Income Tax Officer, Ward-9(3), Hyderabad V. Shri Adela Krishna Reddy, R.R.Dist

ITA 1838/HYD/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6415 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 04-10-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 27-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M SITARAM
• Assessee Lawyers: S RAMA RAO
• Keywords: Capital asset; Cost of acquisition
• Section: 143(3); 2(14)

Judgement Text

ITA NO 1838 OF 2013 ADELA KRISHNA REDDY HYDERABAD PAGE 1 OF 15 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER & SHRI PARTHA SARATHI CHAUDHURI, JUDICIAL MEMBER ITA NO.1838/HYD/2013 (ASSESSMENT YEAR: 2009-10) INCOME TAX OFFICER WARD 9(3) HYDERABAD VS. SHRI ADELA KRISHNA REDDY HYDERABAD PAN: AFGPA 2967 M (APPELLANT) (RESPONDENT) FOR REVENUE : SHRI M. SITARAM, DR FOR ASSESSEE : SHRI S. RAMA RAO DATE OF HEARING : 23 .06.2016 DATE OF PRONOUNCEMENT : 29 .06.2016 O R D E R PER SHRI PARTHA SARATHI CHAUDHURI, J.M. THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST TH E ORDER OF THE LEARNED CIT (A)-V HYDERABAD DATED 25.09.2013 FO R THE RELEVANT A.Y 2009-10. ADDITIONAL GROUNDS RAISED BY THE REVEN UE READ AS UNDER: 1. THE LEARNED CIT (A) OUGHT TO HAVE APPRECIATED MEANING OF AGRICULTURAL LAND IN TERMS OF THE DECISI ON RENDERED BY THE APEX COURT IN THE CASE OF RAJA BENO Y KUMAR SAHAS ROY 32 ITR 466 (DT. 23.05.1957) AND IN THE CASE OF SARIFABIBI MOHD IBRAHIM 204 ITR 631 (19 93). 2. THE LEARNED CIT(A) OUGHT TO HAVE CALLED FOR THE INPUTS TO CLAIM TO EXAMINE WHETHER THERE ARE ANY AGRICULTU RAL ACTIVITIES WERE CARRIED OUT PRIOR TO 2 YEARS BEFORE THE SALE OF LAND. 3. THE LEARNED CIT(A) OUGHT TO HAVE DIRECTED THE AO TO EXAMINE THE ISSUE OF AGRICULTURAL LAND CLAIM IN TOT O AND ITA NO 1838 OF 2013 ADELA KRISHNA REDDY HYDERABAD PAGE 2 OF 15 ASK FOR SUBMISSION OF REMAND REPORT INSTEAD OF DIRE CTING TO VERIFY WHETHER THE SUBJECT LAND FALLS WITHIN THE MUNICIPAL LIMITS OR HADA LIMITS. 4. THE LEARNED CIT(A) OUGHT TO HAVE OBSERVED THAT T HE SUBJECT LAND WAS SOLD FOR THE PURPOSE OF NON-AGRICU LTURAL USAGE I.E CONSTRUCTION OF BUILDING, SINCE IN NORMAL COURSE, THERE SHOULD BE A GOVERNMENT ORDER FOR SUCH CONVERSION OF AGRICULTURAL LAND INTO NON-AGRICULTUR AL PURPOSES LIKE CONSTRUCTION ACTIVITIES AND WITHOUT S UCH VERIFICATION, DECIDING THE SAID LAND AS AGRICULTURA L LAND IS ERRONEOUS ON THE PART OF THE LEARNED CIT(A). 5. THE 'LEARNED CIT(A) OUGHT NOT HAVE RESTRICTED TH E JURISDICTION OF THE AO BY CALLING OF REMAND REPORT ONLY ON THE ISSUE OF MEASUREMENT OF DISTANCE FROM GHMC OR HADA LIMITS INSTEAD OF GIVING POWER TO EXAMINE THE ISSUE A FRESH AND SUBMIT REPORT KEEPING IN VIEW OF THE APEX COURT OBSERVATIONS AS HELD IN THE ABOVE MENTIO NED CASES. 6. SINCE, THE CORE ISSUE IS MISSED OUT FROM THE HAN DS OF THE FACT FINDING AUTHORITIES I.E ASSESSING OFFICER AND COMMISSIONER 0 INCOME TAX (APPEALS), THE HONORABLE TRIBUNAL IS REQUESTED TO REMIT BACK TO THE FILE OF THE AO TO VERIFY THE ISSUE RAISED IN GROUND NO.1 HERE. 7. ANY OTHER GROUND THAT MAY BE PERMITTED TO SUBMIT AT THE TIME OF HEARING. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL, FILED HIS RETURN OF INCOME ON 30.09.2009 ADMITTING TOTAL INCOME OF RS.5,05,620. THE RETURN WAS PROCESSED U/S 143(1) AN D THE INCOME RETURNED WAS ACCEPTED. SUBSEQUENTLY THE CASE WAS TA KEN UP FOR SCRUTINY ON THE BASIS OF CASS BY ISSUING A NOTICE U /S 143(2). THE AO COMPLETED THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT DETERMINING THE TAXABLE INCOME OF THE ASSESSEE AT R S.76,12,500/-. THAT THOUGH THE REVENUE HAS TAKEN MULTIPLE GROUNDS OF APPEAL, THE ITA NO 1838 OF 2013 ADELA KRISHNA REDDY HYDERABAD PAGE 3 OF 15 ONLY ISSUE TO BE ADDRESSED HEREIN IS WHETHER THE CH ARACTER OF THE LAND SOLD BY THE ASSESSEE IS IN NATURE OF AGRICULTU RAL LAND SO AS NOT TO FALL WITHIN THE MISCHIEF OF SECTION 2(14)(III) O F THE ACT. THAT BEING AGGRIEVED BY THE ORDER OF THE AO, ASSESSEE PREFERRE D AN APPEAL BEFORE THE CIT (A). THE AO MADE ADDITIONS BY GIVING THE FOLLOWING REASONS: ON VERIFICATION OF THE INFORMATION FILED BY THE AR WITH REFERENCE TO THE RETURN OF INCOME AND DETAILS FURNISHED BY THE ASSESSEE, THE ASSESSEE HAS SOLD THE FOLLOWING AGRICULTURE LANDS SITUATED AT MAMIDAPALLY VILLAGE, SAROORNAGAR MANDAL, RR DIST. THE DETAILS OF THE PURCHASE COST AND SALE CONSIDERATION ARE FURNISHED HEREUNDER: DOCUMENT NO TOTAL CONSIDERATION COST OF PURCHASE PROFIT 4767/2008-15 GUNTAS 20,62,500 7,50,000 13,12,500 4197/2008-1.2 ACRE 82,50,000 30,00,000 52,50,000 4766/2008 12 GUNTAS 16,50,000 6,00,000 10,50,000 THE AGRICULTURAL LANDS SOLD BY THE ASSESSEE DURING THE PREVIOUS YEAR ARE PURCHASED IN THE YEAR 2006 I.E. WITHIN THE THREE YEARS PERIOD. THEREFORE, THE TRANSACTIONS ATTRACT SHORT TERM CAPITAL GAINS. WHEREAS, IN THE ROI FILED BY THE ASSESSEE FOR THE A.Y 2009-10, THE ASSESSEE HAS NOT ADMITTED THE SHORT TERM CAPITAL GAIN ON THE SALE OF ABOVE MENTIONED AGRICULTURAL LANDS. WHEN THE ISSUE IS CONFRONTED TO THE ASSESSEES AR, IT IS SUBMITTED BY HIM THAT THE LAND SOLD BY THE ASSESSEE IS AN AGRICULTURAL LAND AND IS FAR AWAY FROM THE END OF THE MUNICIPAL LIMITS OF THE HYDERABAD CITY AND THEREFORE, NOT ADMITTED ANY CAPITAL GAINS THEREON. AS PER THE GHMC NOTIFICATION VIDE G.O NO.261, DATED 16.04.2007, THE LAND SITUATED AT MAMIDIPALLY VILLAGE, SAROORNAGAR MANDAL ARE PART OF GHMC AND THEREBY THE LANDS SOLD BY THE ASSESSEE ARE BECOME CAPITAL ASSET UNDER THE IT LAW FOR THE PURPOSE OF CAPITAL GAIN FROM THE DATE OF NOTIFICATION. THEREFO RE, THE SAID SALE TRANSACTION ATTRACTS SHORT TERM CAPITAL GAIN TAX. THE SAID TRANSFER OF LAND TOOK ITA NO 1838 OF 2013 ADELA KRISHNA REDDY HYDERABAD PAGE 4 OF 15 PLACE ON 29.10.08 AND 23.12.08 WHICH IS SUBSEQUENT TO THE DATE OF NOTIFICATION. THE ISSUE I S CLEARLY ANALYSED TO THE ASSESSEES AR AND CONFRONTED WITH THE GHMC NOTIFICATION. THE ASSESSEE HAS NOT FURNISHED THE COPIES OF THE SALE DEEDS FOR THE PURCHASE COST IN RESPECT OF THE ABOVE TRANSACTIONS. ON VERIFICATION OF THE DETAILS OF THE MARKET VALUE OF THE LAND FOR THE CALENDAR YEAR 2006, THE MARKET VALUE PER GUNTA WAS AT RS.50,000. ACCORDINGLY THE COST PRICE IS WORKED OUT AND DETERMINED THE SHORT TERM CAPITAL GAIN AT RS.76,12,500/-. 3. BEFORE THE LEARNED CIT (A), SUBMISSION OF THE AS SESSEE READ AS FOLLOWS: THE ASSESSEE SOLD THE LANDS LOCATED IN MAMIDIPALLY VILLAGE, SAROORNAGAR MANDAI THE PARTICULARS OF WHICH ARE AS FOLLOWS _ 1. DOCUMENT NO'S.4767/2008 - 15 GUNTAS - SALE CONSIDERATION RS.20,62,500/-. 2. DOCUMENT NO'S. 4197/2008 - 1.2 ACRES - SALE CONSIDERATION RS. 52, 50, 000/-. 