TMI Blog2022 (5) TMI 1403X X X X Extracts X X X X X X X X Extracts X X X X ..... l Ltd., is located in the said Notified area. The composition of Gujarat Panchayat Act, 1993 ceased to apply in respect of Notified area from the date of Notification. Further, as per section 264B of the said Act a person or committee appointed for assessment / recovery of taxes of such area shall be deemed to be the Municipal Borough . On the basis of such reasons, the Ld. CIT(A) held the re-opening as valid. Agricultural land OR capital asset - whether the land is a capital asset under section 2(14) r.w.s. 2(14)(iii)(a)? - HELD THAT:- As satellite images shows that no agriculture activities were carried on the land. DR also submitted that report of NRSC is scientific report and conclusive proof. We do not find merit in the submissions of the ld DR, as disclaimer, attach to the said report, NRSC, itself reported the shape file provided by CIT(A) did not match with field boundaries of the reference satellite data, with implication on accuracies of location area. Further, in absence in absence of adequate number of GCPs, rubber sheeting technique carried out also did not yield the desirable results. And that concurrent ground truth was not available for thus study and interp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed and the assessing officer is directed to delete this addition. In the result, the corresponding ground of appeal is allowed. - ITA No. 3021/AHD/2014 - - - Dated:- 13-4-2022 - Shri Pawan Singh, Judicial Member And Dr. Arjun Lal Saini, Accountant Member For the Assessee : Sh. Sourabh Soparkar Senior Advocate with Ms Urvashi Shodhan Advocate, S/Sh Rasesh Shah- CA, Hiren Vepari CA, Rajesh Upadhyay,Sapnesh Sheth, CA P.M. Jagasheth CA For the Revenue : Miss Anupma Singla Additional Commissioner of Income-tax / Senior Department Representative ORDER UNDER SECTION 254(1) OF INCOME-TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER: 1. This is one of the appeals in Hazira Land Acquisition Group appeals. All the appeals pertaining to Hazira Land Acquisition are grouped together as there are certain common facts in all the appeals. The assessee(s) have raised certain common grounds of appeals, therefore to avoid and conflicting decision all appeals are clubbed and with the consent of parties this appeal was treated as lead case. The counsel(s) in various appeals as well as learned Senior departmental representative have agreed that the decision taken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned Commissioner of income Tax (Appeals) has erred in confirming the action of assessing officer in treating agricultural income of Rs.5,000/- ass unexplained credit u/s 68 of the I.T. Act, 1961. 7. It is therefore prayed that the assessment framed u/s 143(3) r.w.s.147 may please be quashed and/or the above additions/disallowance made by Assessing Officer and confirmed by learned Commissioner of Income-tax (Appeals) may please be deleted. 3. Brief facts of the case as gathered from the order of lower authorities are that the assessee filed her return of income for AY 2007-08 declaring total income of Rs.1,91,690/-. Subsequently, case of assessee was re-opened on 21.03.2012 under section 147of the Act on the basis of information that assessee has received compensation on account of compulsory acquisition of her land by Special Land Acquisition Officer, Hazira for M/s Essar Steel Ltd. The land of assessee falls in Survey No. 215/5 situated at village Hazira, Taluka Choryasi, District Surat, was acquired by Special Land Acquisition Officer. As per information received from Special Land Acquisition officer that assessee has received Rs.20 lakh as compensation for her la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udes standing trees, shrubs rooted in the earth part of land and these cannot be treated separately. The compensation was paid for trees; shrubs, bore well and pucca house, which were consideration for agricultural land. The assessee in other submission also stated if capital gains is calculated it will be nil. The assessee furnished the working of capital gains. The assessee requested for dropping the proceedings under sections 147 read with section (r.w.s) 148 of the Act. The explanation / reply furnished by assessee was not accepted by Assessing Officer. The Assessing Officer held that assessee has not produced any evidence that agricultural activities were carried out on the said land. In absence of any documentary evidence, the contention of assessee that vegetable were grown on the land was not accepted by Assessing Officer. The Assessing Officer further noted that he gathered information from Esser Steel Ltd., vide letter dated 20.11.2012 that assessee received compensation of Rs.7.00 lakh against the value of land and Rs.13 lakh received for pukka huts, pukka house, water tank. On the basis of information received from M/s Esser Steel Ltd. The Assessing Officer issued show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessing Officer took his view that possibility of agricultural activities in this area is nil. 5. The Assessing Officer on the basis of information collected from the office of Sub Registrar Athwa, Surat-1; regarding cost of acquisition of the land for the year 1981 treated the cost of acquisition of land in 1981 at Rs.2.05/- per sq.mt. The valuation report dated 28.01.2013 of the Government approved valuer furnished by the assessee, who suggested the rate of at Rs.150/- per sq.mt as on 01.04.1981, was not accepted by assessing officer. It was held that in adopting this rate, as per the submissions of assessee capital gains working is nil. The Assessing Officer adopted the value on the basis of information from office of Sub-Registrar Athwalines Surat at Rs.2.05/- per square metres on 01.04.1981 and computed the cost of acquisition on the share of assessee at Rs.40,289/- and worked out LTCG of Rs.6,59,711/-. 6. For other part of compensation of Rs. 13.00 lakh, which was classified by Assessing Officer against the pucca hut used was treated as income from other sources . Further the Assessing Officer held that the assessee has shown agricultural income of Rs.5,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t / recovery of taxes of such area shall be deemed to be the Municipal Borough . On the basis of such reasons, the Ld. CIT(A) held the re-opening as valid. 