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2016 (5) TMI 1165 - MADHYA PRADESH HIGH COURT

2016 (5) TMI 1165 - MADHYA PRADESH HIGH COURT - TMI - Agriculture land - measurement of distance - Held that:- The distance is more than 9 kms and treating the land sold as agricultural land and, thus, no substantial question of law is arising in this appeal. - I.T.A. No. 24/2015 - Dated:- 4-1-2016 - P. K. Jaiswal And J. K. Jain, JJ. For the Petitioner : R. L. Jain, Veena Mandlik For the Respondent : - Order Heard on the question of admission. 2. Learned Senior Counsel for the appellant has subm .....

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has found and has recorded a distance of 9.7 kms on road and the road points between the lands and municipal limits and allowed the appeal of the assessee. 3. Considering the aforesaid, the learned Appellate Authority allowed the appeal of the assessee in part and set aside the order passed by the Assessing Officer. The aforesaid order was challenged by the Department by filing appeal before the Income Tax Appellate Tribunal, Indore Bench, Indore. The learned Tribunal considering the grounds ma .....

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ansaction, being co-owner. Before coming to any conclusion, we are reproducing hereunder the aforesaid order dated 31.8.2012 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 activity was carried out on the said and and further erred .....

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the Tehsildar is not a competent authority to issue a certificate regarding distance of land from the municipal limit. A plea was also raised that the alnd was sold to devlopr. Our attention as invidted to various pages of the pape book. Relianc was placed on the decision in 138 ITR 245(Guj), 136 ITR 621(Guj), 185 ITR 318(Ker.), 220 ITR 43 (SC) AND 176 ITR 523 (Bom). On the other hand, the learned counsel for the assessee defended the impugned order by submitting that the impugned land was inher .....

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lain that the land in question is situated beyond 9 kms from the municipal limit. Reliance was also placed upon the decision of the Tribunal in ITA No.506/Ind/2010 along with the decision in CIT vs. Smt. Debbie Alemao; 331 ITR 59 (Bom). 3. We have considered the rival submissions and perused the material available on record. The fact, in brief, are that the assessee is an advocate practising in High Court of Madhya Pradesh at Indore,. The assessee earned income from house property, pension being .....

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ugned 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 o by the .....

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of it will be treated as agricultural income. Even if less income has been shown, the assesse cannot be denied the character of agricultural income. So far as the question of distance from Municipal limit is concerned, we have perused the record and find that even as per the report of the Income Tax Inspector (pages 9 and 10 of the paper book) it has been mentioned that the land is situated 9.7 kms. by road from the municipal limit by a straight distance method. The map of the land (page 10) was .....

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the municipal limit and the population of the village is about 2000 persons. The assessee has also produced a certificate from the land Surveyor (page 14) wherein it has been mentioned that the impugned land is situated at 9.09 kms. from the Municipal limit. The assessee has also placed on record the google map (page 13). All these certificates clearly say that the impugned land is situated beyond 9 kms from the municipal limit, therefore, as per Section 2(14)(iii) of the Act, the impugned agri .....

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that some cases like Laukik Developers; 303 ITR (AT) 356 have been relied upon in the impugned order/assessment order wherein the issue was examined with respect to section 801B of the Act whereas the issue before us pertains to section 2(14) with respect to agricultural income, therefore, not applicable to the facts of the present case. The learned CIT DR placed reliance on the decision of the Hon'ble Gujarat High Court in Balkrishna Hariballabhadas vs. CIT; 138 ITR 245. We find that in th .....

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s agricultural land, therefore, it is quite unjustified to treat part of the same land/chunk to the 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 r .....

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cts are altogether different, therefore, may not help the revenue. A decision from Hon'ble Kerala High Court in Kalpetta Estates Ltd. vs. CIT; 185 ITR 318 was relied upon. In that case, it was held that burden of proof is on the assessee to prove that the land was agricultural land at the time of transfer and forest lands were acquired with the intention of extending plantation. Since no agricultural operation was carried out, it was held that it gives rise to capital gain on the sale of suc .....

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JoaquimILlenao; (2011) 331 ITR 59 (Bom) wherein the land, in question, was shown in the revenue record as agricultural land and no permission was taken for conversion of land use. It was held that sine no agricultural income was shown in the return is not the material for the purposes of gains from sale of such land. It is pertinent to mention here that this case also pertains to section 45, 54, 54B, etc. of the Act. 6. If the totality of facts available on record is kept in juxtaposition with t .....

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ther land use was changed, etc. if all these factors 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 f .....

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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 distance is the most appropriate method and not the crow's flies I.e. straight line distance. This view is further supported by the decision in Laukik Developers; 303 ITR 356 (Mum) and the decision from Hon'ble Punjab & Harya .....

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the distance is of significant which would yield to the principle of measuring distance in terms of approach road rather than by straight line on horizontal plane. If principle of measurement of distance is considered straight line distance on horizontal plane or as per crow's flight then it would have no relationship with the statutory requirement of keeping in view the extent of urbanization. Such a course would be illusory. It is in pursuance of the aforesaid provision that Notification .....

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ncongruous to the argument of the Revenue that the distance of land should be measured by the method of straight line on horizontal plane or as per crow's flight because any measurement by crow's flight is bound to ignore the urbanization which has taken place. Tribunal was therefore justified in holding that distance of 2 kms from the municipal limits of city of Khanna has to be reckoned for the purposes of s. 2(14)(iii) by measuring the same as per the road distance on a horizontal pla .....

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u/s 54B of the Act. 7. If the assessment order is analyzed, 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 fro 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 n .....

