Shri Rameshchandra Babubhai Nagarsheth, Surat V. The Income Tax Officer, Ward-3(2)(3), Old Ward- 8(3), Surat

ITA 1939/AHD/2015

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 2259 (ITAT-SURAT)
• Duration Of Justice: 3 year(s) 1 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 01-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R P RASTOGI
• Keywords: TDS
• Section: 12; 2

Judgement Text

RAMESHCHANDRA BABUBHAI NAGARSHETH V. ITO 3(2)(3) SURAT /I.T.A. NO.1939/AHD/2015/A.Y.:08-09 PAGE 1 OF 18 , , IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH, SURAT . . , . . , BEFORE SHRI C.M.GARG, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER . . ./ I.T.A NO.1939/AHD/2015 / A.Y.:2008-09 SHRI RAMESHCH ANDRA BABUBHAI NAGARSHETH, 11.497, NAGARSHETH POLE, VADACHAUTA, SURAT 395003 PAN: AAQPN 5829A V S . INCOME TAX OFFICER, WARD- 3(2)(3) SURAT APPELLANT /RESPONDENT /ASSESSEE BY SHRI RAMESHCHANDRA B NAGRSHETH, THE ASSESSEE HIMSELF /REVENUE BY SHRI R.P. RASTOGI, SR - DR / DATE OF HEARING: 03.08.2018 /PRONOUNCEMENT ON 30.08.2018 /O R D E R PER O. P. MEENA, ACCOUTANT MEMBER: 1. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-3, SURAT (IN SHORT THE CIT (A)) DATED 18.05.2015 PERTAINING TO ASSESSMENT YEAR 2008-09, WHICH IN TURN HAS ARISEN FROM THE ORDER PASSED BY THE INCOME TAX OFFICER, WARD- 8(3) SURAT NOW RE-DESIGNATED AS ITO WARD 3(2)(3), SURAT (IN SHORT THE AO) DATED 18.03.2014 UNDER RAMESHCHANDRA BABUBHAI NAGARSHETH V. ITO 3(2)(3) SURAT /I.T.A. NO.1939/AHD/2015/A.Y.:08-09 PAGE 2 OF 18 SECTION 143 (3) R.W.S. 147 OF INCOME TAX ACT,1961 (IN SHORT THE ACT). 2. THE ASSESSEE HAS TAKEN AS MANY AS 19 GROUNDS OF APPEAL, WHICH ARE ARGUMENTATIVE IN NATURE. HOWEVER, SOME IN SUBSTANCE THESE GROUNDS RELATES TO CONFIRMATION OF ADDITION OF RS. 73,15,714 MADE ON ACCOUNT OF LONG-TERM CAPITAL GAIN ARISING IN RESPECT OF LAND ACQUIRED UNDER COMPULSORY ACQUISITION BY SURAT MUNICIPAL CORPORATION (SMC). IN VIEW OF THESE FACTS AND CIRCUMSTANCES, THESE GROUNDS OF APPEAL ARE BEING CONSIDERED TOGETHER AS COMMON GROUND FOR THE SAKE OF CONVENIENCE AND BREVITY. 3. BRIEF FACTS ARE THAT THE ASSESSEE ALONG WITH OTHER CO-OWNERS HAS SOLD IMMOVABLE PROPERTY ON 01.04.2008 FOR RS.6,04,00,000. HOWEVER, THE SALE DEED WAS REGISTERED ON 01.04.2008 BUT DATE OF CONVEYANCE IS 31.03.2008. THEREFORE, THE AO HAS CONSIDERED THE LONG-TERM CAPITAL GAIN ACCRUED IN A.Y. 2008-09. IT WAS CLAIMED BEFORE THE AO THAT LAND PERTAINS TO RAMESHCHANDRA BABUBHAI NAGARSHETH HUF, AND NOT IN HIS INDIVIDUAL CAPACITY. HOWEVER, THE AO OBSERVED THAT COPY 7/12, SALE DEED EXECUTED WITH SMC, AND RAMESHCHANDRA BABUBHAI