M/S SH. SATYA DEV SHARMA, Jaipur V. ITO, Jaipur

ITA 25/JPR/2012

• Counselvise Citation: 2523114 RSA 2012
• Duration Of Justice: 2 year(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 09-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D C SHARMA
• Assessee Lawyers: SANDEEP JHANWAR
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Cost of acquisition; Date of conversion; Fair market value
• Section: 54; 50C; 2(14); 5(2)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH, JAIPUR (BEFORE SHRI HARI OM MARATHA AND SHRI N.K. SAI NI) ITA NO. 25/JP/2010 ASSESSMENT YEAR : 2008-09 PAN: ABNPS 2913 E SHRI SATYA DEV SHARMA VS. THE ITO 29, JLN MARG, UNIYARA GARDEN WARD- 5(2) JAIPUR JAIPUR (APPELLANT) (RESPONDENT) ITA NO. 123/JP/2012 ASSESSMENT YEAR : 2008-09 PAN: ABNPS 2913 E THE ITO VS. SHRI SATYA DEV SHARMA WARD- 5(2) 20, JLN MARG, UNIYARA GARDEN JAIPUR JAIPUR (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SANDEEP JHANWAR DEPARTMENT BY: SHRI D.C. SHARMA DATE OF HEARING: 23-01-2014 DATE OF PRONOUNCEMENT: 30-01-2014 ORDER PER HARI OM MARATHA, JM:- THESE TWO CROSS APPEALS ARE FILED BY THE ASSESSEE AND DEPARTMENT RESPECTIVELY AGAINST THE ORDER OF LD CIT(A), JAIPUR DATED 01-11- 2011 FOR THE ASSESSMENT YEAR 2008-09. THE MAJOR ISSUE IN THE TWO APPEALS IS IN RESPECT OF TAXATION OF CAPITAL GAIN ON PART OF AGRICULTURAL LAND SOLD BY THE ASSESSEE. 1.0 THE BRIEF FACTS OF THE ISSUE ARE THAT THE ASSES SEE POSSESSED 16 BIGHA OF AGRICULTURAL LAND AT VILLAGE MACHWA. THE GOVERNMEN T RECORD IN FORM OF GIRDAWARI SHOWS THAT THERE WERE AGRICULTURAL ACTIVITIES ON TH E SAID LAND AND VARIOUS CROPS LIKE WHEAT, 2 BAJRA ETC. WERE GROWN ON THE SAID LAND AS PER THIS RECORD (P.B. PAGE 17). SAMWAT 2064 IS RELATED WITH THE ASSESSMENT YEAR UNDER CONSIDERATIO N I.E. A Y 2008-09. DURING THE YEAR, THE ASSESSEE SOLD 4 BIGHA OF AGRICULTURAL LAND OUT OF TOTAL 16 BIGHA FOR A CONSIDERATION OF RS. 1.04 CRORES I.E. @ 26 LACS PER BIGHA. THIS LAN D WAS ALLOTTED TO HIM BY GOVT. IN 1972 ON HIS RETIREMENT FROM DEFENCE SERVICES. ASSESSEE C LAIMED THIS LAND TO BE AGRICULTURAL LAND WHICH IS OUT OF SCOPE OF DEFINITION OF CAPITAL ASSET U/S 2(14). HE CLAIMED THAT LAND IS COVERED BY EXCLUSIONS IN CLAUSE (III) OF SECTION 2( 14) AND NOT COVERED BY SUB CLAUSES (A) AND (B) OF THIS CLAUSE AS IT IS SITUATED IN VILLAGE MACHWA WHERE POPULATION IS LESS THAN 10,000/-. THIS VILLAGE MACHWA IS ALSO OUT OF JAIPUR MUNICIPAL CORPORATION AND IT WAS MORE THAN 8 KMS BEYOND THE LIMITS OF JAIPUR MUNICIP AL CORPORATION AS ON 6.01.1994 WHEN THE NOTIFICATION (P. B. PAGE 1) WAS ISSUED UND ER SUB-CLAUSE (B), THOUGH NOW THE DISTANCE IS 2-3 KMS. ONLY DUE TO EXTENSION OF LIMIT S OF JAIPUR MUNICIPAL CORPORATION. THE SALE DEED (P.B. PAGE 5-10) WAS NOT REGISTERED TILL THE END OF 31.3.2008. HE ALSO PURCHASED BONDS ELIGIBLE U/S 54 EC IN FEB. 2008 FOR A SUM OF RS. 50 LACS. THE ASSESSING OFFICER HOWEVER, MENTIONED IN HER ORDER THAT THE PROPERTY I S SITUATED WITHIN LIMITS OF JAIPUR MUNICIPAL CORPORATION AS PER CERTIFICATE OF TEHSILD AR. FURTHER, PROPERTY IS USED FOR RESIDENTIAL/ COMMERCIAL PURPOSE AND NOT FOR AGRICUL TURAL PURPOSE. SHE FURTHER ADDED THAT INSPECTORS REPORT SUGGEST THAT MULTI STORY PROJECT OF LEADING BUILDER IS COMING UP ADJACENT TO THIS LAND AND THE LAND HAS NOT BEEN ENT ERED IN THE NAME OF THE PURCHASERS. SHE HAS TAKEN MARKET PRICE OF THE PROPERTY AS ON 1.4.19 81 WAS RS. 2700 PER BIGHA ON THE BASIS OF SIMILAR PROPERTY SOLD. SHE ALSO OBSERVED THAT TH E PROVISIONS OF SECTION 50C ARE APPLICABLE IN THIS CASE. AFTER GIVING THE AFORESAID FINDINGS, THE ASSESSING OFFICER COMPUTED THE CAPITAL GAIN AS UNDER : 3 - SHE APPLIED PROVISIONS OF SECTION 50C AND TOOK CIRC LE RATE. ACCORDINGLY, HE APPLIED RS. 35 LACS PER BIGHA AND COMPUTED TOTAL SALE CONSIDERATION AT RS. 1,40,00,000/-. - PURCHASE PRICE : FMV AS ON 1.4.1981 ON THE BASIS OF DOCUMENT DTD. 27.12.1980 @ RS. 2,700/- PER BIGHA AND COMPUTED TOT AL COST OF RS. 10,800/- & INDEXED COST RS.59,508/- (10,800 X 551/ 100). - SHE ACCORDINGLY COMPUTED LONG TERM CAPITAL GAIN AT RS. 1,39,40,492/-. AFTER ALLOWING THE DEDUCTION U/S 54EC OF RS.50,00,0 00/-, TAXABLE CAPITAL GAIN HAS BEEN TAKEN AT RS.89,40,492/-. 2.0 BEFORE LD CIT(A) THE ASSESSEE RAISED THE FOLLOW ING PLEA : THE CAPTIONED LAND IS NOT A CAPITAL ASSET WITHIN TH E MEANING OF SECTION 2(14) AS IT IS AN AGRICULTURAL LAND UNDER CLAUSE (III) OF THIS SECTION AND NOT COVERED BY EXCLUSIONS OF AGRICULTURAL LAND GIVEN IN SUB CLAUSE S (A) & (B) OF THIS CLAUSE (III) OF SECTION 2(14). LD CIT(A) HAS NOT ACCEPTED THIS P LEA AND ASSESSEE HAS TAKEN GROUND NO. 1 IN THIS RESPECT. ALTERNATIVELY THE PROVISIONS OF SECTION 50C DO NOT APPLY IN ASSES SEES CASE AS THE TRANSACTION WAS NOT REGISTERED. THE WORD ASSESSAB LE HAS BEEN INCLUDED IN SECTION 50C W.E.F. 1.10.2009 ONLY AND AS PER THE DE CISION OF HONBLE JAIPUR BENCH OF ITAT ITSELF, THE PROVISIONS OF SECTION 50C WOULD NOT APPLY WHERE THE TRANSACTION OF TRANSFER