Mohammed Abbas, Ranga Reddy V. Income Tax Officer, Ward-15(1), Hyderabad

ITA 454/Hyd/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 1321 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 08-01-2019
• Assessment Year: 2008-2009
• Appeal Filed On: 01-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NILANJAN DEY
• Assessee Lawyers: MOMINA ALAM
• Keywords: Capital asset; Business income; Principle of natural justice; Additional evidence; Cost of acquisition; Revised return; Set aside
• Section: 54B; 54F; 2(14); 195; 250; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B ', HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN , ACCOUNTANT MEMBER SL.NO. ITA NO. AY APPELLANT RESPONDENT 1 &2 448 & 449/H/18 2008 - 09 & 2009 - 10 MOHAMMED GHANI QURESHI, RANGA REDDY. PAN AAEPQ 8284C INCOME - TAX OFFICER, WARD 8(1), HYDERABAD. 3&4 450 & 451/H/18 2008 - 09 & 2009 - 10 MOHAMMED JAMAL QUERSHI, RANGA REDDY. PAN AAEPQ 8285D - DO - 5&6 452 & 453/H/18 2008 - 09 & 2009 - 10 MOHAMMED SAYEED QUERSHI, RANGA REDDY. PAN APTPM 6238E - DO - 7&8 454 & 455/H/18 2008 - 09 & 2009 - 10 MOHAMMED ABBAS, RANGA REDDY. PAN AHAPA 9780C - DO - 9&10 456 & 457/H/18 2008 - 09 & 2009 - 10 MAHMOODA BEGUM, RANGA REDDY PAN BDNPB 5107J - DO ASSESSEE BY: SMT. MOMINA ALAM REVENUE BY: SHRI NILANJAN DEY DATE OF HEARING: 0 8 / 0 1 / 201 9 DATE OF PRONOUNCEMENT: 15 / 0 3 /201 9 O R D E R PER S. RIFAUR RAHMAN , AM: ALL T H E S E APPEAL S FILED BY THE ASSESSEES (PERTAIN TO THE FAMILY MEMBERS) ARE DIRECTED AGAINST A COMMON ORDER OF CIT(A) 2 , HYDERABAD, DATED, 19 TH DECEMBER, 2017 FOR AY S 2008 - 09 & 20 0 9 - 10. AS IDENTICAL ISSUES ARE INVOLVED IN THESE I.T.A. NO. 454 HYD/1 8 AND OTHERS MD. ABBAS QURESHI AND OTHERS 2 APPEALS, THE SAME WERE CLUBBED AND HEARD TOGETHER AND THEREFORE, A COMMON ORDER IS PASSE D FOR THE SAKE OF CONVENIENCE. 2. F OR THE SAKE OF CONVENIENCE, THE FACTS OF SRI MOHAMMED ABB AS QURESHI ARE DISCUSSED AND THE ISSUES ARE ADJUDICATED HEREUNDER (THE FACTS OF THE OTHER CASES ARE SIMILAR AND THEREFORE NOT REPEATED FOR BREVITY). 2.1 . SMT. MAHMOODA BEGUM IS THE OWNER OF AGRICUL TURAL PROPERTY OF AC. 0.24 GUNTAS AND AC. 0.09 GUNTAS IN SURVEY NO.238, NARSINGI VILLAGE, RAJENDRA NAGAR MANDA L , RANGA REDDY DISTRICT PURCHASED FOR A CONSIDERATION OF R S .68,000/ - INCLUDING STAMP DUTY VIDE DOCUMENT DATED 12.11.1998. SHE IS ALSO OWNER OF AG RIC ULTURA L PROPERTY OF AC. 0 .08 GUNTAS IN SURVEY NO.242, NARSINGI VILLAGE, RAJENDRA N AG AR MANDA L, RANGA REDDY DISTRICT PURCHASED FOR A CONSIDERATION OF RS.1 30 ,500/ - INCLUDING STAMP DUTY AS PER DEED DATED 26.05.1999. DUE TO OLD AGE, SMT. MAHMOODA BEGUM AND H ER HUSBAND SRI MOHAMMED ABBAS QURESHI WANTED TO PASS ON THE SAID PROPERTIES TO YOUNGER GENERATION OF 3 CHILDREN AND A HIBA (AS PER ISLAMIC CUSTOMS AND TRADITIONS) WAS EXECUTED WHEREIN THE SHARE FOR EACH WAS DETERMINED AS SMT . MAHAM OODA BEGUM 39%, SRI MOHAM M ED ABBAS QURESHI 39% AND EACH OF THE THREE SONS (THE A SSESSEE AND TWO OTHERS) 13.35%. A LL THE FAMILY MEMBERS ENTERED INTO AN AGREEMENT .OF SALE DATED 29.10.2007 WITH SMT. M. JAYASREE IN RESPECT OF AC 0.09 GUNTAS IN S.NO.238 AND AC 0.08 GUNTAS IN S.NO.242 FOR A CONSIDERATION OF RS.3 .40 CRORES AND IT WAS STIPULATED THAT THE TRANSACTION WOULD BE COMPLETED WITHIN 6 MONTHS. SMT. JAYASREE PAID RS. 2.79 CR O R E S OVER THE PERIOD OF TIME UPTO FEBRUARY 2008. S IMILAR AGREEMENT DATED 29.10.2007 WAS ENTERED BY THE FAMILY MEMBERS IN RESPECT OF LAND ADMEASURING I.T.A. NO. 454 HYD/1 8 AND OTHERS MD. ABBAS QURESHI AND OTHERS 3 AC.0.24 GUNTAS IN S. NO. 238 FOR A CONSIDERATION OF RS. 4. 