Sri Bora Rama Naidu (HUF), Visakhapatnam V. The ITO, Ward-4(1), Visakhapatnam

ITA 264/VIZ/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 2803 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 08-09-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 28-04-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SUBRATA SARKAR
• Assessee Lawyers: T V U B KISHORE BABU
• Keywords: Capital asset
• Section: 2(14)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO. 264 /VIZAG/ 20 10 ASSESSMENT YEAR : 2006 - 07 BORA RAMA NAIDU ( HUF) VISAKHAPATNAM ITO WARD - 4(1) VISAKHAPATNAM (APPELLANT) VS. (RESPONDENT) PAN NO.AHTBP 4058R APPELLANT BY: SHRI T.V.U.B. KISHORE BABU, ADVOCATE RESPONDENT BY: SHRI SUBRATA SARKAR, DR ORDER PER SHRI S.K. YADAV, JUDICIAL MEMBER : - THIS APPEAL I S PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) ON FOLLOWING GROUNDS: - 1. THE LD. CIT(A) ERRED BOTH ON FACTS AND LAW IN THE CIRCUMSTANCES OF THE APPELLANTS CASE FOR ASSESSMENT YEAR 2006 - 07. 2. THE LD. CIT(A) OUGHT NOT HAVE BROUGHT IN TO THE PURVIEW OF CAPITAL ASSET WITHIN THE MEANING OF SECTION 2(14)(III)(A) OF THE INCOME TAX ACT, DESPITE THE FACT THAT THE AGRICULTURAL LANDS SITUATED IN PARADESIPALEM, WHICH ARE BEYOND 8 KMS. FROM THE ERSTWHILE NOTIFIED VISAKHAPATNAM MUNICIPAL LIMITS AS PER THE NOTIF ICATION NO.9447 DATED 6 TH JANUARY, 1994 ISSUED BY GOVERNMENT OF INDIA, THE MINISTRY OF FINANCE. (DEPARTMENT OF REVENUE NO.S.O. 91(E) DATED 8 TH FEBRUARY, 1991 PARA 1 AND 2 OF THE NOTIFICATION). 3. THE LD. CIT(A) ERRED IN CONSIDERING THE EXTENDED MUNICIPAL LIMI TS VIDE NOTIFICATIONS DATED 21 ST NOVEMBER, 2005 ISSUED BY GOVERNMENT OF ANDHRA PRADESH WHICH WAS NOT NOTIFIED BY GOVERNMENT OF INDIA IN THE OFFICIAL GAZETTE TILL NOW AND HELD THE SUBJECT AGRICULTURAL LANDS SITUATED IN PARADESIPALEM AS CAPITAL ASSET FALLING WITHIN THE PURVIEW OF 2(14)(III)(A) OF THE INCOME TAX ACT. 4. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME OF HEARING. 2. THE BRIEF FACTS BORNE OUT FROM THE RECORD ARE THAT THE ASSESSEE SOLD AGRICULTURAL LAND SITUATED IN VILLAGE PARADESIPALEM ON 9.12.2005 . THE LAND WAS SOLD FOR A SALE CONSIDERATION OF RS.75,26,600/ - . THE A.O. TREATED THE ABOVE SAID AGRICULTURAL LAND AS A CAPITAL ASSET IN THE MEANING OF SECTION 2(14) OF THE ACT AND BROUGHT TO THE PURVIEW OF LONG TERM CAPITAL GAIN OF 2 RS.71,39,031/ - . SINCE THE AGRICULTURAL LAND WAS SOLD AS A VACANT SITE AND IN TERMS OF SQ.YDS., THEREFORE, THE SAME WAS TREATED BY THE A.O. AS CAPITAL ASSET AND BROUGHT TO TAX AS CAPITAL GAIN. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) WITH THE SUBMISSION THAT THE LAND S ARE SITUATED BEYOND 8 KMS. FROM ERSTWHILE MUNICIPAL LIMITS OF VISAKHAPATNAM. THEREFORE, THE LAND REMAINS THE AGRICULTURAL LANDS AND CAPITAL GAIN CANNOT BE CHARGED AND THE A.O. HAS WRONGLY INVOKED THE PROVISIONS OF SECTION 2(14) OF THE ACT. 3. CIT(A) RE - EXAMINED THE ISSUE BUT WAS NOT CONVINCED WITH THE EXPLANATIONS OF THE ASSESSEES AND HE REJECTED THE GROUND. 4. NOW THE ASSESSEE IS BEFORE US WITH THE SUBMISSION THAT THE IMPUGNED LAND WAS NOT SITUATED WITHIN THE MUNICIPAL LIMITS OF VMC (VISAKHAPATNAM MUN ICIPAL CORPORATION). HE FURTHER CONTENDED THAT THIS CASE FALLS WITHIN THE PURVIEW OF CLAUSE (B) OF 2(14)(III) OF THE I.T. ACT RELATING TO A DEFINITION OF AGRICULTURAL LAND. HE FURTHER CONTENDED THAT A LIMIT OF A MUNICIPALITY IS ALSO TO BE NOTIFIED BY THE CENTRAL GOVERNMENT. IN THIS REGARD, THE AREA UPTO A DISTANCE OF 8 KMS. WAS NOTIFIED BY THE CENTRAL GOVERNMENT VIDE NOTIFICATION NO.9447 DATED 6.1.1994 AND SINCE THE LAND SITUATES OUTSIDE THE LIMIT OF 8 KMS. FROM THE MUNICIPAL LIMITS, IT WOULD NOT FALL WI THIN THE PURVIEW