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2016 (10) TMI 47 - MADRAS HIGH COURT

2016 (10) TMI 47 - MADRAS HIGH COURT - TM - Sale of land - whether the land sold by the assessee is an agricultural land and situated beyond 8 Kms from the Corporation municipal limit, therefore, the capital gain arising from the sale of the aforesaid land is exempt from capital gain tax? - Held that:- Though the assessee has submitted that the documents to prove that the distance between agricultural land and municipal limit was more than 8 Kms, the assessing officer has only relied on the repo .....

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e assessing officer has totally ignored the report of the Inspector of Survey and Land Records Maintenance, Coimbatore. - As rightly contended by the respondent, revenue department and survey authorities are competent to measure the land and issue appropriate certificates, and the same cannot be ignored by the assessing officer, by relying on the report of the investigation wing. In such matters, it would be appropriate, to take the assistance of the survey authorities, to arrive at the conc .....

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r : Mr.T.R.Senthil Kumar for Ms.R.Hemalatha For The Respondent : Mr.K.R.M.Prabhakaran party-in-person JUDGMENT (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.2716/Mds/2014, dated 22/6/2015, by which, the Tribunal has dismissed the appeal preferred by the revenue. 2. Brief facts of the case are as follows:- The assessee is a HUF, filed its original return of income, on 14/3/2011, for the as .....

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ieve that the land was situated within 8 Kms of municipal limit, a notice under Section 148 was issued. The Assessing Officer, vide letter, dated 07.03.2013, requested the Inspector of Survey and Land Records (Maintenance), Coimbatore, to furnish the distance, as per record (measured at shortest route) with respect to S.Nos.574/2, 575/2, 577, 578/1, 579/1 & 578/1 located at Keeranam Pudupalayam village to the nearest Coimbatore Corporation limits. Responding to the query, the Inspector of Su .....

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said agricultural land the distance measures at 9.13 Kms. 3. However, the Assessing officer, relied on the report of the investigation wing, which reported that the land is located within 8 Kms from City bakery, which according to them is not more than 100 meters from the Corporation limits of Coimbatore. Finally, assessment was made on 31.03.2013 under Section 143 (3) r/w. Section 147 of the Act, wherein, the Assessing Officer held that the land was situated within 8 Kms of the municipal limit .....

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evenue had forwarded a report, wherein, it is clearly stated that the land is located within 8 Kms from City Bakery, which is not more than 100 meters from the Corporation limits of Coimbatore. He submitted that the finding of the Revenue, will supersede the certificates given by the State government departments and that therefore, the issue has to be decided on that basis. 6. The Tribunal, while dismissing the appeal filed by the revenue, held that the Survey Department of the State government .....

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Tax Case Appeal has been filed, on the following substantial questions of law:- 1. Whether on the facts and circumstances of the case, the Appellate Tribunal was correct in holding that the sale land is agricultural land and eligible to claim of exemption under Section 2 (14) of the Income Tax Act? 2. Whether on the facts and circumstances of the case, the Appellate Tribunal is correct in ignoring the evidences gathered by the department for ascertaining the correct distance for the purpose of S .....

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(via Saravanampatti) whereas the shorter route (via Chinnavedampatti) on which the Department relied has been totally ignored. (ii) The evidences collected by the ITO (Inv.) clearly indicate that from the Corporation limits, the lands sold by the assessee is situated within 8 Kms only. (iii) The land in question was not put to use for any agricultural purpose during the two years' period immediately preceding the date of transfer, as laid down in Section 10 (37) (ii) of the Income Tax Act. .....

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s tabulated hereunder: NAME OF THE AUTHORITY DISTANCE OF THE ASSESSEE'S PROPERTY FROM THE CORPORATION LIMITS Inspector of Survey & Land Records Maintenance, Coimbatore North 9.13 Kms Sub-Inspector of Surveys, Coimbatore Corporation-North Zone, Coimbatore 9.10 Kms. Tahsildar (North Coimbatore) 8.40 Kms 9. According to the learned Standing Counsel, being a fact, there can be only one fixed distance, between the Corporation limits and the assessee's property. The point of reckoning for .....

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om the corporation limit. The Income Tax Inspector is not technically qualified or an authorised person to measure distance. The Income Tax Inspector has stated that the distance, as 7.9 Kms (only 100 metres less of 8 Kms), whereas, the reports of the revenue and survey departments have to be accepted. He also submitted that the evidence considered by the appellate authority and the Tribunal are relevant, for the purpose of rendering a decision and thus, rightly taken note of, by the appellate a .....

