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TMI Blog2022 (4) TMI 1625X X X X Extracts X X X X X X X X Extracts X X X X ..... istrict Agriculture officer, Zilla Panchayat Surat has written letter to Collector that many part of the land is under sea water and part of land is barren - Considering the facts that we have already held that the land of the assessee is not capital asset as the same does not fall in municipal area, Hazira Notified area is not a municipality or deemed municipality and on alternative plea also held eligible for exemption under section 10(37), therefore, all other pleas or counter pleas of the parties and the remaining issues arising thereto have become academic. Action of assessing officer in taxing sum as capital gain and not treating the same as part of compensation - No estimate of cost of such built-up structure is furnished. As recorded above the ld CIT(A) estimated the cost of acquisition of built-up units/ pucca structure @ 50% of the cost awarded for such built-up / pucca structure in the award. Considering the area where in the such built-up unit or pucca house is situated, in our view, the estimation of it s cost of acquisition is on lower side, therefore we deem it fit and proper to increase it to 60%, would be reasonable and fair. Therefore, we direct the Assessing offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s ITO Wd-4(2) Surat And Shri Hasmukhbhai Ichchhubhai Patel Versus ITO Wd-4(2) Surat And Shri Ramanbhai Kanjibhai Patel Versus ITO Wd-4(3),Surat And Dahyabhai Somabhai Patel [HUF] Versus ITO Wd-4(1)Surat SHRI PAWAN SINGH, JUDICIAL MEMBER AND DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER For the Assessee : Shri Saurabh N Soparkar, Sr. Advocate Ms Urvashi Shodhan, Advocate For the Revenue : Ms.Anupma Singla, Addl. Commissioner of Income-tax/Sr. Departmental Representativ e ORDER Order under section 254(1) of Income Tax Act PER BENCHR: 1. This group of twenty eight (28) appeals is part of Hazira Land Acquisition cases relating to different assessment years wherein one of the appeal in Ambaben J Patel in ITA No. 3021/Ahd/2014 was treated as a lead case. This combination, after hearing the submission of both the parties, partly allowed the appeal of the assessee in that lead case. The grounds of appeals raised by various assessee s in this group is similar. This combination, in lead case of Ambaben J Patel on various grounds of appeals has passed the following order: 61. We have considered the rival submissions of the parties and have gone through the orders of the lower authorities. We have al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are of the view that the revenue has no vested right to seek the admissions of additional documents. However, keeping in view the peculiarity of the facts that the report of NRSC was taken into consideration by ld CIT(A) while adjudicating about 10 appeals, therefore, to take a uniform approach, the application for admission of additional evidence filed by the revenue is allowed and the documents are taken or record for appreciation of the issues. 63. Now adverting to the main grounds of appeal raised by the assessee. We find that the assessee has raised multiple grounds of appeal. However, first we shall take up the issue, which goes to the root cause of the dispute between assessee and the assessing officer, as raised in ground No. 2 3 of grounds of appeals. To make it more simple we reframed these grounds as to whether the land acquired by the Special Land Acquisition officer is agricultural land or not or if so, it falls within the municipal area as defined under Section 2(14)(iii)(a) of the Income Tax Act or that Hazira Notified area is deemed municipality. Further as to whether the assessee is eligible for exemption under section 10(37) of the Act. The Assessing Officer whil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) by observing that office of the Mamlatdar vide their letter dated 16/01/2013 mentioned that population of each of nine villages (Hazira notified area) mentioned in the letter is less than 10000 as per census 2001 but combined population of nine villages exceed 10000. However, in the certificate issued by Chief Officer of notified area Hazira, the population of Hazira notified area was 2137. The ld. CIT(A) recorded that despite sending reminder letter to the Assessing Officer. We find that CIT(A) proceeded to decide the issue on the basis of material before him and identified the issue that this ground involved three issues viz; (i) if the land acquired is capital asset under section 2(14), (ii) if the land acquired by Special Land Acquisition officer falls in the definition of capital asset under section 2(14)(iii)(a) or not and (iii) whether if it is capital asset under section 2(14). If the land falls under the definition of capital asset, the assessee is eligible for exemption under section 10(37) of the Act or not. The Ld. CIT(A) recorded that assessee claimed the land acquired was situated eight kilometre away from municipal limit of Surat Municipal Corporation, at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... land was used for agriculture purpose or capable of operation. No evidence of agriculture income was furnished. The ld. CIT(A) held that the assessee failed to establish that land was used for agriculture purpose. Thus the conditions of Section 10(37) are not fulfilled. 