Shri Ambaben Jamubhai Patel, Surat V. The Income Tax Officer, Ward-4(4), Surat

ITA 3021/AHD/2014

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 2306 (ITAT-SURAT)
• Duration Of Justice: 7 year(s) 4 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-04-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: DB
• Next Hearing Date: 23-03-2022
• Assessment Year: 2007-2008
• Appeal Filed On: 13-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MISS ANUPMA SINGLA ADDITIONAL
• Assessee Lawyers: SOURABH SOPARKAR SENIOR
• Keywords: Reopening of assessment; Unexplained cash credit; Sale consideration of property below Jantri Value; Capital asset; Additional evidence; Cost of acquisition; Fair market value; Valuation report; Validity of assessment; Competent authority; Benefit of exemption; Revised return; Reason to believe; TDS; Capital Gains
• Section: 68; 148; 6; 63; 139; 143(3); 50C; 54F; 45(5); 2(14); 133(6); 250; 143(2); 208; 139(1); 64; 55A; 194LA; 73; 72

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER ITA No. ITA No.3021/AHD/2014-AY 2007-08 (Hearing in Virtual Court) Ambaben Jamubhai Patel, 41 Gita Nagar Society, Adajan Road Surat. ADPPP8562 P Vs ITO, Ward-4(4) Surat Appellant /assessee Respondent / Revenue Assessee by Sh. Sourabh Soparkar Senior Advocate with Ms Urvashi Shodhan Advocate, S/Sh Rasesh Shah- CA, Hiren Vepari CA, Rajesh Upadhyay,Sapnesh Sheth, CA & P.M. Jagasheth CA Revenue by Miss Anupma Singla Additional Commissioner of Income-tax / Senior Department Representative Date of hearing 23 & 24.03.2022 Order pronounced 13.04.2022 Order under section 254(1) of Income-tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. This is one of the appeals in Hazira Land Acquisition Group appeals. All the appeals pertaining to Hazira Land Acquisition are grouped together as there are certain common facts in all the appeals. The assessee(s) have raised certain common grounds of appeals, therefore to avoid and conflicting decision all appeals are clubbed and with the consent of parties this appeal was treated as lead case. The counsel(s) in various appeals as well as learned Senior departmental representative ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 2 have agreed that the decision taken in this lead case on broad issues may be followed in all the appeals. Therefore, with the consent of the parties this appeal was treated is heard and are adjudicated as lead case. So, now we are adverting to the facts of this case. 2. This appeal by assessee is directed against the order of ld. Commissioner of Income tax (Appeals)-II, hereinafter called “ld CIT(A)” Surat dated17.09.2014for assessment year (AY) 2007- 08, which in turn arises out of an assessment order passed by the Assessing Officer under section 143(3) r.w.s. 147 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’). The assessee has raised following grounds of appeal:- “1. On the facts and circumstances of the case as well as law on the subject, the learned Commissioner of income Tax (Appeals) has erred in confirming the action of the Assessing Officer in reopening the assessment by issuing notice u/s 148 of the Act and thereby framing assessment u/s 143(3) r.w.s. 147 of the Act. 2. On the facts and circumstances of the case as well as law on the subject, the learned Commissioner of income Tax (Appeals) has erred in confirming the action of the Assessing Officer in treating the land sold by assessee as capital asset within the meaning of section 2(14) of the I.T. Act, 1961 & thereby erred in taxing Rs.6,59,711/- as income from long term capital gains. ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 3 3. Without prejudice to what is stated above, the assessing office ought to have allowed deduction to assessee u./s 10(37) of the I.T Act 1961 on account of compulsory acquisition of agricultural land. 4. On the facts and circumstances of the case as well as law on the subject, the learned Commissioner of income Tax (Appeals) has erred in partly confirming the action of assessing office in taxing of Rs.6,50,000/- as capital gain without treating the same as part of land compensation for sale of agricultural land which is exempted and alternatively not allowing deduction u/s 10(37) of the I.T Act, 1961. 5.On the facts and circumstances of the case as well as law on the subject, the learned Commissioner of income Tax (Appeals) has erred in confirming the action of assessing officer in taking cost of acquisition of land at only Rs.2.05 per square meter instead of Rs.150 square meter as claimed by assessee. 6.On the facts and circumstances of the case as well as law on the subject, the learned Commissioner of income Tax (Appeals) has erred in confirming the action of assessing officer in treating agricultural income of Rs.5,000/- ass unexplained credit u/s 68 of the I.T. Act, 1961. 7. It is therefore prayed that the assessment framed u/s 143(3) r.w.s.147 may please be quashed and/or the above additions/disallowance made by Assessing Officer and confirmed by learned Commissioner of Income-tax (Appeals) may please be deleted.” ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 4 3. Brief facts of the case as gathered from the order of lower authorities are that the assessee filed her return of income for AY 2007-08 declaring total income of Rs.1,91,690/-. Subsequently, case of assessee was re-opened on 21.03.2012 under section 147of the Act on the basis of information that assessee has received compensation on account of compulsory acquisition of her land by Special Land Acquisition Officer, Hazira for M/s Essar Steel Ltd. The land of assessee falls in Survey No. 215/5 situated at village Hazira, Taluka Choryasi, District Surat, was acquired by Special Land Acquisition Officer. As per information received from Special Land Acquisition officer that assessee has received Rs.20 lakh as compensation for her land bearing revenue survey No.215/5 on account of compulsory acquisition. On the basis of information from the office of Special Land Acquisition Collector about disbursement of compensation, the Assessing Officer had formed his “reasons to believe” that income to the extent of compensation, chargeable to tax has escaped assessment within the meaning of section 147 of the Act. The Assessing Officer also noted that land of assessee is situated ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 5 in Hazira Notified Area, which was declared as notified area by Industries & Mines Department, Government of Gujarat No. GHU/97/(3)/GID/1096/866/G-1, dated 30.01.1997,under Chapter XVI-A of the Gujarat Municipalities Act, 1963. The said Notification was published in Government of Gujarat Gazette Extraordinary VOL.XXXXVII of January 30, 1997/Magha 10,1918. On the aforesaid reasons, the case of assessee was re-opened. Notice under section 148 was issued to the assessee on 21.03.2012. In response to notice under section 148 the assessee filed her return of income on 12.09.2012 declaring income of Rs.1,96,690/- which consists of agricultural income of Rs. 5000/-. The Assessing Officer after serving statutory notice under section 143(2) on 25.09.2012 proceeded for re-assessment. During the assessment, the assessee filed her reply dated 18.09.2012 and furnished the details of her bank account, Form No.7/12 showing details of land and details of agricultural activities carried out by her father. The assessee also stated that her father used to cultivate the land and were growing vegetable in the land. The vegetables were sold by her father in the locality ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 6 and local market and no bills or invoices were prepared as per custom of local market. The record of Talati evidence showing the agricultural produce was also furnished. The assessee specifically contended that agricultural land was irrigated land. The land is situated 26 kilometre away from Surat City periphery and thus the provision of capital gains is not applicable as per section 10(37) and 2(14)(iii)(a) of Income Tax Act. The village Hazira, where the land is situated having population of less than ten thousand and land was used for agricultural purposes. Thus, it is outside the definition of ‘capital asset’ and not subject to ‘capital gains’ on sale or acquisition. The assessee also stated that as per the provision of Transfer of Property Act, the definition of land includes standing trees, shrubs rooted in the earth part of land and these cannot be treated separately. The compensation was paid for trees; shrubs, bore well and pucca house, which were consideration for agricultural land. The assessee in other submission also stated if capital gains is calculated it will be nil. The assessee furnished the working of capital gains. The assessee requested for dropping the proceedings under ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 7 sections 147 read with section (r.w.s) 148 of the Act. The explanation / reply furnished by assessee was not accepted by Assessing Officer. The Assessing Officer held that assessee has not produced any evidence that agricultural activities were carried out on the said land. In absence of any documentary evidence, the contention of assessee that vegetable were grown on the land was not accepted by Assessing Officer. The Assessing Officer further noted that he gathered information from Esser Steel Ltd., vide letter dated 20.11.2012 that assessee received compensation of Rs.7.00 lakh against the value of land and Rs.13 lakh received for pukka huts, pukka house, water tank. On the basis of information received from M/s Esser Steel Ltd. The Assessing Officer issued show cause notice dated 27.02.2013, as to why the consideration (compensation) of land of Rs.7.00 lakh against the value of land should not be treated as Long Term Capital Gains (LTCG) and Rs.13.00 lakhs received on account of other receipt should not be taxed as “income from other sources”. In the first notice itself, the Assessing Officer made endorsement of final opportunity (para-3, para-6 of assessment order).The ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 8 Assessing Officer recorded that none attended the hearing on 06.03.2013 and the Assessing Officer completed the assessment on the basis of record available with him. 4. The Assessing Officer held that land of assessee bearing Revenue Survey No.215/5 situated at village Hazira Taluka- Choryasi, District Surat was compulsory acquired by special land acquisition officer for Essar Steel Ltd. The land is situated in Hazira Notified Area as per Notification of the Industries & Mines Department, Government of Gujarat and thus falls under the ambit of ‘capital asset’. The Assessing Officer by referring the definition of capital asset defined under section 2(14) held that assessee received compensation of Rs.7.00 lakh on account of transferring of land situated in Notified area, falls within the definition of capital asset as define in Section 2(14)(iii)(a) & (b) of the Act. The Mamlatdar Taluka: Choryasi, District Surat vide letter dated 16.01.2013 inform that population of whole of Hazira Notified area as per Census of 2001 was more than ten thousand. The land Survey No.215/5 falls in Notified area is a capital asset. The compensation received on transferring of ‘capital asset’ is ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 9 liable to be taxed. The Assessing Officer after referring the provision of Section 10(37)(ii) of the Act held that for seeking exemption under this provision, such land must have been used for agricultural purposes during the period of two years immediately preceding the date of transfer. The assessee has not produced any evidence regarding that agricultural activities were actually carried out on this land. Accordingly, the benefit of exemption under section 10(37) is also denied to the assessee. The Assessing Officer also referred a letter dated 16.06.2004 issued by District Agricultural Officer, Zilla Panchayat, Surat that many parts of land of Hazira are covered by high tide and certain parts of that land are uneven and barren. By referring the contents of said letter, the Assessing Officer took his view that possibility of agricultural activities in this area is nil. 5. The Assessing Officer on the basis of information collected from the office of Sub Registrar Athwa, Surat-1; regarding cost of acquisition of the land for the year 1981 treated the cost of acquisition of land in 1981 at Rs.2.05/- per sq.mt. The valuation report dated 28.01.2013 of the Government ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 10 approved valuer furnished by the assessee, who suggested the rate of at Rs.150/- per sq.mt as on 01.04.1981, was not accepted by assessing officer. It was held that in adopting this rate, as per the submissions of assessee capital gains working is nil. The Assessing Officer adopted the value on the basis of information from office of Sub-Registrar Athwalines Surat at Rs.2.05/- per square metres on 01.04.1981 and computed the cost of acquisition on the share of assessee at Rs.40,289/- and worked out LTCG of Rs.6,59,711/-. 6. For other part of compensation of Rs. 13.00 lakh, which was classified by Assessing Officer against the pucca hut used was treated as “income from other sources”. Further the Assessing Officer held that the assessee has shown agricultural income of Rs.5,000/- in her return of income. The Assessing Officer took his view that during assessment, the assessee has not produced any supportive evidence of her agricultural activities, therefore, Rs.5,000/- was treated as “income from undisclosed sources” while passing the assessment order on 07.03.2013. 7. Aggrieved by the additions, and reopening the assessee filed appeal before Ld. CIT(A). Before Ld. CIT(A), the assessee ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 11 challenged the validity of re-opening, treatment of agriculture land as ‘capital asset’, exemption under section 10(37), treatment of additional compensation of Rs.13.00 lakh as “income from other sources”, adopting the cost of acquisition at Rs.2.05/- per sq.mt against the cost of Rs.150/- per square meter claimed by assessee and treating agricultural income of Rs. 5000/- “as income from unexplained sources”. 8. Before ld CIT(A) the assessee filed detailed written submissions as mentioned in para 6.2 of his order. The Ld. CIT(A) has not recorded the actual contents of (written submissions filed by assessee) on the issue of re-opening. The Ld. CIT(A) after considering the submissions of the assessee took his view that notice under section 148 was issued within four years from the end of relevant assessment year. Therefore, provision of section 147 is applicable. Further, no assessment under section 143(3) was passed. The Assessing Officer issued noticed under section 148 after receiving information about payment of compensation to assessee. In the return of income filed under section 139 of the Act, the assessee has not shown any income under the head “LTCG”. The Assessing Officer ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 12 issued notice after recording reasons for escapement of income. The Assessing Officer had formed his believe after recording all the aspects and Notification of Government of Gujarat about Notified area of Hazira. The Ld. CIT(A) noted that Chapter XVI-A of Gujarat Municipalities Act, 1963 (GUJ 34 of 1964), defines the Notified area as urban area or part thereof specified as Notified area to be an Industrial Township Area under the provisions of Clause-(1) of Article 243Q of the Constitution of India. Essar Steel Ltd., is located in the said Notified area. The composition of Gujarat Panchayat Act, 1993 ceased to apply in respect of Notified area from the date of Notification. Further, as per section 264B of the said Act a “person or committee” appointed for assessment / recovery of taxes of such area shall be deemed to be the “Municipal Borough”. On the basis of such reasons, the Ld. CIT(A) held the re-opening as valid. 9. On issue No.2 which relates to agricultural land not a ‘capital asset’. The Ld. CIT(A) observed that Mamlatdar, Taluka, Choryasi, District Surat vide his letter dated 16.01.2013 mentioned that population of the nine villages falling within ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 13 the Notified area as per census of 2001 was more than ten thousand. The Assessing Officer already held that Notified area comprises of land situated in these nine villages and therefore, population of these nine villages are to be considered for the purpose of Section 2(14)(iii)(a). The assessee claimed that her land is situated in village Hazira and its population is only 2137, which alone should be considered for the purpose of this section. The assessee in her alternative and without prejudice submissions claimed the benefit of Section 10(37) by claiming that even if the land acquired was a ‘capital asset’ no capital gains is leviable, as the land was acquired under compulsory acquisition. On such contention of assessee, the Ld. CIT(A) remanded the matter back to Assessing Officer vide his order dated 19.05.2014. The contents of reference is extracted in para-8.2 of Ld. CIT(A)’s order. In the remand order the Ld. CIT(A) recorded that as per the letter dated 16.01.2013 received from Mamlatdar office, population of each of nine villages mentioned in the said letter is less than ten thousand, as per census 2001. However, combined population of all nine villages exceed ten thousand. ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 14 It was also mentioned that in the certificate issued by Chief Officer Notified Area, Hazira, Surat, the population of Hazira Notified area was 2137. The certificate of Chief Officer Hazira Notified Area was issued to some individual assessee, while letter by Mamlatdar Taluka, Choryasi District Surat was sent to Assessing Officer. The Assessing Officer was also asked to clarify regarding the taxability and quantum of capital gains in respect of land and other asset separately and to clarify the population of which area is to be considered for the purpose under section 2(14)(iii)(a) of the Act. The Assessing Officer was also directed to comment on the distance of acquired land from Municipal limit (may be from Surat Municipal area). The Assessing Officer was asked to furnish his remand report within fifteen days of receipt of such direction of Ld. CIT(A). 