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2016 (9) TMI 115 - MADRAS HIGH COURT

2016 (9) TMI 115 - MADRAS HIGH COURT - TMI - Agricultural land - whether the agricultural land sold by the assessee, is situated more than the distance of 8 Kms from Avadi Municipality and as to whether, that the same falls within the definition "agricultural land" - Held that:- In the matter giving weightage to the evidence, report of the departmental inspection vis-a-vis certificates of the Village Administrative Officer, Deputy Surveyor, Ambattur Taluk and General Manager, Metropolitan Transp .....

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easured, only in a straight line or a horizontal plane. In between agricultural land and the nearest municipality, if there is a mountain, or lake or private lands or government properties, and in such other cases, where the public has no access to reach the municipality, the distance has to be measured only through the access road and not in a straight line or horizontal plane. - T.C.A.No.491 of 2016 - Dated:- 3-8-2016 - MR.JUSTICE S.MANIKUMAR AND MR.JUSTICE D.KRISHNA KUMAR For the Petitioner : .....

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the Trustees. The assessee's premises were also searched under Section 132 of the Act on 27/8/2008. For the Assessment Year 2009-10, the assessee filed a e-return of income on 31/7/2009, disclosing a total income of ₹ 3,50,07,409/-. He filed a revised return of income on 29/10/2009, disclosing a total income of ₹ 4,38,44,341/-. Subsequently, a revised return was filed on 22/12/2010, declaring a total income of ₹ 1,29,32,780/-. According to the department, the difference in .....

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d is situated at a distance of more than 8 km from Avadi Municipality and the land being agricultural land, profit on sale of such land is not liable to tax. The department, on verification, found that the land is not an agricultural land and it was sold to the Trust and the assessment was completed, by bringing the entire capital gains of ₹ 3,09,11,561/-, as originally offered, in the return of income, and accordingly, determined the income at ₹ 4,38,44,341/-. On appeal, the Commiss .....

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ficer, to the effect that the land was given on lease to M/s.Vel Horticultures Ltd, for doing agricultural operations. As the said evidence produced before the Tribunal, was not considered originally by the Assessing Officer, the Tribunal, set aside the orders of the lower authorities and remanded the matter back to the file of the Assessing Officer for re-adjudicating the issue afresh, after verifying all the documents, and to pass a speaking order. 5. Thereafter, placing reliance on the decisi .....

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completed the assessment under Section 143(3) r/w. Section 254 r/w. Section 153A of the Income-Tax Act. Holding that the land is not an agricultural land and by denying the assessee's claim for exemption on the profit, by sale of the land at Morai village, ₹ 4,38,44,341/- was brought to tax as capital gains. Aggrieved by the aforesaid order, the respondent has filed an appeal to the Commissioner of Income Tax (Appeals). 6. On appeal, after going through the earlier appellate orders, su .....

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d also the fact that a source of investment has been made made by the assessee, the appellate authority held that the land in question, is an agricultural land, situated at a distance more than 8 Kilometres, from the nearest Municipality (Avadi). The appellate authority has further observed that it is evident from the letter No.5729/2013/A1, dated 3/8/2013, from the Tahsildar, Ambattur that she had made independent enquiries with regard to the distance of the land in question, from the nearest M .....

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of Income Tax (Appeals) held that the route used by the inspector to reach the land is a private road laid and maintained by CRPF and on the facts and circumstances of the case, evidence adduced by both parties, the Commissioner of Income Tax (Appeals) observed that public have no free access to the said road, as it is not under the control of local administration. 7. On the question, as to whether the subject land is an agricultural land or not, the Commissioner of Income Tax (Appeals) has cat .....

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ed the addition, on account of capital gains, in the hands of the assessee, on account of transfer of the said land. 8. Being aggrieved by the said order, Revenue has preferred an appeal before the Income-Tax Appellate Tribunal, Chennai, on the following grounds, 2.1. The CIT(A) erred in directing the AO to delete the addition on account of capital gains in the hands of the assessee on account of transfer of the land. 2.2 The learned CIT(A) erred in, the land sold was an agricultural land and si .....