9. On issue No.2 which relates to agricultural land not a capital asset . The Ld. CIT(A) observed that Mamlatdar, Taluka, Choryasi, District Surat vide his letter dated 16.01.2013 mentioned that population of the nine villages falling within the Notified area as per census of 2001 was more than ten thousand. The Assessing Officer already held that Notified area comprises of land situated in these nine villages and therefore, population of these nine villages are to be considered for the purpose of Section 2(14)(iii)(a). The assessee claimed that her land is situated in village Hazira and its population is only 2137, which alone should be considered for the purpose of this section. The assessee in her alternative and without prejudice submissions claimed the benefit of Section 10(37) by claiming that even if the land acquired was a capital asset no capital gains is leviable, as the land was acquired under compulsory acquisition. On such contention of assessee, the Ld. CIT(A) remanded the matter back to Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the issue was held in favour of assessee by holding that land was acquired beyond eight kilometre within Municipal Corporation. Thus, issue No.3 as framed in para-8.4 by Ld. CIT(A) was decided in favour of assessee. So far as part first issue is concerned, which relates to section 2(14)(iii)(a) of the Act, the ld. CIT(A) observes that as per Notification dated 30.01.1997 (Notified area of Hazira) in assessment order, nine villages were included in the said Notified area. The assessee claimed that as per the certificate of Chief Officer Notified area, the population of Notified area is only 2137, and that such information is available on Net/ website. However, Assessing Officer relied on the certificate issued by Mamlatdar in which individual population of each village included in the Hazira Notified area and total population exceed ten thousand. The Ld. CIT(A) further recorded that examining this issue, he found that several survey numbers falling in nine villages were notified by Notification dated 30.01.1997. If the said notified area is considered as a unit, the population of only those Survey numbers which have been included in the said Notification, has to be considered for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he relevant facts. The assessee is required to establish that land was used for agricultural purposes and only when it classified as agricultural land. The District Agricultural Officer has confirmed that most of the land is rocky, affected by sea water, no irrigation facilities and only grass is grown and unsuitable for irrigation. Thus, it cannot be accepted that land was used for agricultural operation or was capable for operation. No evidence of agricultural income or activities in recent past has been furnished. Somehow Notified area were acquired in past is a part of Surat Urban Development Authority. On the basis of his observation, Ld. CIT(A) held that the land acquired was not agricultural land and is a capital asset within the definition under section 2(14) of the Act. Once the land is held as capital asset, the issue of applicability or sub-clause (a) or (b) or section 2(14)(iii) do not arise in such cases and profit on transfer of such land is assessable under the head of capital gain . 13. On the other part of ground No.2 regarding deduction under section 10(37), the Ld. CIT(A) held that the assessee failed to establish that land was used for agricultural purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es . The constructed property on the land is a capital asset and income earned on sale or acquisition is assessable under the head capital gains only. The Ld. CIT(A) further observed that the assessee either at the assessment stage or appellate stage has not furnished any evidence or details of cost of acquisition, so he estimated @ 50% of Rs.13.00 lakh as cost of acquisition. Therefore, the addition was reduced to Rs.6,50,000/- and directed the assessing officer to assess under the head capital gain in place of income under the head other sources . 16. On the remaining issue which relates to cost of acquisition of land, as has been taken at Rs.2.50/- per square meter by Assessing Officer and Rs.150/- per square meter by assessee, the Ld. CIT(A) held that this ground is relevant only if the population of Notified area is more than ten thousand. Since the Assessing Officer has considered the cost of acquisition at Rs.2.05/- per square meter on the basis of information collected by issuing notice under section 133(6) from office of Sub-Registrar, Surat. The Assessing Officer rejected the valuation report furnished by assessee on the ground that valuation has been done on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d dated 31.07.2017, copy of which is placed on record at page 14 to 23 with its translation at page 36 to 64 and the second award dated 21.01.2008 passed by Special Land Acquisition Officer, copy of which is placed also on record in its translation. Both awards can be regarded as compulsory award, but even then the provision of section 45(5) has no application to invoke this provision. In order to invoke this provision, it is necessary that assessee must receive compensation in two parts, firstly, under award and secondly, by way of enhancement. To support his submission, the learned Senior Counsel for the assessee relied on the decision of Hon'ble Kerala High Court in the case of CPL Lonappan Sons 265 ITR 101 (Ker). In the present case, the whole group of matters, there is no enhancement at all, the amount is paid once and for all. If there be situation, the provision of sub-section (5) of Section 45 cannot be invoked then the case would fall only under sub-section (1) of section 45. If the case falls under sub-section (1) of section 45 then the capital gains on compulsory acquisition of land can be taxed only in the year in which the title in the land vested in the Governmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll as second award dated 21.01.2008, the land is categorised as agricultural land. The lands in question were fertile