Shri Amit Mahendrabhai Shah, Ahmedabad V. The CIT.Ahmedabad-I, Ahmedabad

ITA 1351/AHD/2011

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9733 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-07-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 02-07-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 09-05-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: AND I T A NO AHD
• Keywords: Capital asset; Competent authority
• Section: 2(14); 263; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI PRAMOD KUMAR ACCOUNTANT MEMBER AND SHRI S.S. GODARA JUDICIAL MEMBER ITA NO1351/AHD/2011 (BY ASSESSEE) AND ITA NO.1595/AHD/2012 (BY REVENUE A.Y.2003-04 (1)SHRI AMIT MAHENDRABHAI SHAH, 36 NEW CLOTH MARKET, AHMEDABAD-380 002. PANADKPS 5850 K (2) THE INCOME TAX OFFICER, WARD 3(2), 1 ST FLOOR, PRATYAKSHAKAR BHAVAN, PANAJAA POLE, AMBAWADI, AHMEDABAD. VS . (1) THE INCOME TAX OFFICER, WARD 3(2), 1 ST FLOOR, PRATYAKSHAKAR BHAVAN, PANJARA POLE, AMBAWADI, AHMEDABAD. (2) SHRI AMIT MAHENDRABHAI SHAH, 36 NEW CLOTH MARKET, AHMEDABAD-380002. (APPELLANT) (RESPONDENT) BY ASSESSEE : MRS. ARTI N.SHAH BY REVENUE : MRS. VIBHA BHALLA,CIT D.R / DATE OF HEARING : 2/07/2015 / DATE OF PRONOUNCEMENT: 10/07/2015 / O R D E R PER SHRI S.S. GODARA, JUDICIAL MEMBER THESE TWO APPEALS RELATE TO ASSESSMENT YEAR 2003-04. THE ASSESS EE HAS FILED THE FORMER ONE AGAINST THE CIT-1, AHMEDABADS ORDER DATED 21-3-2011 IN PROCEEDINGS UNDER SECTION 263 OF THE INCOME TAX ACT, 1961 IN SHORT THE ACT . THE REVENUE HAS PREFERRED THE LATTER APPEAL AGAINST THE ORDER DATED 25-5- 2012 PASSED BY THE CIT (A)-6, AHMEDABAD IN PROCEEDINGS U/S.143(3) R.W.S. 263 OF THE ACT, AS CONSEQUENTIAL TO THE CITS ORDER HEREINABOVE. ITA NO.1351 /AHD/2011 ITA NO.1595/AHD/2012 AMIT MAHENDRABHAI SHAH FOR A.Y. 2003-04 - 2 - 2. B OTH THE CASES HAVE COMMON FACTS. THE ASSESSEE / AN INDIVIDUAL SOLD HIS LANDS COMPRISED IN SURVEY NOS.277 TO 279 & 285 TO 286 SITUATED IN VILLAGE KOBA, DIST RICT GANDHINAGAR ON 22-10-2002. HE DID NOT DECLARE PROFITS ARISING THEREFROM OF RS.45,37,835/- AS CAPITAL GAINS. RELEVANT CERTIFICATES ISSUED BY TH E EXECUTIVE ENGINEER, ROADS AND BUILDING DEPARTMENT WERE QUOTED IN SUPPORT. THE ASSESSI NG OFFICER IN THE COURSE OF SCRUTINY OBSERVED THAT THE SAME WERE NOT ISSUED BY A COMPETENT AUTHORITY. THE COMPETENT AUTHORITY IN QUESTION APPEARS TO HA VE CLARIFIED THAT THE ABOVESAID SURVEY NUMBERS FELL WITHIN 6.6 KMS. FROM AHMEDABAD MUNIC IPAL CORPORATION AND 4.5 KMS FROM GANDHINAGAR MUNICIPAL CORPORATION. THE ASSESSING AUTHORITY ACCORDINGLY SOUGHT TO TAX THE ASSESSEES PROFITS ARI SING FROM SALE OF HIS LANDS AS CAPITAL GAINS. 