TMI Blog2016 (9) TMI 115X X X X Extracts X X X X X X X X Extracts X X X X ..... in, 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 : Mr.J.Narayanasamy JUDGEMENT (Judgment of the Court was made by S.MANIKUMAR, J) Challenge in this Tax Case Appeal, is to an order made by the Income Tax Appellate Tribunal in I.T.A.No.410/Mds/2015, dated 9/10/2015, by which, the Tribunal has dismissed the appeal preferred by the revenue. 2. The assessee is the Founder-Chairman of Veltech Group of Educational Institutions, Avadi. There was a search, in the premises of the educational institutions run by the Trust, in which, the assessee is one of 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot fulfil the criteria laid down by the court, in the aforesaid decision. In the subject assessment order, he has also stated that the land was barren, when the Inspector inspected the land, that the buyer was not an agriculturist, and the land was situated in a developed area. Thus, the Assessing Officer 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, submissions of the assessee and evidence on record, in particular, certificates of the Village Administrative Officer, Deputy Surveyor, Ambattur Taluk and General Manager, Metropolitan Transport Corporation (Chennai) Ltd's, certifying that the land is situated, at a distance of more than 8 Kms., from Avadi Municipality and the lease deed, between the assessee, other family members M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 situated at a distance of more than 8 km from the nearest Avadi Municipality and therefore the profit on the sale of such land is not liable to tax. 2.3 The CIT(A) erred in the land sold was situated at a distance of 10Kms from the nearest Avadi Municipality based on the VAO's certificate without any evidence with respect to Village administrative records. 2.4 The CIT(A) erred in the land sold was situated at a distance of 10Kms from the nearest Avadi Municipality based on the Metropolitan Transport 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and is situated at a distance of 5.5 Kms, from the end of Avadi municipality, as per the report of the departmental inspector, who had made a field visit 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 intention appears, should be measured in a straight line on a horizontal plane and therefore, submitted that the aerial distances should be taken. He further submitted that straight line measurement is mandated, as per the amendment to Section 2(14)(iii)(b) of the Income Tax Act, from 1/4/2014, without appreciating the fact that the amendment is only clarificatory in nature, the Tribunal erred in accepting the case of the respondent. According to him, the amendment is applicable to the earlier year also. 12. Mr.S.Rajesh, learned counsel for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to measure the distance from Avadi Municipality, to the plot and found that the distance is 5.5 Kms and on that basis, treated the sale of the agricultural land, as long time capital gains, and added an amount of ₹ 3,06,74,615/- to the total income of the assessee, and imposed penalty under Section 271(1)(c) of the Income-Tax Act. While assailing the correctness of the order, the respondent filed an appeal in I.T.A.No.432/13-14, before the Commissioner of Income-Tax (Appeals) and contended that the assessing officer has erred in selecting a private road, to measure the distance to the 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, certifying that the land is situated more than 8 Kms, from Avadi Municipality, the appellate authority, at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as per which 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 question is not situated within a distance of 8 kms. From the nearest Municipality. The AO was not ready to accept this certificate and he has not given any reason for the same. However, the Inspector reported that the land in question was situated at a distance of 5.5. kms. from the nearest Avadi Municipality. It was the contention of the ld. AR that to reach the land, there is a private road, which is laid and maintained by the CRPF, in which public has no access. Thus, the contention of the 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 measur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een the agricultural land and the nearest municipality, cannot be ignored and there was no justification for the Assessing Officer to reject the report. 21. In CIT v. Satinder Pal Singh reported in 229 CTR 82, the Tribunal therein, while considering the question of measuring distance between the agricultural land and the municipal limits of city, decided the issue, holding that the distance of 2 kms., from the 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 this behalf by a notification in the official gazette which may be issued by the Central Government. The maximum distance prescribed by Section 2(14)(iii)(b) of the Act which may be incorporated in the notification could not be more than 8 Kms. from the local limits of municip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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(14)(iii)(b) of the Act, the distance has to be measured from the agricultural land in question to the outer limit of the municipality by road and not by the straight line or the aerial route. The distance has to be measured from the land in question itself and not from the village in which the land is situated. 25. While considering the rival contentions, the question to be decided in this appeal is, as to how, the distance between an agricultural land and the nearest municipality, should be measured 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntal inspector, we are of the view that the decision of the fact finding authorities that there cannot be any justifiable reason to reject the certificates of the Village Administrative Officer, Deputy Surveyor, Ambattur Taluk and General Manager, Metropolitan Transport Corporation (Chennai) Ltd's, is correct. Our view is also fortified by the decision of the Punjab and Haryana High Court in Commissioner of Income-Tax v. Lal Singh reported in 325 ITR 588 (P H). 31. On the facts and circumstances of this case, we also wish to state 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 Transport Corporation (Chennai) Ltd's, for the purpose of Section 2(14)(iii)(b) of the Income Tax Act, certificates of the Revenue Authorities and Public Transport Corporation Ltd., on the measurement of distance, by the approach road, should be given weightage and accepted, unless the contrary is proved. 32. Therefore, it is not open to the revenue to contend that as per Section 11 of the General Clauses Act, 1857, the dist ..... X X X X Extracts X X X X X X X X Extracts X X X X
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