RADU RAM JAT HUF, Jaipur V. ITO, Jaipur

ITA 182/JPR/2015

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 5562 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 11 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 24-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA CIT DHK
• Assessee Lawyers: O P AGARWAL
• Keywords: Capital asset; Cost of acquisition
• Section: 54B; 54F; 2(14); 144

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS [KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YAD AV, AM VK;DJ VIHY LA-@ ITA NO. 182/JP/2015 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2006-07. SHRI RODU RAM JAT, HUF VILLAGE JHAAT, DEHWALI DHANI, PO BHAMBORIA TEHSIL SANGANER, JAIPUR CUKE VS. THE INCOME TAX OFFICER, WARD 7(2), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AAMHR6014F VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI MANISH AGARWAL & SHRI O.P. AGARWAL (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI R.A, VERMA (ADDL.CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 04.01.2017 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 23.02.2017 VKNS'K@ ORDER PER SHRI KUL BHARAT, JM. THE APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. CIT (APPEALS)- 3, RAJASTHAN DATED 30 TH JAN. 2015 PERTAINING TO ASSESSMENT YEAR 2006-07. T HE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1. ON THE FATS AND IN THE CIRCUMSTANCES OF THE CASE T HE LD. ASSESING OFFICER HAS GROSSLY ERRED IN PASSING THE ASSESSEMEN T ORDER U/S 254/144 OF THE INCOME TAX ACT, 1961 EX PARTE WITHOU T PROVIDING PROPER OPPORTUNITY TO THE ASSESEE TO PRESENT HIS CA SE AND ALSO WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE WHICH WERE BEYOND THE CONTROL OF ASSESSEE, THUS THE ORDER DESERVES TO THE QUASHED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE LD. CIT(A) HAS GROSSLY ERRED IN CONSIDERING THE SALE OF AGRICU LTURE LAND AS SALE OF CAPITAL ASSET AND THEREBY TAXING THE INCOME OF 1 ,75,99,980/- AS INCOME FROM CAPITAL GAIN, ARBITRARILY. 2 ITA NO.182/JP/2015 RODU RAM JAT, HUF. 2.1 THAT THE LD. CIT(A) HAS FURTHER ERRED IN TREATING T HE LAND UNDER QUESTION IS SITUATED WITHIN THE DISTANCE OF 8 KMS. FROM THE MUNICIPAL LIMITS WITHOUT APPRECIATING THE FACT THAT WHEN THE LAND UNDER QUESTION WAS SOLD , AT THAT TIME THE DIS TANCE BETWEEN THE LAND AND THE LOCAL LIMITS OF MUNICIPALI TY WAS MORE THAN 8 KMS. AS THERE WERE NO SUCH DIRECT ROAD TO TH AT AREA. HENCE THE ACTION OF THE LD. CIT(A) OF TREATING THE LAND UNDER CONSIDERATION ASSET A CAPITAL ASSET DESERVE TO BE H OLD BAD IN LAW AND THE ADDITION OF 1,75,99,980/- SO MADE DESERVES TO BE DELETED. 3. WITHOUT PREJUDICE TO GROUND OF APPEAL NO. 1 & 1.1, THE LD. CIT(A) HAS GROSSLY ERRED IN HOLD THE LAND AS CAPITAL ASSET WITHIN THE MEANING O SECTION 2(14)(III)(B) BY GROSSLY IGNORING THE FACT THAT SUBJECT LAND IS AN AGRICULTURE LAND AS PER THE PROV ISION OF SECTION 2(14)(III)(A) AND THIS IS NOT A CAPITAL ASSET AND T HEREFORE THE PROFIT FROM TRANSFER OF SUCH LAND IS EXEMPTED FROM CAPITAL GAINS TAX. 4. ON THE FACT AND IN THE CIRCUMSTANCE OF THE CASE THE LD. CIT(A) HAS GROSSLY ERRED IN CONFIRMING THE ACTION OF LD. AO OF TAKING THE INDEXED COST OF ACQUISITION OF THE SUBJECT LAND AT 32,541/- ON 01MERELY ASSUMPTION AND PRESUMPTION WITHOUT BRINGIN G ON RECORD ANY COGENT MATERIAL AS AGAIN 10,16,996/- DECLARED B Y THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THERE FORE, THE INDEXED COST DECLARED BY THE ASSESSEE DESERVES TO B E ACCEPTED. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE LD. CIT(A) HAS GROSSLY ERRED IN UPHOLDING THE DISALLOWANCE OF THE DEDUCTION OF RUPEES 1,42,67,000/- U/S 54B OF THE INCOME TAX ACT, 1961 MADE BY THE LD. AO WITHOUT PROPERLY APPRECIATING THE FAC TS OF THE CASE AND INTENTION OF THE LAW THEREFORE DEDUCTION CLAIME D U/S 54B DESERVED TO BE ALLOWED. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE LD. CIT(A) HAS GROSSLY ERRED IN UPHOLDING THE DISALLOWANCE OF THE DEDUCTION OF 21,06,004/- U/S 54F OF THE INCOME TAX ACT, 1961 MAD E BY LD. AO WITHOUT PROPERLY APPRECIATING THE FACTS OF THE CASE THEREFORE DEDUCTION CLAIMED U/S 54F DESERVES TO BE ALLOWED. 7. ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE TH E LD. CIT(A) HAS GROSSLY ERRED IN CONFIRMING THE ACTION OF LD. AO OF ESTIMATING THE AGRICULTURE INCOME OF THE ASSESEE AT 1,00,000/- WIT HOUT BRING ON RECORD ANY MATERIAL MERELY ON ASSUMPTION AND PRESUM PTION THEREFORE, ACTION CONFIRMED BY LD. CIT(A) DESERVE T O BE DELETED. 3 ITA NO.182/JP/2015 RODU RAM JAT, HUF. 8. THAT THE APPELLANT CRAVES THE RIGHT TO ADD, DELETE, AMEND OR ABANDON ANY OF THE GROUNDS OF APPEAL EITHER BEFORE OR AT THE TIME OF HEARING OF APPEAL 2. BRIEFLY STATED THE FACT ARE THAT THIS IS THE SEC OND ROUND OF LITIGATION. IN THE EARLIER ROUND, THE ASSESSMENT WAS COMPLETED UNDER S ECTION 144 OF THE INCOME TAX ACT, 1961(HEREINAFTER REFERRED TO AS THE ACT.)AND, THE MATTER TRAVEL UP TO THE STAGE OF THE TRIBUNAL. THIS TRIBUNAL IN ITA NO. 369/JP/2 011 WAS PLEASED TO DIRECT THE ASSESSING OFFICER TO DETERMINE THE DISTANCE OF THE AGRICULTURE LAND SOLD BY THE ASSESSEE AND TO EXAMINE THE CLAIM OF DEDUCTION UND ER SECTION 54B OF THE ACT. THE ASSESSING OFFICER ONCE AGAIN TREATED THE AGRICULTUR E LAND AS CAPITAL ASSET ON THE GROUND THAT THE SAME FALL WITHIN THE PRESCRIBED LIM IT OF MUNICIPAL CORPORATION OF JAIPUR AND THUS COMPUTED CAPITAL GAIN OF RS. 1,75 ,99,979/-. THE ASSESSING OFFICER WHILE FRAMING THE ASSESSMENT ALSO REJECTED THE CLAI M OF THE ASSESSEE REGARDING DEDUCTION UNDER SECTION 54B OF THE ACT. THE ASSESS EE AS AGGRIEVED , PREFERRED AN APPEAL BEFORE LD. CIT(APPEALS) WHO AFTER CONSIDERIN G THE SUBMISSIONS CONFIRMED THE ACTION OF THE ASSESSING OFFICER. NOW THE ASSESSEE IS IN FURTHER APPEAL BEFORE THIS TRIBUNAL. 3. AT THE TIME OF HEARING THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED APROPOS TO GROUND NO. 2 TO 3 THAT THE ASSESSING OFFICER FAI LED TO APPRECIATE THE FACT IN THE RIGHT PERSPECTIVE. HE REITERATED SUBMISSIONS AS MA DE IN THE WRITTEN BRIEF. FOR THE SAKE OF CLARITY THE WRITTEN SUBMISSION OF THE ASSES SEE ARE REPRODUCED AS UNDER:- THESE GROUNDS OF APPEAL RELATE TO ADDITION OF RS.1, 75,99,980/- MADE BY LD. AO ON ACCOUNT OF CAPITAL GAINS PRIMARILY: (I) BY HOLDING THE AGRICULTURE LAND SOLD AS CAPITAL ASS ET (II) BY HOLDING THE LAND SOLD TO BE WITHIN THE DISTANCE OF 8 KMS FROM MUNICIPAL LIMITS 4 ITA NO.182/JP/2015 RODU RAM JAT, HUF. BRIEF FACTS PERTAINING TO THIS GROUND OF APPEAL ARE THAT DURING THE YEAR UNDER APPEAL, THE ASSESSEE HAD SOLD VARIOUS PIECES OF ITS ANCESTRAL AGRICULTURAL LAND TO M/S PROSPERS CONSTRUCTION PVT. LTD. FOR A TOTAL CONSIDERATION OF RS. 176.32 LACS ON 18.01.2006, THE DETAILS OF THE SAME ARE AS UNDER: S. NO. LOCATION SALE CONSIDERATION DATE OF SALE APB 1. VILLAGE CHATARPURA ALIAS LALYAKA BAAS, PATWARHALKA, MAHAPURA, TEHSIL SANGANER 1,25,96,000.00 18.01.2006 2-7 2. VILLAGE JHAI , PATWARHALKA, BHAGORIA TEHSIL, SANGANER 47,94,000.00 18.01.2006 8-13 3. 1/3 SHARE IN THE LAND SITUATED VILLAGE CHATARPURA ALIAS LALYAKA BAAS, PATWARHALKA, MAHAPURA, TEHSIL SANGANER 242520.00 18.01.2006 14- 20 TOTAL 1,76,32,520.00 HOWEVER, IT HAS BEEN ALLEGED BY THE LD. AO THAT THE ABOVEMENTIONED PIECES OF LAND ARE NOT AGRICULTURAL LANDS WITHIN THE MEANING OF SECTION 2( 14)(III)(B) OF THE INCOME TAX ACT, 1961. WHILE COMPLYING WITH THE DIRECTIONS OF THE HONBLE ITAT, JAIPUR BENCH, JAIPUR, THE LD. AO HAS DETERMINED THE SUBJECT PIECES OF LAND AS BEING SITUATED AT A DISTANCE LESS THAN 8 KMS FROM THE LOCAL LIMITS OF JAIPUR MUNICIPAL CORPORATION AN D THUS, HAS CONCLUDED THAT THE SUBJECT PIECES OF LAND ARE CAPITAL ASSETS WITHIN THE MEANIN G OF SECTION 2(14) OF THE ACT. IN THIS REGARD, KIND ATTENTION OF HONBLE BENCH IS INVITED TO NOTIFICATION NO. 9447 DATED 06/01/1994, RELEVANT EXTRACTS OF WHICH IS REPRODUCE D HEREWITH FOR THE SAKE OF CONVENIENCE (CASE LAWS PB 72-75): (1) IN THIS NOTIFICATION, MUNICIPALITY SHALL MEA N ANY AREA------- -- (2) THE REFERENCE TO MUNICIPAL LIMIT OR THE LIMIT O F CANTONMENT BOARD IN THE SCHEDULE TO THIS NOTIFICATION IS TO THE LIMITS AS EXISTING ON T HE DATE ON WHICH THE NOTIFICATION IS PUBLISHED IN THE OFFICIAL GAZETTE. HONBLE ITAT, JAIPUR BENCH IN CASE OF DR. SUBHA TRI PATHI IN ITA NO.LL29/JP/2011 FOR A.Y 2008-09 DT. 24.05.2013 (CASE LAWS PB 1-5 ) WHERE AFTER CONSIDERING THE PURPORT OF NOTIFICATION DT. 06.01.1994 AND ALSO THE AMENDMENT MADE BY F.A ACT, 2013 W.E.F. 01.04.2014, IT WAS HELD THAT THE MUNICIPAL LIMIT IS TO BE SEEN WITH REFERENCE TO THE DATE OF NOTIFICATION I.E. 06.01.1994 AND NOT AS ON THE DATE OF THE SALE. THE RELEVANT FINDING OF HONBLE ITAT IS REPRODUCED AS UNDER:- WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE MATERIALS ON RECORD. THE QUESTION ARISES FOR OUR CONSIDERATION AND ADJUDICATION IS WH ETHER THE LAND IN QUESTION THOUGH LOCATED 5 ITA NO.182/JP/2015 RODU RAM JAT, HUF. BEYOND 8 KMS FROM THE MUNICIPAL LIMITS OF JAIPUR MU NICIPALITY AS ON THE DATE OF NOTIFICATION 6-01-1994 BUT SUBSEQUENTLY IT FALLS WITHIN THE DIST ANCE OF 8 KMS FROM THE MUNICIPAL LIMITS DUE TO THE EXPANSION OF THE MUNICIPAL LIMITS WOULD STILL BE REGARDED AS AGRICULTURAL LAND NOT FALLING IN THE DEFINITION OF CAPITAL ASSET IN TERMS OF SECTION 2(14)(III)(B) OF THE ACT. THERE IS NO DISPUTE THAT JAIPUR MUNICIPALITY HAS BEEN DULY N OTIFIED VIDE SAID NOTIFICATION DATED 6-01- 1994 AND AS ON THE DATE OF SAID NOTIFICATION, THE L AND IN QUESTION WAS BEYOND 8 KMS FROM THE MUNICIPAL LIMITS EXISTS AT THAT POINT