I.T.A. NO.: 307/KOL./2012 AS SESSMENT YEAR : 2007-08 PAGE 1 TO 4 1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA B BENCH, KOLKATA CORAM : SHRI MAHAVIR SINGH (JUDICIAL MEMBER) AND SHRI SHAMIM YAHYA (ACCOUNTANT MEMBER) I.T.A. NO.: 307/KOL./ 2012 ASSESSMENT YEAR : 2007-2008 INCOME TAX OFFICER,...........................,.... ...........APPELLANT WARD-12(1), KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 -VS.- SHRI MALAY KUMAR MITTER,........................... ..............RESPONDENT 34/1, ELGIN ROAD, BHOWANIPUR, KOLKATA-700 020 [PAN : AERPM 6876 K] APPEARANCES BY: SHRI R.P. NAG, JCIT, SR. D.R., FOR THE DEPARTMENT SHRI D.S. DAMLE, AA, FOR THE ASSESSEE DATE OF CONCLUDING THE HEARING : DECEMBER 23, 2013 DATE OF PRONOUNCING THE ORDER : DECEMBER 23, 2013 O R D E R PER SHAMIM YAHYA: 1. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST T HE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-XXIV, KOLKATA DATED 14.12.2011 FOR THE ASSESSMENT YEAR 2007-08. GROUND OF APPEAL R EADS AS UNDER :- WHETHER THE CIT(A) HAS ERRED ON FACTS AND LAW BY COMING TO THE CONCLUSION THAT THE LAND SOLD BY THE ASSESSEE WAS NOT WITHIN THE MEANING OF SUB-CLAUSES (B) AND (A) OF CLAUSE (III) OF SUB-SECTION (14) TO SECT ION 2 OF THE INCOME TAX ACT, WHEN THE SAID LAND WAS IN FACT WITHIN 2.5 KM OF RAJARHAT MUNICIPALITY. 2. IN THIS CASE, DURING THE F . Y . 2006-07 T HE APPELLANT SOLD CERTAIN PLOTS OF LANDS SITUATED IN VILLAGE - K AL ABERI A, P.S. & , P . O. RAJARHAT, DISTRICT 24-PARGANAS (NORTH) FOR A CONSIDE RATI ON OF RS.78 , 30 , 733 / -. THE LAND IN QUESTION WAS INHERITED I.T.A. NO.: 307/KOL./2012 AS SESSMENT YEAR : 2007-08 PAGE 1 TO 4 2 B Y THE A PPELLANT FROM HIS FOREFATHERS. IN THE RETURN OF INC OME F ILED F OR A.Y. 2 007-08 NO CAPITAL GAINS REALIZED ON SALE OF LAND WA S DISCLOS E D . O N T H E PLE A THAT THE LANDS IN QUESTION WERE AGRICULTURAL IN N A TU RE A ND THEREFORE DID NOT FALL WITHIN THE DEFINITION OF ' CAPIT A L A SSET' AS P ER THE PROVISIONS OF SECTION 2(14) OF THE I.T . ACT. IT WAS THEREFORE TH E APP ELLANT'S C ASE THAT NO CAPITAL GAIN WAS CHARGEABLE UNDER SECTI ON 45 OF T H E ACT . TH E AO DEALT WI TH APPELLANT'S SAID CONTENTIONS IN PARA 2.2 & , PARA 3 (I) & , (I I) O F TH E ASSESSMENT ORDER AND THEN CAME TO C ON C LUSION THAT T HE LA ND S B ELONGING TO THE APPELLANT SOLD DURING THE RELEV A NT Y E A R DID N OT FALL W ITHIN THE DEFINITION OF 'AGRICULTURAL LAND ' A S DEFINED IN SE CTION 2(14)(III) O F TH E 1NCOME TAX A CT AND THEREFORE THE SAID LAND CONSTITUTED ' C A PIT AL ASSET' FOR TH E PURPOSE OF SECTION 2(14) OF THE ACT . ACCORDINGLY , PROFI T REA LIZE D ON SALE WAS ASSESSED UNDER SECTION 45 AS LONG TERM CAP ITAL GAIN . 