OF LAND IS NOT REGISTER ED. LD CIT(A) ACCEPTED THIS PLEA AND DIRECTED TO ALTER THE SALE CONSIDERATION A S RECEIVED BY THE ASSESSEE. THE DEPARTMENT HAS COME IN APPEAL BEFORE US AGAINST THE RELIEF SO ALLOWED. REGARDING COST OF ACQUISITION, THE ASSESSEE CONTEND ED THAT THE CASES QUOTED BY THE AO ARE NOT COMPARABLE FOR THE FOLLOWING REASONS : O THE SAID LAND WAS ALREADY IN THE POSSESSION OF THE BUYERS. O THE SAID TRANSFER WAS NOT IN RESPECT OF ONE PIECE O F LAND BUT IT WAS IN RESPECT OF 5 PIECES OF LAND SCATTERED IN AREA OF 2 KMS. O THE SAID LAND WAS VERY DEEP (3 TO 4 KMS.) FROM THE MAIN ROAD AND THE ASSESSEES LAND WAS ONLY 250 MTRS. FURTHER THERE I S A LANE APPROACHING THE ASSESSEES LAND. O IN THE IMMEDIATE VICINITY OF THE ASSESSEES LAND, M ULTISTORIED BUILDINGS ARE BEING CONSTRUCTED. IT IS NOT THE POSITION OF T HE OTHER LAND. IN VIEW OF THE SAID REASONS, THE ASSESSEE CONTENDED THAT FMV OF THE LAND AS ON 1.4.1981 SHOULD HAVE BEEN TAKEN BY COMPUTING THE SAME AS PER PRINCIPLE LAID DOWN IN 133 TTJ 278 4 (TM) (AGRA). ACCORDINGLY, THE VALUE COMES TO RS.18 ,87,477/- AS PER THE FOLLOWING CALCULATION BELOW : 1,04,00,000 X 100 = 18,87,477 551 LD.CIT(A) HOWEVER CONSIDERED RS. 10,000 PER BIGHA I .E. RS. 40,000/- AS AGAINST THE ASSESSING OFFICERS VALUATION OF RS.10,800/- PER BI GHA @ RS.2,700 PER BIGHA. THE ASSESSEE HAS TAKEN GROUND NO. 2 IN THIS RESPECT. D EPARTMENT HAS ALSO TAKEN GROUND NO. 2 FOR INCREASING THE PRICE PER BIGHA AS ON 1.4.1981 T O RS.10,000/-. 3.0 LET US NOW COME TO THE GROUNDS OF THE ASSESSEE S APPEAL. AS REGARDS GROUND NO.1, LD. A/R OF THE ASSESSEE SHRI SANDEEP JHANWAR POINTE D OUT A TYPOGRAPHICAL ERROR IN DRAFTING OF GROUND AND REQUESTED TO READ THE SAME B Y ADDING WORD NOT IN THE FORTH LINE AFTER THE WORDS ASSESSE IS AND BEFORE THE WORDS COVERED IN AND ALSO TO ADD WORDS (A) AND AFTER THE WORDS SUB CLAUSE AND BEFORE THE WORDS (B) OF AND ACCORDINGLY THE CORRECTED GROUND WOULD READ AS UNDER :- UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE LD. C OMMISSIONER OF INCOME TAX (APPEALS), JAIPUR HAS ERRED IN CONFIRMING THE FINDI NGS OF THE ASSESSING OFFICER THAT THE AGRICULTURAL LAND TRANSFERRED BY THE ASSESSEE I S CAPITAL ASSETS WITHIN THE MEANING OF SECTION 2(14)(III) OF THE INCOME TAX ACT , 1961, WHICH ACCORDING TO ASSESSEE IS NOT COVERED IN THE EXCLUSION UNDER SUB- SUB CLAUSE (A) AND (B) OF SECTION 2(14)(III). HE HAS ACCORDINGLY ERRED IN UP HOLDING THE CHARGEABILITY OF LONG TERM CAPITAL GAIN ON THE TRANSFER OF AGRICULTU RAL LAND BY THE ASSESSEE. ] AS FAR AS THE FINDINGS OF THE ASSESSING OFFICER THA T THE LAND IS COVERED IN JMC, THE LD. A/R SUBMITTED THAT THE SAME IS WRONG. THE LETTER O F TEHSILDAR APPENDED BY THE AO IN HER ORDER (AO PAGE 10) ITSELF SAYS THAT THE LAND IS WIT HIN 8 KMS OF THE BOUNDARIES OF THE JMC. FURTHER, THE NOTIFICATION APPENDED BY AO IN H ER ORDER AT PAGE 11 CONTAINS THE NAME OF THE VILLAGE MACHERA AND NOT MACHWA. MACHER A HAS BEEN MISUNDERSTOOD BY AO 5 AS MANCHWA. HE SUBMITTED THAT THE LD. CIT(A) HAS, HOWEVER, GIVEN FINDING THAT THE LAND IS SITUATED AT 2 TO 3 KMS. FROM THE JMC BOUNDARY AN D IT IS WITHIN 8 KMS FROM THE JMC BOUNDARIES (PAGE 13 OF THE ORDER). HE ACCORDINGLY R EQUESTED TO IGNORE THESE FINDINGS OF AO AS THE SAME ARE ABSURD. HE FURTHER SUBMITTED TH AT THE FINDINGS OF AO THAT THE LAND IN QUESTION IS USED FOR RESIDENTIAL/ COMMERCIAL PURPOS E IS ALSO WRONG FOR THE REASONS THAT THE LAND WAS USED BY THE ASSESSEE FOR AGRICULTURAL AND AS PER THE GOVERNMENT RECORD, AGRICULTURAL ACTIVITIES WERE BEING CARRIED ON THE S AID LAND DURING THE YEAR UNDER CONSIDERATION (PB PAGE 17). HE ALSO SUBMITTED THAT THIS FINDING OF AO IS CONTRADICTORY AS FAR AS, THE AO HERSELF HAS SAID THAT THE BUYERS OF THE LAND HAVE DONE PLOTTING ON THE LAND. THE ASSESSEE REFERRED CERTAIN ELECTRICITY BI LLS ALSO IN SUPPORT OF AGRICULTURAL ACTIVITIES ON THE LAND. THE LD. A/R SUBMITTED THAT THE LAND IS AN AGRICULTURAL LAND. THE ASSESSEE SOLD IT AS SUCH CHARGING RATE PER BIGHA. HE SUBMITTED THAT NEITHER THE ASSESSEE NOR THE DEPARTMENT SHOULD HAVE ANY CONCERN AS TO HO W THE LAND COULD BE USED BY THE BUYERS. IT WAS NOT A RELEVANT FACTOR FOR THIS SECTI ON TO SEE THAT HOW THE BUYER INTENDED TO USE THE LAND AS HELD IN THE VARIOUS DECISIONS INCL UDING CIT VS MANILAL SOMNATH 106 ITR 917 (GUJ.), M.S. SRINIVASA NAICKER VS ITO (292 ITR 481) AND MANIBHAI MOTIBHAI PATEL VS CIT (131 ITR 120) (GUJ.). IN SUCH CIRCUMSTANCES , THE OBSERVATION THAT THE NEARBY LOCATIONS ARE GETTING DEVELOPED AS MULTISTORY PROJE CT HAS NO RELEVANCE IN THE PRESENT CASE. HE FURTHER SUBMITTED THAT THE LAND WAS SITUATED BEY OND THE BOUNDARIES OF 8 KMS. OF THE LIMITS OF JMC AS ON 6.1.1994 (I.E. THE DATE OF ISSU ING RELEVANT NOTIFICATION NO. 9447/F. NO. 164/3/87-ITA-I DATED 06/01/1994) AS PER THE CER TIFICATE ON PAGE 11 AND TRACE OF THE SITE PLAN BEING PRODUCED DURING THE COURSE OF HEARI NG. THE LAND HAS NOW COME NEARER TO THE BOUNDARIES COVERED IN THE