OF TIME. THE DISPUTE ARISES BECAUSE OF THE EXPANSION OF MUNICIPAL LIMITS AND THEREBY THE SAID DISTANCE FROM THE MUNICIPAL LIMITS AS ON THE DATE OF SALE OF THE LAND IN QUESTION IS ONLY 2 KMS AND THER EBY THE AUTHORITIES BELOW HAVE TREATED THE LAND IN QUESTION AS NOT FALLING UNDER THE EXCLUSION CLAUSE OF SECTION 2(14)(III)(B) OF THE ACT. THERE IS NO QUARREL ON THE POINT THAT AS PER SUB-CL AUSE (B) OF CLAUSE (III) OF SECTION 2(14), THE NOTIFICATION OF THE CENTRAL GOVT, IS MANDATORY TO B RING THE LAND IN THE DEFINITION OF CAPITAL ASSET WHICH IS NOT LOCATED WITHIN THE LIMITS OF THE MUNICIPALITY BUT LOCATED WITHIN THE DISTANCE OF 8 KMS FROM THE LOCAL LIMITS. SO FAR, THE AGRICUL TURAL LAND WHICH IS LOCATED IN THE LIMITS OF MUNICIPAL LIMITS, THE SAME WILL BE TREATED AS CAPIT AL ASSET AND NO FURTHER REQUIREMENT IS TO BE EXAMINED. SINCE THE LAND IN QUESTION IS LOCATED OUTSIDE THE LOCAL LIMITS OF MUNICIPALITY, THEREFORE, IN ORDER TO DETERMINE WHETHER THE LAND I N QUESTION FALLS UNDER MISCHIEF OF SUB- CLAUSE (B) OF SECTION 2(14)(III) OF THE ACT, THE DI STANCE OF 8 KMS HAS TO BE TAKEN INTO ACCOUNT IN TERMS OF NOTIFICATION DATED 6-01-1994, AS PER EXPLA NATION 2 OF THE SAID NOTIFICATION DATED 06.01.1994, THE MUNICIPAL LIMITS IS TO BE THE LIMIT S AS EXISTING ON THE DATE ON WHICH THE NOTIFICATION IS PUBLISHED IN THE OFFICIAL GAZETTE. WE QUOTE THE EXPLANATION 2 OF THE NOTIFICATION (SUPRA) AS UNDER:- '(2) THE REFERENCE TO THE MUNICI PAL LIMITS OR THE LIMIT OF CANTONMENT BOARD IN THE SCHEDULE TO THIS NOTIFICATION IS TO TH E LIMITS AS EXISTING ON THE DATE ON WHICH ON WHICH THE NOTIFICATION IS PUBLISHED IN THE OFFICIAL GAZETTE.' IF THE STAND OF THE REVENUE IS ACCEPTED THAT THE DI STANCE OF 8 KMS SHOULD BE CONSIDERED FROM THE MUNICIPAL LIMIT EXISTS AS ON THE DATE OF THE SA LE OF LAND THEN IT WOULD RENDER THE NOTIFICATION ISSUED BY THE CENTRAL GOVT, AS INEFFEC TIVE AND UNWORKABLE / OTIOS. AS IT IS MADE CLEAR BY EXPLANATION 2 OF THE SAID NOTIFICATION THA T MUNICIPAL LIMITS IS TO BE CONSIDERED AS EXISTING ON THE DATE ON WHICH NOTIFICATION IS PUBLI SHED IN THE OFFICIAL GAZETTE, THEREFORE, THE DATE OF NOTIFICATION IS RELEVANT AND MATERIAL POINT TO DETERMINE THE DISTANCE OF 8 KMS FROM MUNICIPAL LIMITS. THERE IS NO AMENDMENT OR WITHDRAW AL OF THE SAID NOTIFICATION EXCEPT A RECENT AMENDMENT HAS BEEN BROUGHT IN THE STATUTE BY THE FINANCE ACT 2013 WHEREBY THE REQUIREMENT OF SAID NOTIFICATION HAS BEEN DISPENSED WITH FOR INVOKING SUB-CLAUSE (B) OF CLAUSE (III) OF SECTION 2(14) OF THE ACT W.E.F. 01-04-2014 . THUS IT IS DISCERNIBLE FROM THE NOTIFICATION DATED 06-01-1994 AND THE RECENT AMENDMENT IN THE ST ATUTE WHEREBY THE SAID NOTIFICATION HAS BEEN DISPENSED WITH THAT THE DISTANCE OF 8 KMS HAS TO BE CONSIDERED FROM THE MUNICIPAL LIMITS AS EXISTS ON THE DATE OF NOTIFICATION FOR TH E PURPOSE OF INVOKING SUB CLAUSE (B) OF CLAUSE (III) OF SECTION 2(14) OF THE ACT. ACCORDINGLY WE H OLD THAT THE LAND IN QUESTION WHICH WAS LOCATED BEYOND 8 KMS FROM THE MUNICIPAL LIMITS AS O N 6-01-1994 WHEN THE NOTIFICATION WAS PUBLISHED IN THE OFFICIAL GAZETTE, THE SAME WOULD F ALL UNDER THE EXCLUSION CLAUSE OF THE TERM 'CAPITAL ASSET AS