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nsport Corporation (Chennai) Ltd's letter dated 20.12.2010 wherein it was stated that the bus route No.61B,61K,61D and 61E playing between Avadi and Morai Village is 10 KMs. From the letter itself it was established that various route are available to reach Morai village and hence it will not be treated as concrete evidence for measuring distance between Avadi and Morai village. 2.5 The CIT(A) has failed to note that the Assessing Officer had clearly established that the land was very much w .....

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wing the decision of the Punjab and Haryana High Court in CIT v. Satinder Pal Singh reported in 229 CTR 82, the Income Tax Appellate Tribunal, Chennai, dismissed the appeal filed by the revenue. Against which, the instant Tax Case Appeal has been filed, on the following substantial questions of law, (i) Whether on the facts and in the circumstances of the case the tribunal was right in holding that the distance between the land sold by the assessee situated at Morai and the end of the Avadi Muni .....

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yond 8 Kms from the end of the Municipality without enquiring into the use of the land and thereby holding that the gain on sale of the land cannot be assessed to capital gains. (iii) Whether on the facts and in the circumstances of the case the tribunal was right in holding that since the straight line measurement was mandated as per the amendment to section 2(14)(iii)(b) as on 1.4.2014, the same cannot be applied to the earlier assessment without appreciating that the amendment was clarificato .....

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t and therefore, the land cannot be treated as an agricultural land, as per section 2(14)(iii) of the Income Tax Act. 11. He further submitted that as the Income Tax Act, 1961, does not define, as to how, the land has to be measured and in such circumstances, as per Section 11 of the General Clauses Act, 1897, measurement of any distance, for the purpose of any Central Act or Regulation, made after the commencement of the General Clauses Act, 1897, that distance shall, unless a different intenti .....

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o. 12. Mr.S.Rajesh, learned counsel for the appellant further submitted that if the distance is measured between the end of Avadi Municipality and the assessees land, in straight line, on horizontal plane, the distance is less than 8 Kms and therefore, the land cannot be treated as an agricultural land. He also submitted that measuring the distance via CRPF Road, is permissible and that the same cannot be rejected, on the ground that it is not a public road. 13. Heard the learned counsel appear .....

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te- (a) in any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee, or by any other name) or a cantonment board and which has a population of not less than ten thousand; or (b) in any area within the distance, measured aerially.- (I) not being more than two kilometres, from the local limits of any municipality or cantonment board referred to in item (a) and which ha .....

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1897, deals with measurement of distance and the same is extracted hereunder: In the measurement of any distance, for the purpose of any Central Act or Regulation, made after the commencement of this Act, that distance shall, unless a different intention appears, be measured in a straight line on a horizontal plane. 16. In the case on hand, the assessing officer sent his own departmental inspector to measure the distance from Avadi Municipality, to the plot and found that the distance is 5.5 K .....

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land, from the nearest municipality and the assessing officer ought not to have disagreed with the certificates issued by the competent authorities, who have considered the access to the land, through public road and the same alone should be considered for determining the distance. 17. On the above aspect, after considering the certificates of the Village Administrative Officer, Deputy Surveyor, Ambattur Taluk and General Manager, Metropolitan Transport Corporation (Chennai) Ltd's, certifyi .....

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e, regarding the distance of the land in question, from the nearest Municipality (Avadi), result of which, clearly shows that the land in question is not situated, within a distance of 8 Kms from the nearest Municipality. The appellate authority has also held that no reason has been assigned by the Assessing Officer, in the assessment order, for not accepting the report of the Tahsildar. 18. Adverting to the report of the Departmental Inspector that the land in question is situated at a distance .....

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, vide order in I.T.A.No.432/13-14, dated 28/11/2014, deleted the addition on account of capital gains, in the hands of the assessee, on account of transfer of the said land. 19. Being aggrieved by the aforesaid order, the Deputy Commissioner of Income-Tax, Chennai, has filed an appeal in I.T.A.No.410/Mds/2015 before the Income Tax Appellate Tribunal, A Bench, Chennai. On the aspect of measurement, after adverting to the rival submissions, vide order, dated 9/10/2015, the Tribunal, at Paragrap .....

