TMI Blog2011 (8) TMI 512X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the impugned lands are located within the limits of municipality, viz., GVMC. However, the assessee would be entitled for exemption under section 54B of the Act on the reinvestment made by him in purchase of another agricultural land. - AO directed to verify the claim of the assessee. Provisions of section 50C - for computing short term capital gains - held that:- The Learned CIT(A) has specifically noticed that the assessee did not object before Assessing Officer for adopting the sales value determined for stamp duty purposes for computing the short term capital gain as per the provisions of section 50C of the Act. Hence there was no necessity for the Assessing Officer to make a reference to the valuation officer. Before us, no material was placed to show that the assessee did object before the Assessing Officer for applying the provisions of section 50C. Hence, we do not find any infirmity in the decision of Learned CIT(A) on this issue. - 530 (VIZAG.) OF 2010 - - - Dated:- 8-8-2011 - SUNIL KUMAR YADAV, B.R. BASKARAN, JJ. Samuel Nagadesi for the Appellant. T.H. Lucas Peter for the Respondent. ORDER B.R. Baskaran, Accountant Member. The appeal of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee in the conveyance deed. This land was purchased on 23-1-2004 and hence it was held for more than 36 months. (b) Land having an extent of 3000.8 sq.yards situated in survey No. 338/4 and part of 338/5. This land was sold for a consideration of Rs. 30,94,800 on 23-2-2007. The market value determined for stamp duty purposes was Rs. 96,02,600. This land was purchased on 31-1-2007 and 13-2-2007, i.e. this land was held for less than 36 months. 3.1 The assessee claimed that both the impugned lands are agricultural lands and hence the capital gain arising on the sale is exempt under the Income-tax Act. Alternatively, the assessee submitted that he has invested a sum of Rs. 1,50,94,000 in purchase of another agricultural land in December, 2007 and February, 2008 in a village called "Vellanki" and accordingly claimed exemption under section 54B of the Act against the capital gain arising on sale of first land cited above. 3.2 The Assessing Officer rejected both the claims of the assessee with the following reasons: (a) The nature of land sold by the assessee on 5-2-2007 is described as "Vacant land" in the conveyance deeds both at the time of purchase and sale. The as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the assessee are situated within the limits of Grater Visakha Municipal Corporation (GVMC). However, in the notification dated 6-1-1994 issued by the Central Government for the purposes of section 2(14)(iii)(b) of the Act, the reference is made only to "Visakhapatnam". The GVMC was created by a notification dated 21-11-2005 issued under section 3 of Visakhapatnam Municipal Corporation Act, by including one Municipality named Gajuwaka and 32 Gram Panchayats within the limits of GVMC. The impugned lands are located in one of the Gram panchayats, viz., Madhuravada, so included. However, for the purposes of section 2(14)(iii)(b) of the Act the notification issued by the Central Government on 6-1-1994 still holds the field and hence the extended area of GVMC cannot be considered for the purposes of section 2(14)(iii) of the Income-tax Act. Accordingly the impugned agricultural lands do not fall in the category of "Capital assets" and hence the profit arising on their sale is not taxable. (d) The ITAT, Visakhapatnam, in its order dated 27-9-2010 in the case of Smt. C.Girija in ITA No. 424/Vizag/2009 has held that the agricultural lands situated within the limits of any municipality ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence there is no necessity to go into the applicability of section 2(14)(iii) of the Act to the instant case, as the said provision is applicable only to the agricultural lands. The ITAT, Visakhapatnam did not indulge into enacting any subordinate legislation as alleged by the Learned A.R. The Tribunal has the decision in the case of C. Girija [IT Appeal No. 424 (Vizag) of 2009] by making a plain interpretation of the provisions of section 2(14)(iii) of the Act. The constitutional validity of section 2(14)(iii) has been upheld by Hon'ble Supreme Court in the case of Singhai Rakesh Kumar v. Union of India [2001] 247 ITR 150/115 Taxman 101 and accordingly it was held by the Apex Court that the gains arising from transfer of lands falling under section 2(14)(iii)(ia) and 2(14)(iii)(b) are assessable as capital gains. Even if the lands sold by the assessee, as well as, the new land purchased by him is treated as agricultural lands for a moment, the assessee would not get exemption under section 54B of the Act, as he has failed to comply with the mandatory conditions prescribed in that section with regard to the deposit of unutilized money in the "Capital gains account scheme". He furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to the last preceding census would not be an agricultural land. The clause (b) of section 2(14)(iii) deals with those lands which situates in any area within such distance not being more than 8 kms from the local limits of the municipality or cantonment board as the Central Government may having regard to the extent of and scope for urbanization of that area and other relevant consideration specify in this behalf by notification in the Official Gazette. To bring a land within the purview of clause (b), the Central Government is required to issue a notification in the Official Gazette. Without a notification, a land falls within the 8 kms from the local limits of any municipality would not cease to be an agricultural land. But in the instant case, the impugned land is admittedly situates within area of a local limit of the GVMC for which no notification as specified in clause (b) is required to be issued by the Central Government. We have also examined the contention of the assessees that the GVMC was notified by local laws and local laws cannot supersede the Central Laws. But we do not find any force in this argument because the municipality or cantonment board are subject to lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nue that the impugned lands are not agricultural lands, the said lands would fall in the category of "Capital assets" within the meaning of clause (a) of section 2(14)(iii) of the Act, if they are held to be an agricultural land. 7. However, in the instant case, the contention of the assessee that the impugned lands are agricultural lands has not been accepted by the department. The Assessing Officer has categorically stated that the assessee did not produce any document in support of his contentions, besides observing that the impugned lands have been described as "Vacant lands" in the conveyance deeds. However, it appears that the assessee has furnished copies of adangal register before learned CIT(A) and the first appellate authority was under the impression that the Assessing Officer has considered these documents also. Hence it seems that the said claim of the assessee has not been examined at all by the tax authorities. It is well settled that the question about the nature of land, i.e. the question, whether or not a land is an agricultural land, has to be decided by considering various aspects. In the instant case, as stated earlier, the said claim of the assessee has not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate of return in the "Capital gains scheme". In this regard, the assessee has placed reliance on the decision of ITAT Bangalore in the case of Nipun Mehrotra v. Asstt.CIT [2009] 29 SOT 60. Accordingly, we direct the Assessing Officer to consider the claim of the assessee in the light of principles stated in the above cited case. 10. With regard to the invoking of provisions of section 50C for computing short term capital gains, the learned Authorised Representative contended that the Assessing Officer was not correct in invoking the said provision and further the Assessing Officer has failed to apply "real income principle". The Learned Authorised Representative, in his written submissions, has narrated gist of various case law. However, the Learned Authorised Representative did not point their relevance to the facts of the instant case. As contended by the Learned D.R, the provisions of section 50C are deeming provisions, which have to be necessarily applied by the Assessing Officer while computing the income from capital gains. The Learned CIT(A) has specifically noticed that the assessee did not object before Assessing Officer for adopting the sales value determined for stamp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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