IN THE ITAT INDORE BENCH
Income-tax Officer-5(1), Indore
Versus
Ashok Shukla
IT Appeal No. 207(Ind.) of 2012
[Assessment year 2008-09]
August 31, 2012
ORDER
Joginder Singh , Judicial Member
The Revenue is aggrieved by the impugned order dated 31.1.2012 broadly
on the ground that on the facts and in the circumstances of the case,
the learned first appellate authority erred in treating the land sold
as agricultural land when the assessee failed to substantiate that any
agricultural activity was carried out on the said land and further
erred in holding that the land sold was beyond 8 kms from the
municipal limit.
2. During hearing, we have heard Shri Keshave Saxena, ld. CIT/DR and
Shri S.S. Sheetal, learned Counsel for the assessee. The crux of
arguments on behalf of the Revenue is identical to the ground raised
by further submitting that firstly the assessee has to prove that any
agricultural operation was done by the assessee as the assessee
himself is not doing any agricultural operation being advocate. It was
also pleaded that the Tehsildar is not a competent authority to issue
a certificate regarding distance of land from the municipal limit. A
plea was also raised that the land was sold to developer. Our
attention as invited to various pages of the paper book. Reliance was
placed on the decision in Arundhati Balkrishna v. CIT[1982] 138 ITR
245 (Guj), CIT v. Smt. Sarifabibi Mohmed Ibrahim [1982] 136 ITR
621,Kalpetta Estates Ltd. v. CIT [1990] 185 ITR 318, CIT v. Gemini
Pictures Circuit (P.) Ltd.[1996] 220 ITR 43 and Fazalbhoy Investment
Co. (P.) Ltd. v. CIT [1989] 176 ITR 523. On the other hand, the
learned Counsel for the assessee defended the impugned order by
submitting that the impugned land was inherited by all the brothers
and was also sold as a composite sale being composite land. It was
explained that one of the brothers was carrying out agricultural
operation and it is not necessary that every brother will tilt the
land himself. A plea was also raised that the Assessing Officer as
well as the Inspector of the Income Tax Department visited the land,
the map was prepared by the Inspector himself. The learned counsel
took us to various pages of the paper book through which he tried to
explain that the land in question is situated beyond 9 kms from the
municipal limit. Reliance was also placed upon the decision of the
Tribunal in ITA No. 506/Ind/2010 along with the decision in CIT v.Smt.
Debbie Alemao [2011] 331 ITR 59.
3. We have considered the rival submissions and perused the material
available on record. The facts, in brief, are that the assessee is an
advocate practising in High Court of Madhya Pradesh at Indore. The
assessee earned income from house property, pension being Ex-MLA in
State Legislative Assembly, declared income of Rs. 4,04,690/- on
5.9.2008. The assessee claimed exemption from capital gains on sale of
land by claiming the same to be agricultural land situated in the
revenue record of village Lasudia Parmar (Teh. Sanver) bearing Khasra
No. 184, etc. The stamp duty and registration fees were borne by the
purchaser and the sale consideration amounting to Rs. 1,29,21,582/-
was received through cheque. The Assessing Officer concluded that the
impugned land is situated within 8 kms from the municipal limit and
then mentioned the provisions of section 10(37) of the IT Act which
are applicable in the case of compulsory acquisition, therefore, is
not applicable to the facts of the case as the land was sold by
private deal and no exemption u/s 54B of the Act was claimed. So far
as the argument of the learned CIT DR and observation of the Assessing
Officer that since the land was not cultivated by the assessee himself
and was carried on by the brother, therefore, it cannot be treated as
agricultural land. We are not absolutely convinced by this
argument/observation because there is no requirement in any Act more
especially the Income Tax Act that only the self cultivated land will
be treated as agricultural land. The Tehsildar is the concerned
revenue Officer who on the basis information/report of revenue Patwari
issues a certificate. Since the brother of the assessee was doing
agricultural operation, therefore, any income derived out of it will
be treated as agricultural income. Even if less income has been shown,
the assessee cannot be denied the character of agricultural income.
