Mukeshbhai Pasaji Thakor, Ahmedabad V. ITO, Ward-3(3)(3), Ahmedabad

ITA 424/AHD/2019

AI Insights

The case involves Mukeshbhai Pasaji Thakor, who appealed against the order of the Commissioner of Income Tax (Appeals)-3, Ahmedabad, which pertained to the assessment year 2012-13. The primary issue was the denial of exemption on long-term capital gains from the sale of land, which the assessee claimed was rural agricultural land and thus not a capital asset as per section 2(14) of the Income Tax Act. Initially, the AO accepted the assessee's claim, but a revisionary order under section 263 by the Pr.CIT led to a re-assessment, rejecting the exemption based on the proximity of the land to municipal limits and other factors. The CIT(A) upheld the AO's decision, leading to the current appeal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 133617 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 10 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 23-01-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 11-03-2019
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset
• Section: 2(14); 133(6)

Judgement Text

आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरणआयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण, अहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठअहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठ ‘D’ अहमदाबाद। अहमदाबाद।अहमदाबाद। अहमदाबाद। IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, AHMEDABAD BEFORE SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER ITA No.424/Ahd/2019 Assessment Year :2012-13 Mukeshbhai Pasaji Thakor No.1, Tekravalo Vas Opp: Baliyadev Mandir Nr.Vejalpur Bus Stand PAN : AERPT 7288 J ITO, Ward-3(3)(3) Ahmedabad. (Applicant) (Responent) Assesseeby : None Revenue by : Shri Atul Pandey, Sr.DR स ु नवाई क तार ख/Date of Hearing : 24/01/2023 घोषणा क तार ख /Date of Pronouncement: 08/02/2023 आदेश/O R D E R PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER Present appeal has been filed by the assessee against order passed by the ld. Commissioner of Income Tax (Appeals)-3, Ahmedabad[hereinafter referred to as “Ld.CIT(A) under section 250(6) of the Income Tax Act, 1961 ("the Act" for short) dated 28.12.2018 pertaining to the Asst.Year 2012-13. 2. At the time of hearing, none appeared on behalf of the assessee. The case has been adjourned on all previous occasionsi.e. on 9.12.2021, 23.3.2022, 12.7.2022, 19.10.2022 and 19.1.2023on the written request of the assessee’s counsel. On 19.1.2023 the ITA No.424/Ahd/2019 2 matter was adjourned to 23.1.2023 on the assesses request but none appeared nor any application seeking adjournment was filed on the said date. Accordingly a final opportunity was granted and the appeal fixed for hearing on 24.1.2023, but again nobody appeared on behalf of the assessee. Therefore, it was decided to adjudicate the appeal, ex parte after hearing the ld.DR and considering the material available on record. 3. The grounds of appeal raised by the assessee read as under: “The ld.AO erred in making addition of Rs.2,53,08,032/- treating Exempt Long term capital under section 2(4) as taxable long term capital gain. The addition is in total disregards to the facts of the appellant’s case and merely on suspicion, conjectures and surmises and is totally unjustified and deserves to be deleted and may kindly be deleted. On the facts and in the circumstances of the case and in law the ld.CIT(A) erred in holding that AO is correct and justified.” 4. The solitary grievance of the assessee is with regards to the denial of claim of exemption to Long Term Capital Gains as per section 2(14) of the Act. 5. As transpires from orders of the authorities below, the appeal pertains to order passed in assessment proceedings consequent to revisionary order passed by the ld.Pr.CIT, Ahmedabad, under section 263 of the Act. The facts relating to the case being that during the year the assessee had sold a land for consideration of Rs.2,60,00,000/- which was purchased by him for Rs.4,85,700/-. The capital gain computed on the same after indexation amounted to Rs.2,53,08,032/-. The assessee claimed entire amount of capital gain as exempt, treating the asset (land) as rural agricultural land and thus not a capital asset as per section 2(14) of the Act. The claim of the assessee was accepted in assessment framed under section143(3) of the Act, but subsequently, an order under section 263 of the Act, dated 13.3.2017, was passed by the ld.Pr.CIT, ITA No.424/Ahd/2019 3 Ahmedabad, setting aside the order passed by the AO under section 143(3) of the Act with the direction to frame the order afresh after making necessary inquiry vis a vis the assesses claim of the impugned land qualifying as not being a capital asset in terms of section 2(14) of the Act. The AO was directed to make inquiries under section 133(6) of the Act regarding the distance of the assessee’s land in Tarapur from Gandhinagar and Ahmedabad Municipal limit. The ld.PCIT observed that as per the available records the land was located within 4 kms. limit of Gandhinagar Municipal limit and 5 kms. from Ahmedabad City, and therefore, claim of the assessee, under section 2(14) of the Act , of the asset not qualifying as capital asset,was not in accordance with law. Before the AO, the assessee submitted the following documents as evidence that the land fulfilled all conditions stipulated u/s 2(14) to not qualify as capital asset:: i) Certification from Talati, Village Tarapur (Dist. Gandhinagar) regarding land distance of land from Gandhinagar; ii) A certification from Talati, as regards population of village Tarapur; iii) As regards, distance of land from Gandhinagar, a certificate from Dy. Exe. Engineering, Road project Panchayat sub-division, Dist. Panchayat, Gandhinagar. iv) As regards of Agri land a letter from GUDA dated 15.3.2017. 