3. THE ASSESSEE PLEADED THAT THE ABOVE STATED DISTANCE AS COMPUTED B Y THE APPROPRIATE COMPETENT AUTHORITY WAS AS PER CROW-FLY AND NOT ROA D DISTANCE METHOD. HE EMPHASIZED THAT THE LAND SOLD WAS AGRICULTURAL AS WELL AS ON THE DATE OF SALE DEEDS. THE ASSESSING OFFICER REJECTED ALL THESE PLEAS IN ASSESSM ENT ORDER DATED 29-3-2006 BY REITERATING HIS REASONS GIVEN HEREINABOVE. HE TREATED THE ASSES SEES LAND SOLD AS CAPITAL ASSETS U/S.2 (14) AND COMPUTED CAPITAL GAINS OF RS.41,38,066/-. 4. THE ASSESSEE PREFERRED APPEAL. THE CIT (A) IN HIS ORDER DA TED 15-11-2006 UPHELD THE ASSESSING OFFICERS ACTION. THE ASSESSEE FILED ITA NO.386/AHD/2007 BEFORE THE TRIBUNAL. A CO-ORDINATE BENCH IN ITS ORDER DATED 15-6-2007 REMI TTED THE ISSUE BACK TO THE ASSESSING OFFICER AS UNDER. 6. WE HAVE HEARD THE PARTIES AND PERUSED THE MATERIAL ON RECORD. WE DO NOT CONSIDER THE ASSESSEES CLAIM OF THE DISTANCE BEING RECKONED IN TER MS OF THE MOTORABLE ROAD DISTANCE AS MAINTAINABLE, IN VIEW OF SECTION 11 OF THE GENERAL CLAUSES ACT, AS WELL AS THE CLARIFICATION ISSUED BY THE CB DT IN THE MATTER. HOWEVER, THE QUESTION OF THE EXACT DISTANCE OF THE SAID LAND FR OM THE LOCAL LIMITS OF THE AHMEDABAD MUNICIPAL CORPORATION (AMC) BEING BASIC TO THE DETERMINATION OF ITS STATUS AS A CAPITAL ASSET UNDER THE ACT, WE AR E INCLINED TO ACCEPT THE ASSESSEES PRAYER FOR ADMISSION OF THE SAID ADDITIONAL EVIDE NCE. WE ALSO FIND THAT THE CERTIFICATES STAND ISSUED BY THE DIFFERENT AUTHOR ITIES AT DIFFERENT POINT OF TIME. THE LOCAL LIMIT OF THE MUNICIPAL CORPORATION (MUNICIPALITY) BEING SUBJECT TO CHANGE FROM TIME T TIME, WHAT WOULD BE ITA NO.1351 /AHD/2011 ITA NO.1595/AHD/2012 AMIT MAHENDRABHAI SHAH FOR A.Y. 2003-04 - 3 - RELEVANT IN THE MATTER IS THE DISTANCE FROM THE LOCAL LIMIT OF T HE AHMEDABAD MUNICIPAL CORPORATION (AMC) AS IT (I.E. THE SAID LIMIT) STOOD AT THE RE LEVANT TIME, I.E., THE DATE ON WHICH THE LAND STANDS SOLD. THIS ASPECT OF THE MATTER WE FIND HAS BEEN OVERLOOKED BY THE AUTHORITIES BELOW; NONE OF THE CERTIFICATES SPECIFYING THE DISTANCE FROM THE LOCAL LIMITS OF THE MUNICIPALITY WI TH REFERENCE TO THE PARTICULAR (RELEVANT) TIME, AND WHICH, AS IT APPEARS, IS RESPONSIBL E FOR SOME OF THE CONFUSION IN THE MATTER. ALSO, THE BASIS AND THE METHODOLOGY ADOPTED IN CALCULATING THE DISTANCE SHOULD BE A SCIENTIFIC AND APPROVED ONE; THE TWO EVIDENCES ADDUCED BY THE ASSESSEE, I.E., THAT BEFORE THE A.O., CERTIFYING THE DISTANCE AT 9.7 KM., AND NOW BEFORE US, AT 11 KM., BEING THEMSELVES IN CONTRADICTION. FURTHER, THE LAND BEING WITHIN THE PURVIEW OF AUDA, THE SAME ASSUMES THE CHARACTER OF AN URBAN LAND; THE VERY PROCESS OF DEFINING THE JURISDICTION OF AN URBAN DEVELOPMENT AUTHORITY, WHICH IS ONLY THROUGH AN APPROPRIATE NOTIFICATION, ISSUED WITH THE APPROVAL OF THE MINISTRY OF URBAN AFFAIRS IN THE GOVT. OF INDIA, SIGNIFIES THAT THE LAND UNDER REFERE NCE IS UNDER CONTEMPLATION FOR ACQUISITION FOR THE PURPOSES OF URBANIZATION, OR, IN ANY CASE, IS SUBJECT TO THE PROCESS OF URBANIZATION. THE ISSUE HAS, WE OBSE RVE, NOT BEEN EXAMINED FROM THIS STAND-POINT, AND WHICH MAY BE ALSO OF RELEVANCE. 