Sanjay Nagorao Paidlewar, Nagpur V. ACIT Central Circle 2(2), Nagpur

ITA 112/NAG/2012

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3186 (ITAT-NAGPUR)
• Duration Of Justice: 7 year(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 30-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR MILLIND BHUSARI
• Assessee Lawyers: K P DEWANI IN ITA NO NAG; M MANI IN ITA NOS NAG
• Keywords: Capital asset; Business income; Capital receipt; Capital Gains
• Section: 2(14); 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR , BENCH , ( E - COURT), MUMBAI BEFORE SHRI R.K.GUPTA , J M & SHRI D.KARUNAKAR A RAO , A M ITA NO. 112 / N AG / 20 1 2 ( ASSESSMENT YEAR 200 9 - 10 ) SANJAY NAGORAO PAIDLEWAR, 151 - 152, ANJALI APARTMENT, GANDHI NAGAR, NAGPUR - 440 010 VS. ACIT CENTRAL CIRCLE 2(2) , NAGPUR - 440 001 PAN NO. : A FHPP 5538 E ( APPELLANT ) .. ( RESPONDENT ) AND ITA NO.1 13 /NAG/2012 (ASSESSMENT YEAR 2009 - 10) NITISH RAMESHCHANDRA CHORDIA , 151 - 152, ANJALI APARTMENT, GANDHI NAGAR, NAGPUR - 440 010 VS. ACIT CENTRAL CIRCLE 2(2), NAGPUR - 440 001 PAN NO. : AAKPC 6378 F ( APPELLANT ) .. ( RESPONDENT ) AND ITA NO.1 47 /NAG/2012 (ASSESSMENT YEAR 2009 - 10) SHAISHIR S. DIOTE, 151 - 152, ANJALI APARTMENT, GANDHI NAGAR, NAGPUR - 440 010 VS. ACIT CENTRAL CIRCLE 2(2), NAGPUR - 440 001 PAN NO. : AANPD 1177 C ( APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : MR. M.MANI IN ITA NOS. 112&113/NAG/1 2 AND MR. K.P.DEWANI IN ITA NO.147/NAG/1 2 REVENUE BY : DR. MILLIND BHUSARI DATE OF HEARING : 15 TH MARCH., 2013 DATE OF PRONOUNCEMENT : 22 ND MARCH, 2013 O R D E R P ER BENCH : THESE THREE APPEALS HAVE BEEN PREFERRED BY THREE DIFFERENT ASSESSEES BEFORE THE ITAT NAGPUR BENCH, NAGPUR, AGAIN ST THE ORDER OF LEANED CIT(A) - I , NAGPUR (MAHARASHTRA) RELATING TO ASSESSMENT YEAR 2009 - 10 , WHICH HA VE BEEN HEARD THROUGH E - COURT, MUMBAI. ITA NO S . 112,113&147 NAG/2012 2 \ 2 . SINCE COMMON ISSUES ARE INVOLVED IN ALL THE CASES, THEREFORE, FOR THE SAKE OF CONVENIENCE, THESE CASES HAVE BEEN HEARD AND DISPOSED OF BY THIS CONSOLIDATED ORDER. 3 . IN ALL THE APPEALS, THE AFORESAID ASSESSEES HAVE RAISED GROUND AGAINST THE ACTION OF THE LEARNED CIT(A) IN REGARD TO NOT ACCEPTING THE CLAIM OF THE ASSESSEES THAT AGRICULTURAL LAND IN QUESTION IS NOT A CAPITAL ASSET AS PER SECTION 2(14)(III)( A) AND (B) AND SURPLUS ARISING ON SALE OF THE SAME IS NOT LIABLE TO TAX. THEY HAVE ALSO OBJECTED TO ASSESS THE SURPLUS AMOUNT ON SALE OF AGRICULTURAL LAND AS BUSINESS INCOME 4 . BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE ALONG WITH THREE CO - OWNERS SHRI SANJAY NAGORAO PAIDLEWAR, SHRI SHISHI R SHANKARRAO DIOTE AND SHRI SHANKARRAO JAIRAMJI DIOTE HAD PURCHASED LAND ON 10 - 04 - 2007 BEING AGRICULTURAL LAND OF 1.22 HECTARES AT MOUZA PIPLA S.NO. 90/1, PH 38 AT TAH. DIST. NAGPUR FOR AN AGGREGATE CONSIDERATION OF RS. 29,40,420/ - , THE PROPORTIONATE SHARE IN THE COST OF THE ASSESSEE BEING RS. 7,35,105/ - . THE SAID PROPERTY WAS SOLD ON 15 - 04 - 2008 FOR RS. 80 LACS. THE PROPORTIONATE SHARE OF THE ASSESSEE IN THE SAID SALE TRANSACTION WAS THUS RS. 20 LACS. ASSESSEE HAS CLAIMED THAT THE PROFIT FROM SALE OF LAND I N QUESTION IS EXEMPT FROM TAX AS IT IS AN AGRICULTURAL LAND AND NOT A CAPITAL ASSET ACCORDING TO THE PROVISIONS OF SECTION 2(14) OF THE ACT. ASSESSEE HAS STATED THAT THE ACTUAL DISTANCE BETWEEN THE PROPERTY AT MOUZA PIPLA, S.NO. 90/1, PH 38 AT TAH. DISTRIC T NAGPUR AND THE MUNICIPAL JURISDICTION IS MORE THAN 8 KM AND FURNISHED A CERTIFICATE ITA NO S . 