6. The ld.AO perused the above documents and made the following observations noting that they were all vague and did not assist the claim of the assessee, at para 4 of the order as under: i) The certificate issued by the Talati, states that the distance from Gandhinagar to Tarapur is more than 5 kms. But it does not clarify whether the distance is from ITA No.424/Ahd/2019 4 the City of Gandhinagar or from the boundary of Gandhiangar municipal limits. ii) As regards, copy of certificate of talati-cum mantry, Tarapur for population of Tarapur, it is stated that population is around 3,000, but it is not clarified whether the population given is based on any census report or only estimation. As explanation in section 2(14)(iii) of the Act “population” means the population according to the last preceding census of which the relevant figures have been published. iii) The assessee has stated to have furnished certificate of Dy. Engineer, R&B Division, but certificate is issued by the Dy.Engineer, Road Project Panchayat sub-division, Gandhinagar, Certificate issued that the distance between Gandhinagar Sachivalayato Tarapur is more than 5 kms. No distance between boundary limits of Gandhinagar corporation to Tarapur is mentioned therein. iv) Certificate issued by GUDA states that the land is situated under AGRI Zone (AG-2) but you have not furnished any evidence, whether land was utilized for agri.purpose or not. It is also observed that the assessee has not claimed any agri.income in the return of income filed for the year under consideration. The land in question was not agri.land but capital asset. v) It is stated that the land situated at Village Tarapur is more than 14 kms. From Ahmedabad Municipal corporation. The assessee has not furnished any supporting as regards to distance from AMC, Ahmedabad is 14 kms. 7. Finding the documents submitted by the assessee to be of no relevance, the AO inturn obtained following documents from statutory authorities under section 133(6) of the Act,certifying distance of the land being within 4 Km and 5km limit of Gandhinagar and Ahmedabad municipal limits and also not being an agricultural land: ITA No.424/Ahd/2019 5 i) A letter No.GUDA/Tantrik/3756/2017 dated 28/07/2017 along with copy of MAP, certifying distance at 3 Kms. from boundary limits of Gandhinagar Corporation to Land S.No.243; ii) SthavarMilkatMulyakan – Ganaripatrak from Sub- registrar, Gandhinagar, Sector 11, Gandhiangar. It is stated that category of land is AGRI-MINERAL and rate of stamp duty is at Rs.21000 i.e.rte applicable to developed land; iii) Further, vide para-8 of the order u/s.263 of the Act passed by Pr.CIT-3, Ahmedabad it observed that, as verified on district map of Gandhinagar, Tarapur is situated on National Highway Number 8C, between Adalaj and VasanaHadmatia in Gandhiangar. The map shows that it is only 2.58 kms from the municipal limit of Gandhinagar and Tarapur is only 4.27 km from Ahmedabad. 8. The AO accordingly held that the land in question did not qualify as not being a capital asset in terms of section 2(14) of the Act and the assesses claim of exemption of capital gains earned thereon needed to be rejected. The aforestated documents were confronted to the assessee who in turn reiterated and relied upon the documents filed by him to the AO . The AO noting that the assessee had only reiterated his earlier contentions and finding that all the documents were only xerox copies and vague ,rejected the contention of the assessee and based on his inquiry held that the land being situated within the prescribed limits of Gandhinagar and Ahmedabad municipalities did not qualify for being not treated as a capital asset in terms of section 2(14) of the Act.Accordingly the assesses claim of exemption of capital gains to tax amounting to Rs.2,53,08,032 /- was denied and the entire amount added to the income of the assessee. ITA No.424/Ahd/2019 6 9. The matter was carried in appeal before the ld.CIT(A) where in turn he filed certificates from GUDA and Gandhinager Municipal corporation certifying to the contrary of the distance of the land being beyond 4Km and 5Km of the Gandhinager and Ahmedabad municipal Limits. The assessee furnished certificate from Gandhinagar Municipal corporation stating distance of the land being more than 6 kmsfrom it and a certificate from Gandhinagar Urban development Authority showing the distance of the