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TMI Blog2001 (8) TMI 291X X X X Extracts X X X X X X X X Extracts X X X X ..... e are clearly distinguishable from the present case." 2. The assessee has also filed a cross-objection in ITA No. 1178/Hyd./1997, for the assessment year 1985-86 oil the following grounds: " 1. The learned Commissioner of Income-tax (Appeals) erred in holding that land bearing survey No. 60 sold by the respondent is not an agricultural land. The CIT(A) failed to note that agricultural operations were being carried in the land and various crops were grown and the land was assessed to land revenue, pahanies and certificates of revenue Department conclusively established the fact that the land was agricultural land. 2. The CIT(A) further erred in not considering the fact that tile above agricultural land is situated beyond 8 kms. from in the municipal limits and that the above fact was supported with certificates from Government authorities and therefore capital gains on sale of land if any are not liable to tax. 3. Without prejudice to the above the respondent contends that investment of Rs. One lakh already made in the specified bounds under section 54E of the Act and further investment of Rs. 4 lakhs sought in the specified bounds from out of cash seized in search operation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal before the Tribunal. While disposing of the appeals in the assessee's own case in ITA. Nos. 772 773/Hyd/1989, the ITAT, Hyderabad Bench "A" by its order dated 26-5-1994 restored the appeal and directed the learned Commissioner of Income tax (Appeals) to determine the nature of land sold whether agriculture or not and that the land is located beyond 8 kms. from the municipal limits of the Hyderabad and whether the amount of Rs. 1,272 paid by the assessee as a Protected Tenant in respect of the Inam land constituted cost of acquisition of land and determine capital gains. 6. Pursuant to the above, the learned Commissioner of Income-tax (Appeals) by his impugned order dated 31-3-1997 disposed off the appeal and held that as far as 60 per cent share in the land is concerned the ownership rights have vested in the assessee without any payment of cost by virtue of A.P. (Telangana) Tenancy and Agricultural Lands Act, 1950 in his status as a Protected Tenant and no amount can be charged to tax as capital gains by following the decision of the Jurisdictional High Court in the case of CIT v. Markapakula Agamma [1987] 165 ITR 386 (AP). 7. As regards to the balance of 40 per cent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder the A.P. (Telangana) Abolition of Inams Act, 1955, no such procedure has been envisaged. The words like "Purchase", "Offer", "Sale Deed" do not figure in the A.P. (Telangana) Abolition of Inams Act, 1955. He is, therefore, of the view that payment of Rs. 1,272 is not for the acquisition of the occupancy right, but for its formal recognition. Moreover, the cost of acquisition has to be fair and just and equitable an should represent the fair market value of the property and in the present case it cannot be argued that Rs. 1,272 represents a fair market value of the property. On the facts and circumstances of the case, the learned Commissioner of Income-tax (Appeals) held that in the absence of any cost, the assessee would not be liable to pay any tax on capital gains even with regard to 40 per cent of his interest in the land. 8. Aggrieved by the order of the learned Commissioner of Income-tax (Appeals), the Revenue has filed appeal before the Tribunal. As regards to the character of land in question, the learned Commissioner of Income tax (Appeals) has agreed with the decision of the Assessing Officer and held that land in question is a non-agricultural land notwithstanding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced by the learned Departmental Representative and submitted that the agricultural land bearing Survey No. 60 of Sahebnagar, Kalan Village, admeasuring 13 acres 32 guntas came into possession of the assessee in the year 1952 as a Tenant under a Registered Lease Deed dated 15-2-1952, obtained from the legal heirs of late Nawab Salarjung-III and the assessee carried on agricultural operations since then and by virtue of A.P. (Telangana) Tenancy and Agricultural Lands Act, 1950, the assessee was declared as a Protected Tenant of the above land and ownership rights to the extent of 60 per cent share in the land were converted upon him without payment of any cost or consideration and that the above land being an Inam land, grant made by the Nizam of Hyderabad Nawab Salarjung-III by virtue of A.P. Abolition of Inams Act, 1955 all the protected Tenants in the State of the Andhra Pradesh were declared as owners in respect of the remaining 40 per cent share. 