Shri Kamleshbhai Naranbhai Patel, Ahmedabad V. ITO, S.K Ward-4, Himatnagar

ITA 2395/AHD/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2446 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-06-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2013-2014
• Appeal Filed On: 10-12-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: PF JAIN
• Keywords: Sale consideration of property below Jantri Value; Capital asset
• Section: 50C; 2(14); 148

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI RIFAUR RAHMAN, ACCOUNTANT MEMBER ./ ITA NO.2395/AHD/2018 / ASSTT. YEAR: 2013-14 SHRI KAMLESHBHAI NARANBHAI PATEL 4, KAMLESHWAR PARK SOCIETY ODHAV AHMEDABAD AHMEDABAD 380 097. PAN : BOKPP 8568 R VS. ITO, SABARKANTHA WRD-4 HIMATNAGAR. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI P.F. JAIN, AR REVENUE BY : SHRI VINOD TANWANI, SR.DR ! / DATE OF HEARING : 19/06/2019 '#$ ! / DATE OF PRONOUNCEMENT: 20/06/2019 %& / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST O RDER OF THE LD.CIT(A)-2, AHMEDABAD DATED 2.11.2018 PASSED FOR T HE ASSTT.YEAR 2013-14. 2. THE ASSESSEE HAS TAKEN TEN GROUNDS OF APPEAL, WH ICH ARE ARGUMENTATIVE AND DESCRIPTIVE IN NATURE. IN BRIEF HIS GRIEVANCE REVOLVES AROUND TWO FOLD VIZ. (A) NO CAPITAL GAIN D ESERVES TO BE ASSESSED IN THE HANDS OF THE ASSESSEE ON TRANSFER O F LAND COMPRISED IN BLOCK NO.516, SURVEY NO.330/1-334/4/2, BHUVALDI, ITA NO.2395/AHD/2018 2 AHMEDABAD, AND (B) IF GAIN IS TAXABLE, THEN NOT THE SUM AS COMPUTED BY THE AO. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HAD PURCHASED ALLEGED AGRICULTURE LAND ON 29.3.2007 ALONG WITH 14 CO-OWNERS FOR A CONSIDERATION OF RS.1,23,00,000/-. SUBSEQUENTLY ON 15.10.2010, 12 CO-OWNERS SOLD THEIR SHARES TO THE A SSESSEE AND OTHER TWO CO-OWNERS. THUS, ALL THREE LAND OWNERS T HEREAFTER SOLD THIS LAND ON 26.3.2013 FOR A CONSIDERATION OF RS.1, 71,00,000/-. THE ASSESSEE HAS 1/3 RD SHARE. FOR THE PURPOSE OF CHARGING STAMP DUTY, THE SUB-REGISTRAR HAS VALUED THE PROPERTY FOR PAYMENT OF STAMP DUTY ON TRANSFER OF THIS LAND AT RS.4,72,71,9 00/-. THE AO GOT INFORMATION ABOUT THIS THROUGH ANNUAL INFORMATI ON WING. HE ISSUED A NOTICE UNDER SECTION 148 OF THE ACT ON 6.5 .2016. IN RESPONSE TO THIS NOTICE, THE ASSESSEE WROTE A LETTE R TO THE AO THAT RETURN FILED ON 31.3.2016 BE TREATED AS FILED IN RE SPONSE TO THE NOTICE UNDER SECTION 148. DURING THE ASSESSMENT PR OCEEDINGS THE ASSESSEE FILED A REPLY TO THE AO VIDE LETTER DATED 28.8.2017. IT IS PERTINENT TO TAKE NOTE OF THIS LETTER, WHICH READS AS UNDER: 1) 'I HAVE SOLD AGRICULTURE LAND SITUATED AT: VIL LAGE BHIWALDI, WHICH WAS PURCHASE BY ME ON 29/03/2007 AND 15/10/2010 AND SAME WAS SOLD ON 26/03/2013. ON RECE IPT OF THE NOTICE I HAVE FILED MY RETURN OF INCOME ON 3 1/03/2016 DECLARING TOTAL INCOME FROM CAPITAL GAIN RS.1378330 /- AND TAX ON TOTAL INCOME RS.469980/- PAID WIDE CHALLAN N O.00001, BSR CODE: 0292036 DATED 31/03/2016. 2) I HAVE SOLD AGRICULTURE LAND SITUATED AT: VILL AGE BHUVALDI,TA DASCROI HAVING POPULATION IS LESS THAN T EN THOUSAND AND DISTANCE FROM LOCAL LIMIT OF MUNICIPAL ITY IS MORE THAN EIGHT KM HENCE NOT LIABLE FOR CAPITAL GAI N TAX BUT UNDER WRONG IMPRESSION I HAVE PAID CAPITAL GAIN TAX AND FILED ITA NO.2395/AHD/2018 3 MY RETURN STATED AS ABOVE. IN THE CIRCUMSTANCES REQ UEST YOUR HONOUR TO REFUND OF TAX PAID BY ME. 3) PROVISIONS OF SECTION 50C IS APPLICABLE FOR SA LE OF CAPITAL ASSETS BUT I HAVE SOLD AGRICULTURE LAND HENCE PROVI SION OF SECTION 50C NOT APPLICABLE. I HOPE THIS WILL SUFFIC E YOUR REQUIREMENT. 