80 CRORES TO SRI M. VISHNU VARDHAN WITH THE SAME STIPULATION THAT THE TRANSACTION WOULD BE COMPLETED WITHIN SIX MONTHS. SRI VISHNU VARDHAN PAID RS . 4.21 CRORES OVER THE PERIOD OF TIME UP TO FEBRUARY, 2008. THE ASSESEE RECEIVED HIS SHARE ACCORDINGLY . 2.2 THE ASSESSEE FILED RETURN OF INCOME FOR THE AY 2008 - 09 ON 23.09.2008 DECLARING TOTAL INCOME OF RS.1 .25 LAKHS. THE ASSESSING OFFICER (AO) NOTED THAT THE ASSESSEE DID NOT OFFER CAPITA L GAINS ON THE SALE OF FAMILY PROPERTY FOR THE TOTAL CONSIDERATION OF RS.8 . 20CRORES (AGREEMENT FOR SALE WITH SMT. JAYASREE FOR RS.3 .40 CRORES AND AGREEMENT FOR SALE WITH SRI VISHNU VARDHAN FOR RS 4 .80 CRORES). THE AO ACCORDINGLY ISSUED NOTICE U/S.148 FOR THE AY 2008 - 09 DATED 09.02.2015, IN RESPONSE TO WHICH THE ASSESSEE FILED REVISED RETURN OF INCOME FOR THE AY 2009 - 10 ON 15. 1 2.16 DECLARING NIL CAPITAL GAINS AFTER CLAIMING DED UCTION U/S.54B AND 54F ALONG WITH BUSINESS INCOME OF RS.1.70 LAKHS. NO REVISED RETURN WAS FILED FOR THE AY 2008 - 09 AND THE ASSESSEE FILED A LETTER DATED 20.02.2016 STATING THAT THE ORIGINAL RETURN OF INCOME FILE D MAY BE CONSIDERED IN RESPONSE TO NOTICE U / S .148. AS STATED ABOVE, NO CAPITAL GAINS WAS DECLARED IN THE RETURN FOR THE AY 2008 - 09. 2.3 THE DECLARATION OF CAPITAL GAINS BY FAMILY MEMBERS IN THE AY 2009 - 10 AND THE DEDUCTIONS CLAIMED ARE GIVEN HEREUNDER IN A TABULATED FORM FOR READY REFERENCE: NAME OF THE CASE CAPITAL GAINS DECLARED IN REVISED RETURN BEFORE CLAIMING DEDUCTIONS INDEXED COST OF IMPROVEMENT DEDUCTION U/S 54B DEDUCTION U/S 54F NET CAPITAL GAINS ARRIVED AFTER CLAIMING DEDUCTIONS SRI MOHAMMED GHANI 87,95,159 4,60,069 44,10,229 39,24,861 NIL I.T.A. NO. 454 HYD/1 8 AND OTHERS MD. ABBAS QURESHI AND OTHERS 4 QURESHI SRI MOHAMMED JAMAL QURESHI 1,10,42,810 5,77 ,642 63,14,007 11,91,294 29,59,867 SRI MOHAMMED ABBAS QURESHI 3,32,26,155 17,38,037 2,01,69,151 60,06,557 53,12,410 SMT. MAHMOODA BEGUM 1,75,90,317 9,20,137 50,75,991 1,15,94,189 & 83,04,150 NIL 2.4 IT WAS NOTED THAT SUBSEQUENT TO THE ENTERING AGREEMENT. FOR SALE WITH SMT. JAYASREE AND SRI VISHNU VARDHAN DATED 29. 10 .2007, THE ASSESSEE AND THE FAMILY MEM BE R S REGISTERED AN AGREEMENT OF SALE - CUM - IRRECOVERABLE POWER OF A TTORNEY (ASCLPOA) WITH M/S. NELL PROJECT DEVELOPERS PRIVATE LIMITED (NPDPL) ON 20.05.2008 FOR A CONSIDERATION OF RS.9.20 CRORES WHEREIN, SMT. JAYASREE AND SRI VISHNU VARDHAI WERE INCLUDED AS CONFIRMING PARTIES. AS PER THE SAID REGISTERED ASCIPOA, IT IS NOT ICED THAT THE CONFIRMING PARTIES HAVE CONFIRMED THAT W.E. F. RECEIPT OF SALE CONSIDERATION OF RS. 8 CRORES BY THEM AS PER CLAUSE 1.1 (RS. 7CR. PAID BY THEM TO THE FAMILY MEMBERS OF THE A SSESSEE + RS. 1 CR. EXTRA), THE AGREEMENT FO R SALE DATED 29.10.2007 HAS COME TO AN END AND BECAME UN - ENFORCEABLE AND THEY HAVE COMPLETELY GIVEN UP ALL THE RESPECTIVE RIGHTS/PRIVILEGES INCLUDING THE RIGHT OF PRE - EMPTION TO PURCHASE THE ABOVE SAID LAND OF AC 1.01 GUNTAS. ACCORDINGLY, NPDPL MADE PAYMENT OF SALE CONSIDERATION OF R S .9.20 CRORES IN THE FOLLOWING MANNER: - 1. PAYMENT IN FAVOUR OF VENDOR NO. 1I.E. MAHMOODA BEGUM CHEQUE NO. DATE AMOUNT IN (RS.) DRAWN ON 620755 20/05/2008 30,00,000/ - HDFC BANK, BANJARA HILLS, HYD. 620756 20/05/2008 30,00,000/ - - DO - TOTAL 60,00,000/ - 2. PAYMENT IN FAVOUR OF VENDOR NO. 2 I.E. MD. ABBAS QURESHI CHEQUE NO. DATE AMOUNT IN (RS.) DRAWN ON I.T.A. NO. 454 HYD/1 8 AND OTHERS MD. ABBAS QURESHI AND OTHERS 5 