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authority and Tribunal, are issued by the following authorities:- 1. Tahsildar (Coimbatore North) dated 30/4/2008. 2. Inspector of Survey & Land Records Maintenance, Collectorate Compound, Coimbatore, dated 20.12.2010. 3. Sub-Inspector of Survey, Coimbatore Corporation, North Zone, dated 31/8/2012. 4. Letter from Sub-Inspector of Survey stating the exact place of Corporation limit end to measure the distance along with a map. 5. Certificate of Inspector of Survey & Land Records Maintenan .....

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d counsel appearing for the appellant and perused the materials available on record. 14. On the issue, as to whether, the agricultural land sold by an assessee, is situated more than the distance of 8 Kms from the exact place of Corporation limits, and as to whether, that the same falls within the definition, agricultural land , it is necessary to have a cursory look at few provisions, referred to, by the appellant. Section 2(14)(iii) of the Income Tax Act, reads as follows: (iii) agricultural l .....

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ferred to in item (a) and which has a population of more than ten thousand but not exceeding one lakh; or (II) not being more than six kilometres, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than one lakh but not exceeding ten lakh; or (III) not being more than eight kilometres, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than ten lakh. 15. Sec .....

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distance made by the Tahsildar, for determining the distance between the agricultural land and the nearest municipality, cannot be ignored and there was no justification for the Assessing Officer to reject the report. 17. 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 .....

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ification 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 .....

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994 has been issued by the Central Government. In respect of the State of Punjab, at item No.18 the sub division Khanna has been listed at serial No.19. It has inter-alia been specified that area upto 2 kms., from the municipal limits in all directions has to be regarded other than agricultural land. Once the statutory guidance of taking into account the extent and scope of urbanization of the area has to be reckoned while issuing any such notification then it would be incongruous to the argumen .....

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fer from any legal infirmity warranting interference of this Court. 18. In Commissioner of Income Tax v. Shabbir Hussain Pithawala reported in 2014 (226) Taxman 174, the Madhya Pradesh High Court held that, the distance of the agricultural land belonging to the assessee within the meaning of Section 2(14)(iii)(b) has to be measured in terms of the approach road and not by the straight line distance on horizontal plane or as per crow's flight. 19. In Commissioner of Income Tax v. Nitish Rames .....

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ct, 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. 21. 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 tha .....

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te: 30.4.2008 CERTIFICATE This is to certify that Coimbatore North Taluk, in Keeranatham Village, the agricultural lands having the below mentioned SF Numbers, containing a total area of 4.02 Hectare are situated at a distance of 8.4 KM from the Coimbatore corporation limits. S.F. Number Area 574/2 0.39.0 Hectare 575/2 0.17.0 Hectare 576/2 0.09.0 Hectare 577 0.66.5 Hectare 578/1 0.62.5 Hectare 579/1 1.57.0 Hectare 582/1 0.51.0 Hectare Total 4.02.0 Hectare Signed TEHSILDAR Dt. 30.4.08 Coimbatore .....

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7, 578/1, 579/1 and 582/1 at Keeranam puduppalayam village is situated at a distance of 9.15 kms measured as shortest distance from the near by Coimbatore corporation limit ends on sathy road (land mark when visited: near Gowtham complex, Aishwarya bakery, and Jayam medicals) taken by the approachable shortest road route from boundary of Coimbatore corporation limits at Sathy road via Sivananda puram, Saravanampatty, Keeranatham village to Keeranatham puduppalayam village till the land is situat .....

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nce by road from the limit of Coimbatore corporation (as existed in the year 2007- 2008) till the location of agricultural land in SF Nos.574-579 and 582 at keeranatham puduppalayam village by Mr. K. Prabakaran residing at 291, Avarampalayam road, Sidhapudur, Coimbatore 641 044. In this regard, I hereby certify that I have personally visited and found the shortest distance from the near by Coimbatore corporation limits (as was in the year 2008) at Sathy road (land mark when visited: near Gowtham .....

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ayam Road, Sidhapudur, Post, Coimbatore 641 044. INSPECTOR OF SURVEY AND LAND RECORDS MAINTANCE, Coimbatore (North), Collectorate Compound, Coimbatore 641 018. Dated 15.03.2013. Sub: Request the distance to land in SF Nos. 574-579 and 582 in Keeranatham Village - Reg. Ref: Your letter F. No.AAIHK 0748M/ CIR II/CBE /12-13 Our off. Ref. C. No.112/13, Dated 11.03.2013. CERTIFICATE With reference to the above cited letters, also as required by your end, I have visited the agricultural land with surv .....

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distance as required to the said land as per the Coimbatore Corporation Limit plan as was in the year 2007-2008. From that point as mentioned above by the shortest road route to the said agricultural land the distance measures at 9.13 km. Inspector of Survey and Land Records. (Maintenance) Coimbatore. To Assistant Commissioner of Income Tax, Circle II, Coimbatore. 23. Though the assessee has submitted that the abovesaid documents to prove that the distance between agricultural land and municipa .....