OF THE CLAUSE (B) AND THE REVENUE HAS WRONGLY TREATED THE IMPUGNED LAND AS A CAPITAL ASSET AND COMPUTED THE LONG TERM CAPITAL GAIN. 5. THE LD. D.R. ON THE OTHER HAND HAS SUBMITTED THAT THE IMPUGNED LAND IS ADMITTEDLY SITUATED WITHIN THE MUNICIPAL LIMIT OF THE GVMC. THEREFORE, ASSESSEES CASE FALLS WITHIN THE PURVIEW OF CLAUSE (A) OF SECTION 2(14)(III) OF THE ACT AND THE LAND WHICH FALLS WITHIN THE MUNICIPAL LIMIT, NO NOTIFICATION FROM THE CENTRAL GOVERNMENT IS REQUIRED TO NOTIFY THAT TH E AGRICULTURAL LAND WHICH FALLS WITHIN THE EXTENDED LIMIT OF A MUNICIPALITY CEASE TO BE THE AGRICULTURAL LAND. OUR ATTENTION WAS INVITED TO BOTH THE CLAUSES OF SECTION 2(14)(III) OF THE ACT. THE LD. D.R. FURTHER CONTENDED THAT SINCE THE IMPUGNED LAND IS SITUATED WITHIN THE MUNICIPALITY LIMIT OF GVMC, THE REVENUE HAS RIGHTLY TREATED IT TO BE A CAPITAL ASSET AND COMPUTED THE CAPITAL GAIN. 3 6. HAVING CAREFULLY EXAMINED THE ORDERS OF THE LOWER AUTHORITIES IN THIS REGARD AND THE PROVISIONS OF SECTION 2(14)(II I) OF THE ACT RELATING TO AGRICULTURAL LAND, WE FIND THAT AS PER CLAUSE (A), ANY LAND WHICH IS SITUATED IN AN AREA WHICH IS COMPRISED WITHIN THE JURISDICTION OF MUNICIPALITY OR A CONTAINMENT BOARD WHICH HAS A POPULATION OF NOT LESS THAN 10,000 ACCORDING TO THE LAST PRECEDING CENSUS WOULD NOT BE AN AGRICULTURAL LAND. THE CLAUSE (B) OF SECTION 2(14)(III) DEALS WITH THOSE LANDS WHICH SITUATES IN ANY AREA WITHIN SUCH DISTANCE NOT BEING MORE THAN 8 KMS. FROM THE LOCAL LIMITS OF THE MUNICIPALITY OR CANTONMENT BO ARD AS THE CENTRAL GOVERNMENT MAY HAVING REGARD TO THE EXTENT OF AND SCOPE FOR URBANISATION OF THAT AREA AND OTHER RELEVANT CONSIDERATION SPECIFY IN THIS BEHALF BY NOTIFICATION IN THE OFFICIAL GAZETTE. TO BRING A LAND WITHIN THE PURVIEW OF CLAUSE (B), THE CENTRAL GOVERNMENT IS REQUIRED TO ISSUE A NOTIFICATION IN THE OFFICIAL GAZETTE. WITHOUT A NOTIFICATION, A LAND FALLS WITHIN THE 8 KMS. FROM THE LOCAL LIMITS OF ANY MUNICIPALITY WOULD NOT CEASE TO BE AN AGRICULTURAL LAND. BUT IN THE INSTANT CASE, THE IMP UGNED LAND IS ADMITTEDLY SITUATES WITHIN AREA OF A LOCAL LIMIT OF THE GVMC FOR WHICH NO NOTIFICATION AS SPECIFIED IN CLAUSE (B) IS REQUIRED TO BE ISSUED BY THE CENTRAL GOVERNMENT. WE HAVE ALSO EXAMINED THE CONTENTION OF THE ASSESSEES THAT THE GVMC WAS NOT IFIED BY THE LOCAL LAWS AND LOCAL LAWS CANNOT SUPERSEDE THE CENTRAL LAWS. BUT WE DO NOT FIND ANY FORCE IN THIS ARGUMENT BECAUSE THE MUNICIPALITY OR THE CANTONMENT BOARD ARE SUBJECT TO LOCAL LAWS AND WITHIN A STATE SUBJECT AND ARE CREATED BY A NOTIFICATION BY THE STATE GOVERNMENT. CENTRAL GOVERNMENT HAS NO JURISDICTION TO CREATE A MUNICIPALITY, CANTONMENT BOARD IN ANY STATE OF THE COUNTRY. CENTRAL GOVERNMENT IS CONCERNED WITH THE CENTRAL ACT. ONCE THE MUNICIPALITY OF THE CANTONMENT BOARD IS CREATED BY A NOTIFICATION BY THE STATE GOVERNMENT AS PER LOCAL LAWS, THE CENTRAL ACT WILL APPLY. THEREFORE ONCE THE IMPUGNED LAND IS SITUATED WITHIN THE JURISDICTION OF THE LOCAL LIMIT OF THE GVMC, THE IMPUGNED LAND CEASE TO BE THE AGRICULTURAL LAND AND ON ITS SALE CA PITAL GAIN IS TO BE COMPUTED. WE THEREFORE, FIND NO INFIRMITY IN THE ORDER OF THE CIT(A) WHO HAS RIGHTLY COMPUTED THE CAPITAL GAIN ON SALE OF THE IMPUGNED AGRICULTURAL LAND. 4 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. PRONOUNCED IN THE O PEN COURT ON 28.9 .20 10 SD/ - SD/ - (BR BASKARAN) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM, DATED 28 TH SEPTEMBER , 20 10 COPY TO 1 B. RAMA NAIDU (HUF), DR.NO.58 - 9 - 35, OLD KARASA, VISAKHAPATNAM 2 ITO WARD - 4(1), VISAKHAPATNAM 3 THE CI T, VISAKHAPATNAM 4 THE CIT (A) , VISAKHAPATNAM 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM