ASHOK MANILAL GUPTA, Nagpur V. ` ADDL.. CIT RANGE-4, Nagpur

ITA 200/NAG/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1934 (ITAT-NAGPUR)
• Duration Of Justice: 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-01-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 05-06-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR MILIND BHUSARI
• Assessee Lawyers: M MANI
• Keywords: Capital asset; Business income; Opportunity of being heard; Additional evidence
• Section: 2(14)

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR , BENCH , ( E - COURT), MUMBAI , BEFORE SHRI R.K.GUPTA , J M & SHRI RAJENDRA , A M ITA NO. 200 / N AG / 20 1 2 ( ASSESSMENT YEAR : 200 7 - 0 8 ) ASHOK MANILAL GUPTA, GUPTA NIWAS, LAHARPURE BAJERIA, NAGPUR (MAHARASHTRA) - 4540 008 VS. ACIT, RANGE - 4 , NAGPUR (MAHARASHTRA) PAN/GIR NO. : A BTPG 54 67 H ( APPELLANT ) .. ( RESPONDENT ) /ASSESSEE BY : MR. M.MANI /REVENUE BY : DR. MILI ND BHUSARI \ DATE OF HEARING : 1 9 TH DEC ., 2012 DATE OF PRONOUNCEMENT : 2 ND JAN . ,201 3 O R D E R P ER SHRI R.K.G UPTA, JM : TH E ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE ITAT NAGPUR BENCH, NAGPUR, AGAINST THE ORDER DATED 27 - 3 - 2012 OF LEANED CIT (A) - I I , NAGPUR (MAHARASHTRA) , RELATING T O THE ASSESSMENT YEAR 207 - 08, WHICH HAS BEEN HEARD THROUGH E - COURT, MUMBAI . ITA NO . 2 00 /20 1 2 2 2 . THE ASSESSEE IN ITS APPEAL HAS RAISED FOLLOWING GROUNDS : - 1. THE LEARNED COMMISSIONER OF INCOME TAX(A) - II ERRED IN HOLDING THAT THE SURPLUS AMOUNT OF RS. 14308710/ - RECEIVED O N SALE OF AGRICULTURAL LAND IS NOT AGRICULTURAL INCOME. 2. THE LEARNED COMMISSIONER OF INCOME TAX(A) - II ERRED IN HOLDING THAT THE AGRICULTURAL LANDS ARE WITHIN 8 KMS OF THE MUNICIPAL LIMITS WITHOUT ANY BASIS. 3. THE LEARNED COMMISSIONER OF INCOME TAX(A) - II ERRED IN NOT HOLDING THAT SURPLUS REALIZED ON SALE OF AGRICULTURAL LAND WHICH WERE WITHIN 8 KMS OF THE MUNICIPAL LIMITS IS AN ADVENTURE IN NATURE OF TRADE WHEN THE LAW DEFINES IT AS CAPITAL ASSETS AND THE GAIN ARISING ON TRANSFER AS CAPITAL GAINS. 4. T HE LEARNED COMMISSIONER OF INCOME TAX(A) - II ERRED IN HOLDING THAT THE SALE OF AGRICULTURAL LAND IS AN ADVENTURE IN THE NATURE OF TRADE AND TAXABLE AS BUSINESS INCOME. 5. THE LEARNED COMMISSIONER OF INCOME TAX(A) - II ERRED IN CONFIRMING THE ESTIMATE OF INCO ME AT RS. 4,00,000/ - IGNORING THE PROVISION OF SECTION 44AF. 3 . THE BRIEF FACTS GIVING RISE TO THE APPEAL OF THE ASSESSEE ARE THAT THE ASSESSEE SHOWN INCOME FROM BUSINESS OF TRADING OF RETAIL KHOWA. THE ASSESSEE HAS ALSO INVESTED IN PURCHASE OF AGRICULTUR AL LAND. DURING THE ASSESSMENT PROCEEDING, THE AO NOTED THAT THE ASSESSEE HAD SOLD HIS AGRICULTURAL