PER PROVISIONS OF 2(14)(III)(B) OF THE ACT. SUBSEQUENTLY, FOLLOWING THE ABOVE SAID JUDGEMNENT, HONBLE JAIPUR BENCH OF TRIBUNAL IN THE CASE OF KHETILAL SHARMA HUF VS ITO IN ITA NO. 103/J P/2012 HELD THAT (CASE LAWS PB 6- 14) : 6 ITA NO.182/JP/2015 RODU RAM JAT, HUF. THIS ISSUE HAS BEEN CONSIDERED BY THE COORDINATE B ENCH IN THE CASE OF DR. SUBHA TRIPATHI IN ITA NO. 1129/JP/2011 FOR A.Y. 2008-09 ORDER DATE D 24/5/2013. THE OPERATIVE PORTION OF THE ORDER HAS BEEN REPRODUCED IN THE REPLY OF THE A SSESSEE. IT HAS BEEN HELD BY THE COORDINATE BENCH THAT THERE IS NO DISPUTE THAT THE JAIPUR MUNI CIPALITY HAS BEEN DULY NOTIFIED VIDE SAID NOTIFICATION DATED 06/1/1994 AND AS ON THE DATE OF SAID NOTIFICATION, THE LAND IN QUESTION WAS BEYOND 8 KM FROM THE MUNICIPAL LIMIT EXIST ON THAT POINT OF TIME. IN THE CASE OF ASSESSEE, ON THE DATE OF THIS NOTIFICATION DATED 6TH JANUARY, 19 94, THE MUNICIPAL LIMIT OF JAIPUR ON AJMER ROAD ON WHICH THE ASSESSEE LAND IS SITUATED WAS UP TO ESI HOSPITAL. THE LD AR PLACED THE EVIDENCE IN PAPER BOOK AT SL. NO. 91. THE ASSESSEE S LAND IS 16 KM AWAY FROM THE ESI HOSPITAL. THESE FACTS HAS NOT BEEN CONTROVERTED BY THE LD. DR . BEING A PRECEDENCE, WE RESPECTFULLY FOLLOWING THE ORDER OF THE COORDINATE BENCH AND HEL D THAT LAND SOLD BY THE ASSESSEE IS NOT A CAPITAL ASSET U/S 2(14) OF THE ACT. THUS, CAPITAL G AIN DOES NOT ARISE. ON THIS GROUND, THE ASSESSEES APPEAL IS ALLOWED. IN VIEW OF ABOVE JUDGEMENTS, IT IS HUMBLY PRAYED TH AT LAND SOLD BY ASSESSEE BEING SITUATED BEYOND 8KMS. FROM THE MUNICIPAL LIMITS OF THE JAIPU R AS EXISTED AS ON THE DATE OF ISSUE OF THE NOTIFICATION DT. 6.1.1994 THEREFORE THE SAME SHOULD NOT BE TREATED AS CAPITAL ASSET AND THEREFORE NOT LIABLE FOR CAPITAL GAIN TAXATION. WITHOUT PREJUDICE TO ABOVE, ON MERITS OF THE CASE I T IS HUMBLY SUBMITTED THAT THE LD. AO HAS COMMITTED A SERIOUS ERROR WHILE MEASURING THE DISTA NCE OF SUBJECT PIECES OF LAND FROM THE ENDING POINT OF LOCAL LIMITS OF JAIPUR MUNICIPAL CO RPORATION IN AS MUCH AS THE MODUS OPERANDI ADOPTED BY THE LD. AO IN MEASURING SUCH DISTANCE IS NOT IN ACCORDANCE WITH LAW AND THUS, IS NOT CORRECT. AFTER REFERRING TO THE MUNICIPAL RECORDS AND CONDUC TING FIELD ENQUIRY, LD. AO MENTIONED IN THE ASSESSMENT ORDER (PAGE 2, PARA 3) THAT AS PER T HE MUNICIPAL RECORDS, THE LAST POINT AT WHICH THE LOCAL LIMIT OF THE JURISDICTION OF JAIPUR MUNIC IPAL CORPORATION ENDS AT AJMER ROAD IS, VILLAGE HASANPURA VAS BHANKROTA. IT HAS FURTHER B EEN MENTIONED THAT KHASRA NO. 315 IS THE LAST LAND OF VILLAGE HASANPURA VAS BHANKROTA. HAVIN G OBSERVED SO, THE LD. AO PROCEEDED TO MEASURE THE DISTANCE OF ASSESSEES LAND(S) FROM THI S VILLANGE HASANPURA VAS BHANKROTA, SPECIFICALLY FROM KHASRA NO. 315 OF THIS VILLAGE. F OR THIS PURPOSE, PATWARI OF THE CONCERNED VILLAGE AND THE INSPECTOR OF THE CONCERNED WARD WER E DEPUTED IN ORDER TO MEASURE THE DISTANCE OF SUBJECT PIECES OF LAND FROM THE END OF LOCAL LIMITS OF JMC. THE INSPECTOR VISITED THE SUBJECT PIECES OF LAND ON 25.02.2013 AND VIDE HIS REPORT HE SUBMITTED THAT, THE LAND AR E SITUATED AT FOLLOWING DISTANCES: S.NO. LOCATION DISTANCE FROM LOCAL MUNICIPAL LIMITS OF JMC ROUTE OF