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TMI Blog2013 (8) TMI 760X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion of an immovable property under sec.53A of the Act in case of unregistered agreement amounts to a valid transfer - Merely because an agreement to sale has not been registered, which otherwise is in the nature of agreement referred to in section 53A cannot be taken out of ambit of section 2(47)(v) of the Act when parting of the possession of immovable property has taken place. Distance of land from the municipal limit for deciding the land to be agricultural land Method to be adopted - Method of straight line on horizontal plane or as per crow's flight - Contention of the Revenue that the land fell within the notified area as the distance was within 4.5 KMs by following crow fly method - Assessee s specific contention was that actual road distance between municipality and the land transferred was 5.1 kms ie. more than the notified area limit of 5 KMs Held that:- The reckoning of urbanization as a factor for prescribing the distance is of significant which would yield to the principle of measuring distance in terms of approach road rather than by straight line on horizontal plane - Once the statutory guidance of taking into account the extent and scope of urbanizati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nam, which is within the notified distance of 5 kilometres for the Kumbakonam municipality." Whereas supporting the order of Commissioner of Income Tax (Appeals) in principle, the assessee s cross objections are as below:- 1. The Grounds of Appeal raised by the Income Tax Officer against the order of The Commissioner of Income Tax (Appeals), Tiruchirappalli - 620001 dated 19.11.2012 in I.T.A.No.303/10-11 for the above mentioned Assessment Year is contrary to law, facts, and in the circumstances of the case. 2. The CIT (Appeals) erred in mentioning only the letter of the Purchaser dated 07.07.2007 in isolation without mentioning the agreement dated 20th August 2007 to determine the date of transfer even though the contents of the letter were translated into the agreement dated 20.8.2007 which was available in the records of the Assessing Officer as well as in the Appellate Proceedings conducted by him. 3. The ITO consequently failed to appreciate that there was no violation of the Rule 46A of the Income Tax Rules, 1962 in so far as to the reference to the letter dated 07.07.2007 and ought to have appreciated that the fact of handing over of possession on 20.04.2007 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a distance of 5 kms therefrom, the adjoining lands have been notified as capital assets . 5. It is noticed from the file that on 20.4.2007, the assessee entered into an agreement to sell the aforesaid land for Rs.37,96,800/- with a vendee by the name of Shri K. Ganesan. It was an unregistered agreement. The assessee had received an advance sum of Rs.5 lakhs in lieu of parting with the possession of the land. A perusal of the case file reveals that the said agreement is available at Pages 93 to 95. Per assessee, the advance money in question had been deposited in its savings bank account maintained in City Union Bank, Mandaveli Branch and transactions from 01.4.2007 to 31.3.2008 are reflected at Page 89 to 92 of the paper book. 6. After parting with the possession and receiving advance, on 09.6.2007/09.7.2007, the assessee is stated to have filed an application to the village panchayat seeking approval to carve lay out plan of the land. The same was accepted on 11.6.2007. On 7.7.2007, the vendee requested the assessee to sign various documents in the shape of application for the purpose of converting the land into plots. Thereafter, on 20.7.2007, the Village Administrative Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment computing long term capital gains of Rs.31,34,170/- vide order dated 21.12.2010. 8. Aggrieved, the assessee filed appeal. In the course of lower appellate proceedings, it also filed a letter before the Commissioner of Income Tax (Appeals) dated 07.7.2007 (supra). We find that the assessee s appeal has been accepted by the Commissioner of Income Tax (Appeals) by observing as under :- 6. Having verified the contentions of the Authorized Representative of the appellant as well as the Assessing Officer and also the legal position, it is pertinent to rely on the decision of the Hon'ble Supreme Court in the case of Sarifabibi Md. Ibrahim 204 ITR 631(SC) which clearly distinguishes the appellant's case with that of the above decision as under:- 7. The decision of the Hon ble jurisdictional High Court in the case of Sri M.S. Srinivasa Naicker vs. ITO (2007) 292 ITR 482 (Madras) also support the decision mentioned supra in favour of the appellant that agricultural land sold were put to non agricultural use by the purchaser / buyer but this does not have any bearing on the character of the land on the date of sale in the hands of the appellant. The facts which are sim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntative of the appellant has also drawn my attention to the letter issued by ShriK.Ganesan, the purchaser of the land from the appellant dated 7.7.2007 which is quoted as under:- please refer to the sale agreement dated 20.04.2007 entered into between us for purchase of 4.52 acres of your lands for Rs 37,96,800/- (thirty seven lakhs ninety six thousand and eight hundred only). We are now exploring the possibility of converting the subject lands to plots. For this purpose we have to obtain certain approvals from village panchayat and other authorities. The application for the same are to be signed by the person in whose name the lands are standing as on the date of application. Since the above lands have not been registered in our name though we have purchased it and taken possession on 20.04.2007, the applications are to be signed by you. To avoid delay, we request you to please sign the enclosed application which is on our behalf only. The necessary expenses in connection with the development of lands, approval etc, will be incurred by us. - (Sd/-) K Ganesan . 10. Keeping in view of the Hon'ble Supreme Court decision in the case of Sarifabibi Md. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... JCIT vide order dated 20.12.2010(supra). It transpires that in the said order, the land in question has already been held to be agricultural before housing lay out and approval which has gone unrebutted by the Revenue. Moreover, the land in question was acquired in the year 1959. Even the Village Administrative Officer had certified the same to be agricultural but not cultivated for more than two years as in the year 2007. Hence, we hold that once a parcel of land is agricultural, the mere fact that it is lying uncultivated for a short span of time would not change its nature in the absence of any other material contrary to the same. Therefore, we do not find merit in this argument raised by the Revenue. 11. The next submission of the Revenue is that the Commissioner of Income Tax (Appeals) has admitted additional evidence in violation of Rule 46A of Income-tax Rules, ie. without affording an opportunity of hearing to the Assessing Officer. After perusing operative part of the order of Commissioner of Income Tax (Appeals) herein above, we find that though the assessee had produced the said letter in lower appellate proceedings, the same has been nowhere taken note of. That being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... debarred from enforcing against the transferee and persons claiming under him any right in respect of the property of which the transferee has taken or continued in possession, other than a right expressly provided by the terms of the contract: Provided that nothing in this section shall affect the rights of a transferee for consideration who has no notice of the contract or of the part performance thereof." 14. Thus, in our considered opinion, merely because an agreement to sale has not been registered, which otherwise is in the nature of agreement referred to in section 53A cannot be taken out of ambit of section 2(47)(v) of the Act when parting of the possession of immovable property has taken place. The provisions of clause 10 of the MoU dated 20.11.2003 entered into between the assessee along with his brother with the purchaser reads as under: 10. As far as the area of land earmarked for the Developer is concerned, the Developer is at perfect liberty to plan for development/sale of the said area and accordingly develop or sell and the owners will not interfere with the same. But, it is made clear to the Developer that the Developer should not part with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee, town area committee, town committee, or by any other name) or a cantonment board and which has a population of not less than ten thousand according to the last preceding census of which the relevant figures have been published before the first day of the previous year; or (b) in any area within such distance, not being more than eight kilometers, from the local limits of any municipality or cantonment board referred to in item (a), as the Central Government may, having regard to the extent of, and scope for, urbanization of that area and other relevant considerations, specified in this behalf by notification in the Official Gazette . A perusal of the aforesaid provision shows that 'capital asset' would not include any agricultural land which is not situated in any area within such distance as may be specified in this behalf by a notification in the official gazette which may be issued by the Central Government. The maximum distance prescribed by Section 2(14)(iii)(b) of the Act which may be incorporated in the notification could not be more than 8 Kms. from the local limits of municipal committee or cantonment board etc. The notification has to take into account ..... X X X X Extracts X X X X X X X X Extracts X X X X
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