6.1. IN THIS VIEW OF THE MATTER, WE CONSIDER IT FIT, IN THE INTEREST OF JUSTICE THAT THE MATTER TRAVEL BACK TO THE FILE OF THE A.O. FOR A DECISION IN ACCORDANCE WITH LAW, PER A SPEAKING ORDER, AFTER ALLOWING A REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE TO ENABLE IT TO PRESENT ITS CASE, INCLUDING ANY EV IDENCE THAT IT WISHES TO RELY UPON, BEFORE HIM. WE DECIDE ACCORDINGLY. 5. THE ASSESSING OFFICER TOOK UP CONSEQUENTIAL PROCEEDINGS. HE QUOTED FACTS OF ASSESSEES CO-OWNER SHRI AJAY MAHENDRABHAI SHAHS CASE QUA THE VER Y LAND HOLDING THAT THE AHMEDABAD URBAN DEVELOPMENT AUTHORITY HAD NO JURISDICTION OVER THE LAND SOLD. AND ALSO THAT THE SAME WERE SITUATED AT A DISTANCE OF 10 KMS ., FROM AHMEDABAD MUNICIPAL CORPORATION AND 8 KMS. FROM GANDHINAGAR MUNICIPAL LIMITS. HE ACCORDINGLY HELD THE ASSESSEES LAND NOT TO BE CAPITAL ASSETS U/ S. 2(14) (III)(B) OF THE ACT IN CONSEQUENTIAL ORDER DATED 10-4-2008. THE IMPUGNED CAPITAL GAINS ADDI TION STOOD DELETED. 6. THE CASE FILES REVEAL THAT THE CIT TOOK NOTICE OF THE ABOVESTAT ED CONSEQUENTIAL ORDER AND FORMED AN OPINION THAT THE SAME WAS ERRONEOUS CAUSING PREJUDIC IAL TO THE INTEREST OF THE REVENUE ON THE GROUND THAT THE ASSESSEES LAND SOLD W AS ABOUT WITHIN 8 KMS FROM GANDHINAGAR CITY LIMITS AND NOT BEYOND THAT. HE ISSUED SECT ION 263 SHOW CAUSE NOTICE. THE ASSESSEE PLACED ON RECORD NOTIFICATION ISSUED BY THE GOVT. OF INDIA ITA NO.1351 /AHD/2011 ITA NO.1595/AHD/2012 AMIT MAHENDRABHAI SHAH FOR A.Y. 2003-04 - 4 - U/S. 2(14)(III)(B) COVERING LANDS WITHIN 8 KMS FROM THE MUNICIPAL LIMI TS OF AHMEDABAD AND 4 KMS FROM THOSE OF GANDHINAGAR TO BE WITHIN THE ABOVESTATED STATUTORY PROVISION. THE CIT IN HIS ORDER DATED 21-3-2011 INTERALIA OBS ERVED THAT THE ASSESSEES CERTIFICATE RELIED IN CONSEQUENTIAL PROCEEDINGS WE RE NOT BASED ON ANY SCIENTIFIC FORMULAE AS PER THE TRIBUNALS DIRECTION (SUPRA). AND A LSO THAT THE LATTER PORTION THEREOF ON AUDA FACTOR HAD NOT BEEN CONSIDERED IN THE ASSE SSING OFFICERS CONSEQUENTIAL ORDER. HE DID NOT SPECIFICALLY REJECT THE GOVT. NOTIFI CATION ABOVESAID AND DIRECTED THE ASSESSING OFFICER TO PASS A FRESH ORDER. THE ASSESSEE HAS FILED APPEAL ITA 1351/AHD/2011 AGAINST THIS SECT ION 263 ORDER. 