NAGARSHETH V. ITO 3(2)(3) SURAT /I.T.A. NO.1939/AHD/2015/A.Y.:08-09 PAGE 3 OF 18 PANCH KARAR CLEARLY MENTIONED THE NAME OF SHRI NAVINCHANDRA BABUBHAI NAGARSHETH, SHRI JASGDISHCHANDRA BABUBHAI NAGARSHETH AND SHRI RAMESHCHANDRA BABUBHAI NAGARSHETH CONFIRMED THE FACT THAT LAND BELONGS TO THREE INDIVIDUALS WHO HAVE SIGNED THE SALE DEED AND THESE DOCUMENT CONTAINED THEIR NAME IN THEIR INDIVIDUAL CAPACITY. THE AO FURTHER OBSERVED THAT SAID LAND WAS NOT USED FOR AGRICULTURAL PURPOSE DURING F.Y. 2005-06 AND 2006-07. THE AO ALSO OBSERVED THAT LAND WAS ACQUIRED BY SMC AT DINDOLI FOR SEWAGE TREATMENT PLANT AND WAS NOT UNDER COMPULSORY ACQUISITION OF LAND. THE AO FURTHER NOTED THAT LAND WAS ACQUIRED U/S. 77 OF BPMC ACT, 1949 HENCE, THE SAID LAND WAS ACQUIRED BY NEGOTIATION AND PURCHASED BY SALE DEED AND NOT BY COMPULSORY ACQUISITION. ACCORDINGLY, THE CLAIM OF THE ASSESSEE THAT LAND IS ACQUIRED BY COMPULSORY ACQUISITION WAS REJECTED HENCE, CAPITAL GAINS WAS TAXED. THE AO FURTHER NOTED THAT LAND WAS NOT USED FOR AGRICULTURAL PURPOSE DURING 2 YEARS IMMEDIATELY PRECEDING YEARS FROM THE DATE OF TRANSFER NOR THE SAID LAND WAS ACQUIRED UNDER COMPULSORY RAMESHCHANDRA BABUBHAI NAGARSHETH V. ITO 3(2)(3) SURAT /I.T.A. NO.1939/AHD/2015/A.Y.:08-09 PAGE 4 OF 18 ACQUISITION AND IT WAS WITHIN 8 KM OF MUNICIPAL LIMIT, THEREFORE, IT WAS SUBJECT TO LONG-TERM CAPITAL GAIN. IN VIEW OF THESE FACTS, THE AO HAS WORKED OUT LONG-TERM CAPITAL GAIN AT RS. 73,15,714 I.E. [ SALE CONSIDERATION RS. 6,04,00,000- RS. 1,00,00,000 PAID TO GANOTIA BY SMC FOR HIS RIGHT IN LAND = 5,04,00,000 = 1/3 RD SHARE OF THE ASSESSEE AT RS. 1,68,00,000 LESS INDEXED COST RS. 94,84,286= 73,15,714] 4. BEING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT (A). THE CIT (A) OBSERVED THAT THE EXEMPTION UNDER SECTION 10(37) IS AVAILABLE WHERE THE ASSESSEE HAS BEEN CARRYING ON AGRICULTURAL OPERATION DURING THE PERIOD OF TWO YEARS IMMEDIATELY PRECEDING FROM THE DATE OF TRANSFER AND THE LAND WAS ACQUIRED UNDER COMPULSORY ACQUISITION. THE EXTRACT OF 7/12 SHOWED THAT THERE WAS AGRICULTURAL OPERATION IN UNDIVIDED SURVEY NO. 171 BEFORE DIVISION OF BLOCK 270A AND 270B OF KHARIF CROPS IN FINANCIAL YEAR 2004-05 AND 2005-06. HOWEVER, THERE ARE NO EVIDENCE OF AGRICULTURAL ACTIVITY AFTER THAT. MOREOVER, THESE 7/12 REVENUE RAMESHCHANDRA BABUBHAI NAGARSHETH V. ITO 3(2)(3) SURAT /I.T.A. NO.1939/AHD/2015/A.Y.:08-09 PAGE 5 OF 18 EXTRACT ALSO MENTIONS THE NAME OF GANOTIAS WHO FILED SCA NO.4807 OF 2008 BEFORE HIGH COURT AS PERSONS WHO DID THE AGRICULTURAL OPERATIONS. HENCE, CIT (A) OBSERVED THAT THERE IS NO EVIDENCE OF AGRICULTURAL OPERATIONS IN