TMI Blog2016 (9) TMI 858X X X X Extracts X X X X X X X X Extracts X X X X ..... tance, shall unless a different, intention appears, be measured in a straight line on a horizontal plane. The proper interpretation to Section 11 of the General Clauses Act, 1897, depends upon the purposes for which, an Act is enacted. In the case of an explosive unit or stone quarry operations, aerial distance/crow's flight can be taken. In such circumstances, the distance falls within the ambit of prohibited distance. Thus in Section 11 of the General Clauses Act, 1897, the legislature has also foreseen that measurement of distance, should be in the context and the purposes to be achieved, in any enactment and it is not a straight jacket formula, that in all cases and under all circumstances and notwithstanding the purposes, for which, an Act is enacted, measurement of distance should be done only in straight line on horizontal plane. Reverting to the case on hand we are of the view that the decisions 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, Tahsildar, Ambattur and the General Manager, Metropolitan Transport Corporation (Chennai) Ltd's., are not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me on 31.07.2009, 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 the income originally returned and the revised return, represented capital gains of ₹ 3,09,11,561/- on the sale of land, at Morai Village, Ambattur Taluk originally offered, but withdrawn, in the revised return. During the course of the original assessment proceedings, the assessee contended that the land sold by him, at Morai village is an agricultural land and therefore, contended that the profit on sale of such agricultural land is not liable to tax. 3. According to the assessee, the land is situated at a distance of more than 8 km from the nearest Avadi Municipality and the land being agricultural land, profit on sale of such land is not liable to tax. The department found that the land is not agricultural land, it was sold to a Trust and the assessment was completed, by bringing the entire capital gains of ₹ 3,09,11,561/-, as originally offe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adi Municipality and the lease deed, between the assessee, other family members M/s.Vel Horticultures, leasing the land for agricultural operations, accepted in the scrutiny assessment, and 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 further observed that it is evident from the letter No.5729/2013/A1, dated 03.08.2013, from the Tahsildar, Ambattur that she had made independent enquiries with regard to the distance of the land in question, from the nearest Municipality (Avadi), result of which, clearly proves that the land in question is not situated within a distance of 8 Kms from the nearest Municipality. The appellate authority has further held that no reason has been assigned by the Assessing Officer, in the assessment order, as to why, he has not accepted the report of the Tahsildar. With regard to the report of the departmental Inspector that the land in question is situated at a distance of 5.5 Kms and submitted before the Assessing Officer, the Commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 within 8 Kms from the Avadi Municipality. He deputed three Income-tax Inspector to ascertain actual distance and as per their report, the distance between Avadi Municipality and Morai Village is 5.5 Kms only. 2.6 The CIT(A) has failed to note that the Assessing Officer had followed the direction of the Hon'ble ITAT and by examining all evidences placed before them and passed the order in accordance with law. 9. Upon considering the evidence adduced by the assessee and the Department and following 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 Municipality is beyond 8 Kms by ignoring the evide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espondent. According to him, the amendment is applicable to the earlier years also. 12. Mr.J.Narayanasamy, learned counsel for the appellant further submitted that if the distance is measured between the end of Avadi Municipality and the assessee s 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. Heard the learned counsel appearing for the appellant and perused the materials available on record. 13. On the issue, as to whether, the agricultural land sold by the assessee, is situated more than the distance of 8 Kms from Avadi Municipality and as to whether, the same falls within the definition, agricultural land , it is necessary to have a cursory look at few provisions, referred to, by the learned counsel for the appellant. Section 2(14)(iii) of the Income Tax Act, reads as follows: (iii) agricultural land in India, not being land situate- (a) in any area which is comprised within the jurisdiction of a municipalit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tropolitan Transport Corporation (Chennai) Ltd's, certifying that the land is situated more than 8 Kms, from Avadi Municipality, the appellate authority, at Paragraph 7 of the order in I.T.A.No.433/13-14, dated 28.11.2014, has categorically held that the land in question, is an agricultural land situated, at a distance of more than 8 Kms, from the nearest Avadi Municipality. The appellate authority has further held that from the letter No.5729/2013/A1, dated 03.08.2013, of Mrs.M.Bhushna Devi, Tahsildar, Ambattur, it could be seen that independent enquiries have been made, 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. 17. Adverting to the report of the Departmental Inspector that the land in question is situated at a distance of 5.5 Kms and while observing that the route used by the Inspector to reach the land is a private road, laid and ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arest 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 distance on horizontal plane or as per crow s flight as held by the Punjab Haryana High Court in the case of CIT vs. Satinder Pal Singh (229 CTR 82). In view of this, the AO has no material to prove the contention of the assessee that the distance of the land as on date of sale has to be held more than 8 kms. From the nearest Municipality, is not correct. Therefore, the assessee has to prove one essential condition that the land owned by him or her is situated at a distance more than 8 kms. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 crow s 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 municipal committee or cantonment board etc. The notification has to take into account the extent of, and scope for urbanization of that area and other relevant considerations. The reckoning of urbanization as a factor for prescribing 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 should be measured, by the approach road, or by straight line distance on horizontal plane? When a person cannot approach the land by the distance in straight line on horizontal plane, should the measurement be taken, by approach road? 26. In a given case, the agricultural land is located in a village X and if there is a lake, measuring 4 Kms x 6 Kms, by length and breadth and if on the banks of the lake, the outer limits of the nearest municipality starts, one has to visualise distance which a person has to travel, through an approach road, permitted to be used by public and in such circumstances, it cannot be contended that the distance between the land and the nearest municipality should be measured in straight line on horizontal plane or crow flight/a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reject the certificates of the Village Administrative Officer, Deputy Surveyor, Ambattur Taluk, Tahsildar, Ambattur and the General Manager, Metropolitan Transport Corporation (Chennai) Ltd's., are not perverse, warranting intervention. 30. 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 inspector vis-a-vis the certificates of the Village Administrative Officer, Deputy Surveyor, Ambattur Taluk, Tahsildar, Ambattur 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, who are competent to measure the land and distance, and whose reports are accepted by the Government for demarcation of the limits of an area and the certificate of the Public Transport Corporation Ltd., should be given weightage and accepted, unless the contrary is proved. In the case on hand, there are no materials to reject the said certificates, and no reason has been assigned by the assessing officer, for rejection. 31. In the light of what is stated above, it is not open to the r ..... 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