Ita/364/2022 Of The Pr. Commissioner Of Income Tax v. Shri M Thimmegowda

Digitallysigned by BLAVANYALocation:HIGHCOURT OFKARNATAKA NC: 2024:KHC:40423-DBITA No. 364 of 2022 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 27 DAY OF SEPTEMBER, 2024 PRESENT THE HON'BLE MR JUSTICE S.G.PANDIT AND THE HON'BLE MR JUSTICE C.M. POONACHA INCOME TAX APPEAL NO.364 OF 2022 BETWEEN: 1. THE PR. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE, C.R. BUILDING, QUEENS ROAD, BENGALURU-560 001. 2. THE DEPUTY COMMISIONER OF INCOME TAX CENTRAL CIRCLE-1(3) OF INCOME TAX CENTRAL CIRCLE-1(3) C.R BUILDING, QUEENS ROAD, BENGALURU-560 001. …APPELLANTS (BY SRI. DILIP.M., ADV. A/W SRI. RAVIRAJ.Y.V., ADVOCATE) AND: SHRI M. THIMMEGOWDA #F-113, CENTRAL CHAMBERS, 2-C AND D, 2[nd] FLOOR, 2[nd] MAIN, GANDHINAGAR, BENGALURU-560 009. PAN: ACYPT 2499N. …RESPONDENT THE ITA/INCOME TAX APPEAL IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 20/04/2022 PASSED IN ITA NO.1035/BANG/2019, FOR THE ASSESSMENT YEAR 2007-2008 PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN AND TO ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, BENGALURU IN ITA NO.1035/BANG/2019 DATED 20/04/2022 FOR ASSESSMENT YEAR 2007-2008 ANNEXURE-C AND CONFIRM THE ORDER OF THE APPELLATE COMMISSIONER CONFIRMING THE ORDER PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1(3), BENGALURU AND ETC. THIS APPEAL, COMING ON FOR FINAL HEARING, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE S.G.PANDIT and HON'BLE MR JUSTICE C.M. POONACHA ORAL JUDGMENT (PER: HON'BLE MR JUSTICE S.G.PANDIT) Heard the learned counsel Sri. Dilip.M., along with Sri. Raviraj.Y.V., learned counsel for the appellants/Revenue. 2. The Revenue is in appeal under Section 260-A of the Income Tax Act, 1961 (for short, ‘the Act’) questioning the correctness and legality of order dated 20.04.2022 passed by the Income Tax Appellate Tribunal, ‘A’ Bench, Bengaluru (for short, ‘Appellate Authority’) in ITA.No.1035/Bang/2019 for the assessment year 2007-08. 3. This Court, admitted the appeal on 29.07.2022 to consider the following substantial questions of law: 1."Whether on the facts and in the circumstances of the case, the Tribunal order can be said as perverse in nature in holding that assessee's income is not bussienss income as assessee has sold agricultural land ignoring that as on date of sale the land sold was converted land and same was sold for non agricultural purpose"? the case, the Tribunal order can be said as perverse in nature in holding that assessee's income is not bussienss income as assessee has sold agricultural land ignoring that as on date of sale the land sold was converted land and same was sold for non agricultural purpose"? 3. This Court, admitted the appeal on 29.07.2022 to consider the following substantial questions of law: 1."Whether on the facts and in the circumstances of the case, the Tribunal order can be said as perverse in nature in holding that assessee's income is not bussienss income as assessee has sold agricultural land ignoring that as on date of sale the land sold was converted land and same was sold for non agricultural purpose"? the case, the Tribunal order can be said as perverse in nature in holding that assessee's income is not bussienss income as assessee has sold agricultural land ignoring that as on date of sale the land sold was converted land and same was sold for non agricultural purpose"? 2."Whether on the facts and in the circumstances of the case, the Tribunal is right in law in holding that though the land is converted into non agriculture in view of cultivation of land till date of sale, the land should be treated as agricultural land and same is exempt from capital gains in view of section 2(14) of the Act ignoring that converted land M/s.SPR Developers (P)Ltd had entered into sale agreement with M/s.Vijaya Bank Employees Housing Co-opeertative Society and registered the lands to the extent of 118 Acres by way of Sale deed signed with housing Society which is purely for commercial purpose and as such income earned from that can be considered as business income and not agricultural income nor capital gains"? the case, the Tribunal is right in law in holding that though the land is converted into non agriculture in view of cultivation of land till date of sale, the land should be treated as agricultural land and same is exempt from capital gains in view of section 2(14) of the Act ignoring that converted land M/s.SPR Developers (P)Ltd had entered into sale agreement with M/s.Vijaya Bank Employees Housing Co-opeertative Society and registered the lands to the extent of 118 Acres by way of Sale deed signed with housing Society which is purely for commercial purpose and as such income earned from that can be considered as business income and not agricultural income nor capital gains"? 3."Whether the Tribunal is justified in not considering that the lands were transferred from assessee and family members along with Shri.C.H.Krishnappa who is benami of assessee and the assessment was rightly completed with addition as business income on transfer of land"? that the lands were transferred from assessee and family members along with Shri.C.H.Krishnappa who is benami of assessee and the assessment was rightly completed with addition as business income on transfer of land"? 4."Whether on the facts and in the circumstances of the case, the Tribunal's order can be said as perverse in nature as Tribunal ignored that even if lands were being cultivated after conversion the same cannot be held as agricultural land and As per Section 80 of the Karnataka Land Reforms Act, 1964, the case, the Tribunal's order can be said as perverse in nature as Tribunal ignored that even if lands were being cultivated after conversion the same cannot be held as agricultural land and As per Section 80 of the Karnataka Land Reforms Act, 1964, - 5 - an agricultural land cannot be transferred to an non agriculturist. Therefore, if the assessee claims that he had transferred agricultural land the it is not tenable in the eyes of law"? 4. Learned counsel for the assessee submits that the tax effect in this appeal is less than Rs.2 Crores and therefore, the appeal should not be entertained at the instance of the revenue in view of the Circular No.09/2024 dated 17.09.2024 issued by the Central Board of Direct Taxes. It is also submitted that the aforesaid Circular binds the revenue. 5. On the other hand, learned counsel for the revenue submits that he be granted liberty to revive the appeal in case the matter falls within the exceptions under the aforesaid Circular dated 17.09.2024 and Circular No.5/2024 dated 15.03.2024. 6. In view of the aforesaid submissions, the appeal 4. Learned counsel for the assessee submits that the tax effect in this appeal is less than Rs.2 Crores and therefore, the appeal should not be entertained at the instance of the revenue in view of the Circular No.09/2024 dated 17.09.2024 issued by the Central Board of Direct Taxes. It is also submitted that the aforesaid Circular binds the revenue. 5. On the other hand, learned counsel for the revenue submits that he be granted liberty to revive the appeal in case the matter falls within the exceptions under the aforesaid Circular dated 17.09.2024 and Circular No.5/2024 dated 15.03.2024. 6. In view of the aforesaid submissions, the appeal is disposed of with liberty as prayed for by the learned counsel for the revenue. However, the question of law is kept open to be adjudicated in an appropriate proceeding. Sd/- (S.G.PANDIT) JUDGE Sd/- (C.M. POONACHA) JUDGE SMJ List No.: 4 Sl No.: 37