F.Y. 2006-07 AND 2007-08 AS THE LAND WAS IN POSSESSION OF GANOTIAS. THE ASSESSEE HAS FILED A LETTER NO. TBT/OUT/ 4089 /22 DTD. 23.09.2014 AND CLAIMED THAT AGRICULTURAL BLOCK SITUATED AT DINDOLI SURAT WAS KEPT UNDER RESERVATION BY GOVERNMENT OF GUJARAT VIDE NOTIFICATION NO. GH/100 OF 2004 /DVP/1403/3307 DTD. 02.09.2014 AND HAS BEEN ACQUIRED UNDER PROVISION OF SECTION 20 OF GUJARAT TOWN PLANNING & URBAN DEVELOPMENT ACT, 1976 AND SECTION 77 OF BOMBAY PROVINCIAL MUNICIPAL CORPORATION ACT, 1949(BPMC) FOR THE PUBLIC PURPOSE BY WHICH IT WAS CONVEYED THAT IT WAS A CASE OF COMPULSORY ACQUISITION. HOWEVER, CIT (A) OF THE VIEW AS PER HAT SECTION 77 OF BOMBAY PROVINCIAL MUNICIPAL CORPORATION ACT, 1949, THE SMC IS NOT COMPETENT TO MAKE COMPULSORY ACQUISITION AND IT ONLY COMPETENT TO MAKE RECOMMENDATION TO GOVERNMENT. THEREFORE, THE ASSESSEE RAMESHCHANDRA BABUBHAI NAGARSHETH V. ITO 3(2)(3) SURAT /I.T.A. NO.1939/AHD/2015/A.Y.:08-09 PAGE 6 OF 18 HAS NEITHER DONE AGRICULTURAL OPERATIONS BEFORE TWO YEARS NOR THE CASE IF OF COMPULSORY ACQUISITION HENCE, THE ASSESSEE IS HELD TO BE NOT ENTITLED FOR EXEMPTION UNDER SECTION 10(37) OF THE ACT. 5. BEING, AGGRIEVED THE ASSESSEE FILED THIS APPEAL BEFORE THE TRIBUNAL. THE APPELLANT APPEARED IN PERSON BEFORE US AND SUBMITTED THAT THE AGRICULTURAL LAND WAS COMPULSORY ACQUIRED BY THE SMC UNDER SECTION 77 OF BPMC ACT AND WHO HAD FULL POWER AND AUTHORITY GIVEN BY THE CENTRAL GOVERNMENT FOR ACQUISITION OF IMMOVABLE PROPERTY AND WAS DECLARED TRUSTEE & CUSTODIAN OF THE SAID ACQUIRED PROPERTY. THE APPELLANT HAS REFERRED THE LETTER NO. TBT/OUT/4089/22 DTD. 23.09.2014 BY WHICH THE LAND WAS PLACED UNDER RESERVATION UNDER GOVERNMENT OF GUJARAT VIDE NOTIFICATION NO. GH/V/100 OF 2004/DVP/1403/3307/L DTD. 02.09.2014 AS REPRODUCED BY THE CIT (A) IN HIS APPELLATE ORDER. THE APPELLANT FURTHER RELIED ON THE LETTER NO. ACT/SR/NO.286 DTD. 12.08.2010 FROM SMC WHEREIN IT HAS BEEN CLEARLY MENTIONED THE TDS CERTIFICATE DTD. 11.04.2008 BEARING CERTIFICATE NO. 7195 WHEREIN IT RAMESHCHANDRA BABUBHAI NAGARSHETH V. ITO 3(2)(3) SURAT /I.T.A. NO.1939/AHD/2015/A.Y.:08-09 PAGE 7 OF 18 IS STATED UNDER NATURE OF PAYMENT AS CONTRACTOR BILL MAY BE READ AS COMPULSORY ACQUISITION (LAND/BUILDING). ANY INCONVENIENCE ON ACCOUNT OF SAME MAY KINDLY BE EXCUSED. THEREFORE, IT WAS CONTENDED THAT THE AGRICULTURAL LAND IN QUESTION WAS ACQUIRED UNDER COMPULSORY ACQUISITION HENCE, NO LONG-TERM CAPITAL GAIN IS CHARGEABLE ON THE SAME. WITH REGARD TO AGRICULTURAL OPERATIONS, IT WAS SUBMITTED THAT AS PER EXTRACT OF 7/12 , THE ASSESSEE HAS BEEN FOUND TO HAVE BEEN CARRYING ON AGRICULTURAL OPERATIONS