620757 20/05/2008 30,00,000/ - HDFC BANK, BANJARA HILLS, HYD. 620758 20/05/2008 30,00,000/ - - DO - TOTAL 60,00,000/ - 3. PAYMENT IN FAVOUR OF CONFIRMING PARTY NO. 1 I.E. SMT. M. JAYASREE CHEQUE NO. DATE AMOUNT IN (RS.) DRAWN ON 034580 06/12/2007 60,00,000/ - HDFC BANK, BANJARA HILLS, HYD. 620730 13/02/2008 1,00,00,000/ - - DO - 620720 13/02/2008 1,59,00,000/ - - DO - TOTAL 3,19,00,000/ - 4. PAYMENT IN FAVOUR OF CONFIRMING PARTY NO. 2 I.E. SRI. M. VISHNU VARDHAN CHEQUE NO. DATE AMOUNT IN (RS.) DRAWN ON 566059 14/09/2007 10,00,000/ - HDFC BANK, BANJARA HILLS, HYD. 566174 06/11/2007 4,00,00,000/ - - DO - 034579 06/12/2008 71,00,000/ - - DO - TOTAL 4,81,00,000/ - 2.5 FROM THE ABOVE IT CAN BE SEEN THAT OUT OF SALE CONSIDERATION OF RS.9.20 CRORES, THE ASSE S SEE AND FAMILY MEMBERS HAVE RECEIVED R S .8.20 CRORES AND SMT. JAYASREE AND SRI VISHNU VARDHAN TOGETHER RECEIVED R S . 1 CRORE. IN RESPONSE TO NOTICE U / S.133(6) OF THE AC T, SMT. JAYASREE AND SRI VISHNU VARDHAN CONFIRMED THAT FROM THE ABOVE SALE TRANSACTION, THEY GAINED R S . 1 CRORE AND FILED RETURN OF INCOME FOR THE AY 2009 - 10 DECLARING SHORT TERM CAPITAL GAIN (STCG) ON THE ABOVE SALE 'TRANSACTION WITH NPDPL. 2.6 IN VIE W OF THE ABOVE FACT UAL BACKGROUND , THE AO ISSUED SHOW CAUSE LETTER TO THE ASSESSEE'S WIFE SMT. MAHMOODA BEGUM, AS SHE IS THE ABSOLUTE OWNER OF PROPERTIES SOLD, AS TO I.T.A. NO. 454 HYD/1 8 AND OTHERS MD. ABBAS QURESHI AND OTHERS 6 WHY CAPITAL GAINS ON THE AGREEMENT FOR SALE DATED 29.10,2007 SHOULD NOT BE BROUGHT TO TAX IN THE HANDS OF FAMILY MEMBERS. THE GIST 'OF THE RESPONSE' BY SMT. MAHMOODA BEGUM (LETTER SIGNED BY ALL THE FAMILY MEMBERS) IS AS UNDER: - THEY PURCHAS ED AGRICULTURAL LAND IN THE YEAR 1998 ADMEASURING AC 1.01 GUNTAS AND DULY GOT LAND MUTATION DONE AND HOLDER OF PATTADAR PASS BOOK AND TITLE BOOK. THIS LAND HAS BEEN PUT TO CULTIVATION AND FURTHER SOME - LANDS WOULD TAKEN ON L EASE F ROM NEARBY LANDLORDS AND C ULTIVATE. THIS AGRICULTURAL LAND WAS ORIGINALLY PROPOSED TO BE SOLD TO SMT. JAYASREE AND SRI VISHNU VARDHAN WHO AGREED TO PURCHASE FOR A SALE CONSIDERATION OF R S .8.20 CRORES VIDE DOCUMENT DATED 29.10.2007 AND PAID R S .50 LAKHS EACH AS ADVANCE. THOUGH THE AG REEMENT OF SALE SHOWS THE TRANSACTION 'AS AN AGREEMENT OF SALE WITH POSSESSION REAL POSSESSION WAS NOT HANDED OVER TO THE PURCHASER SINCE THEY COULD NOT PAY THE AGREED AMOUNT AND ANOTHER PARTY BY NAME M / S. NPDL TO WHOM ASCIPOA HAS BEEN EXECUTED ON 20.05 .2008. IN FACT TILL DATE; THE LAND IS IN OUR POSSESSION AND WE HAVE BEEN CARRYING OUT AGRICULTURAL OPERATIONS THEREON. THE SALE PROCEEDS OF AGRICULTURAL DO NOT ATTRACT ANY TAX INCLUDING CAPITAL GAIN AS WE HAVE BEEN CARRYING AGRICULTURAL OPERATIONS SINCE THE DATE OF PURCHASE O F LAND IN THE YEAR 1998 TILL THE DATE OF TRANSFER 20.05.2008 AND ACCORDINGLY THE SAID PROCEEDS WOULD BE THOUGHT TO BE EXEMPT FROM INCOME TAX AND THEREFORE NOT DECLARED IN THE INCOME TAX RETURN FOR THE A Y 2009 - 10. U PON RECEIPT OF THE NOTICE, IT WAS UNDERSTOOD THAT THE LANDS SOLD WAS CATEGORIZED INTO URBAN AGRICULTURAL LANDS ON WHICH TAX INCIDENCE A RISES ON S ALE OF SUCH AGRICULTURAL LAND AN D THEREFORE WE HAVE REVISED RETURN FOR THE AY 20 0 9 - 10 AND IT IS REQUESTED TO ACCEPT THE SAME (A LL THE 5 MEMBERS). WHILE COMPUTING THE CAPITAL GAINS, THE PROPOSED COST OF ACQUISITION AND IMPROVEMENTS FOR EACH MEMBER WAS TAKEN. SINCE, IT IS AN AGRICULTURAL L AND, WE ARE ENTITLED FOR DEDUCTION U / S.54 B IN RESPECT OF INVESTMENT MADE IN AGRICULTURAL LANDS. ACCORDINGLY, THE