Dasari Sujatha, Hyderabad V. The ACIT-5, Visakhapatnam, Visakhapatnam

ITA 26/VIZ/2012

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8982 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 5 year(s) 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-05-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 12-11-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 10-02-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R GOVINDARAJAN
• Keywords: Capital asset; Revision of order; Opportunity of being heard; Earning of tax free income; Application of stay; Question of law
• Section: 143(3); 2(14); 263

Judgement Text

ITA NOS.26&27/VIZAG/2012, 187/VIZAG/2014 & 135/VIZA G/2015 & SP NO.18/VIZAG/2014 DASARI SUJATHA, ANAKAPALLE, VSKP 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . , $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./I.T.A.NO.187/VIZAG/2014 ( / ASSESSMENT YEAR: 2008-09) DASARI SUJATHA ANAKAPALLE, VISAKHAPATNAM [PAN: AKYPD0955D ] VS. ACIT, RANGE - 5, VISAKHAPATNAM ( % / APPELLANT) ( &'% / RESPONDENT) ./I.T.A.NO.26/VIZAG/2012 ( / ASSESSMENT YEAR: 2008-09) DASARI SUJATHA ANAKAPALLE, VISAKHAPATNAM VS. ACIT, RANGE - 5, VISAKHAPATNAM ( % / APPELLANT) ( &'% / RESPONDENT) ./I.T.A.NO.135/VIZAG/2015 ( / ASSESSMENT YEAR: 2008-09) DASARI SUJATHA ANAKAPALLE, VISAKHAPATNAM VS. ACIT, RANGE - 5, VISAKHAPATNAM ( % / APPELLANT) ( &'% / RESPONDENT) ITA NOS.26&27/VIZAG/2012, 187/VIZAG/2014 & 135/VIZA G/2015 & SP NO.18/VIZAG/2014 DASARI SUJATHA, ANAKAPALLE, VSKP 2 ./I.T.A.NO.27/VIZAG/2012 ( / ASSESSMENT YEAR: 2008-09) DASARI MALYADRI ANAKAPALLE, VISAKHAPATNAM [PAN NO.ACPPD4398F] VS. DCIT, RANGE - 5(1), VISAKHAPATNAM ( % / APPELLANT) ( &'% / RESPONDENT) S.P. NO.18/VIZAG/2014 (ARISING OUT OF I.T.A.NO.187/VIZAG/2014) ( / ASSESSMENT YEAR: 2008-09) DASARI SUJATHA ANAKAPALLE, VISAKHAPATNAM VS. ACIT, RANGE - 5, VISAKHAPATNAM ( % / APPELLANT) ( &'% / RESPONDENT) / APPELLANT BY : SHRI SAMUEL NAGADESI, AR / RESPONDENT BY : SHRI R. GOVINDA RAJAN, DR / DATE OF HEARING : 30.03.2017 / DATE OF PRONOUNCEMENT : 05.05.2017 / O R D E R PER V. DURGA RAO, JUDICIAL MEMBER: THESE THREE APPEALS AND A STAY PETITION FILED BY T HE ASSESSEE ARE DIRECTED AGAINST ORDER OF CIT(A), VISAKHAPATNAM IN ITA NO.187/VIZAG/2014, AGAINST ORDER OF THE CIT-1, VISA KHAPATNAM IN ITA NO.26/VIZAG/2012 AND AGAINST ORDER OF THE CIT-2, VI SAKHAPATNAM IN ITA ITA NOS.26&27/VIZAG/2012, 187/VIZAG/2014 & 135/VIZA G/2015 & SP NO.18/VIZAG/2014 DASARI SUJATHA, ANAKAPALLE, VSKP 3 NO.135/VIZAG/2015 PASSED U/S 263 OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS 'THE ACT') FOR THE ASSESSMEN T YEAR 2008-09. SINCE, THE FACTS ARE IDENTICAL AND ISSUES ARE DIFFERENT, T HEY ARE CLUBBED, HEARD TOGETHER AND DISPOSED-OFF BY WAY OF THIS COMMON ORD ER FOR THE SAKE OF CONVENIENCE. 2. ITA NO.27/VIZAG/2012 FILED BY THE ASSESSEESS HU SBAND AGAINST ORDER PASSED BY THE CIT-1, VISAKHAPATNAM DATED 2.1. 2012 AND THE SAME IS DISPOSED BY PASSING A SEPARATE ORDER. 3. THE BRIEF FACTS OF THE CASE EXTRACTED FROM ITA N O.187/VIZAG/2014 ARE THAT THE ASSESSEE IS AN INDIVIDUAL, RUNNING A M ILK DIARY. THE ASSESSEE HAS SOLD 1.02 ACRES OF LAND TO M/S. HEMADR I ENTERPRISES PVT. LTD. ON 25 TH MAY07 FOR A CONSIDERATION OF ` 3,57,96,000/-. SUBSEQUENTLY, A SURVEY WAS CONDUCTED ON 7.8.2008. CONSEQUENT TO THE SURVEY, ASSESSEE WAS ADMITTED A SHORT TERM CAPITAL GAIN OF ` 89,09,341/- AFTER CLAIMING DEDUCTION ON ACCOUNT OF PAYMENT TO U NAUTHORIZED OCCUPANTS OF ` 1,28,35,000/- AND COST OF COMPOUND WALL OF ` 25 LAKHS AND COMMISSION AMOUNT OF ` 80,34,579/-. THE ASSESSMENT U/S 143(3) OF THE ACT WAS COMPLETED BY A.O., DISALLOWING THE A MOUNT OF ` 47,75,000/- OUT OF CLAIM OF COMPENSATION TO VACATE THE LAND OF ` 1,28,35,000/- AND AN AMOUNT OF ` 14,79,066/- OUT OF COMMISSION ITA NOS.26&27/VIZAG/2012, 187/VIZAG/2014 & 135/VIZA G/2015 & SP NO.18/VIZAG/2014 DASARI SUJATHA, ANAKAPALLE, VSKP 4 EXPENDITURE CLAIMED OF ` 80,34,579/-. SUBSEQUENTLY, THE LD. COMMISSIONER HAS INITIATED PROCEEDINGS U/S 263 OF T HE ACT AND DIRECTED THE A.O. TO RE-DO THE ASSESSMENT AFTER ENQUIRIES. THE A.O. BY ORDER DATED 29.5.2012 CONSEQUENT TO THE ORDER U/S 263 OF THE ACT, NOTED THAT THE GENUINENESS OF PAYMENT OF ` 1,28,35,000/- TO VACATE THE OCCUPANTS WAS NOT ESTABLISHED AND THE ENTIRE AMOUNT WAS DISAL LOWED. THE A.O. ALSO FOUND THAT THE NATURE OF SERVICES RENDERED FOR THE COMMISSION PAYMENT WAS NOT ESTABLISHED AND THE ENTIRE COMMISSI ON PAYMENT OF ` 80,34,579/- WAS ALSO DISALLOWED. THE A.O. ALSO NOT ED THAT THE EXPENDITURE CLAIMED OF ` 25 LAKHS TOWARDS CONSTRUCTION OF COMPOUND WALL WAS NOT PROVED. 