JURISDICTIONAL LIMIT OF JMC DUE TO EXTENSIONS AFTER 1994. HE SUBMITTED THAT TH QUESTION WHICH IS TO BE DECIDE D IN THIS CASE IS WHETHER THE SAID LAND 6 WOULD BE COVERED BY SUB CLAUSE (B) OF CLAUSE (III) OF SECTION 2(14). HE SUBMITTED THAT UNDER CLAUSE (B) POWER IS GIVEN TO GOVERNMENT TO NO TIFY THE AREA FROM THE LIMIT OF MUNICIPALITIES ETC. HAVING POPULATION OF NOT LESS T HAN 10,000/. ACCORDINGLY, THE GOVERNMENT, ON 6.1.1994 HAS NOTIFIED CERTAIN AREA. HE REFERRED THE RELEVANT EXTRACTS OF NOTIFICATION NO. 9447/F. NO. 164/3/87-ITA-I DATED 0 6/01/1994 AT PB PAGE 1. HE SUBMITTED THAT AS PER THIS NOTIFICATION, FOR JAIPUR , THE AREA NOTIFIED WAS THE AREA OF 8 KMS. FROM THE BOUNDARIES OF JAIPUR MUNICIPAL CORPORATION AT ENTRY NO. 19.7. THE EXPLANATION (2) OF THE NOTIFICATION CLEARLY INDICATES THAT THE MUNICIPAL LIMITS AS EXISTING ON THE DATE OF ISSUE OF NOTIFICATION ARE TO BE REFERRED [PB PAG E 4]. HE SUBMITTED THAT THERE IS NO AMBIGUITY IN THE LANGUAGE OF NOTIFICATION. THE NOT IFICATION IS ISSUED WITHIN THE POWERS GIVEN TO THE GOVERNMENT. HE SUBMITTED THAT AS PER THE POWERS GIVEN TO THE GOVERNMENT UNDER THIS CLAUSE, IT IS TO NOTIFY THE EXTENDED ARE A UNDER SUB-CLAUSE (B). THE AREA WHICH IS NOTIFIED AS ON A PARTICULAR DATE HAS TO BE FROZEN O R STATIC. IT CANNOT BE DYNAMIC. THE LAW ALSO HAD GIVEN THE POWER TO INCLUDE THE AREA WITHIN THE MEANING OF CAPITAL ASSET, WHERE, THERE IS A SCOPE OF EXTENSION OF LIMITS IN THE NEAR FUTURE. HAD THE LIMITS BEEN EXTENDED TO THE LAND, IT WOULD HAVE BEEN COVERED WITHIN CLAUSE (A) ITSELF. HE STATED THAT OTHERWISE ALSO, THE GOVERNMENT HAS SPECIFICALLY GIVEN THE DAT E OF RECKONING THE LIMIT OF 8 KMS. IN THE EXPLANATION (2) TO THE NOTIFICATION AS STATED A BOVE. HE REFERRED HIS FOLLOWING SPECIFIC SUBMISSIONS MADE IN THE WRITTEN SUBMISSIONS AGAINST EACH AND EVERY OBSERVATION OF THE LD. CIT(A) : CIT(A)S FINDINGS SUBMISSION ARGUMENT OF THE ASSESSEE THAT THE LIMITS PRESCRIBED BY NOTIFICATION DTD. 06.01.1994 HAVE BEEN FROZEN. IF THIS ARGUMENT IS ACCEPTED, IT WOULD RENDER THERE IS NO AMBIGUITY IN THE LANGUAGE OF THE NOTIFICATION AND THEREFORE, RULES OF INTERPRETATION DOES NOT APPLY. THE EXPLANATION OF 7 SEVERAL DECISIONS OF HIGH COURTS AND TRIBUNALS TO NULLITY. IT WAS NOT THE INTENTION OF THE LEGISLATURE TO FREEZE THE LIMITS AS THESE WOULD CHANGE WITH INCREASING URBANIZATION. THE ASSESSEE HAS FAILED TO INTERPRET THE SECTION 2(14)(III) IN ITS RIGHT PERSPECTIVE. NOTIFICATION DTD. 06.01.1994 CLEARLY STATES THAT THE REFERRED LIMITS IN THE SCHEDULE TO THIS NOTIFICATION ARE THOSE LIMITS WHICH ARE EXISTING ON THE DATE OF ON WHICH THE NOTIFICATION WAS PUBLISHED IN THE OFFICIAL GAZETTE I.E. 06.01.1994. CIT(A) HAS NOT QUOTED ANY SUCH JUDGEMENT. THE JUDGEMENTS QUOTED BY HIM ARE ON DIFFERENT LINE OF LAW WHICH HAVE NO APPLICATION IN THE FACTS OF THE ASSESSEES CASE. APPLICABILITY OF ALL THE JUDGEMENTS QUOTED BY THE CIT(A) IS SEPARATELY ANALYSED AND ANNEXED TO THESE SYNOPSIS. AS FAR AS THE INTENTION OF LEGISLATURE IS CONCERNED, WE MAY SUBMIT THAT THE CENTRAL GOVERNMENT NOTIFIED THE DISTANCE OF 8 KMS IN SAID NOTIFICATION KEEPING IN MIND THE POTENTIAL OF GROWTH OF THE CITY IN THE NEAR FUTURE. IN FACT THE BOUNDARIES OF JMC HAVE STILL NOT COVERED THE LAND OF THE ASSESSEE. FROM THE ABOVE DISCUSSION, IT IS QUITE CLEAR THAT CIT(A) HAS ERRED IN APPLYING THE PROVISIONS OF SECTION 2(14)(III) AND DECISIONS OF HONBLE HIGH COURTS AND TRIBUNALS. THE LEGISLATURE HAS USED THE WORD ANY MUNICIPALITY. WHEN THE LEGISLATURE USED ANY MUNICIPALITY, IT WOULD BE SAFE TO INFER THAT LIMITS OF MUNICIPALITY WOULD NOT REMAIN STATIC AND MAY CHANGE WITH THE INCREASING URBANIZATION. WE MAY SUBMIT THAT THE LEGISLATURE HAS USED WORD ANY MUNICIPALITY TO COVER THOSE MUNICIPALITIES UNDER THE CLAUSE (A) OF SECTION 2(14)(III). AS SUCH THERE IS NO RELEVANCE OF THE SAID FINDINGS/OBSERVATIONS. THE CENTRAL GOVERNMENT HAS THE AUTHORITY U/S 507(A) OF THE MUNICIPAL CORPORATION ACT TO DECLARE ANY PORTION OF A RURAL AREA AS AN URBAN AREA. THE MOMENT THE POWER IS EXERCISED U/S 507(A), THE NEED FOR NOTIFICATION U/S 2(14)(III)(B) WOULD NOT ARISE. SIMILARLY THE PROVISIONS OF SECTION 2(14)(III) ARE INDEPENDENT OF THE SAID PROVISIONS QUOTED BY THE CIT(A). ONLY THOSE MUNICIPAL LIMITS ARE COVERED IN SECTION 2(14)((III) WHERE THE POPULATION IS NOT LESS THAN 10,000/-. AS SUCH THERE IS NO 8 THE MOMENT THE CENTRAL GOVERNMENT FEELS THAT A PARTICULAR AREA WITHIN 8 KMS OF THE LIMITS OF MUNICIPALITY HAS TO BE TREATED AS AN URBAN AREA, THE NEED FOR EXERCISE OF POWER U/S 507(A) WOULD ALSO CEASE. THUS TWO PROVISIONS ARE IN A WAY COMPLIMENTARY TO EACH OTHER AND AT TIMES OVERLAP. RELEVANCE OF THE SAID FINDINGS. CAPITAL ASSET HAS BEEN DEFINED U/S 2(14) OF INCOME TAX ACT, 1961. IMPOSITION OF CAPITAL GAIN ON TRANSFER OF CAPITAL ASSET IS A MATTER OF INCOME TAX AS REQUIRED BY SECTION 45. INCOME TAX LAW IS A WHOLE LAW IN ITSELF. NO OTHER LAW OR PROVISIONS SHOULD BE APPLIED UNLESS AN EXPRESS OR