TMI Blog2011 (11) TMI 475X X X X Extracts X X X X X X X X Extracts X X X X ..... ief under S.54B, transaction to be completed within 2 years - Held That:- Case remanded back to verify whether the assessee has purchased the agricultural lands within a period of two years, so as to qualify for relief under S.54B of the Act - IT APPEAL NOS. 1024 TO 1027 AND 1268 TO 1271 (HYD.) OF 2011 - - - Dated:- 16-11-2011 - CHANDRA POOJARI, SMT. ASHA VIJAYARAGHAVAN, JJ. S. Rama Rao for the Appellant. V. Srinivas for the Respondent. ORDER Chandra Poojari, Accountant Member This is a bunch of eight appeals. The appeals of the assessees for the assessment year 2008-09 are directed against similar but separate orders of the CIT(A) I, Hyderabad dated 16.3.2011, whereas the other appeals of the assessee, Shri Mirza Mustafa Baig for the assessment years 2002-03 to 2004-05 and 2006-07 are directed against a common order of the CIT(A)-I, Hyderabad dated 15.3.2011. Since common issues are involved, all these appeals are being disposed off with this consolidated order for the sake of convenience. Appeals of Shri Mirza Mustafa Baig: ITA No.1025/Hyd/2011 : Assessment year 2008-09 ITA No.1268 to 1271/Hyd/2011 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh Court in the case of CIT v. Smt. Jayalakshmi Rajendran [1985] 152 ITR 744/22 Taxman 427; of the A.P. High Court in the case of CIT v. Mrs. Shahzada Begum [1988] 173 ITR 397/38 Taxman 311 and of the Kerala High Court in the case of P.K. Kesavan Nair v. CIT [1988] 174 ITR 253/41 Taxman 16, and observing that a purchase is complete only when the property is conveyed by a registered deed, the assessing officer held that the assessee is not entitled for exemption under S.54B, in respect of purchase of agricultural lands for which neither there is a registration nor possession of the lands. 4. Without prejudice to the above finding, the assessing officer also rejected the claim of the assessee for relief under S.54B of the Act, on the ground that the land sold was not an agricultural land. In this behalf, it may be noted that in the absence of any evidence filed by the assessee in that behalf, to verify the claim of the assessee regarding the cultivation of the land and fulfillment of conditions mentioned in S.54B, the assessing officer obtained copies of Pahani Patrika from Dy. Collector and Tahsildar, who mentioned that there was no cultivation during the financial y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ong term capital gain Rs. 33,19,16,235 Assessee's 1/4th share (Rs. 33,19,16,235) is Rs. 8,29,79,058/-. 6. On appeal, the CIT(A) confirmed the view taken by the assessing officer, not only with regard to rejection of the claim of the assessee for relief under S.54B of the Act, but also with regard to computation of capital gains. 7. Hence, assessee is in second appeal before us. 8. Let us first take up for consideration the appeal for the assessment year 2008-09. 9. The first effective grievance of the assessee in the appeal for assessment year 2008-09, relates to disallowance of agricultural income declared by the assessee, which has been treated by the assessing officer as income from other sources. 10. For the assessment year 2008-09, as already noted, while narrating the facts for that year herein above, assessee has declared agricultural income of Rs. 8,400. The assessing officer disallowed the claim of the assessee in the absence of any evidence filed by the assessee in support of such agricultural income or agricultural activities carried on by the assessee, and treated the agricultural income declared as income from o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shows that the land was under cultivation in the asst. year under consideration also. Further, the lower authorities observed that there was a dispute regarding the ownership of the agricultural land and there cannot be any agricultural operations. This finding of the lower authorities goes against the revenue records which show that the land was under cultivation during the financial year 2006-07 and for 2004-05 and also against VRO's Certificate. Being so, in our opinion, the certificate issued by the VRO, who is concerned revenue authority to issue the said certificate has to be relied upon and it is not possible to reject the same without examining the deponent. In this behalf, we place reliance on the decision of the Supreme Court in the case of Mehta Parikh Co. v. CIT [1956] 30 ITR 181 wherein held that when the persons who gave the affidavits were not cross-examined, it was not open to the revenue to challenge the correctness of the statement made in the affidavits. In view of this, we are inclined to hold that the agricultural income declared by the assessee is to be accepted as agricultural income only. 12. The next effective grievance of the assessee in this app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per acre pleaded by the assessee, and submitted that the rate of Rs.1,40,000 per acre disclosed by the assessee is quite reasonable. 