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TMI Blog2023 (12) TMI 1199X X X X Extracts X X X X X X X X Extracts X X X X ..... up the word shehri sankul aavali chhe , the real meaning of such words is that land falls in urban development area. On appreciation of such contention, we find merit in the submission of Ld. AR for the assessee that mere falling of land within the urban development area or notified area for industrial development of said area would not automatically bring the area in municipal limit unless and until a separate notification is not issued by State Government for including a particular area within municipal limit. No such material was brought on record by AO and he simply assume the jurisdiction on the basis of certain recital in the sale deed and formed his opinion that the impugned land falls in city limit. Assessee has filed sufficient evidence in the form of Land Revenue Record that said land was used for agricultural purposes by the certificate of Land Revenue Authority. Further, the assessee has filed certificate of Gram Panchyat that village Lajpore is not under the area of Surat Municipal Corporation. The assessee has also filed notification of State Government about extension of limit of municipality from time to time, copy of which is available at page No.72 to 81 of paper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer, ignoring the fact that related fact of exempt income was available with him from day one of filing of ROI u/s 139 of the act. 2. That on facts and circumstances of the case, Ld. CIT (Appeals) NFAC, Delhi, has grossly erred in upholding addition of Rs. 2,68,52,300/- and Rs. 45,86,102/- w.r.t. sale of agriculture land bearing Survey No- 207/1-A Block NO- 264 and Survey No- 207/1 -B Block NO- 262 located at village Lajpor, Tal Choryasi, Dist- Surat on the ground that both these pieces of land are located in Surat city does not amount to the exempt assets u/s 2(14) of the income tax act in view of Honourable Supreme Court judgement in the case of Sarifabibi Mohamed Ibrahim - 204 ITR 631. 3. Alternatively, and without prejudice to our ground no- 1 and 2, following ground is raised :- That on facts and circumstances of the case, Ld. CIT (Appeals) NFAC, Delhi, has grossly erred to uphold action of the AO in not following procedure laic down u/s 50C(2) of the act, especially, when the appellant has claimed lesser sale proceed as compared to the value fixed by SVO. Further, Ld CIT(A) has also erred in not allowing time to file valuation report of RVO before him in first appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale deed, the that land is shown as reserve for non-agricultural purpose and industrial development as per Section 88(1)(6) of Bombay Tenancy and Agricultural and Land Act, 1948 vide notification dated 14/11/1991 published by the Revenue Department, Government of Gujarat. In the sale deed, nowhere it is mentioned that it is agricultural land only word "Land" is mentioned. The Assessing Officer after referring the decision of Hon'ble Apex Court in the case of Sarifa Bibi Mohamed Ibrahim & Other 204 ITR 631 (SC) wherein it was held that if the land falls within the definition of capital asset, surplus earned on sale of which is liable to tax as capital gain. The Assessing Officer further noted that the Stamp Valuation Authority valued the said land for the purpose of registration at Rs. 2.73 crores, however, the value on the documents is shown at Rs. 95,60,600/- only. Since the consideration shown on the registered document is lower than the value determined by the Stamp Valuation Authority, therefore, provisions of Section 50C is attracted. Section 50C of the Act create a legal fiction whereby apparent consideration is substituted by valuation by Stamp Valuation Authority and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profit on sale of agricultural land of Rs. 1.11 crore as exempt income. The case of assessee was reopened and notice under Section 148 was issued. The assessee requested the Assessing Officer to treat the original return filed under Section 139 as return in response to notice under Section 148 of the Act. The Assessing Officer noted accepted such request of assessee and proceeded for assessment. The assessee sold two agricultural lands, first land was valued at Rs. 95,60,600/- and other land at Rs. 16,28,900/- and claimed at exempt from tax. The Assessing Officer adopted the value of one land at Rs. 2.73 crores and thereby worked short term capital gain at Rs. 2.68 crores and added to the income of assessee. For other land, the Assessing Officer valued market value at Rs. 46,55,102/- and worked out short term capital gain at Rs. 45,86,102/- and added to the total income. 5. The assessee further submitted that the Assessing Officer while recording the reasons of reopening, recorded that assessee sold immovable property at village-Lajpur, Distt. -Surat for a sale consideration of Rs. 95,60,600/- and that stamp valuation authority valued the sale property at Rs. 2.73 crores and furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed out agriculture activities. The nature of the land was never changed. There was no construction or development on the land. On the basis of above facts, the assessee submitted that the land was not a capital asset so STCG is not leviable and addition thereof is liable to be deleted. The assessee also objected about the valuation made by the stamp valuation authorities. The jantri value of agriculture land was Rs. 6,00/- per square meter and the assessee executed the sale deed @ Rs. 850/- per square meter. As the buyer was the industrial society and wanted to use land for industrial purpose, therefore, the stamp valuation authorities charged at the higher rate of jantri value. The assessee furnished the details of the prevailing rate of jantri value. The assessee also submitted that one of the seller of similar land Govindbhai Devrajbhai (HUF) having PAN: AAHFG 3724 G, also sold his land having area of 4350 square meter at the same village for a consideration of Rs. 30,45,000/- that is @ Rs. 700/- per square meter on 12.04.2010. The Department has accepted their transaction, no reopening in their case was made. Facts of assessee's case are identical with the facts of Govindbhai