S.BALASARASWATHI, CHENNAI V. ITO, CHENNAI

ITA 117/CHNY/2021

AI Insights

The case involves two appeals by Ms. S. Balasaraswathi against the orders of the Commissioner of Income Tax (Appeals)-9, Chennai, and the Principal Commissioner of Income Tax, Chennai, regarding the assessment of long-term capital gains on the sale of agricultural land. The Income Tax Officer had initially assessed the land as a capital asset based on its proximity to urban areas and lack of agricultural activity reported in previous years. However, the Tribunal, referencing a similar case involving one of the co-owners of the land and considering the aerial distance from Tambaram Municipality, ruled that the land is agricultural and not subject to capital gains tax.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 135067 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 9 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 18-01-2023
• Assessment Year: 2014-2015
• Appeal Filed On: 21-04-2021
• Other Referred Cases: ITO vs. Late T. Bhavani Devi in ITA No.1214/Chny/2019
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Fair market value; Capital Gains
• Section: 50C; 133(6)

Judgement Text

आयकर अपीलीय अिधकरण, ‘बी’ ᭠यायपीठ,चे᳖ई IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH, CHENNAI ᮰ी महावीर ᳲसह, उपा᭟यᭃ एवं ᮰ी मनोज कुमार अᮕवाल, लेखा सद᭭य के समᭃ BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENTAND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER आयकर अपीलसं./ITA No.: 2350/CHNY/2019 & 117/CHNY/2021 िनधाᭅरण वषᭅ/Assessment Year: 2014-15 Ms. S. Balasaraswathi, New No.31, Old No.16, Neelakantha Mehta Street, T. Nagar, Chennai – 600 017. PAN: AAAPB 4569P vs. The Income Tax Officer, Non-Corporate Ward-21(1)(i/c), Chennai. (अपीलाथᱮ/Appellant) (ᮧ᭜यथᱮ/Respondent) अपीलाथᱮ कᳱ ओर से/Appellant by : Shri G. Baskar & I. Dinesh, Advocates ᮧ᭜यथᱮ कᳱ ओर से/Respondent by : ShriD. Hema Bhupal, JCIT for Shri S. Senthil Kumaran, CIT सुनवाई कᳱ तारीख/Date of Hearing : 19.01.2023 घोषणा कᳱ तारीख/Date of Pronouncement : 08.02.2023 आदेश /O R D E R PER MAHAVIR SINGH, VICE PRESIDENT: These two appeals by the assessee are arising out of the different orders of the Commissioner of Income Tax (Appeals)-9, Chennai in ITA No.65/CIT(A)-9/AY 2014-15 dated 27.06.2019 and the revision order passed by the PCIT, Chennai - 8 dated 27.03.2021 u/s.263 of the Income Tax Act, 1961 (hereinafter the ‘Act’), revising the assessment completed u/s.143(3) r.w.s.147 of 2 ITA Nos. 2350/Chny/2019 117/Chny/2021 the Act dated 28.12.2018. The assessment was framed by the Income Tax Officer, Non-Corporate Ward 21(1) i/c, Chennai for the relevant assessment year 2014-15 u/s.143(3) r.w.s.147 of the Act, dated 28.12.2018. 2. The only interconnected issue raised in these two appeals of assessee is as regards to assessment of sale of land situated at Varadarajapuram village. 3. The brief facts are that the AO noticed from the sale deed that the assessee along with other five legal heirs sold three immovable properties in the form of land admeasuring 5.79 acres situated at No.111, Varadarajapuram Village, Sriperumbudur Taluk, Kancheepuram District during the financial year 2013-14 relevant to assessment year 2014-15 for a total consideration of Rs.13,88,45,200/-. The assessee’s share being 1/6 th comes to Rs.2,31,47,000/-. According to assessee, the land sold is agricultural land but the AO noted that the assessee has not offered any agricultural income in the previous two years and no agricultural activity has taken placed from Pasaliaandu 1424 as per adangal filed by Deputy Tahsildar, Kundrathur. According to AO, the unsold lands were not utilized by assessee for agricultural 3 ITA Nos. 2350/Chny/2019 117/Chny/2021 purposes. The AO on the basis of Google map noted that the property situated is at a distance of 4 kms from local limits of Tambaram Municipality and the population of Tambaram Municipality as per last preceding census is 1,74,784. Accordingly, he treated this agricultural land in the nature of capital asset taxable under long term capital gain. The AO brought this is long term capital gain tax and assessed the long term capital gain at Rs.2,70,71,209/- on these three parcel of lands. Aggrieved assessee came in appeal before CIT(A). 