IMPLIED REFERENCE IS MADE IN INCOME TAX LAW. HENCE, THE FINDINGS OF CIT(A) THAT THE SECTION 507(A) OF MUNCIAPL CORPORATION ACT AND SECTION 2(14)(III) OF INCOME TAX ACT ARE NOT VALID. NOTIFICATIONS ISSUED BY THE CENTRAL GOVERNMENT ARE INSTANCES OF SUBORDINATE LEGISLATION AND THAT IN THE ABSENCE OF AN EXPRESS OR IMPLIED PROVISION SUBORDINATE LEGISLATION COULD NOT HAVE OVERRULED THE STATUTORY PROVISIONS. THE NOTIFICATION IS NOT OVERRULING THE PROVISIONS OF LAW AS THE GOVERNMENT IS AUTHORIZED TO SPECIFY THE AREA UNDER THE SAID CLAUSE (B) OF SECTION 2(14)(III). THE AREA HAS BEEN SPECIFIED BY THE GOVERNMENT ON THE BASIS OF BOUNDARIES OF MUNICIPAL CORPORATION EXISTING AS ON THE DATE OF NOTIFICATION. THE ONUS IS ON THE ASSESSEE TO SHOW THAT THE CHARACTER OF THE LANDS CHANGED AFTER THE ACQUISITION OF THE CAPITAL ASSET BY THE ASSESSEE AND THAT THE LANDS WERE AGRICULTURAL LANDS AT THE TIME OF TRANSFER OF THE ASSET. THE ASSESSEE HAS PRODUCED THE EXTRACTS OF GIRDAWARI REPORT FOR LAND IN QUESTION SHOWING THAT THE LAND WAS ACTUALLY BEING CULTIVATED AT THE TIME OF TRANSFER (PB PAGE 17). THE BALANCE LAND IS STILL BEING USED FOR AGRICULTURE. THE RATE CHARGED BY ASSESSEE IS RS.26 LACS PER BIGHA (PB PAGE 6). BIGHA IS USED FOR MEASUREMENT OF AGRICULTURAL LAND ONLY. AS SUCH THERE IS NO INTENTION OF ASSESSEE TO CHANGE THE LAND USE AND ASSESSEE WAS NOT CONCERNED OF THE USE OF THE LAND BY THE BUYER. THIS IS CLEARLY INDICATED FROM THE SALE DEED. THE LAND IS STILL LYING AS SUCH AND NO 9 PLOTTING HAS BEEN DONE ON THE SAME. ON THIS BASIS, HE SUBMITTED THAT, THE INTERPRETATIO N TAKEN BY THE LD CIT(A) MAKES THE WHOLE NOTIFICATION AS INVALID AND THE DECISIONS OF COURTS GIVEN ON THAT BASIS BECOMES NULLITY. THE NOTIFICATION DOES TAKE FEW MUNICIPAL A REAS OF THE COUNTRY AND DISTANCES IN ALL CASES ARE SEPARATELY DETERMINED. DISTANCE OF 8 KMS. IS ONLY AN OUTER LIMIT AND NOT A BENCHMARK. HE ACCORDINGLY CONCLUDED THAT THE CLAIM OF THE ASSESSEE IS AS PER LAW AND THIS GROUND OF APPEAL DESERVES TO BE ALLOWED. THE L D. A/R ALSO DRAWN OUR ATTENTION TOWARDS THE DECISION OF JAIPUR BENCH OF ITAT IN THE CASE OF SMT. SUBHA TRIPATHI VS. DCIT (58 SOT 139) WHEREIN THE SAME QUESTION AROSE FOR THE SAME ASSESS MENT YEAR IN RESPECT OF LAND SITUATED IN THE SAME VILLAGE MACHWA . THE HONBLE BENCH HAS DECIDED THE CASE IN FAVOUR OF THE ASSESSEE ON THE SIMILAR BASIS AS ARGUED BY LD. A/R. HE ALSO DREW OUR ATTENTION TOWARDS THE RETURNS OF INCOME FILED BY TH E ASSESSEE IN THE SUBSEQUENT YEARS WHEREIN AGRICULTURAL INCOME SHOWN BY THE ASSESSEE I N RESPECT OF THE REMAINING PART OF LAND HAS BEEN ACCEPTED BY THE DEPARTMENT. 4.0 LD. D/R ON THE OTHER HAND HAS SUPPORTED THE OR DER OF A.O. AND LD CIT(A). HE SUBMITTED THAT THE LAND IN QUESTION WAS CAPITAL ASS ET U/S 2(14). HE REFERRED THE FINDINGS GIVEN BY THE LD CIT(A) THAT 8 KMS FROM THE LOCAL LI MITS WAS TO BE SEEN ON THE DATE OF TRANSFER AND NOT ON THE DATE ON WHICH NOTIFICATION WAS PUBLISHED IN OFFICIAL GAZETTE. HE SUBMITTED THAT ISSUE STANDS COVERED IN THE FAVOUR O F REVENUE BY THE DECISION OF HON,BLE COCHIN TRIBUNAL IN THE CASE OF ARUN SUNNY VS DCIT ( 002 ITR 380) WHEREIN IT WAS HELD THAT THE CENTRAL GOVERNMENT HAD ISSUED THE NOTIFICA TION FOR THE PURPOSE OF CHANGING THE CHARACTER OF THE ASSET. THE NATURE OF THE PROPERTY HAD TO BE EXAMINED AS ON THE DATE OF TRANSFER. FURTHER, THE TRANSFER DEED OF THE ASSET W AS EXECUTED DURING THE YEAR UNDER 10 CONSIDERATION AND THEREFORE, THE NATURE OF THE PROP ERTY WHETHER IT WAS A CAPITAL ASSET OR NOT, HAD TO BE EXAMINED FOR THE YEAR UNDER CONSIDER ATION. HE SUBMITTED THAT LD CIT(A) HAS CORRECTLY HELD THAT ONCE THE PROPERTY WAS FOUND TO BE A CAPITAL ASSET ON THE DATE OF TRANSFER, THE TRANSACTION BECAME LIABLE FOR CAPITAL GAINS TAXATION AND THE DATE OF NOTIFICATION COULD NOT BE USED FOR ANY OTHER PURPOS E. HE FURTHER MENTIONED THAT THE DATE OF NOTIFICATION WAS RELEVANT ONLY IN DECIDING THE N ATURE OF THE PROPERTY. HE PLACED RELIANCE ON THE DECISION OF HONBLE MADRAS HIGH COU RT IN THE CASE OF M. VENKATESAN VS CIT (144 ITR 886) WHERE REFERRING TO THE SCOPE OF S ECTION 45, IT WAS HELD THAT TAXATION OR EXEMPTION FROM TAXATION DEPENDS UPON THE SUBJECT OF TRANSFER ANSWERING OR NOT ANSWERING THE DEFINITION OF CAPITAL ASSET AT THE TI ME OF TRANSFER AND AT NO OTHER POINT OF TIME. HE FURTHER SUBMITTED THAT NORMALLY WHEN THE AREA OF THE MUNICIPALITY IS EXTENDED LOOKING TO THE URBANIZATION ON ACCOUNT OF PRESSURE OF POPULATION, THEN SLOWLY THERE AGRICULTURAL LANDS ARE CONVERTED INTO URBAN AREAS A ND THEY FORM PART OF SUCH URBAN AREAS. IT IS TRUE THAT EVEN AFTER FORMING OF MUNICIPAL ARE AS, THERE MIGHT EXIST SOME LANDS WHICH MAY BE UNDER CULTIVATION, BUT THAT BECOMES AN URBAN AREA WITH THE PASSAGE OF TIME. HE SUBMITTED THAT SECTION 2(14)(III)(B) CLEARLY STIPUL ATES THAT ANY AREA WITHIN SUCH DISTANCE NOT BEING MORE THAN 8 KMS FROM THE LOCAL LIMITS OF ANY MUNICIPALITY, HAS TO BE TREATED AS CAPITAL ASSET FOR