10. The Ld. CIT(A) recorded that despite sending reminder letter to assessing officer on 18.07.2014, no remand report was furnished by Assessing Officer. The Ld. CIT(A) thereafter proceeded to decide the issue on the basis of material on record. The Ld. CIT(A) while considering the corresponding ground noted that this ground involved three issues viz; (i) if ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 15 the land acquired is ‘capital asset’ under section 2(14), (ii) if the land acquired by Special Land Acquisition officer falls in the definition of “capital asset” under section 2(14)(iii)(a) or not and (iii) whether if it is capital asset under section 2(14) [wrongly mentioned as 28(iii)(b)]. If the land falls under the definition of capital asset, the assessee is eligible for exemption under section 10(37) of the Act. The Ld. CIT(A) after considering the submission of assessee recorded that assessee claimed the land acquired was situated eight kilometre away from municipal limit of Surat Municipal Corporation, at the time of acquisition. The Assessing Officer has not invoked the provisions of section 2(14)(iii)(b) in his assessment order. Accordingly, the issue was held in favour of assessee by holding that land was acquired beyond eight kilometre within Municipal Corporation. Thus, issue No.3 as framed in para-8.4 by Ld. CIT(A) was decided in favour of assessee. So far as part first issue is concerned, which relates to section 2(14)(iii)(a) of the Act, the ld. CIT(A) observes that as per Notification dated 30.01.1997 (Notified area of Hazira) in assessment order, nine villages were included in the said Notified area. The assessee ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 16 claimed that as per the certificate of Chief Officer Notified area, the population of Notified area is only 2137, and that such information is available on Net/ website. However, Assessing Officer relied on the certificate issued by Mamlatdar in which individual population of each village included in the Hazira Notified area and total population exceed ten thousand. The Ld. CIT(A) further recorded that examining this issue, he found that several survey numbers falling in nine villages were notified by Notification dated 30.01.1997. If the said notified area is considered as a unit, the population of only those Survey numbers which have been included in the said Notification, has to be considered for the purpose of section 2(14)(iii)(a) of the Act. The remaining population of the villages will not be considered. If the said population of the said Notified area is less than ten thousand, the land acquired cannot be treated as capital asset, provided it was an agricultural land at the time of acquisition or transfer. As per census data 2001, the population of Hazira Notified area is 2137. However, the ld CIT(A) held that Hazira Notified area is a deemed municipality under the provision of Gujarat ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 17 Municipality Act, 1963. The only ambiguity created by certificate Mamlatdar relied by Assessing Officer therefore the matter was remanded to the Assessing Officer to ascertain whether all the survey numbers mentioned in the notification dated 30.01.1997 are included in the Hazira Notified Area or not. The Ld. CIT(A) further noted that if all those survey numbers are not included, the population of those survey numbers is only 2137 and not ten thousand or more. The entire population of all the nine villages cannot be aggregated / combined unless the entire area of the villages falls in the Notified area. Accordingly, Ld. CIT(A) took his view that subject to the verification by Assessing Officer, this issue to be decided by the Assessing Officer. 11. On the same time, Ld. CIT(A) held that this exercise may now be of only academic in view of his decision in para 8.15 of his order on issue, whether the land is a capital asset under section 2(14) r.w.s. 2(14)(iii)(a). On such issue, the Ld. CIT(A) by referring several decisions of superior courts as mentioned in para 8.10 of his order that in the case of G.M. Omer Khan Vs Add CIT (1992) 196 ITR 269 (SC) held that population of ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 18 entire Notified area is to be considered for the purpose of section 2(14)(iii)(a) and not the population of any single village in that area. The case law relied by assessee in Smt. T. Urmial vs. ITO (57 SOT 88), was distinguished by ld CIT(A) by taking view that the ratio of the said decision is not applicable in the present case as there is a clear provision in Gujarat Municipal Act, 1963 that Notified area is deemed to be Municipality. 12. The Ld. CIT(A) further recorded whether the land is an agricultural land or not, is a question of fact and several tests laid down by the courts are only in the nature of guidelines and inference has to be drawn on a cumulative consideration of all the relevant facts. The assessee is required to establish that land was used for agricultural purposes and only when it classified as agricultural land. The District Agricultural Officer has confirmed that most of the land is rocky, affected by sea water, no irrigation facilities and only grass is grown and unsuitable for irrigation. Thus, it cannot be accepted that land was used for agricultural operation or was capable for operation. No evidence of agricultural income or activities in recent past has been furnished. Somehow Notified area were ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 19 acquired in past is a part of Surat Urban Development Authority. On the basis of his observation, Ld. CIT(A) held that the land acquired was not agricultural land and is a capital asset within the definition under section 2(14) of the Act. Once the land is held as capital asset, the issue of applicability or sub-clause (a) or (b) or section 2(14)(iii) do not arise in such cases and profit on transfer of such land is assessable under the head of “capital gain”. 13. On the other part of ground No.2 regarding deduction under section 10(37), the Ld. CIT(A) held that the assessee failed to establish that land was used for agricultural purposes. Thus, the conditions of section 10(37) are not fulfilled. As per information from Land Revenue Authority, the land in the Notified area has no irrigation facilities and most of the land is unsuitable for agricultural purposes and only natural grass grown in the said land. Thus, the Ld. CIT(A) also denied exemption under section 10(37) of the Act. 14. On the other ground which relates to treatment of part of compensation of Rs.13.00 lakh as income from ‘other sources’, the ld. CIT(A) held that this component of compensation is ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 20 given for constructed property on the land consisting of pucca house, pucca wall etc., apart from natural grown grass. The assessee claimed that compensation in respect of aforesaid aspect is actually the compensation in respect of land only and not assessable under the head “other sources” and reliance was placed on the basis of decision of Tribunal in the case of The Special Land Acquisition vs. ITO-TDS-4, Surat in ITA No.236/AHD/2010, wherein the Ld. CIT(A) observed that the said decision was given in respect of liability of Special Land Acquisition Officer to make TDS under section 194LA for payment of compulsory acquisition of land, wherein it was held that Special Land Acquisition Officer was not liable to deduct tax at source on compensation paid in respect of land and also in respect of other constructed property, on the said land. The said judgment was delivered on totally different issue. The Tribunal inexplicit term has clarified in its decision for limited purposes regarding liability to deduct the tax at sources. Therefore, the said decision will not help the assessee. The Ld. CIT(A) while referring the decision of Jaipur Bench in the case of Shyam Sunder Mukhija Vs ITO in ITA ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 21 No.1082/JP/1987 dated 15.04.1991 has allowed the claim of assessee under section 54F in respect of farm house built on agricultural land. The Tribunal held that house constructed on agricultural land sold by assessee is eligible for claim under section 54F i.e. construction on the agricultural land is to be treated as separate capital asset. The assessee has received compensation in respect of such construction separately, therefore inclusion of entire compensation against the land was rejected. 15. However, Ld. CIT(A) held that action of Assessing Officer is not correct on taxability of such amount under the head “income from other sources”. The constructed property on the land is a ‘capital asset’ and income earned on sale or acquisition is assessable under the head “capital gains” only. The Ld. CIT(A) further observed that the assessee either at the assessment stage or appellate stage has not furnished any evidence or details of cost of acquisition, so he estimated @ 50% of Rs.13.00 lakh as cost of acquisition. Therefore, the addition was reduced to Rs.6,50,000/- and directed the assessing ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 22 officer to assess under the head “capital gain” in place of income under the head “other sources”. 16. On the remaining issue which relates to cost of acquisition of land, as has been taken at Rs.2.50/- per square meter by Assessing Officer and Rs.150/- per square meter by assessee, the Ld. CIT(A) held that this ground is relevant only if the population of Notified area is more than ten thousand. Since the Assessing Officer has considered the cost of acquisition at Rs.2.05/- per square meter on the basis of information collected by issuing notice under section 133(6) from office of Sub-Registrar, Surat. The Assessing Officer rejected the valuation report furnished by assessee on the ground that valuation has been done on the basis of reversed calculation. The Ld. CIT(A) further recorded that section 55A of the Act, which is applicable from 01.07.2012 empower the Assessing Officer to refer the capital asset for valuation to the Valuation Officer for determination for fair market value, if the estimates made by Registered valuer is at variance with the fair market value in the opinion of Assessing Officer. This provision was introduced with effect from 01.07.2012 and is applicable for ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 23 all assessment proceedings finalized after that date as the amendment is of procedural in nature. Therefore, it is not obligatory for the Assessing Officer to refer all the cases for valuation and the assessee has to make out a prima facie for the reference and rejected the plea of assessee and dismissed the corresponding grounds. Further aggrieved, assessee has filed present appeal before the Tribunal. 17. We have heard the submission of Shri Saurabh Soparkar, learned Senior Advocate (hereinafter referred to as ‘ learned Senior Advocate’) assisted by Ms. Urvashi Shodhan Advocate. As this case was treated as “lead case”, therefore the submission of Shri Rasesh Shah, C.A, Shri Rajesh Upadhyay, Shri Hiren Vepari, CA, Shri Sapnesh Sheth, CA, Sh Pragnesh Jagasheth for different appellants / assessees / group of assessee’s was also heard on various issues. We have also heard the submission of Ms. Anupma Singla, learned Additional Commissioner of Income-tax/Senior departmental Representative, hereinafter referred as Sr DR for the Revenue. 18. The learned senior Advocate for assessee submits that basically there are four broad issues involved in all these group ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 24 appeals; (i) validity of re-opening, (ii) taxability of capital gains in relation to land; (iii) taxability of capital gains in relation to pucca structure / building and (iv) taxability of capital gains in relation to trees and structures on the land. 19. On issue No.1, the learned Senior Counsel for the assessee submits that revenue sought to invoke the provision of section 45(5) on the ground that case of assessee is covered by special provision governing taxation of compulsory acquisition of land, whole assumption is factually and legally unsustainable. The provision of section 45(5) would apply if and only if there is compulsory acquisition of lands. There are two awards in the present case, the first award is the consent award dated 31.07.2017, copy of which is placed on record at page 14 to 23 with its translation at page 36 to 64 and the second award dated 21.01.2008 passed by Special Land Acquisition Officer, copy of which is placed also on record in its translation. Both awards can be regarded as compulsory award, but even then the provision of section 45(5) has no application to invoke this provision. In order to invoke this provision, it is necessary that assessee must receive compensation in two parts, firstly, under ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 25 award and secondly, by way of enhancement. To support his submission, the learned Senior Counsel for the assessee relied on the decision of Hon'ble Kerala High Court in the case of CPL Lonappan& Sons 265 ITR 101 (Ker). In the present case, the whole group of matters, there is no enhancement at all, the amount is paid once and for all. If there be situation, the provision of sub-section (5) of Section 45 cannot be invoked then the case would fall only under sub-section (1) of section 45. If the case falls under sub-section (1) of section 45 then the capital gains on compulsory acquisition of land can be taxed only in the year in which the title in the land vested in the Government. The title would vests in the Government under section11 (2) of Land Acquisition Act after award, when the possession is taken over before the date of award then on the date of award. To support of this ratio, the learned Senior Counsel for the assessee relied on the decision of Hon'ble Supreme Court in the case of Raj Pal Singh (427 ITR 1-SC). The learned Senior Counsel for assessee submits that under these circumstances, the compensation would be taxable, if at all under the first award on the date of award because possession ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 26 was already taken over prior to date of award, which is on 31.07.2007 and therefore AY 2007-08. So far as case of assessee is covered second award dated 21.01.2008 are concerned, there also position would be same. The vesting day being 21.01.2008, the year of taxability if at all would be AY 2008-09 only. So the taxing capital gains in any other year would be invalid. Accordingly, the re-opening of assessment of other year would be invalid and illegal. 20. On the second issue, which relates taxability of capital gains in relation to land, the learned Senior Counsel for the assessee submits that assessees have pleaded two alternative cases for claiming that amount of compensation received on acquisition would not be subject to capital gains tax. Firstly, the agricultural land is not capital asset, the learned Senior Counsel for the assessee submits that land in question are agricultural land not being situated in an area which is comprised within the jurisdiction of any municipality which has a population of not less than ten thousand, according to last census of which the relevant figure have been published before first day of relevant financial year. Therefore, the land is ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 27 not capital asset within the meaning of section of 2(14). If the land is not capital asset, question of paying any tax on their acquisition cannot arise. In order to succeed on this issue, the assessee has to satisfy two requirements; (i) the land must be “agricultural land” and secondly, in order to claim exemption that agricultural land is not situated within the municipal limit having population of not less than ten thousand, as per the last census published. For first condition, the fact became obvious from the award itself that there are categorical reference that all the lands in question are agricultural land. In first award dated 31.07.2007 as well as second award dated 21.01.2008, the land is categorised as agricultural land. The lands in question were fertile and agricultural operation was carried out and valued at Rs.300/- per square meter. In the second award the fact that agricultural operation are carried out is also certified by District Agricultural Officer, Surat vide his letter dated 16.06.2014 as record in the second award. Where the lands are fallow or were incapable of being cultivated compensation is awarded at a token rate of Rs.1.00/- per square meter. The learned Senior Counsel for ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 28 assessee submits that so far as first award is concerned, no much discussion about agriculture activities, because it was a consent award. However, the fact that agriculturists were paid compensation @ Rs.247/- per square meter much closure to the compensation of Rs.300/- per square meter under the second award clearly shows that these lands are also agricultural land. The awards were passed by officers of State Government. The correctness of the statement made therein cannot be doubted. In the award, the Special Land Acquisition Officer has clearly recorded the nature of land as agricultural land. The observation of Assessing Officer that lands were not fertile or incapable of carrying out any agricultural operation is contrary to the record. To support his submission, the learned Senior Counsel for the assessee relied upon the decision of Hon'ble Delhi High Court in the case of Hindustan Industrial Resources Ltd. vs. ACIT (2011) 335 ITR 77 (Del). 21. The learned Senior Counsel further submits that in the Revenue record, the land is shown as agricultural land. There is no material on record that nature of land was changed from agricultural to non-agricultural before vesting the land either ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 29 with the State Government or before transfer to the Esser Steel Ltd, on behalf of which said land was acquired. The learned Senior Counsel for the assessee submits that mere entry in the Revenue record is not conclusive and all other surrounding circumstances has to be assessed for determining the nature of land as agricultural land. The Hon'ble jurisdictional High Court in the case of CIT Vs Sidharth J Desai (1983) 139 ITR 628 (Guj) held that several facts are relevant and are weighted against each other while determining the true nature and character of the land. The Hon'ble jurisdictional High Court has laid down thirteen test to determine whether the land would be agriculture land or not, which consist of conditions:- a. whether, the land was classified in the revenue record as agricultural and whether it was subject to the payment of land revenue, but this factor alone will not be conclusive; b. whether the land was actually or ordinarily used for agricultural purposes at or about the relevant time; c. whether such user of the land was for a long period or whether it was of a temporary character or by way of stop- gap arrangement; ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 30 d.whether the income derived from the agricultural operations carried on in the land bore any rational proportion to the investment made in purchasing the land’ e. whether the permission under section 65 of the Bombay Land Revenue Code, was obtained for the non- agricultural use of the lands; if so, when and by whom; whether such permission was in respect of the whole or a portion of the land; if the permission was in respect of a portion of the land and if it was obtained in past, what was the nature of the user of the said portion of the land on the material date; f. whether the land, on the relevant date, had ceased to be put to the agricultural use; if so, whether, it was put to an alternative use; whether, such a cessor and/or alternative user was of a permanent or temporary nature; g. whether the land, though entered in revenue record, had never been actually used for agriculture; whether the owner meant or intended to use it for agricultural purposes; h. whether the land was situated in a developed area; whether its physical characteristics, surrounding situation and use of the lands in the adjoining area where such as would indicate that the land was agricultural; ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 31 i. whether the land itself was developed by plotting and providing roads and other facilities; j. whether there were any previous sales of portions of the land for non-agricultural use; k. whether permission under section 63 of the Bombay Tenancy and Agricultural lands Act, was obtained because the sale or intended sale was in favour of a non- agriculturist; if so, whether the sale or intended sale to such non-agriculturist was for non-agricultural or agricultural user. l. whether an agriculturist would purchase the land for agricultural purposes at the price at which the land as sold and whether the owner would have ever sold the land valuing it as a property yielding agricultural produce on the basis of its yield; and m. whether the land was sold on yardage or on acreage basis 22. To support his contention, the learned Senior Counsel for the assessee also relied on the decision of Hon'ble jurisdictional High Court in the case of CIT Vs Special Land Acquisition Officer 72 taxman.com 255 (Guj) (which relates to same part of land). The learned Senior Counsel for the assessee further submits that Revenue has led no evidence to rebut the ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 32 presumption that land under dispute are not agricultural land as held by Hon'ble jurisdictional High Court in Special Land Acquisition Officer. The learned Senior Counsel for the assessee submits that one of the objection was taken by lower authorities that the land owners have not shown any agricultural income in any of the earlier year. The assessee and other land owners having no other income except the agricultural income and therefore they were under no obligation to file return of income. To support his submission, the learned Senior Counsel relied upon the decision of Hon'ble Bombay High Court in the case of CIT Vs Debbie Alamo 331 ITR 59 (Bom). 23. The second issue which needs to be established for claiming exemption to show that agricultural land is not situated within a “municipality” having population of less than ten thousand as per last published census 2001. The learned Senior Counsel for the assessee submits that he has two fold submissions on this aspect. Firstly, that Hazira Notified area is not municipality, in order to appreciate this aspect, it is necessary to refer the process by which Hazira Notified area was ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 33 established / set-up by virtue of Notification issued under section 16 of Gujarat Industrial Development Act, 1962 by way of Notification, would not make an area as ‘Municipality’. The term of “Municipality” is not define in the Income Tax Act. Similarly, it is not define in General Clause, 1882. One look for its meaning under Constitution of India. Article-243P(e) of the Constitution defines the same as “an institution as self- Government constituted under Article 243Q”.Proviso to Article 243Q(1) in turn provides that a ‘municipality’ under this clause may not be constituted in such urban area or part thereof as the Governor may having regard to the size of area and the municipal services being provided or proposed to be provided by industrial establishments in that area and such other factors as may be deemed fit by public Notification, specified to be an industrial township. This would mean in a simple meaning that industrial township set-up under this proviso would not be “Municipality”. As a matter of fact, it cannot be municipality. As such, Hazira Notified area is such an industrial township, therefore, not a municipality. The learned Senior Counsel for assessee submits that on the issuance of ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 34 the Notification under Section 16(1) of Gujarat Industrial Development Act, 1962, Hazira Notified area become a Notified area. Thereupon the provisions of Chapter-XVI-A Gujarat Municipalities Act, 1963 (Guj.35 of 1964) would apply. Hazira Notified area would then be an ‘Industrial Township’ area under Section 264A of the said Act. Under section 264B of the said Act, the State Government has a power to apply any section of the said Act or part thereof, or the Rules in force as maybe applied to a municipal borough to such notified area. Section 264C would create a fiction that for the purposes of any section of the said Act which may be applied to a notified area, the person or committee appointed for such area under section 264B shall be deemed to be a “Municipality” under the said Act. The fiction is an unlimited fiction. Firstly, the fiction is only in relation to those sections of the said Act which are applied to the notified area and even the second part of the fiction of deeming the notified area to be a “municipality” is only for the purpose of the said Act. It does not convert notified area into a “Municipality” in any way. The learned Senior Counsel for the assessee submits that the aforesaid aspects, is ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 35 clarified by Hon'ble Supreme Court in the case of Saij Gram Panchayat Vs State of Gujarat {(1999) (2) SCC 366}. By refereeing various paragraphs of the decision in Saji Gram Panchayat Vs State of Gujarat, the learned Senior Counsel for assessee accordingly retreated that Hazira Notified Area is not Municipality. 24. The learned Senior Counsel for the assessee submits that Section 16 of the Gujarat Industrial Development Act, 1962 is power to the State Government to issue Notification under which it can declare an industrial area as define in the said Act, would be deemed notified area under Gujarat Municipalities Act, 1963 (Guj.35 of 1964). This can be done by simply Notification issued by State Government and it does not require formalities prescribed under Gujarat Municipalities Act, 1963 (Gun.35 of 1964) as this section begins with non obstante clause. Therefore, there are two important aspects to Section 16 of Gujarat Industrial Development Act, 1962.Firstly, it enables the State Government to equal the industrial area under the Gujarat Industrial Development Act, 1962, with a notify area under Gujarat Municipalities Act, 1963 by fiction. ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 36 This fiction can be brought into existence by Notification, therefore provision of Gujarat Municipalities Act, 1963 for creation of Notified area will not be Notified area created Section 16 of Gujarat Industrial Development Act, 1962 also a notified area so created. The Hon'ble Supreme Court further held that as a result of amendment in Section 264A in Gujarat Municipalities Act, 1963(Guj.35 of 1964) as amended on 20.08.1993 in view of insertion of part 9A, in Constitution, Section 264A was substantially amended and now provide that for the purpose this Chapter, notified area means an urban area or part thereof as specified to be an Industrial Township under the proviso to clause (i) to Article 243Q of Constitution of India. Thus, Hazira Notified area under Section 16 Gujarat Industrial Development Act,1962 become a Notified area under new Section 264A of Gujarat Municipalities Act, 1963 (Guj.35 of 1964) and would mean an Industrial Township area under proviso to clause-(i) of Article 243Q of the Constitution of India. On the basis of aforesaid legal position, Ld. Sr. counsel for the assessee submits that Hazira Notified area is not a ‘municipality’. ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 37 25. In second submission, the learned Senior Counsel for the assessee submits that Hazira Notified area did not have population of more than ten thousand as per last census in 2001.The assessee have placed on record a certificate of Mamlatdar which clearly established that population as per last census 2001 data was only 2137. The Assessing Officer did not accept the contention on the premise that Hazira Notified area is a much bigger area in which as many as nine villages comprised in. For that purpose, Assessing Officer relied on the certificate of Mamlatdar dated 16.01.2013 according to which the total population of nine villages comprising of Hazira Notified area was thirty eight thousand (38000). Before Ld. CIT(A), the assessee pointed out that this certificate dated 16.01.2013 is factually incorrect because it does not correctly recorded the area of Hazira Notified area. The boundary have been wrongly taken for that purpose, actual Notification establishing Hazira Notified area was placed on record where some of the villages were not included and that even where a village might have been included, all survey numbers of the villages were not included, the copy of which placed on record. ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 38 In this leading case (Ambaben Patel ITA No.3021/AHD/2014). The Ld. CIT(A) rightly pursued this inquiry and called remand report to examine this issue. The Ld. CIT(A) expressly held that entire population of all the villages cannot be totalled up and the Assessing Officer should ascertain whether all survey numbers are included in the Hazira Notified area. The Assessing Officer never responded on the queries of Ld. CIT(A). The learned Senior Counsel for the assessee submits that an appropriate adverse inference be drawn against the Revenue for not being able to answer the pertinent question raised by Ld. CIT(A) and the fact that population of the Hazira Notified area did not exceed ten thousand needs to be accepted. The learned Senior Counsel for the assessee reiterates that Hazira Notified area is not a municipal area nor at any rate its population exceed ten thousand as per last available census data. Thus, both the conditions are satisfied i.e., land in question being agricultural land not situated in municipality having population of more than ten thousand would not be ‘capital asset’ and therefore on its acquisition question of paying any capital gains tax would not arise. ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 39 26. In alternate submission, the learned Senior Counsel for the assessee submits that capital gains is exempt under section 10(37). The transaction of compulsory acquisition of agricultural land is exempt under section 10(37) of the Act. In order to attract exemption, four conditions have to be satisfied viz., (i) such land is situated in any area referred to in item (a) or item (b) of sub-clause (iii) of clause (14) of Section 2; (ii) such land during the period of two immediately preceding the date of transfer, was being used for agricultural purpose by such Hindu Undivided Family (HUF) or individual or a parent of assessee; (iii) such transfer is by way of compulsory acquisition under any law or a transfer the consideration for which is determined or approved by the Central Government or the Reserve Bank of India and (iv) such income has arisen from the compensation or consideration for such transfer received by such assessee on or after the 1 st day of April, 2004. The learned Senior Counsel for the assessee submits that if a view is taken that land are not situated within a municipal area under the first submission. This condition automatically stands satisfied. For second condition, the learned Senior Counsel for the ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 40 assessee submits that the agricultural operation are carried out is also noted and is certified by District Agricultural Officer, Surat vide his letter dated 16.06.2014. The awards are passed in financial year 2007-08, obviously, this would prove beyond doubt the land was being used for agricultural purposes, not only on date of acquisition but till the date of acquisition all throughout, but in any case for more than two years. For third condition, it was explained that admittedly first award is by consent; however, as held by Hon'ble Supreme Court in the case of Ghanashyam (HUF) 315 ITR 1 (SC) a consent award which has followed all steps of compulsory acquisition has to be regarded as an award of compulsory acquisition. So far as second award is concerned, it is undisputedly an award of compulsory acquisition. For fourth condition, about income arisen on compensation, the learned Senior Counsel for the assessee submits that there is no dispute on this condition. The learned Senior Counsel for assessee submits that even on alternative ground, the transaction of compulsory transaction of land should be regarded as exemption from levy of any capital gains tax. ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 41 27. In other alternative submission, the learned Senior Counsel for the assessee submits that even if any of the submission of assessee is not even acceptable that compensation in relation to land is not exempt under any of the alternate submission, the question of computing capital gains would arise. According to assessee, the cost of acquisition which is deemed market value as on 01.04.1981 as determined by lower authorities at Rs.2.05 per square meter is highly inadequate. The assessee has already placed on record, the valuation report to justify the value at Rs.150/- per square meter. The learned Senior Counsel for the assessee submits that his other colleagues Sh Rasesh Shah may supplement his submission on this issue. 28. On the issue No.3 which relates to taxability of capital gains in relation to building and other issue related to capital gain in relation to trees. The learned Senior Counsel for assessee submits that some of the assessee’s have been given additional and separate compensation in relation to standing trees. If such compensation is to be treated as a part of land and therefore exempting being agricultural land or has to be valued separately. The learned Senior Counsel for the assessee ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 42 submits that Hon'ble jurisdictional High Court in the case of Special Land Acquisition Officer 72 taxmann.com 250 (Guj) (supra) held that any compensation for losses of trees bearing fruit must necessary to be a part of compensation for agricultural land. To support his contention, Ld. Sr. counsel for the assessee submits that compensation given for crop and trees are part of compensation of agricultural land relied on the decision of Hon'ble Karnataka High Court in the case of Ramaiah Reddy 158 ITR 611 (Kar) and decision of Hon'ble Kerala High Court in the case of Alanickai Co. Ltd. 158 ITR 630 (Ker). 29. Shri Rasesh Shah, one of learned Senior Authorized Representatives (hereinafter referred to Ld. AR) for the assessee, who is also representing number of other assessee’s has also filed his detailed written submission on the validity of re-opening, on the issue that agricultural land is not capital asset, on the rejection of claim of exemption 10(37) and on the issue of valuation of built up house (pucca structure) and valuation of land as on 01.04.1981 and addition of Rs.5,000/- by treating the agricultural land as unexplained credit under ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 43 section 68 of the Act. The Ld. AR for the assessee submits that reasons recorded by assessing officer also can be summarized in three parts i.e., (a) land situated within Notified area is capital asset; (b) it is a case of transfer of capital asset by way of compulsory acquisition and Section 45(5) is applicable and that assessee had not filed return of income. The ld AR for the assessee submits that the assessee was the co-owner of 1/7 share in agriculture land at Block No 215/5 of survey no. 37 situated at Village Hazira, Taluka Choryasi, District. The said agriculture land was acquired by the State Government for the purpose of expansion of the steel plant of M/s Essar Steel Ltd. under the compulsory acquisition. The assessee and her family members were awarded compensation of Rs.1,75,00,000/- on account of compulsory acquisition of the land. The total consideration of Rs.1,75,00,000/- was bifurcated in two parts viz. (i) Rs. 65,50,000/- as compensation for land and (ii) Rs. 1,09,50,000/- as compensation for trees, construction etc. Accordingly, the assessee was entitled to receive total consideration of Rs.25,00,000/- for both components. During the assessment ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 44 year under consideration, the assessee received Rs.7,00,000/- as compensation for land and Rs.13,00,000/- as compensation for other items as her share. The ld Sr.AR for the assessee submits that the case of the assessee was reopened under section 147 on 27.03.2012. Notice under section 148 was issued on 21.03.2012. In the reasons recorded, the Assessing Officer recorded information received from Special Land Acquisition Officer, Surat, that the assessee has received compensation of Rs.26,25,000/- for surrender and transferring of ownership rights in the land on account of compulsory acquisition by the Special Land Acquisition officer. As per the Assessing Officer, the said land is situated in Hazira Notified area as per Notifications of the Industries and Mines Department, Government of Gujarat dated 30.01.1997 under Chapter XVI-A of the Gujarat Municipalities Act, 1963 published in Gujarat Government Gazette Extraordinary and therefore, is a Capital Asset and hence capital gains provisions of the Act are applicable. In the reasons recorded, the Assessing Officer also observed that the income is chargeable as capital gain under section 45(5) as the assessee received ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 45 the compensation against acquisition of the land. The Assessing Officer further recorded that assessee had not filed the return of income and thereby had not offered capital gain on compulsory acquisition of the land for taxation. The ld Sr.AR for the assessee submits that the reasons recorded by the Assessing Officer can be summarized under three grounds viz; firstly, the land is situated within Notified Area and therefore, it is a Capital Asset, secondly, it is case of transfer of capital asset by way of compulsory acquisition, the section 45(5) is applicable and thirdly, the assessee had not filed the return of income. On the first ground of reason for reopening, the ld AR for the assessee submitted that as per section 2(14)(iii)(a), the agriculture land can be treated as Capital Asset only when the population of the Notified Area exceeds 10,000. No such prima facie statement regarding the population was made in the reasons recorded. The assessing officer has not referred the census of the notified area in the reasons recorded. As per the decision of the Hon’ble Supreme Court in G.M. Omer Khan Vs. ACIT (196 ITR 269), it has been held that the population of the entire notified areas is to be ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 46 considered for the purpose of section 2(14)(iii) (a). Even in the assessment order, the assessing officer has not indicated the census of the Notified Area. The Assessing Officer has referred the census of nine villages that were included in the Notified Area as per the certificate of Mamlatdar dated 16.01.2013. The total of the population of these nine villages comes to 38,000. In fact, only two villages viz. Hazira and Suvali were included in the Hazira Notified Area. The other seven villages were described as boundaries in the Notification. Further, it is to be noted that not all the Survey Numbers of the land situated in said two villages were included in the Notified Area. Only certain Survey Numbers were included. On the specific contentions of the assessee, the learned CIT(A) therefore, remanded the matter to the Assessing Officer vide his order dated 19.05.2014, requiring the assessing officer to clarify in the remand report, the population of the Notified Area. The learned CIT(A) in para 8.3 of his order mentioned that the remand report was not received by him, but he passed the appellate order without waiting for the remand report. The learned CIT(A), although did not make any final conclusion ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 47 regarding population of the Notified Area, but prima facie concluded that the population of the Notified Area is less than 10000 as per his findings in Para 8.6 to 8.9 of his order. Anyway, the assessing officer has not referred the census of Notified Area in the reasons recorded. 30. On the basis of the above submissions, the ld Sr.AR for the assessee submits that the Assessing Officer has wrongly invoked the provisions of section 2(14)(iii)(a) without considering the census of the population. The matter was not clarified at the assessment stage and the appellate stage so even the prima facie belief of the Assessing Officer that the land falls under section 2(14)(iii)(a) is wrong as assessing officer has not referred the population of the notified area in the reasons recorded and CIT(A) has made prima facie conclusion that the population is less than 10000. The ld Sr.AR for the assessee submits that for purpose of section 2(14)(iii)(a), two conditions should be satisfied viz; (i) the land should be situated in the notified area and (ii) the population of the notified area should exceed 10,000. It is well settled position under the law that in the reasons recorded, the ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 48 assessing officer may not come to the final conclusion but, he has to express prima facie belief that income chargeable to tax has escaped assessment on the basis of the material mentioned in the reasons recorded. The assessing officer has just indicated that the land is situated in the Notified Area, so the materials are indefinite, far-fetched and remote to hold the belief of escapement of income. Accordingly, there was no reason in form of materials in support of the population exceeding 10000, so as to believe that assessee’s case falls under section 2(14)(iii)(a) and therefore, there was any escapement of income chargeable to tax. On the second ground of reasons recorded, the ld Sr.AR for the assessee submits that the assessing officer has formed the belief that income in the form of capital gain, chargeable to tax has escaped assessment on the basis that the assessee had received Rs.26,25,000/- as compensation for surrender and transfer of her ownership rights in land on account of compulsory acquisition. The assessee in fact, received Rs.20,00,000/- and not Rs.26,25,000/- during the year under consideration. Further, the amount mentioned as of ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 49 Rs.26,25,000/- is also wrong as the assessee was entitled to receive Rs.25,00,000/- at 1/7 th share. It is to be noted that in the reasons recorded, the Assessing Officer formed a belief that Rs.26,25,000/- has escaped assessment without application of mind. This is because, the receipts may result in loss and he has worked out the escapement of income only on the basis of the gross receipts, without giving any deduction for indexed cost of acquisition and improvement. 31. The Assessing Officer was not in possession of information about period and cost of acquisition of the land that was acquired. The Assessing Officer cannot form belief that income chargeable to tax under section 45, has escaped assessment merely for reason that assessee received sums on transfer of capital asset unless he indicates prima facie working of such escapement of capital gain in the reason recorded. It is submitted that the income from LTGC results into loss if the fair market value as on 01.04.1981 is taken at Rs.100 per sq. mt. or more. The assessee has claimed fair market value as on 01.04.1981 at Rs. 150/- per sq.mt. Even otherwise, in this case, as explained above, the Assessing Officer did not ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 50 consider the relevant and definite material to form a belief that the land was capital asset so as to fall under clause (iii) (a) of section 2(14) of the Act. On the third ground of reasons recorded, the Assessing Officer has wrongly mentioned that the assessee has not filed the return of income in the reasons recorded although the return was filed by the assessee on 30.11.2007 vide acknowledgment/ receipt No 030208603. Even the assessing officer in the assessment order observed that assessee filed original return of income declaring total income of Rs.1,91,690/-. Thus, under such circumstances, the assessment is required to be quashed as all three grounds of reasons recorded fail. It was submitted that the learned CIT(A) confirmed the validity of assessment as per finding given in para No 7 of his order by taking view that previously no scrutiny assessment was made and the Assessing Officer issued notice under section 148 after recording proper reasons on the basis of the Notification of the Government of Gujarat dated 30.10.1997, referred to in Para 2 of the assessment order, which proves that the land was situated in the Notified Area. The learned CIT(A) has also observed that in the original ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 51 return of income filed, the assessee has not shown the income from Capital Gain on sale of land. 32. The ld AR for the assessee submits that the learned CIT(A) confirmed the validity of assessment made under section 147 only on the basis that the land was situated in the Notified Area but, this only fact is remote for invoking section 2(14)(iii)(a). The condition of population exceeding ten thousand was not considered by the learned CIT(A) for deciding the validity of assessment and accordingly, the learned CIT(A) wrongly rejected the assessee’s ground. Further, the assessee filed her original return of income and the Assessing Officer wrongly stated in the reasons recorded that the assessee did not file the return of income. The learned CIT(A) changed the reasons recorded by giving reference to the return of income filed by the assessee that the assessee did not show income from capital gains in the original return of income filed by the assessee as in her version, the land was not a capital asset and even otherwise, the deduction u/s. 10(37) was available. It is well settled that even in case, where the original assessment is made without scrutiny, the requirement of the Assessing ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 52 Officer forming the belief that income chargeable to tax has escaped assessment would apply. To support his submissions the ld Sr.AR for the assessee relied on the decision in case of Inductotherm (India) P. Ltd. Vs. M. Gopalan, DCIT, reported in 356 ITR 481 (Guj) (2013).The ld AR for the assessee also submitted that it is well settled that the notice of reopening can be supported on the basis of reasons recorded by the assessing officer, the assessing officer cannot supplement such reasons as has been held by Hon’ble Bombay High Court in the case of Hindustan Lever ltd. [(2004) 268 ITR 332]. The third principle of law which is equally applied in the present case is that reopening of the assessment would not be permitted for fishing or roving inquiry. This can, as well be seen as part of the first requirement of the Assessing Officer, having reason to believe that income chargeable to tax has escaped assessment. In other words, notice of reopening which is issued barely for making fishing inquiry, would not satisfy this requirement. To support this submission the ld AR relied in case of PCIT Vs. Manzil D. Shah [95 taxmann.com 96 (Gujarat HC). ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 53 It was submitted that the reasons are to be examined only on the basis of reasons as recorded. The next important point is that even though reasons, as recorded, may not necessarily prove escapement of income at the stage of recording the reasons, such reasons must point out to an income escaping assessment and not merely need of an inquiry which may result in detection of an income escaping assessment. Undoubtedly, at the stage of recording the reasons for reopening the assessment, all that is necessary is the formation of prima facie belief that an income has escaped assessment and it is not necessary that the facts of income having escaped assessment is proved to the hilt. What is, however, necessary is that there must be something which indicates, even if not establishes, the escapement of income from assessment. It is only on this basis that the Assessing Officer can form the belief that an income has escaped assessment. Merely because some further investigations have not been carried out, which, if made, could have led to detection to an income escaping assessment, cannot be reason enough to hold the view that income has escaped assessment. ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 54 It is also important to bear in mind the subtle but important distinction between factors which indicate an income escaping the assessments and the factors which indicate a legitimate suspicion about income escaping the assessment. The former category consists of the facts which, if established to be correct, will have a cause and effect relationship with t he income escaping the assessment. The latter category consists of the facts which, if established to be correct, could legitimately lead to further inquiries which may lead to detection of an income which has escaped assessment. There has to be some kind of a cause and effect relationship between reasons recorded and the income escaping assessment. To buttress his submissions the ld AR for the assessee relied on the decision of Delhi Tribunal in case of Bir Bahadur Singh Sijwali Vs. ITO [ITA No. 3814/Del/2011 dated 20.01.2015] and Hon’ble Supreme Court in case of ITO Vs. LakhmaniMewal Das [103 ITR 147-SC].The ld AR for the assessee submits that Hon’ble Supreme Court in Ganga Saran & Sons Vs. ITO [130 ITR 1] held that “reasons to believe” is stronger than the expression “is satisfied”. It was also ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 55 observed that the belief entertained by the assessing officer should not be irrational or arbitrary. In other words, it must be reasonable and must be based on reasons which are material”. The reliance is also placed on the following decisions;  BawaAbai Singh V/s. DCIT [253 ITR 83 (Del)].,  SheoNath Sing vs. Appellate Assistant C.I.T. [82 ITR 147 (SC)],  Balkrishna H. Wani V/s. ITO [321 ITR 519 (Bom)],  PCIT V/s. Rajesh D. Nandu (HUF) (2019) 261 Taxman 110 (Bom)(HC),  CIT Vs. Paramjit Kaur[311 ITR 38 P& H],  Sagar Enterprises Vs. ACIT (2002) 257 ITR 335 (Guj) (HC),  Mumtaz Haji MohmadMemon V/s. ITO (2018) – 408 ITR 268 (Guj)(HC),  Sunrise Education Trust V/s. ITO [2018] [92 Taxman 74 (Gujarat) 33. On the issue that agricultural land is not a capital asset, the ld AR for the assessee adopted the submissions of learned Senior Counsel Sh Saurabh Soparkar. However, Mr Rasesh Shah, ld AR for assessee submits that to strengthen the submissions of this issue the following case laws may also be looked in to it. ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 56  Smt. Sarifabibi Mohmed Ibrahim &Ors V/s. CIT – 204 ITR 631 (SC)  Hindustan Industrial Resources Ltd. V/s. ACIT – 335 ITR 77 (Del)  CIT V/s. VajubhaiChunilal (HUF) – 120 ITR 21 (Guj)  CWT V/s. Shashiben – 288 ITR 319 (Guj)  CIT V/s. Madhabhai H. Patel – 208 ITR 638 (Guj)  Dr. Motibhai D. Patel V/s. CIT – 127 ITR 671 (Guj)  GordhanbhaiKahanbhaiDalwadi V/s. CIT – [127 IRT 664 (Guj)  Sercon (P) Ltd. V/s. CIT [IT Reference No 149 of 1976 (Guj)  CIT V/s. Special Land Acquisition Officer [72 taxmann.com 255 (Guj)  Combined Industries (P) Ltd. V/s. CIT – 115 ITR 358 (Mad)  M.S. SrinivasaNaicker V/s. ITO – 292 ITR 481 (Mad)  CIT V/s. D. RM. M. SP. SV. A. AnnamalaiChettiar – 273 ITR 404 (Mad)  CIT V/s. S.S. Sangaralingam – 162 CTR 400 (Mad)  PCIT V/s. K.P.R. Developers Ltd. [(2020) 117 taxmann.com 822 (Mad)]  CIT V/s. Venkateswara Hospital [(2019) 106 taxmann.com 282 (Mad) (SLP dismissed by the Honourable Supreme Court)  CIT V/s. P. Mahalakshmi [121 taxmann.com 77 (Mad)]  CIT V/s. Debbie Alemao – 331 ITR 59 (Bom) ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 57  CIT V/s. H.V. Mungale – 145 ITR 208 (Bom)  CIT V/s. Ramaiah Reddy – 158 ITR 611 (Karn)  CIT V/s. FagoomalLaxmichand – 112 ITR 09 (Ker)  CIT V/s. Alanickal Co. Ltd. – 158 ITR 630 (Ker)  CIT V/s. Rajagiri Rubber and Produce Co. Ltd. – 189 ITR 185 (Ker)  Ramjibhai P. Chaudhry V/s. DCIT [124 ITD 1 (Ahd)] ITO V/s. Sri E. Sethupathirajan – ITA No 466/CHNY/2010 34. On the issue of confirmation of addition of Rs.6,50,000/- (Ground No 4 in leading case), the ld AR for the assessee submits that in the assessment order, the assessing officer observed that as per information collected from Essar Steel Ltd Hazira, Surat, the assessee received Rs. 13,00,000/- on account of other receipts such as pakka huts, pakka house, water tank etc. The assessing officer treated this receipt as “Income from other source”. The learned CIT(A) considered it as LTCG by granting deduction of 50% for the cost of improvement. The ld AR for the assessee submits that, as per Form No “G” of the Award, the assessee received aforesaid sum on account of trees, construction etc. No bifurcation was furnished in the Award or by the Essar Steel Ltd. between trees, construction and other items. It was urged that the compensation includes the ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 58 compensation for trees and well as per Form No “G” of the Award. No bifurcation was furnished in the Award or by the Essar Steel Ltd. So no addition for LTCG for transfer of the building can be made by assuming it at Rs. 13,00,000/-. 35. The ld AR for the assessee submits that Hon’ble Gujarat High Court in the case of CIT Vs. The Special Land Acquisition Officer (supra) while hearing appeal against the order passed under section 201/201A, against the Special Land Acquisition officer for not making TDS on payment of compensations in respect of the impugned land (which is under dispute in the present appeal) held that “ any compensation for loss of fruit bearing trees must necessarily be part of the compensation for agricultural land”. Further in the case of ITO Vs. G.S. Lenkha [(2019) 106 taxmann.com 198 (Cochin-Trib) (TM)] also held that “where trees standing on an agricultural land are transferred along with the land as its integral part in one transaction, they would be regarded as “agricultural land” and not a separate capital asset until they are cut and removed, form an integral part of the land and such land has to be regarded as agricultural land. The initial burden to prove that land in question was being used for ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 59 agricultural purpose at the relevant time is on the assessee. The assessee has produced evidence to prove that land was agricultural land in the form of extract of 7/12, the department has to lead evidence to controvert it. Further, when land is classified as agricultural land in revenue records and agricultural operations are found to have been carried on the date of transfer, there is a presumption that land is an agricultural land and the burden is then on the department to rebut it. 36. In without prejudice submissions, the ld AR for the assessee submits that compensation on building is only a mode of paying higher compensation to certain agricultural landowners on account of good agricultural value, better yield, better crop, distance from sea etc. As the State Government had decided to pay compensation uniformly at fixed rate to all landowners whose lands were acquired, the valuation of houses has been considered as one of the mode to pay higher amount of compensation to such land owners who had better market rate for their land. This issue had also been considered by the Hon’ble ITAT in the case of The Special Land Acquisition Officer Vs ITO (supra) and the arguments of the assessee had been accepted by ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 60 holding “in reality, what is paid to the farmers on account of building could not really be the compensation paid for buildings, but was higher amount of compensation paid for acquiring better land fetching higher prince in the market”. 