Revenue record is only one of evidence and not a conclusive piece of evidence that land is used for agricultural purposes – Supreme Court dismisses SLP of assessee.
In a recent case, Hon’ble Supreme Court has declined to interfere with the judgment of the Bombay High Court in holding that revenue record is only one of the evidence and not a conclusive piece of evidence that land is used for agricultural purposes.
ABCAUS Case Law Citation:
4673 (2025) (07) abcaus.in SC
Important Case Laws relied upon by Parties:
Vijay Kumar Talwar vs Commissioner of Income-tax
The Assessing Officer (AO) during the assessment proceedings, noticed that the assessee in question had declared Capital Gain on sale of agricultural land and claimed exemption u/s 2(14)(iii) of the Act.
The assessee was asked to furnish the details regarding the area of the land, location, nearby Municipal Corporation, Town and the evidence related with agricultural activities and the agricultural produced for last three years.
The assessee in its reply contended that the land was situated at Village which fall within the Gram Panchayat and the nearby Town having Municipality which was 72 KM away from the said Village. It was also stated that the land was at the primary stage of development and no agricultural income was generated during the last three years.
The reply was not accepted by AO holding that any land which was open or vacant and not used for any agricultural or other allied activities, land was under development could not be regarded as agricultural land.
The AO further observed that the multiple pieces of land in the said Village were under commercial development because of proximity to prominent places in Mumbai. The assessee was not a farmer and purchased the said land not with the intention of agricultural activities but to develop the land and sell the same for commercial gain.
Thus, the AO not treated the said land as agricultural land and the gain arising therefrom were brought to tax thereby denying exemption claimed u/s 2(14)(iii).
The CIT(A) while considering the contention of the assessee observed that in the return of income the assessee has not revealed any agricultural income. The said land was shown by assessee in his balance-sheet as “fixed asset”. The assessee along with his brother entered in an agreement with purchaser for sale of entire land.
The CIT(A) further observed that under the recital of Conveyance Deed, the assessee had referred the property “for the purpose of development”.
The CIT(A) also observed the decision of the Hon’ble Supreme Court wherein it was held that the agricultural land sold to Housing Society, the land though entered in Revenue record as agricultural and profit on sale assessable to Capital Gain tax.
The CIT(A) further examined the activities undertaken by the assessee for a period of four years and concluded that there was no agricultural activities undertaken by the assessee except developing the land as no verifiable evidence is placed by assessee and confirmed the action of AO.
Before the Tribunal the assessee raised an additional ground that in the event of the land is not considered as agricultural asset, the assessee be allowed the benefit of LTCG and the deductions on account of index cost of acquisition and the benefit of beneficial rate of tax under section 112 of the Act.
The Tribunal noted that the AO had not disputed the fact that impugned land is at the 7 distance of more than 8 KM from the local limit of Municipalities and less population as provided u/s 2(14)(iii) of the Act.
The Tribunal observed that decision of the Hon’ble Supreme Court was applicable on the fact of the present case. The assessee was permanent resident of Mumbai City. The assessee had not shown any income from agriculture activities. No evidence to substantiate that any agriculture activity was undertaken by the assessee during the period of holding the land with him, was shown.
The Tribunal further stated that the assessee had claimed that during the period of holding installed irrigation system, created check dam, water sprinkle etc. No evidence of such activity is filed on record. However, none of the activity carried by the assessee during the period qualified as agriculture activity.
Regarding the alternate claim for deduction on acquisition of cost of improvement the Tribunal restored the additional ground of appeal to the file of AO to verify the Cost of Acquisition and improvement thereon and grant the appropriate relief to the assessee.
Not satisfied, the assessee approached High Court.
Before the Hon’ble High Court, the assessee submitted that the authority below did not consider the Revenue record to show that the land in question was an agricultural land which was a vital material or piece of evidence, and therefore, the finding recorded is vitiated by perversity.
It was further submitted that even the finding of fact may give rise to a substantial question of law if such findings of fact is based on no evidence and/or while arriving at such finding, relevant admissible evidence was not considered or if inadmissible evidence was considered or if legal principles were not applied in appreciating the evidence or where the evidence had not been decided.
The Hon’ble High Court this case observed that the instant case entirely turns on the appreciation of factual material on record. The AO, FAA, and ITAT had recorded concurrent findings that the property in question was not used for agricultural purposes. Practically, the entire material and all the contentions now raised before us were considered by the three authorities threadbare.
The Hon’ble High Court observed that there is no merit in the contention that the three authorities did not consider form 7/12 (revenue record) or the ledger entries. In this case, almost all three authorities, including mainly primary fact-finding authority, i.e. AO, have dealt with the significance of the revenue record.
The Hon’ble High Court held that revenue record is only one of the pieces of evidence that the assessee could have been legitimately relied upon. However, that was by no means any conclusive piece of evidence, as was explained by Hon’ble Supreme Court. Similarly, the authorities below had dealt with the self serving ledger entries but quite correctly disbelieved those entries. Even after indulging the assessee, the authorities had held that those expenses were consistent with even the commercial development of the property in question. The authorities after elaborately examining the effect of survey records and other evidence found that the assessee relied upon, recorded clear and cogent findings of fact.
The Hon’ble High Court held that it was not a case where the authorities had not considered the material placed on record by the assessee. However, after considering and evaluating such material and weighing it against the other material available on record, the three authorities have concluded the property in question was not used for any agricultural purpose by the assessee. None of the three authorities had violated any legal principles regarding evaluating such material.
The Hon’ble High Court further opined that in an appeal under Section 260A, there is no question of the High Court going into the sufficiency and adequacy of evidence. This Court is not exercising powers of the First Appellate Court when dealing with appeals under Section 260A of the Income-tax Act. In this case, the findings of fact are supported by more than adequate material on record. The three authorities had ignored no vital pieces of evidence. There were no allegations that the findings were based on irrelevant or inadmissible evidence. No legal principle concerning the appreciation of evidence had been violated.
The Hon’ble High Court held that there was no reasonable ground to entertain the appeal and accordingly, the appeal was dismissed.
Still not satisfied, the assessee challenged the order of the High Court before the Hon’ble Supreme Court by way of filing a Special Leave Petition (SLP). However the SLP was dismissed by the Apex Court with following observation,
“We are not inclined to interfere with the impugned judgment/order of the High Court. Accordingly, the Special Leave Petition is dismissed.”
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