IN F.Y. 2004-05 AND 2005-06 AS MENTIONED IN UNDIVIDED SURVEY NO. 171 OF BLOCK NO. 270A AND 270B WHEREIN KHARIF CROPS IS CLEARLY MENTIONED. THE CIT (A) WRONGLY OBSERVED THAT THERE WAS NO AGRICULTURAL OPERATIONS IN LAST TWO PRECEDING YEARS BEFORE THE DATE OF SALE OF AGRICULTURAL LAND TO SMC UNDER COMPULSORY ACQUISITION. THE CIT (A) OBSERVED THAT IN SCA NO.4807 OF 2008 BEFORE HONBLE GUJARAT HIGH COURT, THE GANOTIAS ARE MENTIONED AS TENANTS OF AGRICULTURAL LAND. HOWEVER, IN 7/12 EXTRACT THE ASSESSEE`S NAME IS MENTIONED AS ORIGINAL OWNERS. THE CIT (A) AT RAMESHCHANDRA BABUBHAI NAGARSHETH V. ITO 3(2)(3) SURAT /I.T.A. NO.1939/AHD/2015/A.Y.:08-09 PAGE 8 OF 18 PAGE NO. 15 HAS GIVEN SUCH NAME IN HIS APPELLATE ORDER. SINCE THE LAND WAS IN POSSESSION OF GANOTIAS, WHO HAVE NOT PAID ANY RENT ON ACCOUNT OF AGRICULTURAL OPERATIONS CARRIED OUT BY THEM ON BEHALF OF THE ASSESSEE. HOWEVER, THE GANOTIAS WERE EXPECTED TO PAY TOKEN RENT, BUT SAME WAS NOT PAID. HOWEVER, IT IS FACT THE GANOTAIS WERE CARRYING ON AGRICULTURAL OPERATIONS, HENCE, THERE WAS AGRICULTURAL OPERATIONS ON THIS LAND BEFORE TWO IMMEDIATELY PRECEDING YEAR FROM THE DATE OF SALES OR COMPULSORY ACQUISITION. IN SUPPORT OF THIS CONTENTIONS, THE APPELLANT HAS PLACED RELIANCE IN THE CASE OF CIT V. AMARATBHAI S. PATEL TAX APPEAL NO. 355 OF 2013 OF HONBLE GUJARAT HIGH COURT ( COPY OF ORDER PLACED AT PAGE NO. 52 TO 56 OF PAPER BOOK) WHEREIN IT WAS HELD THAT FOR THE PURPOSE OF SECTION 10(37) IT IS NOT REQUIRED THAT THE ASSESSEE HIMSELF SHOULD CARRY OUT THE AGRICULTURAL OPERATIONS ON THE LAND. THE APPELLANT REFERRED PARA 8 OF SAID ORDER WHICH STATES THAT IN VIEW OF THE ABOVE PROVISIONS, AS NOTED , THE REVENUE CONTENDED THAT THE ASSESSEE WOULD NOT BE ENTITLED TO THE EXEMPTION SINCE RAMESHCHANDRA BABUBHAI NAGARSHETH V. ITO 3(2)(3) SURAT /I.T.A. NO.1939/AHD/2015/A.Y.:08-09 PAGE 9 OF 18 THE AGRICULTURAL LAND WAS NOT CULTIVATED BY THE ASSESSEE HIMSELF. WE MAY RECALL THAT CIT (APPEALS) WAS HIMSELF CONVINCED THAT SUCH EXEMPTION WOULD BE AVAILABLE EVEN IN CASE OF A LAND SITUATED IN MUNICIPAL AREA. BUT THAT THE OTHER CONDITIONS, NAMELY OF THE CULTIVATION OF SUCH LAND BY THE ASSESSEE WOULD CRUCIAL. THUS, IT WAS CONTENDED THAT EXEMPTION UNDER SECTION 10(37) WOULD BE AVAILABLE EVEN IF THE LAND IS SITUATED IN MUNICIPAL AREA AND BEING NOT CULTIVATED BY THE ASSESSEE HIMSELF BUT BY THE TENANTS. THE APPELLANT FURTHER SUPPORTED HIS VIEW THAT BY PLACING RELIANCE ON THE ORDER DATED 19.11.2015OF CIT (A)-II, SURAT, IN THE CASE OF SMT. URMI NILESH NAGARSHETH, [CAS/2/248/2015-16] RELATIVE OF THE ASSESSEE AND CO-OWNER OF THE PART OF SAME LAND SITUATED AT DINDOLI WHEREIN THE LD. CIT (A) HAS ACCEPTED THE CONTENTION OF THE ASSESSEE THAT IT IS A CASE OF COMPULSORY ACQUISITION AND WHERE AGRICULTURAL OPERATIONS WERE BEING CARRIED ON AND ALLOWED THE APPEAL OF THAT ASSESSEE IN SIMILAR CIRCUMSTANCES. ( COPY PLACED PAGE NO. 36-43 OF PAPER BOOK). SIMILARLY, THE APPELLANT RELIED IN THE CASE OF SHRI RAMESHCHANDRA BABUBHAI NAGARSHETH V. ITO 3(2)(3) SURAT /I.T.A. NO.1939/AHD/2015/A.Y.:08-09 PAGE 10 OF 18 NAVINCHANDRA BAUBHAI NAGARSHETH, ANOTHER CO-OWNER OF SAME LAND WHEREIN THE CIT (A)-3, SURAT VIDE HIS ORDER DTD. 19.10.2016 HAS ALLOWED THE APPEAL BY FOLLOWING DECISION OF CIT (A)-II SURAT IN THE CASE OF URAMI NAGARSHETH AS WELL AS DECISION OF ITAT- D- BENCH, AHMEDABAD IN THE CASE OF ITO V. DIPAK KALIDAS PAUWALA IN I.T.A.NO. 2685/AHD/2011 DTD. 14.08.2015 WHEREIN THE TRIBUNAL HAS HELD THE THAT SAID LAND IN DINDOLI ( AT BLOCK NO. 305) WAS ACQUIRED BY SMC FOR SEWERAGE TREATMENT PLANT ARE AGRICULTURAL LAND WHICH HAS BEEN COMPULSORY ACQUIRED BY SMC UNDER THE PROVISION OF SECTION 107 OF GTP & UD ACT, 1976 AS THE LAND NEEDED FOR THE PURPOSE OF TOWN PLANNING SCHEME OR DEVELOPMENT PLAN SHALL BE DEEMED TO BE MEANING FOR PUBLIC PURPOSE WITHIN THE MEANING OF LAND ACQUISITION ACT , 1894 (I OF 1894) AND ELIGIBLE FOR EXEMPTION UNDER SECTION 10(37) OF THE ACT. THIS DECISION OF TRIBUNAL WAS ALSO CONFIRMED BY THE HON`BLE JURISDICTIONAL HIGH COURT OF GUJARAT IN TAX APPEAL NO. 249 OF 2016 DATED 28.03.2016. RAMESHCHANDRA BABUBHAI NAGARSHETH V. ITO 3(2)(3) SURAT /I.T.A. NO.1939/AHD/2015/A.Y.:08-09 PAGE 11 OF 18 6. PER CONTRA , THE LEARNED DEPARTMENTAL REPRESENTATIVE (THE LD. D.R.) RELIED ON THE ORDER OF THE LOWER AUTHORITIES AND CONTENDED THAT 7/12 EXTRACT OF AGRICULTURAL LAND DOES NOT SHOW THAT THE ASSESSEE WAS DOING ANY AGRICULTURAL OPERATIONS BEFORE TWO YEARS FROM THE DATE OF EXECUTION OF SALE DEED WITH SMC. FURTHER, THE SALE WAS VOLUNTARY AND NOT UNDER COMPULSORY ACQUISITION AS THE SMC DOES NOT HAVE POWER TO ACQUIRE LAND UNDER COMPULSORY ACQUISITION UNLESS APPROVAL OF STATEMENT GOVERNMENT IS TAKEN. HENCE, CIT (A) WAS RIGHT TO CONFIRMING THE ACTION OF THE AO IN DISALLOWING THE EXEMPTION 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT THE AO HAS DISALLOWED THE CLAIM UNDER SECTION 10(37) OF THE ACT ON THE GROUND THAT THE ASSESSEE HAS SOLD THE LAND VOLUNTARILY, AND IT IS NOT CASE OF COMPULSORY ACQUISITION OF LAND BY SMC AND THERE WAS NO AGRICULTURAL OPERATIONS CARRIED OUT IN 2 YEARS IMMEDIATELY PRECEDING DATE OF SALE OF AGRICULTURAL LAND. HENCE, CONDITIONS OF RAMESHCHANDRA BABUBHAI NAGARSHETH V. ITO 3(2)(3) SURAT /I.T.A. NO.1939/AHD/2015/A.Y.:08-09 