TMI Blog2016 (4) TMI 946X X X X Extracts X X X X X X X X Extracts X X X X ..... . Thus, capital gain does not arise. - Decided in favour of assessee - ITA No. 103/JP/2012 - - - Dated:- 18-3-2016 - SHRI T.R.MEENA, AM AND SHRI LALIET KUMAR, JM For The Assessee by : Shri P.C. Parwal (CA) For The Revenue by : Shri P.R. Meena (JCIT) ORDER PER T.R. MEENA, A.M. This is an appeal filed by the assessee against the order dated 16/11/2011 of the learned CIT(A)-III, Jaipur for A.Y. 2006-07. The effective grounds of appeal are as under:- 1. The Ld. Commissioner of Income Tax (Appeals) on facts and in law in not accepting the contention of the assessee that the agricultural land sold is not a capital asset as per Sec. 2(14)(iii)(b) of the Act and therefore not liable for capital gain U/s 45 of the Act. 2. The Ld. Commissioner of Income Tax (Appeals) has erred on facts and in law in confirming the action of the A.O. in assessing the Long Term Capital gain at ₹ 2,75,09,939/- as against Nil income declared by the assessee by:- (i) Not allowing the claim of transfer expenses of ₹ 4,00,000/- from the sale consideration. (ii) Allowing the index cost of acquisition at ₹ 1,70,461/- as against ₹ 3,23,050/- c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 03 years as per land record furnished by the assessee s AR and belonging to HUF. No documentary evidence of the cost of acquisition has been furnished. As per the copies of the registries furnished by the DIG, Stamps, the per bigha cost of acquisition in the village-Sarangpura comes to ₹ 3,680 per bigha as the 12.5 bighas land was sold for the sum of ₹ 46,000/- and got registered on 23/09/1980. Thereby the cost of acquisition for the land sold comes to ₹ 3,.680/-. 9.32 bighas (2.33 hectare) at ₹ 34,298. In view of this the indexed cost of acquisition calculated by the Assessing Officer at ₹ 1,70,461/-. He further observed that the assessee claimed deduction U/s 54B and 54F of the Act on account of investments made in the names of Sh. Prahalad Sahai Sharma S/o- Sh. Khetilal Sharma on 15/7/2005, Smt. Prem Devi W/o- Sh. Prahalad Sahai on 26/10/2005, Smt. Barji Devi W/o- Sh Khetilal, Smt. Prem Devi W/o- Sh. Prahalad and Smt. Prem Devi W/o late Sh. Narayanlal Sharma on 11/5/2005, Smt. Prem Devi W/o- Sh. Prahalad and Smt. Prem Devi W/o late Sh. Narayanlal Sharma on 10/5/2005, Smt. Prem Devi W/o- Sh. Prahalad and Smt. Prem Devi W/o late Sh. Narayanlal Sharm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e distance within 8 km. The purpose of notification was issued to cover the agricultural lands of specified area which have become part of the urbanization process of such areas and converted into commercial assets due to its proximity to city limits and become eligible to windfall of such process, but otherwise would have not fell in the tax-net, being agriculture land in nature and not capital assets as such. Since the municipal limits doing keep changes from time to time, depending upon the pace of urbanization process of the particular case, therefore, the value and importance of the surrounding agriculture lands also varies from time to time. Accordingly, the municipal limit cannot be assumed as a static concept related to a particular date or period of past. If we go by the appellant s logic, even such prime land would be exempted U/s 2(14)(iii)(b) as it was beyond 8KM from the city limit as prescribed in 1994. The concept of municipal limit is an ongoing process and thus has to be taken, as existed on the day of the land transaction, to make it effective and logical in the line of the spirit of the law. The ld Assessing Officer has mentioned in the assessment order that as p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 139 of the Act. The return U/s 139(4) belated could be filed by the assessee till 31/3/2008. The ld CIT(A) has considered and held that the AR has not supported any evidence that house was constructed on the balance unsold land of the HUF. He agreed with the submission of the AR that in absence of any contrary provision made in Section 54F, the reference of only Section 139 included the time limit of filing of the return U/s 139(4) of the Act. With regard to typographical mistake made by the valuer in the report, it is on the assessee to file revised valuation report while making necessary corrections. In absence of any rectified report, no benefit can be given to the assessee. Accordingly, he not allowed deduction U/s 54F on investment of ₹ 70 lacs. The assessee s appeal has been dismissed by the ld CIT(A). 