3. DOCUMENT NO'S.4766/2008 - 12 GUNTAS - SALE CONSIDERATION RS. 6, 00,000/-. THESE LANDS WERE PURCHASED IN THE YEAR 2006 AND BEING AGRICULTURE LANDS ON WHICH AGRICULTURE ACTIVI TY WAS BEING CONDUCTED THE ASSESSEE HAS NOT ADMITTED THE SHORT TERM CAPITAL GAIN ARISING OUT OF THE SALE OF THESE LANDS. THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS HAS SUBMITTED EVIDENCE SUPPORTING THE AGRICULTURE ACTIVITY ON THE SAID LANDS IN THE FORM OF LEASE DEEDS. (COPY OF LEASE DEEDS ENCLOSED) THE ASSESSEE HUMBLY SUBMITS THAT THE RATIONALE BEHIND THE ADDITION MADE BY THE LEARNED ASSESSING OFFICER IS BASED MAINLY ON THE INFERENCE DRAWN FROM ITA NO 1838 OF 2013 ADELA KRISHNA REDDY HYDERABAD PAGE 5 OF 15 A NOTIFICATION UNDER GO NO. 261 DATED 16.4.2007 ISSUED BY THE GHMC. IT IS HUMBLY SUBMITTED THAT THE SAID GO NO.261 DATED 16.4.2007 DOES NOT MENTION ANYWHERE THAT THE LANDS SITUATED AT MAMIDIPALLY VILLAGE UNDER SAROORNAGAR MANDAI FALL UNDER THE GHMC LIMITS. THE SAID GO PERTAINS TO A NOTIFICATION ON THE LIST OF INDUSTRIES THAT ARE PROHIBITED IN CERTAIN VILLAGES FALLING IN THE DOWNSTREAM OF OSMAN SAGAR AND HIMAYATSAGAR LAKES. HENCE IT IS RESPECTFULLY SUBMITTED THAT THE INFEREN CE DRAWN BY THE ASSESSING OFFICER THAT THE VILLAGE MAMIDIPALLI FALLS UNDER THE MUNCIPAL LIMITS IS INCORRECT. THE SAID VILLAGE MAMIDIPALLI UNDER SAROORNAGAR MANDAI STILL CONTINUES TO BE A GRAMPANCHAYATH AND DOES NOT FALL UNDER ANY MUNICIPALITY NOR FALLS WITHIN 8 KMS RADIUS OF ANY MUNCIPALITY. IN SUPPORT OF THIS CONTENTION THE ASSESSEE IS ENCLOSING HEREWITH A COPY OF 'MEMO' ISSUED BY THE DEPUTY COLLECTOR & MRO, SAROORNAGAR MANDAI FOR YOUR KIND PERUSAL. THE ASSESSEE FURTHER HUMBLY SUBMITS THE FOLLOWING FACTS FOR YOUR KIND CONSIDERATION - A) THE LEARNED ASSESSING OFFICER HAS NOT DISPUTED THE NATURE OF LAND AS 'NON AGRICULTURE LANDS. B) THE LEARNED ASSESSING OFFICER HAS REFERRED AND RELIED ON A GO WHICH TOT RELEVANT TO BRING THE LAND S SOLD BY THE ASSESSEE INTO THE AMBIT OF THE DEFINITI ON OF CAPITAL ASSET. C) THE LEARNED AO FURTHER REFUSED TO CONSIDER A GOVT. MEMO WHICH CLEARLY STATED THAT THE ASSET IS AGRICULTURE LAND AND OUTSIDE THE PURVIEW OF THE DEFINITION OF CAPITAL ASSET, SECTION 2(14)(III) O F THE INCOME TAX ACT FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAIN. IN VIEW OF THE ABOVE FACTS, THE ASSESSEE HUMBLY PLEADS WITH YOUR GOOD OFFICES TO KINDLY DELETE THE ADDITION OF RS.76,12,500/-. ITA NO 1838 OF 2013 ADELA KRISHNA REDDY HYDERABAD PAGE 6 OF 15 4. BASED ON THE OBJECTIONS RAISED BY THE ASSESSEE A ND IN ORDER TO APPRECIATE THE FACTS OF THE CASE, A REMAND REPOR T WAS CALLED FOR FROM THE INCOME TAX OFFICER WARD 9(3) UNDER WHICH T HE FACTS WERE SOUGHT WITH RESPECT TO WHETHER THE ASSESSEES LAND SITUATED AT MAMIDIPALLY VILLAGE LOCATED WITHIN 8 KMS RADIUS OF GHMC OR ANY OTHER MUNICIPALITY IN TERMS OF SECTION 2(14)(III)(B ). 5. AO IN HIS REMAND REPORT OBSERVED THAT: 'THE ASSESSEE FILED A LETTER STATING THAT THE SAID VIILLAGE WAS NOT PART OF GHMC AND IN THIS REGARD HE FILED GO NO.261 DATED 16.4.2007 AS PER WHICH THE MAMIDIPALLY WAS ONE OF THE EIGHT GRAM PANCHAYATS PROPOSED TO BE ENCLOSED IN GHMC. HOWEVER AS PER PARAS NO.10 AND 11 AS WELL AS THE NOTIFICATION ENCLOSED TO THE GO, MAMIDIPALLY VILLAGE HAS NOT BEE N INCLUDED IN THE JURISDICTION OF GHMC. HE HAS FILED COPY OF 'MEMO' ISSUE BY THE DEPUTY COLLECTOR & MRO, SAROORNAGAR MANDAL WHEREIN THE DY. COLLECTOR AND MRO STATED THAT THE MAMIDIPALLY VILLAGE IS A GRAMPANCHAYATH AND NEITHER A MUNICIPALITY NOR FALLS WITHIN 8. K. M. RADIUS OF ANY NEAREST MUNICIPALITY. THE SUBMISSIONS MADE BY THE ASSESSEE ARE NOT ACCEPTABLE. IT IS PERTINENT TO MENTION HERE THAT THE IMPUGNED L AND WAS SITUATED IN THE VII/AGE MAMIDPALLY AND SAROORNAGAR MANDAI, WHICH IS INCLUDED IN THE HYDERABAD AIRPORT DEVELOPMENT AUTHORITY (HADA), VIDE GOMS 352 MA DTD. 30. 