4. THE ASSESSEE CARRIED THE MATTER IN APPEAL AGAINS T THE ORDER PASSED BY THE A.O. U/S 143(3) R.W.S. 263 OF THE ACT DATED 29.5.2012. 5. DURING THE COURSE OF THE APPELLATE PROCEEDINGS, THE ASSESSEE HAS RAISED FOLLOWING ADDITIONAL GROUNDS BEFORE THE LD. CIT(A), VISAKHAPATNAM. FOR THE SAKE OF CONVENIENCE, THE SA ME ARE EXTRACTED AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LEARNED COMMISSIONER ERRED IN LAW AND FACTS OF THE CASE IN TREATING THE IMPUGNED AGRICULTURAL LAND AS CAPITAL ASSET WITHIN THE MEANI NG OF SECTION 2(14)(III) OF THE INCOME-TAX ACT, 1961. ON THE FACTS AND IN THE C IRCUMSTANCES OF THE CASE THE LEARNED COMMISSIONER OUGHT TO HAVE HELD TH E SAME IS NOT A CAPITAL ASSET IN VIEW OF THE PROVISIONS OF SECTION 2(14)(III)(B) OF THE ACT. ITA NOS.26&27/VIZAG/2012, 187/VIZAG/2014 & 135/VIZA G/2015 & SP NO.18/VIZAG/2014 DASARI SUJATHA, ANAKAPALLE, VSKP 5 2. THE REASONS FOR RAISING THE ADDITIONAL GROUND WA S STATED AS UNDER: IT IS MOST RESPECTFULLY SUBMITTED THAT THE ASSESSEE IS NOT AN EDUCATED PERSON LIVING ON AGRICULTURE AND DAIRY FARMING I.E. , REARING COWS AND BUFFALOS. THE APPELLANT IS NOT AT ALL AWARE OF THE PROVISIONS OF THE INCOME- TAX ACT, 1961 AND STATES THAT THIS IS THE FIRST INS TANCE SHE CONFRONTED WITH THE PROBLEM AND WENT BY THE ADVICE OF LOCAL ITP AND THE PRESSURE FROM THE DEPARTMENTAL OFFICERS, WHO CONDUCTED SURVEY MIS GUIDED AND ALSO IGNORED THE RELEVANT PROVISIONS OF NOTIFICATION ISS UED BY THE CENTRAL GOVERNMENT. AS THE SAME IS FOUNDATION TO FIX THE IN CIDENCE OF TAX THE APPELLANT MAKES THIS HUMBLE PRAYER TO PERMIT THE RA ISING OF THE ABOVE ADDITIONAL GROUND. THE LAND IS AGRICULTURAL LAND SITUATED IN THE VILLA GE HAMLET OF THUMMAPALA VILLAGE AND NOT A CAPITAL ASSET WITHIN THE MEANING OF SECTION 2(14)(III) OF THE INCOME-TAX ACT, 1961 ACCORDINGLY THE TRANSFER D OES NOT ATTRACT CAPITAL GAINS TAX AS ENVISAGED IN THE PROCEEDINGS AGAINST T HE APPELLANT. 6. THE LD. CIT(A) KEEPING IN VIEW OF THE LEGAL NATU RE OF THE ISSUE AND ALSO IT GOES TO THE ROOT OF THE MATTER, THE ADDITIO NAL GROUNDS RAISED BY THE ASSESSEE WAS ADMITTED AND CALLED THE A.O. TO GI VE COMMENTS ON THE ADDITIONAL GROUNDS AND ALSO REQUESTED TO GIVE A FAC TUAL REPORT. THE A.O. BY A LETTER DATED 14.3.2014 SUBMITTED THAT THE AUT HORISED REPRESENTATIVE OF THE ASSESSEE HAS SUBMITTED THAT T HE SAID LAND IS NOT A CAPITAL ASSET IN VIEW OF THE PROVISIONS OF SECTION 2(14)(III)(B) OF THE ACT. BUT IT IS PERTINENT TO BRING IT IN YOUR KIND NOTICE THAT THE SAID LAND IS SITUATED WITHIN THE AMBIT OF 8 KMS. OF ANAKAPALLE M UNICIPALITY, WHICH WAS ESTABLISHED IN THE YEAR 1877. THIS THUMMAPALA HAMLET WHERE THE LAND IS SITUATED IS ABOUT 3 KMS. FROM ANAKAPALLE. ITA NOS.26&27/VIZAG/2012, 187/VIZAG/2014 & 135/VIZA G/2015 & SP NO.18/VIZAG/2014 DASARI SUJATHA, ANAKAPALLE, VSKP 6 7. FURTHER, THERE ARE TWO CONDITIONS ENUMERATED IN SECTION 2(14)(III)(B) OF THE ACT TO ASCERTAIN WHETHER THE L AND SHOULD BE TREATED AS A CAPITAL ASSET OR NOT. IN THIS ASPECT, IT IS S UBMITTED THAT AS PER THE LAST TWO CENSUS REPORTS OF 2001 & 2011, THE POPULAT ION OF ANAKAPALLE MUNICIPALITY ARE 85,799 & 86,612 AND AS PER CENSUS OF 2011, THE POPULATION OF THUMMAPALA HAMLET IS 28,187. HENCE, THE CLAIM OF THE ASSESSEE IS NOT TENABLE AND THE SAID LAND IS VERY M UCH CAPITAL ASSET AS PER THE CONDITION LAID DOWN IN SECTION 2(14)(III) O F THE ACT. IN VIEW OF THE ABOVE, IT IS REQUESTED THAT THE CASE MAY BE DEC IDED ON MERITS OF THE CASE. 8. BEFORE THE LD. CIT(A), THE ASSESSEE HAS FILED A DETAILED SUBMISSION VIDE LETTER DATED 19.3.2014 SUBMITTED ON 25.3.2014. IT WAS SUBMITTED BEFORE THE LD. CIT(A) THAT THE LAND IS NOT SITUATED WITHIN THE ANAKAPALLE MUNICIPALITY. THOUGH, THE LAND IS SITUATED WITHIN THE 8 KMS. OF ANAKAPALLE MUNICIPALITY, IT WOULD NOT FALL WITHIN T HE PURVIEW OF CAPITAL ASSET AS ANAKAPALLE MUNICIPALITY AS IT IS NOT NOTIF IED MUNICIPALITY FOR THE PURPOSE OF SECTION 2(14)(III)(B) OF THE ACT. THE C OUNSEL FOR THE ASSESSEE HAS REFERRED NOTIFICATION NO.SO77(E) DATED 6.2.1973 SUPERSEDED TO SHOW IT ANAKAPALLE WAS NOT A NOTIFIED MUNICIPALITY. IT WAS ALSO SUBMITTED THAT ITA NOS.26&27/VIZAG/2012, 187/VIZAG/2014 & 135/VIZA G/2015 & SP NO.18/VIZAG/2014 DASARI SUJATHA, ANAKAPALLE, VSKP 7 THE POPULATION OF THUMMAPALA HAMLET IS NOT A RELEVA NT CRITERIA TO DECIDE WHETHER THE LAND IS CAPITAL ASSET OR NOT. 9. THE LD. CIT(A) AFTER CONSIDERING THE REPORT SUBM ITTED BY THE A.O. DATED 4.3.2014 AND ALSO DETAILED SUBMISSION MADE BY THE ASSESSEE DATED 23.3.2014, THE PLEA RAISED BY ASSESSEES COUN SEL HAS BEEN REJECTED AND THE VIEW EXPRESSED BY THE A.O. IS CONF IRMED. THE RELEVANT PORTION OF THE ORDER IS EXTRACTED AS UNDER: I HAVE CONSIDERED THE SUBMISSIONS MADE. THE SUBJE CT LAND IS ADMITTEDLY SITUATE IN THUMMAPPALA VILLAGE WHICH IS 3 KMS. FROM ANAKAPALLE. THE AO HAS NOT FILED ANY CREDIBLE EVID ENCE TO SHOW THAT THE LAND IS NOT SITUATE IN THE ANAKAPALLE MUNICIPALITY. FURTHER, THERE WAS NO INDICATION IN THE RECORDS TO SHOW THAT AGRICULTURAL ACTIVITY WAS CARRIED ON IN THE IMPUGNED LAND SO AS TO CONSTITUTE AGRICULTURAL LAND FOR THE PURPOSE OF SECTION 2(14). HENCE, THE PLEAS RAISED BY THE AR A RE NOT ACCEPTABLE. FURTHER, THE AR HAS NOT RAISED ANY PLEA IN REGARD T O THE OTHER GROUNDS OF APPEAL. IN THE CIRCUMSTANCES THE AO'S ACTION IS CON FIRMED. 