MEASUREMENT 1. LAND AT CHATARPURA 6.1 KMS VIA MAHAPURA 7 ITA NO.182/JP/2015 RODU RAM JAT, HUF. ALIAS LALYAKA BAS 2. LAND AT VILLAGE JHAI 6.5 KMS VIA MAHAPURA AT THIS JUNCTURE, KIND ATTENTION OF YOUR HONOUR IS INVITED TO THE FACT THAT THIS REPORT SUBMITTED BY INSPECTOR / PATWARI WAS BASED ON THE MEASUREMENT OF DISTANCE TAKEN AS ON 25.02.2013 I.E. WHEN THEY VISITED THE LANDS DURING THE COURSE OF SET-ASIDE ASSESSMENT PROCEEDINGS AND THE ROUTE CONSIDERED FOR SUCH MEASUREMENT WAS VIA MAHA PURA. HOWEVER, THE LD. AO FAILED TO CONSIDER AND IT IS VERY IMPORTANT TO NOTE THAT AT T HE TIME WHEN THESE LANDS WERE SOLD, THERE WAS NO SUCH DIRECT ROUTE / ROAD WHICH COULD CONNECT THESE LANDS FROM THE ENDING POINT OF LOCAL LIMITS OF JMC, AND THEREFORE, THE DISTANCE SU GGESTED BY THE INSPECTOR / PATWARI IS THE DISTANCE THROUGH MAHAPURA ROAD AS ON 25.02.2013 , WHEREAS, THE PROPERTY WAS SOLD LONG AGO, I.E. ON 18.01.2006. CLEARLY, THERE WAS A GAP O F MORE THAN 7 YEARS WHICH IS TOO LONG TO BE IGNORED, MORE PARTICULARLY WHEN DUE TO DEVELOPMENT IN MAHINDRA SEZ, THE AREA WAS DEVELOPED MULTIFOLD WHERE NEW ROADS AND OTHER FACIL ITIES WERE DEVELOPED. IT IS WELL SETTLED THAT, FOR THE PURPOSE OF DETERMI NING WHETHER A PARTICULAR LAND IS SITUATED WITHIN 8 KMS FROM THE LOCAL LIMITS OF MUNICIPALITY NOTIFIED U/S 2(14)(III)(B) OF THE ACT, IT IS ONLY THE CONTEMPORARY DISTANCE (EXISTING AS ON THE DATE OF TRANSFER OF PROPERTY) W HICH CAN BE TAKEN INTO CONSIDERATION AND NOT THE DATE WHEN T HE PLACE WAS VISITED BY INSPECTOR / PATWARI FOR DETERMINING THE DISTANCE, DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IN LIGHT OF THE ABOVE, KIND ATTENTION OF YOUR HONOU R IS INVITED TO THE CRUCIAL FACT THAT AT THE TIME WHEN THE SUBJECT PIECES OF LAND WERE TRANSFERR ED, THERE WAS NO DIRECT ROAD TO THAT AREA AND THE ROAD VIA WHICH THE MEASUREMENT HAS BEEN DON E BY ABOVEMENTIONED OFFICERS WAS CONSTRUCTED ONLY LATER ON. THEREFORE, AT THE TIME O F TRANSFER OF THE SUBJECT PIECES OF LAND, THEY WERE SITUATED AT A DISTANCE MORE THAN 8 KMS FROM TH E LOCAL LIMITS OF JMC AND THUS, FELL WITHIN THE SCOPE OF DEFINITION OF AGRICULTURAL LAND. THE CONTENTION RAISED ABOVE IS BASED ON THE WELL SE TTLED POSITION OF LAW IN THIS REGARD. IN THE CASE OF RANCHHODBHAI BHAJIBHAI PATEL VS. CIT REPORTED IN 81 ITR 446 , (CASE LAWS PB 15-18) THE HONBLE GUJARAT HIGH COURT HAS HELD THAT, THE MATERIAL DATE WITH REFERENCE TO WHICH THE QUESTION WHETHER A PARTICULAR LAND WHICH HAS BEEN SOLD IS AGRICULTURAL LAND OR NOT IS TO BE DECIDED, IS THE DATE OF SALE. 8 ITA NO.182/JP/2015 RODU RAM JAT, HUF. FURTHER, IN THE CASE OF MANIBHAI MOTIBHAI PATEL VS. CIT REPORTED IN 131 ITR 120 (CASE LAWS PB 19-27) IT HAS BEEN HELD AS UNDER: THAT, IN VIEW OF THE PROVISIONS OF THE I.T. ACT, 19 61, AS IT STOOD AT THE RELEVANT TIME, IF THE LAND WAS AGRICULTURAL LAND AT THE TIME OF THE SALE, THE PROFIT MADE ON THE TRANSACTION COULD NOT BE TREATED AS CAPITAL GAINS IN THE HANDS OF THE SELLER. THUS, AT THE TIME OF TRANSFER OF SUBJECT PIECES OF LAND, THEY WERE AGRICULTURAL LANDS BECAUSE AT THAT TIME THERE WAS NO DIRECT ROAD CONNECTING THE C ONCERNED VILLAGES WITH THE LOCAL LIMITS OF JMC AND