112,113&147 NAG/2012 3 FROM THE PATWARI IN SUPPORT OF ITS CLAIM. A O REJECTED THE ASSESSEE S CLAIM HOLDING THAT THE PROPERTY IN QUESTION WAS WITHIN THE SPECIFIED DISTANCE OF THE MUNICIPAL JURISD ICTION OF NAGPUR AND THEREFORE NOT EXEMPT , THEREFORE , BROUGHT TO TAX AN AMOUNT OF RS. 12,64,895/ - UNDER THE HEAD SHORT TERM CAPITAL GAIN. S IMILARLY THE ASSESSEE PURCHASED 2.02 HECTARES OF LAND AT MOUZA PIPLA S.NO. 108/2, PH 38 AT TAH.DISTRICT NAGPUR ALONGW ITH THREE CO - OWNERS SHRI SANJAY NAGORAO PAIDLEWAR, SHRI SHISHIR SHANKARRAO DIOTE AND SHRI SHANKARRAO JAIRAMJI DIOTE ON 23 - 08 - 2007 FOR AN AGGREGATE CONSIDERATION OF RS. 61,66,540/ - ASSESSEE'S SHARE IN CONSIDERATION BEING RS. 15,41,635/ - . THIS LAND WAS SOLD ON 15 - 04 - 2008 FOR AN AGGREGATE CONSIDERATION OF RS. 1,50,00,000/ - T HE PROPORTIONATE SHARE OF THE ASSESSEE BEING RS. 37,50,000/ - . THE ASSESSEE CLAIMED THAT THE PROFIT ON SALE OF THIS LAND IS ALSO EXEMPTED DUE TO THE FACT THAT THE LAND SOLD IS IN THE NATURE OF AGRICULTURAL LAND AND NOT THE CAPITAL ASSET ACCORDING TO SECTION 2(14) OF THE ACT. THE A SSESSEE STATED THAT LAND IN QUESTION AT MOUZA PIPLA, S.NO. 90/1, PH 38 AT TAH. DISTRICT NAGPUR IS BEYOND A DISTANCE OF 8 KM FROM THE MUNICIPAL JURISDICTION OF NAGPUR . THE CERTIFICATE FROM PATWARI WAS SUBMITTED TO SUPPORT ITS CLAIM. HOWEVER A O REJECTED THE ASSESSEES CONTENTION AND HELD THAT THE PROPERTY WAS WITHIN THE DISTANCE OF 8 KM FROM MUNICIPAL LIMITS AND BROUGHT TO TAX AN AMOUNT OF RS. 22,08,365/ - . A O RELIED ON SECTION 11 OF THE GENERAL CLAUSES ACT, 1897 IN SUPPORT THAT DISTANCE MUST BE MEASURED NOT BY ROAD DISTANCE BUT BY THE SHORTEST DISTANCE 'AS THE CROW S FLI GHT '. ITA NO S . 112,113&147 NAG/2012 4 5 . BEING AGGRIEVED WITH THE ORDER S OF THE AO, THESE ASSESSEES PREFERRED APPEAL S BEFORE THE CIT(A ) , WHEREIN A CTION OF THE AO WAS CHALLENGED . DETAIL SUBMISSION S WERE FILED BEFORE THE CIT(A) . IT WAS EXPLAINED THAT THE LAND PUR CHASED BY THESE THREE ASSESSEES WERE AGRICULTURAL LAND AND IN THE SAME SHAPE I.E. AGRICULTURAL LAND WERE SOLD BY THESE THREE ASSE SSEES. THE LAND IN QUESTION SITUATED AT MOUZA PIPLA ARE BEYOND MUNICIPAL LIMIT OF 8 KMS. A CERTIFICATE FROM VILLAGE PATWARI CONFIRMING THAT THE LAND IS SITUATED BEYOND LIMIT OF 8 KMS OF MUNICIPAL LIMIT, WAS FILED. A COPY IN THE REVENUE RECORD FROM WHICH IT WOULD CLEAR THAT IT WAS SHOWN AS AGRICULTURAL LAND IN REVENUE RECORD WAS ALSO FILED. IT WAS STATED THAT AS PER SUB CLAUSE (B ) OF S E CTION 2(14) ( III) OF THE ACT , THE LIMIT OF CITY IS SPECIFIED BY THE NOTIFICATION, HAVING REGARD TO THE EXTENT OF, AND SCOPE O F URBANIZATION OF THE AREAS CONCERNED AND OTHER RELEVANT CONSIDERATION HEREBY SPECIFY THE LIMIT OF DISTANCE. THEREFORE, THE RECKONING OF URBANIZATION AS A FACTOR FOR PRESCRIBING THE DISTANCE IS OF SIGNIFICANT WHICH WOULD YIELD TO THE PRINCIPLE OF MEASURING DISTANCE IN TERMS OF APPROACH ROAD RATHER THAN BY STRAIGHT LINE ON HORIZONTAL PLANT. IF PRINCIPLE OF MEASUREMENT OF DISTANCE IS CONSIDERED STRAIGHT LINE DISTANCE NO RELATIONSHIP WITH THE STATUTORY REQUIREMENT OF KEEPING IN VIEW THE EXTENT OF URBANIZATION. SUCH A COURSE WOULD BE ILLUSORY. IT IS IN PURSUANCE OF THE AFORESAID PROVISIONS THAT NOTIFICATION NO. 9447 DATED 6 - 1 - 1994 HAS BEEN ISSUED BY THE CENTRAL GOVERNMENT. IN RESPECT OF THE CITY OF NAGPUR AT ITEM NO. 35 HAS BEEN SPECIFIED THAT AREA DISTANCE OF ABO UT 8 KMS. FOR THE CORPORATION LIMIT IN ALL DIRECTION. RELIANCE WAS ITA NO S . 