4. So far as the question of distance from Municipal limit is
concerned, we have perused the record and find that even as per the
report of the Income Tax Inspector (pages 9 and 10 of the paper book)
it has been mentioned that the land is situated 9.7 kms by road from
the municipal limit by a straight distance method. The map of the land
(page 10) was prepared by the Income Tax Inspector himself, therefore,
disregard to such document is not justified. A certificate has been
issued by the Executive Engineer, Public Works Department (page 11 of
the paper book) wherein it has been specifically mentioned that the
impugned land is 9.6 kms from the municipal limit. The Land Revenue
Officer (Tehsildar) had also mentioned the Survey No. 95 Area 4.22
acre, Survey No. 96/1 area 1.20 acre and has mentioned that the land
in question is about 10 kms from the municipal limit and the
population of the village is about 2000 persons. The assessee has also
produced a certificate from the land Surveyor (page 14) wherein it has
been mentioned that the impugned land is situated at 9.09 kms from the
Municipal limit. The assessee has also placed on record the google map
(page 13). All these certificates clearly say that the impugned land
is situated beyond 9 kms from the municipal limit, therefore, as per
section 2(14)(iii) of the Act, the impugned agricultural land is
situated in the revenue record of village Lasudia Parmar whose
population is about 2000 people which is less than the condition
mentioned in section 2(14)(iii)(a) of the Act. So far as the condition
mentioned in sub-clause (b) of the aforesaid section is concerned,
from record it is clear that the impugned land is beyond the
prescribed limit of 8 kms from the municipal limit. From this angle
also, there is no mistake in the conclusion drawn in the impugned
order. We further find that some cases like Laukik Developers v. Dy.
CIT [2007] 105 ITD 657 (Mum.) have been relied upon in the impugned
order/assessment order wherein the issue was examined with respect to
section 80IB of the Act whereas the issue before us pertains to
section 2(14) with respect to agricultural income, therefore, not
applicable to the facts of the present case.
The learned CIT DR placed reliance on the decision of the Hon'ble
Gujarat High Court inArundhati Balkrishna (supra). We find that in
that case, the land was situated within municipal limits of Ahmedabad
and the surrounding land was developed and since the land was not
agricultural land, the gains from sale of such land was held to be
exigible to capital gains tax. However, the land in question is
clearly agricultural land situated beyond 9 kms from the municipal
limit, therefore, this case may not help the revenue, moreso one fact
pertinent to mention here that part of the same land, owned by one of
the brothers, was treated as agricultural land, therefore, it is quite
unjustified to treat part of the same land/chunk to be
non-agricultural. Another case relied upon is from Hon'ble Bombay High
Court in Fazalbhoy Investment Co. (P.). Ltd. (supra) wherein there was
no evidence showing that no agricultural operations were carried out
on the land. The Hon'ble Court held that land was not agricultural.
However, in the impugned land, agricultural operation was done by one
of the brothers, therefore, with utmost regard, this judicial
pronouncement may not help the revenue. Another decision relied on is
Gemini Pictures Circuit (P.) Ltd. (supra). The land was situated in
most important business centre of a city and was entered in the
municipal record as urban land and tax was paid thereon. Part of the
land was used for construction of non-residential building. In that
situation, profit on sale of such land was held to be exigible to
capital gains. However, in the impugned case, the facts are altogether
different, therefore, may not help the revenue. A decision from
Hon'ble Kerala High Court in Kalpetta Estates Ltd.(supra) was relied
upon. In that case, it was held that burden of proof is on the
assessee to prove that the land was agricultural land at the time of
transfer and forest lands were acquired with the intention of
extending plantation. Since no agricultural operation was carried out,
it was held that it gives rise to capital gain on the sale of such
land. In the case of Smt. Sarifabibi Mohmed Ibrahim (supra) the land
was situated near railway station and was sold on square yard basis to
housing society. The profit from the sale of such land was held to be
assessable to capital gains tax. Keeping in view the location and
other attendant circumstances, it was held to be assessable to capital
gains tax.
5. The learned counsel for the assessee relied on the decision of the
Hon'ble Bombay High Court in Smt. Debbie Alemao (supra) wherein the
land, in question, was shown in the revenue record as agricultural
land and no permission was taken for conversion of land use. It was
held that since no agricultural income was shown in the return is not
the material for the purposes of gains from sale of such land. It is
pertinent to mention here that this case also pertains to section 45,
54, 54B, etc. of the Act.