4. BUT THE AO HAS REJECTED THE CONTENTIONS OF THE AS SESSEE ON THE GROUND THAT SINCE HE HIMSELF HAS RECOGNIZED CAP ITAL GAIN ASSESSABLE IN HIS HAND WHILE FILING THE RETURN ON 3 1.3.2016, THEREFORE NO EXEMPTION FOR THE ASSESSEE FOR LEVY OF CAPITAL GAIN TAX. THE LD.AO DID NOT ACCEPT CONTENTION OF THE ASS ESSEE THAT HE HAS WRONGLY FILED RETURN RECOGNIZING THE CAPITAL GA IN TAXABLE IN HIS HAND. BASICALLY, THIS GAIN IS EXEMPT FROM TAX. HE DETERMINED TAXABLE INCOME VIDE ASSESSMENT ORDER DATED 22.12.20 17. DISSATISFIED WITH THE FINDING OF THE AO, THE ASSESS EE CARRIED THE MATTER IN APPEAL BEFORE THE LD.CIT(A). THE LD.CIT( A) CONCURRED WITH THE AO AND REJECTED THE CONTENTIONS OF THE ASS ESSEE. THE RELEVANT FINDING OF THE LD.CIT(A) ON THIS ISSUE REA DS AS UNDER: 2.4. L DO NOT AGREE WITH THE SUBMISSION OF THE APP ELLANT THAT THE LAND IS A AGRICULTURE LAND, AND THEREFORE, NOT AMENABLE TO CAPITAL GAIN ON ITS SALE AS APPELLANT HIMSELF HAS F ILED RETURN OF INCOME ON 31/03/2016 AND DECLARED THE GAIN ON SALE OF LAND UNDER THE HEAD CAPITAL GAIN. IT IS SEEN THAT THE LA ND AT BLOCK NO.516, S. NO.330/1-334/4/2, BHUVALDI, AHMEDABAD, TH E CAPITAL GAIN OF WHICH IS UNDER DISPUTE HAS BEEN INS PECTED BY JUNIOR ENGINEER SHRI NIKHIL ROY ON 14/11/2007 FOR T HE PURPOSE OF VALUATION OF THE PROPERTY. THE ENGINEER HAS REPORTED THAT THE LAND IS WITHIN 8 KM FROM MUNICIPA L LIMIT WHICH IS EVIDENT FROM THE GOOGLE MAP ALSO. THEREFOR E, THE APPELLANT'S CONTENTION THAT THE LAND IS BEYOND 8 KM FROM THE MUNICIPAL LIMIT IS NOT TENABLE. APPELLANT HAS FILED RETURN OF INCOME ON 31/03/2016 AND SHOWN THE LAND AS A CAPITA L ASSET. THE DEFINITION OF AGRICULTURE LAND HAS ALSO BEEN ITA NO.2395/AHD/2018 4 REDEFINED BY FINANCE ACT, 2013 WHICH HAS COME INTO EFFECT FROM 01/04/2013 AS UNDER:- '(III) AGRICULTURAL LAND IN INDIA, NOT BEING LA ND 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; OR (B) IN ANY AREA WITHIN THE DISTANCE, MEASURED AERIA LLY: (I) NOT BEING MORE THAN TWO KILOMETRES, FROM THE LO CAL LIMITS OF ANY MUNICIPALITY OR CANTONMENT BOARD REFE RRED TO IN ITEM (A) AND WHICH HAS A POPULATION OF MORE T HAN TEN THOUSAND BUT NOT EXCEEDING ONE LAKH; OR (II) NOT BEING MORE THAN SIX KILOMETRES, FROM THE L OCAL LIMITS OF ANY MUNICIPALITY OR CANTONMENT BOARD REFE RRED TO IN ITEM (A) AND WHICH HAS A POPULATION OF MORE T HAN ONE LAKH BUT NOT EXCEEDING TEN LAKH; OR (III) NOT BEING MORE THAN EIGHT KILOMETRES, FROM TH E LOCAL LIMITS OF ANY MUNICIPALITY OR CANTONMENT BOAR D REFERRED TO IN ITEM (A) AND WHICH HAS A POPULATION OF MORE THAN TEN LAKH. EXPLANATION: FOR THE PURPOSES OF THIS SUB-CLAUSE, 'POPULATION' MEANS THE POPULATION ACCORDING TO THE LAST PRECEDING CENSUS OF WHICH THE RELEVANT FIGURES HAVE BEEN PUBLISHED BEFORE THE FIRST DAY OF THE PREVIOUS YEAR.' IN VIEW OF THE ABOVE, THE CONTENTION OF THE APPELLA NT THAT THE ABOVE LAND WAS AGRICULTURE LAND IS NOT ACCEPTABLE. THE ABOVE FACT IS ALSO REINFORCED AS THE JANTRI VALUE OF THE ABOVE PROPERTY HAS BEEN REPORTED BY THE SUB-REGISTRAR IS AT RS.4,72,71,900/- AND THE DVO HAS ALSO REVALUED THE PROPERTY AT RS.4,30,04,000/- TAKING THE COMPARABLE INSTANCES IN THE SAME LOCALITY. ITA NO.2395/AHD/2018 5 2.5. THE APPELLANT HAS CONTENDED THAT IT HAS BEEN O WNER OF THE PROPERTY FROM 29/03/2007 