and agricultural operation was carried out and valued at Rs.300/- per square meter. In the second award the fact that agricultural operation are carried out is also certified by District Agricultural Officer, Surat vide his letter dated 16.06.2014 as record in the second award. Where the lands are fallow or were incapable of being cultivated compensation is awarded at a token rate of Rs.1.00/- per square meter. The learned Senior Counsel for assessee submits that so far as first award is concerned, no much discussion about agriculture activities, because it was a consent award. However, the fact that agriculturists were paid compensation @ Rs.247/- per square meter much closure to the compensation of Rs.300/- per square meter under the second award clearly shows that these lands are also agricultural land. The awards were passed by officers of State Government. The correctness of the statement made therein cannot be doubted. In the award, the Special Land Acquisition Officer has clearly recorded the nature of land as agricultural land. The observation of Assessing O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be put to the agricultural use; if so, whether, it was put to an alternative use; whether, such a cessor and/or alternative user was of a permanent or temporary nature; g. whether the land, though entered in revenue record, had never been actually used for agriculture; whether the owner meant or intended to use it for agricultural purposes; h. whether the land was situated in a developed area; whether its physical characteristics, surrounding situation and use of the lands in the adjoining area where 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 as sold and whether the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... municipal services being provided or proposed to be provided by industrial establishments in that area and such other factors as may be deemed fit by public Notification, specified to be an industrial township. This would mean in a simple meaning that industrial township set-up under this proviso would not be Municipality . As a matter of fact, it cannot be municipality. As such, Hazira Notified area is such an industrial township, therefore, not a municipality. The learned Senior Counsel for assessee submits that on the issuance of the Notification under Section 16(1) of Gujarat Industrial Development Act, 1962, Hazira Notified area become a Notified area. Thereupon the provisions of Chapter-XVI-A Gujarat Municipalities Act, 1963 (Guj.35 of 1964) would apply. Hazira Notified area would then be an Industrial Township area under Section 264A of the said Act. Under section 264B of the said Act, the State Government has a power to apply any section of the said Act or part thereof, or the Rules in force as maybe applied to a municipal borough to such notified area. Section 264C would create a fiction that for the purposes of any section of the said Act which may be applied to a noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ownship under the proviso to clause (i) to Article 243Q of Constitution of India. Thus, Hazira Notified area under Section 16 Gujarat Industrial Development Act,1962 become a Notified area under new Section 264A of Gujarat Municipalities Act, 1963 (Guj.35 of 1964) and would mean an Industrial Township area under proviso to clause-(i) of Article 243Q of the Constitution of India. On the basis of aforesaid legal position, Ld. Sr. counsel for the assessee submits that Hazira Notified area is not a municipality . 25. In second submission, the learned Senior Counsel for the assessee submits that Hazira Notified area did not have population of more than ten thousand as per last census in 2001.The assessee have placed on record a certificate of Mamlatdar which clearly established that population as per last census 2001 data was only 2137. The Assessing Officer did not accept the contention on the premise that Hazira Notified area is a much bigger area in which as many as nine villages comprised in. For that purpose, Assessing Officer relied on the certificate of Mamlatdar dated 16.01.2013 according to which the total population of nine villages comprising of Hazira Notified area was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... compulsory acquisition under any law or a transfer the consideration for which is determined or approved by the Central Government or the Reserve Bank of India and (iv) such income has arisen from the compensation or consideration for such transfer received by such assessee on or after the 1st day of April, 2004. The learned Senior Counsel for the assessee submits that if a view is taken that land are not situated within a municipal area under the first submission. This condition automatically stands satisfied. For second condition, the learned Senior Counsel for the assessee submits that the agricultural operation are carried out is also noted and is certified by District Agricultural Officer, Surat vide his letter dated 16.06.2014. The awards are passed in financial year 2007-08, obviously, this would prove beyond doubt the land was being used for agricultural purposes, not only on date of acquisition but till the date of acquisition all throughout, but in any case for more than two years. For third condition, it was explained that admittedly first award is by consent; however, as held by Hon'ble Supreme Court in the case of Ghanashyam (HUF) 315 ITR 1 (SC) a consent award wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 630 (Ker). 