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the land was situated at a distance of more than 8 kms. from Avadi Municipality. The AO has also disputed the lease deed between the assessee, other family members and M/s. Vel Horticultures leasing the land for agricultural operations, which had been accepted in the scrutiny assessment and as a source of investment made by the assessee. The AO has also made independent enquiries from the Tahsildar, Ambattur with regard to the distance of the land in question. The result showed that the land in .....

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DR that the nearest route is to be considered to access the distance of the property from the nearest Municipality limit is not acceptable. It is to be noted that the distance to be measured from the accessible road and not from the road made under the control of the CRPF. 6. In our opinion, Tahsildar is the competent authority to issue certificate, which is to be accepted. Further, the distance of agricultural land has to be measured in terms of the approach by road and not by a straight-line d .....

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from the nearest Municipality, which was proved by the assessee. To sum up, in our opinion, the distance has to be measured in terms of the approach by road and not by a straight-line distance on horizontal plane or as per crows flight. Further, the assessee has also proved that the land was situated at a distance more than 8 kms. from the nearest Avadi Municipality. 7. Measurement of aerially distance came into force with effect from 1.4.2014 under sec. 2(14)(iii)(b) of the Act and it cannot .....

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hat the land in question was an agricultural land situated at a distance more than 8 kms., from the nearest Municipality (Avadi). Similar view has been followed by the Tribunal in ITA No.2716/Mds/2014 dated 22.6.2014 in the case of KRN Prabhakaran (HUF). Therefore, there is no merit in the argument of the ld. DR and we are inclined to dismiss the appeals of the Revenue. 20. In Commissioner of Income-Tax v. Lal Singh reported in 325 ITR 588 (P & H), the Punjab and Haryana High Court, held th .....

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municipal limits of city, has to be reckoned for the purposes of Section 2(14)(iii) of the Act, by measuring the same, as per the road distance and not as per straight line distance on a horizontal plane or as per crows flight. When the said decision was challenged, the Punjab and Haryana High Court, held as follows: A perusal of the aforesaid provision shows that capital asset would not include any agricultural land which is not situated in any area within such distance as may be specified in .....

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ibing 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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gruous 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. Moreover, the judgement of the Mumbai Bench appears to have attained finality. Keeping in view the principle of consistency as laid down in Radha Soawami Satsang v. CIT, (1992)193 ITR 321, we are of the view that the opinion expressed by the .....

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e Tax v. Nitish Rameshchandra Chordia reported in (2015) 57 Taxman 394 (Bom.), the Bombay High Court held that "The distance between municipal limits and assessed property/asset is to be measured having regard to the shortest road distance and not as per the crow flies i.e. straight line distance as canvassed by the Revenue." 24. In Commissioner of Income Tax v. Sri Vijay Singh Kadan [I.T.A.No.714 of 2015, dated 14.09.2015], the Delhi High Court, held that for the purpose of Section 2( .....

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sured whether it has to be measured, by the approach road, or by straight line distance on horizontal plane? When a person cannot approach the land by the distance on horizontal plane or straight line, should the measurement be taken, by approach road? 26. In Kunhunarayanan v. Aravindakshan reported in 1974 KLT 300, in the case of shifting of Kudikidappu under the Kerala Land Reforms Act, 1964 and dealing with Section 78(2)(e)(ii) of the Act, directing that the new site should be "within a .....

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ipality starts, one has to visualise distance which a person has to travel, through an approach road, generally used by public. It cannot be contended that the distance between the land and the nearest municipality has to be measured in straight line or horizontal plane or by any crow flight/aerial distance. 28. For illustration, A person may have a shop in Fort Road, on the eastern side. If he has to got to a shop or office or any place located in NSC Bose Road, he has to go round the High Cour .....

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ion, legislature has also foreseen that measurement of distance, would be on the context of the purpose to be achieved in any enactment and it is not a straight jacket formula that in all cases, under all circumstances, notwithstanding the purpose for which an act is made, measurement of the distance should be made on horizontal plane. 30. Reverting to the case on hand, and in the light of the decisions of the Courts, considered in the foregoing paragraphs and the question called upon to decide, .....

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