07. 2001. THE HADA HAS BEEN CONSTITUTED AS A SPECIAL AREA DEVELOPMENT AUTHORITY BY THE GOVERNMENT OF ANDHRA PRADESH U/S 3A OF THE ANDHRA PRADESH URBAN AREAS (DEVELOPMENT) ACT, 1975. NOTIFICATION TO THIS EFFEC T HAS BEEN ISSUED BY THE MUNICIPAL ADMINISTRATION AND URBAN DEVELOPMENT (210 DEPARTMENT, GOVERNMENT OF ANDHRA PRADESH, NOTIFYING 89 VII/AGES FROM 7 MANDALS IN THE VICINITY AND ITA NO 1838 OF 2013 ADELA KRISHNA REDDY HYDERABAD PAGE 7 OF 15 SURROUNDING THE INTERNATIONAL AIRPORT, SAMSHABAD, AS A SPECIAL DEVELOPMENT AREA AND IT IS NOTICED THA T THE VII/AGE SRINAGAR IN MAHESHWARAM MANDAI IS INCLUDED IN THE SAID 89 VIILLAGES. FURTHER THE IMPUGNED LAND WAS SITUATED IN MAMIDIPALLY VILLAGE OF SAROORNAGAR MANDAI WHICH IS WITH THE LIMIT OF HADA AND THEREFORE, WAS A CAPITAL ASSET AS PER SEC. 2(14) OF THE ACT, LIABLE TO CAPIT AL GAINS TAX U/S 45 THEREOF. THE GOVERNMENT NOTIFICATION REGARDING CONSTITUTION OF LOCAL AUTHORITY BY THE NAME HADA AND INCLUSION OF VII/AGE MAMIDAPLLY IN THE LIMIT THEREOF, THE STATUS OF THE LAND WAS THAT OF A CAPITAL ASSET. IT CAN BE SEE N THAT BY WAY OF THE SAID NOTIFICATION, THE AREA HAD BEEN DECLARED AS A SPECIAL DEVELOPMENT AREA' IN AND AROUND THE SAMSHABAD INTERNATIONAL AIRPORT, FOR WHICH IS SPECIAL PLANNING CONTROL, HIGH LEVEL OF INFRASTRUCTURAL AND MANAGERIAL INPUTS, STATUS OF SPECIAL INVESTMENT ZONE ETC. HAD BEEN SPECIFIED. AS PER THE DEFINITION OF THE TERM 'CAPITAL ASSET' A S GIVEN IN THE SEC.2 (14) OF THE ACT, THE UNDERSIGNED FEEL THAT IN THE APPELLANT'S CASE, THE LAND WAS VER Y MUCH WITH THE LIMITS OF THE HADA, WHICH IS A LOCAL AUTHORITY, COMPRISING OF 89 VILLAGES FROM 7 MANDALS , SURROUNDING THE INTERNATIONAL AIRPORT AND HAVING A POPULATION OF 1.54 LAKH AS PER CENSUS, 2001. FURTHER HADA IS A GOVERNMENL NOTFFIED LOCAL AUTHORITY AND IS A MUNICIPALITY WITHIN THE MEANING OF SECTION 2 (14) (III) (A). IT IS PERTINENT TO MENTIO N HERE THAT IN THE CASE OF DEOKI NANDAN & SONS VS. CIT (115 TAXMAN 513), THE HON'BLE DELHI HIIGH COURT HAVE HELD THAT THE FARIDABAD ADMINISTRATIVE COMPLEX WAS AKIN TO A MUNICIPALITY. THEREFORE, THE LAND SOLD WAS A NON-AGRICULTURAL LAND AND THEREFORE , A CAPITAL ASSET AS PER SEC.2(14) OF THE I.T. ACT, L IABLE TO CAPITAL GAINS U/S 45. ACCORDINGLY, THE SAME IS BROUGHT TO TAX. MOREOVER, THE ASSESSEE SOLD THE LAN D TO M/S PADMAJA DEVELOPERS PVT LTD. FROM THIS, ONE CAN JUSTIFY AS GUIDELINE IN DETERMINING THE NATURE OR THE CHARACTER OF LAND AS AGRICULTURAL OR COMMERCIAL . ITA NO 1838 OF 2013 ADELA KRISHNA REDDY HYDERABAD PAGE 8 OF 15 6. THE CIT (A) CALLED FOR ASSESSEES COMMENTS ON TH E REMAND REPORT AND THE ASSESSEE HAD MADE THE FOLLOWING SUBM ISSIONS: ' THE LEARNED ASSESSING OFFICER HAS RELIED ON THE DEFINITION OF A CAPITAL ASSETS WHICH HAS BEEN DEFIN ED AS FOLLOWS - CAPITAL ASSET' MEANS PROPERTY OF ANY KIND HELD BY AN ASSESSEE, WHETHER OR NOT CONNECTED WITH HIS BUSINES S OR PROFESSION, BUT DOES NOT INCLUDE-AGRICULTURAL LA ND IN INDIA, NOT BEING LAND SITUATE- (A)' IN ANY AREA WHICH IS COMPRISED WITHIN THE JURISDICTION OF A MUNICIPALITY (WHETHER KNOWN AS A MUNICIPALITY, MUNICIPAL CORPORATION, NOTIFIED AREA COMMITTEE, TOWN AREA COMMITTEE, TOWN COMMITTEE, OR BY ANY OTHER NAME) OR A CANTONMENT BOARD AND WHICH HAS A POPULATION OF NOT LESS THAN TEN THOUSAND ACCORDING TO THE LAST PRECEDING CENSUS OF WHICH THE RELEVANT FIGURES HAVE BEEN PUBLISHED