29. Shri Rasesh Shah, one of learned Senior Authorized Representatives (hereinafter referred to Ld. AR) for the assessee, who is also representing number of other assessee s has also filed his detailed written submission on the validity of re-opening, on the issue that agricultural land is not capital asset, on the rejection of claim of exemption 10(37) and on the issue of valuation of built up house (pucca structure) and valuation of land as on 01.04.1981 and addition of Rs.5,000/- by treating the agricultural land as unexplained credit under section 68 of the Act. The Ld. AR for the assessee submits that reasons recorded by assessing officer also can be summarized in three parts i.e., (a) land situated within Notified area is capital asset; (b) it is a case of transfer of capital asset by way of compulsory acquisition and Section 45(5) is applicable and that assessee had not filed return of income. The ld AR for the assessee submits that the assessee was the co-owner of 1/7 share in agriculture land at Block No 215/5 of survey no. 37 situated at Village Hazira, Taluka Choryasi, District. The said agriculture land was acquired by the State Government for the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or reopening, the ld AR for the assessee submitted that as per section 2(14)(iii)(a), the agriculture land can be treated as Capital Asset only when the population of the Notified Area exceeds 10,000. No such prima facie statement regarding the population was made in the reasons recorded. The assessing officer has not referred the census of the notified area in the reasons recorded. As per the decision of the Hon ble Supreme Court in G.M. Omer Khan Vs. ACIT (196 ITR 269), it has been held that the population of the entire notified areas is to be considered for the purpose of section 2(14)(iii) (a). Even in the assessment order, the assessing officer has not indicated the census of the Notified Area. The Assessing Officer has referred the census of nine villages that were included in the Notified Area as per the certificate of Mamlatdar dated 16.01.2013. The total of the population of these nine villages comes to 38,000. In fact, only two villages viz. Hazira and Suvali were included in the Hazira Notified Area. The other seven villages were described as boundaries in the Notification. Further, it is to be noted that not all the Survey Numbers of the land situated in said two villag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble to tax. On the second ground of reasons recorded, the ld Sr.AR for the assessee submits that the assessing officer has formed the belief that income in the form of capital gain, chargeable to tax has escaped assessment on the basis that the assessee had received Rs.26,25,000/- as compensation for surrender and transfer of her ownership rights in land on account of compulsory acquisition. The assessee in fact, received Rs.20,00,000/- and not Rs.26,25,000/- during the year under consideration. Further, the amount mentioned as of Rs.26,25,000/- is also wrong as the assessee was entitled to receive Rs.25,00,000/- at 1/7th share. It is to be noted that in the reasons recorded, the Assessing Officer formed a belief that Rs.26,25,000/- has escaped assessment without application of mind. This is because, the receipts may result in loss and he has worked out the escapement of income only on the basis of the gross receipts, without giving any deduction for indexed cost of acquisition and improvement. 31. The Assessing Officer was not in possession of information about period and cost of acquisition of the land that was acquired. The Assessing Officer cannot form belief that income c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r wrongly stated in the reasons recorded that the assessee did not file the return of income. The learned CIT(A) changed the reasons recorded by giving reference to the return of income filed by the assessee that the assessee did not show income from capital gains in the original return of income filed by the assessee as in her version, the land was not a capital asset and even otherwise, the deduction u/s. 10(37) was available. It is well settled that even in case, where the original assessment is made without scrutiny, the requirement of the Assessing Officer forming the belief that income chargeable to tax has escaped assessment would apply. To support his submissions the ld Sr.AR for the assessee relied on the decision in case of Inductotherm (India) P. Ltd. Vs. M. Gopalan, DCIT, reported in 356 ITR 481 (Guj) (2013).The ld AR for the assessee also submitted that it is well settled that the notice of reopening can be supported on the basis of reasons recorded by the assessing officer, the assessing officer cannot supplement such reasons as has been held by Hon ble Bombay High Court in the case of Hindustan Lever ltd. [(2004) 268 ITR 332]. The third principle of law which is equa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. To buttress his submissions the ld AR for the assessee relied on the decision of Delhi Tribunal in case of Bir Bahadur Singh Sijwali Vs. ITO [ITA No. 3814/Del/2011 dated 20.01.2015] and Hon ble Supreme Court in case of ITO Vs. LakhmaniMewal Das [103 ITR 147-SC].The ld AR for the assessee submits that Hon ble Supreme Court in Ganga Saran Sons Vs. ITO [130 ITR 1] held that reasons to believe is stronger than the expression is satisfied . It was also observed that the belief entertained by the assessing officer should not be irrational or arbitrary. In other words, it must be reasonable and must be based on reasons which are material . The reliance is also placed on the following decisions; BawaAbai Singh V/s. DCIT [253 ITR 83 (Del)]., SheoNath Sing vs. Appellate Assistant C.I.T. [82 ITR 147 (SC)], Balkrishna H. Wani V/s. ITO [321 ITR 519 (Bom)], PCIT V/s. Rajesh D. Nandu (HUF) (2019) 261 Taxman 110 (Bom)(HC), CIT Vs. Paramjit Kaur[311 ITR 38 P H], Sagar Enterprises Vs. ACIT (2002) 257 ITR 335 (Guj) (HC), Mumtaz Haji MohmadMemon V/s. ITO (2018) 408 ITR 268 (Guj)(HC), Sunrise Education Trust V/s. ITO [2018] [92 Taxman 74 (Gujarat) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rm No G of the Award, the assessee received aforesaid sum on account of trees, construction etc. No bifurcation was furnished in the Award or by the Essar Steel Ltd. between trees, construction and other items. It was urged that the compensation includes the compensation for trees and well as per Form No G of the Award. No bifurcation was furnished in the Award or by the Essar Steel Ltd. So no addition for LTCG for transfer of the building can be made by assuming it at Rs. 13,00,000/-. 