9911796707
TMI Blog2012 (4) TMI 627X X X X Extracts X X X X X X X X Extracts X X X X ..... in law and on facts in confirming the assessment framed by the learned Assistant Commissioner of Income Tax, Circle - 29(1), New Delhi. 2. That the learned Commissioner of Income Tax (Appeals) has erred while confirming the order of assessment and in failing to hold that the Assessing Officer was not justified either on facts or in law to .have made addition of ₹ 8.36 crores as a long term 'capital gain' in respect of gain arising on the transfer of an 'agricultural land', within the meaning of section 2(14)(iii)(b) of the Income Tax Act, 1961. 3. That the learned Assistant Commissioner of Income Tax has failed to appreciate that, the assessee had transferred the land which fell to his share on the death of his father who had acquired the said land in the year 1995-96 as an agricultural land and continued to remain as such with him too, and such a land being not a capital asset, as defined in section 2(14)(iii)(b) of the Income Tax Act, 1961 could not be held to be a capital asset more particularly when no attempt had been made for the change of user. 4. That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that, the lan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f distance of land situated from Badshahpur Ghata Road was beyond 8 K.Ms. and the certificate obtained by the Assessing Officer showing the distance of 7.7 K.Ms., was on the basis of Badshahpur Ghata road which did not exist on the date of transfer (when the sale took place) as, such a road was only completed in September 2008 and was not in existence on 6th September 2007. 10. That the learned Commissioner of Income Tax (Appeals) has further erred in sustaining levy of interest u/s 234B of the Income Tax Act, 1961. It is thus prayed that the addition sustained by the learned Commissioner of Income Tax (Appeals) of ₹ 8.36 crores be deleted and it be held that no interest u/s 234B of the Income Tax Act, 1961 was leviable. 3. In both the appeals, the issue involved is whether the land sold was a capital asset or not within the meaning of section 2(14)(iii)(b) of the Incometax Act, 1961 (Act). The main dispute is that whether or not the impugned land situated in Village Tigra adjoining to Village Samspur in the Tehsil of Gurgaon at the time of sale was beyond 8 kms. from municipal limits of Gurgaon. The assessee put forth the contention that such land was not a ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tehsildar dated 02.12.2010 and Shri Vijay Kumar Naib, Tehsildar dated 03.12.2010, placed at pages 107 - 109, 110 -112 and 113 - 115 respectively. Even in these statements, Shri Jagdish, Patwari in answer to question nos.4 and 5 has given an estimated distance by stating that the land in question was 7 - 8 kms. from the municipal corporation limit. Shri Jagdish Chander, Patwari has also not stated the population of the Village Tigra. Similarly, the Tehsildar, Shri Pankaj Setia has also shown his ignorance that whether the land is situated in the municipal limit or not. Shri Setia has also stated that on the basis of photostat copy of the certificate, he cannot comprehend whether it is issued by our office or not. The statement that certificate was not issued by him has no adverse inference as it was counter signed by Shri Vijay Kumar Naib, Tehsildar and not by Shri Setia. Only for reason that Shri Setia was confronted on the basis of a photocopy, he could not comprehend whether it was issued by his office or not. In the statement, Shri Vijay Kumar, Naib Tehsildar has also not stated about the distance of the village from municipal corporation, Gurgaon. Ld. AR also submitted that su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In fact, the assessee has placed on record before the Assessing Officer computer printouts of the situation of the Village Tigra. As per these printouts, the distance from the municipal limits to Village Kanhai by road as existed was 4.7 kms. and distance by the then road existed at the time of sale of the land, from Village Kanhai to Village Tigra was of 4.4 kms. Thus, the distance of Village Tigra from the municipal limits as per the then existed road was 9.1 kms. and not 7.7 kms. Ld. AR also pleaded that further distance of the land in question was one more kilometer from Village Tigra on the date of sale. The distance shown in the Shizra's maintained as per the Punjab Revenue Act is to be reduced by 0.7 Kms. on account of the shortening of the road, thus the actual distance of the land at the time of the sale as per revenue shizra was 9.260 kms. Ld. AR also pleaded that in view of the decision of Punjab and Haryana High Court in the case of CIT vs. Satinder Pal Singh cited supra, the distance has to be measured on the basis of approach by road. On the basis of approach by road, the distance comes to 8.40 kms. Ld. AR also pleaded that the road situated between Badshahpur t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der consideration was an Agricultural land or not ld. DR submitted as under:- It is undisputed fact that land is a State subject and the usage to which a particular land can be put is exclusively in the domain of the State Govt. In the present case, land falls in the State of Haryana. In the State of Haryana there are three important legislations which deal with the manner in which land is used. (i) Punjab Scheduled Roads and Controlled Areas Restriction of Un-regulated Development Act 1963. (Here-in-after called Land Control Act 1963) (ii) Haryana Development and Regulations of Urban Area Act 1975. (iii) Haryana Urban Development Authority Act 1977 - (Here-in-after called HUDA Act 1977) The first Act i.e. Land Control Act 1963 empowers the State Govt. through the Director Town and Country Planning to declare