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ance between the municipal limits and the agricultural lands, is 9.13 Kms., the assessing officer has totally ignored the report of the Inspector of Survey and Land Records Maintenance, Coimbatore and recorded as: "While considering the assessee's reply, the Inspector of this Office was deputed to ascertain the Government Department from which both the city limit and the distance to measure between the limit and the land which was sold. She was went to Coimbatore Local Town Planning Off .....

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the records for the F.Y.2007 - 08. In response to the letter, Inspector of Survey and Land Records (Maintenance) gave certificate that, I have measured the distance from the Coimbatore Corporation limit at Sathy road, Coimbatore being exact starting point (Land mark: beyond Ramakrishna mills at LGB Nagar, Piriru-Gowtham tower, Aiswarya bakery and Jayam medical) to measure the distance as required to the said land as per the Coimbatore Corporation limit plan as was in the year 007 - 08. From that .....

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rivu- Gowtham tower, Aiswarya bakery and Jayam medical), as per the Coimbatore Corporation Limit plan as was in the year 2007-2008. However, from the Inspector of Income-Tax enquiry at Chinnavedampatti Panchayat, we have been informed that the Corporation limit ends at Gopala Krishna Mills/City Bakery. Hence, we require the exact place from which the distance to be measured." The Inspector of Survey and land records in his certificate mentioned that, " for measuring the distance from c .....

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port with respect to Mr.K.R.N.Prabakaran case in which it was mentioned that the said land is located within the 8 kilometers from city bakery which according to them is not more than 100mts from the corporation limit of Coimbatore." 24. On the appeal preferred by the assessee, considering the grounds of challenge, submissions and evidence, the Commissioner of Income Tax (Appeals), at Paragraphs 9 to 16, held as follows: "9. I have gone through the grounds of appeal and also the order .....

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s made in the return based on the certificate of distance issued by the Tahsildar (North Coimbatore) in April 2008. The appellant filed a copy of the letter obtained from the Tahsildar (North Coimbatore) certifying that the SF Nos.574/2, 575/2, 576/2, 577, 578/1, 579/1, and 582/1 are lands clearly situated beyond 8.4 KMs from the Coimbatore Corporation Limits. The land measuring 4.02 Hectares is situated at a distance of 8.4 KMs from the Coimbatore Corporation limits. This certificate was issued .....

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15.02.2013 with the Assessing Officer objecting to the re-opening. The appellant also filed the relevant evidence to confirm that the location of the land is more than 8 KMs from the Coimbatore Corporation Limits. The appellant filed the details of Patta passbook and also the adangal and chitta register copies' to prove that the land is agricultural land. The appellant also filed a copy of the starting point and the Corporation Limits of Coimbatore Municipal Corporation certified by the Sub .....

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15 KMs measured as shortest distance from the nearby Coimbatore Corporation limit which ends on Sathy Road (landmark when visited : Near Gowtham Complex, Aishwarya Bakery, and Jayam Medicals). Taken by the approachable shortest road route from boundary of Coimbatore Corporation limits at Sa thy Road via Sivanandapuram, Saravanampatty, Keeranatham Village to Keeranatham Puduppalayam Village where the land is situated at 16 KM from Coimbatore Railway Station as per Coimbatore Corporation limit pla .....

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t also filed a certificate dated 31.08.2012 issued by the Sub Inspector of Surveys, Coimbatore Corporation - North Zone, Coimbatore. In this Certificate it was mentioned that the distance by road from the limit of Coimbatore Corporation (as existed in the year 2007-2008) till the location of agricultural land in SF Nos.574-579 and 582 at Keeranatham Puduppalayam Village is 9.1 KMs. The land mark when visited was shown as near Gowtham Complex, Aishwarya Bakery and Jayam Medicals. The Sub Inspecto .....

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2.2013 submitted that as per the details gathered it was ascertained that the limit for the Coimbatore Corporation ends near a bakery called the "CITY BAKERY" on the Coimbatore - Keeranatham Road during the Financial Year 2007- 08. Keeping this as the starting point for measuring the distance to the site it was found to be 7.9 KMs. The Assessing Officer after examining the details wrote'a letter to the Inspector or Survey and Land Records Maintenance, Coimbatore (North) Collectorat .....