LAND SITUATED AT MOUZA DHUTI, WARDHA ROAD, TAH. NAGPUR, DISTRICT NAGPUR TO SHRI B.TEJA RAJU, AN AGRICULTURIST AND BUSINESSMAN, WHO IS RESIDENT OF HYDERABAD. THE AO FURTHER NOTED THAT THE ASSESSEE HAS SOLD AGRICULTURAL LAND BEARING KHASRA NO. 79/3 & 82/2 FOR A CONSIDERATION OF RS.1,49,76,000/ - . THESE LANDS WERE PURCHASED BY THE ASSESSEE FOR A CONSIDERATION OF RS. 4,25,000/ - AND RS. 2,10,000/ - RESPECTIVELY IN THE YEAR 2005. DETAIL OF PROPERTY IS MENTIONED IN THE ORDER OF THE LEARNED CIT(A) AT PAGE 2. IN VIEW OF THE AO, THE LAND SOLD ITA NO . 2 00 /20 1 2 3 BY THE ASSESSEE WAS SITUATED AT WARDHA ROAD, WHICH IS A DEVELOPED AREA, THEREFORE, HE WAS OF THE VIEW THAT THE AGRICULTURAL LAND SHOWN BY THE ASSESSEE WAS ADVENTURE IN NATURE FOR BUSINESS PURPOSE. ACCORDINGLY, A SHOW CAUSE NOTICE WAS GIVEN AS TO WHY THE SALE CONSIDERATION BE NOT TREATED AS BUSINESS INCOME AGAINST EXEMPTED INCOME SHOWN BY THE ASSESSEE IN VIEW OF THE PROVISION OF SECTION 2 (14). AS PER THE ASSESSEE THE LAND IS BEYOND 8 KM OF THE MUNICIPAL LIMIT OF NAGPUR. IN VIEW OF THE AO , THE ASSESSEE DID NOT HAVE ANY INTENTION TO CARRY OUT AGRICULTURE AS NO EXPENDITURE OR INCOME HAS BEEN SHOWN BY THE ASSESSEE. THEREFORE, THE ASSESSEE IS N OT PUT THE LAND TO AGRICULTURAL USE WITH A VIEW TO THE FACT THAT PURCHASED LAND WAS FROM THE POINT OF VIEW OF BUSINESS. THEREAFTER ON THE BASIS OF TEXT LAID DOWN BY VARIOUS COURTS INCLUDING THE HON BLE APEX COURT THAT WHILE DETERMINING THE LAND IN QUESTION AS TO WHETHER THE SAME IS OF AGRICULTURE PURPOSE OR FOR THE PURPOSE OF BUSINESS, SHOULD BE SEEN. THE LIST OF TEXT IN HAS BEEN TABULATED IN THE ORDER OF THE CIT(A) AT PAGE 3 - 4. AS PER THESE LIST OF TEXT IN ORDER TO DETERMINE WHETHER THE LAND IS AGRICULTUR AL LAND OR NOT, THE AO ASKED THE ASSESSEE TO FILE HIS REPLY. THE LIST IS NUMBERED FROM A TO S. IN RESPONSE TO THE NOTICE OF THE AO, THE ASSESSEE STATED THAT THE ASSESSEE HAS SHOWN SHORT TERM CAPITAL GAIN ON THE SALE OF AGRICULTURAL LAND WHICH WAS PURCHASED BY THE ASSESSEE IN ASSESSMENT YEAR 2006 - 07 AND SINCE THE AGRICULTURAL LAND WAS NOT A CAPITAL ASSET IN VIEW OF PROVISION OF SECTION 2(14) OF THE ACT. THE SHORT TERM CAPITAL GAIN ARISING OUT OF IT WAS CLAIMED AS EXEMPT. ITA NO . 2 00 /20 1 2 4 COPIES OF PURCHASE DEED AND SALE DEED ALONG WITH CERTIFICATES FROM GRAM PANCHAYAT IN SUPPORT OF ABOVE CONTENTION WAS FILED BEFORE THE AO. 3.1 IN RESPECT TO VARIOUS TEXTS IN ORDER TO VERIFY THAT THE LAND IN QUESTION IS OF AGRICULTURAL LAND OR NOT, PARAWISE REPLY WAS FILED BY THE ASSESSEE, WH ICH IS TABULATED IN THE ORDER OF CIT(A) AT PAGE 5 TO 6. IN SUMMARY, THESE RELIES WERE AS UNDER : - (A) PROPERTY IS AGRICULTURAL LAND AND IS SITUATED