TMI Blog2022 (3) TMI 830X X X X Extracts X X X X X X X X Extracts X X X X ..... d was not treated a capital asset, within the meaning of section 2(14) of the Income Tax Act. The disputed issue whether the distance for identifying geographical location of the agricultural land is to be taken by road or by aerial and whether the municipal limits enhanced by the State Government is to be considered as starting point or it has to be taken from notification issued by the Central Government dated 06.01.1994 etc., have been discussed and adjudicated. The Coordinate Bench held that notification issued on 06.01.1994 by the Central Government is to be considered and therefore the Coordinate Bench has decided the issue in favour of the assessee. We find no reason to interfere in the said order of the Coordinate Bench, therefore, respectfully following the binding precedent of the Coordinate Bench in case of Akash Deep Farms P. Ltd. (supra), we delete the addition made by the Assessing Officer on account of Long Term Capital Gain (LTCG). - Decided in favour of assessee. - ITA Nos. 477 to 486/SRT/2019 - - - Dated:- 16-2-2022 - Shri Pawan Singh, JM And Dr. A. L. Saini, AM For the Assessee : Shri Mehul K. Patel, AR For the Respondent : Ms Anupama Singla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r square meter was found on higher side, as compared to the sale instances obtained from Sub Registrar in the same/nearby area which is of ₹ 1.98 to 2.14 per Sq. Meter (Dumas) only. Thus, it is seen that there is huge variance found in the cost shown by the assessee and obtained by the Department as on 01.04.1981. 5. Therefore, assessing officer referred the matter to the DVO for valuation. The DVO in his report dated 31-12-2015 has estimated the FMV as on 01-04-1981 @ ₹ 42.60 per sq.meter. The assessing officer issued a show cause notice to the assessee, stating that why not FMV as on 01-04-1981 @ ₹ 42.60 per sq.meter, should not be adopted. 6. In response to the above show cause notice, the assessee submitted the written submission before the Assessing Officer dated 18.01.2016, which is reproduced by the assessing officer at page nos. 4 to 9 of the assessment order. 7. The Assessing Officer gone through the written submissions of the assessee and observed that fair market value shown by the assessee is higher side therefore assessing officer had taken the FMV of land as on 01.04.1981 at ₹ 42.60 per sq. meter, as suggested by DVO, and accordi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Asset within the meaning of section 2(14) of the Act, and not Liable to Capital Gain. Thus by mistake Assessee has treated as Capital Asset has worked out the Long Term Capital Gain Tax. The additional ground was admitted by CIT(A)and Remand Report was also called for from the AO.The agricultural Land Sold by Assessee and other Co-owners are not liable to Long Term Capital Gain Tax on the basis of following Explanations, Notification, Circulars, and Judgments of various Authority. For ready reference, section 2(14) as applicable to A.Y. 2013-14 is reproduced below: Section 2(14) in The Income- Tax Act, 1961 (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) or a cantonment board and which has a population of not less than ten thousand or (b) in any area within such dist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ereby specifies the areas shown in column (4) of the Schedule hereto annexed and falling outside the local limits of Municipality or Cantonment Board, as the case 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 above-mentioned provision of the Income-tax Act, 1961 (43 of 1961). SCHEDULE Sl No. Name of the State or UT Name of the Municipality Or Cantonment Board falling in the State/UT mentioned under column (2) Detailing of areas falling outside the local limits of Municipality or Cantonment Board; etc., mentioned under column (3) (1) (2) (3) (4) 8. GUJARAT 1. Ahmedabad Areas upto a distance of 8 km. from the Municipal limits in all directions. 37. SURAT Areas upto a distance 8 kms. From the municipal limits in all directions. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... point for consideration of this Hon'ble Tribunal is that for the purpose of deciding the limits of Municipal Corporation, whether the limits as prevailing on the date of issue of Notification as on 6/1/1994 is to be applied, or whether the limits of Municipal Corporation prevailing on the Date of sale is to be applied. a) Now as on Dt. 06/01/1994, Surat City Limit was admittedly ending at Village Piplod. Thus the land is situated beyond 8 Km from the Limit of Surat Municipal Corporation There by it is complying with the Notification No. (SO 9447) (File No.164/3/87-ITA.I) dated 06.01.1994. Most importantly, it is submitted that there is no such Notification published by the CBDT in the Official Gazette after the issue of the above Notification. Now in view of the above stated Notification Dt. 06/01/1994, particularly Explanation 2 of the Notification and I.T.A.T Judgment of Ahmedabad, Jaipur, Indore Bench, Karnataka High Court as well as decisions of the other courts, it is humbly submitted that Assessee's Land is not covered by the definition of Capital Assets and as a result not Liable to Capital Gain Tax. 11. On the other hand, Ms Anupama Singla, Sr. DR f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dule, it means municipal limit of Surat up to 8 Km. Nowhere, the notification states that municipal limits as on 06/01/1994 have to be restricted. In fact, such an interpretation would be absurd as the municipal limits are decided by the State Authorities. It is pertinent to mention that the entire village of Sultanabad is comprised within the limit of Surat Municipal Corporation vide Collector of Surat letter No.19.06.2006 and notification dated 20.07.2006 declared by the Urban Development Authority. Vide Notification No.62/2008 dated 23.12.2008 of Surat Municipal Corporation, the area was declared as a residence zone under T.P. Scheme No. 80. So, the piece of land was well covered with in the limits of Surat Municipal Corporation. Definition of the limits of Municipal area comes within the purview of State Government it is not a Central Govt. subject neither the notification anywhere intends to restrict the municipal limit as on 06.01,1994. In the last, almost 26 years since this notification was gazetted, there has been much change in the urban landscape of the country and certainly Surat city too. Therefore, it is most humbly prayed that defining of Municipal Limit being a St ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, based on the facts narrated above, Learned Counsel for the assessee invited our attention to the order dated 11.08.2015, passed by the Division Bench of ITAT Ahmedabad, in the case of Akash Deep Farms Pvt. Ltd in ITA Nos. 2138/AHD/2012 2564/AHD/2012, for the AY.2009-10, on identical and similar facts, whereby the issue relating to agricultural land sold was not treated a capital asset, within the meaning of section 2(14) of the Income Tax Act. The disputed issue whether the distance for identifying geographical location of the agricultural land is to be taken by road or by aerial and whether the municipal limits enhanced by the State Government is to be considered as starting point or it has to be taken from notification issued by the Central Government dated 06.01.1994 etc., have been discussed and adjudicated. The Coordinate Bench held that notification issued on 06.01.1994 by the Central Government is to be considered and therefore the Coordinate Bench has decided the issue in favour of the assessee. Therefore, Learned Counsel for the assessee submitted that the issue is squarely covered by the aforesaid order of the Tribunal, a copy of which was also placed before the Benc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 35,25,681 3,99,65,826 *transaction at Sr.No. 2 is Offered to tax as Long term capital gains i.e ₹ 79,26,870/- (after indexation) From the above lucid chart it is seen that the assessee has made a total profit of ₹ 3,99,65,826/- from sale of the lands situated at Kaneti and Telav villages of Sanand Taluka of Ahmedabad District during the year. From these sale transactions the assessee has offered to tax only the gains resulting from transaction no.2 as Long term capital gains since the land in question has been considered as Non-agricultural. The balance i.e ₹ 3,99,65,826 - ₹ 81,21,060 = ₹ 3,18,44,766 has not been offered for tax and claimed as exempt u/s 10(1) as agricultural income. 