areas around the scheduled roads enumerated in the Act or in other area which has potential for urbanization to be declared as controlled area . Once any area is declared as controlled area land use in that particular area is controlled and has to be in accordance with the plans made by Director of Town Country Planning or any other person so aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commercial and residential, and no other usage is permitted. Agricultural use is Not Permitted in this entire sector leave along appellants' land. The appellants' land, therefore, as per the Notification issued by Haryana Govt. under Punjab Land Controlled Act, 1963 on the date of sale was undisputedly commercial land. This is the reason that it was sold at the rate of more than 8 crores per acre. Non Confirming use of Land and consequences thereof are also defined in this Notification (supra) as below: (m) 'Non-conforming use' in respect of any land or building in a controlled area means the existing use of such land or building which is contrary to the major land use specified for that part of the area in the development plan; X. Discontinuance of non conforming uses:- (1) If a non-conforming use of land has remained discontinued continuously for a period of two years or more, it shall be deemed to have been terminated and the land shall be allowed to be re-used or redeveloped only according to the conforming use. The Appellants have admitted and also as evidenced by Khasra Girdawari in the Paper Book filed by assessee that no agricultura ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as year 2000. This is yet another conclusive proof of development of area and the fact of its being controlled area. Out of the remaining land, land of around 1 acre was sold as far as back year 2004 to another builder called ATS Property Pvt. Ltd. This is also an indicator of the actual usage of land in the year 2004. The appellants were left with land measuring just about 3 acres. In the aforesaid factual and circumstantial background judicial precedents on the aforesaid subject are required to be looked into to cull out principles/propositions/guidelines on the issue and then to determine whether the land was agricultural land or not? Ld. DR also relied on the order of the Hon'ble Supreme Court in the case of CIT of Wealth Tax vs. Officer Incharge (Court of Wards) reported in 105 ITR 133 (SC) and pleaded that in that case, Hon'ble Supreme Court analysed the subject matter in totality and has held the broad propositions that (i) If land which is capable of being subjected to agriculture process can be held to be agricultural land then in that case practically every type of land including that covered by building would be eligible to be called agricultural land a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oposition:- ........That agricultural land is not measured in yards and the very nature of measurement suggests that the intention of the petitioner was trading activity in land. That being the position, the stock-in-trade in terms of land measured in yards suggests that the land was never intended to be used for agricultural purpose when it was brought into the partnership assets, it was converted into the plots and it had been given measurement in yards. That being the position, the land ceased to have the character of the agricultural land used for agricultural purpose. Since the land has lost the character of agricultural land used for agricultural purpose, the reading down applied by the Bombay High Court of the Explanation inserted in the 1970 offers no guideline as the land has lost its character of being an agricultural land. Ld. DR also relied on the recent decision of ITAT Cochin Bench dated 21.10.2011 in the case of M.K. Abdul Rehman reported in 49 SOT 206. Ld. DR also relied on the decision of ITAT, Hyderabad Bench 'B' in the case of Suresh Kumar D. Shah reported in 49 SOT 341. Ld. DR finally pleaded that to decide the type land, parameters laid down i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... municipal committee, a notified area committee a Town Improvement Trust, the Faridabad Complex Administration the Haryana Urban Development Authority or other authority legally entitled to, or entrusted by the Government with, the control or management of a municipal or local fund; Section 13 of the Act defines object and functions of the HUDA Authority. The object and function are as below: Section 13 The objects of the Authority shall be to promote and secure the development of all or any of the areas comprised in the urban area and for that purpose, the Authority shall have the power to acquire by way of purchase, transfer, exchange or gift, hold, manage, plan, develop and mortgage or otherwise dispose of land and other property, to carry out of itself or through any agency on its behalf, building,engineering, mining and other operations, to execute works in connection with supply of water, treatment and disposal of sewage, sullage and storm water, control of pollution and any other services and amenities and generally to do anything, with the prior approval, or on direction, of the State Government, for the purpose of this Act. From the object and purposes o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocations and extents of land use proposed in the sector for such things as public building and other public works and utilities, roads, housing, recreation, industry, business, markets, schools, hospitals and public and private open spaces and other categories of public and private uses; (b) specify the standards of population density and building density, (c) show every area in the sector which may, in the opinion of the Local Development Authority, be required to be declared for development or redevelopment; and (d) in particular, contain provisions regarding all or any of the following matters, namely:- (i) the division of any site into plots for the erection of buildings; (ii) the allotment or reservation of land for roads, open spaces, gardens, recreation-grounds, schools, markets, and other public purpose; (iii) the Development of any area and the restrictions and conditions subject to which development may be undertaken or carried our; (iv) the erection of building on any site and the restrictions and conditions in regard to the open spaces to be maintained in or around buildings and height and character of building; (v) the alignment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;ble Delhi Court has categorically held that Faridabad Administration Complex created under Faridabad Complex (Regulation and Development) Act, 1971 was held to be akin to a municipality for the purpose of section 2(14)(iii)(a) of the I.T. Act. On the issue whether the land situated within or outside 8 kms., the Ld. DR submitted as under:- Third parameter whether location of land is within or outside 8 kms from the local limit of municipal corporation existing municipal corporation boundary existing on the date of sale. The assessee has claimed that the land was outside 8 kms of the municipal limit of the municipal body existing on the date of sale. The Tehsildar certificate produced by the assessee during the course of assessment proceedings has been proven to be incorrect by the A.O. The A.O. has carried out substantial inquiries with the concerned authorities as well as their superior authorities who were competent to certify the distance and the relevant evidence is part of the assessment order as well as assessment records the same leave no scope for dispute. This leaves no doubt that the land in question was within the distance of 8 kms from the limit of municipal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in a municipal area comprising a population of less than 10000, (ii) it should be at a distance of more than 8 kms from any municipal limit. Ld. AR submitted that land in question is agricultural land and it has so been described in the title deed registered for transfer of this land and it also stands as agricultural land in the revenue record as on the date of the sale. It was submitted by him that the mere fact that no agricultural activity was carried out for the last two years cannot be a basis to suggest that the land was not an agricultural land since the character of the land remained the same. Ld. AR referred to the decision of Bombay High Court in the case of CIT vs. Smt. Debbie Alemao 331 ITR 59, according to which if the land is shown in the revenue record to be used for agricultural purposes, and no permission was ever obtained for non-agricultural use by the assessee, then, the same should be considered to be agricultural land. It was submitted that permission for change of land use was granted only on 15th May, 2008 and, therefore, the character of the land did not change on the date of the sale. It was submitted that though it is a matter of fact that impugned land ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the decision of Hon'ble Madras High Court in the case of M/s M.S. Srinivasa Naicker vs. ITO reported in 211 CTR 222 (Mad), the fact that the purchaser intended to put a different use to the land is an irrelevant consideration. 8. So far as it relates to case law relied upon by the learned DR, the same have been distinguished by the learned AR as under:- Sr. No. Name of Judgments Rebuttal of the Assessee a) 105 ITR 133 (SC) CIT vs. Officer in Charge (Court of Wards) It is submitted that in this case it was held that entries in revenue record are however good prima facie evidence that land is an agricultural land. It was held that, if there is a connection with agricultural purpose then the land is an agricultural land. In the instant case, the khasra girdawari establishes that there was actual cultivation of crops, jawar, gehun, bajra on the said land and as such the land was an agricultural land even in terms of judgement of Apex Court in the case of CIT vs. Officer in charge (Court of Wards reported in 105 ITR 138. b) 204 ITR 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... challenged the constitutional validity of tax as an agricultural Income. In the instant case, the assessee is contending the land held by him was not a capital asset within the meaning of section 45 of the Act as defined in section 2(14)(iii)(b) of the Act. g) 49 SOT 206 (Coch) M.K. Abdul Rehman vs K.M. Anees-ul-Haq This judgement has also no application since here the land was located in a well developed and fast developing area. It is submitted in the instant case, it will be seen that page 249 of the Paper Book that, motorable work had even not been completed upto the date of sale much less the land being located in developed area. h) 49 SOT 341 (Hyd) Suresh Kumar D. Shah vs. DCIT This judgment is also not applicable as land in question was a barren land surrounded by rocky mountains and not fit for agricultural operations. In fact, no agricultural operations were carried on for the last 10 years. In the instant case, agricultural operations were carried for more than 10 years. 