112,113&147 NAG/2012 5 PLACED ON THE DECISION OF HON BLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF CIT VS. SATINDER PAL SINGH, REPORTED IN 229 CTR 82 (P&H) , COPY OF THE SAME WAS ALSO FILED. IT WAS ALSO SUBMITT ED THAT THE HON BLE PUNJAB AND HARYANA HIGH COURT HAS CLEARLY HELD THAT THE DISTANCE HAS TO BE MEASURED AS PER APPROACH ROAD AND NOT AS PER STRAIGHT LINE METHOD OR CROW FLIES. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING THE MATERIAL ON RECORD, LEARNED CIT(A) FOUND THAT THE DISTANCE HAS TO BE MEASURED THROUGH STRAIGHT LINE ON HORIZONTAL AND NOT THROUGH APPROACH ROAD. THE CIT(A) ALSO OBSERVED THAT THE LEGISLATIVE INTENT AS CLEARLY BORNE OUT FROM THE EXPLANATORY NOTES STATES THAT THE AGRICULTURAL LAND WHIC H HAS INHERENT POTENTIAL TO BE UTILIZED DUE TO PROGRESS OF URBANIZATION AND INDUSTRIALIZATION IS TO BE INCLUDED WITHIN THE AMBIT OF THE DEFINITION OF 'CAPITAL ASSET'. THEREFORE TO DETERMINE WHETHER THE LAND HAS POTENTIAL TO BE USED IN THE PROCESS OF URBANI ZATION AND INDUSTRIALIZATION ARE RELEVANT CRITERIA TO BE CONSIDERED. THEREAFTER HE CONSIDERED THE CERTIFICATE OF THE DIRECTOR OF TOWN PLANNING, WHO ISSUED THAT THE LANDS IN QUESTION ARE 1.30 KM AND 1.1 KM, RESPECTIVELY AWAY FROM THE MUNICIPAL LIMIT. THIS C ERTIFICATE WAS ON THE BASIS OF STRAIGHT LINE. THE CONTENTION OF THE ASSESSEE THAT FOR THE PURPOSE OF SECTION 2(14)(III) (B) OF THE ACT, THE DISTANCE IS TO BE RECKONED IN TERMS OF THE APPROACH ROAD OF THE PROPERTY IN QUESTION FROM THE MUNICIPAL LIMITS AND N OT BY A STRAIGHT LINE DISTANCE ON HORIZONTAL PLANE AREA I.E. CROW'S FLIGHT. THE CIT(A) OBSERVED THAT THIS ARGUMENT IS BASED ON THE CONTENTION THAT THE EXTENT AND SCOPE FOR, URBANIZA TION OF ITA NO S . 112,113&147 NAG/2012 6 THAT AREA AND OTHER RELEVANT CONSIDERATIONS ARE TO BE TAKEN INTO AC COUNT. ADOPTING THE LATTER WOULD AMOUNT TO IGNO RI NG T H E STATUTORY REQUIREMENT OF KEEPING IN VIEW THE EXTENT OF THE URBANIZATION. THEREAFTER DREW INFERENCE FROM THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF N.C.BUDHIRAJA & CO., REPORTED IN 204 IT R 412 , WHEREBY IT WAS STATED THAT THE PRINCIPLE OF ADOPTING A LIBERAL INTERPRETATION WHICH ADVANCES THE PURPOSE AND OBJECT OF BENEFICIAL PROVISION CANNOT BE CARRIED TO THE EXTENT OF DOING VIOLENCE TO THE PLAIN AND SIMPLE LANGUAGE USED IN THE ENACTMENT. IT WOULD NOT BE REASONABLE OR PERMISSIBLE FOR THE COURT TO RE - WRITE THE SECTION OR SUBSTITUTE WORDS OR ITS OWN FOR THE ACTUAL WORDS EMPLOYED BY THE LEGISLATURE, IN THE NAME OF GIVING EFFECT TO THE SUPPOSED UNDERLYING OBJECT. ACCORDINGLY, THE CIT(A) HELD THAT THE STRAIGHT LINE METHOD OF HORIZONTAL PLANE I.E. CROWS FLIGHT IS TO BE ADOPTED AND NOT THE APPROACH ROAD. ACCORDINGLY, HE CONFIRMED THE ORDER OF THE AO IN THIS RESPECT. THE CIT(A) FURTHER NOTED THAT THE LAND WAS PURCHASED FOR THE PURPOSE OF BUSINESS AS TH ESE ASSESSEES HAVE SOLD THE LAND TO THE BUILDER, THEREFORE, RECEIPT OF THE SAME HAS TO BE TREATED AS BUSINESS RECEIPT NOT CAPITAL RECEIPT FOR THE PURPOSE OF CAPITAL GAIN. RELIANCE WAS ALSO PLACED ON THE DECISION OF HON BLE BOMBAY HIGH COURT IN THE CASE OF DCIT VS . GOPAL RAMNARAYAN KASAT , REPORTED IN 9 TAXMAN.COM 236 (BOM ) . ACCORDINGLY, THE AO WAS DIRECTED TO BRING THE SURPLUS AMOUNT TO TAX AS BUSINESS INCOME. NOW, THE SE THREE ASSESSEES ARE IN APPEALS HERE BEFORE THE TRIBUNAL. ITA NO S . 