BEYOND 8 KMS. (B) THE INTENTION OF THE ASSESSEE WAS TO CULTIVATE THE SAID AGRICULTURAL LAND. (C) THE SAID AGRICULTURAL LAND WAS UNDER CULTIVATION AND THE SAME IS EVIDENT FROM THE 7/12 EXTRACTS ATTACHED TO SALE DEEDS AT THE TIME OF REGISTRATION OF SALE. (D) THE SAID AGRICULTURAL LAND IS OUTSIDE THE MUNICIPALITY LIMIT AND SITUATED IN A VILLAGE DHUTI (RURAL) AN D MANGRUL (RURAL) . DEVELOPMENTS IN THE ADJOINING CITIES WILL NOT ALTER THE NATURE OF THE AGRICULTURAL LAND SITUATED IN VILLAGE. (E) THE ASSESSEE HAS NOT TRIED TO MAKE NON - AGRICULTURAL USE OF THE SAID AGRICULTURAL LAND. (F) THE SAID LAND IS CLASSIFIED AS AGRICULTURAL LAND IN REVENUE RECORDS AND THE SAME IS EVIDENT FROM THE STAMP DUTY PAID ON REGISTRATION OF SALE DEEDS. (G) NO PERMISSION FOR CONVERSION OF THE AGRICULTURAL LAND TO NON AGRICULTURAL USE WAS OBTAINED BY THE ASSESSEE. (H) THE BUYERS OF THE SAID LAND ARE AGRICULTURIST AS MENTIONED IN THE SALE DEEDS. (I) THE SAID LAND WAS SOLD ON ACREAGE BASIS. (J) THE SALE PRICE OF THE AGRICULTURAL LAND DOES NOT ENTIRELY DEPEND ON THE AGRICULTURAL PRODUCE TAKEN THERE FROM AS THE SAID AGRICULTURAL LAND CAN B E CULTIVATED BY DIFFERENT OWNERS IN DIFFERENT WAYS. THE AO WAS NOT SATISFIED WITH THE REPLY OF THE ASSESSEE AND HE PROCEEDED TO HOLD THAT THE INCOME ARISING OUT OF THE SALE OF AFORESAID ITA NO . 2 00 /20 1 2 5 LANDS WAS ASSESSABLE AS ADVENTURE IN THE NATURE OF TRADE BASED ON TH E FOLLOWING REASONS : - THE LANDS ARE WITHIN 8 KMS OF NAGPUR CITY LIMITS. THE SAID LANDS WERE SOLD WITHIN ONE YEAR OF PURCHASE. THE LAND WAS SITUATED ON WARDHA ROAD, WHICH WAS THE EPICENTER OF COMMERCIAL EXPLOITATION OF LAND AND MOST PROMINENT DESTINATIO N FOR DEVELOPMENTAL INVESTMENTS. INVESTMENT IN LAND IS DISPROPORTIONATE TO INCOME EARNED OUT OF IT THROUGH AGRICULTURAL ACTIVITY AND THEREFORE IS A POINTER TO THE FACT THAT THERE WAS NO INTENTION TO CARRY OUT AGRICULTURAL ACTIVITY. 4. THE ASSESSEE PREFE RRED AN APPEAL BEFORE THE CIT(A) . THE CONTENTIONS RAISED BEFORE THE AO WERE REITERATED BEFORE THE CIT(A) . LEARNED CIT(A) AFTER CONSIDERING THE SUBMISSIONS AND PERUSING THE MATERIAL ON RECORD, FOUND THAT THE FINDINGS OF THE AO ARE CORRECT. LEARNED CIT(A) HA S ALSO CONSIDERED VARIOUS PHOTOGRAPHS OF THE LAND SITUATED IN THE LAND OF ASSESSEE, WHICH WERE SOLD AND FOUND THAT THEY ARE THE LAND IN QUESTION IS VERY NEAR TO THE DEVELOPED AREA AT WARDHA ROAD, THEREFORE, THE LAND IN QUESTION WAS SOLD FOR THE PURPOSE OF BUSINESS AND ACCORDINGLY, THE FINDING OF THE AO WAS CONFIRMED BY LEARNED CIT(A) . WHILE CONFIRMING THE FINDING OF THE AO, LEARNED CIT(A) HAS ALSO PLACED RELIANCE ON VARIOUS CASE LAWS. ACCORDINGLY, THE CLAIM OF THE ASSESSEE THAT LAND IN QUESTION IS EXEMPT IN VIEW OF THE PROVISION OF SECTION 2(14) OF THE ACT AS THE LAND SITUATED BEYOND 8 KM OF MUNICIPAL LIMIT WAS REJECTED ALSO. THE CONTENTION OF THE AO THAT THE SALE CONSIDERATION ON ACCOUNT OF SALE OF AGRICULTURE LAND , WAS ADVENTURE IN NATURE OF TRADE. ITA NO . 