4. The assessee has contended that this land was situated beyond 8 KMs. of municipal area. It was an agriculture land, and therefore, it is to be excluded from the definition of capital asset provided in section 2(14)(iii) of the Income Tax Act. Thus, any gain accrued to the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... artment. Considering the entire submissions and reports referred earlier, this issue can be divided in two parts-(l) while computing distance from municipal limit, which distance- air distance or road distance to be considered. (2) Which municipal limit should be considered for computing distance from agriculture land- municipal limit on the date of sale or municipal limit on the date of issue of the notification by the government or municipal limit as on date. As regards the first part of the issue, appellant submitted decision of honourable Punjab and Haryana High Court in which it is clearly held that it is the road distance from municipal limit and not air distance to be considered. Several tribunal decisions have also upheld this view. There is no judicial decision contrary to this view. Even if Department has not accepted these decisions, these are binding on the appellate authorities. Respectfully following these decisions assessing officer is directed to compute distance of the agricultural lands sold by the appellant by taking road distance from the limits of Ahmedabad Municipal Corporation. As regards second part of the issue as to municipal li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d suggestions were invited from the public within a period of 45 days from the date the copies of the Gazette of India containing such notification became available to the public; And whereas copies of the said Gazette were made available to the public on February 13, 1991; And whereas the objections and suggestions received from the public on the said draft notification have been considered by the Central Government; Now, therefore, in exercise of the powers conferred by item (B)of clause (ii] of the proviso to sub-clause (c) of clause (JA] and item (b) of sub-clause (iii] of clause (14] of section 2 of the Income-tax Act, 1961 (43 of 1961], and in supersession of the notification of the Government of India in the erstwhile Ministry of Finance (Department of Revenue and Insurance] No. S.O. 77(E], dated February 6, 1973, the Central Government having regard to the extent of, and scope for urbanisation of the areas concerned and other relevant considerations, hereby specifies the areas shown in column (4) of the schedule hereto annexed and falling outside the local limits of municipality or cantonment board, as the case may be, shown in the corresponding entry i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l gains and if the distance is beyond 8 km, the agricultural lands sold will be outside the purview of capital asset and hence no capital gains can be charged on the same. This ground is accordingly disposed off. 6. Before us, limited dispute is whether the distance for identifying the geographical location of the agriculture land is to be taken by road or by aerial. Second fold of dispute is whether the municipal limit enhanced by the State Government is to be considered as starting point or it is to be taken from notification issued by the Central Government dated 6.1.1994. The ld.CIT(A) has held that notification issued on 6.1.1994 by the Central Government is to be considered. 7. Ld.DR relied upon the order of the AO. On the other hand, the ld.counsel for the assessee contended that Hon ble Punjab Haryana High Court in the decision referred by the ld.CIT(A) in the case of CIT Vs. Satinder Pal Singh, 229 CTR 82 has held that distance requires to be computed for identifying the geographical location of the agriculture land from the municipal limit is concerned, it is to be measured by road, and if the distance is beyond 8 KMs, then that land would not fall within ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n respect of earlier periods. 2. The matter has been examined in light of judicial decisions on the subject. The Nagpur Bench of the Hon. Bombay High Court Vide order dated 30.03.2015 in ITA 151 of 2013 in the case of Smt. Maltibai R Kadu has held that the amendment prescribing distance to be measured aerially, applies prospectively i.e. in relation to assessment year 2014-15 and subsequent assessment year. For the period prior to assessment year 2014- 15, the High Court held that the distance between the municipal limit and the agricultural land is to be measured having regard to the shortest road distance. The said decision of the High Court has been accepted and the aforesaid disputed issue has not been further contested. 3. Being a settled issue, no appeals may henceforth be filed on this ground by the officers of the Department and appeals already filed, if any, on this issue before various Courts/Tribunals may be withdrawn/ not pressed upon. This may be brought to the notice of all concerned. [F. No. 279/Misc./140/2015-ITJ] (D S Chaudhry) CIT (A J), CBDT 9. Thus, if the finding of the ld.CIT(A) is being examined in the light of the circular ..... X X X X Extracts X X X X X X X X Extracts X X X X
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