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TMI Blog2022 (3) TMI 830X X X X Extracts X X X X X X X X Extracts X X X X ..... Y.2009-10, on identical and similar facts, whereby the issue relating to agricultural land sold was not treated a capital asset, within the meaning of section 2(14) of the Income Tax Act. The disputed issue whether the distance for identifying geographical location of the agricultural land is to be taken by road or by aerial and whether the municipal limits enhanced by the State Government is to be considered as starting point or it has to be taken from notification issued by the Central Government dated 06.01.1994 etc., have been discussed and adjudicated. The Coordinate Bench held that notification issued on 06.01.1994 by the Central Government is to be considered and therefore the Coordinate Bench has decided the issue in favour of the assessee. We find no reason to interfere in the said order of the Coordinate Bench, therefore, respectfully following the binding precedent of the Coordinate Bench in case of Akash Deep Farms P. Ltd. (supra), we delete the addition made by the Assessing Officer on account of Long Term Capital Gain (LTCG). - Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... und on higher side, as compared to the sale instances obtained from Sub Registrar in the same/nearby area which is of ₹ 1.98 to 2.14 per Sq. Meter (Dumas) only. Thus, it is seen that there is huge variance found in the cost shown by the assessee and obtained by the Department as on 01.04.1981. 5. Therefore, assessing officer referred the matter to the DVO for valuation. The DVO in his report dated 31-12-2015 has estimated the FMV as on 01-04-1981 @ ₹ 42.60 per sq.meter. The assessing officer issued a show cause notice to the assessee, stating that why not FMV as on 01-04-1981 @ ₹ 42.60 per sq.meter, should not be adopted. 6. In response to the above show cause notice, the assessee submitted the written submission before the Assessing Officer dated 18.01.2016, which is reproduced by the assessing officer at page nos. 4 to 9 of the assessment order. 7. The Assessing Officer gone through the written submissions of the assessee and observed that fair market value shown by the assessee is higher side therefore assessing officer had taken the FMV of land as on 01.04.1981 at ₹ 42.60 per sq. meter, as suggested by DVO, and accordingly computed the Long Term Capit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lanations, Notification, Circulars, and Judgments of various Authority. For ready reference, section 2(14) as applicable to A.Y. 2013-14 is reproduced below: Section 2(14) in The Income- Tax Act, 1961 (14) "capital asset" means property of any kind held by an assessee, whether or not connected with his business or profession, but does not include- (iii) agricultural land in India, not being land situate- (a) in any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, 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 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, specify in this behalf by notification in the Official Gazette;] For ready reference, the Notification dated 6/1/1994 is reproduced below with relevant specified limit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lling in the State/UT mentioned under column (2) Detailing of areas falling outside the local limits of Municipality or Cantonment Board; etc., mentioned under column (3) (1) (2) (3) (4) 8. GUJARAT 1. Ahmedabad Areas upto a distance of 8 km. from the Municipal limits in all directions. 37. SURAT Areas upto a distance 8 kms. From the municipal limits in all directions. This notification shall have effect on and from the date of its publication in the Official Gazette. Explanations: (1) In this notification, "Municipality" shall mean any area which is comprised within the jurisdiction of a municipality, (whether known as a municipality, municipal corporation, Notified Area Committee, Town Area Committee, Town Committee or by any other name) which has 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. The reference to municipal limits or the limit of Cantonment Board in the Schedule to this notification is to the limits as existing on the date on which the notification is published in the Official Gazette. Notification : No. SO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Explanation 2 of the Notification and I.T.A.T Judgment of Ahmedabad, Jaipur, Indore Bench, Karnataka High Court as well as decisions of the other courts, it is humbly submitted that Assessee's Land is not covered by the definition of Capital Assets and as a result not Liable to Capital Gain Tax." 11. On the other hand, Ms Anupama Singla, Sr. DR for the Revenue, submitted before us written submissions, which are