2 00 /20 1 2 6 5 . AGG RIEVED THEREBY, THE ASSESSEE IS IN APPEAL HERE BEFORE THE TRIBUNAL. THE CONTENTIONS RAISED BEFORE THE LOWER AUTHORITIES ARE REITERATED HERE BEFORE THE TRIBUNAL. LEARNED COUNSEL OF THE ASSESSEE ALSO FILED A CERTIFICATE ISSUED BY EXECUTIVE ENGINEER (METRO), BY WHICH IT HAS BEEN CERTIFIED THAT THE LAND BEARING KHASRA NO.80/2, SITUATED AT MOUZA DHUTI, IS SITUATED BEYOND 8 KM AS THE DISTANCE IS 8.125 KMS. IT WAS SUBMITTED THAT LEARNED CIT(A) HAS RECORDED A FINDING THAT THE LAND SITUATED IN KHASRA NO. 79 IS SITUAT ED AT A DISTANCE OF 8.125 KMS, HOWEVER, THE LAND BEARING KHASRA NO. 80 SITUATED AT 7.5 KM AWAY FROM THE MUNICIPAL LIMIT. HOWEVER, BOTH THE LAND HAS BEEN TREATED BY LEARNED CIT(A) AS SITUATED WITHIN 8 KM. IT WAS FURTHER STATED THAT DUE TO PAUCITY OF TIME, TH E ASSESSEE COULD NOT GET THE CERTIFICATE FROM THE EXECUTIVE ENGINEER IN RESPECT TO LAND BEARING KHASRA NO. 80/2 EARLIER AND NOW THE SAME HAS BEEN RECEIVED AND THIS ADDITIONAL EVIDENCE GOES TO THE ROOT OF THE CASE, THEREFORE, IT SHOULD BE ADMITTED. 6 . IN RE PLY, LEARNED DR FIRSTLY PLACED RELIANCE ON THE ORDER OF LEARNED CIT(A) . IT WAS FURTHER SUBMITTED THAT THE EVIDENCE ISSUED BY THE EXECUTIVE ENGINEER (METRO) IS A NEW EVIDENCE AND, THEREFORE, IF THE SAME IS ADMITTED THEN THE MATTER SHOULD BE RESTORED TO THE FILE OF THE AO TO CONSIDER AFRESH AS IT WAS NOT BEFORE THE AO OR BEFORE THE CIT(A). 7 . WE HAVE HEARD RIVAL SUBMISSIONS OF THE PARTIES AND CONSIDERED THEM CAREFULLY. AFTER CONSIDERING THE SUBMISSIONS OF THE ORDERS OF THE AUTHORITIES BELOW AND OTHER MATERIA L PLACED ON RECORD, WE FIND THAT THE ITA NO . 2 00 /20 1 2 7 ASSESSEE DESERVES TO SUCCEED IN HIS APPEAL IN PART AND PARTLY FOR STATISTICAL PURPOSES. WE NOTED THAT THIS IS NOT ONLY AGRICULTURAL HELD BY THE ASSESSEE BUT THERE ARE MANY OTHER AGRICULTURAL LANDS WHICH WAS OWNED BY THE ASSESSEE. LIST OF AGRICULTURAL LANDS AND AGRICULTURAL INCOME HAS BEEN SHOWN IN RESPECT OF AGRICULTURAL LAND IS PLACED AT PAGE 1 AND 2 OF THE COMPILATION. THE ASSESSEE HAS HELD 9 AGRICULTURAL F A RMS MEASURING 2 ACRE TO 26 ACRES. SOME OF THE LANDS WERE PURCH ASED IN THE YEAR 1999 - 2000 AND SOME OF THE LANDS WERE PURCHASED IN THE YEAR 2006 - 07. THE LAND IN QUESTION WAS PURCHASED ON 8 - 9 - 2005 & 23 - 12 - 2005 , WHICH WERE SOLD IN DECEMBER, 2006. THE INCOME FROM AGRICULTURAL LAND HAS BEEN SHOWN BY THE ASSESSEE RANGING BE TWEEN RS. 68,250/ - TO RS. 3,40,298/ - . FOR EXAMPLE FOR THE ASSESSMENT YEAR 2004 - 05, THE AGRICULTURAL INCOME HAS BEEN SHOWN AT RS. 1.44 LAKHS; FOR THE ASSESSMENT YEAR 2 005 - 06, THE AGRICULTURAL INCOME HAS BEEN SHOWN AT RS. 71,000/ - AND FOR ASSESSMENT YEAR 2007 - 0 8, THE INCOME HAS BEEN SHOWN AT RS. 68,000/ - , HOWEVER, NO INCOME HAS BEEN SHOWN FOR THE ASSESSMENT YEAR 2007 - 08. FOR THE ASSESSMENT YEARS FROM 2008 - 09 TO 2011 - 12, THE AGRICULTURAL INCOME HAS BEEN SHOWN ABOUT RS. 1,77 LAKHS TO RS. 3.40 LAKHS IN RESPECTIVE YEAR S. THEREFORE, IT CANNOT BE SAID THAT THE ASSESSEE IS NOT PRODUCING ANY AGRICULTURAL PRODUCE. THE ASSESSEE HAS STATED ABOVE THAT HE HAS 9 FARMING LAND AND THEY WERE USED FOR AGRICULTURAL PRODUCE. THE AFORESAID TWO LANDS SITUATED AT MOUZA DHUTI, WARDHA ROAD, WHICH WAS PURCHASED IN THE ITA NO . 2 00 /20 1 2 8 YEAR 2005 AND THEY WERE SOLD IN 2006, ONE SIDE OF WARDHA ROAD IS DEVELOPED AND OTHER SIDE OF WARDHA ROAD HAVING AGRICULTURAL LANDS. 7 .1 THE AO VIEWED THAT SINCE THESE LANDS ARE SITUATED NEAR DEVELOPED AREA, THEREFORE, THE ASS ESSEE PURCHASED THESE LANDS FOR THE PURPOSE OF ADVENTURE IN NATURE OF TRADE AND NOT FOR THE PURPOSE OF AGRICULTURAL ACTIVITY. LEARNED CIT(A) WAS ALSO AGREED WITH THE FINDINGS OF THE AO. IN OUR CONSIDERED VIEW, MERELY THAT AGRICULTURAL LAND WAS SITUATED NEAR THE DEVELOPED AREA, THE INFERENCE DRAWN BY THE AO THAT THE AGRICULTURAL LAND HOLDING BY THE ASSESSEE, WHICH WAS PURCHASED DURING THE ASSESSMENT YEAR 2006 - 07 WAS ADVENTURE IN NATURE OF TRADE, IS WITHOUT ANY BASIS. VARIOUS COURTS HAVE LAID DOWN CERTAIN TEXTS IN ORDER TO VERIFY THAT WHETHER THE LAND IN QUESTION WAS AGRICULTURAL LAND OR NOT. IT IS VERY DIFFICULT TO APPLY ALL THOSE TEXTS ON EACH FACTS AS THE CASE OF EVERY INDIVIDUAL OR EACH LAND HAS TO BE SEEN FROM THE PERSPECTIVE OF THE THAT LAND AND SITUATION. THE ASSESSEE HAS FILED A DETAILED REPLY, IN THAT REPLY IT HAS BEEN STATED THAT THE PROPERTY IS AGRICULTURAL LAND, WHICH IS SITUATED BEYOND 8 KMS OF THE MUNICIPAL LIMIT. THE INTENTION OF THE ASSESSEE WAS TO CULTIVATE THE SAID AGRICULTURAL LAND. THE SAID AGRICU LTURAL LAND WAS IN CULTIVATION AND THE SAME IS EVID ENT FROM THE 7/12 EXTRACTS ATTACHED TO THE SALE DEED AT THE TIME OF REGISTRATION OF SALE DEED. FROM THESE KHASRAS, IT IS VERIFIABLE THAT THE LAND WAS PURCHASED BY THE ASSESSEE WAS BEING FOR AGRICULTURAL PU RPOSE. IT HAS BEEN CLEARLY STATED THAT THE DEVELOPMENTS IN THE ADJOINING CITIES WILL NOT ALTER THE NATURE OF THE AGRICULTURAL LAND SITUATED IN VILLAGE. THERE IS NO ITA NO . 