AND ONLY CERTAIN RIGHT HAS BEEN ADDED ON 15/10/2010 AFTER 12 CO-OWNERS HAVE RELINQUISHED THEIR RIGHTS. THEREFORE, EVEN IF CAPIT AL GAIN IS TO BE COMPUTED, THE DATE OF ACQUISITION HAS TO BE TAKE N AS 29/03/2007, I DO NOT AGREE WITH THE CONTENTION OF T HE APPELLANT, AS APPELLANT-WAS OWNER OF ONLY 1/15TH OF LAND ON 29/03/2007. HE HAS PURCHASED 4/15TH OF LAND ON 15/10/2010 WHICH AMOUNTS TO BUYING A NEW PROPERTY. IN VIEW OF-THE ABOVE, THE APPELLANT'S CONTENTION IS RE JECTED AND THE STAND TAKEN BY AO IS UPHELD. THE RELATED GROUND S OF APPEALS ARE ACCORDINGLY DISMISSED. 5. BEFORE US WHILE IMPUGNING ORDER OF THE LD.REVENUE AUTHORITIES, THE LD.COUSNEL FOR THE ASSESSEE TOOK U S THROUGH THE DEFINITION OF CAPITAL ASSET PROVIDED IN SECTION 2 (14)(III) OF THE INCOME TAX ACT, 1962. ACCORDING TO HIM, AS PER THI S DEFINITION IF AN AGRICULTURE LAND IS SITUATED BEYOND 8 KM. OF MUN ICIPAL LIMIT THEN IT WILL NOT FALL WITHIN THE AMBIT OF CAPITAL ASSET ON WHOSE TRANSFER CAPITAL GAIN IS LEVIABLE IN THE HANDS OF T HE ASSESSEE. WHILE TAKING US THROUGH THE FINDING OF THE LD.CIT(A ) RECORDED IN PARA 2.4 EXTRACTED (SUPRA), HE CONTENDED THAT THE L D.CIT(A) HAS REJECTED THE CONTENTIONS OF THE ASSESSEE BY ASSIGNI NG TWO REASONS; (A) IN HIS FIRST REASON, THE LD.CIT(A) HAS OBSERVED THAT DEFINITION OF AGRICULTURE LAND HAS BEEN REDEFINED BY THE FINANCE ACT, 2013. HE TOOK COGNIZANCE OF THIS DEFINITION B Y IGNORING THE FACT THAT IT IS APPLICABLE FROM 1.4.2013 WHEREAS TH E ASSESSEE HAS TRANSFERRED THE LAND ON 26.3.2013. THE TRANSACTION OF THE ASSESSEE FALLS WITHIN THE ASSESSMENT YEAR 2013-14 A ND NOT 2014- 15. THE BOARD HAS ISSUED A CIRCULAR BEARING NO.17 O F 2015 EXPLAINING THAT THIS CHANGED DEFINITION WILL BE APP LICABLE FROM THE ASSESSMENT YEAR 2014-15. IN THE SECOND REASONING, THE LD.CIT(A) HAS OBSERVED THAT ENGINEER SHRI NIKHIL ROY HAS INSP ECTED THE ITA NO.2395/AHD/2018 6 PROPERTY ON 14.11.2007 FOR THE PURPOSE OF VALUATION . HE HAS REPORTED THAT THE LAND IS SITUATED WITHIN 8 KMS. FR OM MUNICIPAL LIMIT WHICH IS EVIDENT FROM GOOGLE MAP ALSO. THIS FINDING OF THE LD.CIT(A) IS FACTUALLY INCORRECT. FIRSTLY, JUNIOR ENGIEER SHRI NIKHIL ROY IS NOT A COMPETENT PERSON TO GIVE ANY CERTIFICA TE DETERMINING GEOGRAPHICAL SITUATION OF THE ASSESSEES PROPERTY F ORM THE MUNICIPAL LIMIT. REVENUE OFFICIAL UNDER THE GUJARA T LAND REVENUE CODE 1879 IS THE COMPETENT OFFICER FOR ISSUING SUCH CERTIFICATE. THE ASSESSEE HAS ANNEXED SUCH CERTIFICATE FROM TALATI-CUM- MANTRY OF THIS VILLAGE AND CERTIFICATE IS AVAILABLE ON PA GE NO.20 OF THE PAPER BOOK. HE TOOK US THROUGH THIS CERTIFICAT E, WHICH READS AS UNDER: RUNNING ENGLISH VERSION OF CERTIFICATE IN GUJARATI FROM GRAM PANCHYAT DTD. 22/1 1/2017 CERTIFYING THE DISTANCE OF AGRICULTURAL LAND OF AJQOVE 10 KMS. FROM THE MUNICIPAL LIMIT. BHUVALADI GRAM PANCHYAT VILLAGE-BHUVALADI, TAL.DASKROI,AHMEDABAD-382430 JAVAKNO. DATE:-22/12/2017 CERTIFICATE THE CERTIFICATE IS GIVEN HERETO THAT THE POPULATION OF VILLAGE- BHUVALADI IS 7829 AS PER POPULATION CENSUS 201, MOJE-BHUVALADI TA.DASKROI FROM THE LIMIT OFAHMEDABAD MUNICIPALITY CORPORATION , IT IS AWAY ABOUT 10 K.M. THE LAND OF MOJE-BHUVALADI REVENUE BLOCK NO.516-G N EW NO. 614 IS IN THE LIMIT OF BHUVALADI WHICH IS HEREB Y CERTIFIED BY ISSUING THIS CERTIFICATE AND THE IMPUG NED LAND IS AGRICULTURAL LAND. ITA NO.2395/AHD/2018 7 SD/-ILLEGIBLE STAMP OF TALATI-CUM-MANTRY BHUVALADI GRAM PANCHAYAT TAL.DASKROI, DIST.AHMEDABAD 6. APART FROM THE ABOVE, DISTANCE FOR DETERMINATION OF GEOGRAPHICAL LOCATION OF ASSESSEES LAND FROM MUNIC IPAL LIMIT IS REQUIRED TO BE TAKEN FROM LIMIT NOTIFIED BY THE CEN TRAL GOVERNMENT IN ITS GAZETTE UNDER INCOME TAX ACT. COPY OF SUCH NOTIFICATION ISSUED ON 6.1.1994 IS AVAILABLE IN THE PAPER BOOK O N PAGE NO.29 ONWARDS. IN OTHER WORDS, MUNICIPAL LIMIT OF AHMEDA BAD CITY EXISTED AS ON 6.1.1994 IS TO BE TAKEN AS A POINT FO R MEASURING DISTANCE UPTO THE BOUNDARY OF THIS VILLAGE. THE OR DER OF THE CIT(A) IS TOTALLY SILENT ABOUT THIS ASPECT. HE JUS T MADE A GENERAL REFERENCE ABOUT GOOGLE-MAP AND OBSERVATION OF THE J UNIOR ENGINEER WHILE VALUING THE VALUE OF THE PROPERTY, W HEREAS IT IS A CRITICAL FACTOR WHICH DETERMINES WHAT IS THE RIGHT OF THE ASSESSEE AND WHETHER CAPITAL GAIN TAXABLE IN THE HANDS OF TH E ASSESSEE OR NOT. 7. NEXT FOLD OF CONTENTIONS, HE SUBMITTED THAT DIST ANCE IS TO BE MEASURED BY ROAD NOT BY CROW-FLIGHTS. HE HAS PLACE D ON RECORD COPY OF BOARD CIRCULAR WHICH WAS TAKEN INTO CONSIDER ATION THE JUDGMENT OF HONBLE BOMBAY HIGH COURT. THIS CIRCULA R HAS BEEN CONSIDERED BY THE ITAT IN IIA NO.3337/AHD/2015. HE HAS PLACED ON RECORD COPY OF THE TRIBUNALS ORDER. HE ALSO PO INTED OUT THAT THIS CIRCULAR HAS BEEN CONSIDERED BY THE DIVISION BE NCH OF ITAT IN THE CASE OF IN ITA NO.2138/AHD/2012 WHERE ONE US WA S AUTHOR (JUDICIAL MEMBER). ON THE STRENGTH OF THESE DOCUME NTS, HE ITA NO.2395/AHD/2018 8 CONTENDED THAT THE ASSESSEE HAS SOLD AGRICULTURE LA ND. IN ORDER TO PROVE STATUS OF THE LAND, THE ASSESSEE HAS PRODUCED COPY OF THE FORM NO.7/12 I.E. DOCUMENTS MAINTAINED BY THE STATE REVENUE OFFICIALS EXHIBITING RECORD OF RIGHTS OF THE LANDHO LDERS UNDER GUJARAT LAND REVENUE CODE, 1879. THIS FACT, ACCORD ING THE LD.COUNSEL FOR THE ASSESSEE HAS NOT BEEN DISPUTED B Y THE AO. THUS, HE EMPHASIZED THAT THE ASSESSEE SOLD AGRICULT URE LAND WHICH WAS SITUATED BEYOND 8 KMS. FROM MUNICIPAL LIMIT, AN D ON SALE OF THIS LAND, IF ANY PROFIT AROSE TO THE ASSESSEE, THE N IT IS NOT TAXABLE. 8. ON THE OTHER HAND, THE LD.DR CONTENDED THAT CERT IFICATE OF JUNIOR ENGINEER IS AVAILABLE ON RECORD WHO OBSERVED THAT SITUATION OF THIS LAND IS WITHIN 8 KMS. CONTRARY TO THIS, TH E ASSESSEE HAS ANNEXED CERTIFICATE OF TALATI-CUM-MANTRY ON PAGE NO.20, BUT HE GAVE HIS OPINION ON ESTIMATE BASIS. IN HIS OPINION , THIS LAND IS SITUATED ABOUT 10 KMS. AWAY FROM THE MUNICIPAL LIMI T. HE FURTHER CONTENDED THAT TALATI-CUM-MANTRY IS AN ELECTED OFFICER AND NOT REVENUE OFFICIAL AND THEREFORE THIS CERTIFICATE SHO ULD NOT BE CONSIDERED. 9. WE HAVE CONSIDERED RIVAL CONTENTIONS AND GONE TH ROUGH THE RECORD CAREFULLY. AN IDENTICAL SITUATION CAME UP B EFORE THE TRIBUNAL IN THE CASE AKASHDEEP FARMS P.LTD. IN ITA NO.2138/AHD/2012 WHEREIN THE TRIBUNAL TOOK NOTE OF THE NOTIFICATION ISSUED BY THE CENTRAL GOVERNMENT UNDER SECTION 2(14) ON 6.1.1994. THIS ASPECT WAS NOTED BY THE TRIBUNAL WHILE TAKING COGNIZANCE OF THE FINDING RECORDED BY THE CIT(A). IN ORDER APPRECIATE THE CONTROVERSY IN PRESENT CASE, WE DEEM IT APPROPRIATE TO TAKE NOTE OF THIS NOTIFICATION AS WE LL AS DISCUSSION ITA NO.2395/AHD/2018 9 MADE BY THE TRIBUNAL ON AN IDENTICAL ISSUE IN THE C ASE AKASHDEEP (SUPRA) READS AS UNDER: INCOME-TAX ACT, 1961 : NOTIFICATION UNDER SECTION 2(IA)(C), PROVISO. CLAUSE (II)(B) AND SECTION 2(14) (III)(B): URBANISATION OF AREAS NOTIFICATION NO. [SO 9447J (FILE NO. 164/3/87-ITA.I ), DATED. 