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2016 (4) TMI 946 - ITAT JAIPUR

2016 (4) TMI 946 - ITAT JAIPUR - TMI - Capital gain U/s 45 - sale of agricultural land - municipal limit - whether land transaction was found within 8 km from the municipal limit. Therefore, it is a capital asset as per section 2(14)(iii)(b)? - Held that:- This issue has been considered by the Coordinate Bench in the case of Dr. Subha Tripathi [2013 (10) TMI 594 - ITAT CHANDIGARH ] wherein held that the Jaipur Municipality has been duly notified vide said notification dated 06/1/1994 and as on t .....

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e 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. - 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 lea .....

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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/- claimed by the assessee. (iii) Not allowing the claim of deduction U/s 54F at ₹ 70,00,000/- and deduction U/s 54B at ₹ 1,99,57,350/-. 2.1 The ld Commissioner of Income Tax (Appeals) has erred on facts an .....

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case the gain on sale of agricultural land is not liable to capital gain tas as the land sold by the assessee is outside the purview of capital asset as per item (b) of sub clause(iii) of section 2(14) of the Income Tax Act, 1961 read with notification No. 9447 dated 06/1/1994. 2. The assessee is having income from long term capital gain and interest income. The assessee HUF filed return of income in response to notice U/s 142(1) of the Income Tax Act, 1961 (in short the Act) declaring total inc .....

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142(1) of the Act and it was gathered by the Assessing Officer that the assessee had sold land on 30/4/2015 at village Sarangpura, khasra No. 399, 400, 403, 407, 409 and 149 total 2.33 hectare for ₹ 2,76,80,400/-. The ld Assessing Officer found that the land sold was within the distance of 8 km from the municipal limit and the same has also been confirmed from the Nagar Nigam, Jaipur. In reply thereto, the Tehsildar, Nagar Nigam, Jaipur vide his letter No. 351 dated 13/12/2010 has given th .....

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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 De .....

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and not in the name of the HUF, therefore, the same cannot be treated as the application of funds eligible of the claim of deduction U/s 54B. Thus, the deduction U/s 54B is not allowable to the assessee in the HUF capacity. Further in respect of the investment made in the name of Sh. Khetilal on 10/04/2006, the investment made can also be not treated to be the investment qualifying for the deduction U/s 54B as the investment has been made in the individual name instead of the HUF capacity. He fu .....

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on has also been done after the due date of filing the return of income U/s 139(1) i.e. 31/07/2006 and no amount has been deposited in the capital gain scheme before that date. Further no evidence has been filed by him in support of the claim made. Further, the investments in the properties are in the individual capacity and not as the HUF. Thus, the investment claimed to be eligible for deduction U/s 54F does not qualify for deduction U/s 54F. He relied on the decision in the case of CIT Vs G.K .....

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ed the matter before the ld CIT(A), who had confirmed the addition by observing that notification No. 9447 dated 06/01/1994 as claimed by the assessee is not applicable in subsequent change made in the municipal limit for calculating the 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 el .....

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d 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 per the certificate obtained from the Nagar Nigam Jaipur, the pro .....

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an being and not any other types of person, being a legal entity like firm, HUF, company etc. The law on this issue is clear and unambiguous, therefore, it cannot be interpreted in different manner to confer benefit on assessee, for which he relied on the decision in the case of: (i) Dharmendra Textile Ltd. 306 ITR 277 (SC) (ii) Vijay Kumar & Ors 151 ITR 48 (Kar) (iii) T & Arvinda Ready 120 ITR 461 (SC) (iv) IPCA Laboratory Ltd. 266 ITR 521 (SC) He further relied on the decision of Hon b .....

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ri Khetilal Sharma and the completion of construction shown as January, 2010, which was beyond the date of filing of return U/s 139(1) i.e. on 31/07/2006. Since the surplus unutilized fund of capital gain was also not deposited in the capital gains account with nationalized bank, therefore, the deduction U/s 54F is not allowable in the appellant s case. The ld AR submitted before him that ld Assessing Officer wrongly assumed that the construction of house in the name of individual but land was u .....

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nce 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 .....

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ively. Thus the entire land came to the possession of the assessee. The aggregate of such land was 13.370 Bhiga i.e. around 3.34 Hectares. Out of this land, assessee sold 2.33 Hectares land on 30.4.2005 to M/s. Praveen Mehta Builders Pvt. Ltd. for ₹ 2,76,80,400/- . During The course of appellate proceedings, assessee by taking an additional ground, contended that the agricultural land sold is beyond 8kms of Municipal Limit of Jaipur as envisaged u/s 2(14)(iii)(b) of the Income Tax Act, 196 .....

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cribed in the notification, has to be taken as existed and declared by the competent authority and relevant to the day of the transaction. As the agricultural land sold falls within 8kms of the present municipal limit, it does not fall under the exemption u/s 2(14)(iii)(b) and the same is liable for capital gain u/s 45 of the Act. As per Section 2(14)(iii)(b) of the Act, an agricultural land situated in any area within such distance, not being more than 8 km from the local limit of any municipal .....

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a distance of 8 kms. from municipal limits in all directions. In the notification, following explanation is given:- (1) In this notification, Municipality shall mean any area- (2) The reference to municipal limit or the limit of cantonment board in the schedule to this notification is to the limits as existing on the date on which the notification is published in the official Gazette. [Notification reported at (1994) 116 CTR (St.) 13] He further submitted that in view of this explanation, for t .....

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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. 06.01.19 .....

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pur Municipality as on the date of notification 6-01-1994 but subsequently it falls within the distance of 8 kms from the Municipal Limits due to the expansion of the Municipal Limits would still be regarded as agricultural land not falling in the definition of capital asset in terms of Section 2(14)(iii)(b) of the Act. There is no dispute that Jaipur Municipality has been duly notified vide said notification dated 6-01-1994 and as on the date of said notification, the land in question was beyon .....

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on of the Central Govt, is mandatory to bring the land in the definition of capital asset which is not located within the limits of the Municipality but located within the distance of 8 kms from the local limits. So far, the agricultural land which is located in the limits of Municipal Limits, the same will be treated as capital asset and no further requirement is to be examined. Since the land in question is located outside the local limits of Municipality, therefore, in order to determine whet .....

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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 not .....

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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 notification has been dispensed with that the distance of 8 kms has to be considered from the Municipal Limits as exists on the date of notification for the purpose of invoking subclause (b) of clause (iii) of Section 2(14) of the Act. Accordingly we hold that the land in question which was located beyond 8 kms from .....

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ld Assessing Officer and land transaction was found within 8 km from the municipal limit. Therefore, it is a capital asset as per section 2(14)(iii)(b) of the Act. 6. We have heard the rival contentions of both the parties and perused the material available on the record. The assessee sold the agricultural land on 30/4/2005 at village Sarangpura measuring 3.33 hectare (9.32 Bigha) for ₹ 2,76,80,400/-. The ld Assessing Officer has confirmed from the Nagar Nigam that the land transaction is .....

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