BEFORE THE FIR ST DAY OF THE PREVIOUS YEAR] ; OR IN THIS REGARD THE ASSESSEE HUMBLY SUBMITS THAT GOVERNMENT IN G.O.MS. NO 352 MA&UD (I) DEPARTMENT., DATED 30-7-2001 HAVE DECLARED THE AREA COMPRISED WITHIN THE JURISDICTION OF SHAMSABAD AND SURROUNDING VILLAGES IN RANGA REDDY DISTRICT TO BE A SPECIAL DEVELOPMENT AREA CALLED AS HYDERABAD AIRPORT DEVELOPMENT AREA (HADA). HADA HAS BEEN NOTIFIED BY BRINING INTO ITS AMBIT ABOUT 458 SQ. KM S AND COVERS 70 REVENUE VILLAGES AND 1 9 HAMLETS ALL FALLING IN RANGA REDDY DISTRICT. HADA AREA IS LOCAT ED ABOUT 21 KM SOUTH OF HYDERABAD CITY WITH A VIEW TO PROMOTING AND SECURING PLANNED DEVELOPMENT OF THE AREAS IN AND AROUND THE PROPOSED INTERNATIONAL AIRP ORT AT SHAMSABAD, THE HADA BOARD CONSISTS OF THE PRINCIPAL SECRETARY TO GOVERNMENT, MUNICIPAL ADMINISTRATION & URBAN DEVELOPMENT DEPARTMENT AS THE CHAIRMAN, THE MANAGING DIRECTOR OF APIIC , AND THE VICE CHAIRMAN, HADA, THE DIRECTOR, HYDERABAD INTERNATIONAL AIRPORT ITA NO 1838 OF 2013 ADELA KRISHNA REDDY HYDERABAD PAGE 9 OF 15 LTD. AND THE MANAGING DIRECTOR, HMWS&SB AS MEMBERS. AS PER THE GO MS. NO 352 THE POPULATION CENSUS OF HADA IS STATED TO BE AS FOLLOWS WHICH REVEALS THE F ACT THAT THE POPULATION OF THE VILLAGE MAMIDIPALLI IS O NLY 3494 WHICH IS FAR LESS THAN THE PRESCRIBED LIMIT OF 10,000 AS MENTIONED U/S 2(14) OF THE ACT. S.NO VILLAGE POPULATION CENSUS YEAR-WISE 1981 1991 2001 1 RAVIRAL 2219 2921 3232 2 NADERGUL 4935 6089 5534 3 NARKHUDA 2520 3234 2616 4 PEDDA SHAPUR 2466 3144 2616 5 JUKAL 1709 2043 1355 6 PALMAKOLE 3351 4757 3926 7 TURKA YAMJAL 3690 6230 2151 8 MAILARDEVPALLY 2529 9945 21210 9 GAGANPAHAD 1887 3908 5386 10 MAMIDAPALLY 4600 5478 3494 11 MANKHAL 6066 7701 3598 12 TUKKUGUDA 2843 3223 4309 13 PAHADI SHARIF 2565 2853 3506 NOTWITHSTANDING THE ABOVE IT IS HUMBLY SUBMITTED THAT THE LEARNED ASSESSING OFFICER ERRED IN ASSUMING THAT ONCE THE LAND FALLS WITHIN THE LIMITS OF THE HYDERABAD AIRPORT DEVELOPMENT AUTHORITY (HADA) CONSTITUTED UNDER AP URBAN AREAS (DEVELOPMENT) ACT THE LAND FALLS UNDER THE 'MUNICIPALITY' AND HENCE THE PROVISIONS OF SECTION 2(14)(III) OF THE INCOME TAX ACT, 1961 ARE ATTRACTE D. IT IS HUMBLY SUBMITTED THAT THE NOTIFIED AUTHORITY HADA IS NOT A MUNICIPALITY NOR IT IS MUNICIPALITY BEING CALLED SO TO FALL WITHIN THE DEFINITION U/S. 2(14)(III) (A) OF IT ACT 1961. THE TERM 'MUNICIPALITY' IS DEFINED U/S. 2(22) OF AP MUNICIPALITIES ACT, 1965 TO MEAN A MUNICIPALITY OF SUCH GRADE AS MAY BE DECLARED BY THE GOVERNMENT, FROM TIME TO TIME, BY NOTIFICATION IN THE ANDHRA PRADESH GAZETTE ON THE BASIS OF INCOME AND SUCH OTHER CRITERIA AS MAY BE PRESCRIBED. THUS, IN THE STATE OF ANDHRA PRADESH, A MUNICIPALITY HAS TO BE MANDATORILY CONSTITUTED IN TERMS OF SECTION.3 OF AP MUNICIPALITIES ITA NO 1838 OF 2013 ADELA KRISHNA REDDY HYDERABAD PAGE 10 OF 15 ACT,1965, AS PER THE GUIDELINES LAID DOWN IN THE CONSTITUTION, AND HAS TO BE SO NOTIFIED BY THE GOVERNMENT WHEREAS SETTING UP OF A DEVELOPMENT! SPECIAL AREA AUTHORITY IS NOT MANDATORY. GENERALLY UNDERSTOOD, 'MUNICIPALITY' MEANS A LEGALLY INCORPORATED OR DUTY AUTHORISED ASSOCIATION OF INHABITANTS OF A LIMITED AREA FOR LOCAL GOVERNMENTAL OR OTHER PUBLIC PURPOSES. THE COUNCIL CONSISTS OF SUCH NUMBER OF MEMBERS AS ARE PRESCRIBED. THEY ARE CALLED COUNCILLORS. THEY ARE ELECTED BY THE RESIDENTS OF THE AREA COMING WITHIN THE JURISDICTION OF THE MUNICIPALITY. THE CHAIRMAN AND VICE-CHAIRMAN OF THE MUNICIPALITY ARE