9. It was further submitted that the decision of the court should be conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ural activity was carried out does not alter the nature of land. In fact, as stated above assessee has not taken any steps to alter the nature of land till the date of sale, as would be evident from sale deed wherein too has been stated that, land was an agricultural land (see page 98-99 of Paper Book) 3) Whether such user of the land was for a long period or whether it was of a temporary character or by way of a stop-gap arrangement? Assessee is a non agriculturist and land was primarily purchased for investment in the fast developing area It is submitted that the aforesaid land had been acquired by the husband of the assessee in the year 1995-96 for agricultural purposes. It is submitted after his death on 24.07.2002 the land devolved upon the assessee. It is evident from the revenue records that Sll1ce year 1995-96 upto 2005 i.e. for approximately 10 years agricultural activities were carried out either by the assessee or her husband. Therefore, user of the land was for agricultural purposes and was for long period and not by way of temporarily character or stop-gap arrangement. It must be appreciated that the n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use. Land was made eligible for commercial use hence no prudent justification for agricultural use? As stated above the land was used for agricultural purposes for 10 years and mere fact that, the land was not used for 2 years did not alter the nature of the land. 7) Whether the land, though entered in revenue records, had never been actually used for agriculture, that is, it had never been ploughed or tilled? Whether the owner meant or intended to use it for agricultural purposes? No evident whatsoever for ploughing or tilling has been produced. Undisputedly land was ordinarily and actually used till two years prior to the date of date. Mere fact that no agricultural activity was carried out does not alter the nature of land. In fact, as stated above assessee has not taken any steps to alter the nature of land till the date of sale as would be evident from sale deed wherein too has been stated that the land was an agricultural land (see page 98-99 of Paper Book). It is submitted from the year 1995-96 upto 2005 i.e. for approximately 10 years agricultural activities were carried out either by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... units of kanals and marlas. Marla is as small as roughly 25 sq. yards. Mere fact that area of the land was stated in kanal and marlas does not make it that the land was sold in yardage basis. The entire land measuring 25 kanal, 3 marla i.e., aggregating to 3.1 acres approximately has been sold as it is to one purchaser and not in yards to various purchasers i.e. after plotting of land. 13 Whether an agriculturist would purchase the land for agricultural purposes at the price at which the land was sold and whether the owner would have ever sold the land valuing it as a property yielding agricultural produce on the basis of its yield? NO QUESTION. No agricultural operations can be sustained on the land costing over ₹ 8 crore per acre. It is not disputed that the purchased acquired the land for non-agricultural purpose. However, the same is irrelevant consideration as held in the case of M.S. Srinavasa Naicker vs. ITO reported in 211 CTR 222 (P and H). 11. Ld. AR also submitted that the decision of the Hon'ble Delhi High Court in the case of Deoki Nandan and Sons (supra) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certificate issued by Land Revenue authorities dated 13.10.2010. It was also specifically stated that the distance as stated in the certificate is computed with reference to Ghata-Badshahpur road which is not relevant as the said road did not exist on the date of sale being under construction. The assessee also sought cross examination of the Patwari and Tehsildar. It was also requested by the assessee to again measure the distance from the road in use at the time of sale of land. 13. Again, vide letter dated 24.12.2010 (the contents of which are also reproduced in the assessment order at pages 8 to 12), it was claimed by the assessee that actual distance is more than 8 Kms and it will be relevant to reproduce the relevant portion of the said letter as under:- 4. Since 'the land had been transferred within accounting year and the excess of sale proceeds over the cost of acquisition had been claimed as exempt, the assessee obtained a certificate dated 13.10.2010 from Tehsildar Gurgaon who duly confirmed that, the aforesaid agriculture land is situated approximately 8.5 Km beyond from the municipal limits. A copy of the said certificate though is on your record, yet the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s situated thus distance is over 8.0 kms. (This is based on actual measurement) 8.4 kms. 7. It is submitted that the assessee apprehends that the distance of 7. 7 Km as has been stated in the said confirmation dated 7.12.2010 is based on an alleged actual distance as on date of the aforesaid confirmation, as against the distance of 8.4 Kms when there was no motorable road, and this distance of 7.7 Km as has been stated is apparently appears to be based on the basis of speedometer of the vehicle on the basis of road now existing. Thus, in order to have it clarified, it,is requested that the Patwari and Tehsildar, Shri Jagdishand the Tehsildar whose statements have been recorded, may kindly be produced for assessee's cross examination, so that the assessee can rebut the allegation (that in the absence of any motorable road) distance of the agricultural land is 7.7 Km). It is reiterated the agricultural land situated was beyond 8 Km from Municipal Limit from Gurgaon, from all directions not 7.7 Km as has now been alleged. It is most humbly submitted that since you are seeking to rely upon the said certificate as obtained by you on 7.12.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee was a distance of 8 kms from the end of municipal limits of Gurgaon. 