PROPOSED SALE PROCEEDINGS RECEIVED BY EACH MEMBER HAVE RE - INVESTED IN THE PURCHASE OF AGRICULTURAL LAND AND CLAIMED EXEMPTION U/S.54 B . FURTHER , SOME AMOUNTS HAVE BEEN INVESTED IN CONSTRUCTION OF PROPERTY ON THEREFORE DEDUCTION U/S.54F HAS ALSO BEEN CLAIMED. ASPER THE HIBA, THE CONSIDERATION RECEIVED BY THE FAMILY MEMBERS IS AS UNDER : I.T.A. NO. 454 HYD/1 8 AND OTHERS MD. ABBAS QURESHI AND OTHERS 7 NAME OF THE PERSON SHARE OF LAND AS PER HIBANAMA RECEIPT OF S ALE CONSIDERATION AS PER HIBANAMA DECLARED BY SMT. MAHMOODA BEGUM. MAHMOODA BEGUM 9 GTS 1,80,00,000 MD ABBAS QURESHI 17 GTS 3,40,00,000 MD JAMAL QURESHI 5.65 GTS 1,13,00,000 MD GHANI QURESHI 4.50 GTS 90,00,000 MD SAYEED QURESHI 4.58 GTS 97,00,000 2.7 THE AO OBSERVED THAT A S PER THE AGREEMENT FOR SALE (AFS) ENTERED WITH SMT. JAYASREE AND SRI VISHNU VARDHAN ON 20.10.2007 , SUBSTANTIAL AMOUNT OF CONSIDERATION WAS PAI D BY TRANSFEROR AND POSSESSION OF THE PROPERTY WAS ALSO GIVEN BY THE FAMIL Y MEM B ERS OF THE A SSESSEE , CLEARLY FA LLI NG IN THE PURVIEW OF PART PERFORMANCE OF THE AGR E EMENT U/S. 5 3A OF THE TRANSFER OF PROPERTY ACT. ALL THE INGREDIENTS OF TRANSFER OF ASSET ARE AVAILABLE IN THE AFS DATED 2 9.10 .2007. P OSSESSION OF THE PROPERTY WAS GIVE N BY THE FAMILY MEMBERS OF THE ASSESSEE TO SMT. JAYASREE AND SRI VISHNU VARDHAN AS PER PARA 3 OF AFS DATED 29.10.2017. FURTHER, HE OBSERVED THAT IN RESPONSE TO SUMMONS U/S.131, THE PURCHASERS (SMT. JAYASRI AND SH. VISHNU VARDHAN) HAVE SUBMITTED THAT THEY HAD PAID RS.7 CRORES TO SMT. M A HMOODA BEGUM AND FAMILY MEMBERS ON DIFFERENT DATES AS PER THE ABOVE MENTIONED AFS AND FURTHER THAT THEY RECEIVED AN AMOUNT OF SALE CONSIDERATION OF RS. 8 CR. FROM NPDPL AND PROFIT OF RS. 1 CRORES WAS DECLARED AS STCG IN THE R ETURNS FOR THE AY 2009 - 10. FURTHER, THE PURCHASERS HAVE CLAIMED CERTAIN DEVELOPMENT EXPENSES ON THE SAID LAND AGAINST THE SALE CONSIDERATION RECEIVED FROM NPDPL, AS EVIDENT FROM THEIR COMPUTATIONS OF INCOME FOR THE AY 2009 - 10. 2.8 THE AO OBSERVED THAT A S PER THE RELEVANT CLAUSES IN AFS AND AS PER THE PURCHASERS ADMISSION THAT THEY HA V E TAKEN POSSESSION OF THE LAND AND DEVELOPED THE PLOTS DURING THE FY 2007 - 08 RELEVANT TO AY 2008 - 09, IT CLEARLY ESTABLISHES I.T.A. NO. 454 HYD/1 8 AND OTHERS MD. ABBAS QURESHI AND OTHERS 8 THAT THE ASSESSEE AND FAMILY MEMBERS HAVE GIVEN PO SSESSION OF THE LAND TO SMT. JAYASREE AND SRI VISHNU VARDHAN IN THE AY 2008 - 09. THE AO AF TER QUOTING EXTENSIVELY FROM THE AFS DATED 29.10.2007 AND ASCIPOW DATED 20.05.2008 (PAGE 17 - 19 OF ASSESSMENT ORDER) GAVE CONCLUSIVE FINDING THAT TRANSFER OF PROPERTY H AD TAKEN PLACE IN THE AY 2008 - 0 9 AND THEREFORE CAPITAL GAINS ARISING THEREON HAS TO BE BROUGHT TO TAX IN THE AY 2008 - 09. 2.9 THE AO OBSERVED THAT W HETHER THE LAND SOLD IS A CAPITAL ASSET U / S.2(14) OF THE ACT IS THE NEXT QUESTION . THE ASSESSEE AND FAMILY MEMBERS FILED REVISED RETURNS FOR THE AY 2009 - 10 CLAIMING THE LAND AS AGRICULTURAL LAND SITUATED WITHIN THE URBAN LIMITS AND CLAIMED DEDUCTION U/S.54B AND U/S.54F. LT WAS SUBMITTED THAT AGRICULTURAL OPERATIONS WERE CARRIED OUT ON THE SAID LAND RIGHT FROM 1988 TILL 2008 BUT NO DOCUMENTARY EVIDENCE FOR CLAIMING IT AS AGRICULTURAL LAND WAS PRODUCED. THE AO MADE ENQUIRIES WITH MRO RAJENDRA NAGAR MANDA L WITH REGARD TO THE SITUATION OF THE LAND IN THE URBAN LIMITS, IN RESPONSE TO WHICH T HE DY. COLLECTOR AND TAHSILDAR, RAJENDRA NAGAR MANDA L REPLIED THAT AS PER THE VERIFICATION OF REVENUE RECORDS FOR FY 2008 - 09 AND 2009 - 10 , IT WAS FOUND THAT THE NAME SMT. MAHMOODA BEGUM W /O . MD. ABBAS IS RECORDED AS PATTADAR AND POSSESSOR IN RESPECT OF LAND IN S.NO.237 (A C. 0.11 GTS), S.NO.238 (AC . 