Ashish Parekh Through L/R Sureshbhai Parekh, Nagpur V. Income tax Officer Ward 3(3), Nagpur

ITA 214/NAG/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 84662 (ITAT-NAGPUR)
• Duration Of Justice: 2 year(s) 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 11-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NARENDRA KANE
• Keywords: Capital asset; Rule of consistency
• Section: 2(14)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER . /ITA NO.214/NAG/2012 ( AY: 2008 - 2009 ) ASHISH PAREKH THROUGH L/R SURESHBHAI PAREKH, C/O. MANOJ MORYANI & CO, 1 ST FLOOR, SUDAMA BHAVAN, GANDHIBAUGH, NAGPUR 440002. / VS. INCOME TAX OFFICER, WARD 3(3), SARAF CHAMBERS, SADAR, NAGPUR 440 001. ./ PAN : AIZPP2688J ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI MANOJ MORYANI / RESPONDENT BY : SHRI NARENDRA KANE , SR. DR / DATE OF HEARING : 02.09.2014 / DATE OF PRONOUNCEMENT : 05 .09.2014 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 11.6.2012 IS AGAINST THE ORDER OF THE CIT (A) - II, NAGPUR DATED 25.1.2012 FOR THE ASSESSMENT YEAR 2008 - 2009. 2. IN THIS APPEAL, ASSESSEE ORIGINALLY RAISED 10 GROUNDS. DURING THE PROCEEDINGS BEFORE US, ASSESSEE FILED THE REVISED GROUND OF APPEAL SUMMARIZING THAT THE CIT (A) IS NOT JUSTIFIED IN HOLDING THAT THE DISTANCE OF THE IMPUGNED LAND IS 8 KMS BY ADOPTING AE RIAL METHOD OF MEASUREMENT I.E., AS CROW S FLIGHT . THE SAID REVISED GROUND READS AS UNDER: THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN NOT HOLDING THE CONTENTION OF THE ASSESSEE THAT AGRICULTURAL LAND SOLD ARE SITUATED BEYOND 8 KMS BY ROAD DISTANCE FROM NAGPUR MUNICIPAL CORPORATION LIMIT AND EXEMPT U/S 2(14)(III)(B) OF THE INCOME TAX ACT, 1961 AND IT WAS NOT A CAPITAL ASSET AND NOT LIABLE TO TAX AND THE DISTANCE IS TO BE MEASURED AS CROW FLIES AND ACCORDING TO THAT METHOD THE DISTAN CE WAS WITHIN EIGHT KMS AND HENCE TAXABLE TO CAPITAL GAINS. THEREFORE, ORDER PASSED IS UNJUSTIFIED, UNWARRANTED AND EXCESSIVE. 3. BEFORE US, AT THE VERY OUTSET, SHRI MANOJ MORYANI, LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE ABOVE GROUND AND MENTIONED THAT THE ISSUE RAISED IN THIS APPEAL I.E., WHETHER THE MEASUREMENT SHOULD BE TAKEN BY THE STRAIGHT LINE MEASUREMENT AS THE CROWS FLIES OR BY NEAREST APPROACH ROAD IS EXACTLY IDENTICAL TO 2 THAT OF THE ISSUE RAISED IN THE CASES OF SHRI UMASHANKAR B. THAKUR VS. ITO VIDE ITA NO. 209/NAG/2012 ( AY: 2007 - 2008) ; SHRI SURESHSINGH U THAKUR VS. ITO VIDE ITA NO. 235/NAG/2012 ( AY: 2007 - 2008) AND SHRI RAMESH SINGH U THAKUR VS. ITO VIDE ITA NO. 236/NAG/2012 ( AY: 2007 - 2008 ), THEREFORE, CONSIDERING THE COVERED NATURE OF THE ISSUE, THE INSTANT APPEAL MAY BE DECIDED IN THE SAME LINES. 4. ON THE OTHER HAND, LD DR DUTIFULLY RELIED ON THE ORDERS OF THE REVENUE AUTHORITIES AND NO CONTRARY MATERIAL WAS BROUGHT TO OUR NOTICE TO CONTROVERT THE SETTLED NATURE OF THE ISSUE. 5. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE ORDERS OF THE REVENUE AUTHOR ITIES AS WELL AS THE CITED DECISIONS OF THE TRIBUNAL AND THE HIGHER JUDICIARY AND ALSO THE RELEVANT MATERIAL PLACED BEFORE US. ON HEARING BOTH THE PARTIES AND ON PERUSAL OF THE SAID ORDER OF THE TRIBUNAL IN THE CASES OF SHRI UMASHANKAR B. THAKUR, SHRI SUR ESHSINGH U THAKUR AND SHRI RAMESH SINGH U THAKUR (SUPRA), WE FIND PARAS 8 AND 9 OF THE SAID TRIBUNALS ORDER ARE RELEVANT IN THIS REGARD WHICH READ AS UNDER: 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE CITED DECISIONS OF THE TRIBUNAL AND THE RELEVANT MATERIAL PLACED BEFORE US. AFTER HEARING BOTH THE PARTIES, WE FIND THAT THERE IS A NEED FOR PERUSING THE SAID PARAS FROM 5 TO 15 OF THE TRIBUNALS ORDER IN THE CASES OF SAJAY NAGORAO PAIDLEWAR; NITISH RAME SHCHANDRA CHORDIA AND SHAISHIR S DIOTE (SUPRA), WHEREIN ONE OF US (AM) IS THE PARTY TO THE SAID ORDER. FOR THE SAKE OF COMPLETENESS OF THIS ORDER, WE FIND IT RELEVANT TO REPRODUCE THE PARAS 9 TO 15 OF THE TRIBUNALS ORDER (SUPRA) WHICH READ AS UNDER: 9. WE HAVE HEARD RIVAL SUBMISSIONS AND CONSIDERED THEM CAREFULLY. WE HAVE ALSO CONSIDERED THE WRITTEN SUBMISSIONS FILED ON BEHALF OF BOTH THE PARTIES IE., ASSESSSEE AND THE DEPARTMENT AND HAVE ALSO PERUSED THE RELEVANT MATERIAL ON RECORD, ON WHICH OUR ATTENT IONS WERE DRAWN. WE HAVE ALSO TAKEN INTO CONSIDERATION THE VARIOUS CASE LAWS RELIED UPON BY THE LEARNED AR AS WELL AS THE LD DR. AFTER CONSIDERING THE SUBMISSION AND PERUSING THE MATERIAL ON RECORD, WE FOUND THAT THE ISSUE IN RESPECT TO WHETHER THE AGRIC ULTURAL LAND IN QUESTION IS AN ASSET WITHIN THE MEANING OF SECTION 2(14) OR NOT HAVE ALREADY BEEN DECIDED BY THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF SATINDER PAL SING (SUPRA). THE DECISION OF THE HNBLE PUNJAB & HARYANA HIGH COURT HAS BEEN CONSISTENTLY FOLLOWED BY VARIOUS BENCHES OF THE TRIBUNAL IN VARIOUS PART OF THE COUNTRY. ONE OF US HAS ALSO TAKEN INTO CONSIDERING THE ISSUE WHILE SITTING IN JAIPUR BENCHES OF THE TRIBUNAL AND FOUND THAT THE DECISION OF THE HONBLE PUNJAB AND HARYANA HIGH COURT HAS TO BE FOLLOWED AND THE DISTANCE HAS TO BE MEASURED THROUGH APPROACH ROAD AND NOT THROUGH THE CROWS FLIGHT DISTANCE. THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF SATINDER PAL SINGH (SUPRA) HAS HELD THAT THE DISTANCE OF AGRICULTURAL LAN D BELONGING TO THE ASSESSEE WITHIN THE MEANING OF SECTION 2(14)(III)(B) HAS TO BE MEASURED IN TERMS OF APPROACH ROAD AND NOT BY A STRAIGHT LINE DISTANCE ON HORIZONTAL PLANE OR AS PER CROWS FLIGHT. COPY OF THE ORDER IS ALSO PLACED IN THE COMPILATION AT PAG ES 1 & 2. 