2 00 /20 1 2 9 DISPUTE THAT THE LAND IN QUESTION IS SITUATED IN VILLAGE, HOWEVER, THERE IS A DEVELOPED AREA WHICH IS OPPOSITE TO THE LAND OF DHUTI VILLAGE. IT IS ALSO CLEAR FROM THE FACT THAT THE ASSESSEE HAS NOT TRIED TO MAKE NON - AGRICULTURAL USE OF THE SAID AGRICULTURAL LAND AS THE ASSESSEE HAS NEITHER APPLIED FOR CONVERSION OF LAND FROM AGRICULTURAL USE TO B USINESS PURPOSE, NOR THE SAME WAS SOLD FOR THE PURPOSE OF BUSINESS. THE SAID LAND IS CLASSIFIED AS AGRICULTURAL LAND IN REVENUE RECORD AND THE SAME IS EVIDENT FROM THE STAMP DUTY PAID ON REGISTRATION OF SALE DEEDS. NO PERMISSION OF CONVERSION OF THE AGRICU LTURAL LAND TO NON - AGRICULTURAL USE WAS OBTAINED BY THE ASSESSEE. THE BUYERS OF THE SAID LAND ARE AGRICULTURIST AS MENTIONED IN THE SALE DEEDS. THE SAID LAND WAS SOLD IN ACREAGE BASIS AND NOT ON THE BASIS OF PLOT DEVELOPED AND IF THESE REPLIES ARE TAKEN I NTO CONSIDERATION THEN WHY EASILY BE HELD THAT THE LAND IN QUESTION WAS NOT PURCHASED BY THE ASSESSEE FOR BUSINESS PURPOSE BUT THE FARM LAND WAS PURCHASED. HOWEVER, IT IS UPTO THE ASSESSEE AS TO WHETHER THE LAND IN QUESTION IS TO BE RETAINED BY HIM OR NOT TO RETAIN HIM. GOOD PRICE WAS AVAILABLE TO THE ASSESSEE, HENCE, HE THOUGHT FIT TO SELL THE SAME AND EARN PROFIT. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE LAND IN QUESTION WAS NOT FOR BUSINESS PURPOSE BUT WAS FOR AGRICULTURAL USE. ACCORDINGLY, WE H OLD THAT THE LAND IN QUESTION WAS AGRICULTURAL LAND. 8 . NOW, THE QUESTION REMAINS AS TO WHETHER THE LAND IN QUESTION IS AN ASSET WITHIN THE MEANING OF SECTION 2(14) OR NOT. IF THE LAND IN QUESTION SITUATES BEYOND 8 KM FROM THE MUNICIPAL LIMITS OF NAGPUR, ITA NO . 2 00 /20 1 2 10 THEN OF COURSE, THE SAME IS EXEMPTED IN VIEW OF SECTION 2(14) OF THE ACT. HOWEVER, IF THE LAND IN QUESTION SITUATES WITHIN THE LIMIT OF 8 KM THEN OF COURSE THE SAME IS ASSESSABLE BEING A CAPITAL ASSET AND CAPITAL GAIN HAS TO BE CHARGED. IN RESPECT TO THE L AND BEARING KHASRA NO. 79, LEARNED CIT(A) HIMSELF ADMITS THAT AS PER CERTIFICATE OF THE CHAIRMAN, NAGPUR IMPROVEMENT TRUST , THE DISTANCE IS OF 8 KMS. HOWEVER, LEARNED CIT(A) HAS TREATED THIS LAND SITUATED WITHIN 8 KM, WHICH NOT UNDERSTANDABLE AS TO WHY THE LEARNED CIT(A) HAS RECORDED THIS LAND SITUATED WITHIN 8 KM FROM THE MUNICIPAL LIMIT. ACCORDINGLY, WE HOLD THAT THE LAND SOLD BY THE ASSESSEE BEARING KHASRA NO. 79 IS NOT AN ASSET WITHIN THE MEANING OF SECTION 2(14) OF THE ACT AS THE SAME IS SITUATED BEYOND 8 KM FROM THE MUNICIPAL LIMIT OF NAGPUR. ACCORDINGLY, THE CONSIDERATION RECEIVED ON ACCOUNT OF SALE OF LAND BEARING KHASRA NO. 79 IS NOT TAXABLE AS THE SAME IS EXEMPT. 