TMI Blog2014 (2) TMI 733X X X X Extracts X X X X X X X X Extracts X X X X ..... rops were grown by the assessee - If any suspicion crept into the mind of the Assessing Officer, nothing prevented him to get the report from Sarpanch, neibours of the impugned land or the revenue Patwari but that was not done by him - The conclusion drawn in the order clearly indicates that the impugned land is situated clearly beyond 8 kms from the municipality - the land would not fall within the definition of capital asset as mentioned in sec. 2(14) of the Act – Decided against Revenue. - ITA No. 478/Ind/2012 - - - Dated:- 3-9-2013 - Shri Joginder Singh And Shri R. C. Sharma,JJ. For the Appellant : Shri R. A. Verma For the Respondent : Shri S. S. Sheetal ORDER Per Joginder Singh, judicial member The Revenue is aggrieved by the order of the first appellate authority dated 18th June, 2012 wherein addition of Rs.62,79,961/- was deleted under the head long term capital gain on account of income from the sale of land by placing reliance upon the certificate issued by PWD Department, ignoring the certificate of Tehsildar by holding that the land sold by the assessee is not a capital asset merely on the ground that it is agricultural land. 2. During heari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment order :- That agricultural land situated interior of Gram Arandia Patwari Halka No. 18 The/Distt.Indore. The agricultural land is far from Tehsil border by a distance more than 8 km. Regarding distance also submitted railway ticket and certificate issued by Patwari. The learned Assessing Officer made inquiries from Tehsildar u/s 133(6) who vide letter dated 19.4.2011, claimed to have intimated that the village Arandia is situated at a distance of 4 to 6 kms from MR 11 route and at a distance of 4 to 5 kms from Nipania Khajrana Kankad by-pass route. The assessee was informed about this information. The assessee attended the proceedings and made written submission that an application has been moved to PWD Department, consequently a certificate issued by PWD was produced by the assessee in which the total distance of the land has been mentioned at more than 9 kms from the municipal limit. The Assessing Officer made inquiries from PWD, Indore as per which vide letter dated 29.11.2011 the SDO, PWD, Sub-Division No. 1, intimated as under :- .....Nearest distance by road from Indore Municipal limit (Niranjanpur) to village Arandia is 7.8 k.m. Secondly, nearest distance by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndore Municipal Corporation has to be measured up on the basis of road net work available on the date of sale and not on the basis of road net work which came in existence later. It was also argued that existence of road net work was a major factor determining price of land and had the later network been available earlier the assessee/appellant would have been benefitted by getting enhanced rate of sale consideration which was not realised as the land has to be sold on the basis of then available road net work only. 4.1.3 The AR finally summed up that as per certificate issued by Competent State Govt. Authority in this behalf i.e. PWD Deptt. The distance of village Arandiya, where the land was situated by shortest route by 7.8 kms and if further distance of 500 kms from road specifically mentioned in purchase deed, executed in the year 1996, is taken into consideration the land was clearly situated beyond 8 kms without any doubt from the outer limit of Indore Municipal Corporation, AR also filed copy of Inspector s report as referred by A.O. in the assessment order and it was contended that such report has to be altogether ignored as the Inspector has measured the distance from M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue, whether the land sold was situated at a distance beyond 8 kms from outer limit of Indore Municipal Corporation, again there is sufficient merit in the contentions of the appellant. The authentic certificate issued by PWD authority dated 4.11.2011 which was before A.O., the distance by shortest route from outer limit of Indore Municipal Corporation i.e. Niranjanpur to village Arandiya was 7./8 kms and the distance through other outer limit of MC i.e. Khajrana, the distance was still more at 9 kms. The certificate dated 19.04.2011 issued by Tahsildar as enclosed with appeal order as Annexure-A cannot be attached any significance in the matter of distance for two reasons. Firstly it is vague as the distance is stated in a wide range of 4 to 6 kms and 4 to 5 kms from two different outer limit as noted above and that too through MR-11 which was not in existence on the date of sale of land. Secondly, when the appellant approached office of the Tehsildar, for certifying the distance of land he was informed by letter dated 18.11.2011, that such information was not available in their office. Letters and applications filed by appellant are collectively marked as Annexure B1 and B2 enc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowed the claimed exemption u/s 10(37) of the Act merely on the ground firstly that the impugned land is situated within the prescribed limit of 8 kms from the municipality and secondly it is not an agricultural land as in earlier year no agricultural income was disclosed by the assessee. If the observation made in the assessment order more specifically in para 5.1, 5.3 and the reply of the assessee are examined, we find that the Assessing Officer conveniently ignored the certificate issued by PWD mentioning that the impugned land is situated beyond the prescribed limit of municipality by specifically mentioning that the land in question is situated beyond more than 9 kms from Municipal limit. The Indore Bench of the Tribunal has dealt with this case in Ashok Shukla (ITA No. 207/Ind/2012 order dated 31.8.2012). We are usefully reproducing the said order for ready reference :- The Revenue is aggrieved by the impugned order dated 31.1.2012 broadly on the ground that on the facts and in the circumstances of the case, the learned first appellate authority erred in treating the land sold as agricultural land when the assessee failed to substantiate that any agricultural activi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e borne by the purchaser and the sale consideration amounting to Rs.1,29,21,582/- was received through cheque. The Assessing Officer concluded that the impugned land is situated within 8 kms from the municipal limit and then mentioned the provisions of section 10(37) of the IT Act which are applicable in the case of compulsory acquisition, therefore, is not applicable to the facts of the case as the land was sold by private deal and no exemption u/s 54B of the Act was claimed. So far as the argument of the learned CIT DR and observation of the Assessing Officer that since the land was not cultivated by the assessee himself and