10. THE CONTENTION RAISED BY THE LD CIT (A) THAT THE RECKONING OF URBANIZATION AS A FACTOR FOR PRESCRIBING THE DISTANCE IS OF SIGNIFICANCE WHICH WOULD YIELD TO THE PRINCIPLE OF MEASURING DISTANCE IN TERMS OF APPROACH ROAD RATHER THAN BY STRAIGHT LINE ON HORIZONTAL PLANE, THIS CONTENTION OF LD CIT (A) HAS ALSO BEEN CONSIDERED BY THE HONBLE PUNJAB AND 3 HARYANA HIGH COURT AND HAS OBSERVED THAT THE PRINCIPLE OF MEASUREMENT OF DISTANCE IS CONSIDERED AS STRAIGHT LINE DISTANCE ON HORIZONTAL PLANE OR AS P ER CROWS FLIGHT THEN IT WOULD HAVE NO RELATIONSHIP WITH THE STATUTORY REQUIREMENT OF KEEPING IN VIEW THE EXTENT OF URBANIZATION . SUCH A COURSE WOULD BE ILLUSORY, WHICH IS IN PURSUANCE OF THE AFORESAID PROVISION THAT NOTIFICATION NO.9447 DATE 6 TH JANUARY, 1994 HAS BEEN ISSUED BY THE CENTRAL GOVERNMENT IN RESPECT OF THE STATE OF PUNJAB, AT ITEM NO.18, THE SUB - DIVISION KHANNA HAS BEEN LISTED AT SERIAL NO.19. IT HAS INTER ALIA BEEN SPECIFIED THAT THE AREA UP TO 2 KMS FROM THE MUNICIPAL LIMITS IN ALL DIRECTIO NS HAS TO BE REGARDED AS OTHER THAN AGRICULTURAL LAND. ONCE THE STATOR GUIDANCE OF TAKING INTO ACCOUNT THE EXTENT AND SCOPE OF URBANIZATION OF THE AREA HAS TO RECKONED WHILE ISSUING ANY SUCH NOTIFICATION THEN IT WOULD BE INCONGRUOUS TO THE ARGUMENT OF THE REVENUE THAT THE DISTANCE OF LAND SHOULD BE MEASURED BY THE METHOD OF STRAIGHT LINE ON HORIZONTAL PLANE OR AS PER CROWS FLIGHT BECAUSE ANY MEASUREMENT BY CROWS FLIGHT IS BOUND TO IGNORE THE URBANIZATION WHICH HAS TAKEN PLACE. THE DECISION OF THE MUMBAI BENCH IN THE CASE OF LAUKIK DEVELOPERS VS. DCIT REPORTED IN (2007) 108 TTJ (MUMBAI) 364, WAS ALSO TAKEN INTO CONSIDERATION BY THE HONBLE PUNJAB & HARYANA HIGH COURT AND FOUND THAT THE DECISION OF THE TRIBUNAL HAS ATTAINED FINALITY. 11. IN CASE OF LAUKIK DEVELOPERS (SUPRA), THE MUMBAI BENCH OF THE TRIBUNAL HAS OBSERVED THAT ONCE THE PRINCIPLE OF MEASURING DISTANCE HAS BEEN SETTLED NAMELY THAT THE DISTANCE OF THE AGRICULTURAL LAND BELONGING TO THE ASSESSEE - RESPONDENT HAS TO BE MEASURED IN TERMS OF BY APPROA CH ROAD AND NOT BY A STRAIGHT LINE DISTANCE ON HORIZONTAL PLANE OR AS PER CROWS FLIGHT. ACCORDINGLY, THE HONBLE PUNJAB AND HARYANA HIGH COURT HELD THAT THE DISTANCE HAS TO BE MEASURED BY APPROACH ROAD AND NOT BY STRAIGHT LINE DISTANCE ON HORIZONTAL PLAN E OR AS PER CROWS FLIGHT. IN CASE OF LAUKIK DEVELOPERS (SUPRA), THE ASSESSEE DISPUTED THAT THE DISTANCE FOR THE PURPOSE OF SECTION 80IB(10) HAS TO BE MEASURED THROUGH STRAIGHT LINE DISTANCE ON HORIZONTAL PLACE AND NOT BY APPROACH ROAD. THE MUMBAI BENCH OF THE TRIBUNAL HAS HELD THAT THE ISSUE REGARDING DISTANCE TO BE MEASURED WITH REGARD TO ROAD DISTANCE OR STRAIGHT LINE DISTANCE IS COVERED WITH THE DECISION OF THE PUNE BENCH OF ITAT IN THE CASE OF MANGALAM INORGANICS (P) LTD (SUPRA), WHEREIN IT WAS HELD THAT THE DISTANCE BETWEEN THE MUNICIPAL LIMITS AND THE ASSESSEES INDUSTRIAL UNDERTAKING HAS TO BE MEASURED HAVING REGARD TO THE ROAD DISTANCE AND NOT AS PER THE CROWS FLIGHT I.E., A STRAIGHT LINE DISTANCE AS CANVASSED BY THE REVENUE. 