PAGE 12 OF 18 SECTION 10(37) OF THE ACT ARE NOT SATISFIED. WE FIND THAT THERE IS NO DISPUTE THAT LAND IS SITUATED WITH 8 KM OF MUNICIPAL LIMIT HENCE, IT WAS ACQUIRED BY THE SMC. THE AO NOTED THAT AFTER F.Y. 2006-07, THERE WAS NO CULTIVATION AS PER 7/12 EXTRACT PLACED AT PAGE NO. 11 &12 OF PAPER BOOK SHOWS THAT THE KHARIF CROP BEING GROWN AS ON 30.01.2007 AND(PB-11) AND 30.01.2006(PB-12). HOWEVER PAGE NO. 58 OF PAPER BOOK WHICH IS EXTRACT OF 7/12 ALSO SHOWS THAT KHARIF CROP BEING GROWN AS ON 04.02.2008. THUS, THE LAND SOLD WAS AN AGRICULTURAL LAND, THOUGH THE CULTIVATION THEREON WAS BEING DONE BY GANOTIAS TO WHOM THE ASSESSEE HAS GIVEN THE LAND ON RENT. THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT V. AMARATBHAI S. PATEL [TAX APPEAL NO. 355 OF 2013] (COPY OF ORDER PLACED AT PAGE NO. 52 TO 56 OF PAPER BOOK) HELD THAT FOR THE PURPOSE OF SECTION 10(37) IT IS NOT REQUIRED THAT THE ASSESSEE HIMSELF SHOULD CARRY OUT THE AGRICULTURAL OPERATIONS ON THE LAND. THE APPELLANT REFERRED PARA 8 OF SAID ORDER WHICH STATES THAT IN VIEW OF THE ABOVE PROVISIONS, AS NOTED , THE REVENUE CONTENDED THAT THE ASSESSEE RAMESHCHANDRA BABUBHAI NAGARSHETH V. ITO 3(2)(3) SURAT /I.T.A. NO.1939/AHD/2015/A.Y.:08-09 PAGE 13 OF 18 WOULD NOT BE ENTITLED TO THAT EXEMPTION SINCE THE AGRICULTURAL LAND WAS NOT CULTIVATED BY THE ASSESSEE HIMSELF. WE MAY RECALL THAT CIT (APPEALS) WAS HIMSELF CONVINCED THAT SUCH EXEMPTION WOULD BE AVAILABLE EVEN IN CASE OF A LAND SITUATED IN MUNICIPAL AREA. BUT THAT THE OTHER CONDITIONS, NAMELY OF THE CULTIVATION OF SUCH LAND BY THE ASSESSEE WOULD CRUCIAL. THUS, WE FIND THAT THE LAND IN QUESTION WAS BEING CULTIVATED BY THE GANOTIAS ON BEHALF OF THE ASSESSEE, BUT THEY HAVE NOT PAID ANY RENT TO THE ASSESSEE HENCE, THE AGRICULTURAL INCOME WAS NOT REFLECTED IN INCOME-TAX RETURN OF THE ASSESSEE. BUT, THIS CANNOT BE REASON FOR DISALLOWANCE ON THE GROUND THAT LAND IN QUESTION WAS NOT AGRICULTURAL LAND. WE FURTHER FIND THAT THESE VERY GANOTIAS NAME IS REFLECTED IN EXTRACT OF 7/12 AND HAVE FILED AN APPLICATION BEFORE THE HONBLE GUJARAT HIGH COURT AS SCA NO.4807 OF 2008 TO CLAIM PART OF SALE CONSIDERATION OUT OF AGRICULTURAL LAND SOLD BY THE ASSESSEE. DUE TO THIS VERY REASON, THE SMC HAS PAID RS. 1,00,000 DIRECTLY TO GANOTIAS OUT OF TOTAL SALE CONSIDERATION OF RS. 6,04,00,000 AS RAMESHCHANDRA BABUBHAI NAGARSHETH V. ITO 3(2)(3) SURAT /I.T.A. NO.1939/AHD/2015/A.Y.:08-09 PAGE 14 OF 18 PERSONS WHO DID THE AGRICULTURAL OPERATIONS. THEREFORE, THERE IS SUFFICIENT EVIDENCE TO INDICATE THAT THE LAND IN QUESTION WAS AGRICULTURAL LAND EVEN THOUGH AGRICULTURAL