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TMI Blog2024 (10) TMI 519X X X X Extracts X X X X X X X X Extracts X X X X ..... eration, Zirakpur was not a Municipality. As is evident from a perusal thereof, which, again has not been denied on behalf of the Department. Too, the Sale Deed clearly mentions that the possession of the land was handed over by the assessee to the purchaser at the site after receipt of the entire amount of payment, before the Joint Sub Registrar, Zirakpur. In this regard, reliance has rightly been placed on the decision of the Hon'ble Supreme Court in the case of CIT Vs Balbir Singh Maini [ 2017 (10) TMI 323 - SUPREME COURT] Therefore, the matter considered from any angle, the order under appeal is found to be unsustainable in law and the same is hereby reversed. The claim of the assessee is found to be justified and it is accepted as such. Assessee appeal allowed. - SHRI A.D.JAIN, VICE PRESIDENT AND SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER For the Assessee: Shri Tej Mohan Singh, Advocate For the Revenue: Shri J.S.Kahlon, CIT-DR ORDER (VIRTUAL HEARAING ) PER A.D.JAIN, VICE PRESIDENT This is assessee's appeal for assessment years 2017-18 against the order of the ld. Commissioner of Income Tax (Appeals) NFAC, Delhi [in short the ld. CIT(A) ] dated 17. 05.2023. 2. The fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rchased during the year under consideration. The assessee had agricultural land in village Chhatt in Punjab. The assessee had sold the same to Maya Builders for Rs. 4,13,13,132/-, out of which, Rs. 3,13,13,131/- had been received in Financial Year 2016-17 relevant to the year under consideration, i.e., assessment year 2017- 18, and had claimed that the same was exempt from capital gain as the land was agricultural in nature and the sale of such land was not the sale of a capital asset. The AO concluded the assessment by treating the land sold as capital asset liable to be taxed under Long Term Capital Gain. 4. Before the AO, the assessee stated that he owned agricultural land in village Chhatt in Punjab, outside the municipal limits, as described in Notification No. 9447 dated 06. 01.1994; that the assessee sold the same to M/s Maya Builders during the year and received Rs.3,13,13,131/- for it during the year, which was claimed exempt as sale consideration of agricultural land. The AO expressed the view that the land sold was a capital asset as per the provisions of Section 2(14)(ii)(a) of the Income Tax Act and that the Notification No. 9447 of dated 06.01.1994 was not applicable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ections are held every five years; that Zirakpur Municipal Council has a population of more than 1.5 Lakh as per Report released by Census India 2011; that however, during the year under consideration, the population of Zirakpur was around 2.50 lakh, as there was a considerable expansion of the city and its population; that the provisions of Section 2(14)(iii) of the Income Tax Act have been amended w.e.f. 01. 04. 2014; that therefore, the assessee's plea that the land is outside the municipal limits, was not acceptable; that the case of the assessee falls under sub- clause (iii) of clause (a), since the land is situated in the Municipal Council of Zirakpur; that therefore, the assessee's plea that the land sold is not a capital asset and is exempt as per Notification dated 06.01.1994, was not acceptable. 6. The ld. CIT(A), while confirming the assessment order, held that the assessee had relied on a 1994 Notification to claim that the capital asset was situated beyond the prescribed limits of any Municipality whose population is in excess of one lakh as per the figures of the latest published Census; that the assessee has, at one place claimed that the land is situated abo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot exceeding one lakh. As per the Explanation to the Section, population means the population according to the last preceding Census, of which, the relevant figures have been published before the first day of the previous year. 9.1 As per Notification No. SODP-SASN/DB/Ss 34 and 10/ PA-9/ 94/2012/ 3907 ( APB 8-9), issued by the Department of Rural Development and Panchayats, Government of Punjab, relied on by the assessee before the authorities below, the Governor of Punjab declared the village or group of contiguous villages mentioned in the said Notification, to constitute a Gram Sabha area and to constitute a Gram Panchayat, in block Dera Bassi, District SAS Nagar. At Item 93 (APB-9) of the Notification, village Chhatt has been shown to be a village constituting Gram Sabha area, for which, the Gram Panchayat was constituted, i.e., Gram Panchayat Chhatt. Thus, evidently, it was by virtue of the aforesaid Notification dated 04.12. 2012, that the Gram Panchayat of village Chhatt was created. Before that, village Chhatt had no Gram Panchayat. This also proves that village Chhatt, at that time, was not comprised within the municipal limits of Zirakpur and had its own Gram Panchayat. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly, the date of issuance of the aforesaid Notification, i.e., 19.12.2016, is much later than the date of last payment of advance against the sale consideration received by the assessee for the sale of the land situated in village Chhatt, i.e., in Financial Year 2016-17, relevant to the year under consideration, i.e., assessment year 2017-18, as brought on record by the assessee. Thus, the assessee is correct in contending that village Chhatt, at the relevant time, was not forming part of the municipal limits of Zirakpur and it was included in the municipal limits of Zirakpur only by virtue of the said Notification dated 19. 12.2016. It also remains unchallenged that the land is situated more than four kilometers away from the municipal limits of Zirakpur, as applicable at that time. In view of these undisputed facts, the only conclusion that can be arrived at is that the land in question did not fall within the definition of capital asset , as per the definition contained in Section 2(14) of the Income Tax Act. 9.5 For the above reason, the ld. CIT(A) has clearly erred in holding that the AO was correct in relying on the Notification dated 19.12.2016 to decide the matter against th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , nebulous, in as much as the ld. CIT(A) holds that . the other data brought on record by the AO regarding population also is a relevant factor in holding that the impugned land transferred falls within the definition of capital asset under the Act and therefore, exigible to capital gain .. As to how it is so, has not been elaborated upon by the ld. CIT(A). 10.1 Further still, the AO has erred in holding that the population of Zirakpur during the year under consideration was around 2.50 lacs as there was considerable expansion of the city and its population. This finding of the AO is also without any basis and it is in direct conflict with the definition of population, as provided by the provisions of the Explanation to Section 2(14)(iii) of the Act, as discussed herein above. To reiterate, the population is to be taken at the figure of the last preceding Census, of which, the relevant figures have been published before the first day of the previous year. As correctly contended, and not disputed, the last Census before 2020 was the Census of 2011. The figure published therein, in the Financial Gazette is of 95,553. The AO was not authorized to stretch the same to an imaginary figur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Section 2(14) of the Income Tax Act. 12. Then, besides the above, it again remains undisputed that in view of Notification (APB 18-22) No. 9447, dated 06. 01.1994, relied on by the assessee all through, the amount received by the assessee is exempt, as rightly contended. This is so, since at the time of receipt of the last payment by the assessee in the year under consideration, Zirakpur was not a Municipality. As is evident from a perusal thereof, which, again has not been denied on behalf of the Department. Too, the Sale Deed dated 21.03.2018 (APB 57-66) clearly mentions that the possession of the land was handed over by the assessee to the purchaser at the site after receipt of the entire amount of payment, before the Joint Sub Registrar, Zirakpur. In this regard, reliance has rightly been placed on the decision of the Hon'ble Supreme Court in the case of CIT Vs Balbir Singh Maini (supra). 13. Therefore, the matter considered from any angle, the order under appeal is found to be unsustainable in law and the same is hereby reversed. The claim of the assessee, by way of Ground Nos. 1, 2, 4 and 6, is found to be justified and it is accepted as such. 14. Ground No. 5 does no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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