3. UPON ASSESSEES APPEAL, LD. CIT(APPEALS) REFERRE D TO THE DECISION OF THE TRIBUNAL IN THE CASE OF CO-OWNER OF THE PROPERT Y SHRI ARIJIT MITRA. IN THIS DECISION IN I.T.A. NO. 1679 & C.O. 184/KOL./20 10 BY ORDER DATED 12.08.2011, THE TRIBUNAL HAS CONSIDERED THE ISSUE A ND CONCLUDED AS UNDER:- FROM THE ABOVE, IT IS CLEAR THAT AGRICULTURAL LAND SITUATED IN AREAS LYING WITHIN A DISTANCE NOT EXCEEDING 8 KM FROM THE LOCAL LIMITS OF SUCH MUNICIPALITIES OR CANTONMENT B OARDS ARE COVERED BY THE AMENDED DEFINITIONS OF CAPITAL ASSE TS, IF SUCH AREA ARE, HAVING REGARD TO THE EXTENT OF AND SCOPE FOR THEIR URBANIZATION AND OTHER RELEVANT CONSIDERATIONS, IS NOTIFIED BY THE CENTRAL GOVERNMENT IN THIS BEHALF. CENTRAL GOVE RNMENT IN EXERCISE OF SUCH POWERS HAS ISSUED THE ABOVE NOTIFI CATION, AS AMENDED LATEST BY NOTIFICATION NO. 11186 DATED 28.1 2.1999 CLEARLY CLARIFIES THAT AGRICULTURAL LAND SITUATION IN RURAL AREAS, OUTSIDE THE MUNICIPALITY OR CANTONMENT BOARD ETC, H AVING A POPULATION OF NOT LESS THAN10,000 AND ALSO BEYOND T HE DISTANCE NOTIFIED BY CENTRAL GOVERNMENT FROM LOCAL LIMITS, I .E. THE OUTER LIMITS OF ANY SUCH MUNICIPALITY OR CANTONMENT BOARD ETC. STILL CONTINUES TO BE EXCLUDED FROM THE DEFINITION OF CAP ITAL ASSET. ACCORDINGLY, ILN VIEW OF SUB-CLAUSE (B) OF SECTION 2(14)(III) OF THE ACT EVEN UNDER THE AMENDED DEFINITION OF EXPRESSION CAPITAL ASSET, THE AGRICULTURAL LAND SITUATED IN THE RURAL AREAS CONTINUES TO BE EXCLUDED FROM THAT DEFINITION. AND AS IN THE PRESENT CASE, ADMITTEDLY, THE AGRICULTURAL LAND OF THE ASSESSEE IS OUTSIDE THE MUNICIPAL LIMITS OF RAJARHAT MUNICIPALI TY AND THAT I.T.A. NO.: 307/KOL./2012 AS SESSMENT YEAR : 2007-08 PAGE 1 TO 4 3 ALSO 2.5 KM AWAY FROM THE OUTER LIMITS OF THE SAID MUNICIPALITY, ASSESSEES LAND DOES NOT COME WITHIN THE PURVIEW OF SECTION 2(14)(III) EITHER UNDER SUB-CLAUSE (A) OR (B) OF TH E ACT, HENCE, THE SAME CANNOT BE CONSIDERED AS CAPITAL ASSET WITH IN THE MEANING OF THIS SECTION. HENCE, NO CAPITAL GAINS TA X CAN BE CHARGED ON THE SALE TRANSACTION OF THIS LAND ENTERE D BY THE ASSESSEE. ACCORDINGLY, WE QUASH THE ASSESSMENT ORDE R QUA CHARGING OF CAPITAL GAINS ON VERY JURISDICTION OF T HE ISSUE. THE C.O. OF THE ASSESSEE IS ALLOWED. REFERRING TO THE ABOVE, LD. CIT(APPEALS) CONCLUDED AS UNDER :- IN ITS ORDER DATED 12.08.2011, THE HONBLE ITAT HA S RECORDED A CATEGORICAL FINDING THAT THE LANDS IN QU ESTION JOINTLY OWNED BY THE APPELLANT WITH SHRI ARIJIT MIT RA DID NOT CONSTITUENT CAPITAL ASSET U/S. 2(14) OF THE I.T. ACT BECAUSE RAJARHAT MUNICIPALITY WAS NOT ONE OF THE NOTIFIED MUNICIPALITY AS PER THE CENTRAL GOVTS NOTIFICATION DATED 28.12.1999. RESPECTFULLY FOLLOWING THE ORDER OF THE HONBLE ITAT, KOLKATA DATED 12.08.2011, I HOLD THAT THE LAN D IN QUESTION WHICH THE APPELLANT TRANSFERRED DURING FIN ANCIAL YEAR 2006-07 WAS AN AGRICULTURAL LAND AND IT DID NO T FALL WITHIN THE AMBIT OF CAPITAL ASSET UNDER SECTION 2 (14) OF THE ACT. FOR SUCH REASON NO CAPITAL GAIN WAS ASSESSABLE TO TAX IN THE APPELLANTS HAND IN AY 2007-08. ACCORDINGLY, TH E AO IS DIRECTED TO DELETE THE ADDITION OF RS.74,77,346/- M ADE ON ACCOUNT OF LONG TERM CAPITAL GAINS. 4. AGAINST THE ABOVE ORDER OF LD. CIT(APPEALS), REV ENUE IS IN APPEAL BEFORE US. 5. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE SUBM ITTED THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE. HE R EFERRED TO THE TRIBUNALS DECISION IN THE CASE OF CO-OWNER OF THE PROPERTY SHRI ARIJIT MITRA AS ABOVE AND CONTENDED THAT IN VIEW OF THE AF ORESAID TRIBUNAL DECISION, NO CAPITAL GAIN WAS EXIGIBLE IN THE ASSES SEES HANDS. 6. LD. D.R. COULD NOT CONTRADICT TO THIS SUBMISSION OF THE LD. COUNSEL OF ASSESSEE. I.T.A. NO.: 307/KOL./2012 AS SESSMENT YEAR : 2007-08 PAGE 1 TO 4 4 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THIS ISSUE IS SQU ARELY COVERED IN FAVOUR OF THE ASSESSEE. THE TRIBUNAL IN THE HANDS OF THE C O-OWNER OF THE PROPERTY HAD HELD THAT THE LANDS IN QUESTION DID NOT CONSTIT UTE CAPITAL ASSET UNDER SECTION 2(14) OF THE INCOME TAX ACT BECAUSE RAJARHA T MUNICIPALITY WAS NOT ONE OF THE NOTIFIED MUNICIPALITY AS PER THE CEN TRAL GOVERNMENTS NOTIFICATION DATED 28.12.1999. HENCE, RESPECTFULLY FOLLOWING THE PRECEDENT, WE HOLD THAT THE LAND IN QUESTION, WHICH WAS TRANSFERRED BY THE ASSESSEE, WAS AN AGRICULTURAL LAND AND IT DID N OT FALL WITHIN THE AMBIT OF CAPITAL ASSET UNDER SECTION 2(14) OF THE INCOM E TAX ACT. ACCORDINGLY WE CONFIRM THE ORDER OF LD. CIT(APPEALS). 8. IN THE RESULT, APPEAL FILED BY REVENUE STANDS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD DAY OF DECEMBER, 2013. SD/- SD/- MAHAVIR SINGH SHAMIM YAHYA (JUDICIAL MEMBER) (ACC OUNTANT MEMBER) KOLKATA, THE 23 RD DAY OF DECEMBER, 2013 COPIES TO : (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ETC ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.