THE PURPOSE OF I.T. ACT. THE LEGI SLATURE HAS USED THE WORD ANY MUNICIPALITY. WHEN THE LEGISLATURE USED ANY MUNIC IPALITY, IT WOULD BE SAFE TO INFER THAT LIMITS OF MUNICIPALITY WOULD NOT REMAIN STATIC AND MAY CHANGE WITH THE INCREASING URBANIZATION. THOUGH THE ASSESSEE CLAIMED THAT THE AGRICULTURAL LAND WAS BEYOND 8 KMS RADIUS OF JMC AS ON 06.01.94, THE AO HAD FOUND THAT THE LAND IN QUESTION WAS WITHIN 2 TO 3 KMS RADIUS OF JMC. FOR THIS HE PLACED RELIANCE ON THE DECISION OF HONBLE ANDHRA PRADESH HIGH COURT IN THE CASE OF CIT VS BOLLA RAMA IAH (174 ITR 154) WHEREIN IT WAS 11 HELD THAT WHEN THE LAND WAS SITUATED WITHIN 8 KMS O F LOCAL LIMITS OF MUNICIPAL CORPORATION, IT WAS LIABLE FOR CAPITAL GAIN. IT WAS HELD THAT IT WAS UNNECESSARY TO GO INTO THE QUESTION WHETHER THE LAND WERE AGRICULTURAL LAN DS OR NOT ON THE DATE OF ACQUISITION, BECAUSE EVEN IF IT WERE AGRICULTURAL LANDS, THEY WE RE NOT EXEMPT FROM CAPITAL GAINS TAX. IT WOULD IMPLY THAT WHAT IS NECESSARY IS THE POSITION AS ON DATE OF SALE AND NOT THE POSITION AS ON THE DATE OF ACQUISITION. FURTHER RELIANCE WAS MADE ON DECISION OF HONBLE APEX COURT IN CIT VS GEMINI PICTURES CIRCUIT (P.) LTD (2 20 ITR 43) WHERE IT WAS HELD THAT MERE FACT THAT THE LAND IN QUESTION WAS AGRICULTURA L LAND COULD NOT BE A GROUND TO CLAIM EXEMPTION U/S 2(14) OF IT ACT WHEN IT WAS SITUATED WITHIN 8 KMS OF THE LOCAL LIMITS OF MUNICIPAL CORPORATION. SINCE THE LAND SOLD BY THE A SSESSEE WAS A CAPITAL ASSET, THEREFORE, THE SURPLUS REALIZED BY THE ASSESSEE ON ALE OF LAND WAS ASSESSABLE AS CAPITAL GAIN. HE ALSO REFERRED THE FINDINGS OF THE LD. CIT(A) THAT THE CE NTRAL GOVERNMENT HAS THE AUTHORITY UNDER SECTION 507(A) OF THE MUNICIPAL CORPORATION ACT TO DECLARE ANY PORTION OF A RURAL AREA AS AN URBAN AREA. THE MOMENT THE POWER IS EXERCISED UN DER SECTION 507(A), THE NEED FOR NOTIFICATION U/S 2(14)(III)(B) WOULD NOT ARISE. SIM ILARLY THE MOMENT THE CENTRAL GOVERNMENT FEELS THAT A PARTICULAR AREA WITHIN 8 KM S OF THE LIMITS OF THE MUNICIPALITY HAS TO BE TREATED AS AN URBAN AREA, THE NEED FOR EXERCI SE OF POWER U/S 507(A) WOULD ALSO CEASE. THUS TWO PROVISIONS ARE IN A WAY COMPLIMENTARY TO E ACH OTHER AND AT TIMES OVERLAP. THEREFORE IT IS NOT REQUIRED THAT CENTRAL GOVERNMEN T SHOULD KEEP ON ISSUING NOTIFICATION. IT HAS FURTHER BEEN SUBMITTED THAT NOTIFICATION CAN NOT OVERRIDE THE PROVISIONS OF LAW. FOR THIS RELIANCE WAS PLACED ON THE DECISION OF KERALA HIGH COURT IN THE CASE OF ALEXANDER GEORGE VS CIT(262 ITR 367) WHERE THE QUESTION AROSE WHETHER A PARTICULAR LAND COULD BE TREATED AS AGRICULTURAL LAND WITH REFERENCE TO NOTI FICATION IN 1973 WHEN IT WAS FOUND TO BE OUTSIDE NOTIFIED AREA ON A SUBSEQUENT NOTIFICATION IN1994 THEN IT WAS HELD THAT SINCE AT THE 12 TIME OF TRANSFER, IT WAS WITHIN THE NOTIFIED AREA, THEREFORE THE LIABILITY COULD NOT BE AVOIDED. IT WAS ACCORDINGLY CONCLUDED THAT THE ONUS WAS ON THE ASSESSEE TO SHOW THAT THE CHARACTER OF THE LANDS CHANGED AFTER THE ACQUISITIO N OF THE CAPITAL ASSET BY THE ASSESSEE AND THAT THE LANDS WERE AGRICULTURAL LANDS AT THE T IME OF TRANSFER OF THE ASSET. THE MATERIAL DATE WITH REFERENCE TO WHICH THE QUESTION WHETHER T HE PARTICULAR ASSET WHICH HAD BEEN SOLD WAS AGRICULTURAL LAND OR NOT WAS TO BE DECIDED WAS THE DATE OF SALE. IN OTHER WORDS, THE ASSESSEE SHOULD FURTHER PROVE THAT IT WAS AGRIC ULTURAL LAND AT THE TIME OF TRANSFER. HE FURTHER REFERRED THE RELEVANT PARA OF THE ORDER OF LD. CIT(A) WHEREIN HE HAD NOTICED THAT THE LAND SOLD BY THE ASSESSEE WAS WITHIN THE DISTAN CE OF 8 KMS FROM THE MUNICIPAL LIMITS OF JAIPUR MUNICIPAL CORPORATION AS PER THE TEHSILDA R, JAIPUR TEHSIL VIDE HIS LETTER DATED 24.12.2010. FURTHER, THE INSPECTOR SENT BY THE AO A LSO REPORTED THAT LAND IN QUESTION WAS LOCATED WITHIN 2 TO 3 KMS FROM THE JAIPUR MUNICIPAL ITY AND A LARGE NUMBER OF RESIDENTIAL TOWERS HAD COME UP IN THE ADJOINING AREAS. ACCORDIN GLY, THE LAND SOLD BY THE ASSESSEE WAS WITHIN 8 KMS FOR JAIPUR MUNICIPAL CORPORATION A ND THEREFORE NOT AN AGRICULTURAL LAND BUT AN URBAN LAND AND THE CAPITAL GAIN EARNED ON SA LE OF SUCH LAND WAS LIABLE TO BE TAXED. HE ACCORDINGLY SUBMITTED THAT THE LD. CIT(A) HAD CO RRECTLY UPHELD THE ACTION OF THE AO TO TREAT THE SAME AS CAPITAL ASSET WITHIN THE MEANI NG OF SECTION 2(14)(III)(B) OF I.T. ACT, 1961. 5.0 IN THE REJOINDER, THE LD. A/R REFERRED OUR ATTE NTION TOWARDS ANNEXURE TO HIS WRITTEN SUBMISSIONS WHEREIN HE HAS ALREADY SUBMITTED THAT V ARIOUS CASE LAWS REFERRED BY THE AUTHORITIES ARE NOT RELEVANT IN THE FOLLOWING MANNE R : - 13 ARUN SUNNY VS. DY. CIT [2 ITR 380 (ITAT, COCHIN B ENCH)] FACTS DECISION RELEVANCE IN PRESENT CASE ASSESSEE PURCHASED A PROPERTY IN 1975 FOR RS. 9,000/-. HE SOLD THIS PROPERTY ON 19.01.2006 FOR RS. 11,02,71,200/- THIS PROPERTY BECAME CAPITAL ASSET BY VIRTUE OF NOTIFICATION DTD. 06.01.1994. HENCE ASSESSEE APPLIED THE FMV OF PROPERTY AS ON 06.01.1994 INSTEAD OF 01.04.1981BEING NO FMV CAN BE ASSIGNED WHEN THE PROPERTY WAS NOT AT ALL CAPITAL ASSET. WHETHER AN ASSET IS LIABLE FOR CAPITAL GAINS TAX AND THE QUESTION AS TO WHAT WOULD BE THE AMOUNT OF CAPITAL GAIN ARE TWO DIFFERENT THINGS. THE DATE OF NOTIFICATION IS RELEVANT ONLY IN DECIDING THE NATURE OF THE PROPERTY. ON THE DATE OF TRANSFER IT IS FOUND THAT THE ASSET IS A CAPITAL ASSET ELIGIBLE FOR CAPITAL GAIN, THE RELEVANCE OF THE NOTIFICATION IS COMPLETE. THE STATUTORY DATE FOR THE FMV CANNOT BE SUBSTITUTED WITH A SUBSEQUENT CONVERSION DATE DETERMINED BY CENTRAL GOVERNMENT THROUGH A NOTIFICATION. BY APPLYING THIS CASE INTO PRESENT CASE, NOTIFICATION PREVAILING ON THE DATE OF TRANSFER WILL BE APPLIED TO FIND OUT WHETHER THE LAND IN QUESTION IS CAPITAL ASSET OR NOT ALEXANDER GEORGE VS. CIT [262 ITR 367 (KER)] FACTS DECISION RELEVANCE IN PRESENT CASE ASSESSEE WAS THE OWNER OF 2.47 ACRES OF LAND AT THRIKKAKARA PANCHAYAT. GOVT. ACQUIRED HIS LAND BY INVOKING URGENCY CLAUSE . POSSESSION WAS TAKEN ON 29.01.1985 AND COMPENSATION WAS PAID ON 01.04.1986. ON THE DATE OF TRANSFER, NOTIFICATION DT. 6.02.1973 WAS IT WAS HELD BY THE HONBLE HIGH COURT OF KERELA THAT PROCEEDING IS TO BE COMPLETED ON THE BASIS OF LAW THAT WAS EXISTING AT THAT TIME (I.E. AT THE TIME OF TRANSFER). IN THE PRESENT CASE, CIT(A) DID NOT APPLY THIS CASE LAW IN CORRECT MANNER. IN 262 ITR 367 IT WAS HELD THAT NOTIFICATION PREVAILING ON THE DATE OF TRANSFER WILL BE APPLICABLE ON THE 14 PREVAILING AS PER WHICH LAND WAS CAPITAL ASSET. IN 1993, ANOTHER NOTIFICATION WAS ISSUED DE-NOTIFYING THE PLACE AT WHICH ASSESSEES LAND WAS SITUATED AND CONSEQUENTLY MAKING ASSESSEES LAND NON- CAPITAL ASSET. ASSESSEE CONTENDED THAT SINCE THE NOTIFICATION DE-NOTIFYING SUCH PLACE CAME INTO FORCE DURING THE PENDENCY OF APPEAL, SO LAND IS NOT A CAPITAL ASSET TRANSACTION. M. VENKATESAN VS. CIT [144 ITR 886 (MAD)] FACTS DECISION RELEVANCE IN PRESENT CASE ASSESSEE OWNS A LAND SITUATED IN TOWN HAVING POPULATION OF MORE THAN 10000 HE SOLD SUCH LAND ON 4.03.1970 HITHERTO ALL AGRICULTURAL LANDS WERE OUTSIDE THE PURVIEW OF CAPITAL ASSET. HOWEVER, AMENDMENT IN SECTION 2(14)(III) CAME W.E.F. 1.04.1970 TREATING THE AGRICULTURAL LANDS SITUATED WITHIN THE LIMITS OF MUNICIPALITIES AND OTHER LOCAL AUTHORITIES WITH A POPULATION OF 10000 OR MORE. ASSESSEE CONTENDED THAT HIS LAND IS NOT CAPITAL ASSET TAX TREATMENT OF THE ASSESSEES TRANSACTION, THEREFORE TO BE CONSIDERED IN THE LIGHT OF AMENDED PROVISION SINCE THAT WAS THE LAW IN FORCE DURING THE RELEVANT A.Y. IN OTHER WORDS, TAXATION OR EXEMPTION FROM TAXATION DEPENDS UPON THE SUBJECT OF TRANSFER ANSWERING OR NOT ANSWERING THE DEFINITION OF CAPITAL ASSET AT THE TIME OF TRANSFER AND AT NO OTHER POINT OF TIME. IN THE PRESENT CASE, CIT(A) DID NOT APPLIED THIS CASE LAW IN CORRECT MANNER. IN 144 ITR 886 IT WAS HELD THAT THE LAW IN FORCE AT THE TIME OF TRANSFER WILL BE APPLICABLE ON THE TRANSACTION 15 RANCHHODBHAI BHAIJIBHAI PATEL VS. [CIT 81 ITR 446 ( GUJ)] FACTS DECISION RELEVANCE IN PRESENT CASE IN THIS CASE ASSESSEE GOT THE CONVERTED AGRICULTURAL LAND INTO NON-AGRICULTURAL BY TAKING PERMISSION FROM COLLECTOR AS REQUIRED BY BOMBAY TENANCY ACT TO SELL THE CONSTRUCTION COMPANY IF THE LAND IS BEING USED FOR AGRICULTURAL PURPOSE, IT IS AGRICULTURAL LAND OTHERWISE FOLLOWING WILL BE CONSIDERED:- INTENTION OF THE OWNER OF LAND DEVELOPMENT & USE OF LANDS IN THE ADJOINING AREA AND THE SURROUNDINGS SITUATION OF THE LAND PHYSICAL CHARACTERISTICS OF LAND LAND IS ASSESSED FOR AGRICULTURAL PURPOSE MEASUREMENT OF LAND (I.E. IN SQ. FT./ACRE/BIGHA) THEREFORE, LAND IN QUESTION WAS HELD TO BE CAPITAL ASSET. IN THE PRESENT CASE LAND IS BEING USED FOR AGRICULTURAL PURPOSE CIT VS. BOLLA RAMAIAH & ORS. [174 ITR 154 (AP)] FACTS DECISION RELEVANCE IN PRESENT CASE ASSESSEE OWNED AN AGRICULTURAL LAND SITUATED EITHER WITHIN THE MUNICIPAL LIMITS OR WITHIN 8 KM FROM IT WAS HELD THAT WHEN THE LAND UNDER REQUISITION IS ACQUIRED, IT VESTS IN THE STATE ON THE DATE OF PUBLICATION OF THE BUT IN PRESENT CASE, LAND IS NOT SITUATED WITHIN 8 KMS OF THE LOCAL LIMITS OF MUNICIPALITY ON THE 16 THE LOCAL LIMITS. THIS LAND WAS PROPOSED TO BE ACQUIRED AND A NOTIFICATION DTD. 12.02.1970 WAS PUBLISHED ON 12.3.1970. AGRICULTURAL LANDS SITUATED WITHIN THE LIMITS OF A MUNICIPALITY OR WITHIN 8 KMS OF THE LIMITS OF ANY MUNICIPALITY WAS MADE A CAPITAL ASSET W.E.F. 1.4.1970 I.E. APPLICABLE FOR A.Y. 1970-71. SECTION 47(VIII) EXEMPTED SALE OF AGRICULTURAL LANDS EFFECTED BEFORE 1.3.1970 (THE DATE OF INTRODUCTION OF THE FINANCE BILL IN THE PARLIAMENT) . ASSESSEE CONTENDED THE ACQUISITION WAS COMPLETED BEFORE 1.3.1970 AND THE LAND WAS AGRICULTURAL LAND ON THE DATE OF ACQUISITION ACQUISITION NOTIFICATION IN THE OFFICIAL GAZETTE, SO 12.3.1970 WAS HELD TO BE THE DATE OF TRANSFER. ASSESSEES LAND FALL EITHER WITHIN THE MUNICIPAL LIMITS OR WITHIN 8 KMS OF THE LOCAL LIMITS. HENCE LAND IN QUESTION WAS HELD TO BE CAPITAL ASSET. DATE OF TRANSFER 6.0 WE HAVE HEARD THE RIVAL