35. The ld AR for the assessee submits that Hon ble Gujarat High Court in the case of CIT Vs. The Special Land Acquisition Officer (supra) while hearing appeal against the order passed under section 201/201A, against the Special Land Acquisition officer for not making TDS on payment of compensations in respect of the impugned land (which is under dispute in the present appeal) held that any compensation for loss of fruit bearing trees must necessarily be part of the compensation for agricultural land . Further in the case of ITO Vs. G.S. Lenkha [(2019) 106 taxmann.com 198 (Cochin-Trib) (TM)] also held that where trees standing on an agricultural land are transferred along with the land as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case. In the revenue records, it was clearly reflected that assessee was in possession of trees. In absence of the bifurcation, the compensation of Rs.13,00,000/- should be considered towards acquisition of trees and water tank or huts for storing agriculture produce. Accordingly, no estimate should be made for acquisition of the building and compensation of Rs.13,00,000/- should be considered as part of land component. Accordingly, the ld AR for the assessee submits that it is transfer of agriculture land not falling under clause (iii)(a) or (iii)(b) of section 2(14) of the Act. Otherwise the exemption under section 10(37) should be allowed on the basis of submissions of learned Senior Counsel (supra). 39. The ld AR for the assessee further submits that even if part of the amount of Rs.13,00,000/- is considered as compensation for acquisition of the building, the deduction for the cost of construction or improvement should be given as building is a depreciable asset. The compensation cannot be more than the cost of the building so it results in to a loss as the compensation of building should be less than the cost of acquisition of the building. Anyway, the loss arising out o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentioned viz. Bhatpore, Mora, Suvali were in the same notified area and the range of price per square meter varied from 0.15 per square meter for Mora Village to Rs. 10/- per square meter for Bhatpore, Icchapore, Suvali, Mora etc which are residential areas today, while villages like Hazira, Kawas etc. were industrial areas as on date. The ldSr.AR for the assessee submits that the valuation given by the Government Approved Valuer was correct considering the location of the property, the proximity of main Surat City in those days, the fertility of the land and the approach of the impugned land from the main road etc. The location of the land was near to the old Surat City and situated in industrial zone, therefore, there was a very high potentiality of future growth. Moreover, the said land was under cultivation at that time having good fertility value and the agriculturists of these areas used to grow vegetables and fruits in their fields and supply the same to the population of Surat city. In the year 1981, there was no concept of Jantri value or the circle rate and therefore, the sale deeds were executed as per free will and convenience of the purchaser and seller. Moreover, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and NTPC acquired the land before 01.04.1981 for their big industrial projects. 42. The ld AR for assessee submits that Tribunal and the Hon ble jurisdictional High Court drew distinction between the Kharbada land and Jirayat land in case of CIT Vs The Special Acquisition Land Officer (supra) wherein it was held that the report of the Agriculture Officer is of general nature and the award did segregate the Kharbada land for which compensation at a much lower rate of Re.1.00/- per acre was paid as against the Jirayat land which was compensated at the rate of Rs. 300 per square meter. The reliance is placed on the decision of the Hon ble Karnataka High Court in the case of M. Govindaraju Vs ITO AMR [(2015) 377 ITR 0243 (Kar) wherein it was held that Assessee had provided the reasons for determining Rs.225/- per square feet as the fair market value of the property by producing the relevant material, including valuation report of a registered valuer, which all have been ignored while arriving at the price of Rs.84/- per square feet. The Assessing Officer assessed the value of the property as on 01.04.1981 on the basis of sale deeds of some nearby properties registered for such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in will be in negative and the assessee is not liable to pay capital gain tax. The assessee has placed on record the following documents:- Reply/letter filed before Assessing Officer dated 17.01.2013 Reply/ letter filed before Assessing Officer dated 18.09.2012 Reasons recorded for reopening the assessment under section 148 Notice under section 148 of the I.T. Act dated 21.03.2012 Form 8-A and proof of revenue records of agricultural land holding in Form No.7/12 Certificate of the Chief Officer, Notified Area Office Hazira certifying the population of Hazira Notified Areas as 2137 as per census record 2001 Details of population in Hazira as per last censes 2001 Certificate dated 15/01/2013 issued by the Mamlatdar Office, Taluka Choryasi Notification of Industries and Mines Department, Government of Gujarat dated 30.01.1997 Valuation report regarding value of land as on 01.04.1981 Notification of Industries and Mines Department dated 30.01.1997 passed under Chapter XVI-A of Gujarat Municipalities Act, 1963 extending provisions of Notified Area to Hazira Industrial area. Notification published under Land Acquisition Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ituation, where in cases where compensation is received in a single tranche, the same would not come under the provisions of section 45(5) of the Act. Section 45(5) is applicable to all cases of compulsory acquisition including the cases where compensation is decided by Consent Award as held by Hon'ble Supreme Court in the case of Balakrishnan (supra). For determination of land compensation sub-clause (a) provides for compensation received before enhancement and sub-clause (b) provides for adding the amount of enhanced compensation. If there is no enhancement compensation, in the cases of compulsory acquisition, it will be quite far-fetched to say that provisions of section 45(5) will not be applicable. 46. In without prejudice, submission of learned Senior DR for the Revenue submits that a compensation was received in multiple tranches (i) by way of consent award under section 11(2) dated 31.07.2007, then by regular award by Special Land Acquisition Act, 1894 dated 21.01.2008 and payment through mediation centre. The learned Senior DR for the Revenue by referring decision of Gujarat High Court in Dhaniben Vs. State (Special Leave Application 784 of 2010) dated 08.02.