ELECTED BY THE MEMBERS OF THE COUNCIL. THE COMMISSIONER IS APPOINTED BY THE GOVERNMENT IN CONSULTATION WITH THE COUNCIL. IT IS THE DUTY OF TH E COMMISSIONER TO CARRY INTO EFFECT THE RESOLUTIONS O F THE COUNCIL UNLESS IT BE THAT THE SAID RESOLUTION I S SUSPENDED OR CANCELLED BY THE GOVERNMENT. THE MUNICIPALITY CONTEMPLATED UNDER SECTION 2(14)(III) (A) MUST BE ONE WHICH SATISFIES THE ABOVE REQUIREMENTS. HENCE ALL THE LOCAL AUTHORITIES MUST SATISFY THE ABOVE REQUIREMENTS TO BE KNOWN AS A 'MUNICIPALITY'. HADA IS BASICALLY AND ESSENTIALLY A CREATION OF THE ACT OF STATE LEGISLATURE CONSISTING OF PERSONS APPOINTED BY THE STATE GOVERNMENT ON SALARY BASIS OF ANDHRA PRADESH URBAN AREAS (DEVELOPMENT) ACT, 1975. THE BOARD MEMBERS ARE NOT ELECTED BY THE PEOPLE AND THERE IS NO ELEMENT OF PEOPLE CHOICE BEING REPRESENTED IN ANY MANNER IN THE CONSTITUTION OF THE BOARD. THE BOARD FUNCTIONS STRICTLY UNDER THE SUPERVISION AND CONTROL OF THE STATE GOVERNMENT AND DOES NOT HOLD OR POSSESS A 'LOCAL FUND'. BEING SO, HADA CANNOT BE CALLED AS A LOCAL AUTHORITY. THUS, THE BOARD HAS TO COMPLY WITH SUCH DIRECTIONS AS MAY BE ISSUED TO IT BY THE STATE GOVERNMENT FROM TIME TO TIME. THE OBJECT AND ACTIVITIES CARRIED ON BY THE HADA ARE ALSO WITH REFERENCE TO THE SAID ACT. ITA NO 1838 OF 2013 ADELA KRISHNA REDDY HYDERABAD PAGE 11 OF 15 FURTHER IT IS VERY CLEAR THAT THE AREA COMPRISED IN THE JURISDICTION OF HADA WAS ESSENTIALLY RURAL IN NATURE, THE ECONOMY OF WHICH WAS PREDOMINANTLY AGRICULTURE BASED. FURTHER, THE GO MAKES IT ABUNDANTLY CLEAR THAT HADA WAS ENTRUSTED WITH ONLY THE JOB OF GRANTING TECHNICAL SANCTION OR APPROVAL FOR ANY PROPOSED CONSTRUCTION OR DEVELOPMENT IN THE AREA, IN ORDER TO REGULATE AND ENSURE PLANNED DEVELOPMENT IN AND AROUND THE PROPOSED AIRPORT AND THE ROLE OF CONCERNED LOCAL AUTHORITIES WAS NOT DONE AWAY WITH. THUS, HADA IS ONLY ENTRUSTED WITH THE RESPONSIBILITY OF PREPARING DRAFT MASTER PLANS AND GRANTING TECHNICAL APPROVAL FOR ANY PROPOSED CONSTRUCTION OR DEVELOPMENT IN ITS JURISDICTION. IT DOES NOT HAV E ANY POWER OR ABILITY TO COLLECT TAXES NOR IS IT RESPONSIBLE FOR PROVISION OF CIVIC AMENITIES WHICH WOULD BE WITHIN THE EXCLUSIVE DOMAIN OF THE LOCAL AUTHORITIES. A CAREFUL AND COMPREHENSIVE READING OF S.8 AND S.36 OF ANDHRA PRADESH URBAN AREAS (DEVELOPMENT) ACT, 1975 CLEARLY SUGGESTS THAT HADA, BEING A DEVELOPMENT/SPECIAL AREA AUTHORITY CONSTITUTED UNDER THE SAID ACT, CANNOT BE EITHER EQUATED WITH A DISTINCT MUNICIPALITY OR CONSIDERED AS A COMPLETE SUBSTITUTE OF A MUNICIPALITY OR ANY OTHER LOCAL AUTHORITY. S.8 PROVIDES THAT THE SPECIAL AREA AUTHORITY CONSTITUTED UNDER THE ACT MAY COVER AN AREA COMPRISED IN MORE THAN ONE LOCAL AUTHORITY, WHETHER MUNICIPALITY OR PANCHAYAT, AND IN SUCH EVENT MAKES IT MANDATORY FOR SUCH AUTHORITY TO CONSULT THE LOCAL AUTHORITIES CONCERNED WHILE PREPARING MASTER ZONAL DEVELOPMENT PLANS BOTH AT INITIAL STAGE AND AFTER PREPARATION OF DRAFT PLA N, BEFORE SUBMISSION TO GOVERNMENT. FURTHER, S.36 OF THE SAID ACT, WHICH IS EXTRACTED HEREUNDER, MAKES IT ABUNDANTLY CLEAR THAT THE DEVELOPMENT/SPECIAL AREA AUTHORITY CREATED UNDER THE ACT, BY ITSELF, WOULD NOT CONSTITUTE A DISTINCT MUNICIPALITY OR ANY OTHER LOCAL AUTHORITY. ITA NO 1838 OF 2013 ADELA KRISHNA REDDY HYDERABAD PAGE 12 OF 15 IN THE INSTANT CASE, THE VILLAGE MAMIDIPALLI IN WHICH THE AGRICULTURAL LAND WAS LOCATED WAS COMPRISED IN THE AREA WITHIN THE JURISDICTION OF GRAM PANCHAYAT AND