SUBMISSION AND HAVE CAR EFULLY PERUSED THE AVAILABLE MATERIAL ON RECORD. WE FIND THAT IN THE CASE OF SM T. SUBHA TRIPATHI VS. DCIT (58 SOT 139) , THIS BENCH HAS ALREADY CONSIDERED THE SIMILAR MATTE R IN RESPECT OF LAND SITUATED IN THE SAME VILLAGE MACHWA FOR THE SAME ASSESSMENT YEA R. THIS BENCH HAS FOUND THAT THE LAND IS SITUATED OUT OF THE LIMIT OF JAIPUR MUNICIP AL CORPORATION AND THEREFORE, WAS NOT COVERED IN SUB-CLAUSE (A) OF SECTION 2(14)(III). I T HAS BEEN HELD BY THIS BENCH THAT FOR THE PURPOSE OF APPLICATION OF SUB-CLAUSE (B) OF CLAUSE (III) OF SECTION 2(14) AND TO MEASURE 8 KMS FROM THE RADIUS OF JAIPUR MUNICIPAL CORPORATION , THE RELEVANT DATE WOULD BE THE DATE OF NOTIFICATION I.E. 6.1.1994 AND NOT THE DATE OF SALE OF LAND IN QUESTION. WE FIND THAT THE 4 BIGHA LAND IN QUESTION WAS PART OF TOTAL 16 B IGHA LAND OF THE ASSESSEE ALLOTTED TO HIM 17 BY THE GOVERNMENT IN LIEU OF HIS RETIREMENT FROM DE FENSE SERVICES. AS PER THE GOVERNMENT RECORD IN FORM OF GIRDAWARI WHICH CAN BE SAID TO BE CONCLUSIVE EVIDENCE IN THIS RESPECT, THE LAND WAS BEING CULTIVATED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION AND SUBSEQUENTLY ALSO. THE ASSESSEE H AS SHOWN AGRICULTURAL INCOME IN THE RETURN OF INCOME OF THE PREVIOUS YEAR AND ALSO IN T HE SUBSEQUENT YEARS WHICH HAS BEEN ACCEPTED. TO FURTHER SUPPORT THIS, ASSESSEE HAS ALS O REFERRED CERTAIN ELECTRICITY BILLS SHOWING CONSUMPTION OF ELECTRICITY FOR AGRICULTURAL USE. THESE DOCUMENTS CLEARLY SUGGEST THAT AGRICULTURAL ACTIVITIES WERE THERE ON THE SAID LAND DURING THE RELEVANT YEAR. THE USE OF LAND DIFFERENTLY BY THE BUYERS ON A SUBSEQUENT DATE OF INSPECTION IS NOT A RELEVANT FACTOR FOR US. IN THIS VIEW OF THE MATTER, FOLLOWING THE ORDER OF THIS BENCH IN THE CASE OF SMT. SUBHA TRIPATHI VS. DCIT WE ALLOW THIS GROUND OF THE ASSESSEES APPEAL. 7.0 THOUGH THE ABOVE DECISIONS GOES TO DECIDE THE N ON-TAXABILITY OF THE ENTIRE CAPITAL GAIN, STILL FOR THE SAKE OF DISPOSING OFF THE GROUN D RAISED BY THE BOTH THE ASSESSEE AND DEPARTMENT, WE ARE PROCEEDING TO DECIDE GROUND NO. 2 OF ASSESSEES APPEAL AND ALSO GROUND NO. 2 OF THE DEPARTMENTAL APPEAL. THE ISSUE INVOLVED IS THAT ON WHAT BASIS FAIR MARKET VALUE OF THE ASSESSEES LAND SHOULD BE CONSI DERED AS ON 01.04.1981 FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAIN. THE AO QU OTED AN ALLEGED COMPARABLE INSTANCE WHEREIN THE RATE HAS BEEN RS.2,700/- PER BIGHA AND TOTAL COST WAS CONSIDERED AT RS.10,800/- FOR 4 BIGHA OF LAND. IT HAS BEEN TAKEN ON THE BASIS OF ENQUIRY FROM DY. INSPECTOR GENERAL, REGISTRAR & STAMPS, JAIPUR WHO W AS CALLED UPON BY THE AO TO PROVIDE THE SAME. DY. INSPECTOR GENERAL, REGISTRAR & STAMPS, JAIPUR FURNISHED A COPY OF SALE DEED OF AGRICULTURAL LAND AT SIMILAR LOCATION EXECUTED ON 27.12.1980. AS PER THIS SALE DEED, THE TOTAL SALE CONSIDERATION WAS RS. 16,000/- FOR 6 BIGHA. ACCORDINGLY THE FAIR 18 MARKET VALUE OF THE PROPERTY AS ON THE DATE OF TRAN SACTION WORKS OUT TO RS. 2,666/- PER BIGHA. CONSIDERING THE SAME, THE FAIR MARKET VALUE OF THE LAND IN QUESTION AS ON 1.4.1981 WAS ESTIMATED BY THE AO AT RS. 2,700/- PER BIGHA RE SULTING TOTAL VALUE OF LAND 10,800/- (2700*4). HENCE AMOUNT OF RS. 10,800/- WAS ADOPTED AS THE FAIR MARKET VALUE OF THE LAND IN QUESTION ON 1.04.1981. THE ASSESSEE RAISED OBJE CTIONS THAT THE COMPARABLE CASE CITED BY THE AO WAS DISTINGUISHABLE DUE TO THE FOLLOWING REASONS: A) THE LAND SOLD BY SH. PANNA S/O SH. MAHADEV JAT CONS ISTED OF KHASRA NO. 226, 246, 244, 245 & 233. THESE KHASRAS OF LAND WERE SCATTERED OVER AN AREA OF 2 KMS. ON THE OTHER HAND, THE LAND OF APPELLANT WAS A BIG SINGLE CHUNK OF LAND AND IT WAS COMPATIBLE FOR RESIDENTIAL USE AFTER PLOTTING. B) THE LAND OF THE APPELLANT WAS IN CLOSE PROXIMITY TO THE STATE HIGHWAY (NEARLY 500MT.) WHEREAS IN THE COMPARABLE CASE CITE D BY THE AO, THE LAND WAS 3 TO 4 KMS AWAY FROM THE MAIN ROAD. C) THE LAND SOLD BY SH. PANNA S/O SH. MAHADEV JAT WAS ALREADY IN POSSESSION OF THE BUYERS AND THEY WERE CULTIVATING THE LAND FOR PAST MANY YEARS. THE ASSESSEE SUBMITTED THAT ALL THESE FACTORS MAKE A LOTS OF DIFFERENCE IN THE VALUE OF LAND. THERE CANNOT BE ANY BASIS TO MAKE SUITABLE A DJUSTMENT FOR THE ABOVE FACTORS IN CASE OF LAND. ACCORDING TO THE ASSESSEE WHEN NO COMPARA BLE CASE IS FOUND, THE FAIR MARKET VALUE OF THE CAPTIONED LAND SHOULD BE COMPUTED ON T HE BASIS OF REVERSE INDEXATION IN THE MANNER APPROVED BY THIRD MEMBER JUDGMENT OF ITAT AG RA IN THE CASE OF JAHANGANJ COLD STORAGE VS ACIT (133 TTJ 278). ACCORDINGLY, T HE VALUE COMES TO RS.18,87,477/-. AFTER CONSIDERING THE OBJECTIONS RAISED BY THE ASSE SSEE, THE LD. CIT(A) FOUND THAT THE CASE SITED BY LD. AO WAS NOT COMPARABLE. HE HOWEVER MAD E HIS OWN ESTIMATION AND ADOPTED A RATE OF RS.10,000/- PER BIGHA AND TOOK THE FAIR M ARKET VALUE AS ON 1.4.1981 OF THE TOTAL LAND AT RS.40,000/-. 