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alcutta High Court Barhat Tea Com. Ltd.; 138 ITR 783. the correct test that has to be applied is whether on the date of sale, the land was agricultural land or not, whether land use was changed or not. Just because after the sale, the purchaser was going to put the land to no-agricultural use, it does not mean that on the date of sale the land has eased to be agricultural land. If in the revenue record, the particular land is recorded as agricultural land and till the date of sale, it is exploit .....

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ural land or not is essentially a question of act. A close reading of section 2(14) (iii) (a) seems to suggest that it is the population of the municipality that has to be taken into account and not the population o any area within the municipality. It may be that a municipality may comprise of many villages, wards and street and each assessee may claim that the limit of population is provided with reference to a place, ward or street. In such an event, the section will have no uniform applicati .....

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definition. It is exactly the case here because section 2(14) (iii) expressly defines agricultural land with regard to its location and distance from the municipal limit. It seems that the learned Assessing Officer has not examined the documents produced by the assessee establishing 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 .....

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e 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 herein above, 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 no merit, therefore, dis .....

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e sale deed executed on 15thday of November 2007 at Indore in which Shri Rakesh Shukla, Shri Ashish Shukla, Shri Sumit Shukla, Shri Satish Shukla and Shjri Ashok Shukla are the endors. The said sale deed (pages 4 to 16 of the paper book) was executed in favour of M/s Fetish Realtors Pvt. Ltd. The Tribunal decided the issue in the case of Shri Ashok Shukla, who is one of the vendors. Since the facts are identical and oozing out of the same sale deed/transaction, therefore, the aforesaid decision .....

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the Revenue, it has remained for academic interest only and dismissed as such. Finally, the appeals of the Revenue and the cross objection of the assessee stand dismissed. 4. We have heard both the parties and have gone through the order of this Bench and find that similar issue has been decided. We, therefore, respectfully following the order of this bench, passed in I,T.A.Nos. 245 and 246/Ind/2013 in the cases of Shri Satish Shukla and Shri Rakesh Shukla dated 23.09.2013 , dismiss both the app .....

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ed the order passed by the Commissioner of Income Tax (Appeal) on 31.01.2012 and dismissed the appeal of the revenue. 2. Brief facts of the case are that in the assessment year 2008-09, the assessee declared income of ₹ 4,04,690/- on 05.09.2008. He also claimed exemption from capital gains on sale of land by claiming the same to be agriculture land situated in the revenue record of Village - Lasudia Parmar, Tehsil - Sanwer, District - Indore bearing Khasra No.184. 3. The sale consideration .....

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from the municipal limit by straight distance method. 5. The learned Commissioner of Income Tax accepted the said contention of the assessee and set aside the order of the Assessment Officer passed on 31.01.2012. 6. The revenue challenged the order dated 31.01.2012 by filing appeal before the ITAT, Indore Bench. The learned ITAT, after appreciating the assessment gave a finding in Para 4 of the impugned order that the agriculture land is situated beyond 9 kms. from the municipal limit of Villag .....

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page 4 of the assessment order, the distance of the land is 8 kms. from the municipal limit. 9. He further submitted that the assessee is a Senior Member of the Bar and is practising law at M. P. High Court, Bench-Indore and, therefore, the land of non-agriculture use and on the date of sale, the land cannot be assessed to be agriculture land. 10. It is not in dispute that the land was an ancestral property and jointly recorded in the name of assessee and his brothers and it is they who were cul .....

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stances erred in taking a different view only on the ground that the assessee is an Advocate by profession. 12. We have heard the learned counsel for the appellant at length and perused the findings recorded by the ITAT as well as the material available on record. Para 4 of the impugned order is relevant, which reads as under :- So far as the question of distance from Municipal limit is concerned, we have perused the record and find that even as per the report of the Income Tax Inspector (pages .....

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e Land Revenue Officer (Tehsildar) had also mentioned the Survey No.95 Area 4.22 acre, Survey No.96/1 area 1.20 acre and has mentioned that the land in question is about 10 kms. from the municipal limit and the population of the village is about 2000 persons. The assessee has also produced a certificate from the land Surveyor (page 14) wherein it has been mentioned that the impugned land is situated at 9.09 kms. from the Municipal limit. The assessee has also placed on record the google map (pag .....

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pugned land is beyond the prescribed limit of 8 kms from the municipal limit. From this angle also, there is no mistake in the conclusion drawn in the impugned order. We further find that some cases like Laukik Developers; 303 ITR (AT) 356 have been relied upon in the impugned order/assessment order wherein the issue was examined with respect to section 801B of the Act whereas the issue before us pertains to section 2(14) with respect to agricultural income, therefore, not applicable to the fact .....

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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 the 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 o .....

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d was used for construction of non-residential building. In that situation, profit on sale f such land was held to be exigible to capital gains. However, in the impugned case, the facts are altogether different, therefore, may not help the revenue. A decision from Hon'ble Kerala High Court in Kalpetta Estates Ltd. vs. CIT; 185 ITR 318 was relied upon. In that case, it was held that burden of proof is on the assessee to prove that the land was agricultural land at the time of transfer and for .....

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was held to be assessable to capital gains tax. 13. On going through the aforesaid findings, we are of the view that findings in respect of distance of agriculture land, which is more than 8 kms from the municipal limit is based on appreciation of the certificate issued by the local authorities, revenue authorities etc. 14. It is not the case of the department that those certificates are incorrect or never issued by the above-mentioned departments. 15. The Land Revenue Officer (Tehsildar) had al .....

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and is situated beyond 9 kms. from the from the municipal limit, therefore, as per Section 2(14)(iii) of the Act, the impugned agricultural land is situated in the revenue record of Village Lasudia Parmar whose population is about 2000 people, which is less than the condition mentioned in Section 2(14)(iii)(a) of the Act. 16. So far as the condition mentioned in sub-clause (b) of the aforesaid Section is concerned, from record it is clear that the impugned land is beyond the prescribed limit of .....

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