66. Before us, the ld. Senior Counsel for assessee vehemently submitted that compensation received on acquisition would not be subject to capital gain, as the agriculture land is not a capital asset as not being situated in an area which comprised within the jurisdiction of any municipality having population of not less than 10000 as per last census. If the land is not a capital asset, question of paying tax on its acquisition would not arise. The assessee has to satisfy two conditions (i) the land is agriculture land and (ii) to claim exemption that agriculture land is not situated within municipal limit having population of not less than 10000. For first condition, the ld. Senior Counsel submits that from the contents of award itself it is clear that the land in question is agriculture land. The award was passed by officers of the State Govt. and the correctness of the statement made in the award cannot be doubted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the said Act which may be applied to a notified area, the person or committee appointed for such area under section 264B shall be deemed to be a Municipality under the said Act. The fiction is an unlimited fiction. Firstly, the fiction is only in relation to those sections of the said Act which are applied to the notified area and even the second part of the fiction of deeming the notified area to be a municipality is only for the purpose of the said Act. It does not convert notified area into a Municipality in any way. 68. The Hon'ble Supreme Court in the case of Saij Gram Panchayat Vs State of Gujarat (supra) while considering the scope of section 16 of GIDA and Section 264A inserted in Gujarat Municipalities Act, in view of insertion of Part IXA in the Constitution held that industrial area under the GIDA would be a notified area under new section 264A of Gujarat Municipalities Act and would mean an industrial township area under the proviso to clause (1) of Article 234-Q of the Constitution of India (Para-10).It was further held that GIDA operates in a different sphere from Part IX and IXA of the Constitution as well as Gujarat Panchayat Act. The latter being provision d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h other factor as the Governor will deem fit to consider, he may by public notification, specifies such area to be an industrial township. 69. Further Hon ble Supreme Court in Solapur MIDC Industries Association Etc. Vs State of Maharashtra Ors., JT (1996) 7 SCC 14 held that Municipal Corporation Act and an Industrial Development Act have distinct fields of operation and there is no inter se conflict between the two. 70. So far as reliance on the case law in G.M Omer Khan Vs Add CIT (supra) relied by ld CIT(A) as well as by ld DR for the revenue is concern, we find that the facts of that case are entirely different. In the said case the land of the assessee was situated in a village within the Municipality. The assessee in that case contended that his laid was in an area which in terms meant a 'Village' and the population of that village was far below ten thousand and the mere fact that the said area fell within the municipality of a city which had a population of more than ten thousand, was of no consequence. He, therefore, claimed that the property in question was an agricultural land not covered by section 2(14). On reference, the High Court interpreting section 2(14)(ii ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a transfer the consideration for which is determined or approved by the Central Government or the Reserve Bank of India and (iv) such income has arisen from the compensation or consideration for such transfer received by such assessee on or after the 1st day of April, 2004. 74. We have already held the land is not situated within a municipal area, thus, first condition is satisfied. So far as second condition, is concerned, we find it is certified by District Agricultural Officer, Surat vide his letter dated 16.06.2014 that the agricultural operation are carried in the land. Further the award was passed in financial year 2007-08, in the award the Special land Acquisition Collector on a number of stances mentioned that the land under acquisition is used for the agriculture purpose, this prove beyond doubt the land was being used for agricultural purposes, not only on date of acquisition but till the date of acquisition all throughout, but in any case for more than two years. The land in the revenue record is also shown as agriculture land. For third condition, we find that that first award is by consent; however, as held by Hon'ble Supreme Court in the case of CIT Vs Ghanashyam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... realised