9 . HOWEVER, REGARDING LAND BEARING KHASRA NO. 80/2, THE CHARMAN OF NAGPUR IMPROVEMENT TRU ST HAS STATED THAT THIS PLOT IS SITUATED AT 7.5 KMS BEYOND THE MUNICIPAL LIMIT OF NAGPUR AND HENCE, THE SAME IS WITHIN 8 KMS. HOWEVER, LEARNED AR OF THE ASSESSEE HAS FILED A CERTIFICATE FROM EXECUTIVE ENGINEER (METRO), NAGPUR, WHO HAS CERTIFIED THAT THE L AND BEARING KHASRA NO 80/2 AT MAUZA DHUTI, IS SITUATED BEYOND 8.125 KMS FROM MUNICIPAL LIMIT OF NAGPUR. SINCE THIS IS A NEW EVIDENCE AND THIS FACT HAS TO BE ASCERTAINED BY THE AO, THEREFORE, WE ARE OF THE CONSIDERE D VIEW THAT FOR A LIMIT PURPOSE, THIS ISSUE IS RESTORED TO THE FILE OF THE AO TO VERIFY THE LAND BEARING KHASRA NO. 80/2, WHETHER ITA NO . 2 00 /20 1 2 11 SITUATES BEYOND 8.125 KMS OR BEYOND 7.5 KMS FROM MUNICIPAL LIMIT OF NAGPUR. IF IT IS FOUND THAT THE LAND SITUATES BEYOND 8.125 KMS , THEN OF COURSE NO CAPITAL GAIN ARISES . ACCORDINGLY, WE DIRECT THE AO TO PASS A FRESH ORDER AFTER AFFORDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE ON THIS POINT OF ISSUE. WE ORDER ACCORDINGLY, WHICH COVERS GROUNDS NO. 1 TO 4 . 1 0 . GROUND NO. 5 , IS AGAINST CONFIRMING THE ESTIMATE OF INCOME AT RS. 4,00,000/ - IGNORING THE PROVISION OF SECTION 44AF. THE AO MADE AN ESTIMATE OF RS. 4,00,000/ - IN RESPECT OF BUSINESS OF KHOWA. THE TOTAL TURN OVER OF THE ASSESSEE IS ONLY RS. 29,65,308/ - , WHICH WAS REVISED TO RS. 21,65,308/ - , WHICH IS BELOW 40 LAKHS AND UNDER SECTION 44AF THE AO WAS SUPPOSED TO ACCEPT THE INCOME SHOWN BY THE ASSESSEE. HOWEVER, HE DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE. THEREFORE, HE ESTIMATED AN INCOME FROM KHOWA BUSINESS AT RS. 4 LAKHS. LEARNED CIT(A) CONFIRMED THE ACTION OF THE AO. LEARNED CIT(A) NOTED THAT NEITHER THE ASSESSEE HAS MAINTAINED THE LIST OF SUNDRY CREDITORS, SUNDRY DEBTORS OR TOTAL STOCK - IN - TRADE AND WHAT IS THE AMOUNT OF CASH BALANCE , THEREFORE, HE WAS OF THE VIEW THAT THE AO WAS JUSTIFIED IN MAKING THE ES TIMATE AT RS. 4 LAKH. 1 1 . AFTER CONSIDERING THE ORDER OF THE AO AND THE LEARNED CIT(A) , WE ARE OF THE VIEW THAT IF THE ESTIMATE IS REDUCED TO RS. 3 LAKH, THAT WILL MEET THE END OF JUSTICE TO BOTH THE SIDES. ACCORDINGLY, WE REDUCE THE AMOUNT OF ESTIMATE MADE BY AO AND CONFIRMED BY THE LEARNED CIT(A) ITA NO . 2 00 /20 1 2 12 FROM RS. 4 LAKHS TO RS. 3 LAKHS. IN THIS REGARD, THE ASSESSEE GETS RELIEF OF RS. 1 LAKH . 12 . IN THE RESULT , APPEAL OF THE ASSESSEE IS ALLOWED IN PART AND PARTLY FOR ST AT ISTICAL PURPOSES . ORDER PRONOUNCED IN THE E - COURT ON THIS 2 ND DAY OF JAN . 201 3 . - 201 3 SD/ - SD/ - ( ) ( RAJENDRA ) ( ) ( R.K.GUPTA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 02 / 01 / 201 3 . /PKM , PS COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A) , MUMBAI / NAGPUR . 4. / CIT 5. / DR, ITAT, MUMBAI / NAGPUR . 6. GUARD FILE. //TRUE COPY// / BY ORDER, ( DY./ASSTT. REGISTRAR) / ITAT, MUMBAI