THUS THEY WERE AT A DISTANCE MORE THAN 8 KM S FROM THE LOCAL LIMITS OF JMC. THUS, THE SAME CANNOT BE TREATED AS CAPITAL ASSET, PARTIC ULARLY WHEN NO EFFORT HAS BEEN MADE EITHER ON THE PART OF LD. AO OR THE CONCERNED OFFICERS TO EXAMINE AS TO WHETHER THE ROAD VIA MAHAPURA EXISTED AT THE TIME OF TRANSFER OF SUBJECT PIECES OF LAND OR NOT? THEREFORE, THE ACTION OF TREATING THE SUBJECT PIECE S OF LAND AS CAPITAL ASSET IS BAD IN LAW AS WELL AS ON FACTS AND SUFFERS FROM LACK OF PROPER IN QUIRY. APPARENTLY, IT WAS PRESUMED BY LD. AO THAT THE ROAD THAT EXISTED ON THE DATE OF INSPEC TION OF THE SUBJECT PIECES OF LAND EXISTED AT THE TIME OF TRANSFER OF SUBJECT LAND AS WELL. HENCE, IN VIEW OF THE FACTS AND CIRCUMSTANCES OF TH E CASE AND THE SUBMISSIONS MADE ABOVE, IT IS HUMBLY PRAYED THAT THE SUBJECT PIECES OF LAND MA Y PLEASE BE TREATED AS AGRICULTURAL LAND AS AGAINST CAPITAL ASSET AND THE CONSEQUENT ADDITION M ADE ON ACCOUNT OF CAPITAL GAIN BE DELETED. 3.1. ON THE CONTRARY, THE LD. DEPARTMENTAL REPRESEN TATIVE OPPOSED THE SUBMISSION OF THE ASSESSEE. 3.2. WE HAVE HEARD THE RIVAL CONTENTION AND PERUSE D THE MATERIAL AVAILABLE RECORD AND GONE THROUGH THE ORDER OF THE AUTHORITIES BELOW . THE UNDISPUTED FACTS EMERGE FROM THE RECORDS THAT THE PROPERTY IN QUESTION WAS AGRICULTURE WAS BEING USED FOR AGRICULTURAL PURPOSES. THE CLAIM OF THE ASSESSEE I S THAT THE CAPITAL ASSET IS AN AGRICULTURE LAND. THEREFORE, IN TERMS OF DEFINITION PROVIDED UNDER SECTION 2(14) OF THE ACT, IT WOULD NOT FALL IN THE CATEGORY OF CAPITAL A SSET, THEREFORE THE CAPITAL GAIN TAX IS ATTRACTED ON THE TRANSFER OF THE SAME. WE FIND THA T THE ASSESSING OFFICER HAS COME 9 ITA NO.182/JP/2015 RODU RAM JAT, HUF. TO THE CONCLUSION THAT THE AGRICULTURE LAND WAS WIT HIN THE 8 KMS FROM THE MUNICIPAL LIMIT. IT IS OBSERVED BY THE ASSESSING OFFICER THA T WARD NO. 12 AT TIME THAT IS IN THE YEAR 1994 WAS HAVING VILLAGE HASAMPURA VAS BHANKOTA , IN ITS TERRITORY. HE HAS ALSO OBSERVED THAT AS PER RAJASTHAN STATE GAZETTE NOTIFI CATION DATED 23/4/1992 AS ON 18/04/1992 THE VILLAGE HASMPURA VAS BHANKROTA WAS W ITHIN THE MUNICIPAL LIMIT OF JAIPUR NAGAR PARISHAD. UNDER THESE FACTS HE TREATED THE LAND AS CAPITAL ASSET AND COMPUTED THE CAPITAL GAIN ON TRANSFER OF SUCH LAND. THE LD. COUNSEL FOR THE ASSESEE DURING THE COURSE OF HEARING HAS DRAWN OUR ATTENTIO N ON PAPER BOOK PAGE NO. 1 CERTIFICATE BY THE PATWARI, WHICH CERTIFIES THAT TH E LAND IS ABOUT 10 KMS. FROM THE JAIPUR MUNICIPALITY. HOWEVER, THE ASSESSING OFFICE R, DURING THE COURSE OF ASSESSMENT PROCEEDINGS HAD DEPUTED THE INSPECTOR OF THE WARD TO MEASURE THE DISTANCE ALONG WITH THE CONCERNED REVENUE OFFICER. ALONG WITH ONE OF THE MEMBER HUF VISITED THE LAND IN QUESTION ON 25/2/2013 TO MEASURE THE DIST ANCE. AS TWO REPORT SUBMITTED BY THE INSPECTORS AND THE REVENUE OFFICIAL STATING THAT LAND IN ACQUISITION AT 7.3 KM (VIA JHAI-DEH WAKI DHANI AND 6.5 KM VIA MAHANPURA J HAI. 3.3 IN THE PRESENT CASE THERE ARE THREE REPORTS WIT H REGARD TO DISTANCE OF LAND IN QUESTION THE PATWARI , HAS GIVEN THE DISTANCE 10 KM S. ANOTHER REVENUE OFFICIAL GAVE REPORT OF DISTANCE OF 7.3 KMS AND THE INSPECTOR OF THE