37. The ld AR for the assessee submits that the decision of the Tribunal was reversed by the Hon’ble Gujarat High Court in the case of CIT Vs Special Land Acquisition Officer (supra) on the aspect of building and not on other aspects of compensation for land and trees, where it was held that the compensation of the buildings (Kachha huts and Pakka huts) were not part of the compensation for the land. 38. The ldAR for the assessee submits that in case of the assessee’s husband, Essar Steel Ltd. has given bifurcation for other receipts given to him. However, no such bifurcation is given in the assessee’s case. In the revenue records, it was clearly reflected that assessee was in possession of trees. In absence of the bifurcation, the compensation of Rs.13,00,000/- should be considered towards acquisition of trees and water tank or huts for storing agriculture produce. Accordingly, no estimate should be made for acquisition of the building and compensation of ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 61 Rs.13,00,000/- should be considered as part of land component. Accordingly, the ld AR for the assessee submits that it is transfer of agriculture land not falling under clause (iii)(a) or (iii)(b) of section 2(14) of the Act. Otherwise the exemption under section 10(37) should be allowed on the basis of submissions of learned Senior Counsel (supra). 39. The ld AR for the assessee further submits that even if part of the amount of Rs.13,00,000/- is considered as compensation for acquisition of the building, the deduction for the cost of construction or improvement should be given as building is a depreciable asset. The compensation cannot be more than the cost of the building so it results in to a loss as the compensation of building should be less than the cost of acquisition of the building. Anyway, the loss arising out of the transfer of agriculture land by adopting lowest fair market value as on 01.04.1981 at 150/- per square meter should be adjusted against capital gain that may be estimated for transfer of building. 40. On the issue of valuation of land as on 01.04.1981 (Fifth ground of appeal), the ld AR for the assessee submits that the assessing ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 62 officer allowed deduction on account of cost of acquisition of land by adopting fair market value as on 01.04.1981 at Rs. 2.05 per sq. Meter as against the cost of acquisition claimed by the assessee at Rs. 150 Per square meter. The assessee placed reliance on the valuation report of Approved Valuer in support of the rate of Rs. 150 per square meter, whereas the assessing officer adopted the rate of Rs. 2.05/- per square meter on the basis of information furnished by the Sub-Registrar, Athwa, Surat. The Registered Valuer has narrated the following points in his report for valuing the land at Rs. 150/- per square meter.  The land is Jirayat,  The vegetables were grown,  The land was watered by the well,  The land is road touch,  The soil is black,  The electricity facility is easily available in the area,  It was falling in the industrial zone,  The productivity of land was good,  The storage facility of agricultural products were available,  The rain water was passing through land so there was no erosion of soil. ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 63 41. On the basis of the above factors, the Registered Valuer has given the valuation by reverse calculation method by discounting the present value by 10%. The learned CIT(A) observed that the estimation by assessing officer was on the basis of actual sale instances of land in the area in 1981 and that the information was obtained from the Sub Registrar, Surat. He further observed that the assessee had not explained as to why her valuation is 73 times the value determined on the basis of actual sale instances of land in that area in 1981. The land under reference was mostly barren land and its value appreciated only after the notification dated 30.01.1997 due to prospects of industrialization. The learned CIT(A) further observed that the valuation report was prepared without application of mind to show Nil capital gains based on reverse calculation. He further observed that though the village Hazira was not mentioned in the comparable sale instances, the villages mentioned viz. Bhatpore, Mora, Suvali were in the same notified area and the range of price per square meter varied from 0.15 per square meter for Mora Village to Rs. 10/- per square meter for Bhatpore, Icchapore, Suvali, Mora etc which are residential areas today, ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 64 while villages like Hazira, Kawas etc. were industrial areas as on date. The ldSr.AR for the assessee submits that the valuation given by the Government Approved Valuer was correct considering the location of the property, the proximity of main Surat City in those days, the fertility of the land and the approach of the impugned land from the main road etc. The location of the land was near to the old Surat City and situated in industrial zone, therefore, there was a very high potentiality of future growth. Moreover, the said land was under cultivation at that time having good fertility value and the agriculturists of these areas used to grow vegetables and fruits in their fields and supply the same to the population of Surat city. In the year 1981, there was no concept of Jantri value or the circle rate and therefore, the sale deeds were executed as per free will and convenience of the purchaser and seller. Moreover, in those days, the rate of stamp duty was also much higher to the tune of 14.20% and the registration fee was 2% and therefore, there was a duty of 16.20% of the registered value. Due to such high level of duties, there was a general human tendency for the buyer and seller to register the sale deed at a lower rate. Moreover, the ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 65 maximum marginal rate of income tax in financial year (F.Y.) 1981, was as high as 60% and the basic exemption limit was around Rs.8,000/- which was at prohibitively high level for any person to avoid such heavy tax duty which had resulted in declaration of lower sale value while executing the sale deed. Thus, the actual market rate of property in those days was not as low as reflected in the record of the Registrar of Properties. The ld AR for the assessee submits that now a days by virtue of provisions of section 50C and 56(2)(vii)(b), the documents are registered at the circle rate which may be at par with the market value. Therefore, the valuation adopted by the AO strictly on the basis of available sale instances was definitely misleading in as much as the same is not reflecting the actual market value as on 01.04.1981. The assessing officer has not considered such factors while determining the value of the land. The valuation made by the assessing officer which was confirmed by the CIT(A) is totally absurd in as much as even the art silk cloth was not available at Rs.2.05 per square meter as on 01.04.1981. Accordingly, it is submitted that the alleged comparable cases cited by the assessing officer and the CIT(A) are not at all ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 66 comparable as they are related to other villages with residential area. The other villages are not part of the Hazira Notified area but of course, they are situated at the boundary described in the notification. The finding of the learned CIT(A) that the other villages are part of the Notified Area are wrong. The impugned land related to the assessee was a farm and not residential area. The land was having trees and construction and the compensation was paid at the rate of Rs. 247/- per square meter as against compensation of Rs. 1.00 per square meter for Kharbada land. The learned CIT(A) erred in holding that the land was barren land. The learned CIT(A) has also erred in stating that the industrial development in Hazira started after notification dated 30.01.1997. In fact, two major industries viz. KRIBHCO and NTPC acquired the land before 01.04.1981 for their big industrial projects. 42. The ld AR for assessee submits that Tribunal and the Hon’ble jurisdictional High Court drew distinction between the Kharbada land and Jirayat land in case of CIT Vs The Special Acquisition Land Officer (supra) wherein it was held that the report of the Agriculture Officer is of general nature and the award did ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 67 segregate the Kharbada land for which compensation at a much lower rate of Re.1.00/- per acre was paid as against the Jirayat land which was compensated at the rate of Rs. 300 per square meter. The reliance is placed on the decision of the Hon’ble Karnataka High Court in the case of M. Govindaraju Vs ITO & AMR [(2015) 377 ITR 0243 (Kar) wherein it was held that “Assessee had provided the reasons for determining Rs.225/- per square feet as the fair market value of the property by producing the relevant material, including valuation report of a registered valuer, which all have been ignored while arriving at the price of Rs.84/- per square feet. The Assessing Officer assessed the value of the property as on 01.04.1981 on the basis of sale deeds of some nearby properties registered for such price in the year 1981 and thus arrived at the figure.” The learned CIT(A) has also erred in not accepting the theory of reverse calculation. The ld AR for the assessee submits that Ahmedabad Tribunal in case of Madhusudan P. Patel V/s. ITO [ITA No 2579/Ahd/2010 dated 05.04.2013] accepted the theory of reverse calculation by discounting at 10%. Accordingly, the report of the registered ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 68 valuer adopting reverse calculation method is fair and reasonable and should be accepted. 43. On the next issue which relates to treatment of agriculture income of Rs. 5000/-, offered by the assessee and by Assessing Officer as unexplained cash credit under section 68 of the Act. The ld Sr.AR for the assessee submits that the Assessing Officer treated the said receipt as unexplained credit on the ground that assessee did not file details of agricultural income and expenditure. The claim was also rejected on the ground that the assessee did not show agricultural income in the original return of income filed. It was explained in course of assessment proceedings that vegetables were cultivated on the agricultural land and this fact was also recorded in revenue records in Form 7/12 and 8A by the Revenue Authorities. It was also explained that the assessee’s father used to sell vegetables in the local market and no purchase or sale bills were requested as per the custom of retail vegetable sale. The learned CIT(A) also rejected the assessee’s claim on the same reason as adduced by the Assessing Officer. The ld Sr.AR for the assessee submits that the assessee had grown the vegetables which were sold through her ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 69 father in the local market. The facts regarding growing of vegetables are supported by Revenue records produced by the assessee. The assessee did not show the agricultural income in the original return of income as the income was exempted. However, in the revised return of income filed, the assessee has shown the agriculture income and this claim should be accepted particularly when assessee does not have any other source of income except property income and interest on bank accounts. The ld AR for the assessee submits that the assessee is liable to be succeed on the validity of the reopening and if the issue of validity of reopening is not held in favour of the assessee the issue of valuation of land as on 01.04.1981, if taken at Rs. 100 per square meter, the capital gain will be in negative and the assessee is not liable to pay capital gain tax. The assessee has placed on record the following documents:-  Reply/letter filed before Assessing Officer dated 17.01.2013  Reply/ letter filed before Assessing Officer dated 18.09.2012  Reasons recorded for reopening the assessment under section 148 ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 70  Notice under section 148 of the I.T. Act dated 21.03.2012  Form 8-A and proof of revenue records of agricultural land holding in Form No.7/12  Certificate of the Chief Officer, Notified Area Office – Hazira certifying the population of Hazira Notified Areas as 2137 as per census record 2001  Details of population in Hazira as per last censes 2001  Certificate dated 15/01/2013 issued by the Mamlatdar Office, Taluka Choryasi  Notification of Industries and Mines Department, Government of Gujarat dated 30.01.1997  Valuation report regarding value of land as on 01.04.1981  Notification of Industries and Mines Department dated 30.01.1997 passed under Chapter XVI-A of Gujarat Municipalities Act, 1963 extending provisions of Notified Area to Hazira Industrial area.  Notification published under Land Acquisition Act, 1984, on 06.01.2006 declaring further land to be acquired for expansion of Essar Steel Ltd., and appointing Special Land Acquisition Officer for the same.  Consent Award dated 31.07.2007 under section 11(2) of the Land Acquisition Act, 1984 originally in Gujarati  True English translation of the Consent Award  Regular Award dated 21.01.2008 under section 11(1) of the Land Acquisition Act, 1984 originally in Gujarati  Free English translation of Regular Award. ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 71 44. The copy of the following decisions are also placed on record;  Commissioner of Wealth Tax vs. Shashiben (207) 288 ITR 319 (Guj)(HC)  ITO vs. Sri E. Sethupathirajan ITA No.466/ds/2010  Special Land Acquisition Officer vs. ITO (2910) 29 CCH 0654 (Ahd.)(Trib.) 45. On the other hand learned Senior DR for Revenue on the validity of re-opening submits that land was acquired under Land Acquisition Act, 1894. Various steps were undertaken by the State Government for issuing notice under section 4 & 6 of the Land Acquisition Act, 1894 and award was announced under section 11(2) of the Act. The learned Senior DR for the Revenue submits, had the Government not undertaken these steps under the Land Acquisition Act, 1894, the land owners would not have agreed to divest the land to M/s Essar Steel Ltd. Reliance is placed by learned Senior DR for the Revenue in the case of Balakrishnan reported in 391 ITR 178 (SC) wherein it was held that merely because the compensation amount is agreed upon would not change the character of acquisition from that of compulsory acquisition to the voluntary sale. Therefore, even in case where the award is received under the consent award, ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 72 provision of Section 45(5) of the Act is applicable. The learned Senior DR further explains that for applicability of section 45(5), the assessee must receive compensation in two parts; firstly under the award and then enhancement. In the instant group of cases, it was contended that there is no enhancement; therefore section 45(5) does not come into play. The learned Senior DR for the Revenue by inviting our attention to the language employed in sections 45(5) and submits that this sub-section starts with a non-obstante clause, and it is a special provision inserted for dealing with the cases pertaining to compulsory acquisition. If it’s so apply in case of enhancement, it will lead to an anomalous situation, where in cases where compensation is received in a single tranche, the same would not come under the provisions of section 45(5) of the Act. Section 45(5) is applicable to all cases of compulsory acquisition including the cases where compensation is decided by ‘Consent Award’ as held by Hon'ble Supreme Court in the case of Balakrishnan (supra). For determination of land compensation sub-clause (a) provides for compensation received before enhancement and sub-clause (b) provides for adding the amount of enhanced compensation. If there is no enhancement ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 73 compensation, in the cases of compulsory acquisition, it will be quite far-fetched to say that provisions of section 45(5) will not be applicable. 46. In without prejudice, submission of learned Senior DR for the Revenue submits that a compensation was received in multiple tranches (i) by way of consent award under section 11(2) dated 31.07.2007, then by regular award by Special Land Acquisition Act, 1894 dated 21.01.2008 and payment through mediation centre. The learned Senior DR for the Revenue by referring decision of Gujarat High Court in Dhaniben Vs. State (Special Leave Application 784 of 2010) dated 08.02.2010 and submits when payment was received by land owners, in multiple tranches, the provisions of section45(5) are applicable. On the submission of learned Senior Counsel for assessee regarding the year of taxability i.e., in the year of award that Hon'ble Supreme Court in the case of Raj Pal Singh (supra) held that year of taxability has to be in the year in which award was announced, learned Senior DR for the Revenue submits that the case law relied by Ld. Senior counsel for the assessee is distinct on the fact that as in that case, the property was under possession of ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 74 assessee even prior to date of first Notification, Hon'ble court held that the year of taxability will be year in which award is pronounced. However, this is not so in case of assessee. Further, provisions of Section 45(5) categorically provided for the year of taxability to be the year of receipt. Section 45(5) is a special provision for compulsory acquisition which provides for capital gains in the year of receipt. 47. On the contention on behalf of assessee, that reasons recorded by Assessing Officer are not correct as the Assessing Officer mentioned that no return of income was filed by assessee, while the assessee has filed return of income, the Assessing Officer did not mention the population of Notified area, which is twin condition to be specified under section 2(14)(iii)(a) and that the assessing officer recorded that this is a case of compulsory acquisition, when it is factually incorrect. The learned Senior DR for the Revenue submits that the Hon'ble Supreme Court in the case of Raymond Woollen Mills Ltd. 236 ITR 34 (SC) held that the court can only see whether there is a prima facie material on the basis of which the department could have re-opened the case sufficiently or correctness of the material cannot be considered at ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 75 that stage. The learned Senior DR for the Revenue submits that in most of the case, either no return of income was filed or returns with meagre income were filed. The Assessing Officer was in possession of information received from Special Land Acquisition Officer that various persons having land at Hazira Notified area had received compensation for financial year 2006- 07 onward on account of compulsory acquisition of land, the income earned on acquisition of land was not offered for taxation. Therefore, the Assessing Officer had sufficient reason to believe that income chargeable to tax has escaped assessment. The learned Senior DR for the Revenue submits that the submission on behalf of assessee that reasons recorded are not correct is misplaced. The learned Senior DR for the Revenue prayed to dismiss the contention of learned Senior Counsel as well as of learned AR for the assessee and to reject the corresponding grounds of appeals, where so ever has raised in the group appeals of several assessee(s). 48. On the second issue, where land in question was agricultural land, and if so, it is not a capital asset, the learned Senior DR for the Revenue submits that Ld. Senior Counsel for assessee while ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 76 making his submissions invited attentions on various parts of award passed by Special Land Acquisition Officer and contended that land in question was agricultural land and therefore compensation was granted on the rate applicable to agricultural land. The learned Senior DR for the Revenue submits that during the course of assessment proceedings, the District Agricultural Officer submitted his report to the Assessing Officer that most of the land is rocky, having no irrigation facilities has high tide from the sea, and therefore non-cultivable. The learned Senior DR for the Revenue by referring various contents of award, has shown us, that according to letter dated 16.06.2004 issued by District Agricultural Officer, Surat has referred about growing of various agricultural produce rooted trees and also mentioned that there is no possibility of agricultural produce and only kharif season is taken from the land. It is also mentioned that some parts of the land have been surrounded by the water, some of part of land are having ditches and heaps, and some land is found to be pasture. There is a very small proportion of land where one can get higher yield from land. Further, there is reference that land under acquisition is jarayat type, wherein grass, Juvar, grass, wild ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 77 babool, local babool, mango trees, chico trees, palm trees and dates trees etc. And in some part some residence are located. And there is no facility of irrigation. The irrigation facilities are by taking out water from wells and vegetable are grown formerly. There are no irrigation facilities of any canal. On the basis of aforesaid submissions, the learned Senior DR for the Revenue submits that there is barely any irrigation facility on the land. Thus, the land was not usable for agriculture purposes. 49. On the contention of assessee, that in the Revenue record, the entries shows the nature of agricultural land in the record of revenue department, learned Senior DR for the Revenue submits that in case of Special Land Acquisition Office (supra), Hon'ble jurisdictional High Court in para 27 of its decision clearly held that “ Nevertheless, at the stage of deciding whether Special Land Acquisition officer committed an error or not in collecting the tax at source while releasing the compensation, vitas question would be, did the Assessing Officer have sufficient materials to ignore the government land records in which the land is shown as agricultural land on which owner continued to pay land revenue year after year”. ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 78 50. On the applicability of section 2(14)(iii)(a) of the Act, learned Senior DR for the Revenue submits that during the course of hearing, the learned Senior Counsel for the assessee submits that Hazira Notified area is not a ‘municipality’. The learned Senior DR for the Revenue after referring the word “agricultural land” as referred in section 2(14) that land not being situated in any area which is situated within the jurisdiction of 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. The learned Senior DR for the Revenue submits that on perusal of aforesaid provision, it can be noted that for the purpose of this section, a notified area committee has to be given the same treatment as ‘municipality’. The word ‘municipality’ has not define anywhere in the Income Tax Act. Part IX-A of the Constitution of India, Article 243P(e) defines ‘Municipality; which means an institution of self-government constituted under Article 243Q. The learned Senior Counsel for the assessee also contended that Hazira Notified area was not constituted under the Gujarat Municipalities Act, 1963rather the same was ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 79 constituted under Gujarat Industrial Development Act 1962, therefore only limited section of Gujarat Municipalities Act, 1963 (Guj.34 of 1964). The learned Senior DR invited our attention to the Notification issued by Industries and Mines Development dated. 30.01.1997 and after reading the contents of Notification learned Senior DR submits that by above Notification, Government of Gujarat made ample clear that all provision of the municipality shall apply within Hazira Notified Area. 51. On the submission of learned Senior Counsel of assessee that if intend was to treat in Hazira Notified area as a municipality as required under the provision of Income Tax Act, the Central Government by way of Notification should have clearly provided for it. The learned Senior DR for the Revenue submits that local government is a State Government subject as provided under the Eight Schedule of Constitution of India. Moreover, Income Tax Act creates the fiction for treatment of a notified area as deemed municipality. The word “deemed” is used as a great deal in modern legislation in different sense and it is not a deeming provision is everything made for the purpose creating a fiction.A deeming provision might be made to include what is obvious or ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 80 what is uncertain or to impose for the purpose of statute an artificial construction of a word or phrase that would not prevail, but in each case it would be a question as to with what object, the legislature had made a deeming provision, as held by Hon’ble Apex Court in case of Consolidated Coffee Ltd & Another vs. Coffee Board (1980) 3 SCC 358. Deeming provisions create a legal fiction. Fiction establishes something which is not in existence. The reason for using them is generally to give equal treatment to two transactions that are different in substance but analogous. 52. The learned DR for the Revenue also invited our attention to section 16 of Gujarat Industrial Development Act, 1962, by virtue of which the State Government may by Notification in this official Gazette declared that the provision relating to Notified areas and any other provisions of Gujarat Municipalities Act, 1963, shall extend and be brought into force in any industrial area, and thereupon such area shall be deemed to be a Notified area under that Act and in the case of Saij Gram Panchayat (supra) held that section 16 of the Gujarat Industrial Development Act, 1962 gives power to the State Government to issue a Notification under ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 81 which it can declare that Industrial area as defined in the Act would also be a deemed Notified area under the Gujarat Municipalities Act. It was further held that there are two important aspects of section 16 of the Gujarat Industrial Development Act (GIDA). First, it enables the State Government to equate an industrial area under the GIDA with notified area under the Gujarat Municipalities Act, by a fiction. This fiction can be brought by a Notification section 16 of Gujarat Industrial Development Act, 1962 and also a notified area so created would be governed by all provisions of Gujarat Municipalities Act, applicable to the Notified area. On the basis of aforesaid submission, The learned DR submits that Hazira Notified area is a ‘deemed municipality’ under Income tax Act and very much comes under the purview of section 2(14)(iii)(a) of the Act. 53. On the submissions of learned Senior Counsel for the assessee that the population of Hazira Notified area was not more than ten thousand as per last census 2001 and that Hazira Notified area is a much bigger area comprising of nine villages and for the purpose of determination of population, in which population of the villages where land was acquired has to be considered and ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 82 not that of the entire area. The learned DR for the Revenue submits that on the perusal section 2(14)(iii)(a) clearly provides for consideration of the population of the entire municipality or a notified area or a cantonment board as the case may be and it would be erroneous to consider only the population of a few villages. To support her contention, the learned DR for the revenue relied upon the decision of Hon'ble Supreme Court in the case of G. M. Omer Khan reported in 196 ITR 269 (SC), wherein the Hon'ble Apex Court held that population of the entire area is to be considered for the purposes of section 2(14)(iii)(a) and not the population of any single village in that area. 54. On the aspect of exemption under section 10(37), the learned DR for the revenue submits that assessee claims exemption under section 10(37) of the Act, for which important condition for seeking such exemption is that land should be used for the purpose of agricultural during the period of two year immediately preceding the date of transfer. The assessee could not demonstrate that they were carrying out any activities rather entries in the land record cannot be considered as conclusive evidence. The learned DR for the Revenue submits that ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 83 department has filed ample evidence in the form of report from National Report Sensing Centre (NRSC) Hyderabad, which was relied in ten case by Ld.CIT(A) during first appellate stage to establish that no agricultural activities was carried out either at the time of acquisition or year preceding. The assessee(s) have not been able to satisfy all the condition for making claim of exemption under section 10(37) of the Act. Such report of NRSC was obtained by ld CIT(A) by making proper reference under section 250(4) of Income tax Act. 55. On the issue regarding taxability of capital gains on trees, building and other issue the learned DR for the revenue place reliance on the finding of Ld. CIT(A). Additional evidence by revenue 56. The learned DR for the Revenue submits that the revenue has filed application for admission of additional evidence. In the application for admission of additional evidence, the applicant / revenue contended that payment of compensations have been made on large amount, on account of construction, trees etc., which was unusual and abnormal and uncommon as normally the quality of construction in the rural area is of inferior quality. ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 84 During the first appellate stage, the Ld. CIT(A) decided to make further enquiries. In order to verify the basis of authenticity of these payments made for a “non-land-component”. A reference was made under section 250(4), to the National Remote Sensing Centre (‘NRSC’ for short), Hyderabad a unit of Indian Space Research Organisation (ISRO), to determine the nature of crops produces, number of trees existing, whether any construction /structure existed on the land in question on the relevant dates from the analysis of the satellite images since year 1999 to 2012. In response to reference of Ld. CIT(A), NRSC furnished a comprehensive report, based on remote sensing visuals and other data taken from satellites. The report of NRSC, Hyderabad received in September, 2016. In the report, it was found that no agricultural activities or evidence of any crops have been found on the various parcels of land from the report 1999 to 2012. It was further contended that report of NRSC, Hyderabad was not available when majority of appeal(s) were decided by ld CIT(A) and only in ten cases, the report was considered. The report of NRSC, Hyderabad is relevant to the issue involved in all the appeal(s) and needs to be considered for fair and judicious ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 85 adjudication. The revenue prayed for admission of such additional evidence that consideration of additional evidence would be decisive in determining the controversy in just and equitable manner. Along with application for admission of additional evidence, the Revenue filed a copy of report of NRSC, Hyderabad along with various satellite images. 57. The learned DR for the Revenue submits that the additional evidence furnished by the Revenue is vital evidence and is relevant to determine the controversy in the issues with regard to nature of land, and the agricultural activities undertaken by land owners / agriculturists to ascertain whether land was used for agricultural purposes, in the immediate preceding assessment years from the date of award / transfer of ownership to M/s Essar Steel Ltd. The learned DR for the Revenue further submits that as the said report was considered by Ld. CIT(A) in ten cases only, since in all the cases, a uniform approach is likely to be adopted by the Bench, therefore it is expedient in the interest of justice and to appreciate the real controversy with regard to nature of land the evidence in having material bearing on the issue. In order to effective and complete adjudication and to ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 86 adopt a uniform approach on the issues, the admission of additional evidence filed by the Revenue is essential. 58. On the other hand, the learned Senior Counsel for the assessee submits that Rule 29 of Income Tax Appellate Tribunal, 1963 deals with the filing of additional evidence. The learned Senior counsel for the assessee submits that bare reading of Rule 29 of the ITAT, 1963 makes it clear that there are two part of this Rule; number (i) that parties to the appeal(s) are not entitled to produce the additional evidence either oral or documentary before the Tribunal but if the Tribunal required any documents to be produced or examined to enable it to pass order for any substantial cause and the Income Tax Authority and (ii) the Income Tax Authority have decided the case without sufficient opportunities to the assessee to adduce evidence on the points as specified by them, only in those two conditions, the Tribunal is empowered to admit the additional evidence with the reasons. The Revenue has no right to file additional evidence as they are precluded for filing such additional evidence. On the veracity of the documents, the learned Senior Counsel for the assessee submits that the report of NRSC, Hyderabad is itself is not ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 87 conclusive proof and by referring various paragraphs of reports, submits that in the disclaimer, attach to the said report, NRSC, Hyderabad reported the shape file provided by CIT(A) did not match with field boundaries of the reference satellite data, with implication on accuracies of location area. And in absence in absence of adequate number of GCPs (Good Clinical Practices), rubber sheeting technique carried out also did not yield the desirable results. Concurrent ground truth was not available for thus study and hence, interpretation is exclusively based on the manifestation of features and experience of the interpreter, which could be subjective. In the last observation in the disclaimer it is mentioned that results have to be interpreter and corroborative in association with the ground observation, available, if any. Thus, the report itself contents vague observation and cannot be used as evidence or conclusive or expert report based of any scientific evidence. Even otherwise, the court is fully empowered to assess or re-assess the veracity of such report. The assessee(s) during the appellate stage were not given any opportunity to comment on such report obtained at their back. It is settled law ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 88 that no evidence or report can be relied which is collected at the back of the parties. 59. The learned Senior counsel reiterated that though the revenue is not entitled to file additional evidence even otherwise, if the Bench is of the considered view and deems may in its discretion may looked into it, the so-called report is of no use and does not give any desirable result to assess or determine the nature of land or any evidence to negate the fact that the land was not used by agricultural purposes. 60. In the short rejoinder, the learned DR for the Revenue submits that report of NRSC, Hyderabad was obtained by Ld. CIT(A) by exercising his statutory power under section 250(4) and since it was obtained by making a statutory reference. Thus, it has not only an evidentiary value but it would certainly throw light on the issue before the Bench. 