0.24 GTS)_ AND S.NO.242 (AC . 0.07 GTS) AND 'NO ENTRY FOUND IN THE COLUMNS OF CROPS'. HE FURTHER INFORMED THAT THE DISTANCE BETWEEN THE SAID LAND SITUATED AT NARSINGI VILLAGE AND GHMC RAJENDRA NAGAR CIRCLE IS APPRO XIMATELY 7 K MS. THUS, THE AO OPINED THAT AS PER THE REPORT OF DY. COLLECTOR AND TAHSILDAR, RAJENDRA NAGAR MANDA L , THE PROPERTY IS SITUATED WITHIN THE MUNICIPAL LIMITS OF NOTIFIED MUNICIPAL AREA AS SPEC I F I ED IN THE ACT AND ALSO NO CROPS WERE GROWN . I.T.A. NO. 454 HYD/1 8 AND OTHERS MD. ABBAS QURESHI AND OTHERS 9 2.10. THE AO NOTED THAT THE ASSESS E E DID NOT PRODUCE ANY EVIDENCE WITH REGARD TO THE PRIMARY/SECONDARY AGRICULTURAL O PERATIONS CARRIED OUT ON THE SAID LAND. NO EVIDENCE WAS PRODUCED WITH REGARD TO THE EARNING OF AGRICULTURAL INCOME (RETURNS OF INCOME SHOW NO AGRICULTURAL INCOME). FURTHER, THE LANDS SOLD BY THE ASSESSEE AND FAMILY MEMBERS ARE LOCATED IN WELL DEVELOPED AND FAST DEVELOPING AREA WITH SEVERA L HOUS ING AS WELL AS INFRASTRUCTURE PROJECT S BEING SET UP. 2.11 IN VIEW OF THE ABOVE OBSERVATIONS , THE AO CONCLUDED COMPREHENSIVELY THAT THE LAND SOLD BY THE ASSESSEE AND FAMILY MEMBERS IS A CAPITAL ASSET AS DEFINED IN S ECTION 2(14) OF THE ACT. THE AO FURTHER CONCLUDED THAT THE SAID LANDS ARE WITHIN THE LIMITS OF GHMC AS PER THE GOVERNMENT OF ANDHRA PRADESH G.O.MS.NO.261 DATED 16.04.2007 AND THUS IT IS IMMATERIAL WHETHER THE LANDS ARE SITUATED WITHIN 8 KMS FROM RAJENDRA N AGAR MUNICIPALITY OR NOT. THEREFORE, THE AO CONCLUDED THAT THE ASSESSEE AND FAMILY MEMBERS ARE LIABLE FOR CAPITAL GAINS ON THE TRANSFER OF SAID PROPERTY IN THE AY 2008 - 09. THE AO ACCORDINGLY COMPLETED THE ASSESSMENT FOR THE AY 2008 - 09 ON 'SUBSTANTIVE B ASI S' BY TAK I N G THE INDEXED COST OF ACQUISITION AT RS.2,12,838/ - AND ARRIVED CAPITAL GAINS OF R S .87,87,162/ - ADOPTING THE CONSIDERATION RECEIVED BY THE ASSESSEE AT RS.90, 00,000/ - . 3. IN RESPECT OF AY 2009 - 10 , WHICH HAS BEEN COMPLETED BY THE AO ON 'PROTEC TIVE BASIS', THE ASSESSEE FILED RETURN OF INCOME DECLARING BUSINESS INCOME' OF R S .1.70 LAKHS AND DECLARED NIL CAPITAL G AINS AFTER CLAIMING DEDUCTION U /S 54B AND 54F. THE CONCLUSION OF THE AO IN RESPECT OF COST OF IMPROVEMENT TO THE LAND , DEDUCTION U/S.54B AND 54F ARE AS UNDER: - I.T.A. NO. 454 HYD/1 8 AND OTHERS MD. ABBAS QURESHI AND OTHERS 10 3 .1 THE ASSESSEE AND FAMILY MEMBERS CLAIMED IMPROVEMENT OF THE PROPERTY AMOUNTING TO RS. 28,78, 000/ - (SHARE TO THE ASSESSE E OF RS .4 ,06,099) AND IT WAS CLAIMED THA T TH E SA I D EXPENDITURE WAS INCURRED DURING THE FY 1998 - 99 TO 2001 - 02. THE ASSESSEE WAS ASKED TO SUBMIT NECESSARY DOCUMENTS/EVIDENCES IN THIS REGARD SUCH AS BILLS/VOUCHERS ETC. FOR THE SAID CLAIM AND AS ASSESSEE COULD NOT PRODUCE ANY SUCH EVIDENCES, THE CLA IM OF IMPROVEMENT TO THE LAND WAS DISALLOWED . 3 .2 AS REGARDS DEDUCTION U / S.54B , T HE ASSESSEE CLAIMED THAT H E HAD INVESTED PART OF THE SALE PROCEEDS IN THE AGRICULTURAL LAND AS PER AFS DATED 02.11.2007 FOR R S. 31.90 LAKHS AND INCURRED EXPENDITURE FOR LEVE LLING OF LAND AND ROCK CUTTING OF RS.10,52,700 / - AND PROPORTIONATE EXPENDITURE INCURRED FOR FIXING COMPOUND WALL FOR AC 1.68 GUNTAS OUT OF TOTAL AC 12 IS RS.1,67,529 / - TOTALING TO RS.44,10,229 / - . THE AO NOTED THAT THE SAID PROPERTY WAS PURCHASED. BY SMT. M AHMOODA BEGUM AND NOT BY THE ASSESSE E FOR R S . 2.09 LAKHS AND PAID, STAMP DUT Y ACCORDINGLY. THE AO NOTED THAT THE AFS DOESN'T CONTAIN THE DETAILS AND MODE OF PAYMENT AND THE APPELLANT HAD ALSO NOT FURNISHED THE PAYMENT DETAILS WITH DOCUMENTARY EVIDENCE. THE AO FURTHER HELD THAT TO CLAIM EXEMPTION U/S.54B, THE INVESTMENT SHOULD HAVE BEEN MADE AFTER THE DATE OF TRANSFER I.E. 25.05.2008. TAKING THE ABOVE INTO CONSIDERATION, THE AO HELD THAT EXEMPTION U / S. 54B IS NOT ALLOWABLE, SINCE T H E PROPERTY DOES NOT BELONG TO THE ASSESSEE (THE ORIGINAL OWNER OF THE PROPERTY SMT. MAHMOODA BEGUM) AND FURTHER, THE LAND SOLD IS NOT AN AGRICULTURAL LAND AND IT IS AN URBAN AS DEFINED U/S.2( 14) OF THE ACT, WHICH WAS CONFIRMED BY THE ASSESSEE BY FILING RE VISED RETURN AND THE ASSESSEE FAILED TO PRODUCE ANY EVIDENCE ABOUT THE CULTIVATION OF LANDS. I.T.A. NO. 454 HYD/1 8 AND OTHERS MD. ABBAS QURESHI AND OTHERS 11 FURTHER, THE LETTER OF D Y. COLLECTOR AND TAHSILDAR, RAJENDRA NAGAR MANDA L CLEARLY BRINGS OUT THE FACT THAT THE PROPERLY IS SITUATED WITHIN THE MUNICIPAL LIMIT OF N OTIFIED MUNICIPAL AREA AND ALSO NO CROPS WERE RAISED. ACCORDINGLY, THE CLAIM U/S 54B OF RS .44 , 10, 229/ - ( LAND COST OF RS.31.90 LAKHS AND PLOT IMPROVEMENT CHARGES OF RS.12,20,229/ - ) WAS DISALLOWED. 3 .3 AS REGARDS DEDUCTION U/S .54F , T HE ASSESSEE CLAIMED INVESTMENT IN PLOT NO . 4 64, ADMEASURING 250 SQ. Y DS SITUATED, AT NARSINGI VILLAGE REGISTERED VIDE SALE DEED DATED 30.04.2008 FOR RS.6 LAKHS. HE CL AI M ED THAT HE INVESTED AN AMOUNT OF RS.37.05 LAKHS AS PER AFS DATED 14.2.2008 AS AGAINST ACTUAL SALE DEED AMOU NT OF RS.6 LAKHS. FURTHER THE ASSESSEE CLAIMED R S .12.75 LAKHS FOR THE CONSTRUCTION OF HOUSE. THE AO ASKED EVIDENCES REGARDING CONSTRUCTION OF HOUSE LIKE MUNICIPAL PLAN APPROVAL, SANCTION LETTER, CONSTRUCTION EXPENDITURE DETAILS ALONG WITH BILLS/VOUCHERS ET C. IN RESPECT OF DEDUCTION CLAIMED U/S.54F TO THE EXTENT OF RS.50.25 LAKHS (37.50 LAKHS LAND AND RS.12.75 LAKHS FOR CONSTRUCTION OF HOUSE). HOWEVER, THE ASSESSEE COULD NOT PRODUCE ANY EVIDENCE IN THIS REGARD. IN THE ABSENCE OF PRODUCTION OF SUCH EVIDENCE, THE AO OPINED THAT THE ASSESSEE ONLY PURCHASED A PLOT OF LAND AND DID NOT UNDERTAKE ANY CONSTRUCTION OF HOUSE ON THE PLOT. NO MUNICIPAL PLAN APPROVAL, MUNICIPAL TAX BILLS, WATER BILLS, ELECTRICITY BILLS ETC. IN THE: NAME OF THE ASSESSEE WERE FURNISHED. IT WAS FURTHER NOTED BY THE AO THAT THE AFS FOR THE SAID LAND ON WHICH HE WAS SUPPOSED TO HAVE CONSTRUCTED HOUSE, STANDS IN THE NAME OF SRI MOHD . ABBAS QURESHI AND NO T THE ASSESSEE. IN VIEW OF THE FACTS AS BROUGHT OUT ABOVE, THE AO DISALLOWED DEDUCTION U/S.54 F AND COMPUTED LONG TERM CAPITAL GAINS OF R S .87,87 1 62 / - . I.T.A. NO. 454 HYD/1 8 AND OTHERS MD. ABBAS QURESHI AND OTHERS 12 4. AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) CONTESTING THE FOLLOWING GROUNDS, WHICH ARE COMMON IN ALL THE APPEALS: I) PROPERTIES BEING SOLD ARE NOT CAPITAL ASSETS 2(14) OF THE ACT. II ) PROPERTIES BEING SOLD ARE AGRICULTURAL LANDS. (III) THE CAPITAL GAINS IF ANY, ARISES IN THE AY 2009 - 10 AND NOT IN 2008 - 09. (IV) THE TRANSFER OF PROPER TY HAS TAKEN PLACE ONIY IN TH E A Y 2009 - 10 AND N O T IN AY 2008 - 09 AS PER SECTION 53A OF TRANSFER OF PROPERTY ACT. V) DOCUMENTS /CLAIMS/DEDUCTIONS/EXPENSES SUBMITTED BUT NOT ALLOWED. 