TMI Blog2014 (1) TMI 1860X X X X Extracts X X X X X X X X Extracts X X X X ..... without any basis. In these facts and circumstances, where no comparable case is available, the best way to estimate the cost would be to compute the Fair Market Value on the basis of reverse calculation considering the cost inflation index as held in Jahanganj Cold Storage (2010 (4) TMI 765 - ITAT, AGRA) in which one of us was also a party. Accordingly, the estimation made by the assessee in this respect had to be accepted. We thus allow this ground of appeal of the assessee and reject the ground of the departmental appeal. Rejecting the agricultural income - As already found by us, the assessee has shown evidences of land being cultivated. The agriculture income has been accepted in the previous year and also in the subsequent years. In these facts and circumstances, size of land, government records of crop and the amount of agricultural income shown, we find no reason to reject the assessee's claim. We accordingly allow this ground of the assessee's appeal also. Provision of section 50C applicability as the land was sold by the assessee through agreement and the sale deed was not registered - AO had observed that land has been developed and is in the possession of the bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igha of agricultural land at Village Machwa. The Government record in form of Girdawari shows that there were agricultural activities on the said land and various crops like wheat, bajra etc. were grown on the said land as per this record (P.B. Page 17). Samwat 2064 is related with the assessment year under consideration i.e. A Y 2008-09. During the year, the Assessee sold 4 bigha of agricultural land out of total 16 bigha for a consideration of ₹ 1.04 crores i.e. @ 26 lacs per bigha. This land was allotted to him by Govt. in 1972 on his retirement from defence services. Assessee claimed this land to be agricultural land which is out of scope of definition of capital asset u/s 2(14). He claimed that land is covered by exclusions in clause (iii) of section 2(14) and not covered by sub clauses (a) and (b) of this clause as it is situated in village Machwa where population is less than 10,000/-. This village Machwa is also out of Jaipur Municipal Corporation and it was more than 8 kms beyond the limits of Jaipur Municipal Corporation as on 6.01.1994 when the notification (P. B. Page 1) was issued under sub-clause (b), though now the distance is 2-3 kms. only due to extension of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to alter the sale consideration as received by the assessee. The department has come in appeal before us against the relief so allowed. Regarding Cost of acquisition, the assessee contended that the cases quoted by the AO are not comparable for the following reasons : The said land was already in the possession of the buyers. The said transfer was not in respect of one piece of land but it was in respect of 5 pieces of land scattered in area of 2 kms. The said land was very deep (3 to 4 kms.) from the main road and the assessee's land was only 250 mtrs. Further there is a lane approaching the assessee's land. In the immediate vicinity of the assessee's land, multistoried buildings are being constructed. It is not the position of the other land. In view of the said reasons, the assessee contended that FMV of the land as on 1.4.1981 should have been taken by computing the same as per principle laid down in Jahanganj Cold Storage v. Asstt. CIT [2011] 45 SOT 74/9 taxmann.com 261 (Agra) (TM). Accordingly, the value comes to ₹ 18,87,477/- as per the following calculation below : Ld.CIT(A) however considered ₹ 10,000 per bigha i. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder consideration (PB Page 17). He also submitted that this finding of AO is contradictory as far as, the AO herself has said that the buyers of the land have done plotting on the land. The assessee referred certain electricity bills also in support of agricultural activities on the land. The ld. A/R submitted that the land is an agricultural land. The assessee sold it as such charging rate per bigha. He submitted that neither the assessee nor the department should have any concern as to how the land could be used by the buyers. It was not a relevant factor for this section to see that how the buyer intended to use the land as held in the various decisions including CIT v. Manilal Somnath [1977] 106 ITR 917 (Guj.), M.S. Srinivasa Naicker v. ITO [2007] 292 ITR 481/[2008] 169 Taxman 255 (Mad.) and Manibhai Motibhai Patel v. CIT [1981] 131 ITR 120/6 Taxman 218 (Guj.). In such circumstances, the observation that the nearby locations are getting developed as multistory project has no relevance in the present case. He further submitted that the land was situated beyond the boundaries of 8 Kms. of the limits of JMC as on 6.1.1994 (i.e. the date of issuing relevant notification No. 9447/F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chmark. He accordingly concluded that the claim of the assessee is as per law and this ground of appeal deserves to be allowed. The ld. A/R also drawn our attention towards the decision of Jaipur Bench of ITAT in the case of Smt. (Dr.) Subha Tripathi v. Dy. CIT [2013] 58 SOT 139/34 taxmann.com 286 wherein the same question arose for the same assessment year in respect of land situated in the same village Machwa. The Hon'ble Bench has decided the case in favour of the assessee on the similar basis as argued by ld. A/R. He also drew our attention towards the returns of income filed by the assessee in the subsequent years wherein agricultural income shown by the assessee in respect of the remaining part of land has been accepted by the department. 4. Ld. D/R on the other hand has supported the order of A.O. and ld CIT(A). He submitted that the land in question was capital asset u/s 2(14). He referred the findings given by the ld CIT(A) that 8 kms from the local limits was to be seen on the date of transfer and not on the date on which notification was published in official Gazette. He submitted that issue stands covered in the favour of Revenue by the decision of Hon,ble Cochin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of CIT v. Bolla Ramaiah [1988] 174 ITR 154/39 Taxman 345 wherein it was held that when the land was situated within 8 kms of local limits of municipal corporation, it was liable for capital gain. It was held that it was unnecessary to go into the question whether the land were agricultural lands or not on the date of acquisition, because even if it were agricultural lands, they were not exempt from capital gains tax. It would imply that what is necessary is the position as on date of sale and not the position as on the date of acquisition. Further reliance was made on decision of Hon'ble Apex court in CIT v. Gemini Pictures Circuit (P.) Ltd. [1996] 220 ITR 43/85 Taxman 594 where it was held that mere fact that the land in question was agricultural land could not be a ground to claim exemption u/s 2(14) of IT Act when it was situated within 8 kms of the local limits of Municipal Corporation. Since the land sold by the assessee was a capital asset, therefore, the surplus realized by the assessee on ale of land was assessable as capital gain. He also referred the findings of the ld. CIT(A) that the central government has the authority under section 507(a) of the Munici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accordingly submitted that the Ld. CIT(A) had correctly upheld the action of the AO to treat the same as capital asset within the meaning of section 2(14)(iii)(b) of I.T. Act, 1961. 5. In the rejoinder, the ld. A/R referred our attention towards annexure to his written submissions wherein he has already submitted that various case laws referred by the authorities are not relevant in the following manner : - 6. We have heard the rival submission and have carefully perused the available material on record. We find that in the case of Smt. (Dr.) Subha Tripathi (supra), this Bench has already considered the similar matter in respect of land situated in the same village Machwa for the same assessment year. This Bench has found that the land is situated out of the limit of Jaipur Municipal Corporation and therefore, was not covered in sub-clause (a) of section 2(14)(iii). It has been held by this Bench that for the purpose of application of sub-clause (b) of clause (iii) of section 2(14) and to measure 8 KMs from the radius of Jaipur Municipal Corporation, the relevant date would be the date of notification i.e. 6.1.1994 and not the date of sale of land in question. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f ₹ 10,800/- was adopted as the fair market value of the land in question on 1.04.1981. The assessee raised objections that the comparable case cited by the AO was distinguishable due to the following reasons: (a) The land sold by SH. Panna S/o Sh. Mahadev Jat consisted of Khasra No. 226, 246, 244, 245 233. These khasras of land were scattered over an area of 2 kms. on the other hand, the land of appellant was a big single chunk of land and it was compatible for residential use after plotting. (b) The land of the appellant was in close proximity to the state highway (nearly 500mt.) whereas in the comparable case cited by the AO, the land was 3 to 4 kms away from the main road. (c) The land sold by Sh. Panna S/o Sh. Mahadev Jat was already in possession of the buyers and they were cultivating the land for past many years. The assessee submitted that all these factors make a lots of difference in the value of land. There cannot be any basis to make suitable adjustment for the above factors in case of land. According to the assessee when no comparable case is found, the Fair Market Value of the captioned land should be computed on the basis of reverse indexation in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;s appeal also. 10. Now we come to the remaining ground no.1 of department's appeal which is against holding that the provision of section 50C would not apply as the land was sold by the assessee through agreement and the sale deed was not registered. The AO had observed that land has been developed and is in the possession of the buyers and sale consideration has been received in toto by the assessee. Further, assessee has claimed that the property has not yet been registered and hence, provisions of section 50C are not applicable. In this regard, AO observed that the registration of sale property has not been made only to evade the stamp duty payments on the sale. Therefore, section 50C would be applicable on the sale of property and accordingly applicable DLC rates i.e. 1,40,00,000/- would be applied on such transfer. Accordingly, the AO took the sale consideration of ₹ 1,40,00,000/- as per section 50C instead of actual sale consideration of ₹ 1,04,00,000/-. In the first appeal, ld CIT(A) made a reliance on the decision of Hon'ble Jodhpur Tribunal in the case of Navneet Kumar Thakkar v. ITO [2008] 110 ITD 525 where it was held that to attract section 50C, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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