D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... falls within the city limits (shaherisankul). The Assessing Officer also reported that once the land is considered as capital asset, it has no concern to whom it was sold. On the certificate of Talati, the Assessing Officer submitted that Talati-cum- Mantri, is not competent to decide city limits and distance of property from such limits. On the issue of jantri rate, the Assessing Officer reported that such rates are decided by Stamp Valuation Authority. On the question of report of DVO, the Assessing Officer reported that matter was referred to DVO and the assessee has not contested the market value adopted by Assessing Officer despite granting opportunity by Valuation Officer. On the admission of additional evidence, the Assessing officer contended that neither he refused to admit such evidences nor the assessee prevented by sufficient cause for producing evidences in the course of assessment proceedings despite giving sufficient opportunity. The Assessing Officer requested not to admit any new evidence as per Rule-46A of the IT Rules. 9. The copy of remand report was provided to the assessee for his comment. The assessee filed his comment vide reply dated 09.08.2023. Such cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... self can be within the prescribed distance from the Municipal limit as per Section 2(14) of the Act. The Assessing Office has pointed out that agricultural activity are not possible in this land. On the claim of assessee, that assessee has shown agricultural income in his returned of income and argued that agricultural activities are carried out in the said land, the Ld.CIT(A) held that assessee has owns various agricultural land in his individual or joint ownership and mere offering of agricultural income does not prove that agricultural activities were carried out in the impugned land during last two-three years. The Ld.CIT(A) wile referring the decision of Hon'ble Apex Court in the case of Sarifabibi Mohamad Ibrahim reported in 204 ITR 631 (SC) held that to ascertain the true corrected and nature of land, it must be seen whether it has been put to use for agricultural purpose for a reasonable span of time prior to relevant date. In this case the land was intended to be use for industrial purpose in future, therefore the condition held by Hon'ble Apex Court was satisfied. On the contention of assessee is that assessee has not applied for non-agriculture (NA) permission, the Ld.CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. AR for the assessee reiterated all contention in his submission, which were made before Ld.CIT(A). The Ld.AR of the assessee submits that he has filed copy of Land Revenue Record, certificate of Tehsildar about the nature of land. The details of municipal limit extension. He has also filed various notifications about inclusion of various area while making extension of Surat Municipal Corporation from time to time as per details on page Nos. 72 to 84. The Ld. AR of assessee further submits that State Government in their muster plan has declared the area of Lajpore as reserve for Industrial Development vide Notification dated 14.11.1991 copy of such notification is filed on page No.93 to 94 of the paper book. The Ld.AR of assessee submits that the Lajpore village was not included in the municipal limit of Surat Municipality Corporation. The land of Lajpore village was notified for Industrial Development for urban development, however, facts remains the same that it was never included in the municipal area till the assessee sold the land to the buyers. The Ld.AR of the assessee filed that he has filed enough evidence to substantiate that he owned agricultural land, sold as agricu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for the purpose charging stamp duty at Rs. 2.73 crores and that assessee has not shown long term capital gains. The Assessing Officer after serving notice under section 148 proceeded for assessment. In the assessment order, the Assessing Office made addition of Rs. 2.68 crores by reducing the cost of acquisition and brought the remaining surplus to taxation under the head "capital gains" as short term capital gains. The Assessing Officer while treating the gain as short term capital gains recorded that assessee has purchased the said land on 01.06.2007 and sold on 26.04.2010, within the period of 36 months. The Assessing Officer was also of the view that land being situated within the city limit is a capital asset and the Stamp Duty Authority determined the value of land at Rs. 2.73 crores, therefore, the provision of Section 50C is attracted. We find that Assessing Officer made reference for DVO for valuation of assets on the date of transfer however, report of DVO was not received, the Assessing Officer brought the surplus earn to taxation under the head "short term capital gains". The Ld.CIT(A) on filing detailed written submission, though called the remand report on various s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt, wherein the land of village Lajpore (Lajpore) is declared as reserve for non-agricultural and industrial development. As recorded above, that by mere declaration of area under industrial development, it would not be automatically include in municipal limit. For bringing the area in municipal limit a separate notification of State Government is required. In the notification placed on record about extension of Municipal limit of Surat Municipal Corporation, the area of village Lajpore is not included in municipal limit. 16. We find that this combination in Ambaben Jamubhai Patel Vs ITO in ITA No. 3021/AHd/2014 dated 13.04.2022 while considering the issue if the Hazira Industrial Development area is municipal area or not, held that agriculture land falls in Industrial development area would not be treated as land falls in municipal limits of Surat Municipal Corporation by treating it as deemed municipality. In the said case it was held that the land falls in the notified area cannot be treated as capital asset as per section 2(14) of Income Tax Act and compensation received on its acquisition will be exempt for taxation under section 10(37). Thus, on the basis of the various evid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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