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TMI Blog2015 (7) TMI 104X X X X Extracts X X X X X X X X Extracts X X X X ..... the sale consideration was not taxable on the sale of said land i.e. either on account of capital gain or on account of business income. Any consideration received out of sale of agricultural land, cannot be treated as business income for the purpose of capital gain or for the purpose of business income, whatever the case may be.- Decided in favour of assessee. - ITA No.112/Nag/2012 , ITA No.113/Nag/2012, IT A No.1 47 /Nag/2012 - - - Dated:- 22-3-2013 - SHRI R.K.GUPTA, SHRI D.KARUNAKARA RAO, JJ For The Appellant : Mr. M.Mani And Mr. K.P.Dewani For The Respondent : Dr. Millind Bhusari ORDER These three appeals have been preferred by three different assessees before the ITAT Nagpur Bench, Nagpur, against the order of leaned CIT(A)-I, Nagpur (Maharashtra) relating to assessment year 2009-10, which have been heard through E-Court, Mumbai. 2. Since common issues are involved in all the cases, therefore, for the sake of convenience, these cases have been heard and disposed of by this consolidated order. 3. In all the appeals, the aforesaid assessees have raised ground against the action of the learned CIT(A) in regard to not accepting the claim of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agpur is beyond a distance of 8 km from the municipal jurisdiction of Nagpur. The certificate from Patwari was submitted to support its claim. However AO rejected the assessee s contention and held that the property was within the distance of 8 km from municipal limits and brought to tax an amount of ₹ 22,08,365/-. AO relied on section 11 of the General Clauses Act, 1897 in support that distance must be measured not by road distance but by the shortest distance as the crow s flight . 5. Being aggrieved with the orders of the AO, these assessees preferred appeals before the CIT(A), wherein action of the AO was challenged. Detail submissions were filed before the CIT(A). It was explained that the land purchased by these three assessees were agricultural land and in the same shape i.e. agricultural land were sold by these three assessees. The land in question situated at Mouza Pipla are beyond Municipal limit of 8 kms. A certificate from village patwari confirming that the land is situated beyond limit of 8 kms of municipal limit, was filed. A copy in the revenue record from which it would clear that it was shown as agricultural land in revenue record was also filed. It was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... approach road of the property in question from the municipal limits and not by a straight line distance on horizontal plane area i.e. crow's flight. The CIT(A) observed that this argument is based on the contention that the extent and scope for, urbanization of that area and other relevant considerations are to be taken into account. Adopting the latter would amount to ignoring the statutory requirement of keeping in view the extent of the urbanization. Thereafter drew inference from the decision of the Hon ble Supreme Court in the case of N.C.Budhiraja Co., reported in 204 ITR 412, whereby it was stated that the principle of adopting a liberal interpretation which advances the purpose and object of beneficial provision cannot be carried to the extent of doing violence to the plain and simple language used in the enactment. It would not be reasonable or permissible for the Court to re-write the section or substitute words or its own for the actual words employed by the legislature, in the name of giving effect to the supposed underlying object. Accordingly, the CIT(A) held that the straight line method of horizontal plane i.e. crows flight is to be adopted and not the approa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A) is not correct as he has not appreciated the decision of the Hon ble Punjab and Haryana High Court in the case of Satinder Pal Singh (supra). 7. Per Contra, learned DR, firstly placed heavily reliance on the order of the learned CIT(A). It was further submitted that the provisions of Section2(14) are to be taken as strictly and not to be read as harmoniously as held by the Hon ble Apex Court in the case of N.C.Budhiraja CO (supra). Reliance was also placed on the decision of Hon ble Bombay High Court CIT Vs T. P. Asrani, reported in (1980) 122 ITR 735 (Bom), whereby it has been held that interpretation of the provision has to be considered in a strict manner and not harmoniously. It was further submitted that though there is a direction decision of the Hon ble Punjab and Haryana High Court, however, the same has a persuasive value only and, therefore, the decision of the Hon ble Punjab and Haryana High Court was rightly not followed by the learned CIT(A). It was submitted that the land has been sold to the builders and it is very near to the municipality i.e. less than 8 kms., if crows flight distance is taken and huge amount earned by the assessee as the lands