reproduced below: "The present set of appeals involves the issue whether the municipal limits for the purpose of section 2(14) of the Income Tax Act are to be considered as exist is on the date of notification i.e. 06/01/1994 or on date of the transaction of sale of impugned land. In this regard, kind attention is invited to the notification which is annexed with this submission. The relevant row is extracted hereunder: 8 Gujarat 37 Surat Area upto 8 km after The ld. A.R. for the assessee has contended that the municipal limit as on the date of notification have to be considered to decide if a purchase piece of land falls within 8 km. For this, he placed reliance on explanation to the notification & submitted that the explanation restricts the municipal li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, almost 26 years since this notification was gazetted, there has been much change in the urban landscape of the country and certainly Surat city too. Therefore, it is most humbly prayed that defining of Municipal Limit being a State Govt. Subject, this notification will have to be read in conjunction with the municipal Limit as notified by the designated State Govt. Authorities. Therefore, the land in question was well within the limit of Surat Municipal Corporation on the date of transaction. Alternatively, the ld. AR submitted that post 2014- 15, this issue is redundant as aerial limits have to be considered rather than the shortest motorable route. It is submitted in this regard that issue does not become redundant as the aerial distance has to be considered from the limit of municipality. To conclude, it is prayed that the said notification dated 06.01.1994 has to be read in conjunction with the Municipal Limits as notified by the designated State Government Authority. The Notification of Municipal Limit is a State Govt. Subject and nowhere the notification intends to limit, the Municipal Limits as on 06.01.1994." 12. We have carefully considered the rival submissions. The c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decided the issue in favour of the assessee. Therefore, Learned Counsel for the assessee submitted that the issue is squarely covered by the aforesaid order of the Tribunal, a copy of which was also placed before the Bench. 14. We see no reasons to take any other view of the matter than the view so taken by the Division Bench of Tribunal in the case of Akash Deep Farms Pvt. Ltd (supra), vide order dated 11.08.2015. In this order, the Tribunal has inter alia observed as follows: 3. Brief facts of the case are that the assessee has filed its return of income electronically on 30.9.2009 declaring total income at ₹ 1,10,350/-. The case of the assessee was selected for scrutiny assessment, and notice under section 143(2) dated 23.8.2010 was issued and served upon the assessee. On scrutiny of the accounts, it revealed to the AO that the assessee had earned a profit of ₹ 3,99,63,932/- on sale of land. The ld.AO has noticed the details in tabular form exhibiting name of village where the land was situated and survey no, date of purchase, purchase amount, date of sale, sale consideration and the gain. Such details are produced at page no.3 of the assessment order, which read ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al limit and therefore these lands were capital assets and sale thereof were liable for capital gains. Assessing officer got certificate from ADDA that lands situated in two villages were within 8 km of air distance from the limit of Ahmedabad Municipal Corporation. A map drawn by AUDA is also incorporated in assessment order quoted earlier. During appeal, appellant took two arguments-(l) for calculating distance from municipal limit, road distance is to be seen and not air distance as done by the AO. Appellant submitted several judicial decisions supporting its contention. (2) The AUDA has taken present municipal limit whereas municipal limit has expanded over a period of time. Assessing officer in the reports submitted that limits of Ahmedabad municipal Corporation increased from 2006 and therefore at the time of sale of agricultural lands, Ahmedabad municipal Corporation limits have already been expanded and therefore from the expanded municipal limit, the agricultural lands situated in Telav Village were within 8 km and therefore the same were capital asset and taxable under section 45. As regards agricultural land situated in Kaneti Village, assessing officer did not object ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scope for, urbanisation of that area and other relevant considerations, specify in f his behalf by notification in the Official Gazette As per clause (b), in order to be excluded from the definition of Capital Asset, the land should not be situated within such distance from the local limits of ANY municipality {referred to in clause (a)} as specified by the central government by notification in the Official gazette. The said notification i.e Notification No. (SO 9447) (File No.l64/3/87- ITA.I) dated 06.01.1994 for the purpose of item (b) of sub clause (iii) of clause (14) of section 2 of the Income Tax Act 1961 is reproduced below: INCOME-TAX ACT, 1961 : NOTIFICATION UNDER SECTION 2(IA)(C), PROVISO. CLAUSE (II)(B) AND SECTION 2(14)(III)(B): URBANISATION OF AREAS Notification No. [SO 9447J (File No. 164/3/87-ITA.I), dated. 6-1-1994 Whereas a draft notification was published by the Central Government in exercise of the powers conferred by item (B] of clause (ii) of the proviso to sub-clause (c] of clause (1A], and item (b] of sub-clause (iii) of clause (4), of section 2 of the Income-tax Act, 196I (43 of 1961, in the Gazette of India, Extraordinary, Part II, section 3, subse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the end of the aforesaid notification that municipal limit is the limit as existing on the date of publication of the notification and not the limit on the date of transaction or as on date. The notification is published on 6-1-1994 and therefore the municipal limits as on 6-1-1994 is to be taken for computing 8 km road distance to decide whether agricultural land is a capital asset or not. The municipal limit on the date of transaction is not relevant as far as application of this notification is concerned. Appellant submitted that prior to 2006, the municipal limit of Ahmedabad Municipal Corporation was very restricted and form that limit, both the villages in which agricultural lands were situated are much beyond 8 km distance. Since notifications with regard to Ahmedabad municipal Corporation limits are available from which assessing officer can work out the distance of these agricultural lands. In view of the clear provisions in the notification referred earlier, it is held that the municipal limits relevant for computing distance is the municipal limit existing on the date of issue of this notification i.e. 6-1-1994. Assessing officer is therefore directed to compute the ro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In other words, if the land which is not forming part of capital asset sold by an assessee, then, no gain as such would be considered, as accrued to the assessee. In the present case, the ld.AO has observed that if the distance of geographical situation of the assessee's land is being measured from municipality limit, by way of crow's flight, then, it is within the municipal limit. In various authoritative pronouncements, as discussed by the ld.CIT(A), it has been held that the distance is to be measured by road and not by aerial route. At this stage, it is important to take note of the Board Circular bearing No.17/2015. It reads as under: "CBDT CIRCULAR NO -17/2015, Dated: October 06, 2015 Subject:- Measurement of the distance for the purpose of section 2(14)(iii)(b) of the Income-tax Act for the period prior to Assessment year 2014-15 "Agricultural Land" is excluded from the definition of capital asset as per section 2(14)(iii) of the Income-tax Act based, inter-alia, on its proximity to a municipality or cantonment board. The method of measuring the distance of the said land from the municipality, has given rise to considerable litigation. Although, the amendment by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he issue is squarely covered in favour of the assessee by the decision of the Coordinate Bench, in the case of ITO vs. Akash Deep Farms P. Ltd.(supra) and there is no change in facts and law and the Revenue is unable to produce any material to controvert the aforesaid findings of the Coordinate Bench. We find no reason to interfere in the said order of the Coordinate Bench, therefore, respectfully following the binding precedent of the Coordinate Bench in case of Akash Deep Farms P. Ltd. (supra), we delete the addition of ₹ 11,63,296/-, made by the Assessing Officer on account of Long Term Capital Gain (LTCG). 16. In the result, appeal filed by the assessee is allowed. 17. We have adjudicated the appeal by taking lead case in ITA No.477/SRT/2019, for AY.2013-14, in the case of Printisha Pravinbhai Patel. Since facts and issues involved in other appeals of assessees are similar and identical therefore, our decision in the case of Printisha Pravinbhai Patel(supra) shall apply mutatis mutandis in case of other assessees also. 18. In the result, appeals filed by the assessees (in ITA Nos.477 to 486 for AY.2013-14), are allowed. Registry is directed to place one copy of this o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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