5. AS REGARDS PROPERTIES SOLD ARE NOT CAPITAL ASSETS U/S.2(14) OF THE ACT , THE AR OF THE ASSESSEE SUBMITTED AS UNDER: : THE AR SUBMITTED THAT THE SAID LANDS ARE AGRICULTURAL LANDS LOCATED IN NARSING I GRAM PANCHAYAT. NARSINGI GRAM PANCHAYAT WAS NEVER MERGED WITH RAJENDR A NAGAR MUNICIPALITY AT ANY POIN T OF TIME. GOVERNMENT OF ANDHRA PRADESH MERGED RAJENDRA NAGAR MUNICIPALITY WITH H YDERABAD MUNICIPAL CORPORATION ON 16.04.2007 TO FORM GREATER HYDERABAD MUNICIPAL CORPORATION (GHMC). THE GHMC PROPOSED TO MERGE NARSINGI GRAM PANCHAYAT AND SOME OTHER GRAM PANCHAYATS WITH GHMC VIDE GO DATED 26.03.2013. THEREAFTER GO DATED 31.08.2013 WAS ISSUED STATING THAT NARSINGI GRAM PA NCHAYAT S HAL BE MERGED WITH GHMC. THE GO DATED 31.08.2013 WAS CONTESTED BY THE RESIDENTS OF THESE GRAM PANC HAYATS AND THE HON'BLE AP HIGH COURT VIDE ORDER DATED 26.09.2013 PASSED INTERIM SUSPENSION ORDERS AND STAYED OPERATION OF GO DATED 31.08.2013. THEREAFTER, GOVERNMENT OF AP ISSUED GO DATED 08.01.2014 CANCELLING THE EARLIER GO DATED 31.08.2013. IN EFFECT, NA RSINGI VILLAGE FALL UNDER JURISDICTION OF NARSINGI GRAM PANCHAYAT AND WAS NEVER MERGED WITH RAJENDRA NAGAR M UN ICIPALITY OR GHMC. IN THE CBDT NOTIFICATION DATED 06.01.1994, IT WAS STATED THAT URBANIZATION OF AREAS MEANS AREAS UP TO A DISTANCE I.T.A. NO. 454 HYD/1 8 AND OTHERS MD. ABBAS QURESHI AND OTHERS 13 OF 8 K M S FRO M THE MUNICIPAL LIMITS IN A L L DIRECTIONS. THE SAID NOTIFICATION DOES 'NOT INCLUDE RAJENDRA NAGAR MANDA L AND HENCE THE AREAS OUTSIDE OF RAJENDRA NAGAR MUNICIPALITY DO NOT COME UNDER THE CLASSIFICATION OF URBAN 'AND. THE AO ERRONEOUSLY RELIED UPON THE LETTER ISSUED BY DY. COLLECTOR AND TAHSILDAR, STATING THAT THE DISTANCE BETWEEN THE SAID LAND AND GH M C RAJENDRA NAGAR CIRCLE IS APPROXIMATELY 7 KMS. THIS LETTER MENTIONS THE APPROXIMATE DISTANCE AND DOES NOT CLEARLY MENTION WHETHER THE DISTANCE IS BASED ON ROAD OR AERIAL DISTANCE. AS PER THE SOFTWARE TOOL WW.FREEMAPTOOLS.COM THE AERIAL DISTANCE BETWEEN THE SAID LAND AND RAJENDRA NAGAR MUNICIPALITY IS 9.059 KMS. AS PER THE CENSUS DATA OF RANGA REDDY DISTRICT PUBLISHED IN 2011, THE POPULATION OF NARSINGI VILLAGE IS 9,449. AS PER THE RELIANCE PLACED BY THE AO IN THE CASE OF SRUJAN SINGH [125 TAXMAN 1075], FOR THE AGRICULTURAL LAND TO BE TAKEN AS CAPITAL ASSET, IT SHOULD BE IN AN AREA WITHIN THE M UNICIPALITY LIMITS AND THE AREA SHOULD MORE THAN 10,000 POPULATION. ON B OTH THE ACCOUNTS, THE SAID AGRICULTURAL LAND DOES NOT COME UNDER PURVIEW OF CAPITAL ASSET AS THE INCOME TAX ACT. 5.1 AS REGARDS PROPERTIES SOLD ARE AGRICULTURAL LANDS , THE AR SUBMITTED THAT THE SAID LAND ARE ABUTTING MUSI RESERVOIR ON ONE SIDE AND O N THE OTHER SIDE THERE IS A WELL. SMT. MAHMOODA BEGUM, HER HUSBAND AND THREE CHILDREN WERE UNDERTAKING AGRICULTURAL AND FARMING OPERATIONS AND THEY WERE CULTIVATING RICE AND OTHER AGRICULTURE PRODUCE IN THE SAID LAND FROM THE T IM E THEY HAVE ACQUIRED THE LAND IN THE YEAR 1998/1999 TILL THE YEAR 2008. IN ADDITION TO UNDERTAKING FARMING ON THE SAID LA ND , ALL OF T HEM ALSO USED TO UNDERTAKE AGRICULTURAL OPERATIONS IN THE NEIGHBOURING LANDS TAKEN ON IEASE. THE ADANGAL / PAHANI RECORDS FOR THE PROPERTY DEMONSTRATE THAT IT WAS AGRICULTURAL LANDS IN S .NO.237, 238 AND 242 AND IT WAS YIELDING TWO MAHAN I PANTA RECORDED IN THE SAID ADANGAL / PAHANI, SUBMITTED TO THE AO. 6. AFTER CONSIDERING THE SUBMISSIONS O F THE ASSESSEE, THE CIT(A) OBSERVED AS UNDER: I.T.A. NO. 454 HYD/1 8 AND OTHERS MD. ABBAS QURESHI AND OTHERS 14 7.3 . I HAVE CAREFULLY CONSIDERED THE M A TERIAL ON RECORD, THE ARGUMENTS OF THE AR AND THE EVIDENCES PRODUCED IN SUPPORT OF THE CONTENTIONS. IT WAS CONTENDED THAT THE A SSESSEE AND FAMILY MEMBERS WERE CULTIVATIN G AND GROWING RICE DURING THE YEAR 1998 