112,113&147 NAG/2012 7 6 . DETAIL SUBMISSIONS HAVE B EEN ADVANCED ON BEHALF OF THE ASSESSEE S . ATTENTION OF THE BENCH WAS DRAWN ON COPY OF WRITTEN SUBMISSION PLACED IN THE COMPILATION AS WELL AS ON VARIOUS OTHER DOCUMENTS. RELIANCE WAS PLACED ON VARIOUS CASE LAWS, WHICH HAVE BEEN MENTIONED IN THE WRITTEN SUBM ISSIONS. RELIANCE WAS ALSO PLACED ON THE ARGUMENTS ADVANCED BY ANOTHER COUNSEL FOR ANOTHER ASSESSEE, WHICH WAS ADVANCED ON THE SAME LINES. IT WAS FURTHER SUBMITTED THAT LEARNED CIT(A) HAS IGNORED THE CERTIFICATE OF PATWARI BY WHICH IT WAS CLEARLY CERTIFIED THAT THE LAND IN QUESTION IS LOCATED BEYOND 8KMS. FROM MUNICIPAL LIMIT. LEARNED CIT(A) HAS NOT CONSIDERED THE DECISION OF THE HON BLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF S ATINDER PAL SINGH (SUPRA) . IT WAS FURTHER SUBMITTED THAT THE VARIOUS BENCHE S OF THE TRIBUNAL HAVE ALSO DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY HOLDING THAT THE DISTANCE OF 8KMS HAS TO BE MEASURED AS PER APPROACH ROAD DISTANCE AND NOT AS PER CROWS FLIGHT DISTANCE. ATTENTION OF THE BENCH WAS ALSO INVITED ON VARIOUS CASE LAWS , COPIES OF WHICH ARE PLACED IN THE COMPILATION. REGARDING THE VIEW THAT THE SURPLUS IS TO BE TREATED AS BUSINESS INCOME, IT WAS SUBMITTED THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE HON BLE APEX COURT IN THE CASE OF DLF LIMITED, DECIDED IN C IVIL APPEAL NOS. 1727 TO 1729/1998 AND IN VARIOUS OTHER CIVIL APPEALS, COPIES OF WHICH ARE ALSO PLACED IN THE COMPILATION. IT WAS FURTHER SUBMITTED THAT THE DETAILED ORDER IN THE CASE OF DLF UNITED LIMITED , WHICH HAS BEEN CONFIRMED BY THE HON BLE SUPREME C OURT, WAS DECIDED BY THE HON BLE DELHI HIGH COURT REPORTED ITA NO S . 112,113&147 NAG/2012 8 IN 217 ITR 333 . COPY OF THE SAME IS ALSO PLACED IN THE COMPILATION. ACCORDINGLY, IT WAS SUBMITTED THAT THE DECISION OF THE LEARNED CIT(A) IS NOT CORRECT A S HE HAS NOT APPRECIATED THE DECISION OF TH E HON BLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF SATINDER PAL SINGH (SUPRA) . 7 . PER CONTRA, LEARNED DR, FIRSTLY PLACED HEAVILY RELIANCE ON THE ORDER OF THE LEARNED CIT(A) . IT WAS FURTHER SUBMITTED THAT THE PROVISION S OF SECTION 2(14) ARE TO BE TAKEN AS STRICTLY AND NOT TO BE READ AS HARMONIOUSLY AS HELD BY THE HON BLE APEX COURT IN THE CASE OF N.C.BUDHIRAJA & CO (SUPRA) . RELIANCE WAS ALSO PLACED ON THE DECISION OF HON BLE BOMBAY HIGH COURT CIT V S T. P. ASRANI , REPORTED IN (1980) 122 ITR 735 (BOM) , WH EREBY IT HAS BEEN HELD THAT INTERPRETATION OF THE PROVISION HAS TO BE CONSIDERED IN A STRICT MANNER AND NOT HARMONIOUSLY. IT WAS FURTHER SUBMITTED THAT THOUGH THERE IS A DIRECTION DECISION OF THE HON BLE PUNJAB AND HARYANA HIGH COURT, HOWEVER, THE SAME HAS A PERSUASIVE VALUE ONLY AND, THEREFORE, THE DECISION OF THE HON BLE PUNJAB AND HARYANA HIGH COURT WAS RIGHTLY NOT FOLLOWED BY THE LEARNED CIT(A) . IT WAS SUBMITTED THAT THE LAND HAS BEEN SOLD TO THE BUILDERS AND IT IS VERY NEAR TO THE MUNICIPALITY I.E. LES S THAN 8 KMS., I F CROWS FLIGHT DISTANCE IS TAKEN AND HUGE AMOUNT EARNED BY THE ASSESSEE AS THE LANDS WERE SOLD TO THE BUILDERS, AND THEREFORE, THE LEARNED CIT(A) WAS JUSTIFIED IN TREATING THE SURPLUS AS BUSINESS INCOME. IT WAS ALSO SUBMITTED THAT THE VARI OUS DECISIONS OF THE VARIOUS BENCHES ITA NO S . 112,113&147 NAG/2012 9 ARE NOT ON THE DIRECT ISSUE BUT THEY ARE IN REGARD TO UNDER SECTION 80I OF THE ACT AND THOSE DECISIONS ARE NOT APPLICABLE ON THE FACTS OF THE PRESENT CASE. 8 . IN REPLY, LEARNED COUNSEL OF THE ASSESSEE STATED THAT VARIO US DECISIONS OF VARIOUS BENCHES OF THE TRIBUNAL ARE DIRECTLY ON THE ISSUE. REGARDING THE DECISIONS WHICH ARE GIVEN IN RESPECT TO SECTION 80I OF THE ACT, IT WAS SUBMITTED THAT THE LANGUAGE IS THE SAME AND, THEREFORE, THE EXEMPTION CLAUSE HAS TO BE READ AS H ARMONIOUSLY. THEREFORE, THESE DECISIONS HAVE BEEN RELIED UPON . 