6-1- 1994 WHEREAS A DRAFT NOTIFICATION WAS PUBLISHED BY THE C ENTRAL GOVERNMENT IN EXERCISE OF THE POWERS CONFERRED BY I TEM (B] OF CLAUSE (II) OF THE PROVISO TO SUB-CLAUSE (C] OF CLAUSE (1A], AND ITEM (B] OF SUB-CLAUSE (III) OF CLAUSE (]4J, OF SECTION 2 OF THE INCOME-TAX ACT, 196I (43 OF 1961J, IN THE GAZET TE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUBSECTIO N (II], DATED FEBRUARY 13, 1991, UNDER THE NOTIFICATION OF THE GOVERNMENT OF INDIA IN THE MINISTRY OF FINANCE (DEP ARTMENT OF REVENUE] NO. S.O. 91 (E], DATED FEBRUARY 8, 1991 , FOR SPECIFYING CERTAIN AREAS FOR THE PURPOSES OF THE SA ID CLAUSES AND OBJECTIONS AND SUGGESTIONS WERE INVITED FROM TH E PUBLIC WITHIN A PERIOD OF 45 DAYS FROM THE DATE THE COPIES OF THE GAZETTE OF INDIA CONTAINING SUCH NOTIFICATION BECAM E AVAILABLE TO THE PUBLIC; AND WHEREAS COPIES OF THE SAID GAZETTE WERE MADE AV AILABLE TO THE PUBLIC ON FEBRUARY 13, 1991; AND WHEREAS THE OBJECTIONS AND SUGGESTIONS RECEIVED FROM THE PUBLIC ON THE SAID DRAFT NOTIFICATION HAVE BEEN CONSIDERED BY THE CENTRAL GOVERNMENT; NOW, THEREFORE, IN EXERCISE OF THE POWERS CONFERRED BY ITEM (B) OF CLAUSE (II] OF THE PROVISO TO SUB-CLAUSE (C) OF CLAUSE (JA] AND ITEM (B) OF SUB-CLAUSE (III] OF CLAUSE (14 ] OF SECTION 2 OF THE INCOME-TAX ACT, 1961 (43 OF 1961], AND IN SUPERSESSION OF THE NOTIFICATION OF THE GOVERNMENT OF INDIA IN THE ERSTWHILE MINISTRY OF FINANCE (DEPARTMENT OF REVENUE AND INSURANCE] NO. S.O. 77(E], DATED FEBRUARY 6, 19 73, THE CENTRAL GOVERNMENT HAVING REGARD TO THE EXTENT OF, AND SCOPE FOR URBANISATION OF THE AREAS CONCERNED AND O THER RELEVANT CONSIDERATIONS, HEREBY SPECIFIES THE AREAS SHOWN IN COLUMN (4] OF THE SCHEDULE HERETO ANNEXED AND FALLI NG ITA NO.2395/AHD/2018 10 OUTSIDE THE LOCAL LIMITS OF MUNICIPALITY OR CANTONM ENT BOARD, AS THE CASE MAY BE, SHOWN IN THE CORRESPONDING ENTR Y IN COLUMN (3] THEREOF AND AGAINST THE STATE OR UNION T ERRITORY SHOWN IN COLUMN (2] THEREOF FOR THE PURPOSES OF THE ABOVE MENTIONED PROVISION OF THE INCOME-TAX ACT, 1961 (43 OF 1961]. . GUJARAT 1. AHMEDABAD AREA UPTO A DISTANCE OF 8 KMS. FROM THE MUNICIPAL LIMITS IN ALL DIRECTIONS EXPLN1(2) - THE REFERENCE TO MUNICIPAL LIMITS OR TH E LIMIT OF CANTONMENT BOARD IN THE SCHEDULE TO THIS NOTIFICATI ON IS TO THE LIMITS AS EXISTING ON THE DATE ON WHICH THE NOT IFICATION IS PUBLISHED IN THE OFFICIAL GAZETTE.' FROM THE ABOVE, IT IS CLEAR THAT THE LAND SITUATED WITHIN 8 KILOMETERS FROM AHMEDABAD MUNICIPAL CORPORATION LIM IT IS URBAN LAND AND TO BE TREATED AS CAPITAL ASSET. HOWE VER LAND SITUATED OUTSIDE 8 KM LIMIT WILL BE AGRICULTURAL LA ND NOT TO BE TREATED AS CAPITAL ASSET. FOR COMPUTING THE DISTANC E OF 8 KM, THE MUNICIPAL LIMIT IS ALSO DEFINED. SINCE MUNI CIPAL LIMIT IS DYNAMIC AND CHANGING OVER A PERIOD OF TIME, AN EXPLANATION IS GIVEN AT THE END OF THE AFORESAID NO TIFICATION THAT MUNICIPAL LIMIT IS THE LIMIT AS EXISTING ON TH E DATE OF PUBLICATION OF THE NOTIFICATION AND NOT THE LIMIT O N THE DATE OF TRANSACTION OR AS ON DATE. THE NOTIFICATION IS P UBLISHED ON 6-1-1994 AND THEREFORE THE MUNICIPAL LIMITS AS ON 6 -1-1994 IS TO BE TAKEN FOR COMPUTING 8 KM ROAD DISTANCE TO DECIDE WHETHER AGRICULTURAL LAND IS A CAPITAL ASSET OR NOT . THE MUNICIPAL LIMIT ON THE DATE OF TRANSACTION IS NOT R ELEVANT AS FAR AS APPLICATION OF THIS NOTIFICATION IS CONCERNE D. APPELLANT SUBMITTED THAT PRIOR TO 2006, THE MUNICIPAL LIMIT O F AHMEDABAD MUNICIPAL CORPORATION WAS VERY RESTRICTED AND FORM THAT LIMIT, BOTH THE VILLAGES IN WHICH AGRICUL TURAL LANDS WERE SITUATED ARE MUCH BEYOND 8 KM DISTANCE. SINCE NOTIFICATIONS WITH REGARD TO AHMEDABAD MUNICIPAL CORPORATION LIMITS ARE AVAILABLE FROM WHICH ASSESSI NG OFFICER CAN WORK OUT THE DISTANCE OF THESE AGRICULTURAL LAN DS. IN VIEW OF THE CLEAR PROVISIONS IN THE NOTIFICATION RE FERRED EARLIER, IT IS HELD THAT THE MUNICIPAL LIMITS RELEV ANT FOR COMPUTING DISTANCE IS THE MUNICIPAL LIMIT EXISTING ON THE DATE OF ISSUE OF THIS NOTIFICATION I.E. 6-1-1994. A SSESSING OFFICER IS THEREFORE DIRECTED TO COMPUTE THE ROAD D ISTANCE OF ITA NO.2395/AHD/2018 11 THE AGRICULTURAL LANDS FROM THE MUNICIPAL LIMITS OF AMC AS ON 6-1 -1994. IF THE DISTANCE IS WITHIN 8 KM, APPELLAN T IS LIABLE FOR CAPITAL GAINS AND IF THE DISTANCE IS BEYOND 8 K M, THE AGRICULTURAL LANDS SOLD WILL BE OUTSIDE THE PURVIEW OF CAPITAL ASSET AND HENCE NO CAPITAL GAINS CAN BE CHARGED ON THE SAME. THIS GROUND IS ACCORDINGLY DISPOSED OFF. 6. BEFORE US, LIMITED DISPUTE IS WHETHER THE DISTAN CE FOR IDENTIFYING THE GEOGRAPHICAL LOCATION OF THE AGRICU LTURE LAND IS TO BE TAKEN BY ROAD OR BY AERIAL. SECOND FOLD OF DISP UTE IS WHETHER THE MUNICIPAL LIMIT ENHANCED BY THE STATE GOVERNMEN T IS TO BE CONSIDERED AS STARTING POINT OR IT IS TO BE TAKEN F ROM NOTIFICATION ISSUED BY THE CENTRAL GOVERNMENT DATED 6.1.1994. T HE LD.CIT(A) HAS HELD THAT NOTIFICATION ISSUED ON 6.1.1994 BY TH E CENTRAL GOVERNMENT IS TO BE CONSIDERED. 7. LD.DR RELIED UPON THE ORDER OF THE AO. ON THE O THER HAND, THE LD.COUNSEL FOR THE ASSESSEE CONTENDED THAT HON BLE PUNJAB & HARYANA HIGH COURT IN THE DECISION REFERRED BY THE LD.CIT(A) IN THE CASE OF CIT VS. SATINDER PAL SINGH, 229 CTR 82 HAS HELD THAT DISTANCE REQUIRES TO BE COMPUTED FOR IDENTIFYING TH E GEOGRAPHICAL LOCATION OF THE AGRICULTURE LAND FROM THE MUNICIPAL LIMIT IS CONCERNED, IT IS TO BE MEASURED BY ROAD, AND IF THE DISTANCE IS BEYOND 8 KMS, THEN THAT LAND WOULD NOT FALL WITHIN THE DEFINITION OF CAPITAL ASSET. HE FURTHER POINTED THAT HONBLE BOMBAY HIGH COURT HAS ALSO CONCURRED WITH THIS VIEW IN THE DECI SION OF CIT VS. NITISH RAMESCHANDRA CHORDIA, 57 TAXMANN.COM 394. H E PLACED ON RECORD COPY OF THIS DECISION. IN THIS DECISION, THE HONBLE BOMBAY HIGH COURT HAS SPECIFICALLY LAID DOWN THAT T HE DISTANCE IS TO BE MEASURED BY ROAD AND NOT AS PER CROWS FLIGHT . THE LD.COUNSEL FOR THE ASSESSEE POINTED OUT AFTER THIS DECISION OF THE HONBLE BOMBAY HIGH COURT, THE BOARD HAS ISSUED CIR CULAR BEARING NOS.17/2015 AND ACCEPTED THE DECISION. HE PLACED O N RECORD COPY OF THE CIRCULAR. 8. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GO NE THROUGH THE RECORD CAREFULLY. THE DEFINITION OF CAPITAL A SSET HAS BEEN PROVIDED IN SECTION 2(14) OF THE ACT. SUB-CLAUSE (A ) AND (B) OF SECTION 2(14)(III) CONTEMPLATES THAT IF AN AGRICULT URE LAND IS IN INDIA, AND IT IS SITUATED AT A DISTANCE OF MORE THA N 8 KMS. FROM THE LOCAL LIMIT OF ANY MUNICIPALITY CANTONMENT BOAR D, THEN, THAT LAND WOULD NOT FALL WITHIN THE AMBIT OF DEFINITION CAPITAL ASSET. IN OTHER WORDS, IF THE LAND WHICH IS NOT FORMING PA RT OF CAPITAL ASSET SOLD BY AN ASSESSEE, THEN, NO GAIN AS SUCH WO ULD BE CONSIDERED, AS ACCRUED TO THE ASSESSEE. IN THE PRE SENT CASE, THE ITA NO.2395/AHD/2018 12 LD.AO HAS OBSERVED THAT IF