4. The CIT(A) also confirmed the action of AO by observing in para 6 as under:- 6. I have perused the assessment order and also the written submissions of the appellant. The contention of the AR is not acceptable due to the following reasons. i) As per the ITR filed by the appellant, no agricultural land has been declared. ii) No agricultural activities had taken place from “Pasaliaandu 1424" as per the ‘adangal' filed from the Deputy Tahsildar, Kundrathur. iii) The sale value of the land of 5.79 acres of land was Rs.13.88 crores which also indicates that the land is not for agricultural purposes. iv) The land was never used for agricultural activities, never ploughed, tilled etc. v) The transacted lands are surrounded by residential flats with close proximity to various established industries, which shows that the lands are not agricultural lands. vi) From the google map and as per the latest census data, the AO has established that the land under consideration is a capital asset u/s 2(14). 4 ITA Nos. 2350/Chny/2019 117/Chny/2021 vii) The AR has stated that the appellant sought directions u/s 144A from the Jt.CIT. However, on verification of the records and the assessment order, it is seen that no such directions u/s 144A were sought. viii) The distance as per the website "DistancesFrom.com" and the certificate issued by the VAO are road distances and whereas the AO has rightly adopted the aerial distance. ix) The facts of the case under consideration as well as the case of T. Bhavani Devi are also not similar and therefore, the said decision of the Ld.CIT(A)-2 is not applicable to the facts of the case. The extent of land, the sale consideration, the aerial distance as per the AO etc as per the present case and as per the case relied upon are different and distinguishable. 61. In view of the above detailed discussion, I am in agreement with the AO that the land under consideration is not an agricultural land within the meaning of Sec.2(14) of the Act and hence capital gains is chargeable. Therefore, the action of the AO in computing Long Term Capital Gains of Rs.2,70,71,209/- is hereby confirmed. Accordingly, these grounds of appeal are dismissed. Aggrieved, assessee came in appeal before the Tribunal. 5. In the mean time, the PCIT issued revision notice u/s.263 of the Act and revised the assessment order by stating that as per Revenue records, the land is classified a residential land as per the Sub-Registrar Office records, Padappai, Kancheepuram District during financial year 2013-14 relevant to assessment year 2014-15. He also noted that the guideline value of this land is at Rs.900, Rs.1000 & Rs.1100 respectively for the survey Nos.238, 239 & 240. Therefore taking the lowest price at Rs.900/- per sq.ft., the total sale value of the land comes to Rs.22,68,07,200/- as against 5 ITA Nos. 2350/Chny/2019 117/Chny/2021 declared value of assessee at Rs.13,88,45,200/-. The PCIT estimated the 1/6 th share of the assessee at Rs.3,78,01,200/- instead of declared by assessee at Rs.2,31,47,000/-. The PCIT directed the AO to adopt the fair market value as per section 50C of the Act and assess the assessee’s share at Rs.3,78,01,200/-. Against this revision order also, the assessee came in appeal before us. 6. At the outset, the ld.counsel for the assessee stated that this issue is covered by Tribunal’s decision in assessee’s one of the co- owners case, ITO vs. Late T. Bhavani Devi in ITA No.1214/Chny/2019, wherein the Tribunal considered the land as agricultural land because the land is situated more than 6 kms from the outer limit of Tambaram Municipality measuring aerially. Despite the fact, the bench on the last hearing allowed both the parties to measure distance correctly if they have no objection but the Revenue filed a report from AO dated 27.01.2013 and the same reads as under:- As directed, Aerial distance measurement between outer limit of Tambaram Municipality to the Vardharajapuram village, Sriperumbudur has been performed on Google Maps and subsequent screenshots of the same has been taken. 6 ITA Nos. 2350/Chny/2019 117/Chny/2021 Sereenshot l is the measurement between outer limit of Tambaram Municipality to the Vardharajapuram village, Sriperumbudur which comes out to be l.69 Kms. Screenshot 2 & Scrcenshot 3 is the measurement between outer limit of Tambaram Municipality to the Vardharajapufam Village Panchayat Office, Sriperumbudur which comes out to be 2.91 Kıms and 3.41 Kms. Measurement of various boundaries of Vardharajapuram village, Sriperumbudur from outer limit of Tambaram Municipality is well within the 6 Kms range. I am further attaching the Certificate of Encumbarance of Property for the said Survey No. 237, 238/1, 240/2A, 240/1A received from SRO Office, Padappai. As per EC, the impugned property is classified as "House Site" only. Letter has been sent to Tehsildar, Kundrathur Taluk Ofice, asking to certify whether the above mentioned property is agricultural or residential land. Also Inspector (Shri Pratyush Singh) of this Ward visited to the office of Tahsildar, Kundrathur on 25.01.2023, to collect the information. After Personal discussion with the Tahsildar, it is informed that due to closed holidays the report will be submitted by 10.00 AM. on 30.01.2023. 