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2016 (9) TMI 809 - ITAT DELHI

2016 (9) TMI 809 - ITAT DELHI - TMI - Sale proceeds of agricultural land - whether the land in question was situated outside the municipal limits of Gurgaon (as confirmed by the Patwari Gurgaon) and hence the land was not a capital asset as defined in section 2(14)(iii)? - Held that:- AO had not given any opportunity to the assessee to negate the Tehsildar’s report that the land in question was within 6.6 kms from the Municipal Corporation of Gurgaon. It was submitted that now the assessee seeks .....

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in the year 2006 was approximately 12kms. - iv). Certificate dated 25.10.2013 certifying that the distance of land is 8.5 kms from Mandi village, 11.2 kms from Aya Nagar and 13kms from Ambience Mall, Gurgaon. - We have heard the rival submissions and perused the relevant documents. We also deem it fit to admit the documents being admitted as additional evidence under Rule 29 of the ITAT Rules, 1963 as these documents/evidences will have a bearing on the final outcome of this case. Howev .....

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as afore said after giving the assessee a proper opportunity of being heard. - ITA No. 4274/Del/2010 - Dated:- 18-7-2016 - Shri G. D. Agrawal, Hon ble Vice President And Shri Sudhanshu Srivastava, Judicial Member Assessee by Sh. Gagan Kumar, Adv. & Sh. Amit Kaushik, CA Sh. Manoj Nagrath, CA Revenue by Sh. K.K. Jaiswal, DR ORDER Per Sudhanshu Srivastava, Judicial Member The present appeal is preferred by the Department against the order passed by the Ld. CIT (Appeals)-V, New Delhi. The date o .....

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term capital gain in respect of these sale proceeds of agricultural land claimed as exempt. In response thereto the assessee submitted the details thereof along with a certificate from the Patwari, Gurgaon certifying that the land in question was situated at a distance beyond 8 Kilometers from the Municipal Cantonment limits. Subsequently, the Tehsildar, Tehsil Sohna, (Haryana) was requested by the AO to authenticate and validate the fact as to whether the land in question was approximately 10 .....

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aning of section 2(14) of the Income Tax Act and therefore any gain arising out of transfer of such capital asset was to be taxed as per the provisions of section 45 of the Income Tax Act, 1961. The AO calculated the indexed cost of acquisition at ₹ 31,64,472/- and since the assessee was owner of ½ share of land, the proportionate cost of acquisition for the assessee was calculated at ₹ 15,82,236/- and the long term capital gain for ½ share was calculated at ₹ 5,5 .....

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of section 2(14)(iii) and that the income arising on sale of agricultural land was exempt. The observations of the Ld. CIT (A) on this issue are in Paras 7.8 and 7.9 of the impugned order and they are being reproduced hereunder for a ready reference: 7.8 On a close reading of the assessment order, I find that the entire assessment was framed by holding that the land as possessed by the Appellant was situated less than 8 kms distance from Gurgaon Municipal Corporation. However, the said ground n .....

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g Officer, in his remand report, observed that the land was beyond the municipal limits of Gurgaon/Sohna. From this observation, it is apparent that the AO has concluded that the said agricultural land is outside the municipal limits of Gurgaon/Sohna and therefore, the gain arising therefrom will not be taxable under the Act. The ld. AO has made a new observation that the said land was within eight kilometers from the municipal limits of Delhi and thus, the land fell outside the exemption provid .....

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e is one single municipality and not more than one. When the land under consideration admittedly falls outside the Sohna municipality, as notified by the Central Government in accordance with section 2(14)(iii)(b) of the Act, there is no question of it being considered within the limits of the Delhi City Municipality, as referred by the AO in his remand report. It is noteworthy that upto the AY 1969-70, the exclusion from capital asset in sec. 2(14)(iii) of the Act was in respect of agricultural .....

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ords, out of agricultural lands in India, the lands falling in these two items would fall within the definition of capital assets . These lands are (a) agricultural lands situated within the jurisdiction of municipality and which has a population of not less than ten thousand according to the last preceding census, of which, the relevant figures have been published before the first day of the previous year; and (b) agricultural lands situated in any area within such distance, not more than eight .....

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In this case, it is only Sohna Municipality Area. XXXXXX 12. Now, undisputedly, the land in question lies in village Ghata, which falls in Tehsil Sohna, DistrictNow, undisputedly, the land in question lies in village Ghata, which falls in Tehsil Sohna, District Gurgaon and is more than five kms. away from Sohna Municipality. The Notification specifies areas up to five kilometers in all direction, from the municipal limits of Sohna Municipality. So, according to the Notification, areas up to fiv .....

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eight kms. of the municipal limits of Delhi and so, it is outside the exemption of sec. 2(14) of the Act. In my view, the AO has erroneously arrived at this conclusion without referring to and or completely ignoring sub clause (b) of clause (iii) of sec. 2(14) of the Act. 14. The case of the AO is based on the observation in page 5 of the order that the land being within 8 kms. of municipal limits of Gurgaon Municipal Corporation, it was capital asset within the meaning of sec. 2(14) of the I.T .....

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of the case and in law, the order of the ld. CIT (A) is wrong, perverse, illegal and against the provisions of law which is liable to be set aside. 2. The ld. CIT(A) has erred on facts and in law in deleting addition of ₹ 5,59,17,764/- on account of long term capital gains arising out of sale of land, ignoring that the provisions of sec. 2(14)(iii) of the Income Tax Act, 1961 are clearly applicable in this case. The land in question is situated about 6 kms from the local limit of Municipal .....

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ntrols are under the jurisdiction of Sohna Municipality as is evident from Para 15 and 16 of the impugned order and, therefore, the approach adopted by the Ld. CIT (A) is contradictory when it is concluded by him that the land is not a capital asset but an agricultural land which will not attract capital gains. The Ld. DR relied on the judgment of the Hon ble Apex Court in G.M. Omar Khan vs. ACIT 196 ITR 269 (SC), wherein the Hon ble Apex Court has held that local self-Government is carried out .....

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hence, an area so as to stand apart for the purpose of section 2(14)(iii)(a). The Ld. AR also contested the finding in the assessment order that the AR of the assessee had accepted that the land was situated within 6 kms of the municipal limits of Delhi. Placing reliance on the findings of the AO, it was submitted that the Ld. CIT (A) has erred in deleting the addition and the order should be set aside. 7. The Ld. AR, in response submitted that the AO himself has stated in the remand report (re .....

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n against which it is informed that the actual PWD road has been lost in HUDA sectors and part of it only exists at some places and the nearest possible distance of the land from the limit of Gurgaon Municipal Committee is measured by road at more than 8 kms. whereas, by way of additional evidence, it has been informed by the assessee that the land is situated around 19 kms. from the Municipal limits of Sohna and, vide order sheet entry dt. 29.04.2010, it has been admitted by the AR of the asses .....

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istance is to be taken from the limits of Municipal Corporation of Delhi which is less than 8 kms. 8. The Ld. AR also drew the attention of the Bench to the assessee s application before the Tribunal seeking admission of additional evidence under Rule 29 of the ITAT Rules, 1963. It was submitted that the AO had not given any opportunity to the assessee to negate the Tehsildar s report that the land in question was within 6.6 kms from the Municipal Corporation of Gurgaon. It was submitted that no .....

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