7. WE PROCEED FURTHER AND FIND THAT THE ASSESSING OFFICER AGAIN TOOK UP CONSEQUENTIAL PROCEEDINGS AS PER THE CITS DIRECTIONS AND RESTORED THE IMPUGNED LONG TERM CAPITAL GAINS ADDITION OF RS.41,32,436/- BY INTERALIA OBSERVING THAT THE LANDS FELL WITHIN 8 KMS. OF THE GANDHINAGAR MUNICIPAL CORPORATION LIMITS ALONG WITH T HE FACT THAT THE TOWN PLANNING DEPARTMENTS LETTER DT. 16-2-2001 HAD INDICATED THE SAME LAND TO BE FALLING UNDER RESIDENTIAL ZONE W.E.F. 16-4-2004. 8. THE ASSESSEE PREFERRED APPEAL. THE CIT (A) HAS DELETED THE IMPUGNED ADDITION AS UNDER: 2.3. I HAVE CONSIDERED THE FACTS OF THE CASE; ASSESSMENT ORDER AND APPELLANTS WRITTEN SUBMISSION. ASSESSING OFFICER TREATED THE AGRICULT URE LAND SOLD BY THE APPELLANT AS URBAN LAND TO BE TREATED AS CAPITAL ASSET UNDER SECTION 45 OF THE INCOME TAX ACT. APPELLANT SUBMITTED THAT THE LAND SOLD W AS SITUATED OUTSIDE 4 KM FROM GANDHINAGAR MUNICIPAL LIMIT AND BEYOND 8 KM FROM AHMEDABAD MUNICIPAL LIMIT AND THEREFORE THE LAND SOLD WAS AGRICULTURE WITHIN THE DEFINITION OF SECTION 2(14). ASSESSING OFFICER CALLED INFOR MATION FROM THE DEPUTY EXECUTIVE ENGINEER, CAPITAL PROJECTS, GANDHINAGAR WHO MENTIONED THAT THE DISTANCE FROM KOBA IS ABOUT 8 KM FROM GANDHINAGAR AND 10 KM FROM AHMEDABAD MUNICIPAL LIMIT. ASSESSING OFFICER TREATED DISTANC E OF ABOUT 8 KM FROM GANDHINAGAR AS WITHIN 8 KM FROM GANDHINAGAR AND TREATED THE LAND SOLD AS NON-AGRICULTURE WITHIN THE DEFINITION OF SECTION 2(14). APPELLANT SUBMITTED THAT AS PER NOTIFICATION NUMBER 9447 DATED 6-01-1994 ISSUED BY INCOME TAX DEPARTMENT FOR THE PURPOSE OF SECTION2(14)-URBANIZAT ION OF AREAS, PRESCRIBING DISTANCES FROM MUNICIPAL LIMIT, THE DISTANCE OF 4 KM IS ITA NO.1351 /AHD/2011 ITA NO.1595/AHD/2012 AMIT MAHENDRABHAI SHAH FOR A.Y. 2003-04 - 5 - PRESCRIBED FOR GANDINAGAR. FOR AHMEDABAD THIS IS 8KM. THEREFORE AS PER CBDT NOTIFICATION, AREAS OUTSIDE 4 KM DISTANCE FROM GANDHINAGAR MUNICIPAL LIMITS WILL BE NON-AGRICULTURE. ASSESSING OFFICER TREATED THE SAM E IN THE PERSPECTIVE OF 8 KM DISTANCE WHICH IS FUNDAMENTALLY WRONG. THE SECTION AUTHORIZES GOVERNMENT TO PRESCRIBE THE DISTANCE FOR DIFFERENT AREAS NOT EXCEEDING 8 KM. SINCE GOVERNMENT HAS PRESCRIBED DISTANCE OF 4 KM FOR CONSIDERED ON THE BASIS OF 4 KM GANDHINAGAR DISTRICT FOR THE PURPOSE OF SECTION 2 (14), THE AGRICULTURE LAND IS TO BE CONSIDERED ON THE BASIS OF 4 KM DISTANCE OUTSIDE MUNICIPAL LIMIT AS AGAINST 8 KM CONSIDERED BY THE ASSE SSING OFFICER. SINCE THE ADDITION MADE BY THE ASSESSING OFFICER BY TREA TING AGRICULTURE LAND AS CAPITAL ASSET IS ON THE BASIS OF 8 KM DISTANCE FROM GANDHINAGAR MUNICIPAL LIMIT, THERE IS A MISTAKE IN INTERPRETING THE PROVISI ON OF SECTION 2(14). AFTER CONSIDERING THE NOTIFICATION ISSUED BY THE GOVERNM ENT FOR THIS SECTION, THERE REMAINS NO DOUBT ABOUT THE NATURE OF LAND SOLD WHICH IS BEYOND 4 KM