12. In support of the contentions that where no cost is paid to acquiring ownership rights in an asset, computation of capital gains cannot be made under law, the assessee relied upon the decision of the Supreme Court in the case of C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITA Nos. 772 and 773/Hyd./1997, dated 26-5-1994, in para 17 gave a categorical finding that "in recognition of status as a Protect Tenant, in respect of this land and also in recognition of the right of the appellant under section 7(1) to get himself registered as occupant of this land, the R.D.O. issued formal proceedings under section 7(3) directing registration of the appellant as the occupant of the land in the year 1983. It is not as through for the first time the appellant acquired interest in this land. The Certificate issued by the R.D.O. was only in recognition of the pre-existing right of the appellant to this land as Protected Tenant". The above finding conclusively establish the facts that the assessee did not pay any cost for acquisition of ownership rights in the land and the finding since has not been challenged by the Revenue in any reference, the revenue is now estopped from contending in the present appeal that the payment Rs. 1,272 made to the R.D.O. constituted the cost for acquisition of ownership rights in the land. The Certificate issued by the R.D.O. was only in recognition of pre-existing rights of the assessee and, therefore, there is no element of cost i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s conclusively establish the fact that the land was agriculture in character and agricultural operations were being carried, since earlier years including in the year 1983-84 to the date of sale and kharif crops like Jawar, Bajra etc. are grown therein. There are two wells which served agriculture operations and the land is known as "Chinna Thota Bai". The fact that the agricultural operations were carried and regular irrigation facility was available is also evidenced by the Sale Agreement dated 2-4-1984 entered by the assessee with Mancha Mallesh Yadav and others. 19. Further, the above land was regularly assessed to Land Revenue Tax and pursuant to demand notices, taxes were paid upto the revenue assessment year 1982-83 and particulars of tax payments were filed on record. The assessee had also filed Certificate, dated 20-2-1985, from the concerned Mandal Revenue Officer who had certified that the above land is agriculture in character and agricultural operations were being carried on before sale. The assessee did not convert the agriculture land into non-agriculture land before sale. Under the provisions of Hyderabad Land Revenue Act (of VIII of 1317 Fasli) agriculture land c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Asstt. Executive Engineer P.W. (R B), Hyderabad, dated 6-10-1986 and the other from the Asstt. Engineer, Sub-Division-II, Construction Division-III, Municipal Corporation, Hyderabad, dated 11-8-1986. Above Certificates establish the fact that the lands are situated beyond 8 kms. distance from the municipal limits. The Assessing Officer without disputing the Certificates arrived at a finding that the lands are situated within a distance of 8 kms. based on the measurement by means of scale in map published by the Urban Development Authorities and the fact is also noted in Para 11 of its order. Determining the distance based on scale measurement on map is highly illogical and such distance cannot be relied upon. 21. In the light of the above evidence, the learned counsel for the assessee has submitted that the lands being agricultural land, located at a distance beyond 8 kms. from the municipal limits, on transfer, tax is not liable on capital gains, as it does not constitutes a capital asset within the meaning of section 2(14)(iii)(b) of the Act. By considering from any point of view, the learned counsel for the assessee has submitted that capital gains on sale of the land are n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... him by virtue of A.P. (Telangana) Abolition of Inams Act, 1955 without payment of any consideration and the amount Rs. 1,272 paid to the RDO in 1983 in terms of section 7(3) of the AP (Telangana) Abolition of Inams Act, 1955 was to register the assessee as an occupant of the Inam Land as a Protected Tenant. Therefore, there is no cost of acquisition of the land in dispute and the question of capital gains does not arise for the purpose of income-tax. In support of this contention we would like to reproduce the A.P. (Telangana) Abolition of Inams Act, 1955: Section 2(1)(c) "Inam means land held under a gift or a grant made by the Nizam or by any Jagirdah, holder of a Samsthan or other competent grantor and continued or confirmed by virtue of a muntakhab or other title deed, with or without the condition of service and coupled with the remission of the whole or part of the land revenue thereon and entered as such in the village records and includes- (i) arazi makhta, arazi agrahar and seri inam; and (ii) lands held as inam by virtue of long possession and entered as inam in the village record: Provided that in respect of former jagir areas, the expression inam shall not in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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