9 . WE HAVE HEARD RIVAL SUBMISSIONS AND CONSIDERED THEM CAREFULLY. WE HAVE ALSO CONSIDERED THE WRITTEN SUBMISSIONS FILED ON BEHALF OF BOTH THE PARTIES I.E. ASSESSEES AND DEPARTMENT AND HAVE ALS O PERUSED THE RELEVANT MATERIAL ON RECORD, ON WHICH OUR ATTENTIONS WERE DRAWN. WE HAVE ALSO TAKEN INTO CONSIDERATION THE VARIOUS CASE LAWS RELIED UPON BY THE LEARNED AR AS WELL AS LEARNED CIT DR . AFTER CONSIDERING THE SUBMISSION AND PERUSING THE MATERIAL O N RECORD, WE FOUND THAT THE ISSUE IN RESPECT TO WHETHER THE AGRICULTURAL LAND IN QUESTION IS AN ASSET WITHIN THE MEANING OF SECTION 2(14) OR NOT, HAVE ALREADY BEEN DECIDED BY THE HON BLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF SATINDER PAL SINGH(SUPRA ) . THIS DECISION OF THE HON BLE PUNJAB AND HARYANA HIGH COURT HAS BEEN CONSISTENTLY FOLLOWED BY VARIOUS BENCHES OF THE TRIBUNAL IN VARIOUS PARTS OF THE COUNTRY. ONE OF US HAS ALSO TAKEN INTO CONSIDERING THIS ISSUE WHILE SITTING IN JAIPUR BENCHES OF THE TRI BUNAL ITA NO S . 112,113&147 NAG/2012 10 AND FOUND THAT THE DECISION OF THE HON BLE PUNJAB AND HARYANA HIGH COURT HAS TO BE FOLLOWED AND THE DISTANCE HAS TO MEASURED THROUGH APPROACH ROAD AND NOT THROUGH THE CROWS FLIGHT DISTANCE. THE HON BLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF SA TINDER PAL SINGH (SUPRA) HAS HELD THAT THE DISTANCE OF AGRICULTURAL LAND BELONGING TO THE ASSESSEE WITHIN THE MEANING OF SECTION 2(14)(III) (B) HAS TO BE MEASURED IN TERMS OF APPROACH ROAD AND NOT BY A STRAIGHT LINE DISTANCE ON HORIZONTAL PLANE OR AS PER CRO WS FLIGHT. COPY OF THE ORDER IS ALSO PLACED IN THE COMPILATION AT PAGES 1 & 2 . 10 . THE CONTENTION RAISED BY LEARNED CIT(A) THAT THE RECKONING OF URBANIZATION AS A FACTOR FOR PRESCRIBING THE DISTANCE IS OF SIGNIFICANCE WHICH WOULD YIELD TO THE PRINCIPLE O F MEASURING DISTANCE IN TERMS OF APPROACH ROAD RATHER THAN BY STRAIGHT LINE ON HORIZONTAL PLANE, THIS CONTENTION OF LEARNED CIT(A) HAS ALSO BEEN CONSIDERED BY THE HON BLE PUNJAB AND HARYANA HIGH COURT AND HAS OBSERVED THAT THE PRINCIPLE OF MEASUREMENT OF D ISTANCE IS CONSIDERED AS STRAIGHT LINE DISTANCE ON HORIZONTAL PLANE OR AS PER CROWS FLIGHT THEN IT WOULD HAVE NO RELATIONSHIP WITH THE STATUTORY REQUIREMENT OF KEEPING IN VIEW THE EXTENT OF URBANIZATION. SUCH A COURSE WOULD BE ILLUSORY, WHICH IS IN PURSUA NCE OF THE AFORESAID PROVISION THAT NOTIFICATION NO. 9447 DATED. 6 TH JANUARY, 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 S PECIFIED THAT AREA UPTO 2 KMS. FROM THE MUNICIPAL LIMITS IN ALL DIRECTIONS HAS TO BE REGARDED AS ITA NO S . 112,113&147 NAG/2012 11 OTHER THAN AGRICULTURAL LAND. ONCE THE STATOR GUIDANCE OF TAKING INTO ACCOUNT THE EXTENT AND SCOPE OF URBANIZATION 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 PLANE OR AS PER CROWS FLIGHT BECAUSE ANY MEASUREMENT BY CROWS FLIGHT IS BOUND TO IGNORE THE URBANIZATION WHICH HAS TAKEN PLACE. THE DECISION OF THE MUMBAI BENCH IN THE CASE OF LAUKIK DEVELOPERS VS DCIT, REPORTED IN (2007) 108 TTJ (MUMBAI) 364 , WAS ALSO TA KEN INTO CONSIDERATION BY THE HO NBLE PUNJAB AND HARYANA HIGH COURT AND FOUND THAT THE DECISION OF THE TRIBUNAL HAS ATTAINED FINALITY. 1 1 . IN CASE OF LAUKIK DEVELOPERS (SUPRA) , THE MUMBAI BENCH OF THE TRIBUNAL HAS OBSERVED THAT ONCE THE PRINCIPLE OF MEASURING DISTANCE HAS BEEN SETTLED NAMELY THAT THE DISTANCE OF THE AGRICULTURAL LAND BELONGING TO THE ASSESSEE - RESPONDENT HAS TO BE MEASURED IN TERMS OF BY APPROACH ROAD AND NOT BY A STRAIGHT LINE DISTANCE ON HORIZONTAL PLANE OR AS PER CROWS FLIGHT. ACCORDINGLY, THE HON BLE PUNJAB AND HARYANA HIGH COURT HELD THAT THE DISTANCE HAS TO BE ME ASURED BY APPROACH ROAD AN D NOT BY STRAIGHT LINE DISTANCE ON HORIZONTAL PLANE OR AS PER CROWS FLIGHT. IN CASE OF LAUKIK DEVELOPERS (SUPRA) , THE ASSESSEE DISPUTED THAT THE DISTANCE FOR THE PURPOSE OF SECTION 80IB(10) HAS TO BE MEASURED THROUGH STRAIGHT LIN E DISTANCE ON HORIZONTAL PLANE AND NOT BY APPROACH ROAD. THE MUMBAI BENCH OF THE TRIBUNAL HAS HELD THAT THE ISSUE REGARDING DISTANCE TO BE MEASURED ITA NO S . 