AS SUCH THE SPECIAL AREA AUTHORITY, BEING HADA, SHALL BE DEEMED TO BE SUCH GRAM PANCHAYAT, TO THE EXTENT OF EXECUTION OF THE DELEGATED FUNCTION OF GRANTING TECHNICAL APPROVAL FOR CONSTRUCTIONS DEVELOPMENT OF LAY- OUTS. THE AGRICULTURE LAND AT MAMIDPALLI DOES NOT FALL WITHIN ANY AREA WHICH IS COMPRISED WITHIN THE JURISDICTION OF A MUNICIPALITY OR CANTONMENT BOARD OR WHICH HAS A POPULATION OF NOT LESS THAN 10,000 SINCE AS PER THE LATEST CENSUS AS PER THE GO THE POPULATION OF THE VILLAGE IS ONLY 3494 WHICH HAVE BEEN DULY PUBLISHED IN THE GO REFERRED ABOVE. HENCE THE LAND DOES NOT FALL IN SUB-CLAUSE (A) OF SECTION 2(14)(III) OF THE ACT AS ME LAND IS OUTSIDE OF ANY MUNICIPALITY INCLUDING GHMG. THE LAND SOLD BY ASSESSEE ALSO DOES NOT FALL UNDER CLAUSE (B) OF SECTION 214)(III) WHICH PRESCRIBES THAT ANY AREA WITHIN SUCH DISTANCE, NOT BEING MORE THAN 8 KM FROM THE LOCAL LIMIT OF ANY MUNICIPALITY OR CANTONMENT BOARD AS REFERRED TO IN THE SAID SUB-CLAUSE AS THE LANDS COVERED UNDER HADA ARE MORE THAN 21 KMS FROM THE MUNICIPAL AREAS I.E.GHMC OF HYDERABAD. THE LEARNED ASSESSING OFFICER HAS NOWHERE DISPUTED THE FACT THAT THE LANDS SOLD BY THE AO ARE NOT AGRICULTURE LANDS EXCEPT FOR THE FACT THAT THE ASSESSEE HAS SOLD THE LANDS TO A COMPANY M/S PADMAJA DEVELOPERS PVT LTD. IT IS HUMBLY SUBMITTED THAT THE ASSESSEE HAS NOT CONVERTED THE INTO NON AGRICULTURE LANDS BEFORE SALE AND THE LANDS SOLD CONTINUE TO SPECIFIED AS AGRICULTURAL LAND IN REVENUE RECORDS. IT IS FURTHER HUMBLY SUBMITTED THAT ON SIMILAR FACT S THE HON'BLE HYDERABAD BENCH 'A' OF THE ITAT HYDERABAD IN THE CASE OF SMT. T. URMILA VERSUS ITA NO 1838 OF 2013 ADELA KRISHNA REDDY HYDERABAD PAGE 13 OF 15 INCOME-TAX OFFICER, WARD-6(2) IT APPEAL NO. 398 (HYD.) OF 20 12[ASSESSMENT YEAR 2008-09J DECEMBER 12, 2012, HAS HELD THAT LANDS FALLING WITHIN HADA CANNOT BE CONSTRUED AS LAND WITHIN THE MUNICIPAL LIMITS. (COPY ENCLOSED). THE HONBLE TRIBUNAL OBSERVED THAT - 'IT WAS NOT SHOWN THAT THE AUTHORITY CONCERNED WITH THE DEVELOPMENT OF THE AREAS IS A MUNICIPALITY AS DEFINED U/S 2(14) OF THE ACT. AS PER THE PROVISIONS OF SEC. 2(14 )(III) OF THE ACT, THE AGRICULTURAL LAND WILL FALL IN THE DEFINITION OF 'CAPITAL ASSET' ONLY IF IT IS SITUATE IN ANY AREA WHICH IS COMPRISED WITHIN THE JURISDICTION OF A MUNICIPALITY (WHETHER KNOWN AS MUNICIPALITY, MUNICIPAL CORPORATION, NOTIFIED AREA COMMITTEE, TOWN AREA COMMITTEE, TOWN COMMITTEE OR BY ANY OTHER NAME) .... IN VIEW OF THE ABOVE CITED REASONS , WE DO NOT FIND ANY MERIT IN THE SAID GROUNDS AND ACCORDINGLY DISMISS THEM. ' IN VIEW OF THE ABOVE FACTS THE ASSESSEE HUMBLY PLEADS WITH YOUR GOOD OFFICES THAT THE CONTENTION OF THE LEARNED AO THAT THE LANDS SOLD BY THE ASSESSEE FALL UNDER THE DEFINITION OF CAPITAL ASSET AS DEFINED U/S 2(14)(III) OF THE ACT IS NOT SUSTAINABLE. 7. ON A CAREFUL CONSIDERATION OF THE ASSESSMENT ORD ER, SUBMISSIONS OF THE ASSESSEE REMAND REPORT, THE LEAR NED CIT (A) WAS OF THE OPINION THAT THE AO HAS CONSIDERED HADA AS A GOVT. NOTIFIED LOCAL AUTHORITY AND CONCLUDED THAT IT IS A MUNICIPA LITY WITHIN THE MEANING OF SECTION 2(14)(III)(A) WHICH IS NOT JUSTI FIED AS THE LANDS COVERED UNDER HADA CONTINUE TO BE GRAM PANCHAYAT LA NDS AND HADA IS SPECIAL AREA AUTHORITY TO FUNCTION AS A BOD Y FOR GRANTING TECHNICAL APPROVAL FOR CONSTRUCTIONS/DEVELOPMENT OF LAY-OUTS IN THE AREA COVERED WITHIN ITS LIMITS. FURTHER, LAND SOLD BY THE ASSESSEE ALSO DOES NOT FALL WITHIN SUCH