61. We have considered the rival submissions of the parties and have gone through the orders of the lower authorities. We have also considered the various documentary evidences furnished by the parties. Further, we have also deliberated on various case laws relied by both the parties. First we are taking application for ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 89 admission of additional evidence field by the revenue. In the application the revenue has contended that during first appellate stage, the ld CIT(A) made reference under section 250(4) to NRSC Hyderabad for ascertaining nature of land its user from the period 1999 to 2014. And that NRSC prepared its report and sent to the office of ld CIT(A). The report of NSRC was considered by ld CIT(A) in ten cases while adjudication the issue with regards to nature and use of the land in preceding year before the date of acquisition. Before us, the learned DR for the revenue vehemently argued that the admissions of additional documents are essential for effective and complete adjudication of the issues and the controversy and in taking uniform approach in all the appeals. 62. The copy of the application for admission of additional evidence was furnished to all the learned Counsels and authorised representatives, representing different assessee(s). No written reply was filed by any of the assessee(s). Though, all the Counsels representing various assessee(s) objected for admission of such additional evidences. The leading learned Senior Counsel, while opposing the application submitted that under Rule 29 of ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 90 Income Tax (Appellate Tribunal) Rules, the revenue is not entitled to file additional evidence even otherwise, if the Bench is of the considered view and deems it necessary may in its discretion with reasons may admits it. And that report of NRSC is of no use and does not give any desirable result to assess or determine the nature of land or any evidence to negate the fact that the land was not used for agricultural purposes. By referring various paragraphs of reports, the learned Senior Counsel also submitted that in the disclaimer, attached to the said report, NRSC, Hyderabad reported the shape file provided by CIT(A) did not match with field boundaries of the reference satellite data, with implication on accuracies of location area. And in absence in absence of adequate number of GCPs, rubber sheeting technique carried out also did not yield the desirable results. After careful consideration of the contention of the party, and going through the language employed in Rule 29, we are of the view that the revenue has no vested right to seek the admissions of additional documents. However, keeping in view the peculiarity of the facts that the report of NRSC was taken into consideration by ld CIT(A) while adjudicating about 10 appeals, therefore, to take a uniform ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 91 approach, the application for admission of additional evidence filed by the revenue is allowed and the documents are taken or record for appreciation of the issues. 63. Now adverting to the main grounds of appeal raised by the assessee. We find that the assessee has raised multiple grounds of appeal. However, first we shall take up the issue, which goes to the root cause of the dispute between assessee and the assessing officer, as raised in ground No. 2 & 3 of grounds of appeals. To make it more simple we reframed these grounds as to whether the land acquired by the Special Land Acquisition officer is agricultural land or not or if so, it falls within the municipal area as defined under Section 2(14)(iii)(a) of the Income Tax Act or that Hazira Notified area is deemed municipality. Further as to whether the assessee is eligible for exemption under section 10(37) of the Act. The Assessing Officer while passing the assessment order held that land of assessee is situated in Hazira notified area which was declared as notified area by Industries and Mines Department, govt. of Gujarat as well as Chapter XVI A of Gujarat Municipalities Act. Though, the assessee before Assessing Officer objected that her land is not a capital asset as ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 92 defined under Section 2(14) of Act. The land is used for agriculture and agriculture activities were carried out by her father. The assessee to substantiate her claim furnished the detail of agriculture activities, extract of form NO. 7/12. The assessee also stated that her land is 26 KM away from the Surat city and the provision of capital gain is not applicable on payment received on account of acquisition of her land. In alternative, it was also contended that the village Hazira where land is situated having population of less than 10,000. The contentions of assessee were rejected and the compensation received by assessee was brought to tax by Assessing Officer that land is situated in Hazira notified area and as per the notification of Industries and Mines Department, Govt. of Gujarat, the land falls under the ambit of capital gain and compensation received on acquisition of land falls within the definition of capital asset. The claim of assessee under section 10(37) was also rejected by taking a view that assessee has not produced any evidence regarding the agriculture activities carried out in 2 years preceding the date of acquisition /transfer. As recorded above before ld. CIT(A), the assessee filed her detailed written ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 93 submission as recorded in para 6.2 of his order. The Ld. CIT(A) confirmed the action of Assessing Officer by observing that Mamlatdar, Taluka-Choryasi, Dist.-Surat, vide his letter dated 16/01/2013 mentioned that population of nine villages falling within notified area as per census of 2001 was more than 10000 and that Hazira is a deemed municipality. On the alternative plea about the claim of assessee on the benefit of exemption under section 10(37), the ld. CIT(A) remanded the matter to the Assessing Officer to give his report to clarify regarding the population as to which area is to be considered for the purpose of section 2(14)(ii)(a). The assessing officer was alsodirected to comment on the distance of acquired land from municipal limit (Surat Municipality). The said remand report was required by Ld. CIT(A) by observing that office of the Mamlatdar vide their letter dated 16/01/2013 mentioned that population of each of nine villages (Hazira notified area) mentioned in the letter is less than 10000 as per census 2001 but combined population of nine villages exceed 10000. However, in the certificate issued by Chief Officer of notified area Hazira, the population of Hazira notified area was 2137. The ld. CIT(A) recorded that despite sending ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 94 reminder letter to the Assessing Officer. We find that CIT(A) proceeded to decide the issue on the basis of material before him and identified the issue that this ground involved three issues viz; (i) if the land acquired is capital asset under section 2(14), (ii) if the land acquired by Special Land Acquisition officer falls in the definition of “capital asset” under section 2(14)(iii)(a) or not and (iii) whether if it is capital asset under section 2(14). If the land falls under the definition of capital asset, the assessee is eligible for exemption under section 10(37) of the Act or not. The Ld. CIT(A) recorded that assessee claimed the land acquired was situated eight kilometre away from municipal limit of Surat Municipal Corporation, at the time of acquisition. The ld. CIT(A) held that Assessing Officer has not invoked the section 2(14)(iii)(b) in his assessment order. Accordingly, the issue was held in favour of assessee by holding that land was acquired beyond eight kilometre within Municipal Corporation. We find that this finding of the ld CIT(A) is not challenged by revenue, thus, attained finality. 64. So far as part first issue is concerned, which relates to section 2(14)(iii)(a) of the Act is concerned, the ld CIT(A) held that as per ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 95 Notification dated 30.01.1997 (Notified area of Hazira) nine villages were included in the said Notified area. If the said notified area is considered as a unit, the population of only those Survey numbers which have been included in the said Notification, has to be considered for the purpose section 2(14)(iii)(a) of the Act. The remaining population of the villages will not be considered. If the said population of the said Notified area is less than ten thousand, the land acquired cannot be treated as capital asset, provided it was an agricultural land at the time of acquisition or transfer. As per census data 2001, the population of Hazira Notified area is 2137. The ld CIT(A) held that Hazira Notified area is a deemed municipality under the provisions of Gujarat Municipality Act, 1963. The ambiguity is created by certificate Mamlatdar relied by Assessing Officer. The Ld. CIT(A) further noted that if all those survey numbers are not included, the population of those survey numbers is only 2137 and not ten thousand or more. The entire population of all the nine villages cannot be aggregated unless entire area of the villages falls in the Notified area. The ld. CIT(A) at the same time held that this exercise may be academic for the reasons given in ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 96 a decision in subsequent findings by making reliance in case of G.M. Omer Khan Vs Addl.CIT (Supra) wherein it was held that population of entire notified is to be considered for the purpose of Section 2(14)(ii)(a) and not the population of any single village. 65. On the issue whether the land is an agriculture land or nor, the ld. CIT(A) held that the assessee was required to establish that land was used for agriculture purpose only. The District Agriculture Officer confirmed that most of the land is rocky, affected from Sea water and no irrigation facility. Thus, the contention of assessee cannot be accepted that land was used for agriculture purpose or capable of operation. No evidence of agriculture income was furnished. The ld. CIT(A) held that the assessee failed to establish that land was used for agriculture purpose. Thus the conditions of Section 10(37) are not fulfilled. 66. Before us, the ld. Senior Counsel for assessee vehemently submitted that compensation received on acquisition would not be subject to capital gain, as the agriculture land is not a capital asset as not being situated in an area which comprised within the jurisdiction of any municipality having population of not less than 10000 as per last census. If the land is not a capital asset, ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 97 question of paying tax on its acquisition would not arise. The assessee has to satisfy two conditions (i) the land is agriculture land and (ii) to claim exemption that agriculture land is not situated within municipal limit having population of not less than 10000. For first condition, the ld. Senior Counsel submits that from the contents of award itself it is clear that the land in question is agriculture land. The award was passed by officers of the State Govt. and the correctness of the statement made in the award cannot be doubted. The land is shown as agriculture land in the revenue record. The jurisdictional High Court in CIT Vs Sidharth J Desai (supra) has laid down thirteen test to determine the true nature and character of the agriculture land. On the second aspect that for claiming exemption to show that agriculture land is not situated within a municipality having population of less than 10000. It was submitted that Hazira is not a municipality and in order to appreciate this aspect, the process by which this area was established makes it clear that by way of notification, it would not make an area as municipality. Thus, we examined the order of lower authorities viz a viz the submission of learned senior counsel for assessee. ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 98 67. We are in agreement with the submissions of learned Senior Counsel for the assessee that the word “Municipality” is not defined in the Income Tax Act, it is also not defined in General Clause Act. Article-243P(e) of the Constitution of India defines the same as “an institution as self-Government constituted under Article 243Q”. Proviso to Article 243Q(1). In turn, it provides that a ‘municipality’ under this clause may not be constituted in such urban area or part thereof as the Governor may having regard to the size of area and the municipal services being provided or proposed to be provided by industrial establishments in that area and such other factors as may be deemed fit by public Notification, specified to be an industrial township. In a simple meaning that industrial township set-up under this proviso would not be “Municipality”. We also concur with the submissions of learned Senior Counsel Hazira Notified area is Industrial Township, therefore, not a municipality. On the issuance of the Notification under Section 16(1) of Gujarat Industrial Development Act, 1962, Hazira Notified area become a Notified area, thereupon the provisions of Chapter-XVI-A Gujarat Municipalities Act, would apply. Hazira Notified area ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 99 would then be an ‘Industrial Township’ area under Section 264A of the said Act. We are in agreement with the submission of learned Senior counsel for the assessee that under section 264B of the said Act, the State Government has a power to apply any section of the said Act or part thereof, or the Rules in force as maybe applied to a municipal borough to such notified area. Section 264C would create a fiction that for the purposes of any section of the said Act which may be applied to a notified area, the person or committee appointed for such area under section 264B shall be deemed to be a “Municipality” under the said Act. The fiction is an unlimited fiction. Firstly, the fiction is only in relation to those sections of the said Act which are applied to the notified area and even the second part of the fiction of deeming the notified area to be a “municipality” is only for the purpose of the said Act. It does not convert notified area into a “Municipality” in any way. 68. The Hon'ble Supreme Court in the case of Saij Gram Panchayat Vs State of Gujarat (supra) while considering the scope of section 16 of GIDA and Section 264A inserted in Gujarat Municipalities Act, in view of insertion of Part IXA in the ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 100 Constitution held that industrial area under the GIDA would be a notified area under new section 264A of Gujarat Municipalities Act and would mean an ‘industrial township area’ under the proviso to clause (1) of Article 234-Q of the Constitution of India (Para-10).It was further held that GIDA operates in a different sphere from Part IX and IXA of the Constitution as well as Gujarat Panchayat Act. The latter being provision dealing with local self-government, while former being an Act of Industrial Development and orderly establishment an organization and industries in a State. The Industrial Areas which have been notified under Section 16 of the GIDA. These industrial areas have been developed by the Gujarat Industrial Development Corporation (GIDC) and they can hardly be looked upon as rural areas covered by Part IX of the Constitution. It is only such industrial areas which can be notified under Section 16 of the Gujarat Industrial Development Act, 1963. If by a notification issued under Section 16, these industrial areas are deemed to be notified areas under the Gujarat Municipalities Act and are equated with industrial townships under the proviso to Clause (1) of Article 243Q, the constitutional scheme is not violated. It ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 101 was further held that under Chapter 3 of the Gujarat Industrial Development Act, 1962, the Gujarat Industrial Development Corporation, has been given power, inter alia, to develop land for the purpose of facilitating the location of industries and commercial centres. It has also been given the power to provide amenities and common facilities in such areas including provision of roads, lighting, water supply, drainage facilities and so on. It may do this either jointly with Government or local authorities or on an agency basis in furtherance of the purposes for which the corporation is established. The industrial area thus has separate provision for municipal services being provided by the Industrial Development Corporation. Once such an area is a deemed notified area under the Gujarat Municipalities Act, 1964, it is equated with an industrial township under Part IXA of the Constitution, where municipal services may be provided by industries. It was further held that unless, it qualifies with the criteria prescribed under Article 243- Q of Constitution of India cannot be at par with municipality. Article 243-Q constitute three types of municipalities viz (i) Nagar Panchayat (ii) a Municipal council and (iii) Municipal ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 102 corporation, it provides that a municipality under clause (1) may not be constituted under certain circumstances. In respect of any three types of areas, set out in clause (1) of Article 243-Q, having regard to the size of area, the municipal services being provided or proposed to be provided by the industrial establishment in that area and such other factor as the Governor will deem fit to consider, he may by public notification, specifies such area to be an industrial township. 69. Further Hon’ble Supreme Court in Solapur MIDC Industries Association Etc. Vs State of Maharashtra & Ors., JT (1996) 7 SCC 14 held that Municipal Corporation Act and an Industrial Development Act have distinct fields of operation and there is no inter se conflict between the two. 70. So far as reliance on the case law in G.M Omer Khan Vs Add CIT (supra) relied by ld CIT(A) as well as by ld DR for the revenue is concern, we find that the facts of that case are entirely different. In the said case the land of the assessee was situated in a village within the Municipality. The assessee in that case contended that his laid was in an area which in terms meant a 'Village' and the population of that village was far below ten thousand and ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 103 the mere fact that the said area fell within the municipality of a city which had a population of more than ten thousand, was of no consequence. He, therefore, claimed that the property in question was an agricultural land not covered by section 2(14). On reference, the High Court interpreting section 2(14)(iii)(a) opined that the property acquired was a 'capital asset' as the words 'which has a population of not less than ten thousand' In section 2(14) (iii) (a) would qualify only 'the municipality or cantonment and not the expression 'area', and, therefore, the capital gains arising out of the sale of the land In question could not be exempted under section 2(14)(iii)(a). 71. Considering the aforesaid legal position, we are of the view that by setting up of an industrial area by way of notification under section 16 of GIDA, the notified area would not be a deemed municipality, though, certain provision of Gujarat Municipalities Act are applicable for day to day affairs of the notifies area. Hence, we hold that the Hazira Notified area is not municipal area or deemed municipality therefore, the agriculture land situated in such notified area would not partake the character of agriculture land as ‘capital asset’ as defined under section 2(14) ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 104 of the Act and the value of compensation received on acquisition of such land is not be taxable under Income tax Act. Thus, the appeal of assessee is liable to be succeeded on this issue alone. 72. Now adverting to the issue whether the land acquired is agriculture land and /or being used for agriculture purpose and assessee is eligible for exemption under section 10(37) of the Act. The assessing officer while rejecting the eligibility of section 10(37) held that the assessee has not produced any evidences regarding agriculture activities carried out on the land and that the District Agriculture officer, Zilla Panchayat Surat has written letter to Collector that many part of the land is under sea water and part of land is barren. The ld CIT(A) affirmed the action of assessing officer by taking view similar view. 73. Before, us the learned Senior Counsel for the assessee vehemently argued that for seeking eligibility under section 10(37), the assessee has fulfilled the four conditions of this sub- section, viz., (i) such land is situated in any area referred to in item (a) or item (b) of sub-clause (iii) of clause (14) of Section 2; (ii) such land during the period of two immediately preceding the date of transfer, was being used for agricultural purpose by such ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 105 Hindu Undivided Family (HUF) or individual or a parent of assessee; (iii) such transfer is by way of compulsory acquisition under any law or a transfer the consideration for which is determined or approved by the Central Government or the Reserve Bank of India and (iv) such income has arisen from the compensation or consideration for such transfer received by such assessee on or after the 1 st day of April, 2004. 74. We have already held the land is not situated within a municipal area, thus, first condition is satisfied. So far as second condition, is concerned, we find it is certified by District Agricultural Officer, Surat vide his letter dated 16.06.2014 that the agricultural operation are carried in the land. Further the award was passed in financial year 2007-08, in the award the Special land Acquisition Collector on a number of stances mentioned that the land under acquisition is used for the agriculture purpose, this prove beyond doubt the land was being used for agricultural purposes, not only on date of acquisition but till the date of acquisition all throughout, but in any case for more than two years. The land in the revenue record is also shown as agriculture land. For third condition, we find that that first ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 106 award is by consent; however, as held by Hon'ble Supreme Court in the case of CIT Vs Ghanashyam (HUF) (supra) it was held that consent award which has followed all steps of compulsory acquisition has to be regarded as an award of compulsory acquisition. There is no dispute that the State Government before starting the acquisition proceedings, initiated under Land Acquisition Act 1894, issued notice under section 4 & 6 of that Act. So far as second award is concerned, it is undisputedly an award of compulsory acquisition. For fourth condition, there is no dispute the income arisen on compensation. 75. The Hon’ble Delhi High Court in Hindustan Industrial Resources Ltd Vs CIT (supra) held that when award passed by District Collector (Land Acquisition) is a document which established beyond doubt that the land in question was an agricultural land. Thus, on the date of purchase, the land in question was an agricultural land and on the date of acquisition, the character of the land continued to be agricultural. 76. Further, the Hon’ble Gujarat High Court in CIT Vs Siddhrath J Desai (supra) while considering the fact that the assessee had purchased a piece of agricultural land which was situated in an ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 107 area not included in the municipal limits. There was no development in the surrounding area indicating any potentiality for the development of the land. For the period of three years immediately after its purchase, agricultural activity was carried on in the land. At or about the time of its subsequent sale, the land was not actually put to agricultural use. All the while, however, the land continued to be listed in the revenue record and it was assessed to land revenue. On 22-11-1968, the assessee obtained permission of the competent authority under section 63 of the Bombay Tenancy and Agricultural Lands Act, 1948, for the sale of the land to a co-operative housing society. On 1-2-1969, the assessee sold the land to the society. On 5-2- 1969, the society obtained the permission for non-agriculture use of the land, under section 65 of the Bombay Land Revenue Code, 1869, from the competent authority. The assessee claimed that the surplus realised by him on the sale of land was not liable to be taxed as capital gains as the land in question was agricultural land. The ITO held that since no agricultural operations were carried on immediately before the sale of the land, the land could not be treated as agricultural on the date of ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 108 its sale and, therefore, the surplus realised by the assessee was liable to be taxed as capital gains. On appeal, the AAC reversed the decision of the ITO. On further appeal, the Tribunal affirmed the decision of the AAC. On reference before High Court held that having regard to the facts and findings recorded by the Tribunal, it was obvious that not only the physical characteristics of land, in the instant case, but the user also was agricultural. Even though the land was not actually put to agricultural use since about one year prior to the sale, there was no evidence to establish that it was converted to any other use. The fact that permission under section 63 of the Bombay Tenancy and Agricultural Lands Act was obtained by the assessee to sell the lands to the society for residential purposes would not, militate against the land continuing to be agricultural on the date of its sale, as the permission was obtained only about two and a half months prior to the sale. Therefore, till the land was held by the assessee its character as agricultural land was not changed either as a result of its reclassification on in the revenue records or by the actual alteration of its use. Again, there was no evidence on record to show that there was any ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 109 development in the surrounding area or that the land itself was developed prior to its sale. The land was located on the outskirts of the village but it was not situate in the municipal limit. The land must, therefore, be taken as having been situate in a rural area and it continued to have an agricultural bias right up to the date of its sale. Further, there was no evidence or material on record to indicate that the price offered for the land by the society, even proceeding on the basis that" the intended user of his part was non-agricultural, would not have been offered by an agriculture who wanted to purchase the land for purely agricultural user. There being no evidence on record as regard the nature of the soil, its fertility, its suitability and adaptability for raising cash crops, the irrigation facility and such or similar factors which had a great bearing on the valuation of an agricultural land, it would be hazardous to come to the conclusion that the price offered was such that no agriculturist would have paid the same if he wanted to purchase the land for purely agricultural purposes. Accordingly, the land was an agricultural land and the surplus realised on a sale thereof was not liable to be assessed to capital gains tax. The High Court laid ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 110 down thirteen test to determine whether the land would be agriculture land by applying such test. 77. So far as reliance of revenue on the report of NRSC is concerned, which was otherwise relied by ld CIT(A) in ten cases. The ld DR for the revenue while making her submissions by referring various parts of it submitted that no agriculture activity or evidence of any crop is found on various parcel of the land from 1999 to 2012. And only shrubs were found with no sign of any crop or vegetables of the parcels of land. Further the satellite images shows that no agriculture activities were carried on the land. The ld DR also submitted that report of NRSC is scientific report and conclusive proof. We do not find merit in the submissions of the ld DR, as disclaimer, attach to the said report, NRSC, itself reported the shape file provided by CIT(A) did not match with field boundaries of the reference satellite data, with implication on accuracies of location area. Further, in absence in absence of adequate number of GCPs, rubber sheeting technique carried out also did not yield the desirable results. And that concurrent ground truth was not available for thus study and interpretation is exclusively based on the ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 111 manifestation of features and experience of the interpreter, which could be subjective. It is also mention in the last para in the disclaimer that results have to be corroborative in association with the ground observation, available, if any. Thus, the report itself contents vague observation and cannot be used as evidence or conclusive or expert report based of any scientific evidence against the assessee. Moreover, said report was not provided to the assessee. Thus, by applying of such test we find that the land of the assessee acquired by Special Land acquisition officer is agriculture land. In the result, the assessee is also succeeded on this issue/ ground as well. 78. Considering the facts that we have already held that the land of the assessee is not ‘capital asset’ as the same does not fall in municipal area, Hazira Notified area is not a municipality or deemed municipality and on alternative plea also held eligible for exemption under section 10(37), therefore, all other pleas or counter pleas of the parties and the remaining issues arising thereto have become academic. 79. Now adverting to the ground of appeal relates to reopening of the assessment. The assessing officer made reopening on the basis ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 112 of information received from the office of Special Land Acquisition officer that the assessee has received compensation on transfer of land and that he has reason to believe that income of the assessee has escaped assessment to the extent of capital gain. Notice under section 148 was duly served on the assessee. In response to the notice under section 148 the assessee filed return of income, declaring same income as declared in the return filed under section 139(1) of the Act. We find that in this lead case the assessee before, ld CIT(A), has raised specific ground of appeal against reopening. However no specific finding was given in this case by ld CIT(A), except mention that ground No. 1 of the appeal is dismissed. The learned Senior Counsel for the assessee while making his submission vehemently argued that first award ( with consent) was passed on 31.07.2007 and second award for compulsory acquisition was passed by Special Land Acquisition Officer on 21.01.2008. Thus, both the award was passed in financial year 2007-08, hence, the receipt can only be taxed in assessment year 2008-09 and not in any other assessment year. The other ld AR for the assessee, Sh. Rasesh Shah, also made submission on the sufficiency of the reasons ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 113 and not mentioning various other aspect, and submitted that the re-assessment is bad in law. However, the other ld AR Sh Hiren Vepari representing in appeal listed at serial number 163 & 164 in ITA No. 2967 & 2968/Ahd/2015 submits that he is not pressing the ground of reopening. Remaining learned AR’s adopted the submissions of learned Senior Counsel or of Sh Rasesh Shah. The ld SR DR for the revenue strongly objected against the objections of reopening and the validity of the assessment order and relied on the decision of Supreme Court in Raymond Woollen Mills Ltd Vs CIT (supra). Considering the contentions of both the side, we are of the view that at the stage of reopening the assessing officer has only to see whether there was prima facie some material on the basis of which the Department could reopen the case. The sufficiency or correctness of the material was not a thing to be considered at this stage. We find that Hon’ble Supreme Court in Raymond Woollen Mills Ltd Vs CIT (supra) while considering the technical objection of sufficiency of reasons had not strike down the reopening of the case. And it was held that it would be open to the assessee to prove that assumption in the notice was ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 114 erroneous. Thus, in view of the aforesaid factual and legal discussion, we do not find merit in the grounds in challenging the validity of re-opening, thus, the corresponding grounds of appeal is dis missed. 80. Next ground of appeal relates to partly confirming the action of assessing officer in taxing Rs. 6,50,000/- as capital gain and not treating the same as part of compensation. The assessing officer treated part of compensation of Rs.13.00 lakh as income from ‘other sources’. On appeal, the ld. CIT(A) held that this component of compensation is given for constructed property on the land consisting of pucca house, pucca wall etc., apart from natural grown grass. The assessee claimed that compensation in respect of aforesaid aspect is actually the compensation in respect of land only and not assessable under the head “other sources”. The ld CIT(A) held that action of Assessing Officer is not correct on taxability of such amount under the head “income from other sources”. The constructed property on the land is a ‘capital asset’ and income earned on sale or acquisition is assessable under the head “capital gains” only. The Ld. CIT(A) further observed that the assessee either at the assessment ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 115 stage or appellate stage has not furnished any evidence or details of cost of acquisition, so he estimated @ 50% of Rs.13.00 lakh as cost of acquisition. Therefore, the addition was reduced to Rs.6,50,000/- and directed the assessing officer to assess under the head “capital gain” in place of income under the head “other sources”. Before us, the learned Senior Counsel urged that some of the assessee(s) were paid additional and separate compensation in relation to standing trees and such compensation is to be treated as part of land and thus exempt. Sh Rasesh Shah, the ld AR for the other assessee also supported the submissions of learned Senior Counsel and in addition filed his detailed written submissions inter alia stated therein that as per Form-G of Award passed by Special Land Acquisition Collector no bifurcation was furnished between trees, construction and other items, so no addition on account of LTCG can be made. As recorded above the learned DR for the revenue supported the order of ld CIT(A). On consideration of facts, we find that in some of the cases, there is payment against the built-up units/ pucca houses. Additional payments were also made only for those landowners who were holding such ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 116 built-up unit. We find that no evidence was furnished by the land owners about the cost of acquisition or improvement thereof, either before the assessing officer or before ld CIT(A). Even before us, no such estimate of cost of such built-up structure is furnished. As recorded above the ld CIT(A) estimated the cost of acquisition of built-up units/ pucca structure @ 50% of the cost awarded for such built-up / pucca structure in the award. Considering the area where in the such built-up unit or pucca house is situated, it our view, the estimation of it’s cost of acquisition is on lower side, therefore we deem it fit and proper to increase it to 60%, would be reasonable and fair. Therefore, we direct the Assessing officer to treat the cost of acquisition @ 60% of Rs. 13.00 lacs as cost of acquisition. In the result, the corresponding ground of appeal is partly allowed. 81. Next ground relates to treating the agriculture income of Rs. 5,000/- as unexplained cash credit. Considering the facts that we have already held that the land of assessee was agriculture and was being used as such, therefore, the income offered by assessee as agriculture is also allowed and the assessing officer ITA No.3021/SRT/2014 (A.Y.2007-08) Ambaben Jamubhai Patel 117 is directed to delete this addition. In the result, the corresponding ground of appeal is allowed. 82. Before, summing up, we appreciate the submissions , of ld senior DR for the revenue in representing and defending the orders of lower authorities and in assisting the bench in disposal in this bunch of appeals. 83. As recorded in initial part of this order, this order would be followed in all remaining appeals of Hazira Land Acquisition appeals. 84. In the result, the appeal of the assessee is partly allowed. Order pronounced in the open court on 13/04/2022 by placing the result on the Notice Board. Sd/- Sd/- (Dr ARJUN LAL SAINI) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Surat, Dated: 13/04/2022 Gangadhar Sr PS Dkp. Out Sourcing P.S Copy to: 1. Appellant- 2. Respondent- 3. CIT(A)- 4. CIT 5. DR 6. Guard File True copy/ By order // True Copy // Assistant Registrar, ITAT, Surat