112,113&147 NAG/2012 12 WITH REGARD TO ROAD DIS TANCE OR A STRAIGHT LINE DISTANCE IS COVERED WITH THE DECISION OF THE PUNE TRIBUNAL I N THE CASE OF MANGALAM INORGANICS (P) LTD (SUPRA) , WHEREIN IT WAS HELD THAT THE DISTANCE BETWEEN THE MUNICIPAL LIMITS AND ASSESSEES INDUSTRIAL UNDERTAKING HAS TO BE MEASURED HAVING REGARD TO THE RO A D DISTANCE AND NOT AS PER THE CROWS FLIGHT I.E., A STRAI GHT - LINE DISTANCE AS CANVASSED BY THE REVENUE. 1 2 . IN CASE OF ITO VS. ASHOK SHUKLA, DECIDED IN ITA NO. 207/ INDORE/2012 , FOR ASSESSMENT YEAR 2008 - 09 , VIDE ORDER DATED 31 - 8 - 2012, THE ISSUE WAS IN RESPECT TO WHETHER THE ASSESSEE WAS ENTITLED TO EXEMPTION F ROM CAPITAL GAIN ON SALE OF AGRICULTURAL LAND. THIS ISSUE WAS EXAMINED IN DETAIL AND IT WAS FOUND THAT THE TEHSILDAR AND PATWARI HAVE GIVEN A REPORT THAT THE LAND IN QUESTION WAS AGRICULTURAL LAND AND THE DISTANCE IS 9.7 KMS FROM THE MUNICIPAL LIMIT. THIS DISTANCE WAS THROUGH THE APPROACH ROAD AND NOT BY STRAIGHT LINE DISTANCE METHOD. THEREAFTER DISCUSSING THE ISSUE ON MERIT AND HAVING TAKING INTO CONSIDERATION THE DECISION OF THE TRIBUNAL IN THE CASE OF LAUKIK DEVELOPERS (SUPRA) AND CONSIDERING THE DECISIO N OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF BALKRISHNA HARIBALLABHADAS VS. CIT, REPORTED IN 138 ITR 245 , WHICH WAS RELIED UPON BY THE LEARNED DR AND FOUND THAT THE MEASUREMENT HAS TO BE ADOPTED BY THE APPROACH ROAD AND NOT BY STRAIGHT LINE METHOD. R ELIANCE WAS ALSO PLACED ON THE DECISION OF THE HON BLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF SATINDER PAL SINGH (SUPRA) . ITA NO S . 112,113&147 NAG/2012 13 1 3 . IN CASE OF ACIT VS. M/S SHAGUN INFRASTRUCTURE PVT. LTD., DECIDED IN ITA NO. 209/NAG/2009 , FOR ASSESSMENT YEAR 2006 - 07, VIDE ORDER DATED 27 - 6 - 2011, THE NAGPUR BENCH OF THE TRIBUNAL HAS HELD THAT THE LAND IN QUESTION WHICH WAS SITUATED MORE THAN 8 KMS. FROM THE LOCAL MUNICIPAL LIMIT AND IS CLEARLY AGRICULTURAL LAND IN TERMS OF SECTION 2(14)(III) OF THE ACT,, THEREFORE, ANY INCOM E FROM SUCH LAND INCLUDING PROFIT ARISING FROM SALE OF SUCH AGRICULTURAL LAND IS NOT ASSESSABLE AS INCOME. 1 4 . IN CASE OF ACIT VS. GAURAV KHANDELWAL , DECIDED IN ITA NO. 195/AGRA/2010 , FOR ASSESSMENT YEAR 2006 - 07, THE AGRA BENCH OF THE TRIBUNAL FOLLOWING TH E DECISION OF MUMBAI BENCH IN CASE OF LAUKIK DEVELOPERS (SUPRA) AND THE DECISION OF HON BLE PUNJAB AND HAR YANA HIGH COURT IN THE CASE OF SATINDER PAL SINGH (SUPRA) , HE LD THAT THE DISTANCE OF 8KMS HAS TO BE MEASURED BY APPROACH ROAD DISTANCE AND NOT BY STRA IGHT LINE DISTANCE ON HORIZONTAL PLANE. SIMILAR VIEW HAS BEEN EXPRESSED IN CASE OF SHRI MA I NRAJ VS. ACIT , DECIDED IN ITA NO. 1371/M D S /2011 , FOR ASSESSMENT YEAR 2007 - 08 VIDE ORDER DATED 18 - 8 - 2011. IN THIS CASE ALSO IT HAS BEEN HELD THAT THE DISTANCE HAS TO B E MEASURED BY APPROACH ROAD AND NOT THROUGH CROWS FLIGHT OR STRAIGHT LINE METHOD. IN CASE OF SMT. SAVITHRI AMMAL VS. ITO , DECIDED IN ITA NO.487/M D S /201 2 , VIDE ORDER DATED 12 - 7 - 2012 AGAIN IT HAS BEEN HELD THAT THE DISTANCE HAS TO BE MEASURED AS PER THE AP PROACH ROAD AND NOT BY STRAIGHT LINE METHOD. SIMILAR VIEW HAS BEEN EXPRESSED IN CASE OF ITO VS. SHRI CHAGANLAL LAL JI ASWIN BUSINESS , DECIDED IN ITA ITA NO S . 