10. ON BEING AGGRIEVED, ASSESSEE CARRIED MATTER IN APPEAL BEFORE THE TRIBUNAL. BEFORE THE TRIBUNAL, THE ASSESSEE HAS RA ISED FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) TO THE EXTENT CONFIRMING THE ORDER OF THE ASSESSING OFFICER UNDER SECTION 143 (3) READ WI TH SECTION 263 OF THE INCOME-TAX ACT, 1961 IS ERRONEOUS IN LAW AND FACTS O F THE CASE. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN LAW AND FACTS OF THE CASE, IN HOLDING THAT THE ORDER UNDER SECTION 143(3) READ WITH SECTION 263 STATING THAT THE ASSESSEE'S APPEAL BEFO RE THE ITAT AGAINST THE ORDER MADE UNDER SECTION 263 WAS DISMISSED. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED COMMISSIONER (APPEALS) OUGHT TO HAVE APPRECIATED THE FACT THAT THE APPEAL BEFORE IT AT CHALLENGING THE ORDER OF THE COMMISSIONER IN EXERCISE OF POWERS UND ER SECTION 263 IS STILL PENDING ADJUDICATION BEFORE THE HONOURABLE TRIBUNAL AND OUGHT TO HAVE SET ASIDE THE IMPUGNED ORDER AS THE SAME IS PASSED WITHOUT EVEN AFFORDING AN OPPORTUNITY TO THE ASSESSEE CONTRARY T O THE DIRECTIONS OF THE ITA NOS.26&27/VIZAG/2012, 187/VIZAG/2014 & 135/VIZA G/2015 & SP NO.18/VIZAG/2014 DASARI SUJATHA, ANAKAPALLE, VSKP 8 COMMISSIONER. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE LEARNED COMMISSIONER INCOME TAX (APPEALS) ERRED IN LAW AND FACTS OF THE CASE IN CONFIRMING THE ORDER DISREGARDING THE FACT THAT THE ATTEMPT TO REOPEN THE ASSESSMENT BY APPROVING THE REOPENING OF THE ORIGIN AL ASSESSMENT UNDER SECTION 147, MADE FUTILE BY DROPPING OF THE PROCEED INGS COMMENCED PURSUANT TO THE NOTICE UNDER SECTION 147, THEREFORE , OUGHT NOT TO HAVE INITIATED PROCEEDINGS UNDER SECTION 263 OF THE INCO ME-TAX ACT, 1961 THAT TO ASSESSING OFFICER PASSING IMPUGNED ORDER WITHOUT AFFORDING FRESH OPPORTUNITY AS DIRECTED BY THE COMMISSIONER. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE LEARNED COMMISSIONER (APPEALS) ERRED IN LAW AND FACTS OF THE CASE IN ADJ UDICATING THE ADDITIONAL GROUND ONLY AND NOT ADJUDICATING THE MAIN GROUNDS W HICH ARE SELF EXPLANATORY. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE LEARNED COMMISSIONER (APPEALS) ERRED IN LAW AND FACTS OF TH E CASE IN HOLDING THAT THERE WAS NO INDICATION IN THE RECORDS TO SHOW THAT AGRICULTURAL ACTIVITY WAS CARRIED ON IN THE IMPUGNED LAND SO AS TO CONSTI TUTE 'AGRICULTURAL LAND' FOR THE PURPOSE OF SECTION 2(14). 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN LAW A ND FACTS OF THE CASE IN STATING THAT THE AR HAS NOT RAISED ANY PLEA IN R EGARD TO THE OTHER GROUNDS OF APPEALS WHICH ARE CONNECTED WITH THE MIS TAKEN BASIS OF FRAMING THE ASSESSMENT, ISSUE AS TO AFFORDING AN OP PORTUNITY OF BEING HEARD WHILE PASSING THE IMPUGNED ORDER; THE QUESTIO N AS TO NATURAL OPPORTUNITY OF BEING HEARD AND FAIR HEARING; THE GR OUNDS BEING SELF EXPLANATORY, THE COMMISSIONER (APPEALS) OUGHT TO HA VE ADJUDICATED THE SAME. 7. THE APPELLANT CRAVE LEAVE TO ADD TO/ALTER/SUBSTITUT E/ DELETE/MODIFY ALL OR ANY OF THE ABOVE GROUNDS. 11. THOUGH THE ASSESSEE HAS RAISED AS MANY AS GROUN DS, THE MAIN CONTENTION OF THE ASSESSEE IS THAT THE LAND SOLD BY ASSESSEE IS AN AGRICULTURAL LAND, THEREFORE, CAPITAL GAINS CANNOT BE TAXED. LD. A.R. HAS SUBMITTED THAT ANAKAPALLE MUNICIPALITY IS NOT A NOT IFIED MUNICIPALITY, AND THEREFORE, SECTION 2(14)(III)(B) OF THE ACT HAS NO APPLICATION. ITA NOS.26&27/VIZAG/2012, 187/VIZAG/2014 & 135/VIZA G/2015 & SP NO.18/VIZAG/2014 DASARI SUJATHA, ANAKAPALLE, VSKP 9 12. THE LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMIT TED THAT THE LAND IS SITUATED IN SURVEY NO.663 OF THUMMAPALA, HAMLET OF KOTTAVARU VILLAGE, THEREFORE, SECTION 2(14)(III)(A) OF THE ACT HAS ALS O NO APPLICATION. FOR THE ABOVE PROPOSITION, HE RELIED UPON THE JUDGEMENT OF HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. P.J. THOMAS (1995 ) 211 ITR 897. 