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TMI Blog2014 (12) TMI 599X X X X Extracts X X X X X X X X Extracts X X X X ..... e the land was situated in the State of Punjab - distance of the land under consideration can be measured from Gurgaon Municipal Corporation for the purpose of Section 2(14)(iii)(b). Whether aerial distance is to be considered or as per road distance – Held that:- CIT(A) rightly held that the distance is to be measured as per road distance and not as per aerial distance – following the decision in CIT v. Satinder Pal Singh [2010 (1) TMI 752 - Punjab and Haryana High Court] - ‘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 – thus, the distance of the land is to be measured as per road distance and not aerial distance as per crow’s flight. Whether distance up to the land should be considered or up to the village within which such land is situated – Held that:- The view taken by the CIT(A) cannot be accepted - the land should be within the area whose distance is not more than 8 Kms. - There is no mention that if the land is in any particular village, then the distance of 8 Kms. is to be consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... D. Agrawal And Shri H. S. Sidhu,JJ. For the Petitioner : Shri Vikram Sahay, Sr.DR. For the Respondent : Shri V.K. Aggarwal, AR. ORDER Per G. D. Agrawal, VP :- ITA No.4603/Del/2011 Assessee s appeal This appeal by the assessee is directed against the order of learned CIT(A)-XXVII, New Delhi dated 5th August, 2011 for the AY 2006-07. 2. Though the assessee has raised as many as thirteen grounds of appeal, they are all against the addition of ₹ 7,75,12,500/- made by the Assessing Officer on account of long term capital gain. The facts of the case are that for the year under consideration, the assessee, viz., Late Shri Randhir Singh Kadan filed the return declaring total income of ₹ 25,64,290/-. During the course of assessment proceedings, the Assessing Officer noticed that on 9.9.2005, the assessee had transferred the property admeasuring 5.9625 acres at Village Ghata, Tehsil Sohna, District Gurgaon. It was claimed by the assessee that the capital gain from the sale of above land is not taxable because the land is agricultural land which does not fall within the definition of capital asset under Section 2(14). The assessee had claimed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clause (b) of Section 2(14)(iii), the agricultural land sold by the assessee was a capital asset. He, therefore, made the addition of ₹ 7,75,12,500/- as long term capital gain. On appeal, learned CIT(A) did not accept the Assessing Officer s view that the distance is to be measured as per aerial distance. He also rejected both the certificates relied upon by the Assessing Officer. The relevant finding of the CIT(A) in this regard reads as under:- 37. As far as the AO's reliance on the certificates/letters mentioned above is concerned, the same was admittedly with respect to aerial distance of the land from the Municipal limits of Gurgaon. As has already been held above, the distance is to be measured along the road from the local limits of Gurgaon Municipality of the area in which the land is situated. Therefore, these letters are not relevant for the purpose of the issue in hand and are accordingly rejected. It may be mentioned here that the appellant had pointed out a number of defects in these certificates relied upon by the AO vide his written submissions filed during the course of the appellate proceedings especially vide letter dated 25.02.2011. However, the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certificate from Officer Surveyor on behalf of Directorate, Survey, Air. The certificates furnished by the assessee were confronted to the Assessing Officer and vice-versa. After considering all these new certificates furnished before him as well as the comments of the Assessing Officer and the assessee, learned CIT(A) rejected the certificates furnished by the assessee on the ground that the distance is to be taken from the local limits of the municipal corporation to the area in which land is situated and not up to the land as mentioned in the report of the Patwari. He also rejected the report of the Assistant Engineer on the ground that the Assistant Engineer did not appear before the Assessing Officer and moreover, in the certificate, the name of the Assistant Engineer is not mentioned. He accepted the certificate furnished by the Assessing Officer which was from Directorate of Survey (Air) and DGDC Data Center, New Delhi. On the basis of the above certificate, he came to the conclusion that the land sold by the assessee was a capital asset in terms of provisions of Section 2(14)(iii)(b) of the Act. The assessee, aggrieved with the order of learned CIT(A), is in appeal before u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . As per Revenue, clause (b) is applicable while, as per assessee, even clause (b) is not applicable. To buttress his claim, it was the contention of the assessee that the distance of the land is to be considered from the local limits of Sohna Municipality and not Gurgaon Municipality because the land is within Sohna Tehsil. This contention of the assessee has not been accepted by either of the lower authorities. From a plain reading of clause (b) also makes it clear that this clause would be applicable where the land is situated in any area which is not more than 8 Kms. from the local limits of any municipality. Thus, the provisions of clause (b) of Section 2(14)(iii) are unambiguous, plain and simple i.e. distance of the land can be considered from the local limits of any of the municipalities. While rejecting the assessee s claim, the learned CIT(A) has relied upon the decision of Hon'ble Punjab Haryana High Court in the case of Smt. Anjana Sehgal vide Income Tax Appeal No.276 of 2004, wherein their Lordships held as under:- A perusal of the above provisions makes it clear that what is intended to be covered in term Capital Asset is agricultural land comprised within ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c 2(14) is very clear that it should be measured as per road distance no infirmity in Tribunal s order Revenue s appeal dismissed Held 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 the extent of, and scope for urbanization of that area and other relevant considerations. The reckoning of urbanization as a factor for prescribing the distance is of significance which would yield to the principle of measuring distance in terms of approach road rather than by straight line on horizontal plane. If principle of measurement of distance is considered straight line distance on horizontal plane or as per crow s flight then it would have no relationship with the statutory requirement of keeping in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce from the outer limit of Gurgaon municipal corporation up to the land, though the distance was taken as per crow s flight. However, during remand proceedings, the Assessing Officer has suggested that the distance is to be taken from the local limits of the municipal corporation to the area in which land is situated and not up to the land as mentioned in the report of the Patwari. This contention of the Assessing Officer is accepted by the learned CIT(A) which is evident from paragraph 47 of his order which is reproduced below:- 47. The contents of the letter and AO's objections to the same have been carefully considered. As already held above, the distance is to be taken from the local limits from the Municipal Corporation to the area in which the land is situated and not up to the land as mentioned in the report of the Patwari. Therefore, this report cannot be relied upon. As far as report of the Asstt. Engineer, Gurgaon is concerned, no name of the Assistant Engineer is mentioned who has issued this report. A letter was written by the A.O. to Assistant Engineer, Gurgaon for attending his office on 23.7.11. Nobody attended the A.O. s office on that date, therefore, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of CIT Vs. Lal Singh Ors. [2010] 325 ITR 588 to support his claim that the distance is to be measured up to the land and not up to the village in which land is situated. In the above mentioned case, the assessee had produced a certificate from the Tehsildar to the effect that the land which the assessee had sold situated beyond 8 Kms. from Gurgaon municipal limits. The Assessing Officer did not accept the report of the Tehsildar and instead relied upon the report of the Inspector rejected the assessee s claim. On appeal, learned CIT(A) as well as ITAT accepted the certificate from the Tehsildar. The appeal by the Revenue to the High Court was dismissed and their Lordships held as under:- Held, dismissing the appeal, that the Commissioner (Appeals) had rightly not accepted the report of the inspector. In the report, neither the khasra number of the land of the assessee was given nor had it been explained how the distance of the land from the municipal limits was measured. On the other hand, the Commissioner (Appeals) has rightly relied upon the report given by the Tehsildar on the application of the Assessing Officer himself and it could not be discarded. 17. The lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... face. The presumption of the Assessing Officer as well as CIT(A) that the area means the village in which such land is situated is without any basis. In fact, the correct interpretation of the word in any area within such distance not being more than 8 Kms. from the local limits of any municipality would mean the land should be within such area which is not more than 8 Kms. from the local limit of the municipality. In the graphical presentation given by the learned counsel which is annexed as Annexure-A to this order, he has given two circles, one circle is mentioned as municipality which is marked as Circle-1 and the other is a big circle which is marked as Circle-2 which has an outer distance of 8 Kms. from the local limit of the municipality in all directions. The land within Circle-1 would be covered by clause (a) of Section 2(14)(iii) and the land outside Circle-1 but within Circle-2 would fall within the ambit of clause (b) of Section 2(14)(iii). Therefore, in effect, the land should be within the distance of 8 Kms. from the local limit of the municipality and not from the outer limit of the village in which such land falls. (D) Final determination of distance of the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Survey (Air) DGDC. 21. In the certificate, it has been mentioned by the Officer Surveyor that he has measured the distance from the outer limit of Gurgaon municipal boundary to the outer limit of Ghata village. Thus, the distance is not measured up to the land but up to the Ghata village. Moreover, the distance has not been measured by actual physical verification but on the basis of digital method from Survey map. While discussing issue (c), we have already mentioned that the distance is to be measured from the land and not from the limits of the village. As per the certificate, its distance at western limit of Ghata village is 9.21 Kms. from the municipal boundary of Gurgaon. Thus, even as per this certificate, some land in this village is certainly more than 8 Kms. from the limits of Gurgaon municipal boundary. Therefore, in our opinion, this certificate cannot be relied upon to adjudicate the distance of the land from outer limit of Gurgaon municipal boundary. 22. The assessee has produced the certificate dated 31st January, 2011 from Tehsildar, Sohna in which the distance of the land from Rajeev Chowk, Gurgaon, i.e., the outer limit of Gurgaon municipal area is certif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nion, merely because the Assistant Engineer did not turn up in response to notice issued under Section 131, that cannot be a ground for rejecting the certificate. His non-appearance is not the fault of the assessee. The Assessing Officer had enough power to enforce the attendance of a witness and moreover, he could have got verified the certificate by sending the Inspector. 25. The assessee had also produced the certificates from Shri I.D. Rustogi, former Additional Director General, CPWD who had certified the distance of the land from Gurgaon Municipality as 10.4 Kms. in which he has given point to point route distance. No valid reason has been given by the Revenue authorities for rejecting this certificate. Considering the certificate of the Tehsildar coupled with his statement before the Assessing Officer, certificate of the Assistant Engineer, Gurgaon Municipal Corporation and the certificate from Shri I.D. Rustogi, former Additional Director General, CPWD, in our opinion, the distance of the land from Gurgaon Municipal Corporation is established to be beyond 8 Kms. In view of the above, we hold that the land sold by the assessee does not fall within the ambit of either clau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otiations for transfer of a capital asset, if, - (a) such sum is forfeited; and (b) the negotiations do not result in transfer of such capital asset. 30. He, therefore, pointed out that the advance received in the course of negotiations for transfer of capital asset would be taxable only after 1.4.2015 and not earlier. The assessment year under consideration is 2006-07 when there was no such clause under Section 56. At the relevant time, Section 51 was in existence which provided for adjustment of the forfeited advance against the cost of acquisition of the asset. Section 51 reads as under:- 51. Where any capital asset was on any previous occasion the subject of negotiations for its transfer, any advance or other money received and retained by the assessee in respect of such negotiations shall be deducted from the cost for which the asset was acquired or the written down value or the fair market value, as the case may be, in computing the cost of acquisition. 31. Thus, as per Section 51, any advance received and forfeited by the assessee in respect of any negotiations for transfer of capital asset is to be deducted from the cost of the asset, the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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