112,113&147 NAG/2012 14 NO. 857/M D S /2011, FOR THE ASSESSMENT YEAR 2007 - 08 , VIDE ORDER DATED 18 - 2 - 2011 . IN CASE OF ITO VS. M/S RANJIT RATTAN MEHRA (HUF), DECIDED IN ITA NO. 442/ASR/2011 FOR ASSESSMENT YEAR 200 8 - 09 , THE AMRITSAR BENCH OF THE TRIBUNAL HAS TAKEN A VIEW THAT THE DISTANCE OF 8 KMS HAS TO BE MEASURED THROUGH THE APPROACH ROAD AND NOT THROUGH THE STRAIGHT LINE METHOD. WHILE HOLD ING SO, THE DECISION OF THE HONBLE PUNJAB AND HARYANA HIGH COURT IN CASE OF SATINDER PAL SINGH (SUPRA) , WAS TAKEN INTO CONSIDERATION AND ANOTHER DECISION O F THE SAME HIGH COURT IN CASE OF CIT VS. LAL SINGH & OTHERS, REPORTED IN (2010) 228 CTR 575 WAS ALS O TAKEN INTO CONSIDERATION AND HAS ALLOWED THE ISSUE IN FAVOUR OF THE ASSESSEE BY HOLDING THAT THE DISTANCE OF 8KM HAS TO BE MEASURED THROUGH APPROACH ROAD AND NOT BY STRAIGHT LINE METHOD ON HORIZONTAL PLANE. 1 5 . WE HAVE ALSO TAKEN INTO CONSIDERATION VAR IOUS ARGUMENTS OF LEARNED CIT DR AND FOUND THAT SINCE THE ISSUE IS COVERED BY THE DECISION OF THE VARIOUS BENCHES OF THE TRIBUNAL AS WELL BY HON BLE PUNJAB AND HARYANA HIGH COURT, THEREFORE, IN VIEW OF THE CONSISTENCY THE VIEW TAKEN BY VARIOUS BENCHES HAS TO BE FOLLOWED. THERE IS NO CONTRARY DECISION IS AVAILABLE ON THE SAME FACTS AND, THEREFORE, IT CANNOT BE SAID THAT THE DECISION OF THE HON BLE PUNJAB AND HARYANA HIGH COURT HAS ONLY PERSUASIVE VALUE. IF THERE IS ANY CONTRARY DECISION IS AVAILABLE EITHER BY THE HON BLE HIGH COURT OR BY ANY OTHER BENCHES OF THE TRIBUNAL, THEN OF COURSE IT CAN BE SAID THAT THE DECISION OF OTHER ITA NO S . 112,113&147 NAG/2012 15 BENCHES HA VE PERSUASIVE VALUE. IN VIEW OF THE AFORESAID FACTS AND CIRCUMSTANCES OF THE CASE, WE HELD THAT DISTANCE OF 8 KMS. HAS TO BE MEASURED THROUGH APPROACH ROAD AND NOT BY STRAIGHT LINE DISTANCE ON HORIZONTAL PLANE OR CROWS FLIGHT. HENCE, THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEES. 1 6 . REGARDING THE ISSUE IN REGARD TO WHETHER THE SALE CONSIDERATION OUT OF AGRICULTURAL INCO ME IS ASSESSABLE AS BUSINESS INCOME OR NOT, ONCE WE HAVE HELD THAT THIS WAS AN AGRICULTURAL LAND AND, THEREFORE, ANY CONSIDERATION OUT OF SALE OF AGRICULTURAL LAND, WHICH IS NOT ASSESSABLE AS THE LAND WAS SITUATED BEYOND 8 KMS., THEREFORE, THE DIRECTION OF THE LEARNED CIT(A) THAT THE SURPLUS MAY BE TREATED AS BUSINESS INCOME , HAS BECOME NOW MEANINGLESS. E VEN AND OTHERWISE, THIS ISSUE IS ALSO DECIDED BY VARIOUS HIGH COURTS INCLUDING THE HON BLE BOMBAY HIGH COURT. THOUGH LEARNED CIT(A) HAS PLACED RELIANCE ON THE DECISION OF THE HON BLE BOMBAY HIGH COURT IN CASE OF GOPAL RAMNARAYAN KASAT , REPORTED IN 9 TAXMAN.COM 236 (BOM) , HOWEVER, IN A LATEST DECISION THE HON BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. SMT. DEBBIE ALEMAO, REPORTED IN (2011) 331 ITR 59 , HAS H ELD THAT THE LAND WHICH WAS SHOWN AS AGRICULTURAL LAND IN THE REVENUE RECORDS AND NEVER SOUGHT TO BE USED FOR NON - AGRICULTURAL PURPOSE S BY THE ASSESSEE TILL IT WAS SOLD HAS TO BE TREATED AS AGRICULTURAL LAND, EVEN THOUGH NO AGRICULTURAL INCOME WAS SHOWN BY THE ASSESSEE FROM THIS LAND AND, THEREFORE, NO CAPITAL GAIN WAS TAXABLE ON THE SALE OF THE SAID LAND. ITA NO S . 112,113&147 NAG/2012 16 1 7 . FACTS IN THE CASE IN HAND ARE SIMILAR. THE LAND IN QUESTION WAS SHOWN AS AGRICULTURAL LAND IN THE REVENUE RECORD. WHETHER THERE WAS ANY AGRICULTURAL INCOME OR NOT , IS NOT THE MOOT QUESTION TO DECIDE THE ISSUE, HOWEVER, THE IMPORTANT FACTOR IS TO BE DECIDED AS TO WHETHER THE CHARACTER OF THE LAND IS AGRICULTURE OR NOT. UNDISPUTEDLY , IN THE REVENUE RECORD AND AS PER THE PATWARI CERTIFICATE, THE LAND IN Q UESTION IS AGRICULTURAL LAND. THEREFORE, THE SALE CONSIDERATION WAS NOT TAXABLE ON THE SALE OF SAID LAND I.E. EITHER ON ACCOUNT OF CAPITAL GAIN OR ON ACCOUNT OF BUSINESS INCOME. 