12. IN CASE OF ITO V S. ASHOK SHUKLA , DECIDED IN ITA NO.207/INDORE/2012, FOR ASSESSMENT YEAR 2008 - 2009, VIDE ORDER DATED 31.8.2012, THE ISSUE WAS IN RESPECT TO WHETHER THE ASSESSEE WAS ENTITLED TO EXEMPTION FROM CAPITAL GAIN ON SALE OF AGRICULTURAL LAND. THIS ISSUE WAS EXAMIN ED IN DETAIL AND IT WAS FOUND THAT THE TEHSILDAR AND PATWARI HAVE GIVEN A REPORT THAT THE LAND IN QUESTION WAS AGRICULTURAL LAND AND THE DISTANCE IS 9.7 KMS FROM THE MUNICIPAL LIMIT. THIS DISTANCE WAS THROUGH THE APPROACH ROAD AND NOT BY STRAIGHT LINE DIS TANCE METHOD. THEREAFTER DISCUSSING THE ISSUE ON MERIT AND HAVING TAKING INTO CONSIDERATION THE DECISION OF THE TRIBUNAL IN THE CASE OF LAUKIK DEVELOPERS (SUPRA) AND CONSIDERING THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF BALKRISHNA HARI BALLABHADAS VS. CIT, REPORTED IN 138 ITR 245, WHICH WAS RELIED UPON BY THE LEARNED DR AND FOUND THAT THE MEASUREMENT HAS TO BE ADOPTED BY THE APPROACH ROAD AND NOT BY STRAIGHT LINE METHOD . RELIANCE WAS ALSO PLACED ON THE DECISION OF THE HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF SATINDER PAL SINGH (SUPRA). 13. IN THE CASE OF ACIT VS. M/S. SHAGUN INFRASTRUCTURE PVT LTD DECIDED IN ITA NO.209/NAG/2009, FOR ASSESSMENT YEAR 2006 - 2007, VIDE ORDER DATED 27.6.2011, THE NAGPUR BENCH OF THE TRIBUNAL HAS HELD THAT THE LAND IN QUESTION WHICH WAS SITUATED MORE THAN 8 KMS FROM THE LOCAL LIMITS AND IS CLEARLY AGRICULTURAL LAND IN TERMS OF SECTION 2(14)(III) OF THE ACT., THEREFORE, ANY INCOME FROM SUCH LAND INCLUDING PROFIT ARISING FROM SALE OF SUCH AGRICULTURA L LAND IS NOT ASSESSABLE AS INCOME . 14. IN CASE OF ACIT VS. GAURAV KHANDELWAL , DECIDED IN ITA NO.195/AGRA/2010, FOR ASSESSMENT YEAR 2006 - 07, THE AGRA BENCH OF THE TRIBUNAL FOLLOWING THE DECISION OF MUMBAI BENCH IN THE CASE OF LAUKIK DEVELOPERS (SUPRA) AND THE DECISION OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF SATNDER PAL SINGH (SUPRA), HELD THAT THE DISTANCE OF 8 KMS HAS TO BE MEASURED BY APPROACH ROAD DISTANCE AND NOT BY STRAIGHT LINE DISTANCE ON HORIZONTAL PLANE . SIMILAR VIEW HAS BEEN EXPRESS ED IN THE CASE OF SHRI MAINRAJ VS. ACIT , DECIDED IN ITA NO.1371/MDS/2011, FOR ASSESSMENT YEAR 2007 - 2008 VIDE ORDER DATED 18.8.2011. IN THIS CASE ALSO IT HAS BEEN HELD THAT THE DISTANCE HAS TO BE MEASURED BY APPROACH ROAD AND NOT THROUGH CROWS FLIGHT OR S TRAIGHT LINE METHOD. IN CASE OF SMT SAVITHRI AMMAL VS. ITO, DECIDED IN ITA NO.487/MDS/2012, VIDE ORDER DATED 12.7.2012 AGAIN IT HAS BEEN HELD THAT THE DISTANCE HAS TO BE MEASURED AS PER THE APPROACH ROAD AND NOT BY STRAIGHT LINE METHOD. SIMILAR VIEW HAS BEEN EXPRESSED IN CASE OF ITO VS. SHRI CHAGANLAL LALJI ASWIN BUSINESS, DECIDED IN ITA NO.857/MDS/2011, FOR THE ASSESSMENT YEAR 2007 - 08, VIDE ORDER DATED 18.2.2011. IN CASE OF ITO VS. M/S. RANJIT RATTAN MEHRA (HUF), DECIDED IN ITA NO.442/ASR/2011 FOR 4 ASSES SMENT YEAR 2008 - 2009, THE AMRITSAR BENCH OF THE TRIBUNAL HAS TAKEN A VIEW THAT THE DISTANCE OF 8 KMS HAS TO BE MEASURED THROUGH THE APPROACH ROAD AND NOT THROUGH