TMI Blog2021 (11) TMI 874X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) relied upon the certificates, reports and maps submitted by Land Revenue and Survey authorities who are Government Authorities assigned with duties of maintaining of land records and other relevant records connected thereto with measurement of land distance . Their reports can not be brushed aside lightly and has to be given weightage , although there is no doubt that conflicting reports were issued by these authorities, but the conclusive report dated 14.12.2012 made it very clear that there are three road routes to reach the land in question, while the shortest road route is from Main Mirzapur Road , and the distance of Aarzai No. 318 is only 7.800 Kms., which is well within 8 kms. Thus, we hold that the land in question is within 8kms from the Municipal limits of Allahabad and is a capital asset as defined u/s 2(14) and capital gains arising on the sale of land shall be chargeable to income-tax within the provisions of the 1961 Act. This effective issue is decided against the assessee Applicability of the Section 50C - assessee has challenged before us the value so adopted by stamp valuation authorities and has stated that fair market value is much lower than th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. That in any view of the matter entire working of capital gain is totally incorrect in so far as sale consideration as considered by the assessing officer is highly objectionable as the provision of Section 50C of the income tax act in not applicable. The sale consideration as mentioned in the agreement is true and correct and sale consideration as considered by the assessing officer is nothing but only an artificial figure based on irrelevant consideration hence liable to be ignored. 4. That in any view of the matter sale consideration is respect of agricultural land received at Rs, 48,00,000.00 as mentioned in agreement is true and correct and no material brought on record by the department to show any excess amount received by the appellant hence the addition made by invoking provision of section 50C is unwarranted. 5. That is any view of the matter the two lower authorities were wrong in observing that the land in question is capital assets within the meaning of Section 2(14) of the income tax act when in real sense the land in question which was sold was agricultural land and the nature of the land is also recorded in government record as agricultural lan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rty hence simply on notional value addition as made is not correct. 4. That in any view of the matter it is settled law that income tax to be levied on real income and not artificial /notional value as done in present case hence both the lower authorities were wrong in confirming the addition. 3. The brief facts of the case are that the assessee is a firm . The case of the assessee was selected for framing scrutiny assessment u/s 143(3) read with Section 143(2) of the 1961 Act. During the course of assessment proceedings under Section 143(2) read with Section 143(3) of the 1961 Act, the Assessing Officer observed that the assessee has sold agricultural land to Naini Educational Trust, Kareli, Allahabad. The Assessing Officer observed that the assessee has not declared Capital Gain on the sale of land. The assessee was asked by the Assessing Officer to explain the same. The assessee submitted before the Assessing Officer that the land was purchased at Newada, Samogar, Karchana, Allahabad in 2001 for construction of hospital and medical college. The assessee also submitted before the AO that the land is an agricultural land and is reflected in the balance sheet of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Long term capital gain ₹ 3388780 Amount of difference required to be added u/s 50C ₹ 3359000 Total Capital Gain -₹ 6747780 The amount of ₹ 6747780 is added in the total income of the assessee as long-term capital gain. Penalty notice u/s 271(1)(c) of the I.T. Act, 1961 is issued on this point. 4. The assessee being aggrieved by an assessment framed by the AO filed first appeal with Ld. CIT (A) , who after considering the contentions of the assessee decided appeal against the assessee, vide appellate order dated 08th March , 2013, by holding as under:- 4. Decision Admission of additional evidence: 4.1 I have considered the application of the appellant for the admission of additional evidence in the form of certificate issued by Tehsildar Karchana mentioned in the foregoing paras and the report of the A.O.. The appellant has submitted that they were under impression that the A.O. had accepted their plea that land in question was not an urban land, therefore, they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. It is pertinent to mention here that distance by the shortest route is relevant for deciding the dispute at hand. There may be no. of routes to approach to a particular place. But as per the report, the distance of Aarazi no 318 is 7.800 kms. Only. Other routes cannot be considered relevant for resolving the issue because then one can talk of many other routes showing different distances. This may be noted here