1 8 . EVEN WE FOUND THAT THIS ISSUE HAS BEEN DECIDED BY THE HON BLE APEX COURT WHILE CONFIRMING THE ORDER OF THE HON BLE DELHI HIGH COURT IN THE CASE OF DLF UNITED LIMITED , 217 ITR 337 . THE FACTS IN THE CASE OF DLF UNITED LIMITED (SUPRA) WERE THAT THE DLF LIMITED PURCHASED AGRICULTURAL LAND FROM VARIOUS FARMERS IN THE EAR AND SHOWN E XEMPTION, HOWEVER, THE AO TREATED THE SALE CONSIDERATION AS REVENUE RECEIPT. UPTO THE STAGE OF TRIBUNAL, THE ORDER OF AO WAS CONFIRMED, HOWEVER, THE HON BLE DELHI HIGH COURT HELD THAT THE LAND IN QUESTION WAS OF AGRICULTURAL LAND AND THEREFORE, ANY RECEIPT ON ACCOUNT OF SALE OF AGRICULTURAL LAND IS NOT TAXABLE. THIS DECISION OF THE HON BLE DELHI HIGH COURT HAS BEEN CONFIRMED BY THE HON BLE APEX COURT, WHEREBY IT HAS BEEN HELD THAT EVEN AND OTHERWISE WE SEE NO MERIT IN THE SPECIAL LEAVE PETITION AND THE SAME ARE ACCORDINGLY DISMISSED ON THE GROUND OF DELAY AS WELL AS ON MERITS. COP IES OF THESE ORDERS ARE PLACED IN THE COMPILATION. ITA NO S . 112,113&147 NAG/2012 17 1 9 . THIS ISSUE HAS ALSO BEEN CONSIDERED IN VARIOUS OTHER DECISION I.E. IN CASE OF HINDUSTAN INDUSTRIAL RESOURCES LIMITED VS. ACIT , REPORTED IN 335 ITR 77 , WHEREIN IT WAS HELD THAT IN VIEW OF THE FINDING OF THE TRIBUNAL THAT THE LAND IN QUESTION WAS AGRICULTURAL LAND AT THE TIME OF PURCHASE BY THE ASSESSEE AS ALSO AT THE TIME OF ACQUISITION, THE LAND WAS CLEARLY AGRICULTURAL LAND IRR ESPECTIVE OF THE FACT THAT THE ASSESSEE INTENDED TO USE THE LAND FOR INDUSTRIAL PURPOSES AND DI D NOT CARRY OUT ANY AGRICULTURAL OPERATIONS AND, THEREFORE, NO CAPITAL GAINS COULD BE CHARGED ON ACQUISITION THEREOF UNDER THE LAND ACQUISITION ACT, 1894. WHILE HOLDING SO, THE DECISION IN THE CASE OF DLF UNITED LIMITED (SUPRA) , WAS TAKEN INTO CONSIDERATION BY THE H O N BLE DELHI HIGH COURT. 20 . IN CASE OF SHRI SATYANARAYAN O. AGRAWAL VS. ADCIT, DECIDED IN ITA NO. 169/NAG/2012 FOR ASSESSMENT YEAR 2007 - 08, SIMILAR VI EW ALSO WAS TAKEN FOLLOWING THE VARIOUS CASE LAWS AND ULTIMATELY IT WAS HELD THAT THE CONSIDERATION RECEIVED OUT OF SALE OF AGRICULTURAL LAND WAS NOT TAXABLE. 2 1 . SINCE THIS ISSUE HAS ALREADY BEEN DECIDED BY VARIOUS B ENCHES OF THE TRIBUNAL AND THE H ON BLE BOMBAY HIGH COURT AS WELL AS THE HON BLE DELHI HIGH COURT AND THE DECISION OF THE HON BLE DELHI HIGH COURT IN THE CASE OF DLF UNITED LIMITED (SUPRA) , WHICH HAS BEEN CONFIRMED BY THE HON BLE SUPREME COURT, THEREFORE, WE H O LD THAT ANY CONSIDERATION RECEIVED OUT OF SALE OF AGRICULTURAL LAND, CANNOT BE TREATED AS BUSINESS INCOME FOR THE PURPOSE OF CAPITAL GAIN OR FOR THE ITA NO S . 112,113&147 NAG/2012 18 PURPOSE OF BUSINESS INCOME, WHATEVER THE CASE MAY BE. IN VIEW OF THE AFORESAID FACTS AND CIRCUMSTANCES OF THE CASE, WE ALLOW THIS GROUND IN F AVOUR OF ALL THE ASSESSEES. 2 2 . IN REGARD TO CHARGING OF IN TEREST, IT IS CONSEQUENTIAL IN NATURE. THEREFORE, THE AO IS DIRECTED TO ALLOW THE CONSEQUENTIAL RELIEF TO ALL THE SE THREE ASSESSEE S . 2 3 . RESULTANTLY, APPEAL S OF THE ASSESSEE S ARE ALLOWED . ORDER P RONOUNCED IN THE OPEN COURT ON THIS 22 ND DAY OF MARCH, 2013 SD/ - SD/ - (D.KARUNAKAR A RAO) (R.K.GUPTA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED : 22 / 03 / 2013 . PKM , PS COPY OF THE ORDER FORWARDED TO : 1. T HE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) ,NAGPUR . 4. CIT 5. DR, ITAT, MUMBAI /NAGPUR 6. GUARD FILE. //TRUE COPY// BY ORDER, ( ASSTT. REGISTR AR) ITAT, MUMBAI