was carried on by the brother, therefore, it cannot be treated as agricultural land. We are not absolutely convinced by this argument/observation because there is no requirement in any Act more especially the Income Tax Act that only the self cultivated land will be treated as agricultural land. The Tehsildar is the concerned revenue Officer who on the basis information/report of revenue Patwari issues a certificate. Since the brother of the assessee was doing agricultural operation, therefore, any income derived out of it will be treated as agricultural inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hna Hariballabhadas vs. CIT; 138 ITR 245. We find that in that case, the land was situated within municipal limits of Ahmedabad and the surrounding land was developed and since the land was not agricultural land, the gains from sale of such land was held to be exigible to capital gains tax. However, the land in question is clearly agricultural land situated beyond 9 kms from the municipal limit, therefore, this case may not help the revenue, moreso one fact pertinent to mention here that part of the same land, owned by one of the brothers, was treated as agricultural land, therefore, it is quite unjustified to treat part of the same land/chunk to be non-agricultural. Another case relied upon is from Hon ble Bombay High Court in Fazalbhoy Inv. Company Pvt. Ltd.; 176 ITR 523 wherein there was no evidence showing that no agricultural operations were carried out on the land. The Hon ble Court held that land was not agricultural. However, in the impugned land, agricultural operation was done by one of the brothers, therefore, with utmost regard, this judicial pronouncement may not help the revenue. Another decision relied on is CIT Vs. Gemini Pictures Circuit Private Limited; 220 ITR 43 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are cumulatively kept in mind, one clear fact is oozing out that the impugned land is situated beyond the prescribed limit from the municipality, recorded as agricultural land in the revenue record, agricultural operation was done by one of the brothers, we are of the considered opinion that the no capital gains tax is exigible on sale of such land. So far as the objection of the learned CIT DR that the Tehsildar is not a competent authority for measuring the distance, we are not satisfied with such submission especially when the Inspector of the department of Income tax and Tehsildar both have certified that the land is situated beyond 8 kms from the municipal limit. We are of the considered opinion that Tehsildar is the most competent revenue Officer to certify the proof of agricultural operation, distance of land from a particular place, rate of land, etc. Our view is further fortified by the decision from Hon ble Punjab Haryana High Court in CIT vs. Lalsingh Others; 228 CTR 575. So far as the issue of measuring the land through straight method/aerial method is concerned, we are of the view that for measuring the land we are supposed to go by the road, therefore, road distan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Court clearly supports the case of the assessee. In the case of Lalsingh Others (supra) the Hon ble High Court concluded that the report of the Tehsildar having certified that the assessee s land was 8 kms away from the municipal limit, the land constituted agricultural land entitling the assessee to exemption u/s 54B of the Act. 7. If the assessment order is analysed, we are of the view that the learned Assessing Officer is more guided by section 45 of the Act which speaks about capital gains arising from the transfer of capital asset. Section 54B of the Act speaks about non-charging of gains of the cases where there is a transfer of land used for agricultural purposes. An amendment was effected with effect from 1.4.1970 so as to include lands situated in certain specified areas within the ambit of nonagricultural land. However, burden is on the assessee to prove that the land is agricultural land and at the same time, onus is on the department to prove that the land is non-agricultural or it forms part of business asset. For the purposes of land being agricultural land, actual agricultural operation or cultivation or tilting of land is always not necessary. What is to be s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the distance of land beyond prescribed municipal limit and more specifically when Khasra number, etc. has been duly mentioned in the report of Tehsildar. So far as the argument of the learned CIT DR that the land was sold at a substantial amount is not the relevant factor to prove that it was non-agricultural land because it depends upon so many factors. Even in the grounds of appeal, the revenue has raised a ground that the documentary evidences produced by the assessee belong to the land of Shri Rakesh Shukla, brother of the assessee. We are not convinced with this argument also because the total land is adjoining to each other and is from one chunk. This claim of the revenue rather supports the case of the assessee. As mentioned earlier, in the case of one of the brothers, it has been allowed as agricultural land, therefore, no different yard stick can be adopted in the case of another brother, being the land is part of the same chunk. The totality of facts clearly leads to the conclusion, under the facts narrated hereinabove, that the impugned land is agricultural land, therefore, the stand of the learned CIT(A) is affirmed. Finally, the appeal of the revenue is having not m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l of them are more in the nature of guidelines. The question has to be answered in each case having peculiar facts of those cases. In the present appeal, the revenue record issued by Tehsildar, in our view, is more authentic document in which it has been clearly mentioned that various crops were grown by the assessee which is further supported by an affidavit of the assessee which has not been found untrue. No evidence has been brought on record by the Assessing Officer evidencing that no crops were grown by the assessee. If any suspicion crept into the mind of the Assessing Officer, nothing prevented him to get the report from Sarpanch, neibours of the impugned land or the revenue Patwari but that was not done by him. The conclusion drawn in the impugned order clearly indicates that the impugned land is situated clearly beyond 8 kms from the municipality. In view of these facts, the land would not fall within the definition of capital asset as mentioned in sec. 2(14) of the Act, therefore, we find no infirmity in the conclusion drawn in the impugned order. It is affirmed. Finally, the appeal of the Revenue is having no merit, consequently, dismissed. This order was pronounced ..... X X X X Extracts X X X X X X X X Extracts X X X X
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