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The Commissioner of Income Tax Versus Nitish Rameshchandra Chordia, Smt. Maltibai R. Kadu, & Thirteen Othres

2015 (4) TMI 227 - BOMBAY HIGH COURT

Measurement of distance for the purpose of agricultural land - ITAT held that the distance of 8 kms. ought to be measured by the approach road and not by the straight line method ? - Held that:- If the assessee has earned business income and not the agricultural income, Section 11 of the General Clauses Act will prevail unless a different intention appears to the contrary. The impugned order appears well reasoned in the facts and circumstances to clearly indicate that any consideration received .....

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cultural land. See DLF United Ltd. vs. Commissioner of Income Tax [1995 (9) TMI 51 - DELHI High Court] - Insofar as relevance of Section 11 of the General Clauses Act is concerned, it needs to be noted that here the relevant amendment prescribing distance to be counted must be aerial has come into force w.e.f. 1st April, 2014. The need of amendment itself shows that, in order to avoid any confusion, the exercise became necessary. The Parliament noticed the Judgments being delivered and th .....

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t from 1.4.2014 and therefore, prospectively applies in relation to the assessment year 201415 and subsequent assessment years. Hence, the question whether prior to the said assessment year 201415 the Authorities erred in computing the distance by road does not arise at all. The IT cannot be questioned on that ground. For these reasons, Section 11 of the General Clauses Act also has no application in the present matter where the ITAT was concerned with the assessment year 200910 or prior to t .....

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l these matters are same, Income Tax Appeal No.120 of 2013 is treated as a lead case and arguments are heard therein with an understanding that adjudication therein will dispose of the other appeals also. 2. Income Tax Appeal No.120 of 2013 is preferred against the Order dt.22­03­2013 passed by the Income Tax Appellate Tribunal, Nagpur Bench in ITA No. 113/Nag/2012 with a prayer to quash and set aside the same. 3. The facts, briefly stated, are as under : That, on or about 13­01­ .....

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see had, in response, filed its return of Income on 23­04­2010 for total income of ₹ 3,30,450. The assessee had, in regular income, shown the same income. It was noticed that the assesee had, along with three partners namely Shri Sanjay Nagorao Padwalkar, Shankarrao Jairanmji Diote, Shishir Shankarrao Diote, on 10.04.2007, purchased the land Patwari Halka No. 38, bearing Survey No. 90/1 for a consideration of ₹ 29,40,420/­ and the same was sold on 15­04­2008 for & .....

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thod and not by the road distance. Thus, the income of ₹ 12,64,895/­ was added to the income as short term capital gain. The assessee had also purchased land Patwari Halka No.38 admeasuring 2.02 hectares with the above mentioned individuals on 23­08­2007 for a consideration of ₹ 61,66,540/­ and the same was resold for a consideration of ₹ 1,50,00,000/­ with proportionate gain of ₹ 37,50,000/­ claimed as exempt by a distance of 8 kms. The claim was .....

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ured by the approach Road, but by the straight line method. 4. The substantial question of law, thus, raised is as to whether the ITAT was correct to hold that the distance of 8 kms. ought to be measured by the approach road and not by the straight line method ? 5. We have heard the rival submissions at the Bar and perused the rulings cited before us. 6. Learned Advocate Shri K.P.Dewani submitted that there are rulings in favour of the assessee to indicate that the ITAT ought to have considered .....

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f agricultural land within the meaning of section 2(14)(iii)(b) of the Income Tax Act. The assessee took stand that the distance should be taken through the approach road while the Assessing Officer has taken the aerial distance and accordingly, held that the land sold by the assessee is a capital asset as being situated within 8 kms. of the Municipal Limit. 7. In Laukik Developers Vs Deputy Commissioner of Income Tax reported at (2007) 108 TTJ (Mumbai) 364, the ITAT, Mumbai Bench held that the .....

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e Division Bench of this Court in Commissioner of Income Tax vs. Smt Debbie Alemao (2011) 239 CTR (Bom) 326 considered the fact that an agricultural land shown in the revenue records and when no any permission was sought for non­agricultural use by the assessee, the distance has to be measured by the approach road. The nature of the land whether agricultural or non-agricultural would be decisive to arrive at the conclusion on considering the facts as to whether capital gains were earned whic .....

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. Shri Parchure contended that the business income cannot be equated with the agricultural income. When capital assets were sold, the income is business income and not the agricultural income. The only dispute involved in this appeal relates to measurement of distance for the purpose of non­agricultural land within the meaning of section 2(14)(iii)(b) of the Income Tax Act. The assessee took stand that the distance should be taken through the approach road while the Assessing Officer has tak .....

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a capital asset being situated within 8 kms. of the Municipal Limits. The assessee went in appeal before the CIT(A). The CIT (A) held the land to be an agricultural land and not a capital asset by holding as under : "3.2. On the above issue, the Hon'ble P&H High Court in the case of CIT vs. Santinder Pal Singh 33 DTR 281(P&H)(2010) has approved the decision of Hon'ble ITAT Mumbai in the case of Laukik Developers Pvt. Ltd. The conclusion is reproduced as under :­ "Di .....

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ng population and would serve the interest of justice. Agricultural lands are already subjected to land revenues and other local taxes need not be overburdened. The revenue can tap other alternative resources to meet the revenue requirements. 11. Another submission of learned Advocate Shri Dewani is that any amendment to a taxing statute is intended to remove any hardship caused to taxpayers and not to the tax department. When two views are available to interpreter of the provision of the taxing .....

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il unless a different intention appears to the contrary. The impugned order appears well reasoned in the facts and circumstances to clearly indicate that any consideration received out of sale of the agricultural land cannot be treated as business income for the purpose of income tax. The distance between the municipal limits and assessed property/asset is to be measured having regard to the shortest road distance and not as per the crow's flies i.e. a straight line distance as canvassed by .....

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. vs. Commissioner of Income Tax, (1995) 129 CTR (Del) 33, the Hon'ble Delhi High Court referred to explanation 2(1)(A) relied upon by the Counsel for the Revenue and held that surplus of the compensation amount arising as a result of acquisition of agricultural land in question was capital asset and not the income at all. The question of change in the definition of agricultural income because of insertion of the explanation has no relevance. Thus, in the facts and circumstances of the case, .....

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and after assessment under the Land Acquisition Act, the Income Tax Officer, while assessing that the Company was a dealer in lands, had held that the acquired land constituted the Company's stock­in­trade and compensation received by the Company was liable to be taxed as an income in three assessment years under consideration. The question which was raised was answered by the Delhi Court in paragraph 9 of the ruling under consideration, which reads thus : .......This Court further h .....

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question really involved a determination as to whether the price paid for the land by way of compensation could be included within the definition of agricultural income. It was further held that agricultural land was excluded from the definition of 'capital asset' occurring in s. 2(14)(iii) and accordingly any gain resulting from the acquisition of agricultural land was not income, and accordingly the answer to the said question was that the compensation amount was not income. 14. Thus, .....

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onsidered as business income. The ruling is squarely applicable to the facts and circumstances under our consideration in the present case as well. 15. Insofar as relevance of Section 11 of the General Clauses Act is concerned, it needs to be noted that here the relevant amendment prescribing distance to be counted must be aerial has come into force w.e.f. 1st April, 2014. The need of amendment itself shows that, in order to avoid any confusion, the exercise became necessary. The Parliament noti .....

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