14. The Learned Departmental Representative on the other hand, strongly supported the orders of the lower authorities. He submitted that the lands in question were not of agricultural nature, and they were not put to cultivation, as clearly evident from the material taken into consideration by the assessing officer. He further submitted that even though the land in question was outside the specified area of 8 KMs of Rajendranagar Municipality, it is within specified area of 8 KMs of the Hyderabad Municipal Corporation, and hence, notwithstanding the fact the land in question falls within the Revenue jurisdiction of Rajendranagar Mandal and more than 8 KMs away from the Rajendranagar Municipal limits, it is an urban land since it falls within 8 KMs of Hyderabad Municipal Corporation limits, and as such, it is a capital asset giving rise to capital gains on its sale. He submitted that if the property is within the specified area of 8 KMs of any municipality, not necessarily within the jurisdiction of the Revenue authority, the property assumes the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether it falls under the limits of Rajendra Nagar Mandal or otherwise. Further, mere fact that the land in question was agricultural land cannot be a ground to claim for exemption under section 2(14) of the Act as the land is situated within the local limits of Hyderabad Municipal Corporation. Further, it was held recently by the Hon'ble Punjab Haryana High Court in the case of Smt. Anjana Sehgal ( supra ) that the expression "from the local limits of any municipality" used in section 2(14)(iii)(b) of the Income-tax Act denotes "any municipality or municipality of the District in which the land is situated". Further, capital gains arising from the transfer of agricultural land situated in municipal or other urban areas or notified adjoining areas will be liable to income-tax. In this view of the matter, and considering the facts and the circumstances of the present case, in our considered view, the lower authorities are justified in determining the land in question, as capital asset liable for income-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 is reasonable t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tices were issued under S.153A of the Act. In response to the same, the assessee filed returns of income admitting the incomes as follows- Asst . Year Income Admitted Rs. Agricultural Income Rs. 2002-03 45,000 12,000 2003-04 42,000 14,500 2004-05 46,000 16,200 2006-07 76,000 25,600 19. During the assessment proceedings for the above years, the assessee was called upon to file the receipts and payments account for the agricultural income claimed in the return of income and also documentary evidence relating to the agricultural income. Since the assessee failed to produce any evidence regarding the agricultural income, the assessing officer treated the agricultural income shown by the assessee as non-agricultural income and completed the assessment accordingly, vide orders of assessment dated 18.12.2009 passed under S.143(3) read with S.153A of the Act. 20. On appeal, the CIT(A) confirmed the disallowance of agricultural income made by the assessing officer, in the following manner- "05.0 .. I find that the assessing officer has discussed the issue of agricultural i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o accept the agricultural income in these cases also. We accordingly allow the ground taken by the assessee. 23. In the result, these four appeals of the assessee, being ITA Nos. 1268 to 1271/Hyd/2011 for the assessment years 2002-03 to 2004-05 and 2006-07, are allowed. APPEALS OF OTHER ASSESSEES:- ITA.No.1024/Hyd/2011 of Smt. Gousia Begum: ITA No.1026/Hyd/2011 of Shri Mirza Nader Baig, ITA No.1027/Hyd/2011 of Shri Shri Mirza Yousuf Baig 24. Now turning to these appeals for the assessment year 2008-09, facts of the case, issues involved are identical to those considered while dealing with the appeal of Shri Mirza Mustaf Baig for the assessment year 2008-09, hereinabove, viz. ( a ) Disallowance of agricultural income ( b ) Assessment of long term capital gains on sale of land ( c ) Disallowance of claim for relief under S.54B ( d ) Charging of interest under S.234B and 234C As already noted above, appellants herein jointly hold the land in question, which yielded the alleged agricultural income and capital gains, and led to the claim of the assessees for relief under S.54B and ultimate assessment of capital gains by the assessing officer, rejecting th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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