FROM GANDHINAGAR MUNICIPAL LIMIT. THE OTHER ARGUMENT OF THE ASSESSING OFFICER THAT THE LAND IN QUESTION WAS DECLARED AS RESIDENT IAL ZONE IS NOT RELEVANT SINCE THE DEFINITION OF AGRICULTURE LAND AS PER SECTION 2(14 ) DOES NOT PROVIDE ANY SUCH CONDITION OR REQUIREMENT. IN VIEW OF THIS IT IS HEL D THAT THE AGRICULTURE LAND SOLD BY THE APPELLANT IS NOT A CAPITAL ASSET AND THEREF ORE THERE IS NO QUESTION OF CHARGING LONG-TERM CAPITAL GAIN ON SUCH SALE. ACCORDINGLY THE ADDITION MADE BY THE ASSESSING OFFICER IS DELETED. THE REVENUES APPEAL ITA.1595/AHD/2012 EMANATES FROM THIS LOWER APPELLATE ORDER. 9. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE CASE FILES. THE ASSESSEES THRUST IS IN GETTING THE CITS ORDER PASSED U/S. 263 QUASHED. THE REVE NUE SEEKS RESTORATION OF THE IMPUGNED CAPITAL GAINS IN PROCEEDINGS CONSEQUENTIAL TH ERETO. IT HAS COME ON RECORD THAT THE ASSESSEES LANDS SOLD ARE ABOUT 8 KMS FROM THE GANDHINAGAR MUNICIPAL CORPORATION LIMITS. THE GOVT. NOTIFICATION AS QUOTED IN THE LOWE R APPELLATE ORDER FORMING PART OF THE PAPER BOOK ALREADY HOLDS SUCH A LIMIT T O BE THAT OF 4 KMS ONLY. THE REVENUE IS NOT ABLE TO DISPUTE CORRECTNESS THEREOF. NOR DOE S IT CONTROVERT THE FACT THAT THE ASSESSEES LAND BECAME PART OF RESIDENTIAL ZONE W.E.F. 16-4-2004 I.E. MUCH AFTER THE DATE OF SALE DEED DT.22-10-2002. WE OBSERVE IN THESE CIRCUMS TANCES THAT THE SAME ARE NOT CAPITAL ASSETS U/S. 2(14) OF THE ACT SO AS TO GIVE RISE T O ANY CAPITAL GAINS. THE REVENUES ARGUMENTS IN APPEAL ITA 1595/AHD/2012 FAIL ON BOTH COUNTS. THIS APPEAL IS DISMISSED. THIS RENDERS THE ASSESSEES APPEAL IT A NO. 1351/AHD/2011 AGAINST THE CITS ORDER U/S. 263 OF THE ACT AS HAVING BECOME INFRUCTUOUS. ITA NO.1351 /AHD/2011 ITA NO.1595/AHD/2012 AMIT MAHENDRABHAI SHAH FOR A.Y. 2003-04 - 6 - 12. ORDERED ACCORDINGLY. ORDER PRONOUNCED IN THE COURT ON THIS DAY, THE 10 TH JULY, 2015 AT AHMEDABAD. SD/- SD/- (PRAMOD KUMAR) (S.S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 10 /7/2015 PATKI S.A. SR. P.S. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ! '# $ / CONCERNED CIT 4. $ () / THE CIT-1, AHMEDABAD. 5. '() **'# , '# , ,-! / DR, ITAT, AHMEDABAD 6. )./ 0 / GUARD FILE. / BY ORDER / ( DY./ASSTT.REGISTRAR) !, #$ / ITAT, AHMEDABAD 1. DATE OF DICTATION- 03.07.2015 DIRECT ON COMPUTER 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER- 3.07.2015 OTHER MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P.S./P.S. 6-7-2015. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 10-7-2015 5. DATE ON WHICH THE FAIR ORDER COMES TO THE SR.P.S. 10-7-2015. 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK- 10-7-2015. 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER