Khaitan Lefin Ltd., Kolkata V. JCIT, (OSD), CIR-8, KOLKATA, Kolkata

ITA 200/KOL/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 6250 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 10-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset
• Section: 143(3); 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA A BENCH, KOLKATA (BEFORE SRI S.S. GODARA, JUDICIAL ME MBER & SRI M. BALAGANESH, ACCOUNTANT MEMBER) ITA NO. 200/KOL/2016 ASSESSMENT YEAR: 2009-10 KHAITAN LEFIN LIMITED........................ .......................APPELLANT 46C, J L NEHRU ROAD KOLKATA 700 071 [PAN : AABCK 1371 L] VS. COMMISSIONER OF INCOME TAX (APPEALS)-11, KOLKATA.. ............................RESPONDENT APPEARANCES BY: SHRI SANJAY BHATTACHARYA, FCA & ARVIND AGARWAL, FOR AS SESSEE . SHRI PRADIP MAJUMDAR, ADDL. CIT D/R. FOR REVENUE. DATE OF CONCLUDING THE HEARING : DECEMBER 26 TH , 2018 DATE OF PRONOUNCING THE ORDER : JANUARY 25 TH , 2019 ORDER PER S.S. GODARA, JM :- THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2009-10 A RISES AGAINST COMMISSIONER OF INCOME TAX (APPEALS)-11, KOLKATAS ORDER DATED 10/11/2015 PASSED IN CASE NO. ITA NO.575/CIT(A)-11/CIR-8(1)/14-15/KOL , CONFIRMING THE ASSESSING OFFICERS ACTION MAKING LONG TERM CAPITAL GAIN (LTC G) ADDITION OF RS.3,09,77,775/-, IN ASSESSMENT ORDER DT. 05/12/2011, IN PROCEEDINGS U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). HEARD BOTH THE PARTIES REITERATING THEIR RESPECTIVE STANDS AGAINST AND IN SUPPORT OF THE IMPUGNED LTCG ADDITION. CASE FILE PERUSED. 2. WE FIND AT THE OUTSET THAT THE CIT(A)S DETAILED DISCUSSION AFFIRMING THE ASSESSING OFFICERS ACTION HOLDING THE ASSESSEES L AND TO BE A CAPITAL ASSET GIVING RISE TO THE IMPUGNED LTCG ON TRANSFER READS AS UNDER:- 2 ITA NO. 200/KOL/2016 ASSESSMENT YEAR: 2009-10 KHAITAN LEFIN LIMITED 3 ITA NO. 200/KOL/2016 ASSESSMENT YEAR: 2009-10 KHAITAN LEFIN LIMITED 4 ITA NO. 200/KOL/2016 ASSESSMENT YEAR: 2009-10 KHAITAN LEFIN LIMITED 5 ITA NO. 200/KOL/2016 ASSESSMENT YEAR: 2009-10 KHAITAN LEFIN LIMITED 6 ITA NO. 200/KOL/2016 ASSESSMENT YEAR: 2009-10 KHAITAN LEFIN LIMITED 3. WE HAVE HEARD RIVAL CONTENTIONS. RELEVANT CASE R ECORDS COMPRISING OF THE ERSTWHILE ANDHRA PRADESH STATE GOVERNMENT NOTIFICAT ION DT. 16/04/2017 MERGING 8 GRAM PANCHAYATS IN THE GREATER HYDERABAD MUNICIPAL CORPORATION (GHMC), COPY OF THE CITY PLANNERS LETTER DT. 22/03/2012 CLARIFYING MAM IDIPALLY GRAM PANCHAYAT AS NOT MERGED IN THE SAID GRAM PANCHAYAT AS ON 01/04/2008, HYDERABAD METROPOLITAN DEVELOPMENT AUTHORITY DIRECTOR PLANNING-II LETTER D T. 19/03/2015 ADDRESSED TO THE DCIT, CIRCLE-8(1) U/S 133(6) OF THE ACT THAT THE SA ID PANCHAYAT CONSISTED OF THREE DIFFERENT VILLAGES, GOVERNMENT OF ANDHRA PRADESH RE VENUE DEPARTMENT MEMO DT. 21/01/2008 CLARIFYING THAT THE LANDS IN THE SAID PA NCHAYAT IN THE VILLAGE SAROONAGAR MANDAL, RANGA REDDY DISTRICT ARE AGRICULTURAL NOT F ALLING WITHIN 8 KMS. OF ANY MUNICIPALITY OR MUNICIPAL CORPORATION, COPY OF GOVE RNMENT NOTIFICATION DT. 06/01/1994 ISSUED U/S 2(1A)(C) PROVISOS UNDER CLAUSE (II)(B) A ND SECTION 2(14)(III)(B) OF THE ACT, COPY OF GHMCS LETTER DT. 18/08/2014 STATING MAMIDA PALLY GRAM PANCHAYAT NOT TO HAVE BEEN MERGED WITH THE CORPORATION, COPY OF REMAND RE PORT DT. 16/10/2015 ALONG WITH COVERING LETTER, TAX PAYERS REJOINDER THERETO, SALE DEED RELATED DOCUMENTS, PURCHASE DEED DT. 08/04/2004, AGREEMENT CUM POWER-OF-ATTORNE Y AND VARIOUS RETURNS AS WELL AS SCRUTINY RELATED DOCUMENTS; STAND PERUSED. 4. THERE IS NO DISPUTE THAT THE ASSESSEE HAD INDEED SOLD ITS LAND IN QUESTION MEASURING 5.33 ACRES SITUATED IN VILLAGE MAMIDIPALL Y MANDAL SAROONAGAR DISTRICT RANGA REDDY IN ERSTWHILE ANDHRA PRADESH DURING THE RELEVA NT PREVIOUS YEAR; THE SOLE DISPUTE IN THE INSTANT LIS THAT ARISES FOR OUR APT ADJUDICA TION IS AS TO WHETHER THE ASSESSEES LAND SOLD WAS A CAPITAL ASSET OR NOT FALLING WITHIN 8 KM S. OF THE GHMC U/S 2(14)(III)(B) OF 7 ITA NO. 200/KOL/2016 ASSESSMENT YEAR: 2009-10 KHAITAN LEFIN LIMITED THE ACT AS APPLICABLE IN THE IMPUGNED ASSESSMENT YEA R. THE TAXPAYER STAND THROUGHOUT IS THAT ITS LAND IS NOT A CAPITAL ASSET SINCE IT IS SITUATED BEYOND 8 KMS. DISTANCE OF ANY MUNICIPALITY WHEREAS THE REVENUES CASE IS THAT MAM IDIPALLY GRAM PANCHAYAT IS ADJACENT TO THE GHMC LIMITS. AND ALSO THAT IS HAPPE NS TO BE A HUB OF MAJOR ECONOMIC ACTIVITY INCLUDING AVIATION SECTOR. WE FIND NO MERI T IN THE LATTERS STAND BASED ON THE LOWER AUTHORITYS RESPECTIVE FINDINGS. WE MAKE IT C LEAR FIRST OF ALL THAT THERE IS NO REBUTTAL COMING FROM THE DEPARTMENT THAT THE LAND I N QUESTION HAS EVER BEEN CONVERTED FROM AGRICULTURAL TO NON-AGRICULTURAL USE AT ANY PO INT OF TIME BEFORE THE SALE IN QUESTION. THE STATE GOVERNMENTS REVENUE RECORDS STRONGLY SUP PORT THE ASSESSEES CASE RATHER THAT ITS LANDS ARE VERY MUCH AGRICULTURAL IN NATURE . THE ASSESSING OFFICER TRIED TO APPLY PERFORMANCE TEST THAT FOR DETERMINATION OF LAND I N ISSUE WHAT IS REQUIRED TO BE SHOWN IS CONNECTION WITH THE AGRICULTURAL PURPOSE IS THE USE AND NOT THE MERE POSSIBILITY OF THE LAND USER BY SOME POSSIBLE FUTURE OWNER FOR AGRICUL TURAL OBJECTS. WE SEE NO MERIT IN THE IMPUGNED REASONING. THE LEGISLATURE MAKES IT CLEAR THAT AGRICULTURAL LANDS BEYOND 8 KMS. FROM THE LOCAL MUNICIPALITY ETC.; AS THE CENTR AL GOVERNMENT MAY, HAVING REGARD TO THE EXTENT/SCOPE FOR URBANISATION AND OTHER CONSIDE RATION, SPECIFICALLY IN THE BEHALF. WE KEEP IN MIND THE STATUTORY PROVISION TO HOLD THAT T HERE IS NO EVIDENCE ON RECORD PUT FORTH AT THE REVENUES BEHEST SPECIFICALLY QUOTING ANY ROAD OR SURFACE CONNECTIVITY OF THE ASSESSEES LANDS TO BE WITHIN 8KMS. DISTANCE FROM A NY MUNICIPALITY INCLUDING GMCH. THE LOWER AUTHORITIES HAVE STRONGLY RELIED UPON THE SOME AVIATION SECTOR SEZ WHICH CANNOT BE TAKEN AS THE RELEVANT FACTOR IS 8 KMS DIS TANCE NOT FULFILLED U/S 2(14)(III)(B) OF THE ACT. THEY HAVE FURTHER RELIED UPON GOOGLE ASS ISTANT IN COMING TO THE CONCLUSION THAT THE ASSESSEES LANDS ARE WITHIN 6 KMS. OF THE GHMC LIMITS. SUCH A METHOD HAS NOWHERE BEEN PRESCRIBED IN THE ACT. THE LEGISLATURE ; IN FINANCE ACT, 2013 W.E.F. 01/04/2013, HAS MADE IT CLEAR WHILST SUBSTITUTING T HE EARLIER PROVISION WITH THE DISTANCE OF THE LAND IN QUESTION HAS TO BE MEASURED AS PER AERIAL DISTANCE. THIS IS NOT THE REVENUES CASE THAT THE SAID AMENDMENT CARRIES ANY RETROSPECTIVE OPERATION. MEANING THEREBY THAT 8 KMS DISTANCE CONDITION HAS TO BE MEA SURED IN TERMS OF THE ROAD ONLY AS HELD BY THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. VIJAY SINGH KADAN [2015] 378 ITR 71 (DELHI). THE REVENUE FAILS TO DISPUTE THAT NEITHER OF THE L OWER AUTHORITIES HAS QUOTED ANY SURFACE LINK BETWEEN THE ASSESSEES LAND AND THE NEAREST MUNICIPALITY NAMELY GHMC SO AS TO TREAT ITS LANDS AS CAPITAL ASS ET GIVING RISE TO LONG TERM CAPITAL GAINS ON TRANSFER. WE THEREFORE ACCEPT THE ASSESSEE S SOLE SUBSTANTIVE GROUND AND DIRECT 8 ITA NO. 200/KOL/2016 ASSESSMENT YEAR: 2009-10 KHAITAN LEFIN LIMITED THE ASSESSING OFFICER TO DELETE THE IMPUGNED LONG T ERM CAPITAL GAINS ADDITION OF RS.3,09,77,775/-. 5. THIS ASSESSEES APPEAL IS ALLOWED. KOLKATA, THE 25 TH DAY OF JANUARY, 2019. SD/- SD/- [M. BALAGANESH] [S.S. GODARA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 25.01.2019 {SC SPS} COPY OF THE ORDER FORWARDED TO: 1. KAHITAN LEFIN LIMITED 46C, J L NEHRU ROAD KOLKATA 700 071 2. COMMISSIONER OF INCOME TAX (APPEALS)-11, KOLKATA 3. CIT(A)- 4. CIT- , 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE CO PY BY ORDER ASSISTANT REGISTRAR ITAT, KOLKATA BENCHES