Sh. Amarjit Singh Sidhu (HUF), Chandigarh V. ITO, Chandigarh

ITA 330/CHANDI/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 60848 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-05-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 13-03-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: A K JINDAL
• Keywords: Capital asset

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SHRI H.L.KARWA, HON'BLE, VICE PRESIDENT AND SHRI T.R.SOOD, ACCOUNTANT MEMBER ITA NO.330/CHD/2012 ASSESSMENT YEAR: 2008-09 SHRI AMARJIT SINGH SIDHU(HUF), VS THE ITO, WARD-1( 3), CHANDIGARH CHANDIGARH PAN NO. AABHA2570G (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A.K. JINDAL RESPONDENT BY : SHRI AKHILESH GUPTA DATE OF HEARING : 10.05.2012 DATE OF PRONOUNCEMENT : 17.05.2012 ORDER PER H.L.KARWA, VP THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF CIT(A), CHANDIGARH DATED 23.12.2011 RELATING TO ASSESSMENT YEAR 2008-09. 2. THE ONLY GROUND RAISED BY THE ASSESSEE IN THIS A PPEAL READS AS UNDER:- 1. THAT THE LD. CIT(A) IS NOT JUSTIFIED IN UPHOLDI NG THE ACTION OF ASSESSING OFFICER TREATING THE AGRICU LTURAL LAND SOLD BY THE APPELLANT AS CAPITAL ASSET FOR THE PURPOSE OF CAPITAL GAIN AND THUS, UPHOLDING THE LEV Y OF 2 TAX ON THE SALE OF AGRICULTURAL LAND UNDER THE FACT S AND CIRCUMSTANCES OF THE CASE. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSI NG OFFICER TREATED THE AGRICULTURAL LAND SOLD BY THE ASSESSEE AS CAPITAL ASSET; WITHIN THE MEANING OF SECTION 2(14)(III)(B) OF THE INCOME TAX ACT, 1961 ( IN SHORT 'THE ACT'). ACCORDINGLY, THE CAPITAL GAIN ON SALE OF AGRICUL TURAL LAND WAS TAXED. THE LAND IN QUESTION WAS IN VILLAGE CHAK KHARAK SINGH WALA UNDER SANGAT BLOCK OF DISTRICT BHATINDA IN PUNJAB. THE LAND WAS ABOUT 30 KMS AWAY FROM BHATINDA, BUT ONLY 1.5 KMS FROM DABWALI TOWN. THE PLEA OF THE ASSESSEE WAS THAT SINCE THE LAND WAS IN PUNJAB STAT E AND DABWALI WAS IN DISTRICT SIRSA OF HARYANA STATE, THE CAPITAL GAIN WAS NOT PAYABLE ON THE SALE OF THE AGRICULTURAL LAND BECAUSE IT WAS BEYOND 8 KM S FROM THE MUNICIPALITY LIMITS OF BHATINDA. THE ASSESSEE RELIED ON THE DECI SION OF ITAT, CHANDIGARH BENCH IN THE CASE OF SMT. ANJANA SEHGAL IN ITA NO. 135/CHANDI/2001 DATED 19.4.2004 FOR THE ASSESSMENT YEAR 1997-98. THE ASS ESSING OFFICER WAS NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE ON T HE GROUND THAT THE ORDER PASSED BY THE TRIBUNAL (SUPRA) WAS SUB-JUDICE AS TH E APPEAL FILED BY THE DEPARTMENT WAS PENDING BEFORE THE HON'BLE PUNJAB & HARYANA HIGH COURT. THE CONTENTION OF THE ASSESSEE WITH REGARD TO NON CHARGING LONG TERM CAPITAL GAIN TAX ON THE SALE OF AGRICULTURAL LAN D WAS, THEREFORE, NOT ACCEPTED. 4. ON APPEAL, THE CIT(A) FOLLOWING THE DECISION OF HON'BLE PUNJAB & HARYANA HIGH COURT DATED 1.3.2011 PASSED IN TH E CASE OF CIT, CHANDIGARH V SMT. ANJANA SEHGAL IN ITA NO. 276 OF 2004 HELD T HAT THE ASSESSING OFFICER HAS RIGHTLY TREATED THE AGRICULTURAL LAND SOLD BY THE ASSESSEE AS 3 CAPITAL ASSET AND TAXED LONG TERM CAPITAL GAINS T HEREON AND HE UPHELD THE ACTION OF THE ASSESSING OFFICER. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS. SHRI A.K. JINDAL, LD. COUNSEL FOR THE ASSESSEE WAS FAIR ENOUGH TO CONCEDE THAT T HE ISSUE IN HAND IS COVERED IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE B Y THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT, CHAN DIGARH V SMT. ANJANA SEHGAL IN INCOME TAX APPEAL NO. 276 OF 2004. WHILE ADJUDICATING A SIMILAR ISSUE, THE HON'BLE JURISDICTIONAL HIGH COURT IN T HE CASE OF SMT. ANJANA SEHGAL (SUPRA) VIDE ITS ORDER DATED 1.3.201L HELD A S UNDER:- 8. A PERUSAL OF THE ABOVE PROVISIONS MAKE S IT CLEAR THAT WHAT IS INTENDED TO BE COVERED IN TER M 'CAPITAL ASSET' IS AGRICULTURAL LAND COMPRISED WITHIN THE JURIS DICTION OF A MUNICIPALITY AND WITHIN THE SPECIFIED DISTANCE F ROM THE LOCAL LIMITS OF MUNICIPALITY OR OTHER LOCAL BODIES MENTIONED THEREIN AS SPECIFIED IN THE NOTIFICATION. IT IS UNDISPUTED THAT THE LAND IN QUESTION IS WITHIN THE SPEC IFIED DISTANCE FROM PANCHKULA MUNICIPALITY WHICH FALLS IN THE STA TE OF HARYANA WHILE LAND IS IN THE STATE OF PUNJAB. THUS LAN D IS URBAN LAND FOR THE PURPOSE OF DEFINITION OF 'CAPITAL ASS ET' UNDER SECTION 2(14). CONCEPT OF MUNICIPALITY AS A UNIT OF STATE O R THE FACT THAT A STATE AS NO JURISDICTION TO MAKE LAW BEYOND ITS TER RITORY HAVE NO RELEVANCE FOR THE PURPOSE OF DETERMINING WHETHER PARTICULAR LAND WAS 'CAPITAL ASSET' OR NOT F OR THE PURPOSE OF TAXING CAPITAL GAIN. IF THE LAND IS ADJACENT TO A MUNICIPALITY AND IS URBAN LAND COVERED UNDER SECTION 2(14), EVEN IF MUNICIPALITY AND THE LAND FALL IN DIFFER ENT STATES, THE LAND WILL CONTINUE TO BE URBAN LAND. IF SUCH LAND IS EXCLUDED FROM THE DEFINITION OF 'CAPITAL ASSET', PURPOSE OF STATUTORY SCHEME WILL NOT BE ACHIEVED. 9. THE JUDGMENTS RELIED UPON TO SUBMIT T HAT ALL WORDS OF A STATUTE SHOULD BE ASSIGNED MEANING DO NOT SUPPORT THE CONTENTION OF THE ASSESSEE, INCLUDING THE LA ND IN DISPUTE IN 'CAPITAL ASSET' DOES NOT IGNORE ANY WORD IN THE DEFINITION AS ASSUMED BY LEARNED COUNSEL. SPEECH OF FINANCE MINISTER ALSO DOES NOT HELP THE ASSESSEE. THE RELEVANT EXTR ACT THEREOF IS AS UNDER:- 4 SUB-CLAUSE (A) SEEKS TO AMEND CLAUSE (14) OF SECTI ON 2 OF THE INCOME TAX ACT WHICH DEFINES THE TE RM CAPITAL ASSET. THE AMENDMENT SEEKS TO BRING WITHIN THE TERM CAPITAL ASSET AGRICULTURAL LAND SITUATED WITHIN THE LIMITS OF ANY MUNICIPALITY (WHETHER KNOWN AS A MUNICIPALI TY, MUNICIPAL CORPORATION, NOTIFIED AREA COMMITTEE , TOWN AREA COMMITTEE, TOWN COMMITTEE OR BY AN Y OTHER NAME) OR A CANTONMENT BOARD HAVIN G A POPULATION OF 10,000 OR MORE ACCORDING TO THE LA ST CENSUS FOR WHICH THE FIGURES HAVE BEEN PUBLISHED BEFORE THE FIRST DAY OF THE PREVIOU S YEAR. FURTHER, AGRICULTURAL LAND SITUATED IN AREAS LYI NG WITHIN A DISTANCE NOT EXCEEDING 8 KILOMETER S FROM THE LOCAL LIMITS OF SUCH MUNICIPALITIES OR CANTONMENT BOARDS WILL ALSO BE COVERED BY THE AMENDED DEFINITION OF CAPITAL ASSET, IF SUCH AR EAS ARE, HAVING REGARD TO THE EXTENT OF AND SCOPE FO R THEIR URBANISATION AND OTHER RELEVANT CONSIDERATION S, NOTIFIED BY THE CENTRAL GOVERNMENT IN THIS BEHALF. THE EFFECT OF THE PROPOSED AMEND MENT WILL BE THAT CAPITAL GAINS ARISING FROM THE TRANSFE R OF AGRICULTURAL LAND SITUATED IN MUNICIPAL OR OTHER UR BAN AREAS OR NOTIFIED ADJOINING AREAS WILL BE LIABLE TO INCOME-TAX FOR THE ASSESSMENT YEAR 1970-71 AND SUBSEQUENT YEARS. 10. WE ARE UNABLE TO ACCEPT THAT THE ABOVE SPEECH LEADS TO ANY OTHER INTERPRETATION. ACCORDINGLY, WE ANSWER SUBSTANTIAL QUESTIONS IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE. 11. ACCORDINGLY, THE APPEALS ARE ALLOWED. THE IMPUGNED ORDERS ARE SET ASIDE. 6. SHRI A.K. JINDAL, LD. COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THAT S.L.P. FILED AGAINST THE JUDGMENT OF HON'BLE PUNJA B & HARYANA HIGH COURT DATED 1.3.2011 PASSED IN ITA NO. 276 OF 2004 HAS B EEN DISMISSED BY THE HON'BLE SUPREME COURT IN SPECIAL LEAVE TO APPEAL (C IVIL) NO.(S).19096/2011 VIDE ITS ORDER DATED 9.1.2012. IN OUR CONSIDERED V IEW, THE DECISION OF JURISDICTIONAL HIGH COURT PASSED IN THE CASE OF SMT . ANJANA SEHGAL (SUPRA) IS SQUARELY APPLICABLE TO THE FACTS OF THE PRESENT CAS E, WHEREIN THE HON'BLE HIGH 5 COURT HAS EXPLICITLY HELD THAT THE CONCEPT OF M UNICIPALITY AS A UNIT OF STATE OR THE FACT THAT A STATE HAS NO JURISDICTION TO MAK E LAW BEYOND ITS TERRITORY HAVE NO RELEVANCE FOR THE PURPOSE OF DETERMINI NG WHETHER A PARTICULAR LAND IS CAPITAL ASSET OR NOT. 7. IN VIEW OF THE ABOVE, WE DISMISS THE APPEAL OF THE ASSESSEE BEING DEVOID OF ANY MERIT. 8. IN THE RESULT, APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 17 TH DAY OF MAY, 2012 SD/- SD/- (T. R. SOOD) (H.L.KARWA) ACCOUNTANT MEMBER VICE PRESIDENT DATED : 17 TH MAY, 2012 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR TRUE COPY BY ORDER ASSISTANT REGISTRAR