TMI Blog2021 (1) TMI 560X X X X Extracts X X X X X X X X Extracts X X X X ..... - - - Dated:- 13-1-2021 - Sri J. Sudhakar Reddy, Accountant Member For the Assessee : Ms. Lavanya Gadodia For the Revenue : Ms. Chinmaya, JCIT ORDER PER J. SUDHAKAR REDDY, AM: This is an appeal filed by the assessee directed against the order of the Learned Commissioner of Income Tax (Appeals), Dhanbad [hereinafter the CIT(A) ], passed u/s. 250 of the Income Tax Act, 1961 (the Act ), dated 18.03.2020 for the Assessment Year 2013-14. 2. The ld. Counsel for the assessee, Ms. Lavanya Gadodia submitted that the sole issue that arises for adjudication in the appeal is whether the land sold by the assessee, by way of a registered sale deed is a capital asset as defined u/s 2 (14) of the Act. She submitted that the assessee has sold agricultural land and this fact that the asset in question is agricultural land is evident from a perusal of the registered sale deed, entries in revenue records and other documents. She pointed out that the land in question was classified as Don as is evident from the Revenue record a copy of which is filed at page 14 of the paper book as is apparent from the registered sale deed which means that the land is wet land in which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... land and not sq. yard or sq. feet of land. She drew the attention of the Bench to pages 19 to 23 of the paper book filed, whereas photographs of the land is given and submitted that the ld. CIT(A) records the fact that there are gardens of mango, guava etc. on the land. She once again drew the attention of the Bench to the facts recorded in the Revenue records, copies of which are placed in the paper book to prove that the land in question is agricultural land and to the copies of the Indian Village Directory where it is recorded that LAPRA village is located 12 kms away from Khelari and 60 kms away from Ranchi . She vehemently contended that 11.8 acres of land cannot be considered as non-agricultural land, simply because a house is located in that particular property and that a farm house cannot convert agricultural land into non-agricultural land. She prayed for relief. 5. Rival contentions heard. On a careful consideration of the facts and circumstances of the case, perusal of the papers on record and the case law cited, we hold as follows. 6. The ld. CIT(A) at the last paragraph of his order records the fact as follows: Rather on the basis of above discussion it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te that the assessee had indeed sold its land in question measuring 5.33 acres situated in village Mamidipally Mandal Saroonagar district Ranga Reddy in erstwhile Andhra Pradesh during the relevant previous year; The sole dispute in the instant lis that arises for our apt adjudication is as to whether the assessee's land sold was a capital asset or not falling within 8 Kms. of the GHMC u/s 2(14)(IU)(B) of the Act as applicable in the impugned Assessment Year. The taxpayer stand throughout is that its land is not a capital asset since it is situated beyond 8 Kms. distance of any municipality whereas the Revenue's case is that Mamidipally gram panchayat is adjacent to the GHMC limits. And also that is happens to be a hub of major economic activity including aviation sector. We find no merit in the latters stand based on the lower authority's respective findings. We make it clear first of all that there is no rebuttal coming from the department that the land in question has ever been converted from agricultural to non-agricultural use at any point of time before the sale in question. The state government's revenue records strongly support the assessee's case rath ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation from DDIT(Inv.), Chennai, which stated that the area of Chennai Metropolitan region was much larger than what was stated by the Tehsildar in his report and the land sold by the assessees was situated at about 3 Kms. from the Chennai Metropolitan area. On the basis of the said information, the Assessing Officer entertained a belief that the gain arising from the sale of the said land was chargeable to tax and the income of the assessees in the form of capital gains had escaped assessment. As rightly contended by the ld. Counsel for the assessees in this regard, the location of the land from the local limits of Chennai Municipal Corporation was relevant to decide as to whether the said land was an agricultural land in India within the meaning of clause (iii) of sub-section (14) of section 2 and the distance of the land from the Chennai Metropolitan area was not relevant in this context. The information received by the Assessing Officer regarding the location of the land being situated at about 3 Kms. from the Chennai Metropolitan area thus was vague and irrelevant to decide the issue relating to the exemption claimed by the assessees in respect of gain from the sale of their la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ricultural land of the assessee is outside the Municipal Limits of Hyderabad Municipality and that also 8 km away from the outer limits of this Municipality, assessee s land does not come within the purview of section 2(14)(iii) either under sub clause (a) or (b) of the Act, hence the same cannot be considered as capital asset within the meaning of this section. Hence, no capital gain tax can be charged on the sale transaction of this land entered by the assessee. This is supported by the order of Kolkata Bench of this Tribunal in the case of Arijit Mitra (cited supra), Haresh V. Milani v. Jt. CIT [2008] 114 ITD 428 (Pune) and M.S. Srinivasa Naicker v. ITO [2007] 292 ITR 481/[2008] 169 Taxman 255 (Mad). By borrowing the meaning from the above section, we are not able to appreciate that the land falls within the territorial limit of any municipality without notification of Central Government as held by the Karnataka High Court in the case of Madhukumar N. (HUF) (cited supra) 50. Further, we make it clear that when the land which does not fall under the provisions of section 2(14)(iii) of the IT Act and an assessee who is engaged in agricultural operations in such agricultural l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acteristics, surrounding situation and use of the lands in the adjoining area were such as would indicate that the land was agricultural; i. whether the land itself was developed by plotting and providing roads and other facilities; j. whether there were any previous sales of portions of the land for non-agricultural use; k. whether permission under section 63 of the Bombay Tenancy and Agricultural Lands Act, was obtained because the sale or intended sale was in favour of a non-agriculturist: if so, whether the sale or intended sale to such non-agriculturist was for non-agricultural or agricultural user: l. whether an agriculturist would purchase the land for agricultural purposes at the price at which the land was sold and whether the owner would have ever sold the land valuing it as a property yielding agricultural produce on the basis of its yield; and m. whether the land was sold on yardage or on acreage basis. 2. Having regard to the facts and findings recorded by the Tribunal, it was obyious that not only the physical characteristics of land, in the instant case, but the user also was agricultural. Even though the land was not actually put to agricult ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4:- That the sale of land to an industrial unit, when the conversion of land takes place subsequent to the sale by the buyer, cannot lead to a conclusion that the land sold is not agricultural land. Khaitan Lefin Limited vs. CIT ITA No.200/Kol/2016, Judgment dated 25.01.2019 (Kol Trib.) 4. There is no dispute that the assessee had indeed sold its land in question measuring 5.33 acres situated in village Mamidipally Mandal Saroonagar district Ranga Reddy in erstwhile Andhra Pradesh during the relevant previous year; The sole dispute in the instant lis that arises for our apt adjudication is as to whether the assessee's land sold was a capital asset or not falling within 8 Kms. of the GHMC u/s 2(14)(III)(B) of the Act as applicable in the impugned Assessment Year. The taxpayer stand throughout is that its land is not a capital asset since it is situated beyond 8 Kms. distance of any municipality whereas the Revenue's case is that Mamidipally gram panchayat is adjacent to the GHMC limits. And also that is happens to be a hub of major economic activity including aviation sector. We find no merit in the latters stand based on the lower authority's respective f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is to be treated as a capital asset in the terms of section 2(14) of the Act. It is true that the definition of agricultural land is not given in the Income-tax Act, but various factors contribute to ascertain the correct nature of a particular piece of land. If a land is situated within 8 kms of the municipal limits of a city even if it is recorded as agricultural land in the revenue records, it is to be treated as non-agricultural land and for that matter an Asset but in this case, the admitted fact is that this land falls beyond 8 kms from the notified limit. It is true that as per revenue records, the land has been recorded as agricultural land. It is found to be a fact that the assessee has been showing agricultural income from this very land and the same has been accepted by the Revenue as such year after year. The land was purchased by the assessee and at that time it was low lying as some mud was taken from it for making bricks etc. But admittedly after purchase, no such activity was carried out on this land. Even if we accept the contention of the Revenue that no agricultural production was done by the assessee on this land, this mere fact will not take out the land out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in question was agricultural land. Thus. on the date of purchase, the land in question was agricultural land and on the date of acquisition, the character of the land continued to be agricultural. When these two clear findings have been returned, it is apparent that in the transitional period. that is. between purchase and acquisition. the nature and character of the land did not change. The fact that the appellant/assessee intended to use the land for industrial purposes did not in any wav alter the nature and character of the land. The further fact that the appellant/assessee did not carry out any agricultural operations did not also result in any conversion of the agricultural land into an industrial land. It is nobody's case that the appellant/assessee carried out any operations for setting up any plant or machinery or of the like nature so as to lead to an inference that the nature and character of the land had been changed from agricultural to industrial. The mere fact that the appellant/assessee did not carry out any agricultural operation did not alter the nature and character of the land. In any event. this discussion is not relevant in the backdrop of the clear findi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ricultural lands which were situated beyond 8 Kms of local limits of the Municipality. As rightly observed by the tribunal, merely because the land came to be sold during the year under consideration to non-agriculturist, the same will not change the characteristics of the land in the hands of the seller - assessee. It is not in dispute that at the relevant time, the lands were held/used by the assessee as agricultural land. Merely because the said land came to be sold to a non-aariculturist. may be in breach of law prevailing in the State, character of the land would not be changed and the land still would continue as an agricultural land. At the most the sale in favour of non-agriculturist can be declared as illegal and/or invalid. There is no provision that if the agricultural land is sold in favour of non-agriculturist in breach of law prevailing in the State. it would lose its character as agricultural land and would be treated as non-agricultural land. CIT vs. Siddharth J. Desai [1982] 10 Taxman 1 (Guj) = [1983] 139ITR 628 (Guj) 2. Having regard to the facts and findings recorded by the Tribunal, it was obyious that not only the physical characteristics of land, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transferred by the assessee, was an agricultural land and it did not fall within the ambit of 'capital asset' under section 2(14) of the Income Tax Act. Accordingly we confirm the order of ld. CIT(Appeals). Sita Ram Sharma vs. ITO (2015) 58 taxmann.com 180 (Jaipur ITAT) 9. We have heard the rival contentions of both the parties and perused the material available on the record. The land sold by all the brothers situated in village- Sanjhaia, Tehsil- Sanganer, district- Jaipur. In case of assessee s brother namely Shri Ram Sahay Sharma in A.Y. 2007-08 by the ITO ward 7(2) laipur order dated 25/03/2013 had not made any addition on account of Iona term capital gain. Further the ld CIT(A) as well as this Bench also allowed the appeal in case of Smt. Kamla Devi Sharma (supra) who also sold her land at Saniharia village to M/s Vatika Ltd. on 16/05/2006 and held that the agricultural land sold by the assessee is not capital assets as envisaged U/s 2(14) of the Act as same was sold to Vatika Ltd. within a short span of time. The other case laws relied by the assessee is also squarely applicable. Therefore, we hold that the land sold by all the assessees are agri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to such conclusion, we draw strength from the following case laws. 14. (i) In the case of CIT vs. DKB Co. Reported in 243 ITR 618, the Hon'ble Kerala High Court held that It is the settled position in law that there cannot be estoppels against a statute. There is no provision in the statute which permits a compromise assessment. The above position was indicated by the Apex Court in UOI vs. Banwari Lal Agarwal (1999) 238 ITR 461. It cannot be laid down as a principle of universal application that whenever an assessment has been completed by accepting the offer of an assessee, no penalty can be imposed. It has not been so observed by the Apex ITA No.6076/Del/2012 AY 2009-10 Sh. Haripal Singh Court in Sir Shadilal Sugar and General Mills Ljtd. Vs. CIT (1987) reported in 168 ITR 705, as the Tribunal held. Its conclusion has been arrived at by a clear misappreciation of the ratio laid down in the said case. (ii) In the case of Mayank Poddar (HUF) vs. WTO reported in 262 ITR 633 the Hon'ble Calcutta High Court has held as under. Even if the assessee had included the same in his return, that would not preclude the assessee from claiming the benefit of law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ute, article 265 of the Constitution of India in unmistakable terms provides that no tax shall be levied or collected except by authority of law. Acquiescence cannot take away from a party the relief that he is entitled to where the tax is levied or collected without authority of law. The Constitution Bench of the Supreme Court in Amalgamated Coalfields Ltd. Vs. Janapada Sabha, AIR 1961 SC 964, held thus (page 965): It may be stated at the outset that the tax now impugned has been imposed by the local authority from March 12, 1935, and that the first occasion when its validity was attached was in only 1957, though if the petitioners are right in their submissions their acquiescence might not itself be a ground for denying them relief. Before however we set out the points urged by the Ld. Attorney General in support of the petition, it would be convenience if we narrate briefly the history of the levy of this tax. The Supreme Court thus, held that acquiescence to an illegal tax for a long time is not a ground for denying the party the relief that he is entitled to. 14.1. Vide Circular No.5/2001-02(F.No.142/13/2010-SO-PPL) dt. 3.6.2010, the Board explained the rationalis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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