4. Now the assessee is in appeal before us. The ld AR of the assessee has submitted that the assessee s father Shri Govind Ram owned certain agricultural land at Village Sarangpura, Teh. Sanganer, Jaipur. He has three sons namely Sundara, Sujilal and Khetilal. Sundara and Sujilal had no issue and they expired in the year 1975 and 1988 respectively. Thus the entire lan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion reported at (1994) 116 CTR (St.) 13] He further submitted that in view of this explanation, for the purpose of ascertaining whether a particular land is agricultural land or not as referred in section 2(14), the distance of 8 km. is required to be considered from the municipal limit which was existing on the date on which the aforesaid notification is published in the Official Gazette and not that Municipal Limit which is existing on the date of sale of land. It is submitted that as on the date of this notification dated 6th January 1994, the municipal limit of Jaipur on Ajmer Road on which the assessee land is situated is upto the ESI Hospital. The assessee s land is 16km. away from the ESI Hospital. This fact is not in dispute. Hence, the land sold by the assessee not a capital asset u/s 2(14) and therefore on sale of such asset, no capital gain would rise. He further stated that this issue is now settled by decision of Hon ble ITAT in case of Dr. Subha Tripathi in ITA No.ll29/JP/2011 for A.Y 2008-09 dt. 24.05.2013 where after considering the purport of notification dt. 06.01.1994 and also the amendment made by F.A Act, 2013 w.e.f. 01.04.2014, it was held that the municip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts or the limit of Cantonment Board in the Schedule to this notification is to the limits as existing on the date on which on which the notification is published in the official gazette. If the stand of the Revenue is accepted that the distance of 8 kms should be considered from the Municipal Limit exists as on the date of the sale of land then it would render the notification issued by the Central Govt, as ineffective and unworkable / otios. As it is made clear by explanation 2 of the said notification that Municipal Limits is to be considered as existing on the date on which notification is published in the official gazette, therefore, the date of notification is relevant and material point to determine the distance of 8 kms from Municipal Limits. There is no amendment or withdrawal of the said notification except a recent amendment has been brought in the statute by the Finance Act 2013 whereby the requirement of said notification has been dispensed with for invoking sub-clause (b) of clause (iii) of Section 2(14) of the Act w.e.f. 01-04-2014. Thus it is discernible from the notification dated 06-01-1994 and the recent amendment in the statute whereby the said notificatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of assessee, on the date of this notification dated 6th January, 1994, the municipal limit of Jaipur on Ajmer Road on which the assessee land is situated was up to ESI hospital. The ld AR placed the evidence in paper book at sl. no. 91. The assessee s land is 16 km away from the ESI hospital. These facts has not been controverted by the ld DR. Being a precedence, we respectfully following the order of the Coordinate Bench and held that land sold by the assessee is not a capital asset U/s 2(14) of the Act. Thus, capital gain does not arise. On this ground, the assessee s appeal is allowed. 7. The ground No. 2 of the assessee s appeal is against not allowing the transfer expenses of ₹ 4 lacs, not allowing the indexed cost of acquisition at ₹ 3,23,050/-, deduction U/s 54F at ₹ 70 lacs and deduction U/s 54B at ₹ 1,99,57,350/- as investment made in the name of family members not in the name of HUF, as the assessee s appeal in ground No. 1 has been allowed by the Bench in favour of the assessee, therefore, we have considered view that this ground is not required to be adjudicated. 8. In the result, the assessee s appeal is allowed. Order pronounce ..... 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