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the letter of the ITa (Inv.) dated 05.03.2013 wherein it was stated that the land seems to be located within 8 KMs from the municipal limits of Coimbatore. The ITa (Inv.) in his letter dated 13.03.2013 stated that the distance was measured from the "City Bakery" which is situated in the corner of Athipalayam Road which leads to Keeranatham Puduppalayam Village [bearing Survey Nos. 574/2, 575/2, 576/2, 577, 578/1, 579/1 and 582/1] via Chinnavedampatti (where property of Sri Prabhakaran .....

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ion limit. One side of Rabindranath Tagore Road is Corporation Limit and the other side is not coming under Corporation Limit earlier. The width of the road is only 10 meter. At present both the sides are within the Corporation Limit. A photocopy of the Municipal Passbook and property tax receipts issued by the Coimbatore Corporation for the period from 2001-02 to 2011-12 to a property belonging to Shri P.G. Mahalingam and Shri P. Mani which is situated on Rabindranath Tagore Road, adjacently op .....

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he came to the conclusion that Rabindranath Tagore Road is the Corporation Limit during the period in which Shri Prabhakaran had disposed-off the property. Hence taking "City Bakery" as the starting point for measuring the distance is not on sound reasoning of any evidence from Corporation Authorities. The municipal tax passbook and property tax receipt did not indicate the Corporation Limit to measure the distance from the Corporation Limit to the lands of the appellant. The Assessing .....

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asure the shortest distance to the said land from the Coimbatore Corporation Limit (2007-2008). For this purpose, I have measured the distance from the Coimbatore Corporation Limit at Sathy Road, Coimbatore, being the exact starting point (landmark : beyond Ramakrishna Mills at LGB Nagar Pirivu - Gowtham Towers, Aishwarya Bakery and Jayam Medicals) to measure the distance as required to the said land as per the Coimbatore Corporation Limit plan as was in the year 2007-2008. From that point as me .....

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), it was also mentioned that the Inspector of Income Tax made enquiry at Chinnavedampatti Panchayat and the Corporation Limit ends at Gopalakrishna Mills / City Bakery. In reply to the letter of the Assessing Officer, the Inspector of Survey and Land Records (Maintenance), Coimbatore (North), clarified that the exact point will be only at (landmark) beyond Ramakrishna Mills, at LGB Nagar Pirivu - Gowtham Towers, Aishwarya Bakery and Jayam Medicals) and not from Gopalakrishna Mills / City Bakery .....

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ort. The Assessing Officer in the order stated that "so the decision was taken in favour of revenue based on the Departmental Report and the consideration received on sale of agricultural land by the assessee attracts capital gains and the assessment is completed accordingly". As seen from the ITO (Inv.) report and the Inspector's report, the outer limit of Municipal Corporation was considered as "City Bakery" from which the distance was measured. The ITO (Inv.) letter do .....

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ctor of Survey and Land Records (Maintenance) regarding clarification on the enquiries made by the Inspector of Income Tax at Chinnavedampatti Panchayat to be informed that the Corporation Limit ends at Gopalakrishna Mills / City Bakery. The Inspector of Survey and Land Records (Maintenance) who is the authority has clarified that the exact starting point will be only at LGB Nagar Pirivu - Gowtham Towers, Aishwarya. Bakery and Jayam Medicals and not from City Bakery or any other place, as per Co .....

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rmation to this extent. The report of the ITO (Inv.) as discussed earlier cannot be considered without proper authentication from the concerned Authority regarding the Municipal Corporation out limit. In my opinion the Assessing Officer erred in taking a decision in favour of the Revenue based on the Departmental Report which is not properly authenticated. The Inspector of Income Tax report against the clarification by various State Government Authorities, (that too, independently verified by th .....

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ue, before the Income-Tax Appellate Tribunal, after considering the submission of the departmental representative that the investigation wing of the revenue has forwarded a report, in which, they have clearly stated that the said land is located within 8 Kilometers from city bakery, which is not more than 100 Mts., from the corporation limits of Coimbatore and the further contention that the finding of the Revenue would supersede the certificates given by the state government departments, the Tr .....

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n of which is extracted herein above, has held that the land sold by the assessee is an agricultural land and situated beyond 8 Kms from the Corporation municipal limit, thereby the capital gain arising from the sale of the aforesaid land is exempt from capital gain tax as per the provisions of the Act. In this situation we do not have any hesitation to confirm the order of the Ld. CIT (A)." 26. In the light of the decisions of the Courts, considered in the foregoing paragraphs and the ques .....

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decision of the Punjab and Haryana High Court in Commissioner of Income-Tax v. Lal Singh reported in 325 ITR 588 (P & H). 27. As rightly contended by the respondent, revenue department and survey authorities are competent to measure the land and issue appropriate certificates, and the same cannot be ignored by the assessing officer, by relying on the report of the investigation wing. In such matters, it would be appropriate, to take the assistance of the survey authorities, to arrive at the .....

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