INCOME TAX HAS GIVEN THE DISTANCE OF 6.3 KM. NOW, IT IS TO BE EXAMINED WHICH REPORT IS CORRECT. THE LIMIT OF MUNICIPALITY IS FIXED BY THE CONCERNED STATE OR THE CENTRAL GOVERNMENT AS THE CASE MAY BE BY WAY OF GAZETTE NOTIFICATION. THE NOTIFIC ATION DATED 6/1/1994 WAS IN VOGUE WHEN THE TRANSFER OF LAND TOOK PLACE . THE A SSESSING OFFICER WAS REQUIRED TO GIVE A CLEAR FINDING WITH REGARD TO LIMIT OF JAIPUR MUNICIPALITY CORPORATION AND FROM THAT POINT, WHAT WAS THE DISTANCE OF ASSESSEES LAN D IN QUESTION AS ON THE DATE OF 10 ITA NO.182/JP/2015 RODU RAM JAT, HUF. TRANSFER. THIS FACT HE COULD HAVE GATHERED FROM TH E RECORDS OF THE PWD OR ANY OTHER INSTRUMENTALITY OF THE STATES WHICH IS RESPONSIBLE FOR LAYING AND MAINTENANCE OF ROADS. WE FIND THAT NEITHER THE AO NOR LD. CIT(A) HAS GIVEN ANY SPECIFIC FINDINGS TO THIS EFFECT. AS THERE IS MERIT INTO THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE, THAT THE DISTANCE BETWEEN MUNICIPALITY LIMIT AND AG RICULTURAL LAND IS TO BE CONSIDERED ON THE DATE OF TRANSFER ON LAND. BY SUBSEQUENTLY, EVENTS IN THE FORM OF LAYING OF THE DIRECT ROAD POSSIBLY REDUCES THE DISTANCE. THE REFORE, THE DISTANCE SHOULD RELATE TO THE DATE OF TRANSFER ASSET FOR THE PURPOSE OF CO NSIDERING WHETHER THE AGRICULTURAL LAND WAS CAPITAL ASSET OR NOT ON THE DATE OF TRANSF ER. THE ISSUE OF DISTANCE OF AGRICULTURE LAND FROM THE CONCERNED MUNICIPALITY DE TERMINES CHARACTER OF SUCH LAND WHETHER IT IS A CAPITAL ASSET OR NOT. IN THE PRESE NT CASE GOES TO THE VERY ROOT OF DISPUTE. UNDER THESE FACTS, WE DEEM IT PROPER TO S ET ASIDE THIS ISSUE AND DIRECT THE ASSESSING OFFICER TO GIVE CLEAR FINDING WITH REGARD TO THE FACT AS WHAT WAS THE LIMIT OF JAIPUR MUNICIPALITY AS PER THE RELEVANT NOTIFICATIO N IN FORCE ON THE DATE ON TRANSFER AND ALSO THE DISTANCE BETWEEN JAIPUR MUNICIPALITY A ND AGRICULTURAL LAND IN QUESTION ON THE DATE OF TRANSFER. NEEDLESS TO SAY, THAT ASSE SSEE WOULD COOPERATE WITH THE ASSESSING OFFICER. IN THE LIGHT OF ABOVE THE ASSES SING OFFICER WOULD DECIDED THIS ISSUE AFRESH. THE GROUNDS NO. 2 TO 3 ARE ALLOWED FO R STATISTICAL PURPOSE. 4. GROUND NO. 4 TO 6 ARE AGAINST BENEFIT OF INDEXAT ION AND DEDUCTION UNDER SECTION 54B AND 54F OF THE ACT. 4.1. SINCE WE HAVE RESTORED THE ISSUE WHETHER THE L AND IN QUESTION IS CAPITAL ASSET OR NOT FOR YOUR DETERMINATION, WE DEEM IT PROPER TO RESTORE THIS GROUND AS WELL TO THE FILE OF AO FOR DECISION AFRESH. 11 ITA NO.182/JP/2015 RODU RAM JAT, HUF. 5. GROUND NO. 2 TO 6 OF THE ASSESSEES APPEAL ARE A LLOWED FOR STATISTICAL PURPOSE. GROUND NO. 1 AND 7 ARE DISMISSED AS DISCUSSED ABOVE . 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSE ORDER PRONOUNCED IN THE OPEN COURT ON 23/2/2017. SD/- SD/- FOE FLAG ;KNO ( DQY HKKJR ) (VIKRAM SINGH YADAV) ( KUL BHARAT ) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 23/2/2017. POOJA/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- SHRI RODU RAM JAT, HUF , JAIPU R. 2. THE RESPONDENT- THE INCOME TAX OFFICER, WARD 7(2 ), JAIPUR. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 182/JP/2015) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR 12 ITA NO.182/JP/2015 RODU RAM JAT, HUF.