TMI Blog2013 (9) TMI 559X X X X Extracts X X X X X X X X Extracts X X X X ..... me-tax - With regard to determination of cost of acquisition of the land disposed of, we are of the opinion that considering the proximity of the land to the city, it was reasonable to fix the value of as on 1.4.1981 at Rs.30,000 per acre, instead of Rs.10,000 determined by the Assessing Officer, as against Rs.1,40,000 claimed by the assessee. One of the reasons for which the claim of the assessee for relief under S.54B was rejected by the assessing officer was that what was paid by the assessee was only an advance for purchase, and unless it was actual purchase of land, assessee would not be entitled for relief under S.54B. There was some merit in this reasoning of the assessing officer - However, in terms of S.54B of the Act, assessee had to purchase the agricultural land within a period of two years. Hence, though mere payment of advance does not entitled the assessee for relief under S.54B of the Act, if ultimately whole transaction of purchase of land was completed within a period of two years as contemplated under S.54B of the Act, assessee was entitled for relief under S.54B of the Act - we set aside the orders of the lower authorities, and restored this issue to the file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income-tax Act. However, the Assessing Officer rejecting the contention of the assessee, proceeded to bring to tax long term capital gains arising out of the sale of the said land. 3. The assessee also claimed exemption under S.54B of the Act on account of purchase of agricultural lands, which were registered at Yenkepally Village, Pudur Mandal, R.R. District of Rs.1,05,08,220 from the amount received by way of capital gains. Similarly, assessee also claimed exemption under S.54B in respect of the advance paid for purchase of agricultural lands at Puppalaguda Village, Rajendra Nagar Mandal of Rs.96,62,500. The assessing officer observed that mere payment of advance for purchase of agricultural lands without possession and without registration, does not entitle the assessee to exemption under S.54B. He noted that as per the provisions of S.54B of the Act, if the assessee has within a period of two years from the date of sale of agricultural land, purchases another agricultural land, exemption is available. He further noted that if the amount is not used for purchase of the agricultural lands before the due date of filing return of income, the same should be deposited in capital ga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate adopted by other persons selling land to DLF group in the same area. The assessing officer also observed in this behalf that persons of Md. Kareemuddin group, Md. Khairuddin group and Md. Gayasuddin group who had sold land in the same area to the same group to whom assessee had sold land, had shown market value of the land as on 1.4.1981 at Rs.10,000. The assessing officer also observed that as per the certificate obtained from the sub registrar, the market value as on 1.4.1981 was about Rs.2 per sq. yard, which is even less than Rs.10,000 per acre. Assessing officer, therefore, adopted the market value of Rs.10,000 per acre to work out the indexed cost of acquisition and computed the long term capital gains as follows Sale consideration received Rs.33,25,00,000 Les : Brokerage/Commission paid Rs. 3,00,000 Rs.33,22,00,000 Less: Indexed cost of acquisition : Cost as on 1.4.1981 Rs.10,000 per acre 10,000 X 5.15 acres X 551 100 Rs.2,83,765 Long term capital gain Rs. 33,19,16,235 Assessee s 1/4th share (Rs.33,19,16,235) is Rs.8,29,79,058/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that the paddy and the vegetables were grown and the same was used for self consumption. The assessing officer without bringing any evidence against the assessee, disallowed the claim of the assessee. Further, for disbelieving the contention of the assessed, the lower authorities relied on the pahani patrika obtained from Dy. Collector and Tahsildar. It was mentioned therein that there was no cultivation during the financial year 2005-06. Later, there was an affidavit filed from the Village Revenue Officer, Narsing Village who mentioned that due to pressure of work, he did not fill the columns of cultivation in the pahani patrika during the financial year 2005-06 for all the lands in the entire village. This fact also brought to the knowledge of the lower authorities. However, no enquiries were carried out in this regard. On the other hand, there was information from the Dy. Collector that the land was under cultivation for the financial year 2006-07 and 2004-05 and in earlier years. However, the affidavit filed by the VRO shows that the land was under cultivation in the asst. year under consideration also. Further, the lower authorities observed that there was a dispute rega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee has also filed before the assessing officer, an