THE STRAIGHT LINE METHOD. WHILE HOLDING SO, THE DECISION OF THE HONBLE PUNJAB AND HARYANA HI GH COURT IN THE CASE OF SATINDER PAL SINGH (SUPRA), WAS TAKEN INTO CONSIDERATION AND ANOTHER DECISION OF THE SAME HIGH COURT IN THE CASE OF CIT VS. LAL SINGH & OTHERS, REPORTED IN (2010) 228 CTR 575 WAS ALSO TAKEN INTO CONSIDERATION AND HAS ALLOWED THE ISS UE IN FAVOUR OF THE ASSESSEE BY HOLDING THAT THE DISTANCE OF 8 KMS HAS TO BE MEASURED THROUGH APPROACH ROAD AND NOT BY STRAIGHT LINE METHOD ON HORIZONTAL PLANE. 15. WE HAVE ALSO TAKEN INTO CONSIDERATION VARIOUS ARGUMENTS OF LD CIT DR AND FOUND THAT SINCE T HE ISSUE IS COVERED BY THE DECISION OF THE VARIOUS BENCHES OF THE TRIBUNAL AS WELL AS BY THE HONBLE PUNJAB AND HARYANA HIGH COURT, THEREFORE, IN VIEW OF THE CONSISTENCY THE VIEW TAKEN BY VARIOUS BENCHES HAS TO BE FOLLOWED. THERE IS NO CONTRARY DECISION I S AVAILABLE ON THE SAME FACTS AND THEREFORE, IT CANNOT BE SAID THAT THE DECISION OF THE HONBLE PUNJAB & HARYANA HIGH COURT HAS ONLY PERSUASIVE VALUE. IF THERE IS ANY CONTRARY DECISION IS AVAILABLE EITHER BY THE HONBLE HIGH COURT OR BY ANY OTHER BENCHES OF THE TRIBUNAL, THEN OF COURSE IT CAN BE SAID THAT THE DECISION OF OTHER BENCHES HAVE PERSUASIVE VALUE. IN VIEW OF THE AFORESAID FACTS AND CIRCUMSTANCES OF THE CASE, WE HELD THAT DISTANCE OF 8 KMS, HAS TO BE MEASURED THROUGH APPROACH ROAD AND NOT BY STRA IGHT LINE DISTANCE ON HORIZONTAL PLANE OR CROWS FLIGHT. HENCE, THE ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEES. 9. THUS, IT IS DECIDED ISSUE THAT THE MEASUREMENT HAS TO BE DONE BY NEAREST APPROACH ROAD (NAR). FURTHER, IT IS AN UNDISPUTED FACT THAT THE DISTANCE OF IMPUGNED LANDS FROM THE MUNICIPAL LIMITS IS BEYOND 8 KMS BASED ON THE SAID METHOD OF NAR. CONSIDERING THE ABOVE SETTLED POSITION OF THE ISSUE AT THE LEVEL OF THE HIGHER JUDICIARY AS WELL AS BY THE VARIOUS ORDER OF THE TRIBUNAL AND FOLLOWING TH E PRINCIPLE OF CONSISTENCY, WE ARE OF THE OPINION THAT THE ISSUE STANDS COVERED IN FAVOUR OF THE ASSESSEE AND THUS, THE DISTANCE OF 8 KMS HAS TO BE MEASURED THROUGH APPROACH ROAD AND NOT BY STRAIGHT LINE DISTANCE ON HORIZONTAL PLACE OR CROWS FLIGHT. ACCO RDINGLY, THE GROUND RAISED BY THE ASSESSEE IS ALLOWED . 6. CONSIDERING THE ABOVE SETTLED NATURE OF THE ISSUE, WE ARE OF THE OPINION THAT THE MEASUREMENT OF THE IMPUGNED LAND HAS TO BE DONE BY THE NEAREST APPROACH ROAD (NAR) AND NOT BY THE STRAIGHT LINE DISTANCE ON HORIZONTAL PLACE OR CROWS FLIGHT. ACCORDINGLY, G ROUND RAISED BY THE ASSESSEE IS ALLOWED . 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONO UNCED IN THE OPEN COURT ON 5 TH SEPTEMBER, 2014 . SD/ - SD/ - (VIVEK VARMA) (D. KARUNAKARA RAO) / JUDICIAL MEMBER / ACCOUNTANT MEMBER NAGPUR ; 5 /09/2014 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5 5. , / DR, ITAT, NAGPUR. 6. / GUARD FILE . //TRUE COPY// / BY ORDER, (SR. PRIVATE SECRETARY) / ITAT, NAGPUR