Sunil Bansal v. Assistant Commissioner Of Income Tax, Circle-3, Ncr Building,Statue Circle, Jaipur

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 31/2019 Sunil Bansal S/o Shri Damodar Lal Bansal, Aged About 51 Years,P/o, M/s S.s. Consultant R/o B-31-36, Keshav Path, Suraj Nagar(W) Civil Lines, Jaipur ----Appellant Versus Assistant Commissioner Of Income Tax, Circle-3, Ncr Building,Statue Circle, Jaipur ----Respondent For Appellant(s) : Mr. Gunjan Pathak, Adv.For Respondent(s): HON'BLE THE CHIEF JUSTICE HON'BLE MR. JUSTICE G R MOOLCHANDANI Judgment Reportable Per : S.Ravindra Bhat, CJ29/05/2019 1. This is an assessee’s appeal under Section 260A of theIncome Tax Act, 1961 contends that the Income Tax AppellateTribunal (ITAT) has fallen into error; in its impugned order. Itproposes a question of law i.e. whether the properties sold were tobe excluded from the meaning of capital asset as they wereagricultural land as defined by Section 2(14) of the Act of 1961. 2.The relevant facts are that the assessee reported, (forthe assessment year 2008-2009) certain sale transactions. Hisreturn claimed that the transaction in purchase and sale ofagricultural land could not be included in taxable income in view ofSection 2(14)(iii) of the Act of 1961; in support of his contentionthe assessee relied upon a certificate issued by the concerned Revenue Officer i.e. the Tehsildar to the effect that the land wassituated 8 kilometers from any city municipality limits. The AOhowever, rejected the contention after considering the nature ofthe transactions. The asessee had contended that the landsinitially purchased by him were infact registered and wereintended to be maintained by him in their original character asagriculture lands and were in that form transferred to others wholater got them converted into purposes other than agriculture, forexample toward development etc. It was thus contended that theessential 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 theCIT(A) who accepted his contention and held that having regard tothe circumstances, the primary intention was to retain thecharacter of the property as agriculture land. The revenue’sappeal was allowed by ITAT. 4.It is contended on behalf of the assessee that the ITATfell into error in interfering with the order of the AppellateCommissioner. Learned Counsel emphasised the fact that theassessee primarily derived income from the house properties andother sources and was not engaged in business in any mannerwhatsoever. The purchases of the agriculture land were made forinvestment purposes and not with intention to sell them. 5.Relinace was placed upon Raja Bahadur KamakhyaNarain Singh Vs. CIT- (1970) 77 ITR 253 (SC) and certain otherjudgments in support of the argument that the intention is to bereckoned from the nature of the transactions rather than anyother factor. It was also urged that the primary interpretation ofthe statue should be a liberal one. Thus the ITAT fell nto error bysetting aside the findings of the Appellate Commissioner. 6.The ITAT in its impugned order has not only consideredthe particular transaction, reported by the assessee but alsoanalysed over a period of time, the nature of the sale and purchase activities. The ITAT reasoning in this regard is as follows:- 5.Relinace was placed upon Raja Bahadur KamakhyaNarain Singh Vs. CIT- (1970) 77 ITR 253 (SC) and certain otherjudgments in support of the argument that the intention is to bereckoned from the nature of the transactions rather than anyother factor. It was also urged that the primary interpretation ofthe statue should be a liberal one. Thus the ITAT fell nto error bysetting aside the findings of the Appellate Commissioner. 6.The ITAT in its impugned order has not only consideredthe particular transaction, reported by the assessee but alsoanalysed over a period of time, the nature of the sale and purchase activities. The ITAT reasoning in this regard is as follows:- “7. We have considered the rival submissions as well as relevantmaterial on record. The first issue arises for our consideration andadjudication is whether the transaction of purchase and salecarried out by the assessee during the year under considerationare in the nature of trade and consequently the surplus/gainarising from sale of the lands is in the nature of business incomeor it is capital gain. The details of purchase and sale of the landsare given by the Assessing Officer in para 2 of the assessmentorder as under: There is no dispute that there are 16 transactions of purchase ofthe lands during the financial year relevant to the assessmentyear under consideration and equal number of transactions of saleby the assessee. On careful analysis of these details, it could benoted that some of the lands purchased during the year were alsosold during the same year and even within a period of less thanone month. It is evident from these details that the landpurchased during the year bearing khasra No. 424/5 on31/5/2007 was sold on 30/6/2007. Therefore, the said sale waswithin a period of 13 days from the date of purchase. Similarlysome of the other transactions of land bearing khasara No. 42 and65 were also sold within a period of four months from the date ofpurchase. Thus, it is discernable from the number of transactionscarried out by the assessee one after another during the yearunder consideration and the period of holding is less than monthand in some cases within few months which cannot be on the faceof it regarded as investments made by the assessee in agriculturallands. The intention of the assessee for purchase of the land isalso not in dispute that it was for resale and within a short periodof time though the sale is only to the companies of which theassessee is a Director. Thus, it is apparent that the assessee wasacting as an interface to purchase the lands from the land ownersand then converted in non- agricultural use and sold to thesecompanies who are in the business of real estate.” 7.In all cases, the Court’s conclusions with respect to theintention of assessee with regard to the specific transactions is tobe ganged not merely from what he or the concerned entitycontends but rather on an appreciation of the overall facts andcircumstances presented to the Court at the time of proceeding.8.This Court is of the opinion that the ITAT’s conclusionswith rejecting the assessee’s arguments that the intention wasalways to retain the properties acquired, as agricultural land andnot 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 withrespect to the facts; the findings are essentially on an applicationmind based upon the factual material. In the opinion of the Court,no substantial question of law is involved, which calls forinterpretation. 9.For the above reasons the appeal is dismissed. (G R MOOLCHANDANI),J (S. RAVINDRA BHAT),CJ N.Gandhi/Aks/s-75