13. THE LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMIT TED THAT THE LAND SITUATED IN A SMALL VILLAGE AND THE ASSESSEE CARRIE D AGRICULTURAL OPERATIONS EARLIER DUE TO SOME DISPUTES, HE COULD N OT CARRY AGRICULTURAL OPERATIONS UNDER THE YEAR IN CONSIDERATION, THEREFO RE, IT CANNOT BE SAID THAT THE LAND IS NOT AN AGRICULTURAL LAND. FOR THA T HE RELIED ON THE JUDGEMENT OF THE HONBLE MADRAS HIGH COURT IN THE C ASE OF SAKUNTHALA VEDACHALAM VS. VANITHA MANICKAVASAGAM (2014) 369 IT R 558. 14. HE ALSO RELIED ON THE DECISION OF THE COORDINAT E BENCH IN THE CASE OF SMT. CHALASANI NAGA RATNA KUMARI VS. ITO IN ITA NO.639/VIZAG/2013 DATED 23.12.2016 AND SUBMITTED THAT ONCE A LAND IS AGRICULTURAL LAND AS PER THE REVENUE RECORDS, ASSESSEE NEED NOT CARRY AG RICULTURAL OPERATIONS FOR THE YEAR UNDER CONSIDERATION AND SUBMITTED THAT THE LAND SITUATED IN THUMMAPALA HAMLET OF KOTTAVARU VILLAGE IS AN AGRICU LTURAL LAND AS PER THE REVENUE RECORDS. FOR THAT HE REFERRED PAGE 41 OF THE PAPER BOOK (ADANGAL/PAHANI). ITA NOS.26&27/VIZAG/2012, 187/VIZAG/2014 & 135/VIZA G/2015 & SP NO.18/VIZAG/2014 DASARI SUJATHA, ANAKAPALLE, VSKP 10 15. THE LD. COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THAT THE LAND IS NOT CONVERTED FROM AGRICULTURAL TO NON-AGRICULTURAL , FOR THAT HE HAS FILED A CERTIFICATE ISSUED BY THE DY. TAHSILDAR (RTI C.NO .125/16A DATED 24.5.2016). HE ALSO SUBMITTED THAT THE LAND SOLD B Y THE ASSESSEE IS OUTSIDE THE PURVIEW OF THE GVMC LIMITS OF VISAKHAPA TNAM. FOR THAT HE HAS FILED A CERTIFICATE ISSUED BY THE O/O ZONAL COM MISSIONER, ANAKAPALLE ZONE (RTI NO.1311/G2/2016 DATED NIL) AND SUBMITTED THAT THE IMPUGNED LAND IS AN AGRICULTURAL LAND AND NO CAPITA L GAINS CAN BE TAXED IN VIEW OF SECTION 2(14) OF THE ACT. 16. ON THE OTHER HAND, THE LD. D.R. HAS SUBMITTED T HAT THE ASSESSEE HAS FAILED TO PROVE THAT HE HAS CARRIED OUT THE AGR ICULTURAL OPERATIONS, THEREFORE, THE LAND IS NOT AN AGRICULTURAL LAND, CA PITAL GAIN TAX CAN BE COLLECTED. HE STRONGLY SUPPORTED THE ORDER PASSED BY THE LD. CIT(A). 17. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATE RIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE ASSESSEE HAS SOLD THE LANDED PROPERTY TO THE EXTENT OF 1 ACRE 2 CENTS IN SURVEY NOS.613/1, 663/1 & 670/1 FOR A CONSIDERATION OF ` 3,57,96,000/-. SUBSEQUENTLY, A SURVEY WAS CONDUCTED IN THE CASE OF ASSESSEE ON 7.8.2008. CONSEQUENT TO THE SURVEY CONDUCTED BY TH E DEPARTMENT, THE ASSESSEE HAD FILED A RETURN OF INCOME ON 25.8.2008 BY CLAIMING CERTAIN ITA NOS.26&27/VIZAG/2012, 187/VIZAG/2014 & 135/VIZA G/2015 & SP NO.18/VIZAG/2014 DASARI SUJATHA, ANAKAPALLE, VSKP 11 EXPENDITURE IN CONNECTION WITH THE LAND. THE ASSES SING OFFICER HAS PASSED THE ASSESSMENT U/S 143(3) OF THE ACT ALLOWIN G CERTAIN EXPENDITURE CLAIMED BY THE ASSESSEE. SUBSEQUENTLY, THE LD. COMMISSIONER BY EXERCISING THE POWER U/S 263 OF THE ACT, DIRECTED THE A.O. TO RE-DO THE ASSESSMENT. CONSEQUENT TO THE DI RECTIONS ISSUED BY THE LD. COMMISSIONER U/S 263 OF THE ACT, THE A.O. H AS PASSED AN ASSESSMENT ORDER U/S 143(3) R.W.S. 263 OF THE ACT B Y ORDER DATED 29.5.2012. BEFORE THE LD. CIT(A), THE ASSESSEE HA S RAISED A LEGAL ISSUE THAT THE LAND SOLD BY THE ASSESSEE IS AN AGRICULTU RAL LAND AND NO CAPITAL GAINS CAN BE TAXED. THE LD. CIT(A) HAS ADMITTED T HE ADDITIONAL GROUND RAISED BY THE ASSESSEE AND ALSO CALLED THE REPORT F ROM THE A.O. IN RESPECT OF THE DISTANCE AND NATURE OF THE LAND. TH E LD. CIT(A) AFTER CONSIDERING THE REPORT SUBMITTED BY THE A.O. HE HAS HELD THAT THE ASSESSEE HAS NOT FILED ANY EVIDENCE TO SHOW THAT TH E LAND IS NOT SITUATED IN ANAKAPALLE MUNICIPALITY AND THERE IS NO INDICAT ION THAT THE ASSESSEE HAS CARRIED OUT THE AGRICULTURAL OPERATIONS IN THE IMPUGNED LAND FOR THE PURPOSE OF SECTION 2(14) OF THE ACT AND CONFIRMED T HE ORDER OF THE A.O. 18. WE FIND THAT THE ASSESSEE HAS SOLD THE LAND IN S URVEY NOS.613/1, 663/1 & 670/1 SITUATED IN THUMMAPALA HAMLET OF KOTT AVARU VILLAGE, ANAKAPALLE MANDALAM, VISAKHAPATNAM DISTRICT. DURIN G THE COURSE OF ITA NOS.26&27/VIZAG/2012, 187/VIZAG/2014 & 135/VIZA G/2015 & SP NO.18/VIZAG/2014 DASARI SUJATHA, ANAKAPALLE, VSKP 12 HEARING OF THE APPEAL, THE LD. D.R. FILED A LETTER DATED 10.8.2016, FILED BY ITO WARD-1, ANAKAPALLE ADDRESSING TO THE COMMISSI ONER OF INCOME TAX (DR), ITAT, VISAKHAPATNAM, WHEREIN IT IS CLEARL Y MENTIONED THAT SURVEY NO.663/1 OF THUMMAPALA HAMLET OF KOTTAVARU V ILLAGE, WHICH IS A MAJOR PANCHAYAT OF ANAKAPALLE MANDALAM DOES NOT FAL L WITHIN THE JURISDICTION OF VISAKHAPATNAM. THE LAND IS SITUATE D 3 KMS. AWAY FROM ANAKAPALLE MUNICIPALITY. IT ALSO STATED THAT AS PE R THE GAZETTE NOTIFICATION NO.9447 DATED 6.1.1994 AND AN AMENDMEN T NOTIFICATION NO.11186 DATED 28.12.1999 ISSUED BY THE CENTRAL GOV ERNMENT, ANAKAPALLE WAS NOT A NOTIFIED MUNICIPALITY. FURTHE R, AS PER GOMS NO.375 DATED 30.7.2013, ISSUED BY THE GOVERNMENT OF ANDHRA PRADESH, AREA COVERED UNDER THE ANAKAPALLE MUNICIPALITY WERE INCLUDED IN THE LIMITS OF THE GREATER VISAKHAPATNAM MUNICIPAL CORPO RATION. FROM THE ABOVE LETTER, IT IS CLEAR THAT THE LAND SOLD BY THE ASSESSEE IS SITUATED IN THUMMAPALA HAMLET OF KOTTAVARU VILLAGE. IT IS ALSO CLEAR THAT THE ANAKAPALLE MUNICIPALITY IS NOT NOTIFIED AS PER THE GAZETTE NOTIFICATION AS MENTIONED ABOVE. HOWEVER, THE ANAKAPALLE MUNICIPAL ITY INCLUDED THE LIMITS OF GREATER VISAKHAPATNAM MUNICIPAL CORPORATI ON BY GOMS 375 DATED 30.7.2013. SO FAR AS GVMC LIMITS OF ANAKAPAL LE MUNICIPALITY IS CONCERNED, ASSESSEE HAS FILED A LETTER ISSUED BY RT I NO.1311/G2/2016 DATED NIL, WHEREIN, IT IS CLEAR THAT THE THUMMAPALA HAMLET OF KOTTAVARU ITA NOS.26&27/VIZAG/2012, 187/VIZAG/2014 & 135/VIZA G/2015 & SP NO.18/VIZAG/2014 DASARI SUJATHA, ANAKAPALLE, VSKP 13 VILLAGE NEAR AMLA COLLEGE, IS NOT MERGED WITH GVMC VISAKHAPATNAM AS PER GOMS NO.375/MA&UD DATED 30.7.2013. FROM THE PA PER BOOK FILED BY THE ASSESSEE AT PAGE NO.2 VIDE CERTIFICATE DATED 12.7.2006 ISSUED BY THE DY. TAHSILDAR, ANAKAPALLE, THE LANDS IN SURVEY NOS.613/1, 663/1, 670/1 OF THUMMAPALA HAMLET OF KOTTAVARU VILLAGE ARE NOT AFFECTED IN LAND CONVERSION. THE TAHSILDAR, ANAKAPALLE HAS ALS O ISSUED THAT SURVEY NO.613/1, TO THE EXTENT OF 0.53 CENTS OF THUMMAPALA HAMLET, ANAKAPALLE MANDAL ARE CLASSIFIED AS JIRAYITI DRY AS PER SETTLEMENT OF FAIR ADANGAL. AS PER ADANGAL/PAHANI (PAPER BOOK PG.41), SURVEY NO.663/1, 670/1, 613/1, THE LAND IS CLASSIFIED AS A DRY LAND AND CULTIVATABLE LAND. WE FIND FROM THE ABOVE, AS PER THE REVENUE RECORDS, THE IMPUGNED LAND IS A DRY CULTIVATABLE JIRAYITI LAND. THE IMPUGNED LAND IS NOT CONVERTED FROM AGRICULTURAL TO NON-AGRICULTURAL LAND. IT IS ALSO CLEAR FROM THE CERTIFICATE ISSUED BY THE OFFICE OF ZONAL COMMISSIO NER, ANAKAPALLE ZONE THAT THE LAND SITUATED IN THUMMAPALA HAMLET OF KOTT AVARU VILLAGE, ANAKAPALLE, VISAKHAPATNAM DIST., IS NOT COVERED BY GVMC LIMITS. 19. UNDER THE ABOVE FACTUAL BACKGROUNDS, IT HAS TO BE EXAMINED WHETHER CAPITAL GAIN TAX ATTRACTS TO THE LAND SOLD BY THE ASSESSEE OR NOT? THE PROVISIONS OF SECTION 2(14)(III)(A) OR (B) OF T HE ACT, PRESCRIBED ITA NOS.26&27/VIZAG/2012, 187/VIZAG/2014 & 135/VIZA G/2015 & SP NO.18/VIZAG/2014 DASARI SUJATHA, ANAKAPALLE, VSKP 14 CERTAIN CONDITIONS FOR TREATING THE LAND AS CAPITAL ASSET. FOR THE SAKE OF CONVENIENCE, THE RELEVANT PROVISIONS ARE EXTRACTED AS UNDER: [2(14)(III) AGRICULTURAL LAND IN INDIA, NOT BEING LA ND SITUATE (A) IN ANY AREA WHICH IS COMPRISED WITHIN THE JURISDICTI ON OF A MUNICIPALITY (WHETHER KNOWN AS A MUNICIPALITY, MUNICIPAL CORPORA TION, 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 SUCH DISTANCE, NOT BEING MORE THA N EIGHT KILOMETERS, FROM THE LOCAL LIMITS OF ANY MUNICIPALITY OR CANTON MENT BOARD REFERRED TO IN ITEM (A), AS THE CENTRAL GOVERNMENT MAY, HAVING REG ARD TO THE EXTENT OF, AND SCOPE FOR, URBANIZATION OF THAT AREA AND OTHER RELEVANT CONSIDERATIONS, SPECIFY IN THIS BEHALF BY NOTIFICATION IN THE OFFIC IAL GAZETTE. 20. FROM THE ABOVE, IT IS VERY CLEAR THAT AS PER SE CTION 2(14)(III)(A) OF THE ACT, TO ATTRACT THE CAPITAL GA INS, THE LAND HAS TO SITUATE IN A MUNICIPALITY, MUNICIPAL CORPORATION, N OTIFIED AREA, COMMITTEE OR TOWN AREA COMMITTEE OR TOWN COMMITTEE OR ANY OTHER NAME OR A CANTONMENT BOARD, WHICH HAS A POPULATION OF MORE THAN 10,000. IN THE PRESENT CASE, THE LAND SOLD BY THE ASSESSEE NOT SITUATED IN ANY OF THE PLACES AS MENTIONED ABOVE. IN FACT THE LAND SITUATED IN A HAMLET VILLAGE IS NOT EVEN SITUATED I N A VILLAGE. THEREFORE, SECTION 2(14)(III)(A) HAS NO APPLICATION . 21. SO FAR AS APPLICATION OF SECTION 2(14)(III)(B) OF THE ACT IS CONCERNED TO ATTRACT THE CAPITAL GAINS, THE LAND MU ST SITUATE WITHIN 8 KMS. FROM THE NOTIFIED MUNICIPALITY. IN THE PRESEN T CASE, THE LAND IS ITA NOS.26&27/VIZAG/2012, 187/VIZAG/2014 & 135/VIZA G/2015 & SP NO.18/VIZAG/2014 DASARI SUJATHA, ANAKAPALLE, VSKP 15 SITUATED 3 KMS. AWAY FROM ANAKAPALLE MUNICIPALITY, HOWEVER, THE ANAKAPALLE MUNICIPALITY IS NOT A NOTIFIED MUNICIPAL ITY AS PER THE NOTIFICATION DATED 6.1.1991 AND AMENDED NOTIFICATIO N NO.11186 DATED 28.12.1999, THEREFORE, SECTION 2(14)(III)(B) OF THE ACT HAS ALSO NO APPLICATION. 22. THE ONLY POINT FOR CONSIDERATION IS WHETHER THE ASSESSEE IS TO CARRY AGRICULTURAL OPERATIONS IN THE LAND. IN THIS CONTEXT, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE LAN D IS AN AGRICULTURAL DRY LAND. TO THAT EFFECT, HE FILED A REVENUE RECORD AND IT CLEARLY SHOWS THAT IT IS A DRY AND CULTIVATABLE LAN D. SO FAR AS CARRYING AGRICULTURAL OPERATIONS IN THE YEAR UNDER CONSIDERA TION IS CONCERNED, IT IS SUBMITTED THAT DUE TO SOME DISPUTES, SHE IS N OT ABLE TO CARRY THE AGRICULTURAL OPERATIONS. WE FIND THAT AS PER THE R EVENUE RECORDS, THE IMPUGNED LAND IS AGRICULTURAL LAND. ONCE LAND IS C ATEGORIZED AS A DRY AGRICULTURAL LAND, EVEN IF THE YEAR UNDER CONSIDERA TION THE ASSESSEE IS NOT ABLE TO CARRY THE AGRICULTURAL OPERATIONS, THE AGRICULTURAL LAND CANNOT BE TREATED AS A NON AGRICULTURAL LAND. THIS ASPECT WAS CONSIDERED BY HONBLE MADRAS HIGH COURT IN THE CASE OF SAKUNTHALA VEDACHALAM VS. VANITHA MANICKAVASAGAM (SUPRA), WHER EIN THE HONBLE MADRAS HIGH COURT HAS HELD AS FOLLOWS: ITA NOS.26&27/VIZAG/2012, 187/VIZAG/2014 & 135/VIZA G/2015 & SP NO.18/VIZAG/2014 DASARI SUJATHA, ANAKAPALLE, VSKP 16 15. TO GET EXEMPTION, THE ASSESSEE HAS TO SATISFY T HE CONDITIONS LAID DOWN IN SECTION 2(14) OF THE INCOME TAX ACT, WHICH READS AS FOLLOWS: 2(14) CAPITAL ASSET MEANS PROPERTY OF ANY KIND HE LD BY AN ASSESSEE, WHETHER OR NOT CONNECTED WITH HIS BUSINESS OR PROFE SSION, BUT DOES NOT INCLUDE (I) ANY STOCK-IN-TRADE, CONSUMABLE STORES OR RAW MA TERIALS HELD FOR THE PURPOSES OF HIS BUSINESS OR PROFESSION (II) PERSONAL EFFECTS, THAT IS TO SAY, MOVABLE PROP ERTY (INCLUDING WEARING APPAREL AND FURNITURE, BUT EXCLUDING JEWELLERY) HEL D FOR PERSONAL USE BY THE ASSESSEE OR ANY MEMBER OF HIS FAMILY DEPENDENT ON HIM: EXPLANATION--FOR THE PURPOSES OF THIS SUB- CLAUSE, 'JEWELLERY' INCLUDES - (A) ORNAMENTS MADE OF GOLD, SILVER, PLATINUM OR ANY OTHER PRECIOUS METAL OR ANY ALLOY CONTAINING ONE OR MORE OF SUCH P RECIOUS METALS, WHETHER OR NOT CONTAINING ANY PRECIOUS OR SEMI- PRE CIOUS STONE, AND WHETHER OR NOT WORKED OR SEWN INTO ANY WEARING APPA REL (B) PRECIOUS OR SEMI-PRECIOUS STONES, WHETHER OR NO T SET IN ANY FURNITURE, UTENSIL OR OTHER ARTICLE OR WORKED OR SE WN INTO ANY WEARING APPAREL (III) AGRICULTURAL LAND IN INDIA, NOT BEING LAND SIT UATE - (A) IN ANY AREA WHICH IS COMPRISED WITHIN THE JURIS DICTION OF A MUNICIPALITY (WHETHER KNOWN AS A MUNICIPALITY, MUNI CIPAL CORPORATION, NOTIFIED AREA COMMITTEE, TOWN AREA COMMITTEE, TOWN COMMITTEE, OR BY ANY OTHER NAME) OR A CANTONMENT BOARD AND WHICH HAS A P OPULATION OF NOT LESS THAN TEN THOUSAND ACCORDING TO THE LAST PRECED ING CENSUS OF WHICH THE RELEVANT FIGURES HAVE BEEN PUBLISHED BEFORE THE FIRST DAY OF THE PREVIOUS YEAR OR (B) IN ANY AREA WITHIN SUCH DISTANCE, NOT BEING MOR E THAN EIGHT KILOMETRES, FROM THE LOCAL LIMITS OF ANY MUNICIPALI TY OR CANTONMENT BOARD REFERRED TO IN ITEM (A), AS THE CENTRAL GOVERNMENT MAY, HAVING REGARD TO THE EXTENT OF, AND SCOPE FOR, URBANISATION OF THAT AREA AND OTHER RELEVANT CONSIDERATIONS, SPECIFY IN THIS BEHALF BY NOTIFICAT ION IN THE OFFICIAL GAZETTE (IV) 6 PER CENT. GOLD BONDS, 1977, OR 7 PER CENT. GOLD BONDS, 1980, OR NATIONAL DEFENCE GOLD BONDS, 1980, ISSUED BY THE CE NTRAL GOVERNMENT (V) SPECIAL BEARER BONDS, 1991, ISSUED BY THE CENTR AL GOVERNMENT (VI) GOLD DEPOSIT BONDS ISSUED UNDER THE GOLD DEPOS IT SCHEME, 1999 NOTIFIED BY THE CENTRAL GOVERNMENT ' ITA NOS.26&27/VIZAG/2012, 187/VIZAG/2014 & 135/VIZA G/2015 & SP NO.18/VIZAG/2014 DASARI SUJATHA, ANAKAPALLE, VSKP 17 16. ONCE THE TRIBUNAL HAS ACCEPTED THAT THE CLASSIF ICATION OF LANDS AS PER THE REVENUE RECORDS ARE AGRICULTURAL LANDS, WHI CH ARE EVIDENCED BY THE ADANGAL AND THE LETTER OF THE TAHSILDAR AND SATISFI ES OTHER CONDITIONS OF SECTION 2(14) OF THE INCOME TAX ACT, WE ARE OF THE V IEW THAT THE TRIBUNAL HAS MISDIRECTED ITSELF AS STATED ABOVE. 17. YET OTHER REASON GIVEN BY THE TRIBUNAL IS THAT THE ADJACENT LANDS ARE PUT TO COMMERCIAL USE BY WAY OF PLOTS AND THERE FORE, THE VERY CHARACTER OF THE LANDS OF THE ASSESSEES IS DOUBTED AS AGRICULTURAL IN NATURE. THE MANNER IN WHICH THE ADJACENT LANDS ARE USED BY THE OWNER THEREIN IS NOT A GROUND FOR THE TRIBUNAL TO COME TO A CONCLUSION THAT THE ASSESSEES' LANDS ARE NOT AGRICULTURAL IN NATURE. TH E REASON GIVEN BY THE TRIBUNAL THAT THE ADJACENT LANDS HAVE BEEN DIVIDED INTO PLOTS FOR SALE WOULD NOT MEAN THAT THE LANDS SOLD BY THE ASSESSEES WERE FOR THE PURPOSE OF DEVELOPMENT OF PLOTS. ALSO THE REASONING GIVEN B Y THE TRIBUNAL 'NO AGRICULTURISTS WOULD HAVE PURCHASED THE LAND SOLD B Y THE ASSESSEE FOR PURSUING ANY AGRICULTURAL ACTIVITY' IS BASED ON MER E CONJECTURES AND SURMISES. 18. THE PLEA OF THE LEARNED STANDING COUNSEL APPEAR ING FOR THE REVENUE THAT THERE WAS NO AGRICULTURAL OPERATIONS P RIOR TO THE DATE OF SALE IS OF NO AVAIL AS THE DEFINITION UNDER SECTION 2 (1 4) OF THE INCOME TAX ACT HAS THE ANSWER TO SUCH A PLEA RAISED. FURTHER MORE, IT IS ALSO ON RECORD THAT THE LANDS ARE AGRICULTURAL LANDS CLASSIFIED AS DRY LANDS, FOR WHICH KIST HAS BEEN PAID. 19. THE VIEW OF THE ASSESSEE IS FORTIFIED BY THE DE CISION REPORTED IN (1937) 32 ITR 466 (COMMISSIONER OF INCOME-TAX V. RAJ A BENOY KUMAR SAHAS ROY), WHEREIN, IT IS HELD AS FOLLOWS: THERE WAS AUTHORITY FOR THE PROPOSITION THAT THE EX PRESSION AGRICULTURAL LAND' MENTIONED IN ENTRY 21 OF LIST II OF THE SEVENTH SCHEDULE TO THE GOVERNMENT OF INDIA ACT, 1935, SHOULD BE INTERPRETED IN ITS WIDER SIGNIFICANCE AS INCLUDING LANDS WHICH ARE USED OR A RE CAPABLE OF BEING USED FOR RAISING ANY VALUABLE PLANTS OR TREES OR FO R ANY OTHER PURPOSE OF HUSBANDRY (SEE SAROJINIDEVI V. SHRI KRISHNA ANJANNE YA SUBRAHMANYAM AND OTHER(1) AND MEGH RAJ V. ALLAH RAKHIA (2)).' 20. FOR THE FOREGOING REASONS, WE PASS THE FOLLOWIN G ORDER: (I) ON THE QUESTION OF LAW RAISED, WE ARE OF THE VIEW THAT THE TRIBUNAL WAS NOT JUSTIFIED IN REJECTING THE EXEMPTION. ACCORDINGLY, THE QUESTIONS OF LAW ARE ANSWERED IN FAVOUR OF THE ASSESSEES; (II)CONSEQUENTLY, THE ORDER OF THE TRIBUNAL DATED 1 1.4.2013 IS SET ASIDE. IN THE RESULT, BOTH THE ABOVE TAX CASE (APPEALS) ARE ALLOWED. NO COSTS. CONSEQUENTLY, CONNECTED MISCELLANEOUS PETITIONS ARE CLOSED. ITA NOS.26&27/VIZAG/2012, 187/VIZAG/2014 & 135/VIZA G/2015 & SP NO.18/VIZAG/2014 DASARI SUJATHA, ANAKAPALLE, VSKP 18 23. FROM THE ABOVE, IT IS VERY MUCH CLEAR THAT ONCE LAND IS CLASSIFIED IN THE REVENUE RECORD AS AN AGRICULTURAL LAND EVEN ASS ESSEE HAS NOT CARRIED AGRICULTURAL OPERATIONS, CAPITAL GAIN TAX CANNOT BE ATTRACTED. 24. IN THE CASE OF SMT. CHALASANI NAGA RATNA KUMARI (SUPRA), WHEREIN THE COORDINATE BENCH OF THE TRIBUNAL, WHEREIN BOTH THE JUDICIAL MEMBER & ACCOUNTANT MEMBER ARE PARTIES TO THE ORDER DATED 23.12.2016 HAS CONSIDERED THE SIMILAR ISSUE AND HELD THAT ONCE LAN DS ARE CLASSIFIED AS AGRICULTURAL LANDS IN THE REVENUE RECORDS, SUITABLE FOR AGRICULTURAL OPERATIONS WHERE AGRICULTURAL OPERATIONS CARRIED OR NOT, THE CHARACTER OF THE LAND CANNOT CHANGE FROM AGRICULTURAL TO NON AGR ICULTURAL LAND. THE RELEVANT PORTION OF THE ORDER IS EXTRACTED BELOW: 8. HAVING HEARD BOTH THE SIDES AND CONSIDERED MATERIAL S ON RECORD, WE FIND THAT THE A.O. COMPUTED CAPITAL GAINS ON TRANSFER OF LANDS FOR THE REASON THAT THE LANDS SOLD BY THE ASSESSEE ARE NOT AGRICUL TURAL LANDS AND LIABLE FOR CAPITAL GAINS. THE A.O. FURTHER OBSERVED THAT THE LANDS ARE SITUATED WITHIN 8 KMS. FROM THE LIMITS OF GVMC AND HENCE, PREVIOUS LIMITS OF VISAKHAPATNAM MUNICIPAL CORPORATION IS IRRELEVANT T O DETERMINE THE DISTANCE. SINCE, AS ON THE DATE OF TRANSFER OF LA NDS, THE EXTENDED LIMITS OF GVMC HAS BEEN NOTIFIED BY THE GOVT. OF ANDHRA PR ADESH, THE DISTANCE FROM THE EXTENDED LIMITS OF GVMC HAS TO BE CONSIDER ED TO DETERMINE WHETHER THE PARTICULAR LAND IS SITUATED WITHIN 8 KM S. FROM SUCH DISTANCE OR NOT. THE ASSESSEE CLAIMS THAT THE LANDS ARE AGRICU LTURAL LANDS AND AGRICULTURAL OPERATIONS WERE CARRIED OUT TILL 2007 AND AFTER WHICH THERE WERE DISPUTES AND AS A RESULT AGRICULTURAL OPERATIO NS COULD NOT BE CARRIED OUT. WE FIND FORCE IN THE ARGUMENTS OF THE ASSESSE E FOR THE REASON THAT THE IMPUGNED LANDS ARE CLASSIFIED AS AGRICULTURAL L ANDS IN THE REVENUE RECORDS OF THE STATE GOVERNMENT. THOUGH THERE IS N O AGRICULTURAL OPERATION CARRIED OUT BY THE ASSESSEE, THE LANDS HE LD BY THE ASSESSEE ARE CLASSIFIED AS AGRICULTURAL LANDS IN THE REVENUE REC ORDS AND ALSO SUITABLE FOR AGRICULTURAL OPERATIONS. THEREFORE, IMPUGNED LANDS CANNOT BE HELD AS NON-AGRICULTURAL LANDS, JUST BECAUSE THE ASSESSEE H AS NOT CARRIED OUT ANY ITA NOS.26&27/VIZAG/2012, 187/VIZAG/2014 & 135/VIZA G/2015 & SP NO.18/VIZAG/2014 DASARI SUJATHA, ANAKAPALLE, VSKP 19 AGRICULTURAL OPERATIONS. ONCE, THE LANDS ARE CLASS IFIED AS AGRICULTURAL LANDS IN THE REVENUE RECORDS AND SUITABLE FOR AGRICULTURA L OPERATIONS, WHETHER OR NOT AGRICULTURAL OPERATIONS CARRIED OUT BY THE ASSE SSEE, THE CHARACTERISTICS OF LAND DOES NOT CHANGE FROM AGRICULTURAL LAND TO N ON-AGRICULTURAL LANDS. THEREFORE, WE ARE OF THE VIEW THAT THE LOWER AUTHOR ITIES WERE ERRED IN HOLDING THE IMPUGNED LANDS ARE NON AGRICULTURAL LAN DS. 25. IN THE CASE OF CIT VS. P.J. THOMAS (1995) 211 I TR 0897, THE HONBLE MADRAS HIGH COURT HAS HELD THAT SEC. 2(14) (III) REFERS TO THE EXCLUSION AS CAPITAL ASSET OF AGRICULTURAL LANDS SI TUATE IN AN AREA WHICH IS COMPRISED WITHIN THE JURISDICTION OF A MUN ICIPALITY (WHETHER KNOWN AS MUNICIPALITY OR MUNICIPAL CORPORA TION, NOTIFIED AREA COMMITTEE, TOWN AREA COMMITTEE, TOWN COMMITTEE OR BY ANY OTHER NAME) OR A CANTONMENT, WHICH HAS A