OPERATIONS WERE BEING CARRIED OUT BY SOMEONE ELSE. BUT THIS FACT WILL NOT CHANGE THE NATURE OF LAND BEING AGRICULTURAL LAND AND FOR THIS VERY LAND THE ASSESSEE HAS RECEIVED CONSIDERATION. HENCE, CIT (A) WAS NOT CORRECT IN HOLDING THAT THAT THERE IS NO EVIDENCE OF AGRICULTURAL OPERATIONS IN F.Y. 2006-07 AND 2007-08 AS THE LAND WAS IN POSSESSION OF GANOTIAS. IN VIEW OF THIS MATTER, WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSEE IS ELIGIBLE FOR EXEMPTION UNDER SECTION 10(37). 8. SO FAR THE CONTENTION OF THE ASSESSEE THAT LAND WAS AGRICULTURAL LAND AND IT WAS CASE OF COMPULSORY ACQUISITION BY SMC, IT IS NOTICED THAT AS PER LETTER NO. ACT/SR/3161 DTD. 31.08.2010 (PB-9) IT HAS BEEN CLEARLY MENTIONED BY THE SMC THAT NATURE OF PAYMENT WAS COMPULSORY ACQUISITION (LAND/ BUILDING).IT IS FURTHER SEEN FROM THE PERUSAL OF LETTER NO. TBT/OUT/ 4089/ 22 RAMESHCHANDRA BABUBHAI NAGARSHETH V. ITO 3(2)(3) SURAT /I.T.A. NO.1939/AHD/2015/A.Y.:08-09 PAGE 15 OF 18 DTD. 23.09.2014 REPRODUCED BY THE CIT (A) AT PAGE NO. 20 OF APPELLATE ORDER, THAT LAND IN QUESTION WAS PLACED UNDER RESERVATION BY THE GOVERNMENT OF GUJARAT VIDE ORDER DATED NOTIFICATION NO. GH/V/100 OF 2004/DVP/1403/3307/L DTD. 02.09.2014 UNDER THE PROVISION OF SECTION 20 OF GUJARAT TOWN PLANNING & URBAN DEVELOPMENT ACT 1976 AT THE DISPOSAL OF THE SMC TO ACQUIRE THE LAND UNDER SECTION 77 OF BOMBAY PROVINCIAL MUNICIPAL CORPORATION ACT, 1949 FOR ERECTION OF SEWERAGE TREATMENT PLANT. THUS, IT WAS A CASE OF COMPULSORY ACQUISITION OF LAND FOR WHICH THE SMC UNDER THE INSTRUCTION OF GOVERNMENT OF GUJARAT FOR WHICH THE SMC HAS ALSO GIVEN A CERTIFICATE DATED 12.08.2010 [LETTER NO. ACT/SR/NO2861] WHEREIN NATURE OF PAYMENT TO THE ASSESSEE IS DESCRIBED AGAINST COMPULSORY ACQUISITION OF LAND AT DINDOLI. THE LD. CIT (A) HAS NOT APPRECIATED THIS LETTER SUBMITTED BY THE APPELLANT BEFORE HIM IN PROPER PERSPECTIVE. THIS VIEW OF US IS ALSO SUPPORTED DECISION OF CIT (A)- II, SURAT, IN HIS APPELLATE ORDER DTD. 19.11.2015 IN THE CASE OF SMT. RAMESHCHANDRA BABUBHAI NAGARSHETH V. ITO 3(2)(3) SURAT /I.T.A. NO.1939/AHD/2015/A.Y.:08-09 PAGE 16 OF 18 URMI NILESH NAGARSHETH, CAS/2/248/2015-16 RELATIVE OF THE ASSESSEE AND CO-OWNER OF THE PART OF SAME LAND AREA SITUATED AT DINDOLI, WHEREIN THE LD. CIT (A) HAS ACCEPTED THE CONTENTION OF THE ASSESSEE THAT IT IS A CASE OF COMPULSORY ACQUISITION AND WHERE AGRICULTURAL OPERATIONS WERE BEING CARRIED ON AND ALLOWED THE APPEAL OF THAT ASSESSEE IN SIMILAR CIRCUMSTANCES. (COPY PLACED PAGE NO. 36-43 OF PAPER BOOK). SIMILARLY, THE APPELLANT RELIED IN THE CASE OF SHRI NAVINCHANDRA BABUBHAI NAGARSHETH, ANOTHER