affidavit of the Village Revenue Officer, who mentioned that due to pressure of work, he had not filled in the column of cultivation in the Pahani Patrika. The assessing officer did not give due weightage to this valuable piece of evidence, and proceeded to determine the lands in question as of non-agricultural nature. He also disputed the conclusion of the assessing officer in denying the assessee the relief under S.54B on the ground that payment of advances for purchase of land would not entitle the assessee to relief under S.54B, and submitted that the assessee ultimately concluded the transaction of purchase within time allowed by the statute, and possession of the lands in question was taken on 10.7.2009, viz. within a period of two years, and consequently, the assessee is entitled to relief under S.54B of the Act. He also disputed the rate taken into consideration by the assessing officer, for arriving at the cost of acquisition, by adopting the market value of the land as on 1.4.1981 at Rs.10,000 per acre as against Rs.1,40,000 per acre pleaded by the assessee, and submitted that the rate of Rs.1,40,000 per acre disc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e held on that basis in earlier paras that the assessee derived agricultural income. But, the question still remains whether the impugned land come within the meaning of capital asset . The land is situated at Narsing Village of Rajendra Nagar Mandal, R.R. District which is within the municipal limits of Rajendra Nagar. According to the learned counsel for the assessee, Rajendra Municipality is not notified by the Central Government and therefore the agricultural lands which fall under the jurisdiction of the Rajendra Nagar Mandal cannot be considered as capital asset within the meaning of section 2(14) of the Income-tax Act. But, the fact is that this is urban land akin to the Hyderabad Municipality situated within 8 KM from the local limits of Hyderabad Municipal Corporation. In similar circumstances, the jurisdictional High Court in the case of CIT vs. Bola Ramaiah (174 ITR 154) held that the capital gains arising out of sale of land situated within 8 KM of local limits of Hyderabad Municipality, is liable for tax on capital gains irrespective of the fact whether it falls under the limits of Rajendra Nagar Mandal or otherwise. Further, mere fact that the land in question was ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aring to the assessee. Grounds of the assessee on this issue are allowed for statistical purpose. 16. The next grievance of the assessee which arises for consideration relates to charging of interest under S.234B and 234C of the Act. Assessee s ground in this behalf reads as follows- 8. The learned Commissioner of Income-tax(Appeals) erred in charging interest u/s. 234B and u/s. 234C of the I.T. Act. The learned Commissioner of Income-tax(Appeals) ought to have seen that the department seized cash and, therefore, interest u/s. 234B and 234C is not chargeable. The levy of above interest is merely consequential and mandatory in nature and accordingly, this ground is rejected. 17. In the result, assessee s appeal for assessment year 2008-09, being ITA No.1025/Hyd/2011 is partly allowed for statistical purposes. 18. As regards the other appeals of the assessee, being ITA Nos.1268 to 1271/Hyd/2011 for the assessment years 2002-03 to 2004-05 and 2006-07, facts in brief are that consequent upon the search action which took place, as noted above, notices were issued under S.153A of the Act. In response to the same, the assessee filed returns of income admitting the incomes as f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been preferred against the said decision of the AO meaning thereby that the appellant has accepted in principle the stand taken by the AO treating agricultural income as non-agricultural income. Thus, considering the fact and circumstances of the case I am not inclined to accept the contention of the appellant that he had derived agricultural income from the disputed land. In other words, the addition made by the AO treating the agricultural income as non-agricultural income for all the above mentioned assessment years is confirmed. 21. Aggrieved by the orders of the CIT (A) confirming the action of the assessing officer in treating the agricultural income disclosed by the assessee as income from other sources, assessee preferred second appeals before us on this issue. 22. We heard both sides. In view of our findings in para-11, in the context of assessee s appeal for assessment year 2008-09, wherein we have held that agricultural income declared by the assessee to be accepted as agricultural income, accordingly we direct the assessing officer to accept the agricultural income in these cases also. We accordingly allow the ground taken by the assessee. 23. In the result ..... X X X X Extracts X X X X X X X X Extracts X X X X
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