THE DISTANCE OF GEOGRAPH ICAL SITUATION OF THE ASSESSEES LAND IS BEING MEASURED FROM MUNIC IPALITY LIMIT, BY WAY OF CROWS FLIGHT, THEN, IT IS WITHIN THE MUN ICIPAL LIMIT. IN VARIOUS AUTHORITATIVE PRONOUNCEMENTS, AS DISCUSSED BY THE LD.CIT(A), IT HAS BEEN HELD THAT THE DISTANCE IS TO BE MEASURED BY ROAD AND NOT BY AERIAL ROUTE. AT THIS STAGE, IT IS IMPORTANT TO TAKE NOTE OF THE BOARD CIRCULAR BEARING NO.17/2015. IT READS AS UNDER: CBDT CIRCULAR NO -17/2015, DATED: OCTOBER 06, 2015 SUBJECT:- MEASUREMENT OF THE DISTANCE FOR THE PURPO SE OF SECTION 2(14)(III)(B) OF THE INCOME-TAX ACT FOR THE PERIOD PRIOR TO ASSESSMENT YEAR 2014-15 'AGRICULTURAL LAND IS EXCLUDED FROM THE DEFINITION OF CAPITAL ASSET AS PER SECTION 2(14)(III) OF THE INCOME-TAX ACT BAS ED, INTER-ALIA, ON ITS PROXIMITY TO A MUNICIPALITY OR CANTONMENT BO ARD. THE METHOD OF MEASURING THE DISTANCE OF THE SAID LAND F ROM THE MUNICIPALITY, HAS GIVEN RISE TO CONSIDERABLE LITIGA TION. ALTHOUGH, THE AMENDMENT BY THE FINANCE ACT, 2013 W.E.F. 1.04. 2014 PRESCRIBES THE MEASUREMENT OF THE DISTANCE TO BE TA KEN AERIALLY, AMBIGUITY PERSISTS IN RESPECT OF EARLIER PERIODS. 2. THE MATTER HAS BEEN EXAMINED IN LIGHT OF JUDICIA L DECISIONS ON THE SUBJECT. THE NAGPUR BENCH OF THE HON. BOMBAY HI GH COURT VIDE ORDER DATED 30.03.2015 IN ITA 151 OF 2013 IN T HE CASE OF SMT. MALTIBAI R KADU HAS HELD THAT THE AMENDMENT PR ESCRIBING DISTANCE TO BE MEASURED AERIALLY, APPLIES PROSPECTI VELY I.E. IN RELATION TO ASSESSMENT YEAR 2014-15 AND SUBSEQUENT ASSESSMENT YEAR. FOR THE PERIOD PRIOR TO ASSESSMENT YEAR 2014- 15, THE HIGH COURT HELD THAT THE DISTANCE BETWEEN THE MUNICIPAL LIMIT AND THE AGRICULTURAL LAND IS TO BE MEASURED HAVING REGARD T O THE SHORTEST ROAD DISTANCE. THE SAID DECISION OF THE HIGH COURT HAS BEEN ACCEPTED AND THE AFORESAID DISPUTED ISSUE HAS NOT B EEN FURTHER CONTESTED. 3. BEING A SETTLED ISSUE, NO APPEALS MAY HENCEFORTH BE FILED ON THIS GROUND BY THE OFFICERS OF THE DEPARTMENT AND A PPEALS ALREADY FILED, IF ANY, ON THIS ISSUE BEFORE VARIOUS COURTS/ TRIBUNALS MAY BE WITHDRAWN/ NOT PRESSED UPON. THIS MAY BE BROUGHT TO THE NOTICE OF ALL CONCERNED. ITA NO.2395/AHD/2018 13 [F. NO. 279/MISC./140/2015-ITJ] (D S CHAUDHRY) CIT (A&J), CBDT 9. THUS, IF THE FINDING OF THE LD.CIT(A) IS BEING E XAMINED IN THE LIGHT OF THE CIRCULAR, THEN ONE THING IS CLEAR THAT THE DISTANCE IS TO BE MEASURED BY ROADS IN THIS ACCOUNTING YEAR. THE LAND SOLD BY THE ASSESSEE IS SITUATED BEYOND 8 KMS. OF THE MUNIC IPAL LIMIT. 10. NEXT OBJECTION OF THE AO WAS THAT THE STATE GOV ERNMENT HAS ENHANCED THE MUNICIPAL LIMIT IN 2006 AND THE DI STANCE IS TO BE MEASURED FROM NEW BOUNDARY OF THE AHMEDABAD MUNICIP AL CORPORATION LIMIT. AMC LIMIT WAS EXTENDED UPTO SAR KHEJ SINCE 2006. THE LD.CIT(A) HAS EXAMINED THIS ASPECT, AND HAS OBSERVED THAT PERUSAL OF SUB-CLAUSE (B) OF SECTION 2(14)(III ) WOULD INDICATE THAT THE MUNICIPAL LIMIT IS TO BE TAKEN FROM THE AR EA WHICH HAS BEEN NOTIFIED BY THE CENTRAL GOVERNMENT IN ITS GAZE TTE NOTIFICATION. CENTRAL GOVERNMENT HAS NOTIFIED THE AREA ON 6.1.1994, AND FROM THAT NOTIFICATION, THE AGRICULTU RE LAND OF THE ASSESSEE WAS SITUATED BEYOND A DISTANCE OF 8KMS. 10. IN THE LIGHT OF THE ABOVE, LET US EXAMINE THE F ACTS OF THE PRESENT CASE. BOTH THE REVENUE AUTHORITIES HAVE NO T DISPUTED THAT THE LAND SOLD BY THE ASSESSEE WAS NOT AGRICULT URE LAND. DISPUTE IS ABOUT ITS GEOGRAPHICAL