POPULATION OF NOT LESS THAN 10,000 ACCORDING TO THE LAST PRECEDING CENSUS. IN ORDER THAT THE BENEFIT OF EXCLUSION OF AGRICULTURAL LAND AS CA PITAL ASSET MAY NOT BE AVAILABLE, THE LAND SHOULD BE SITUATED WITHI N THE JURISDICTION OF A MUNICIPALITY OR A CANTONMENT BOAR D AS STATED EARLIER AND IS ALSO RELATED TO THE POPULATION. THOU GH THE EXPRESSION, 'MUNICIPALITY, MUNICIPAL CORPORATION, N OTIFIED AREA COMMITTEE TOWN AREA COMMITTEE, TOWN COMMITTEE', ETC ., HAVE BEEN USED THEY REFER ONLY TO CERTAIN SPECIFIC ENTIT IES EITHER KNOWN BY THAT NAME OR BY ANY OTHER NAME AND THAT CANNOT B E TAKEN TO APPLY TO A PANCHAYAT WHICH IS AND HAS ALSO ALWAYS B EEN ITA NOS.26&27/VIZAG/2012, 187/VIZAG/2014 & 135/VIZA G/2015 & SP NO.18/VIZAG/2014 DASARI SUJATHA, ANAKAPALLE, VSKP 20 UNDERSTOOD AS DISTINCT AND DIFFERENT FROM MUNICIPAL ITY, ETC. IN THE ABSENCE OF CLEAR OR SPECIFIC WORDS IN THE SECTION T O TAKE IN A PANCHAYAT, IT IS NOT POSSIBLE TO COUNTENANCE THE AR GUMENT OF COUNSEL FOR THE REVENUE. THE TRIBUNAL WAS QUITE JUS TIFIED IN DELETING THE TAX ARISING ON CAPITAL GAINS ON ACCOUN T OF THE SALE OF THE AGRICULTURAL LANDS BY THE ASSESSEE. FROM THE ABOVE, IT IS VERY CLEAR THAT THE EXCLUSION PROVIDED U/S 2(14)(III) DO ES NOT APPLY TO AGRICULTURAL LAND SITUATED WITHIN THE PANCHAYAT LIM ITS. 26. KEEPING IN VIEW OF THE ABOVE AND ALSO BY CONSID ERING THE FACTS AND CIRCUMSTANCES OF THE CASE, THE IMPUGNED LAND SOLD B Y THE ASSESSEE NOT ATTRACT THE CAPITAL GAINS TAX AND NO CAPITAL GAIN C AN BE TAXED. WE ALSO OBSERVED THAT THE ASSESSING OFFICER HAS NOT AT ALL EXAMINED BEFORE PASSING THE ORDER U/S 143(3) OF THE ACT WHETHER THE CAPITAL GAIN ATTRACTS OR NOT. AFTER SURVEY PROCEEDINGS, ASSESSEE FILED T HE RETURN AND SAME IS ACCEPTED WITHOUT MAKING ANY ENQUIRY. IT IS THE D UTY OF THE A.O. TO CONDUCT AN ENQUIRY BEFORE ASSESSING PARTICULAR INCO ME HAS TO BE TAXED OR NOT. IN THIS CASE, SUCH ENQUIRY WAS NOT MADE BY THE A.O. IN VIEW OF THE ABOVE, WE ARE OF THE OPINION THAT THE A.O. IS N OT CORRECT IN TAXING EXEMPT INCOME AS A CAPITAL GAIN. WE FIND THAT THE LD . CIT(A) WITHOUT CONSIDERING THE FACTS OF THE CASE AND WITHOUT EXAMI NING WHETHER THE ITA NOS.26&27/VIZAG/2012, 187/VIZAG/2014 & 135/VIZA G/2015 & SP NO.18/VIZAG/2014 DASARI SUJATHA, ANAKAPALLE, VSKP 21 IMPUGNED LAND IS AN AGRICULTURAL LAND OR NOT, THE G ROUND RAISED BY THE ASSESSEE IS DISMISSED. THUS, WE REVERSE THE ORDER PASSED BY THE CIT(A) AND THE GROUND RAISED BY THE ASSESSEE IS ALLOWED. 27. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IN ITA NO. 187/VIZAG/2014 IS ALLOWED. SO FAR AS OTHER APPEALS FILED BY THE ASSESSEE IN ITA NOS.26/VIZAG/2012 & 135/VIZAG/2015 ARE INFRU CTUOUS AND THE SAME ARE DISMISSED. 28. SO FAR AS ITA NO.27/VIZAG/2012 IS CONCERNED, TH E A.O. HAS PASSED AN ORDER U/S 143(3) R.W.S. 147 OF THE ACT DATED 30. 8.2011 ALLOWING CERTAIN CLAIMS MADE BY THE ASSESSEE. SUBSEQUENTLY, THE COMMISSIONER FOUND THAT THE A.O. HAS NOT MADE ANY ENQUIRY BEFORE ALLOWING THE CLAIMS MADE BY THE ASSESSEE AND BY EXERCISING THE POWER U/ S 263 OF THE ACT, THE COMMISSIONER HAS DIRECTED THE A.O. TO RE-DO THE ASSESSMENT DE- NOVO. WE FIND THAT THE A.O. HAS NOT EXAMINED THE I SSUE AT THE TIME OF COMPLETION OF ASSESSMENT AND HENCE CIT(A) RIGHTLY A SSUMED THE JURISDICTION TO REVISE THE ASSESSMENT ORDER. 29. IN VIEW OF THE ABOVE, WE FIND NO REASON TO INTE RFERE WITH THE ORDER PASSED BY THE LD. CIT U/S 263 OF THE ACT DATED 2.1. 2012. IN VIEW OF THE ABOVE, THE APPEAL FILED BY THE ASSESSEE IS DISMISSE D. ITA NOS.26&27/VIZAG/2012, 187/VIZAG/2014 & 135/VIZA G/2015 & SP NO.18/VIZAG/2014 DASARI SUJATHA, ANAKAPALLE, VSKP 22 30. THE ASSESSEE HAS FILED A STAY PETITION REQUESTI NG FOR STAY OF DEMAND. SINCE, THE APPEALS OF THE ASSESSEES HAVE B EEN DISPOSED, THE STAY APPLICATION FILED BY THE ASSESSEE BECOME INFRU CTUOUS. THEREFORE, STAY APPLICATION VIDE SP NO.18/VIZAG/2014 FILED BY THE ASSESSEE IS DISMISSED AS INFRUCTUOUS. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 5 TH MAY17. SD/- SD/- ( . ) ( . ) (G. MANJUNATHA) (V. DURGA RAO) /ACCOUNTANT MEMBER /JUDICIAL MEMBER ! /VISAKHAPATNAM: % /DATED : 05.05.2017 VG/SPS '! (! /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT SHRI SAMUEL NAGADESI, CHARTERED ACCOUNTANT, 408, SRI RAMAKRISHNA TOWERS, BESIDES IMAGE HOSPITALS, AMEERPE T, HYDERABAD-500 073. 2. / THE RESPONDENT THE ACIT, RANGE-5, VISAKHAPATNA M 3. / THE RESPONDENT THE DCIT, RANGE-5(1), VISAKHAPA TNAM 3. ) / THE CIT-1, VISAKHAPATNAM 4. ) ( ) / THE CIT(A),VISAKHAPATNAM 5. ! , , , , ! / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // /0 , (SR.PRIVATE SECRETARY) , , ! / ITAT, VISAKHAPATNAM