said land being 9.53 kms from the municipal limits of Ahmedabad. He also furnished evidence of growing agricultural crop of Jawar on the said land, furnished Revenue record in Form No12 reflecting the said fact. 10. The ld.CIT(A) however upheld the order of the AO, holding at para 2.5 & 2 .6 of his order as under: “2.5 After going through the facts of the case, it is seen that the appellant has failed to furnish any evidences in support of his claim of exemption u/s.2(14) of the Act on the land sold. The same is treated as capital assets as none of conditions as laid down in section 2(14) of the Act has been satisfied. Accordingly, the AO has added the same in the total income. The appellant ahs harped on the certificates he has submitted of Talati, Dy. Engineer, R&B Division, and from GUDA and claimed that all the conditions in section 2(14) of the Act has been meted out. Therefore, the exemption u/s.2(14) of the Act of Rs.2,53,08,032/- should not be denied. It is seen that the AO has doubted the veracity of the certificates submitted by the appellant and has stated that these are not specific and vague (as discussed in Para 2.3 of this order). Therefore, the same cannot be taken as evidence. Secondly, the AO has also got the information u/s.133(6) of the Ct from the following authorities and confronted the appellant at the time of assessment proceedings:- ITA No.424/Ahd/2019 7 11. Perusal of the above reveals that the Ld.CIT(A) agreed with the AO while rejecting the documents submitted by the assessee to the AO proving that the land was situated beyond the prescribed limits of Gandhinagar and Ahmedabad municipalities and that it was agricultural land. The Ld.CIT(A) held that the AO had correctly doubted the veracity of these documents, being found by the AO to be all xerox copies and vague. The AO had noted that the documents certifying distance did not mention whether it was measured from ITA No.424/Ahd/2019 8 the city limits or municipal limits. Also the document evidencing the land being agricultural was only noted by the AO to be a certificate from GUDA that the land was situated in Agri Zone. He found that no evidence was produced by the assessee of having utilized the land for agricultural purposes. 12. The above facts noted by the AO/CIT(A) have remained uncontroverted before us therefore we do not find any infirmity in the order of the Ld.CIT(A) upholding the AO’s rejection of the documents submitted by the assessee evidencing his land to qualify as not being a capital asset as per section 2(14) of the Act, is 13. The Ld.CIT(A) further noted that the AO got specific information from the competent authority under section 133(6) of the Act stating that the land was situated within 4 kms limit from Gandhinagar and within 5 kms. from Ahmedabad City. The ld.CIT(A) noted that GUDA had certified the distance of the land as within 3 Kms limit of Gandhinagar corporation and had supplied copy of Map alongwith its letter. He noted that even the district map of Gandhinager showed the land to be at a distance of 2.58kms. from municipal limits of Gandhinagar and 4.27 Kms. from Ahmedabad. The Ld.CIT(A) also noted that no evidence of the land being used for agricultural purposes was furnished by the assessee and in fact noted that no agriculture income had been returned by the assessee. But we find that the assessee did submit distance certificates of the land both from Gandhinagar and Ahmedabad municipal limits ,issued by the Gandhinagar municipal corporation and GUDA stating the land to be at a distance of 6Kms and 9.53 Kms respectively from the two municipalities. The Ld.CIT(A) has not dealt with these certificates submitted by the assessee. The assessee also ITA No.424/Ahd/2019 9 contended that the land was used for growing Sorghum (Jawar) and furnished copies of Form No.12 evidencing the fact of the land being cultivated since 2007-08. The Ld.CIT(A) has not addressed this aspect also. 14. In view of the above we find that the Ld.CIT(A) has confirmed the addition made without dealing with the contentions and evidences filed by the assessee. 15. The issue clearly needs reconsideration. Since the matter for determination is the factual aspect of whether the land sold by the assessee fulfilled the criteria of section 2(14) of the Act to qualify as not being a capital asset, it would serve the interest of justice by restoring the issue to the AO who may determine the same by making all necessary inquiries and taking note of the evidences filed by the assessee. 16. The matter is accordingly restored to the AO for adjudicating afresh the assesses claim of exemption of capital gains with the limited scope of determining whether the asset sold by the assessee qualified as not being a capital asset in terms of section 2(14) of the Act. Needless to add the assessee be granted due opportunity of hearing in this regard. 17. The appeal of the assessee is allowed for statistical purposes. Order pronounced in the Court on 8 th February, 2023 at Ahmedabad. Sd/- Sd/- (SIDDHARTHA NAUTIYAL) JUDICIAL MEMBER (ANNAPURNA GUPTA) ACCOUNTANT MEMBER Ahmedabad, dated 8/02/2023