CO- OWNER OF SAME LAND WHEREIN THE CIT (A)-3, SURAT VIDE HIS ORDER DTD. 19.10.2016 HAS ALLOWED THE APPEAL BY FOLLOWING DECISION OF CIT (A) II SURAT IN THE CASE OF URMI NAGARSHETH AS WELL AS DECISION OF ITAT- D- BENCH, AHMEDABAD IN THE CASE OF ITO V. DIPAK KALIDAS PAUWALA IN I.T.A.NO. 2685/AHD/2011 DTD. 14.08.2015 WHEREIN THE TRIBUNAL HAS HELD THE THAT SAID LAND IN DINDOLI ( AT BLOCK NO. 305) WAS ACQUIRED BY SMC FOR SEWERAGE TREATMENT PLANT ARE AGRICULTURAL LAND WHICH HAS BEEN COMPULSORY ACQUIRED BY SMC UNDER THE PROVISION OF SECTION 107 OF GTP & UD ACT, 1976 AS THE LAND NEEDED RAMESHCHANDRA BABUBHAI NAGARSHETH V. ITO 3(2)(3) SURAT /I.T.A. NO.1939/AHD/2015/A.Y.:08-09 PAGE 17 OF 18 FOR THE PURPOSE OF TOWN PLANNING SCHEME OR DEVELOPMENT PLAN SHALL BE DEEMED TO BE MEANING FOR PUBLIC PURPOSE WITHIN THE MEANING OF LAND ACQUISITION ACT , 1894 (I OF 1894) AND ELIGIBLE FOR EXEMPTION UNDER SECTION 10(37) OF THE ACT. THIS DECISION OF TRIBUNAL WAS ALSO CONFIRMED BY THE HON`BLE JURISDICTIONAL HIGH COURT OF GUJARAT IN TAX APPEAL NO. 249 OF 2016 DATED 28.03.2016. THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF CO-ORDINATE BENCH IN THE CASE OF ITO V. DIPAK KALIDAS [I.T.A.NO. 2685/AHD/2011 DTD. 14.08.2015 (PB-44) WHICH HAS BEEN CONFIRMED BY THE HON`BLE JURISDICTIONAL HIGH COURT OF GUJARAT IN TAX APPEAL NO. 249/ 2016 DTD. 28.03.2016, WE HOLD THAT THE LAND IN QUESTION WAS COMPULSORY ACQUISITION BY THE SMC UNDER THE DIRECTION OF GOVERNMENT OF GUJARAT. HENCE, CONDITIONS STIPULATED IN SECTION 10(37) IS SATISFIED. IN VIEW OF ABOVE FACTS AND CIRCUMSTANCES, WE HOLD THAT THE LAND WAS BEING CULTIVATED FOR AGRICULTURAL PURPOSE BEFORE 2 YEARS OF IMMEDIATELY PRECEDING OF DATE OF SALES BY THE TENANTS OF LAND AND LAND WAS COMPULSORY ACQUIRED BY SMC, HENCE, CONDITIONS AS LAID RAMESHCHANDRA BABUBHAI NAGARSHETH V. ITO 3(2)(3) SURAT /I.T.A. NO.1939/AHD/2015/A.Y.:08-09 PAGE 18 OF 18 DOWN IN SECTION 10(37) ARE DULY SATISFIED. ACCORDINGLY, THE ASSESSEE IS ELIGIBLE FOR EXEMPTION UNDER SECTION 10(37) OF THE ACT. CONSEQUENTLY, THE ADDITION OF RS. 73,15,714 MADE BY THE AO ON ACCOUNT OF LONG-TERM CAPITAL GAIN IS NOT TAXABLE AND IS THEREFORE, DELETED. IN VIEW OF THIS, GROUND OF APPEAL OF THE ASSESSEE ARE ALLOWED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED. 10. ORDER PRONOUNCED IN THE OPEN COURT ON 30.08.2018. SD/- SD/- ( . . /C.M. GARG) ( . . /O.P.MEENA) /JUDICIAL MEMBER /ACCOUNTANT MEMBER DATED: 30 TH AUGUST 2018. / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ( ) THE CIT(A)4. / PR. CIT 5. , / D.R. (ITAT) 6. / GUARD FILE ITAT. BY ORDER / / TRUE COPY / / ASSISTANT REGISTRAR, SURAT