19 8.0 WE HAVE HEARD THE RIVAL PARTIES AND CONSIDERED THE MATERIAL ON RECORD. WE FIND THAT VALUE OF LAND DIFFERS DRASTICALLY DUE TO ITS S URROUNDINGS, DISTANCE FROM ROAD, DISPUTES, POSSESSION ETC. THERE IS NO DISPUTE ON THE ISSUE TH AT THE IN THE INSTANCES QUOTED BY THE LD. AO, THE BUYERS WERE ALREADY IN THE POSSESSION OF LA ND IN QUESTION WHICH IS MAJOR FACTOR WHICH AFFECTS THE RATES OF THE TRANSACTION AND ATTA CHED OBLIGATIONS. FURTHER, THERE ARE ISSUES REGARDING PROXIMITY FROM ROAD AND SCATTERED LAND. WE ALSO FIND THAT AO HAS GIVEN A FINDING THAT MULTISTORIED PROJECTS HAVE BEEN DEVE LOPED NEAR THE ASSESSEES LAND AND THE BUYER OF THE ASSESSEES LAND IS ALSO DEVELOPING SOM E PROJECT ON THIS LAND. NO SUCH DEVELOPMENT OF THE COMPARABLE LAND HAS BEEN BROUGHT ON RECORD BY THE AO. LD. CIT(A) ALSO AGREED THAT THE INSTANCE QUOTED BY THE AO IS NOT COMPARABLE. HOWEVER, HE HAS TAKEN A ARBITRARY VALUE WITHOUT ANY BASIS. IN THESE FACT S AND CIRCUMSTANCES, WHERE NO COMPARABLE CASE IS AVAILABLE, THE BEST WAY TO ESTIM ATE THE COST WOULD BE TO COMPUTE THE FAIR MARKET VALUE ON THE BASIS OF REVERSE CALCULATI ON CONSIDERING THE COST INFLATION INDEX AS HELD IN THIRD MEMBER DECISION OF ITAT AGRA (SUPR A) IN WHICH ONE OF US WAS ALSO A PARTY. ACCORDINGLY, THE ESTIMATION MADE BY THE ASS ESSEE IN THIS RESPECT HAD TO BE ACCEPTED. WE THUS ALLOW THIS GROUND OF APPEAL OF TH E ASSESSEE AND REJECT THE GROUND OF THE DEPARTMENTAL APPEAL. 9.0 GROUND NO. 3 OF THE ASSESSEES APPEAL IS AGAINS T REJECTING THE AGRICULTURAL INCOME OF RS.42,000/-. AS ALREADY FOUND BY US, THE ASSESS EE HAS SHOWN EVIDENCES OF LAND BEING CULTIVATED. THE AGRICULTURE INCOME HAS BEEN ACCEPT ED IN THE PREVIOUS YEAR AND ALSO IN THE SUBSEQUENT YEARS. IN THESE FACTS AND CIRCUMSTANCES, SIZE OF LAND, GOVERNMENT RECORDS OF CROP AND THE AMOUNT OF AGRICULTURAL INCOME SHOWN, W E FIND NO REASON TO REJECT THE ASSESSEES CLAIM. WE ACCORDINGLY ALLOW THIS GROUND OF THE ASSESSEES APPEAL ALSO. 20 10.0 NOW WE COME TO THE REMAINING GROUND NO.1 OF DE PARTMENTS APPEAL WHICH IS AGAINST HOLDING THAT THE PROVISION OF SECTION 50C W OULD NOT APPLY AS THE LAND WAS SOLD BY THE ASSESSEE THROUGH AGREEMENT AND THE SALE DEED WA S NOT REGISTERED. THE AO HAD OBSERVED THAT LAND HAS BEEN DEVELOPED AND IS IN THE POSSESSION OF THE BUYERS AND SALE CONSIDERATION HAS BEEN RECEIVED IN TOTO BY THE ASSE SSEE. FURTHER, ASSESSEE HAS CLAIMED THAT THE PROPERTY HAS NOT YET BEEN REGISTERED AND HENCE, PROVISIONS OF SECTION 50C ARE NOT APPLICABLE. IN THIS REGARD, AO OBSERVED THAT THE R EGISTRATION OF SALE PROPERTY HAS NOT BEEN MADE ONLY TO EVADE THE STAMP DUTY PAYMENTS ON THE S ALE. THEREFORE, SECTION 50C WOULD BE APPLICABLE ON THE SALE OF PROPERTY AND ACCORDING LY APPLICABLE DLC RATES I.E. 1,40,00,000/- WOULD BE APPLIED ON SUCH TRANSFER. AC CORDINGLY, THE AO TOOK THE SALE CONSIDERATION OF RS. 1,40,00,000/- AS PER SECTION 5 0C INSTEAD OF ACTUAL SALE CONSIDERATION OF RS. 1,04,00,000/-. IN THE FIRST APPEAL, LD CIT( A) MADE A RELIANCE ON THE DECISION OF HONBLE JODHPUR TRIBUNAL IN THE CASE OF NAVNEET KUM AR THAKKAR VS ITO (298 ITR 042) WHERE IT WAS HELD THAT TO ATTRACT SECTION 50C, THE PROPERTY UNDER TRANSFER FROM THE ASSESSEE TO ANOTHER PERSON SHOULD HAVE BEEN ASSESSED FOR STA MP VALUATION PURPOSE AT A HIGHER VALUE THAN THAT RECEIVED OR ACCRUING TO THE ASSESSE E. UNLESS THE PROPERTY TRANSFERRED HAVE BEEN REGISTERED BY SALE DEED AND FOR THE PURPOSE TH E VALUE HAD BEEN ASSESSED AND STAMP DUTY HAVE BEEN PAID BY THE PARTIES, SECTION 50C COU LD NOT COME INTO OPERATION. FURTHER RELIANCE WAS MADE ON THE DECISION OF HONBLE JAIPUR TRIBUNAL IN THE CASE OF VIJAYLAXMI DHADDHA VS ITO(20 DTR 365) AND HONBLE LUCKNOW TRIB UNAL IN THE CASE OF CARLTON HOTEL PVT LTD. (122 TTJ 515) HAVE HELD THAT IF THE PROPERTY SOLD IS NOT REGISTERED THEN SECTION 50C WOULD NOT HAVE ANY APPLICATION. ACCORDI NGLY, LD. CIT(A) HELD THAT IN THE PRESENT CASE, THE SALE DEEDS HAD NOT BEEN REGISTERE D AND THE BUYERS HAD NOT PAID ANY 21 STAMP DUTY THEREFORE SECTION 50C WOULD NOT HAVE ANY APPLICATION AND DIRECTED THE LD. AO TO ADOPT THE SALE CONSIDERATION AT RS. 1,04,00,000/ - INSTEAD OF RS. 1,40,00,000/-. 11.0 WE HAVE HEARD THE RIVAL PARTIES AND PERUSED TH E MATERIAL ON RECORD. THE PRESENT CASE IS FOR A Y 2008-09, I.E. PRIOR TO AMENDMENT MA DE IN THE PROVISIONS OF SECTION 50C TO TAKE INTO CONSIDERATION THE TRANSFERS WHICH HAVE NO T BEEN REGISTERED FOR STAMP DUTY PURPOSE. IN VIEW OF THE VARIOUS DECISIONS QUOTED B Y THE LD. CIT(A), WE ARE IN AGREEMENT WITH HIS ORDER AND CONFIRM THE SAME. THIS GROUND O F THE DEPARTMENTAL APPEAL IS ALSO REJECTED. 12.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS A LLOWED AND THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 -01-2014 . SD/- SD/- (.N.K. SAINI) (HARI OM MARATHA) ACCOUNTANT MEMBER JUDICIAL MEMEBR JAIPUR DATED: 30 TH JAN 2014 *MISHRA COPY FORWARDED TO:- BY ORDER 1. SHRI SATYA DEV SHARMA JAIPUR 2. THE ITO , WARD- 5 (2), JAIPUR 3. THE LD. CIT(A) 4. THE LD. CIT 5. THE DR 6. THE GUARD FILE (ITA NO.25/JP/12) A.R., ITAT, J AIPUR 22 23