that the distance of 7.800kms is not aerial distance which has been proposed to be introduced by the Finance Act, 2013 which will be effective from 01.04.2014. The distance of 7.800kms is as per route chart no. 1 of the enclosed map according to which the distance of Aarazi on 327 has been shown 7.200 kms. And the distance between Aarazi No .327 and Aarazi no. 318 is 600 mtrs. So the total distance of Aarazi no. 318 is 7.800 kms. , which is less than 8 kms. The A.R. for the appellant has argued that the report of the SDM signed by other authorities talk of the distance of all plots of village Samogara. As may be seen the submission of the appellant is not correct as the report gives accurate distance of land in question from the municipal limits. Moreover, the fina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee by treating the same as urban land. Our attention was drawn by ld. Counsel for the assessee to the assessment order passed by the Assessing Officer. Our attention was also drawn by ld. Counsel for the assessee to the appellate order passed by ld.CIT(A), and it was submitted by ld. Counsel for the assessee that ld.CIT(A) has confirmed the assessment order passed by the Assessing Officer and additions as was made by the AO stood confirmed by ld. CIT(A). The Ld. counsel for the assessee submitted that the land in question was agricultural land which was more than 8kms. from the Municipal limits of Allahabad , and hence the same cannot be brought to tax within the provisions of the 1961 Act. Our attention was also drawn by ld. Counsel for the assessee to Page No. 23, 23A, 23B,23C and 23Dof the paper-book filed by the assessee, which are reports of the Tehsildar, SDM and maps of the land.The ld. Counsel for the assessee submitted that the route map is enclosed in the paper book and distance of the plot sold was more than 8kms. from the municipal limits of Allahabad. The ld. Counsel for the assessee relied upon the decision of Hon'ble Madras High Court in the case of CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee firm, which is placed at paper book at page number 16-18. In her affidavit, She has reiterated the contentions as are raised by ld. Counsel before us, by mainly averring that no cash whatsoever was received over and above the sale consideration of ₹ 48,00,000/- , the sale consideration was received through banking channel, and as certified by Tehsildar and SDM, the distance between municipal limits and the land in question is more than 8 kms and that the character of land is agricultural. 5.2 On the other hand the Ld. DR submitted before the Bench that this land is within 7.2km from the municipal limit of Allahabad and hence capital gain arising on the sale of land are taxable, as the said land is capital asset as defined u/s 2(14) of the 1961 Act. The ld. DR drew our attention to the certificate issued by the SDM, which is placed in paper book at page 23A to contend that the land is within 8 kms from the municipal limit of 8Kms. It was submitted by ld. DR that village Newada is on the main Mirzapur road and is only 7.2kms. from the outside limits of Allahabad Municipal Corporation, and hence the said land is within 8kms. of the limits of municipal corporat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 143(2) read with Section 143(3) of the 1961 Act. The assessee has sold land during the year under consideration and disputes have arisen between the rival parties , as to the chargeability to tax of gains arising on the sale of land as to the whether the said land is a capital asset within the inclusive definition of Section 2(14) , and also as to the quantum amount of capital gains chargeable to tax by invoking provisions of Section 50C of 1961 Act. It is the claim of the assessee that the land in question was an agricultural land. The first effective dispute has arisen between the rival parties as to whether the said land is within eight kilometers from the limits of municipal corporation of Allahabad , and thus falls within the inclusive definition of Capital Asset u/s 2(14). Before proceeding further, it will be profitable to identify the land sold by the assessee and other terms of the sale as are relevant for adjudicating the dispute between rival parties. The assessee has sold land for a total consideration of ₹ 48,00,000/- , vide two sale deeds both executed on the same date viz. 27th December , 2007. The said two sale deeds were executed by assessee in favour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t circle rate is ₹ 12,00,000/- per acre, but since it is situated on Mirzapur Road, the circle rate is higher by 50% , and hence for 0.2856 hectares, the circle rates comes to ₹ 12,75,000/-. It is also stated in this second sale deed that stamp duty is paid on circle rate. Now, before proceeding further, it will be profitable at this stage to reproduce provisions of Section 2(14)(iii) of the 1961 Act , as were applicable for the ay: 2008-09, which are reproduced hereunder: Definitions. 2. In this Act, unless the context otherwise requires,- *** *** 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- (i)*** (ii)*** [(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) or a cantonment board and which has a population of not less than ten thousand according to the last preceding census of which the relevant fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the definition of capital asset as specified in Section 2(14) of the 1961 Act, the agricultural land not only falling within Municipal limits of Allahabad shall be included, but also the agricultural land falling within distance of 8 kms. from the municipal limits of Allahabad in all directions , shall also be included. It is undisputed that the population within Allahabad Municipal limits as per last census of 2001 was 1.05 Million which is much higher than 10000(Source: Ministry of Housing and Urban Affairs). Coming back, such distance between the municipal limits and he agricultural land is to be measured having regard to the shortest road distance. Reference is drawn to CBDT circular no. 17/2015, dated 06th October, 2015, wherein Revenue has accepted this position and acceded that the amendment made by Finance Act, 2013 w.e.f. 01.04.2014 prescribes the measurement of the distance to be taken aerially , but the said amendment is to be applied prospectively from assessment year 2014-15 and subsequent assessment years. The above view was taken by Nagpur Bench of Hon ble Bombay High Court in the case of Smt. Maltibai R. Kadu(supra), which decision has been accepted by Revenue. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. CIT(A). The AO was informed on behalf of Officer-incharge( Nazul) that the limit of Municipal Corporation of Allahabad is upto Sargam Talkies at Mirzapur Road and upto Chhvan Railway. The AO was informed that Village Newada, Samogar is not within the Municipal limits of Allahabad. The AO also enclosed copies of Gazette. The AO also enclosed a certificate dated 08th October, 2012 issued by Tehsildar, Karchana, Allahabad to the effect that according to the official Gazette, Revenue village Newada, Samogar, Pargana Arail, Tehsildar Karchana is in district Allahabad and Village Samogar is within 4.5 to 5kms from the Municipal limits. These reports were confronted by ld. CIT(A) to the assessee. The AO also submitted to ld. CIT(A) that the Tehsildar Karchana has denied the issuing of certificate date 04.02.2011 furnished by the assessee. In this respect , the AO forwarded to ld. CIt(A), letter dated 15.10.2012 issued by the said authority. The said certificate issued by Tehsildar Karchana is reproduced hereunder : The ld. CIT(A) confronted these documents to the assessee. The assessee denied the truth of the certificate issued by Tehsildar dated 15.10.2012 and the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r certificate , the Aarazi No. 327 is on main road of Mirzapur is the remotest plot in Village Newada , Samogra. Its distance is 7.200 Kms from the limits of Allahabad Nagar Nigam. The said plot has been shown in the map, route chart number 1 by the points A B. Aarazi No. 318 is on the south of plot no 327 , 600 meters by the map. The total distance of the plot number 318 is 7.800 Kms. However, by second road route, the total distance is 8.900 kms from the Nagar Nigam , while by third road route , the distance of plots is 13.400 kms from Municipal limits of Allahabad. We have carefully gone through these certificates, maps, contentions of the assessee, the orders of authorities below, and it is an accepted position that for impugned ay: 2008-09 , we have to considered shortest road distance to measure the distance between the land in question and the Municipal limits of Allahabad, and not the aerial routes. So far as considering the shortest road distance , we have observed that there are three road routes to reach the land in question from Allahabad Municipal limits , and we are concerned with the shortest road route which is via Main Mirzapur road, and on perusal of the report da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Aarazi No 326 and 327 are on the main Mirzapur Road. The other plots are contiguous except Aarazi no. 243. The distance of Aarazi No 327 which is on main Mirzapur Road is 7.200 Kms from Nagar Nigam Limit i.e. SargamTalkies(ADA Mod), Naini , Allahabad , which is also reflected as Point A and Point B in the map. The decision relied upon by assessee in the case of CIT v. K.R.N. Prabhakaran(HUF) (supra) in fact supports the stand of Revenue as the Revenue is relying upon the certificates/reports issued by land revenue and survey authorities and are not relying on the report of the AO or any other officer/wing of Income-tax Department. The decision relied upon by assessee in the case of Smt. Sakunthala Rangarajan(supra) also does not support the assessee, as the distance measured by land revenue and survey authorities in the instance case were by access/approach road and it was not straight line or horizontal . Thus, we hold that the land in question is within 8kms from the Municipal limits of Allahabad and is a capital asset as defined u/s 2(14) and capital gains arising on the sale of land shall be chargeable to income-tax within the provisions of the 1961 Act. This effective issue i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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