6. If the totality of facts available on record is kept in
juxtaposition with the judicial pronouncements discussed hereinabove
and the intention of the legislature along with relevant sections, we
are of the considered opinion that a particular land is agricultural
land or not depends upon so many factors. Any agricultural income
derived from agricultural operations will qualify for agricultural
income. So far as capital gains on the sale of such land is concerned,
it also depends upon factors like location of the land, use of the
land, distance from municipal limit, whether land use was changed,
etc. If all these factors are cumulatively kept in mind, one clear
fact is oozing out that the impugned land is situated beyond the
prescribed limit from the municipality, recorded as agricultural land
in the revenue record, agricultural operation was done by one of the
brothers, we are of the considered opinion that the no capital gains
tax is exigible on sale of such land. So far as the objection of the
learned CIT DR that the Tehsildar is not a competent authority for
measuring the distance, we are not satisfied with such submission
especially when the Inspector of the department of Income tax and
Tehsildar both have certified that the land is situated beyond 8 kms
from the municipal limit. We are of the considered opinion that
Tehsildar is the most competent revenue Officer to certify the proof
of agricultural operation, distance of land from a particular place,
rate of land, etc. Our view is further fortified by the decision from
Hon'ble Punjab & Haryana High Court in CIT v. Lal Singh [2010] 195
Taxman 420. So far as the issue of measuring the land through straight
method/aerial method is concerned, we are of the view that for
measuring the land we are supposed to go by the road, therefore, road
distance is the most appropriate method and not the crow's flies i.e.
straight line distance. This view is further supported by the decision
in Laukik Developers (supra) and the decision from Hon'ble Punjab &
Haryana High Court in CIT v. Satinder Pal Singh [2010] 188 Taxman 54.
The Hon'ble Court held as under :-
"The maximum distance prescribed by sc. 2(14)(iii)(b) which may be
incorporated in the notification could not be more than 8 kms from the
local limits of municipal committee or cantonment board, etc. The
notification has to take into account the extent of and scope for
urbanisation of that area and other relevant considerations. The
reckoning of urbanisation as a factor for prescribing the distance is
of significance which would yield to the principle of measuring
distance in terms of approach road rather than by straight line on
horizontal plane. If principle of measurement of distance is
considered straight line distance on horizontal plane or as per crow's
flight then it would have no relationship with the statutory
requirement of keeping in view the extent of urbanisation. Such a
course would be illusory. It is in pursuance of the aforesaid
provision that Notification No. 9447 dt. 6th Jan., 1994 has been
issued by the Central Government. In respect of the State of Punjab,
at item No. 18 the sub-division Khanna has been listed at serial No.
19. It has inter alia been specified that area upto 2 kms from the
municipal limits in all directions has to be regarded other than
agricultural land. Once the statutory guidance of taking into account
the extent and scope of urbanisation of the area has to be reckoned
while issuing any such notification then it would be incongruous to
the argument of the Revenue that the distance of land should be
measured by the method of straight line on horizontal planes or as per
crow's flight because any measurement by crow's flight is bound to
ignore the urbanisation which has taken place. Tribunal was therefore
justified in holding that distance of 2 kms from the municipal limits
of city of Khanna has to be reckoned for the purposes of s. 2(14)(iii)
by measuring the same as per the road distance and not as per straight
line distance on a horizontal plane or as per crow's flight - Laukik
Developers v. Dy. CIT [2007] 108 TTJ (Mumbai) 364 : [2007] 105 ITD 657
(Mumbai) approved."
The above conclusion by the Hon'ble High Court clearly supports the
case of the assessee. In the case of Lal Singh (supra) the Hon'ble
High Court concluded that "the report of the Tehsildar having
certified that the assessee's land was 8 kms away from the municipal
limit, the land constituted agricultural land entitling the assessee
to exemption u/s 54B of the Act.
7. If the assessment order is analysed, we are of the view that the
learned Assessing Officer is more guided by section 45 of the Act
which speaks about capital gains arising from the transfer of capital
asset. Section 54B of the Act speaks about non-charging of gains of
the cases where there is a transfer of land used for agricultural
purposes. An amendment was effected with effect from 1.4.1970 so as to
include lands situated in certain specified areas within the ambit of
non-agricultural land. However, burden is on the assessee to prove
that the land is agricultural land and at the same time, onus is on
the department to prove that the land is non-agricultural or it forms
part of business asset. For the purposes of land being agricultural
land, actual agricultural operation or cultivation or tilting of land
is always not necessary. What is to be seen is whether such land is
capable of agricultural operation being carried on. Our view is
fortified by Hon'ble Calcutta High Court CIT v. Borhat Tea Co. Ltd.
[1982] 138 ITR 783. The correct test that has to be applied is whether
on the date of sale, the land was agricultural land or not, whether
land use was changed or not. Just because after the sale, the
purchaser was going to put the land to non-agricultural use, it does
not mean that on the date of sale the land has ceased to be
agricultural land. If in the revenue record, the particular land is
recorded as agricultural land and till the date of sale, it is
exploited as agricultural land and the owner of the land has not taken
any step to indicate his intention to exploit the land for
non-agricultural purposes then such land to be regarded as
agricultural land. The purpose for which such land is sold is not of
much importance and weight. If the department is in a position to
prove that it was used as agricultural land as a stop gap arrangement
and its land use was changed before the sale then the situation may be
different. Whether the land is an agricultural land or not is
essentially a question of fact. A close reading of section
2(14)(iii)(a) seems to suggest that it is the population of the
municipality that has to be taken into account and not the population
of any area within the municipality. It may be that a municipality may
comprise of many villages, wards and street and each assessee may
claim that the limit of population is provided with reference to a
place, ward or street. In such an event, the section will have no
uniform application and will lead to many anomalies. Panchayat is
different from municipality. Municipality is always understood
differently from Panchayat, therefore, the land situated beyond
prescribed municipal limit and is recorded as agricultural land in the
revenue record is to be considered as agricultural land until proved
otherwise. Admittedly, the term "capital asset" has an all embracing
connotation and includes every kind of property as generally
understood except those are expressly excluded from the definition. It
is exactly the case here because section 2(14)(iii) expressly defines
agricultural land with regard to its location and distance from the
municipal limit. It seems that the learned Assessing Officer has not
examined the documents produced by the assessee establishing the
distance of land beyond prescribed municipal limit and more
specifically when Khasra number, etc. has been duly mentioned in the
report of Tehsildar. So far as the argument of the learned CIT DR that
the land was sold at a substantial amount is not the relevant factor
to prove that it was non-agricultural land because it depends upon so
many factors. Even in the grounds of appeal, the revenue has raised a
ground that the documentary evidences produced by the assessee belong
to the land of Shri Rakesh Shukla, brother of the assessee. We are not
convinced with this argument also because the total land is adjoining
to each other and is from one chunk. This claim of the revenue rather
supports the case of the assessee. As mentioned earlier, in the case
of one of the brothers, it has been allowed as agricultural land,
therefore, no different yard stick can be adopted in the case of
another brother, being the land is part of the same chunk. The
totality of facts clearly leads to the conclusion, under the facts
narrated hereinabove, that the impugned land is agricultural land,
therefore, the stand of the learned CIT(A) is affirmed.
Finally, the appeal of the revenue is having not merit, therefore, dismissed.
--
Regards,
Pawan Singla , LLB
M. No. 9825829075
------------------------------------
Posted by: Nitesh More <moreassociate@gmail.com>
------------------------------------
receive alert on mobile, subscribe to SMS Channel named "aaykarbhavan"
[COST FREE]
SEND "on aaykarbhavan" TO 9870807070 FROM YOUR MOBILE.
To receive the mails from this group send message to aaykarbhavan-subscribe@yahoogroups.comYahoo Groups Links
<*> To visit your group on the web, go to:
http://groups.yahoo.com/group/aaykarbhavan/
<*> Your email settings:
Individual Email | Traditional
<*> To change settings online go to:
http://groups.yahoo.com/group/aaykarbhavan/join
(Yahoo! ID required)
<*> To change settings via email:
aaykarbhavan-digest@yahoogroups.com
aaykarbhavan-fullfeatured@yahoogroups.com
<*> To unsubscribe from this group, send an email to:
aaykarbhavan-unsubscribe@yahoogroups.com
<*> Your use of Yahoo Groups is subject to:
https://info.yahoo.com/legal/us/yahoo/utos/terms/
No comments:
Post a Comment