DISTANCE OF NOT BEIN G MORE THAN 8 KM FROM THE LOCAL LIMIT OF ANY MUNICIPALITY OR CANTONM ENT BOARD AS REFERRED TO IN SUB-CLAUSE(B) OF SECTION 2(14)(III) AS THE LANDS COVERED ITA NO 1838 OF 2013 ADELA KRISHNA REDDY HYDERABAD PAGE 14 OF 15 UNDER HADA ARE MORE THAN 21 KMS FROM THE MUNICIPAL AREAS I.E. GHMC HYDERABAD. THE LEARNED CIT (A) BEING APPRAISED BY THE ASSESSEE ALSO ADHERED TO THE RATIONALE ADOPTED BY T HE ITAT HYDERABAD BENCH A IN THE CASE OF SMT. T. URMILA V S. INCOME TAX OFFICER WARD 6(2) IN APPEAL NO.398/HYD/2012 FOR THE A.Y 2008-09, DATED 12 TH DECEMBER, 2012 WHICH HAS HELD THAT LANDS FALLING W ITHIN THE HADA CANNOT BE CONSTRUED AS LAND WITHIN THE MUN ICIPAL LIMITS. ACCORDINGLY THE LEARNED CIT (A) ALLOWED REL IEF TO THE ASSESSEE DECLARING THE SAID LAND AS AGRICULTURAL LAND AND TH AT THEY DO NOT FALL WITHIN THE CAPITAL ASSET AS DEFINED U/S 2(14)( III) OF THE ACT. BEING AGGRIEVED, THE REVENUE HAS BROUGHT OUT THIS A PPEAL BEFORE US. THE LEARNED DR RELIED ON THE ORDER OF THE AO, W HEREAS THE LEARNED AR SUBMITTED VARIOUS SUBMISSIONS AS DONE BE FORE THE FIRST APPELLATE AUTHORITY AND RELIED ON THE ORDER OF THE CIT (A). THE LEARNED AR FURTHER POINTED OUT BEFORE US THE DECISI ON OF THE HYDERABAD BENCH A IN THE CASE OF SMT. T. URMILA V S. INCOME TAX OFFICER WARD 6(2) IN APPEAL NO.398/HYD/2012 FOR THE A.Y 2008-09, DATED 12 TH DECEMBER, 2012. 8. WE HAVE HEARD THE CONTENTIONS OF THE PARTIES HER EIN, PERUSED THE CASE RECORDS AND ON THE FACTS AND CIRCUMSTANCES ARRIVE AT OUR CONSIDERED VIEW THAT IN THIS CASE THE AO HAS CONSID ERED HADA AS A GOVT. NOTIFIED LOCAL AUTHORITY AND CONCLUDED THAT I T IS A MUNICIPALITY WITHIN THE MEANING OF SECTION 2(14)(III)(A) WHICH I S NOT JUSTIFIED AS THE LANDS COVERED UNDER HADA CONTINUE TO BE GRAM PA NCHAYATS LAND. THAT FURTHER IT IS IN RECORD THAT THE LAND SO LD BY THE ASSESSEE ALSO DOES NOT FALL WITHIN SUCH DISTANCE OF NOT BEIN G MORE THAN 8 KMS FROM THE LOCAL LIMIT OF ANY MUNICIPALITY OR CAN TONMENT RATHER LANDS COVERED UNDER HADA ARE MORE THAN 21 KMS FROM THE ITA NO 1838 OF 2013 ADELA KRISHNA REDDY HYDERABAD PAGE 15 OF 15 MUNICIPAL AREAS I.E. GHMC OF HYDERABAD. THAT FURTHE R, WE OBSERVE THE DECISION OF COORDINATE BENCH OF ITAT HYDERABAD BENCH A IN THE CASE OF T. URMILA (SUPRA) WHEREIN IN A SIMILAR ISSUE THE TRIBUNAL HELD ON FACTS THAT HADA IS NOT A LOCAL BOD Y AND LANDS WITHIN HADA IS NOT CAPITAL ASSET U/S 2(14)(III) OF THE ACT. THIS DECISION OF THE COORDINATE BENCH WAS UPHELD BY THE HON'BLE HYDERABAD HIGH COURT WHEN ON AN APPEAL BY THE REVEN UE IN T. URMILAS CASE WAS DISMISSED. THAT IN THE INSTANT CA SE, THE LAND SOLD BY THE ASSESSEE IS WITHIN THE HADA AND THEREFORE, T HE CHARACTER OF THE LAND IS AGRICULTURAL LAND AND RESPECTFULLY FOLL OWING THE DECISION OF THE COORDINATE BENCH AND THAT OF THE HON'BLE HYD ERABAD HIGH COURT, WE DO NOT SEE ANY REASON TO INTERFERE WITH T HE ORDER OF THE LEARNED CIT (A). THAT ACCORDINGLY, THE ORDER GRANTE D TO THE ASSESSEE IS SUSTAINED. 8. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH JUNE, 2016. S D/ - S D/ - (B. RAMAKOTAIAH) (PARTHA SARATHI CHAUDHURI) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 29 TH JUNE, 2016. VNODAN/SPS COPY TO: 1. INCOME TAX OFFICER WARD 12(5) HYDERABAD 2. SMT. GUTHULA NAGAMANI, FLAT NO.203, HIG 130 & 137, REVATHI NILAYAM, 6 TH PHASE, KPHB, HYDERABAD 500072 3. CIT-1 HYDERABAD 4. PRINCIPAL CIT-1 HYDERABAD 5. THE DR, ITAT, HYDERABAD 6. GUARD FILE BY ORDER