by the assessee was liable to be taxed as capital gains. On appeal, the AAC reversed the decision of the ITO. On further appeal, the Tribunal affirmed the decision of the AAC. On reference before High Court held that having regard to the facts and findings recorded by the Tribunal, it was obvious that not only the physical characteristics of land, in the instant case, but the user also was agricultural. Even though the land was not actually put to agricultural use since about one year prior to the sale, there was no evidence to establish that it was converted to any other use. The fact that permission under section 63 of the Bombay Tenancy and Agricultural Lands Act was obtained by the assessee to sell the lands to the society for residential purposes would not, militate against the land continuing to be agricultural on the date of its sale, as the permission was obtained only about two and a half months prior to the sale. Therefore, till the land was held by the assessee its character as agricultural land was not changed either as a result of its reclassification on in the revenue records or by the actual alteration of its use. Again, there was no evidence on record to sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sults. And that concurrent ground truth was not available for thus study and interpretation is exclusively based on the manifestation of features and experience of the interpreter, which could be subjective. It is also mention in the last para in the disclaimer that results have to be corroborative in association with the ground observation, available, if any. Thus, the report itself contents vague observation and cannot be used as evidence or conclusive or expert report based of any scientific evidence against the assessee. Moreover, said report was not provided to the assessee. Thus, by applying of such test we find that the land of the assessee acquired by Special Land acquisition officer is agriculture land. In the result, the assessee is also succeeded on this issue/ ground as well. 78. Considering the facts that we have already held that the land of the assessee is not capital asset as the same does not fall in municipal area, Hazira Notified area is not a municipality or deemed municipality and on alternative plea also held eligible for exemption under section 10(37), therefore, all other pleas or counter pleas of the parties and the remaining issues arising thereto have bec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idering the technical objection of sufficiency of reasons had not strike down the reopening of the case. And it was held that it would be open to the assessee to prove that assumption in the notice was erroneous. Thus, in view of the aforesaid factual and legal discussion, we do not find merit in the grounds in challenging the validity of re-opening, thus, the corresponding grounds of appeal is dis missed. 80. Next ground of appeal relates to partly confirming the action of assessing officer in taxing Rs. 6,50,000/- as capital gain and not treating the same as part of compensation. The assessing officer treated part of compensation of Rs.13.00 lakh as income from other sources . On appeal, the ld. CIT(A) held that this component of compensation is given for constructed property on the land consisting of pucca house, pucca wall etc., apart from natural grown grass. The assessee claimed that compensation in respect of aforesaid aspect is actually the compensation in respect of land only and not assessable under the head other sources . The ld CIT(A) held that action of Assessing Officer is not correct on taxability of such amount under the head income from other sources . The constru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cash credit. Considering the facts that we have already held that the land of assessee was agriculture and was being used as such, therefore, the income offered by assessee as agriculture is also allowed and the assessing officer is directed to delete this addition. In the result, the corresponding ground of appeal is allowed. 82. Before, summing up, we appreciate the submissions, of ld senior DR for the revenue in representing and defending the orders of lower authorities and in assisting the bench in disposal in this bunch of appeals. 83. As recorded in initial part of this order, this order would be followed in all remaining appeals of Hazira Land Acquisition appeals. 84. In the result, the appeal of the assessee is partly allowed. 2. Considering the fact that in all the aforesaid appeals, the facts are almost similar, the assessee has raised common grounds of appeals. Considering the fact that in lead case in Ambaben J Patel, we have already allowed the appeal of assessee, therefore, following the principle of consistency, the appeal (s) of the assessees are partly allowed with similar directions. 3. In the result, all the appeals of the assessees are partly allowed. Copy of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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