6.1 From the above report, it is clear that even now the Revenue could not controvert that the land situated in Varadarajapuram village is less than 6 kms as noted by the Tribunal in one of the co- owners case. In the co-owners case in ITA No.1214/Chny/2019, supra, the Tribunal has considered this issue in great detail and find that the land situated is agricultural land and it is in Village Varadarajapuram which is beyond 6 kms of outer limit of Tambaram Municipality. The relevant reads as under:- 7 ITA Nos. 2350/Chny/2019 117/Chny/2021 “7. We have heard rival contentions and gone through facts and circumstances of the case. We noted that the JCIT vide his directions dated 30.12.2017 has noted the fact in 8 (iii) & (iv) as under:- 8 (iii) The maps above depict the outer limit of Tambaram Municipality being the nearest municipality to Varadarajapuram and also the limits of Karasangal which is an area located beyond Varadarajapuram. From the map it may be seen that a point beyond Varadarajapuram that too on the other end of Karasangal itself is only 5.65 kms from the outer limits of Tambaram Municipality, when measured aerially. (iv) Further it can be very clearly conferred from the above map that Varadarajapuram is only 4.17 kms from the outer limit of Tambaram Municipality, when measured aerially. From the above, it is clear that the JCIT has calculated the aerial distance of Varadarajapuram village from the outer limit of Tambaram Municipality measured aerially as seen from the google map positioning of GPS. Further, we noted that in the same directions, the JCIT has referred to one letter of Tahsildar dated 22.12.2017, wherein the Revenue Tahsildar has only made approximation of the land in question from the outer limit of Tambaram Municipality. The relevant para 4 reads as under:- “4. The return filed in response to the notice u/s.148 was taken up for scrutiny by issue of a notice u/s.143(2). Subsequently notices were issued u/s.142(1) calling for specific details and documents in response to which the assessee Shri S. Balasubramaniyan appeared and submitted details & documents before the assessing officer. The assessee had submitted a copy of a letter from Village Administrative Officer (VAO) of Varadarajapuram village, dated 22/11/2017 in which the VAO has stated that the land in question is situated within 7 kms from outer limits of Tambaram municipality. On the other hand, the assessing officer vide notice u/s 133(6) dated 22/11/2017 sought certain details of the land from the Tahsildar, Sriperumbudhur Taluk. In response to the above notice, the Tahsildar vide letter dated 22/11/17 made submissions. In the said submission, the Tahsildar has stated that the land in question is situated within 4 Km approximately from the outer limits of Tambaram Municipality.” 8 ITA Nos. 2350/Chny/2019 117/Chny/2021 7.1 We have also gone through the web documents filed by assessee in her paper-book at pages 1 to 3 and particularly page 3, the land in question, when measured aerially the distance from outer limit of Tambaram Municipality is 8.14 kms (5.06 miles). Even the VAO vide his certificate dated 22.11.2017 has certified that the aforementioned land is situated beyond 7 kms from Tambaram Municipality. In entirety of facts and going through these evidences we are of the view that the land situated in village Varadarajapuram is beyond 6 kms of outer limit of Tambaram Municipality. Hence, we are of the view that the aforesaid land was not taxable because land did not fall within the distance of 6 kms from the outer limit of Tambaram Municipality measured aerially. Hence, we find no infirmity in the order of CIT(A) and the same is confirmed.” Hence, we find no infirmity in the claim of assessee and once this land is agricultural land, which is not controverted, the revision order passed by PCIT cannot be sustained. Hence, we reverse the order of PCIT as well as the order of CIT(A) and AO. We allow both the appeals of assessee. 7. In the result, both the appeals of the assessee are allowed. Order pronounced in the open court on 8 th February, 2023 at Chennai. Sd/- Sd/- (मनोज कुमार अᮕवाल) (MANOJ KUMAR AGGARWAL) लेखा सद᭭य/ACCOUNTANT MEMBER (महावीर ᳲसह ) (MAHAVIR SINGH) उपा᭟यᭃ /VICE PRESIDENT चे᳖ई/Chennai, ᳰदनांक/Dated, the 8 th February, 2023 RSR आदेश कᳱ ᮧितिलिप अᮕेिषत/Copy to: 1. अपीलाथᱮ/Appellant 2. ᮧ᭜यथᱮ/Respondent 3. आयकरआयुᲦ (अपील)/CIT(A) 4. आयकरआयुᲦ /CIT 5. िवभागीयᮧितिनिध/DR 6. गाडᭅफाईल/GF.