2013 (9) TMI 1117 - AT - Income Tax

Agricultural land - municipal limits - agricultural land - Held that - The impugned land is situated beyond the prescribed limit from the municipality, recorded as agricultural land in the revenue record, agricultural operation was done by one of the brothers, we are of the considered opinion that the no capital gains tax is exigible on sale of such land. So far as the objection of the learned CIT DR that the Tehsildar is not a competent authority for measuring the distance, we are not satisfied with such submission especially when the Inspector of the department of Income tax and Tehsildar both have certified that the land is situated beyond 8 kms from the municipal limit. We are of the considered opinion that Tehsildar is the most competent revenue Officer to certify the proof of agricultural operation, distance of land from a particular place, rate of land, etc.

Issues Involved:
1. Justification of CIT(A) in relying on the decision in the case of Ashok Shukla regarding the measurement of distance for agricultural land under section 2(14)(iii) of the IT Act.
2. Determination of whether the land sold was agricultural land and situated beyond 8 kms from the municipal limit.
3. Examination of the evidence and documents presented to support the claim of agricultural land.
4. Competence of Tehsildar in issuing certificates regarding the distance and character of the land.
5. Applicability of various judicial precedents in determining the nature of the land and the method of measuring distance.

Detailed Analysis:

1. Justification of CIT(A) in relying on the decision in the case of Ashok Shukla:
The Tribunal examined whether the CIT(A) was justified in relying on the decision in the case of Ashok Shukla, which the Department had not accepted. The core issue was the method of measuring distance for the purposes of section 2(14)(iii) of the IT Act. The CIT(A) had relied on the road distance method rather than the straight-line method, which was contested by the Department. The Tribunal upheld the CIT(A)'s reliance on the decision in Ashok Shukla, noting that the facts were identical and arising from the same property transaction involving co-owners.

2. Determination of whether the land sold was agricultural land and situated beyond 8 kms from the municipal limit:
The Tribunal considered whether the land sold was agricultural land and beyond 8 kms from the municipal limit. The assessee claimed exemption from capital gains, asserting the land was agricultural and situated in the village Lasudia Parmar. The Tribunal noted that the land was recorded as agricultural in the revenue records and agricultural operations were carried out by one of the brothers. Multiple certificates, including those from the Tehsildar and the Executive Engineer, confirmed the land was beyond 8 kms from the municipal limit.

3. Examination of the evidence and documents presented to support the claim of agricultural land:
The Tribunal scrutinized various documents, including the map prepared by the Income Tax Inspector, certificates from the Executive Engineer and the Tehsildar, and a Google map, all indicating the land was beyond 9 kms from the municipal limit. The Tribunal emphasized that the land was recorded as agricultural in the revenue records and agricultural operations were conducted, thereby qualifying it as agricultural land under section 2(14)(iii).

4. Competence of Tehsildar in issuing certificates regarding the distance and character of the land:
The Tribunal addressed the Department's contention that the Tehsildar was not competent to issue certificates regarding the distance of the land from the municipal limit. The Tribunal rejected this argument, affirming that the Tehsildar, as a revenue officer, was competent to certify the distance and the agricultural nature of the land. This view was supported by judicial precedents, including the decision from the Punjab & Haryana High Court in CIT vs. Lalsingh & Others.

5. Applicability of various judicial precedents in determining the nature of the land and the method of measuring distance:
The Tribunal considered several judicial precedents cited by both parties. It concluded that the method of measuring distance should be the road distance, not the straight-line method, as supported by decisions like Laukik Developers and CIT vs. Satinder Pal Singh. The Tribunal also noted that the character of the land as agricultural was supported by the fact that agricultural operations were conducted, and the land was recorded as agricultural in the revenue records. The Tribunal dismissed the Department's reliance on cases where the land was situated within municipal limits or used for non-agricultural purposes.

Conclusion:
The Tribunal dismissed the appeals of the Revenue, affirming the CIT(A)'s decision that the land was agricultural and beyond 8 kms from the municipal limit. The cross-objection by the assessee was also dismissed as it was merely in support of the CIT(A)'s order. The Tribunal's decision was pronounced in the open Court on 23.9.2013.

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