SITUATION AND APP LICABILITY OF AMENDMENT CARRIED OUT IN THE DEFINITION OF AGRICUL TURE LAND BY WAY OF FINANCE ACT, 2013. AS FAR AS APPLICABILITY OF AMENDMENT CARRIED OUT IN THE DEFINITION OF AGRICULTURE LAND W AY OF FINANCE ACT, 2013 IS CONCERNED, BOARD HAS ALREADY CONSIDERED THIS ASPECT IN THE CIRCULAR NO.17 OF 2015 AND OPINED THAT IT WILL BE APPLICABLE ONLY FROM THE ASSESSMENT YEAR 2014-15. WE HAVE EXTRACTE D THIS CIRCULAR WHILE TAKING COGNIZANCE OF THE FINDING REC ORDED BY THE TRIBUNAL IN AKASHDEEP (SUPRA). SIMILARLY, BOARD HAS EXPLAINED THAT DISTANCE BETWEEN MUNICIPAL LIMIT AND AGRICULTU RE LAND IS TO BE ITA NO.2395/AHD/2018 14 MEASURED HAVING REGARD TO THE SHORTEST ROAD DISTANC E AND NOT BY WAY OF CROWS FLIGHT. 11. THIRD ASPECT IS THAT EVEN IF THE ASSESSEE HAS I NCLUDED GAIN ON TRANSFER OF THIS LAND IN HIS RETURN OF INCOME, HE H AS EVERY RIGHT TO PLEAD THAT GAIN IS NOT TAXABLE AND IT BE EXCLUDED F ROM HIS TAXABLE INCOME. DUTY OF THE AO IS TO DETERMINE RIGHT TAX L IABILITY IN THE HANDS OF THE ASSESSEE, AND NOT ON THE BASIS OF ERRO NEOUS ADMISSION. THEREFORE, EVEN IF THE ASSESSEE HAS ADM ITTED INITIALLY ABOUT THE TAXABILITY, AND LATER ON REALIZE HIS RIGH T THEN HIS RIGHT HAS TO BE GIVEN EFFECT AND ADJUDICATED UPON. THE O NLY CIRCUMSTANCE, WHICH HAS LEFT FOR CONSIDERATION IS, WHETHER THE LAND SITUATES BEYOND 8 KMS. FROM THE MUNICIPAL LIMIT OR NOT. THE ASSESSEE IS RELYING UPON THE CERTIFICATE ISSUED BY TALATI . THE TALATI IS REVENUE OFFICIAL APPOINTED BY THE STATE GOVERNME NT. HIS DUTY IS TO MAINTAIN ACCOUNTS AND RECORD ALL RIGHTS IN A PARTICULAR VILLAGE. THE ILLEGIBLE WRITTEN ON PAGE NO.20 NOTES SIGNATU RE I.E. TALATI - CUM-MANTRY , BHUVALADI GRAM PANCHAYAT , WHICH MEANS, HE IS A REVENUE OFFICIAL-CUM-ACCOUNTANT FOR THIS GRAM PANCHAYAT . HE IS NOT AN ELECTED PERSON RATHER HE IS COMPETENT PERSON TO GIVE CERTIFIED COPY OF LAND RECORD AND OTHER CERTIFICATE S. WE DO NOT FIND ANY MERIT IN THE CONTENTION OF THE LD.DR THAT HE IS NOT A REVENUE OFFICIAL RATHER AN ELECTED PERSON IN THE GRAM PANCHAYAT . TALATI IS AKIN TO PATWARI IN OTHER PARTS OF INDIA. HE IS A VILLAGE ACCOUNTA NT AND AS CONTEMPLATED IN SECTIONS 16 AND 17 OF THE GU JARAT LAND REVENUE CODE 1879. THUS, COGNIZANCE COULD BE TAKEN ON THE BASIS OF HIS CERTIFICATE. THE LD.CIT(A) HAS JUST MADE A BALD REFERENCE TO GOOGLE-MAP ETC., BUT HAS NOT PIN-POINT ED WHAT WAS THE DISTANCE GIVEN IN THE GOOGLE-MAP IN 1994 WHEN T HE CENTRAL ITA NO.2395/AHD/2018 15 GOVERNMENT HAS ISSUED NOTIFICATION FOR THE PURPOSE OF SECTION 2(14) OF THE INCOME TAX ACT. HIS OBSERVATION THAT THIS IS EVIDENT FROM GOOGLE-MAP ALSO IS JUST AN OBSERVATION WITHOUT ANY SCIENTIFIC LOOK TO THE DATA RECORDED AS ON 6.1.1994. THEREFOR E, WE ARE OF THE VIEW THAT THE LAND TRANSFERRED BY THE ASSESSEE WAS NOT A CAPITAL ASSET WITHIN THE MEANING OF SECTION 2(14) AND GAIN ARISING FROM SUCH TRANSFER IS NOT TAXABLE IN HIS HA ND. 12. AS FAR OTHER ALTERNATIVE CONTENTION IS CONCERNE D, WE DO NOT DEEM IT NECESSARY TO ADJUDICATE THEM BECAUSE WE HAV E HELD THAT ON TRANSFER OF THIS AGRICULTURE LAND, LONG TERM CAP ITAL GAIN IS NOT LEVIABLE IN THE HANDS OF THE ASSESSEE. 13. SO FAR AS CHARGING OF INTEREST UNDER SECTION 23 4A/B/C IS CONCERNED, IT IS CONSEQUENTIAL IN NATURE. 14. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 20 TH JUNE, 2019. SD/- SD/- (RIFAUR RAHMAN) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER