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2016 (12) TMI 610 - ITAT JAIPUR

2016 (12) TMI 610 - ITAT JAIPUR - TMI - Gain on sale of land - nature of land - agricultural land or capital asset within the meaning of Section 2(14)(iii) - measurement of distance - Held that:- The position in law is clear that section 2(14)(iii)(b) of the Act covers the situation where the subject land is not only located within the distance of 8 kms from the local limits, which is covered by Clause (a) to section 2(14)(iii) of the Act, but also requires the fulfillment of the condition that .....

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to the assessment year 2014-15 and subsequent assessment years. - For the year under consideration, the distance has to be measured by the approach road. The amendment brought in by the Finance Act, 2013 to measure the distance aerially is effective from 01- 04-2014 and therefore, applies prospectively in relation to the assessment year 2014-15 and subsequent assessment years. we find that the matter require fresh examination taking into consideration the above legal proposition. We accordi .....

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learned CIT(A)-II, Jaipur for A.Y. 2011-12. The sole ground of appeal raised by the assessee is as under:- The ld CIT(A) has erred on facts and in law in confirming the action of A.O. in holding that the agricultural land sold by the assessee is a capital asset within the meaning of Section 2(14)(iii) of the Income Tax Act, 1961 by not considering the arguments of assessee in its entirety and thereby assessing the income from capital gain on sale of such land at ₹ 69,30,140/-. 2. Briefly t .....

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is submitted before the Assessing Officer by the assessee that sale proceeds of agricultural land at village Salingrampura was exempted and received in gift from brother ₹ 87,40,000/-. The assessee filed copy of the sale deed and evidence of acquisition of land as gift from his brother. The ld Assessing Officer also enquired from the Sub-Registrar, Sanganer-1 and Commissioner of Jaipur Nagar Nigam for stamp duty and to find out the distance from the municipal limit of the land sold. After .....

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has not claimed any exemption either on account of the land beyond the purview of definition of Capital asset in terms of sec. 2 (14) as the agricultural land beyond 8 kms of the Municipal limit of Jaipur Nagar Nigam, Jaipur. It is also admitted fact that there was no claim in the return of income for deduction u/s 54F for making investment in purchase of new residential house. (iv) The contradictory stand taken by the assessee during the course of his examination vis-a-vis submission filed duri .....

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s received from the Tehsildar Sanganer and Tehsildar Nagar Nigam Jaipur ore scanned in assessment order:- (vii) The assessee was owner of 3-4 residential flats constructed at 75 Sunder Nagar, Malviya Nagar, Jaipur and was also owner of a number of other plots as mentioned in the Balance Sheet out of which some are residential houses as such the assessee was having more than one residential house as on the date of transfer of original asset. Accordingly, the assessee was not eligible for claiming .....

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x Act, 1961 as he has purchased residential house other than the new asset within the period of one year from the date of transfer of original asset. The ld Assessing Officer further held that the assessee has sold capital asset which was not disclosed in the return of income and the information was not filed in AIR as well as the assessee is not eligible for claiming deduction u/s 54F of the Act and has furnished fabricated document in the form of copy of sale deed by tempering page No. 2 where .....

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no. 3(i) relates to the issue whether the land sold by the appellant is a capital asset within the meaning of section 2(14)(iii)(b). In this case, the Assessing Officer conducted inquires with the Sub Registrar, Sanganer-I and the Commissioner, Jaipur Nagar Nigam to ascertain the distance of the impugned land from the Municipal Limits of Jaipur Nagar Nigam. The reply given by the Tehsildar revealed that this land is situated around 5 kms from the local limit of the municipality at village Murili .....

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the impugned land was situated beyond a distance of 8 kms from the Municipal limit on the date of sale. On the contrary, the two reports submitted by the revenue authorities clearly state that the impugned land was located within a distance of 8 kms from the Municipal limit. In view of the above reports given by the revenue authorities, it is held that the impugned land was situated within a distance of 8 kms from the Municipal limit (in fact only 2.5 kms away) and therefore is a capital asset .....

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from Tehsildar Sanganer who reported that the land sold is situated at 2.5 kms of the Municipal limits. Report is also obtained from the office of Nagar Nigam, Jaipur where it was stated that the land sold by the assessee is 5 kms of the Municipal limits. Accordingly, the AO held that the agricultural land sold by the assessee is a capital asset u/s 2(14) of the Act and determined the long term capital gain at ₹ 75,85,570/-. He has further submitted that before the Ld. CIT(A), assessee has .....

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. Subha Tripathi in ITA No. 1129/JP/11 for AY 2008-09 dated 24.05.2013. It was further claimed that the certificate obtained by the AO do not specify as to what was the municipal limit of Jaipur as on 06.01.1994. Further, on 21.09.2010, when the agricultural land was sold, there was no direct approach road from Murlipura to Gram Saligrampura. It was requested that these facts may be directly got verified from office of Nagar Nigam/ Tehsildar Sanganer. These contention of the assessee are mention .....

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d not on the date of sale. He further observed that AO has submitted two reports which states that lands are situated within a distance of 8 kms from the Municipal limit but assessee has not furnished any evidence to show that the land was situated beyond a distance of 8 kms from the Municipal limit on the date of sale. In observing so, the Ld. CIT(A) did not consider the decision of Hon ble ITAT relied by the assessee. He also did not consider the claim of the assessee that there was no direct .....

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dar/ Nagar Nigam and thereafter determined whether the agricultural land sold is a capital asset or not in terms of section 2(14) of the Income Tax Act, 1961. Therefore, he prayed to allow the appeal of the assessee. 5. At the outset, the ld DR has vehemently supported the order of the ld CIT(A). 6. We have heard the rival contentions of both the parties and perused the material available on the record. In the instant case, the assessee sold an agricultural land at village Salingrampura, Tehsil- .....

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refer to the relevant provisions of section 2(14) of the Act: "2(14) 'capital asset' means property of any kind held by an assessee, whether or not connected with his business or profession, but does not include- (iii) agricultural land in India, not being land situate- (a) in any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee, or by any other name .....

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nt considerations, specified in this behalf by notification in the Official Gazette." 6.2 The above definition of capital asset to include the agriculture land was brought on the statue by the Finance Bill, 1970. It would therefore be relevant to refer to the statement of objects and reasons while introducing the amendment to the definition of capital asset contained in section 2(14) by the Finance Bill, 1970 reported in 75 ITR (St.) 69 and the relevant extracts reproduced as under: "S .....

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figures have been published before the first day of the previous year. Further, agricultural land situated in areas lying within a distance not exceeding 8 kilometers from the local limits of such municipalities or cantonment boards will also be covered by the amended definition of 'capital asset', if such areas are, having regard to the extent of and scope for their urbanisation and other relevant considerations, notified by the Central Government in this behalf. The effect of the prop .....

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nsfer of such agricultural land, as hitertho. 6.3 In context of section 2(14)(iii)(b) of the Act, we now refer to the notification dated 6th January, 1994, issued by the Central Government reported in 205 ITR (St.) 121, the relevant extracts reproduced as under: "Now, therefore, in exercise of the powers conferred by item (B) of clause (ii) of the proviso to sub-clause (c) of clause (1A) and item (b) of sub-clause (iii) of clause (14) of section 2 of the Income-tax Act, 1961 (43 of 1961), a .....

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s, as the case may be, shown in the corresponding entry in column (3) thereof and against the State or Union Territory shown in column (2) thereof for the purposes of the abovementioned provision of the Income-tax Act, 1961 (43 of 1961). No. Name of the State or Union Territory Name of the municipality or cantonment board falling in the State/Union Territory mentioned under column (2) Details of areas falling outside the local limits of municipality or - cantonment board, etc., mentioned under c .....

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of which the relevant figures have been published before the first day of the previous year. (2) The reference to municipal limits or the limit of Cantonment Board in the schedule to this notification is to the limits as existing on the date on which the limits as existing on the date on which the notification is published in the Official Gazette. 6.4 A perusal of the above provisions read with the notification makes it clear that what is intended to be covered in the term "capital asset&q .....

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thin the distance of 8 kms from the local limits. 6.5 We now refer to the decision of the Coordinate Bench in case of Smt. (Dr.) Subha Tripathi (supra) which has been relied upon by the ld AR. The operative part of the decision is reproduced as under: 2.7 We have considered the rival submissions as well as the materials on record. The question arises for our consideration and adjudication is whether the land in question though located beyond 8 kms from the Municipal Limits of Jaipur Municipality .....

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rom the Municipal Limits exists at that point of time. The dispute arises because of the expansion of Municipal Limits and thereby the said distance from the Municipal Limits as on the date of sale of the land in question is only 2 kms and thereby the authorities below have treated the land in question as not falling under the exclusion clause of Section 2(14)(iii)(b) of the Act. There is no quarrel on the point that as per sub-clause (b) of clause (iii) of Section 2(14), the notification of the .....

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and in question falls under mischief of subclause (b) of Section 2(14(iii) of the Act, the distance of 8 kms has to be taken into account in terms of notification dated 6-01-1994. As per explanation 2 of the said notification dated 6-01-1994, the Municipal Limits is to be the limits as existing on the date on which the notification is published in the official gazette. We quote the explanation 2 of the notification (supra) as under:- "(2) The reference to the municipal limits or the limit o .....

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Municipal Limits is to be considered as existing on the date on which notification is published in the official gazette, therefore, the date of notification is relevant and material point to determine the distance of 8 kms from Municipal Limits. There is no amendment or withdrawal of the said notification except a recent amendment has been brought in the statute by the Finance Act 2013 whereby the requirement of said notification has been dispensed with for invoking sub-clause (b) of clause (ii .....

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al Limits as on 6-01- 1994 when the notification was published in the official gazette, the same would fall under the exclusion clause of the term 'capital asset' as per provisions of 2(14)(iii)(b) of the Act. 6.6 The Coordinate Bench while delivering the above decision has referred to the decision of the Hon ble Karnataka High Court in case of CIT v. Madhukumar N. (HUF) [2012] 208 Taxman 394/23 taxmann.com 341 (Kar.) where the Hon ble High Court has laid down the following proposition i .....

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tuation where the subject land is not only located within the distance of 8 kms from the local limits, which is covered by Clause (a) to section 2(14)(iii) of the Act, but also requires the fulfillment of the condition that the Central Government has issued a notification under this Clause for the purpose of including the area up to 8 kms, from the municipal limits, to render the land as a "Capital Asset. 11. In the present case, it is not in dispute that the subject land is not located wit .....

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have spelt out the reason as to why the subject land cannot be considered as a 'capital asset' be giving this very reason, we find the conclusion arrived at by the Tribunal is nevertheless the correct conclusion. 6.7 In light of above, the position in law is clear that section 2(14)(iii)(b) of the Act covers the situation where the subject land is not only located within the distance of 8 kms from the local limits, which is covered by Clause (a) to section 2(14)(iii) of the Act, but als .....

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6-01-1994, the Municipal Limits is to be the limits as existing on the date on which the notification is published in the official gazette. There is no amendment or withdrawal of the said notification except the amendment brought in the statute by the Finance Act 2013 whereby the requirement of said notification has been dispensed with. The amendment by the Finance Act 2013 is with effect from 01-04-2014 and therefore, applies prospectively in relation to the assessment year 2014-15 and subsequ .....

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nd therefore, applies prospectively in relation to the assessment year 2014-15 and subsequent assessment years. For the purposes of guidance, we refer to the decision of Hon ble Punjab and Haryana High Court in case of Commissioner of Income-tax-II, Ludhiana vs. Satinder Pal Singh [2010] 188 TAXMAN 54 (PUNJ. & HAR.) wherein the Hon ble High Court has held as under: 6. A perusal of the aforesaid provision shows that capital asset would not include any agricultural land which is not situated i .....

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s. 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 straight line distance on horizontal plane or as per crow s flight then it would have no relationship with the statutory requirement of keeping in view the extent of urbanization. Such a course would be illusory. It is in .....

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ned while issuing any such notification then it would be incongruous to the argument of the Revenue that the distance of land should be measured by the method of straight line on horizontal plane or as per crow s flight because any measurement by crow s flight is bound to ignore the urbanization which has taken place. Moreover, the judgment of the Mumbai Bench appears to have attained finality. Keeping in view the principle of consistency as laid down in Radhasoami Satsang v. CIT [1992] 193 ITR .....

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