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... son to believe that income chargeable to tax has escaped assessment. The learned Senior DR for the Revenue submits that the submission on behalf of assessee that reasons recorded are not correct is misplaced. The learned Senior DR for the Revenue prayed to dismiss the contention of learned Senior Counsel as well as of learned AR for the assessee and to reject the corresponding grounds of appeals, where so ever has raised in the group appeals of several assessee(s). 48. On the second issue, where land in question was agricultural land, and if so, it is not a capital asset, the learned Senior DR for the Revenue submits that Ld. Senior Counsel for assessee while making his submissions invited attentions on various parts of award passed by Special Land Acquisition Officer and contended that land in question was agricultural land and therefore compensation was granted on the rate applicable to agricultural land. The learned Senior DR for the Revenue submits that during the course of assessment proceedings, the District Agricultural Officer submitted his report to the Assessing Officer that most of the land is rocky, having no irrigation facilities has high tide from the sea, and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rea which is situated within the jurisdiction of 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. The learned Senior DR for the Revenue submits that on perusal of aforesaid provision, it can be noted that for the purpose of this section, a notified area committee has to be given the same treatment as municipality . The word municipality has not define anywhere in the Income Tax Act. Part IX-A of the Constitution of India, Article 243P(e) defines Municipality; which means an institution of self-government constituted under Article 243Q. The learned Senior Counsel for the assessee also contended that Hazira Notified area was not constituted under the Gujarat Municipalities Act, 1963rather the same was constituted under Gujarat Industrial Development Act 1962, therefore only limited section of Gujarat Municipalities Act, 1963 (Guj.34 of 1964). The learned Senior DR invited our attention to the Notification issued by Industries and Mines Development dated. 30.01.1997 and after reading the contents of Notification learned Senior DR submits that by a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it enables the State Government to equate an industrial area under the GIDA with notified area under the Gujarat Municipalities Act, by a fiction. This fiction can be brought by a Notification section 16 of Gujarat Industrial Development Act, 1962 and also a notified area so created would be governed by all provisions of Gujarat Municipalities Act, applicable to the Notified area. On the basis of aforesaid submission, The learned DR submits that Hazira Notified area is a deemed municipality under Income tax Act and very much comes under the purview of section 2(14)(iii)(a) of the Act. 53. On the submissions of learned Senior Counsel for the assessee that the population of Hazira Notified area was not more than ten thousand as per last census 2001 and that Hazira Notified area is a much bigger area comprising of nine villages and for the purpose of determination of population, in which population of the villages where land was acquired has to be considered and not that of the entire area. The learned DR for the Revenue submits that on the perusal section 2(14)(iii)(a) clearly provides for consideration of the population of the entire municipality or a notified area or a cant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . A reference was made under section 250(4), to the National Remote Sensing Centre ( NRSC for short), Hyderabad a unit of Indian Space Research Organisation (ISRO), to determine the nature of crops produces, number of trees existing, whether any construction /structure existed on the land in question on the relevant dates from the analysis of the satellite images since year 1999 to 2012. In response to reference of Ld. CIT(A), NRSC furnished a comprehensive report, based on remote sensing visuals and other data taken from satellites. The report of NRSC, Hyderabad received in September, 2016. In the report, it was found that no agricultural activities or evidence of any crops have been found on the various parcels of land from the report 1999 to 2012. It was further contended that report of NRSC, Hyderabad was not available when majority of appeal(s) were decided by ld CIT(A) and only in ten cases, the report was considered. The report of NRSC, Hyderabad is relevant to the issue involved in all the appeal(s) and needs to be considered for fair and judicious adjudication. The revenue prayed for admission of such additional evidence that consideration of additional evidence would be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... various paragraphs of reports, submits that in the disclaimer, attach to the said report, NRSC, Hyderabad reported the shape file provided by CIT(A) did not match with field boundaries of the reference satellite data, with implication on accuracies of location area. And in absence in absence of adequate number of GCPs (Good Clinical Practices), rubber sheeting technique carried out also did not yield the desirable results. Concurrent ground truth was not available for thus study and hence, interpretation is exclusively based on the manifestation of features and experience of the interpreter, which could be subjective. In the last observation in the disclaimer it is mentioned that results have to be interpreter and corroborative in association with the ground observation, available, if any. Thus, the report itself contents vague observation and cannot be used as evidence or conclusive or expert report based of any scientific evidence. Even otherwise, the court is fully empowered to assess or re-assess the veracity of such report. The assessee(s) during the appellate stage were not given any opportunity to comment on such report obtained at their back. It is settled