TMI Blog2013 (11) TMI 171X X X X Extracts X X X X X X X X Extracts X X X X ..... on 2(14)(iii)(a) or 2(14)(iii)(b) – Held that:- The land in question giving rise to capital gain was, in fact, urban land though agricultural operations have been carried out on them - The land is situated at Narsing Village of Rajendra Nagar Mandal, R.R. District which is within the municipal limits of Rajendra Nagar - This is urban land akin to the Hyderabad Municipality situated within 8 KM from the local limits of Hyderabad Municipal Corporation - 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 - Land in question is capital asset liable for income-tax – Following the decision of coordinate bench in the case of Smt. Gousia Begum and Others [2013 (9) TMI 559 - ITAT HYDERABAD]., held that the land in dispute cannot be considered as agricultural land so as to hold that it is exempt from capital gains – Decided against the Assessee. - ITA No. 721/H/12 - - - Dated:- 31-1-2013 - Shri Chandra Poojari And Smt. Asha Vijayaraghavan,JJ. For the Appellant : Shri K. C. Devdas For the Respondent : Shri A. K. Satapath ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the land owners as also to the developers. Details of payments are as under:- B. Vijay Kumar (Rs.) Total consideration received from PEBL - 21,73,35,000 Less: Paid to land owners - 7,02,37,500 Balance consideration with assessee - 14,70,97,500 Less: Paid to developers - 12,97,65,563 Balance - 1,73,31,937 B. Raghu Alekh Total consideration received from PEBL - 6,21,00,000 Less: Paid to land owners - 1,96,25,000 Balance consideration with the assessee - 4,24,75,000 Less: Paid to developers - 3,97,64,887 Balance - 27,10,113 4. The assessees filed returns of income showing short term capital gains by deducting from the full value of consideration the amounts paid to land owners, registration charges and cost of improvement being the amount paid to developers. The returns were filed showing STCG as because the assessees became the owner of the land by virtue of agreement of sale and irrecoverable GPA and then transferred the land to PEBL. Computation of incomes by the assessees: B. Vijay K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be discharged by the assessee. Further, enquiries caused in Chennai through the DDIT, Chennai did not any result, which showed that none of the parties through whom the assessee carried on leveling work were existent. vii) It was observed by the AO that enquiries made with the banks in Chennai in which the said parties maintained accounts, showed negligible balance as the amounts were withdrawn, however, credits in some accounts were more than what was mentioned in the development agreement. 6. The AO relied on the statement of General Manager of PEBL recorded on 22/12/2009 wherein he had stated that the clause-3 in the registered sale deed indicating that the consideration was paid towards cost of land and cost of improvement, was not correct and the clause was inserted at the request of the assessee i.e. Shri Vijay Kumar. The AO examined one Sri N. Srinivas, the owner of the land, whose statement was recorded on 29/12/2009 wherein the owner stated that there was no leveling work on the land as agricultural operations were carried on by him on the same land. Therefore, the AO concluded that there was no physical barrier in the said land. Finally, the AO observed that the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re carried out in your lands before lands were given possession to Mr. B. Vijay Kumar and Mr. Raghu Alekh ? Ans.: I state that Mr. B. Vijay Kumar also purchased some lands and doing the work of removing the boulders in those lands. Since Mr. B. VijayKumar is purchasing our lands, he has carried out the work of removal of boulders, in our land also." 10. The AR relied on the statement made by Mr. N. Srinivasan at a later stage wherein he had stated that a portion of the land was cultivable and the balance land was rocky. The AR further submitted that the AO had erred in utilizing the statement of Shri Raghunath Reddy, employee of the purchaser company and on cross examination and reexamination it was proved that the statement made by him was not correct. Lastly, the subsequent spot inspection after sale could not throw any light about the condition of land at the time of sale. It was submitted by the AR that Assessing Officer took existence of google earth images before the CIT(A) for the first time to state that there was no improvement on the land. The AR submitted that the basis on which the Assessing Officer came to a conclusion that the topography remained same all along wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Similarly, the Assessing Officer should not have ignored the clarification made by Shri N. Srinivas on 31/12/2009. iii) The conclusion drawn by the Assessing Officer that these retractions/clarifications made by the deponents under undue influence is not corroborated and are only presumptions. iv) The Assessing Officer should have taken judicial notice of the clause in the registered sale deed and wrongly ignored the bifurcation of the consideration towards cost of land and cost of improvement. v) the observation of the Assessing Officer that the Chennai Parties could not be traced by the Department cannot be drawn as an adverse inference as the parties had left the place of work immediately after the work was completed. However, the amounts were paid to these parties by bank transfers and credited to their accounts. vi) The development work was done over a period of few days and not done within six days. vii)The spot inspection by the department and the google images do not have any evidentiary value. The learned counsel pointed out that the assessee never accompanied the Assessing Officer while taking photographs of the land and it is possible that the Assessing Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s book furnished by Sri N. Srinivas, HUF showed that Ac. 4.01 guntas had been categorized as dry agricultural land. Sri N. Srinivas, HUF had claimed deduction u/s 54B. e) The contractors at Chennai were not registered and even the payments to them were not in terms with the alleged development agreements. f) The Chennai parties were not in existence and were not found filing returns of income. g) The assessee and his son failed to discharge the onus of proving that development work had been executed by them and even the technical ability to carry out such works could not be proved. h) The bank accounts of the persons of the contractors, with whom the said development agreements were entered into showed withdrawals and transfer of amounts immediately after the receipt of the amounts from the assessee and his son. i) Even the bank account opening forms of the Chennai parties did not show that they were engaged in the works of the civil contracts or had expertise to carry out such works. j) The statement of Sri L. Raghu Rami Reddy showed that no development work was carried out in the entire land purchased by PEBL and that the clause regarding development had been inserted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch entitled for relief under S.54B of the Act, and the lower authorities were not justified in rejecting the claim of the assessee. He submitted that the lower authorities were not justified in treating the lands of the assessee giving rise to the capital gains in dispute, as of non-agricultural nature. It is submitted that even though there were disputes about the ownership of the property sold, the lands sold were in the possession of the assessee, who was carrying on agricultural operations on the same. He also submitted that the 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 transa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oducing necessary evidence in the form of comparable cases of the relevant time, notwithstanding opportunity given by the assessing officer for that purpose. 15. We have considered the rival submissions. We do not find merit in the contention of the assessee. The land in question giving rise to capital gain was, in fact, urban land though agricultural operations have been carried out on them. The assessee placed before the lower authorities pahani patrika, VRO's Certificate and details of electricity Bill/slab pass Book etc. We have 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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