were sold to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gnificance which would yield to the principle of measuring distance in terms of approach road rather than by straight line on horizontal plane, this contention of learned CIT(A) has also been considered by the Hon ble Punjab and Haryana High Court and has observed that the principle of measurement of distance is considered as 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 view the extent of urbanization. Such a course would be illusory, which is in pursuance of the aforesaid provision that Notification No.9447 dated.6th January, 1994 has been issued by the Central Government. In respect of the State of Punjab, at item No.18, the sub-division Khanna has been listed at serial No.19. It has inter alia been specified that area upto 2 kms. from the municipal limits in all directions has to be regarded as other than agricultural land. Once the stator guidance of taking into account the extent and scope of urbanization of the area has to be reckoned while issuing any such notification then it would be incongruous to the argument of the Revenue that the distance of land should be measured by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and considering the decision of the Hon ble Gujarat High Court in the case of Balkrishna Hariballabhadas Vs. CIT, reported in 138 ITR 245, which was relied upon by the learned DR and found that the measurement has to be adopted by the approach road and not by straight line method. Reliance was also placed on the decision of the Hon ble Punjab and Haryana High Court in the case of Satinder Pal Singh (supra). 13. In case of ACIT Vs. M/s Shagun Infrastructure Pvt. Ltd., decided in ITA No.209/Nag/2009, for assessment year 2006-07, vide order dated 27-6-2011, the Nagpur Bench of the Tribunal has held that the land in question which was situated more than 8 kms. from the local municipal limit and is clearly agricultural land in terms of Section 2(14)(iii) of the Act,, therefore, any income from such land including profit arising from sale of such agricultural land is not assessable as income. 14. In case of ACIT Vs. Gaurav Khandelwal, decided in ITA No.195/Agra/2010, for assessment year 2006-07, the Agra Bench of the Tribunal following the decision of Mumbai Bench in case of Laukik Developers (supra) and the decision of Hon ble Punjab and Haryana High Court in the case of Satinder ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kms. has to be measured through approach road and not by straight line distance on horizontal plane or crow s flight. Hence, this issue is decided in favour of the assessees. 16. Regarding the issue in regard to whether the sale consideration out of agricultural income is assessable as business income or not, once we have held that this was an agricultural land and, therefore, any consideration out of sale of agricultural land, which is not assessable as the land was situated beyond 8 kms., therefore, the direction of the learned CIT(A) that the surplus may be treated as business income, has become now meaningless. Even and otherwise, this issue is also decided by various High Courts including the Hon ble Bombay High Court. Though learned CIT(A) has placed reliance on the decision of the Hon ble Bombay High Court in case of Gopal Ramnarayan Kasat, reported in 9 Taxman.com 236 (Bom), however, in a latest decision the Hon ble Bombay High Court in the case of CIT Vs. Smt. Debbie Alemao, reported in (2011) 331 ITR 59, has held that the land which was shown as agricultural land in the revenue records and never sought to be used for non-agricultural purposes by the assessee till it wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hile holding so, the decision in the case of DLF United Limited (supra), was taken into consideration by the Hon ble Delhi High Court. 20. In case of Shri Satyanarayan O. Agrawal Vs. ADCIT, decided in ITA No.169/Nag/2012 for assessment year 2007-08, similar view also was taken following the various case laws and ultimately it was held that the consideration received out of sale of agricultural land was not taxable. 21. Since this issue has already been decided by various benches of the Tribunal and the Hon ble Bombay High Court as well as the Hon ble Delhi High Court and the decision of the Hon ble Delhi High Court in the case of DLF United Limited (supra), which has been confirmed by the Hon ble Supreme Court, therefore, we hold that any consideration received out of sale of agricultural land, cannot be treated as business income for the purpose of capital gain or for the purpose of business income, whatever the case may be. In view of the aforesaid facts and circumstances of the case, we allow this ground in favour of all the assessees. 22. In regard to charging of in terest, it is consequential in nature. Therefore, the AO is directed to allow the consequential relief t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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