15. From the analysis of provisions of Section 2 (14) (iii) which defines the 'Capital asset' and exclude 'agricultural land' from the definition of 'capital assets' will reveal that if at the time of sale the impugned land is 'agricultural land', then, it shall not be deemed to be capital assets if either it does not fall within the limits of any municipality etc., of which population exceeds ten thousand or it should be situated at a distance more than the distance specified by Central Government in this behalf by way of notification in official gazette. Now it is the case of the assessee that his land, at the time of sale does not fall within the 8 kms. from the end of municipal limit of Gurgaon. Firstly, it is the case of Assessing Officer that the said distance is lesser than 8 Kms, therefore, the assessee does not qualify for exemption of capital gain and, secondly, it is the case of Assessing Officer that the impugned land is not agricultural land. 16. First, coming to the contention of Assessing Officer that the distance of the assessee's land is l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of the said letter are as under:- To Smt. Geedka Singhvi, 73, Sukhdev Vihar, Mathura Road, New Delhi. Memo No.8528 Dated 2.11.11. Subject: Information of road leading from village Badshahpur to Ghatta village (Golf Course Extension Road) under RTI Act, 2005. With reference to your letter dated 02.11.2011, it is intimated that the road work from Badshahpur to Ghatta village stretch stand completed in September, 2008. This is for your kind information. Executive Engineer, HUDA, Division No.1, Gurgaon. 17. The road on the basis of which the distance in the second certificate stated came into existence after the date of sale of land. The distance has to be measured in terms of the approach by road and not by a straight line distance on a horizontal plane or as per crow flight distance as held by Hon'ble Punjab and Haryana High Court in the case of CIT vs. Satinder Pal Singh cited supra. In this view of the situation, the Assessing Officer having not brought any material on record to prove that the contention of the assessee is incorrect, the distance of the impugned land as on the date of sale has to be held to be more than 8 Kms, therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for this purpose, he placed reliance on the decision in the case of Deoki Nandan and Sons (supra). He also held that the land can be agricultural land only if it is being used for agricultural purposes by the assessee and, in this manner, the Assessing Officer has concluded that the land was not in the nature of agricultural land. Learned CIT (A) has upheld such findings of the Assessing Officer. 19. We have carefully considered the submissions of both the parties in this regard. Copy of sale deed has been furnished before us according to which the land sold has been described as agricultural land in Column No.5 requiring to describe 'type of property.' Copy of Khasra, Girdawari has been placed in the paper book at page 106-107 of the paper book which also describe the property as agricultural land. In this Khasra-Girdawari, particulars regarding 2001-02 to March, 2007 have been given and it is observed therefrom that from 2001-02 to February, 2005 the land (except small portion) was being used as self cultivated in which the assessee has grown crop upto 26th February, 2005. Thereafter, from October, 2005 to 2006, some part of the and has been cultivated. From October, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s acquired the said land with an intention to develop the same. If the cumulative effect of these tests are to be seen, then also it has to be held that the character of the land sold by the assessee was agricultural as on the date of the sale. It may be mentioned here that what is important to be seen is the factual position on the date of sale of the land and this position of law has been established by the decision of Hon'ble jurisdictional High Court in the case of Hindustan Industrial Resources Ltd. vs. ACIT 355 ITR 77 and the relevant observations of their lordships from the said decision are reproduced below:- 9. Having considered the arguments advanced by the counsel for the parties, we are of the view that the assessee's contentions deserve to be upheld and the findings returned by the Income-tax Appellate Tribunal ought to be reversed. We are conscious that we are not merely reversing a finding of fact, what we are intending to do is to point out that the Tribunal's finding of fact is contrary to its own record and, therefore, is in the realm of perversity. This is so because the Tribunal clearly held that at the point of time when the assessee purchased ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies in favour of the assessee as most of the important tests are in favour of the contention that land in question was agricultural land. 22. It may further be mentioned that the character of the land has to be decided as per the provisions of Income-tax Act and it has already been mentioned that agricultural land has been defined in the Act itself and one has to go by the criteria laid down in the Income Tax Act and Rules. If the character of the land is agricultural, then, the issue has to be decided in the light of the Notification issued by Central Government and reference to other Acts i.e., HUDA Act and Punjab Scheduled Roads and Controlled Areas Restriction of Un-regulated Development Act, 1963, etc. will be wholly irrelevant to consider the issue raised in the present appeals. The case law relied upon by the learned DR are distinguishable on facts and it has been demonstrated in the rejoinder by the learned AR that how they are distinguishable on facts. Therefore, for the sake of brevity the same is not repeated. 23. In view of the above discussion, it is held that the land in question at the time of sale by the assessees was agricultural land within the meaning of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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