anapplication to the concerned Authority, which is subject to the order/decision and/or permission if sanctioned,such agricultural land can be used and converted intoand/or usable for non-agricultural purpose and nototherwise. By any act or inaction of unauthorised useof such agricultural land to non-agricultural purpose, inno way, legally converts such agricultural land to non-agricultural land. It is only subject to penalty and/orcharges for such use of agricultural land to non-agricultural purpose. Admittedly, there is nothing onrecord to show that such application was ever filed atany point of time prior to the date of its transferand/or even thereafter at least by the assessee or bythe third party, after purchase of such property. Theowners of such property are always at liberty toconvert and/or take action. Even otherwise suchsubsequent action or inaction, in no way is sufficient toprove such tax liability (Long term capital gain) uponthe original vendor, who sold the property as theancestral agricultural property.” 14.He has also relied on the decision of Patna High Court in thecase of Commissioner of Income Tax Vs. Dumraon ColdStorage Refrigeration Service (P.) Ltd. Reported in 1983141 ITR 700 regarding the question of agricultural land. ThePatna High Court has observed as under:- 14.He has also relied on the decision of Patna High Court in thecase of Commissioner of Income Tax Vs. Dumraon ColdStorage Refrigeration Service (P.) Ltd. Reported in 1983141 ITR 700 regarding the question of agricultural land. ThePatna High Court has observed as under:- 7. “In the case of CWT v. Officer-in-Charge (Court ofWards), Paigah [1976] 105 ITR 133 (SC), while tryingto define an "agricultural land", it was observed by theSupreme Court as follows (p. 136): "We think that this must be land which could be saidto be either actually used or ordinarily used or meantto be used for agricultural purposes. In other words,'agricultural land' must have a connection with anagricultural user or purpose." 8. If on the materials it is established that the landwhich is the subject-matter of controversy has actuallybeen used for agricultural purposes then merelybecause such land is near a railway station or within amunicipality is not of much consequence. Similarly,what is the purpose for which the lands have been soldalso is not of much consequence because the stage toconsider for the purpose of capital gain is the day theland is sold; what was the nature of the land on thatday and not what it would be in future. In the case of Addl. CIT v. Tarachand Jain [1980] 123 ITR 567 (Pat),this court considered a similar question. In that casethe ITO had found that, (a) for the last 2 to 3 years noagricultural operation had been carried out on theland, (b) although the land was agricultural land in thepast, owing to the development of the town it acquiredthe character of urban property, and (c) it had beensold for the purpose of construction of a building. Thiscourt pointed out that merely because a land has beensold for the purpose of construction of a building or ithas been sold at a high price, it cannot be held thatthe land in question was not an agricultural land, if onmaterials it is otherwise established that it was anagricultural land on the date it was sold. It was alsoobserved that there may be cases in which for onereason or the other, actual agricultural operationsmight not have been carried on and yet the owner hadalways intended to use it for agricultural purposes. Inthe case of CIT v. Manilal Somnath [1977] 106 ITR917 (Guj), it was held that in order to determinewhether a particular land is agricultural land or not onehas first to find out the use to which it is being put. Inthe case of CED v. V. Venugopala Varma Rajah [1976]105 ITR 593, the Supreme Court again pointed outthat "the question whether a land is an agriculturalland" has to be decided on evidence of actual orintended user for which the land may have beenprepared or set apart". I have already pointed outabove that the Tribunal has pointed out severalmaterials and circumstances which established the factthat whatever may be the position on the day therecord of rights was prepared, i.e., in the year 1912,for the last several years before the date of the salethe lands were being used for agricultural purposes,and, as such, they shall be deemed to be agriculturallands for the purpose of determining whether they aresubject to capital gain.” 15.He has relied upon decision of the Delhi High Court in the case ofCommissioner of Income Tax Vs. Moonlight Builders & Developers reported in (2008) 307 ITR 0197 which reads as under:- 8. Precisely the same thing has happened insofar asthese appeals are concerned. The revenue hasaccepted the primary orders passed by the Tribunalon 14-7-2003 and 14-6-2004 but has chosen to 15.He has relied upon decision of the Delhi High Court in the case ofCommissioner of Income Tax Vs. Moonlight Builders & Developers reported in (2008) 307 ITR 0197 which reads as under:- 8. Precisely the same thing has happened insofar asthese appeals are concerned. The revenue hasaccepted the primary orders passed by the Tribunalon 14-7-2003 and 14-6-2004 but has chosen to challenge the orders passed by the Tribunal in thepresent appeals which merely follow these primaryorders. There is no reason given by the revenue forthis pick and choose attitude or this attitude ofaccepting favorable orders in respect of one assessedbut not accepting the same favorable order in respectof another assessed, without there being anydistinction between their cases. Consequently, in viewof the arbitrary manner of proceeding in the matter,we do not think that it will be proper or in the interestof justice to allow the revenue to seek to recover taxfrom one assessed while declining to recover tax fromanother assessed on identical facts. 