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2016 (10) TMI 528 - ITAT MUMBAI

2016 (10) TMI 528 - ITAT MUMBAI - TM - Sale of land - nature of land - agricultural land - jurisdiction of municipality - Held that:- From the record we found that the land so sold by assessee was not within the jurisdiction of any of the municipality and further the agricultural lands sold are not situated within 8 Km from any of the municipality i.e. Vasai Municipal Council, Navgarh Manikpur Municipal Council, Nalasopara Municipal Council and virar Municipal council. 53 villages were only prop .....

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r 2011-12 i.e. A.Y. 2012-13. Further as per the revenue records the Juchandra Village is shown as a separate entity till 31.05.2011.It is therefore clear that the impugned agricultural land was not situate within jurisdiction of VVMC during the impugned assessment year. - We also find that VVMC was also not a notified municipality during the impugned assessment year, as per last available notification no. 8010(E) dated 6th 1994 as amended by notification no. SO 1302 dated 28th Dec 1999. In f .....

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less than 10,000. We had also gone through the 1st , 2nd , & 3rd draft notification dt. 14/09/2006, 03/07/2009 and 05/04/2010 respectively proposing that the Municipal Council of Vasai Virar Mahanagar Palika be constituted. However vide final notification dt. 31/05/2011 the City of Vasai Virar Mahanagar Palika came to be constituted. Since the sale deed pertaining to the subject Agricultural land were executed by assessee between 19/04/2010 to 04/01/2011, the same cannot be said to be non agricu .....

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alika. The Agricultural land sold were on AS is where IS basis and were forming part of Junchandra village at the time of sale and was not part of Vasai Virar mahanagar Palika as sought to be made out by the AO. - In view of the above we do not find any justification in the order of lower authorities for not treating the land sold as Agricultural land thus the AO and CIT(A) was not justified in considering Agricultural land as capital asset under section 2(14) of the Act. - ITA No.1103/Mum/2 .....

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als) ('the Ld. CIT(A)')was not justified in upholding addition of ₹ 5,71,41, 146/made to the income of the Appellant. 1.2. ADDITION AS "LONG TERM CAPITAL GAIN" 1.2.1. Under the facts and circumstances of the case, the learned CIT(A) was not justified in considering surplus from sale of agricultural land as Long Term Capital Gain, despite it being exempt from tax under the provision of the Act. 1.2.2. Under the facts and circumstances of the case, the learned CIT(A)was not .....

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ed in confirming the adoption of the sale value as per section 50C of the Act, by ignoring the fact that the difference between actual sale price and market value was not more than 10% of the sale value. 1.3.3. Without prejudice to the above, under the facts and circumstances of the case, the learned CIT(A)was not justified in confirming the adoption of wrong indexation of cost of purchase resulting in a lower cost of purchase and a higher Capital Gain.? 2. Rival contentions have been heard and .....

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return of income. Details of transactions in immovable property were called for as part of the assessment proceedings. The AR submitted a computation sheet in which a 'surplus' of ₹ 7,32,03,178/- on sale of agricultural land was shown alogwith another amount of ₹ 3,25,0001- claimed as 'receipts from sale of agricultural products'. Both these were claimed as exempt 'agricultural income', includible for rate purposes only in the enclosure to the assessee's l .....

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transactions submitted by the assessee. Thus, there are in all 20 sale transactions during the year and the profits arising from these 20 transactions were subjected to tax. The assessee claimed that the plots of land sold during the year are agricultural land on the ground that he has continued agricultural operations after acquiring them and therefore the surplus from sale of land is agricultural income and exempt from tax as per the provisions of I.T.Act vis. Section 2(1A) and section 2(14). .....

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empt 'agricultural income'. The AO further held that the assessee has sold many plots of land some of which are in his name as per land records and for some he holds the Sathe-Karars or Agreement to Sale. In view of the discussions as above, both these are 'capital assets' as per the provisions of section 2(14) and profits/gains arising from transfer of these land forms part of taxable income. Thus, the entire profit arising on sale of land was brought to tax net under the head l .....

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4). In support thereof he relies on 7/12 extracts from Land Revenue records and that he has sold such land on as-is-where-is basis without doing any development work. 5. He invited our attention to the submission made by the assessee before the lower authorities to the effect that the assessee himself has stated that the quality of soil is not good in these villages as it is mixed with salt-water which adversely affects the yield of crops. Secondly, he has invested in land despite the fact that .....

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ses because no person would invest huge money in agricultural land where the potential yield is low and cultivation is not a viable option. Therefore, the assessee claims that he has invested in land in this area with the intention of carrying on cultivation is baseless, illogical and lacks credibility. On the subject of Vasai-Virar Municipal Corporation (WMC), the AO did not accept Assesses contention and discussed the details and sequence of events culminating the formation of VVMC as below: & .....

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voiced by the local people, the area covered under the Municipal Corporation of Vasai-Virar is revised and the revised boundaries shall be as per Schedule III and IV (of the said notification) respectively. • From the above, it is clear that the notification dated 31st May 2011 cannot be read in isolation but has to be read with the original notification dated 3rd July 2009. In other words, the revised notification dated s:" May 2011 merges into the original notification dated 3rd July .....

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opment of high-rise housing structures, transport facilities, etc. have found a place in and around the areas mentioned in the notification. These cannot be denied nor reversed. Therefore, it is only proper that the said vii/ages and the land located within, be construed as forming part of the 'larger urban area' as per the Notifications. Moreover assessments and tax need not be held up, pending finality of other legal proceedings since Income tax assessments, are time-bound which have t .....

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profits on sale of such land which are not includible as 'capital asset' is agricultural income as per section 2(1A) and therefore eligible for exemption. It was further argued that the assessee has been purchasing agricultural lands since 1987-88 up to the year 19 4-95 and thus came to be in possession of Agricultural Land of about 450 acres. He sold in all 60 acres to M/s Citizen co-op Society spread over AY's 1992-93, 1998-99 & & 2001-02 and has not sold any further land t .....

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₹ 1,59,659/-, details of which are given as under :- Date of sale and handing over possession Date of registration Total cost Indexed cost Sale value as per agreement Sale value section 50C Alleged LTCG 02.06.2008 01.05.2010 1340400 3624038 13700000 13700000 10075962 10.11.2008 21.04.2010 578500 1463605 5000000 5034500 3567895 15.03.2010 20.08.2010 982000 2692198 4000000 4000000 1307802 14951659 As per ld. AR the above transaction of sale of agricultural land took place in earlier years in .....

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onsidered sale value as per section 50C of the Act without considering the facts that the difference between market value and sale value was not more between 1%-4% of the sales value. The learned AO has not considered first proviso of the section 32A( 4) of the Bombay Stamp Act 1958, whereas the 10% difference in the value stamp duty value and agreement value is allowed. For this purpose, reliance was placed on the decision of Hon. Pune Bench in the case of Rahul Constructions Vs. Dy. CIT (2010) .....

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e ignored. As per ld. AR the Agricultural land were held by the assessee since the year 1989, as per tribunal order No. (2008) 23 SOT 459 (Mumbai) onwards has been the same in nature and no improvements thereon have been made, more over they have been sold on a where is basis and surplus arising out of sale of Agricultural Land have been shown in assessee s accounts. The said agricultural land was sold under the compulsion, which involves lots of litigation and involvement of influential third p .....

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f VVMC, wherein the assessee would have got the price 5 to 6 time higher than the assessee had received for sale of agricultural land during the current year. As such, the agricultural land sold was under the compulsion and there was no intention to sell the agricultural land. He further contended that VVMC came into existence on 31.05.2011 after the Govt. of Maharashtra concluded the hearing of the people affected by the Notification announcing formation of VVMC. Hence, the nature of agricultur .....

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009, the VVMC was constituted vide Notification bearing same number as above and thereafter, vide Notification No,VVM,2009/88/CR-244/09/UD-23 dated 31st May 2011, the Govt. of Maharashtra clarified that due to further demands voiced by the local people, the area covered under Municipal Corporation of Vasai-Virar is revised and the revised boundaries shall be as per schedule III and IV (of the said Notification) respectively. Therefore, it is clear that the notification dated 31st May 2011 cannot .....

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correct. 9. We have considered rival contentions and carefully gone through the orders of authorities below. From the record we found that the land so sold by assessee was not within the jurisdiction of any of the municipality and further the agricultural lands sold are not situated within 8 Km from any of the municipality i.e. Vasai Municipal Council, Navgarh Manikpur Municipal Council, Nalasopara Municipal Council and virar Municipal council. Out of the said municipalities, only Virar and Vasa .....

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otification was published by Government of Maharashtra on 14th September 2006 which proposed creation of a larger Council viz. Vasai Virar Mahanagar Council by combining then existing smaller independence municipal councils of 1. Vasai Municipal Council 2. Navghar Manikpur Council 3. Nalasopara Municipal Council 4. Virar Municipal Council and also 53 specified villages. The villages Juchandra, and other Villages, wherein the impugned Agricultural Land are situated are all more than 8km in distan .....

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cil by combining the existing independent municipal councils of 1 Vasai Municipal Council 2. Navghar Maikpur Council 3. Nallasopara Municipal Council 4. Virar Municipal Council and 53 specified villages. Thereafter due to public demand of the local people and based on representations made to the State Government, to exclude 53 peripheral villages (including juchandra ) from the area of the said large urban area, the Government of Maharashtra vide notification dated 5th April 2010 published the T .....

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a rural area and became an Urban Land only on & from 31st May 2011. Vasai Virar Mahanagar Council (VVMC) had finally came into existence vide Final notice dated 31st May 2011 i.e. A.Y. 2012-13. This is further fortified by the fact that the VVMC started collecting taxes in its name only on & from the financial year 2011-12 i.e. A.Y. 2012-13. Further as per the revenue records the Juchandra Village is shown as a separate entity till 31.05.2011.It is therefore clear that the impugned agric .....

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no. 8010(E) dated 6th 1994 as amended by notification no. S.O. 1302 dated 28th Dec 1999, under Income Tax Act. There is no dispute to the fact that at the time of Sale the subject agricultural land is situated in the village Juchandra of Taluka Vasai, the population of which was 5,912 as per the census, so is less than 10,000. We have also verified the following documents as placed on record: A. Population certificate of village Juchandra Grampanchayat dated 02/06/2008. B. Map showing location o .....

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r Palika be constituted. However vide final notification dt. 31/05/2011 the City of Vasai Virar Mahanagar Palika came to be constituted. Since the sale deed pertaining to the subject Agricultural land were executed by assessee between 19/04/2010 to 04/01/2011, the same cannot be said to be non agricultural land during the relevant period. We also found that Vasai-Virar Municipal corporation has started collecting LBT (local body tax) with effect from 1st April, 2011. Even as per the ready reckon .....

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