law that no evid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome Tax (Appellate Tribunal) Rules, the revenue is not entitled to file additional evidence even otherwise, if the Bench is of the considered view and deems it necessary may in its discretion with reasons may admits it. And that report of NRSC is of no use and does not give any desirable result to assess or determine the nature of land or any evidence to negate the fact that the land was not used for agricultural purposes. By referring various paragraphs of reports, the learned Senior Counsel also submitted that in the disclaimer, attached to the said report, NRSC, Hyderabad reported the shape file provided by CIT(A) did not match with field boundaries of the reference satellite data, with implication on accuracies of location area. And in absence in absence of adequate number of GCPs, rubber sheeting technique carried out also did not yield the desirable results. After careful consideration of the contention of the party, and going through the language employed in Rule 29, we are of the view that the revenue has no vested right to seek the admissions of additional documents. However, keeping in view the peculiarity of the facts that the report of NRSC was taken into consideratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egarding the agriculture activities carried out in 2 years preceding the date of acquisition /transfer. As recorded above before ld. CIT(A), the assessee filed her detailed written submission as recorded in para 6.2 of his order. The Ld. CIT(A) confirmed the action of Assessing Officer by observing that Mamlatdar, Taluka-Choryasi, Dist.-Surat, vide his letter dated 16/01/2013 mentioned that population of nine villages falling within notified area as per census of 2001 was more than 10000 and that Hazira is a deemed municipality. On the alternative plea about the claim of assessee on the benefit of exemption under section 10(37), the ld. CIT(A) remanded the matter to the Assessing Officer to give his report to clarify regarding the population as to which area is to be considered for the purpose of section 2(14)(ii)(a). The assessing officer was also directed to comment on the distance of acquired land from municipal limit (Surat Municipality). The said remand report was required by Ld. CIT(A) by observing that office of the Mamlatdar vide their letter dated 16/01/2013 mentioned that population of each of nine villages (Hazira notified area) mentioned in the letter is less than 10000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. CIT(A) further noted that if all those survey numbers are not included, the population of those survey numbers is only 2137 and not ten thousand or more. The entire population of all the nine villages cannot be aggregated unless entire area of the villages falls in the Notified area. The ld. CIT(A) at the same time held that this exercise may be academic for the reasons given in a decision in subsequent findings by making reliance in case of G.M. Omer Khan Vs Addl.CIT (Supra) wherein it was held that population of entire notified is to be considered for the purpose of Section 2(14)(ii)(a) and not the population of any single village. 65. On the issue whether the land is an agriculture land or nor, the ld. CIT(A) held that the assessee was required to establish that land was used for agriculture purpose only. The District Agriculture Officer confirmed that most of the land is rocky, affected from Sea water and no irrigation facility. Thus, the contention of assessee cannot be accepted that land was used for agriculture purpose or capable of operation. No evidence of agriculture income was furnished. The ld. CIT(A) held that the assessee failed to establish that land was used ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... factors as may be deemed fit by public Notification, specified to be an industrial township. In a simple meaning that industrial township set-up under this proviso would not be Municipality . We also concur with the submissions of learned Senior Counsel Hazira Notified area is Industrial Township, therefore, not a municipality. On the issuance of the Notification under Section 16(1) of Gujarat Industrial Development Act, 1962, Hazira Notified area become a Notified area, thereupon the provisions of Chapter-XVI-A Gujarat Municipalities Act, would apply. Hazira Notified area would then be an Industrial Township area under Section 264A of the said Act. We are in agreement with the submission of learned Senior counsel for the assessee that under section 264B of the said Act, the State Government has a power to apply any section of the said Act or part thereof, or the Rules in force as maybe applied to a municipal borough to such notified area. Section 264C would create a fiction that for the purposes of any section of the said Act which may be applied to a notified area, the person or committee appointed for such area under section 264B shall be deemed to be a Municipality under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therance of the purposes for which the corporation is established. The industrial area thus has separate provision for municipal services being provided by the Industrial Development Corporation. Once such an area is a deemed notified area under the Gujarat Municipalities Act, 1964, it is equated with an industrial township under Part IXA of the Constitution, where municipal services may be provided by industries. It was further held that unless, it qualifies with the criteria prescribed under Article 243- Q of Constitution of India cannot be at par with municipality. Article 243-Q constitute three types of municipalities viz (i) Nagar Panchayat (ii) a Municipal council and (iii) Municipal corporation, it provides that a municipality under clause (1) may not be constituted under certain circumstances. In respect of any three types of areas, set out in clause (1) of Article 243-Q, having regard to the size of area, the municipal services being provided or proposed to be provided by the industrial establishment in that area and such other factor as the Governor will deem fit to consider, he may by public notification, specifies such area to be an industrial township. 