9. Following the decisions of the Supreme Court aswell as of his Court, we dismiss these appeals and holdthat no substantial question of law has arisen for ourconsideration.” 16.He has also relied on the decision of the Gujarat High Court in the case of Commissioner of Income tax (TDS) Vs. Special Land Acquisition Officer reported in (20160 242 Taxman 398wherein the Court has observed as under:- “21. Thus the fact that a particular land is treated asan agricultural land in the revenue records and sotreated since long and continues to invite land revenueseems to be strong prima facie factors to suggest thatthe land was agricultural land. The Courts have of-course held that this would be a rebuttal presumptionand if in a given case, it is shown that the land wasnever put to or was capable of being put to agriculturaluse, the same may still be considered as nonagricultural land. 22. In this context, we are prepared to accept therevenue's contention that mere award by the LandAcquisition Officer would not be conclusive. This is sofor two reasons. Firstly, the aim and object of passingan award under the Land Acquisition Act, 1894, is toarrive at a just compensation for compulsoryacquisition of the property of a citizen. The paramountconsideration before the Special Land Acquisitionofficer at that stage is to ascertain the market valueof the land under acquisition as on the relevant datei.e. date of publication of section 4 notification. Quiteapart from the very character of the land being agricultural or otherwise, range of other factors wouldbe relevant for such purpose including the nonagricultural use potential of the land. On the otherhand, the applicability of section 194LA of the Actwould depend on whether the compensation which isbeing paid is for an immovable property which is inthe nature of an agricultural land or otherwise. Suchquestion when so needed can be decided only by theAssessing Officer and the view of the Land AcquisitionOfficer expressed in acquisition award would not befinal, binding or conclusive. 23. Nevertheless, at the stage of deciding whether theSpecial Land Acquisition Officer committed an error innot collecting the tax at source while releasing thecompensation, vital question would be, did theAssessing Officer have sufficient materials to ignorethe Government land records in which the land isshown as an agricultural land on which the ownerscontinue to pay the land revenue year after year. 23. Nevertheless, at the stage of deciding whether theSpecial Land Acquisition Officer committed an error innot collecting the tax at source while releasing thecompensation, vital question would be, did theAssessing Officer have sufficient materials to ignorethe Government land records in which the land isshown as an agricultural land on which the ownerscontinue to pay the land revenue year after year. 24. In this context, we have noticed that the Revenueauthority placed heavy reliance on two factors, Onewas the personal visit by the Assessing Officer andthe other was the certificate issued by the DistrictAgricultural Officer dated 16.6.2004. The visit, ascorrectly pointed out by the counsel for therespondent, would have taken place few years afterthe acquisition was completed and possession of theland was handed over to the company for whosebenefit the acquisition was carried out. The characterof the land also would have undergone majorchanges. It would be highly unsafe to rely on a spotvisit by the Assessing Officer of such circumstances tooverrule the initial presumption available from therevenue records that the lands were agriculturallands. Like-wise, the certificate of the AgriculturalOfficer was also general in nature and did not pinpointwhether and what portion of the land was totallyuncultivable. The award does segregate the Kharabaland for compensation at a much lower rate of Rs. 1per Are as against the Jirayat land which werecompensated at the rate of Rs. 300 per sq. mtrs. Theobservations of the Assessing Officer that there wasno facility of irrigation and that part of the land,suffered from ingress of saline water, would notindicate that the entire parcel of land or at any ratesubstantial portion thereof was either not put toagricultural use or was not capable of so using. 25. We may however, clarify that these areobservations made only for the purpose of deciding theapplicability of section 194LA of the Act and would notpreclude the revenue from pursuing the issue in thecontext of tax liability of the persons receiving thecompensation for the land acquired.” 17.He has relied on the decision of the Mumbai Tribunal in the case of Income Tax Officer Vs. Special Land AcquisitionOfficer reported in (2011) 30 CCH 0221 wherein it has beenheld as under:- 25. We may however, clarify that these areobservations made only for the purpose of deciding theapplicability of section 194LA of the Act and would notpreclude the revenue from pursuing the issue in thecontext of tax liability of the persons receiving thecompensation for the land acquired.” 17.He has relied on the decision of the Mumbai Tribunal in the case of Income Tax Officer Vs. Special Land AcquisitionOfficer reported in (2011) 30 CCH 0221 wherein it has beenheld as under:- “The revenue authority acquired land under thecategory of the agricultural land thecompensation was also paid as applicable foracquisition of agricultural land. The variouscategories as mentioned in 7/12 extract and inthe acquisition notification are necessary for thepurpose of acquisition of agricultural landbecause the compensation as well as theacquisition has to be decided on the basis theseclasses of the agricultural land. Various factorswhether the land is under cultivation orBarron/desolated, if the land is thickly habituatedand constructed are relevant for the purpose ofacquisition. Accordingly these are the variousnecessary factors have to be taken into accountfor acquisition of t