69. Further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 10(37) of the Act. The assessing officer while rejecting the eligibility of section 10(37) held that the assessee has not produced any evidences regarding agriculture activities carried out on the land and that the District Agriculture officer, Zilla Panchayat Surat has written letter to Collector that many part of the land is under sea water and part of land is barren. The ld CIT(A) affirmed the action of assessing officer by taking view similar view. 73. Before, us the learned Senior Counsel for the assessee vehemently argued that for seeking eligibility under section 10(37), the assessee has fulfilled the four conditions of this subsection, viz., (i) such land is situated in any area referred to in item (a) or item (b) of sub-clause (iii) of clause (14) of Section 2; (ii) such land during the period of two immediately preceding the date of transfer, was being used for agricultural purpose by such Hindu Undivided Family (HUF) or individual or a parent of assessee; (iii) such transfer is by way of compulsory acquisition under any law or a transfer the consideration for which is determined or approved by the Central Government or the Reserve Bank of India and (iv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after its purchase, agricultural activity was carried on in the land. At or about the time of its subsequent sale, the land was not actually put to agricultural use. All the while, however, the land continued to be listed in the revenue record and it was assessed to land revenue. On 22-11-1968, the assessee obtained permission of the competent authority under section 63 of the Bombay Tenancy and Agricultural Lands Act, 1948, for the sale of the land to a co-operative housing society. On 1-2-1969, the assessee sold the land to the society. On 5-2- 1969, the society obtained the permission for non-agriculture use of the land, under section 65 of the Bombay Land Revenue Code, 1869, from the competent authority. The assessee claimed that the surplus realised by him on the sale of land was not liable to be taxed as capital gains as the land in question was agricultural land. The ITO held that since no agricultural operations were carried on immediately before the sale of the land, the land could not be treated as agricultural on the date of its sale and, therefore, the surplus realised by the assessee was liable to be taxed as capital gains. On appeal, the AAC reversed the decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n test to determine whether the land would be agriculture land by applying such test. 77. So far as reliance of revenue on the report of NRSC is concerned, which was otherwise relied by ld CIT(A) in ten cases. The ld DR for the revenue while making her submissions by referring various parts of it submitted that no agriculture activity or evidence of any crop is found on various parcel of the land from 1999 to 2012. And only shrubs were found with no sign of any crop or vegetables of the parcels of land. Further the satellite images shows that no agriculture activities were carried on the land. The ld DR also submitted that report of NRSC is scientific report and conclusive proof. We do not find merit in the submissions of the ld DR, as disclaimer, attach to the said report, NRSC, itself reported the shape file provided by CIT(A) did not match with field boundaries of the reference satellite data, with implication on accuracies of location area. Further, in absence in absence of adequate number of GCPs, rubber sheeting technique carried out also did not yield the desirable results. And that concurrent ground truth was not available for thus study and interpretation is exclusive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other ld AR for the assessee, Sh. Rasesh Shah, also made submission on the sufficiency of the reasons and not mentioning various other aspect, and submitted that the re-assessment is bad in law. However, the other ld AR Sh Hiren Vepari representing in appeal listed at serial number 163 164 in ITA No. 2967 2968/Ahd/2015 submits that he is not pressing the ground of reopening. Remaining learned AR s adopted the submissions of learned Senior Counsel or of Sh Rasesh Shah. The ld SR DR for the revenue strongly objected against the objections of reopening and the validity of the assessment order and relied on the decision of Supreme Court in Raymond Woollen Mills Ltd Vs CIT (supra). Considering the contentions of both the side, we are of the view that at the stage of reopening the assessing officer has only to see whether there was prima facie some material on the basis of which the Department could reopen the case. The sufficiency or correctness of the material was not a thing to be considered at this stage. We find that Hon ble Supreme Court in Raymond Woollen Mills Ltd Vs CIT (supra) while considering the technical objection of sufficiency of reasons had not strike down the reopen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the cases, there is payment against the built-up units/ pucca houses. Additional payments were also made only for those landowners who were holding such built-up unit. We find that no evidence was furnished by the land owners about the cost of acquisition or improvement thereof, either before the assessing officer or before ld CIT(A). Even before us, no such estimate of cost of such built-up structure is furnished. As recorded above the ld CIT(A) estimated the cost of acquisition of built-up units/ pucca structure @ 50% of the cost awarded for such built-up / pucca structure in the award. Considering the area where in the such built-up unit or pucca house is situated, it our view, the estimation of it s cost of acquisition is on lower side, therefore we deem it fit and proper to increase it to 60%, would be reasonable and fair. Therefore, we direct the Assessing officer to treat the cost of acquisition @ 60% of Rs. 13.00 lacs as cost of acquisition. In the result, the corresponding ground of appeal is partly allowed. 81. Next ground relates to treating the agriculture income of Rs. 5,000/- as unexplained cash credit. Considering the facts that we have already held that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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