TO TILL 2 0 08 AND FURTHER, THEY HAVE TAKEN THE NEIGHBOURING LANDS ON LEASE FOR AGRICULTURAL OPERATIONS. BUT THE FACT IS THAT NO EVIDENCE REGARDING CARRYING OF AGRICULTURAL OPERATIONS WERE PRODUCED EITHER BEFORE THE AO OR BEFORE ME. IN RESPECT OF UNDERTAKING AGRICULTURAL OPERATIO NS EVIDENCE WAS PRODUCED. IT IS RELEVANT AND MATERIAL TO NOTE THAT NO AGRICULTURAL INCOME HAS BEEN DECLARED IN THE IT RETURNS FILED BY THE APPELLANT AND FAMILY MEMBERS. IF THEY HAVE CARRIED OUT AGRICULTURAL OPERATIONS OF THEIR L A NDS AND LEASE LANDS, CERTAINLY IT WOULD RESULT IN CONSIDERABLE AGRICULTURAL INCOME. FURTHERMORE, T H E AR SUBMITTED PHOTOGRAPHS OF THE SAID AGRICULTURAL LAND WHICH IS PART OF TH E DOCUMENTATION OF SALE DEED EXECUTED BY THE APP ELLANT AND FAMILY MEMBERS (THE PHOTOGRAPH OF THE PROPERTY UNDER TRAN S FE R HAS TO BE ENCLOSED TO THE DEED AS PER PREVAI L ING LAWS OF AP GOVERNMENT). THE PHOTOS AND IMAGES ARE ENCLOSED TO THIS ORDER AS ANNEXURE W HICH CLEARLY DEMONSTRATES THAT NO AGRICULTURAL O PERATIONS WERE CARRIED OUT ON THE SAID LAND. THE AR ENCLOSED PAHANI/ADANGAL OF THE SAID LANDS AS PAGE N O . 6 & 7 OF THE PAPER BOOK CONTAINING 44 PA GES IN SUPPORT OF THE CONTENTION THAT THE APPELLANT AND FAMIL Y MEMBERS CARRIED OUT AGRICULTURAL OPERATION. ON VERIFICATION OF THE SAID DOCUMENTS, IT IS SEEN THAT IT ONLY MENTIONED THAT IT IS A WET LAND AND NO OTHER DETAILS REGARDING CARRYING OF AGRICULTURAL OPERATIONS WERE AVA ILABLE . THEREFORE, THE CONTENTIONS OF TH E APPELLANT THAT THE SAID LANDS WERE AGRICULTURAL LANDS IS A MERE STATEMENT WITHOUT ANY EVIDENCE AND IN FACT THE' ABOVE MENTIONED FACTS CLEARLY DEMONSTRATE THAT NO AGRICULTURAL OPERATIONS WERE BEING CARRIED OUT IN THE SAID LANDS AND THEREFORE IT IS A CAPIT AL ASSET LIABLE FOR CAPITAL GAINS. 7.4 COMING TO THE ISSUE AS TO WHETHER THE SAID LAND IS WITHIN 8 KMS FROM THE MUNICIPAL LIMITS OR NOT, THE AR RELIED UPON A SOFTWARE TOOL WWW.FREEMAPTOOLS.COM WHEREIN THE AERIAL D I STANCE BETWEEN THE SAID L AND AND RAJENDR A NAGAR MUNICIPALITY WAS MARKED AS 9.059 KMS. IT IS HOWEVER TO BE NOTED THAT IT IS NOT AN ACCEPTED TOOL / M ETHOD FOR DETERMINING THE DISTANCE. ON THE OTHER HAND, THE DY. COLLECTOR AND TAHSILDAR STATED THAT THE D ISTANCE BETWEEN THE SAID LAND AND GHMC RAJENDR A N AGAR CIRCLE IS APPROXIMATELY 7 KMS. IT HAS BEEN HELD BY ME IN PARA NO. 7.3 ABOVE THAT THE SAID LANDS UNDER TRA NSFER ARE NOT AGRICULTURAL LANDS AND THEREFORE THE ISSUE OF M EASUR I N G I.T.A. NO. 454 HYD/1 8 AND OTHERS MD. ABBAS QURESHI AND OTHERS 15 THE DISTANCE FROM THE LAND TO THE MUNICIPAL LIMIT AND THEREUPON ARRIVING AT A DECISION AS TO WHETHER THE LAND TRANSFERRED IS A CAPITAL ASSET OR NOT DOESN'T ARISE. 7.5 IN VIEW OF THE ABOVE, GROUNDS NO.(I) AND (II) OF APPEAL ARE DISMISSED. 7. AS REGARDS THE YEAR OF TAXABILITY AND OPERATION OF SECTION 53A OF TRANSFER PROPERTY ACT, THE AR OF THE ASSESSEE SUBMITTED AS UNDER: THE APPELLANT AND FAMILY MEM BERS ENTERED INTO AFS WITH SMT. N. JAYASREE ON 25.10.2007 FOR A CONSIDERATION OF RS.3.40 CRORES AND OUT OF THE SAID SALE CONSIDERATION, RS.2.79 CORES WAS RECEIVED IN THE FY 2007 - 08 BY THE INDIVIDUAL FAMILY MEMBERS IN PROPORTION TO THEIR SHARE IN ACCORDANCE WITH HIBA AGREED UPON BY THE FAMILY MEMBERS. SIMILARLY IN RESPECT OF AFS WITH SRI M. VISHNU V A RDHAN DATED 29.10.2007 , OUT OF THE SALE CONSIDERATION OF RS.4 . 80 CORES , RS.4.21 CRORES W A S RECEIVED BY THE FAMILY MEMBERS IN THE FY 2007 - 0 8. THE SAID AFS WAS C ANCELLED BY S MT . N. JAYASREE AND SRI N. V ISHNU VARDHAN , THE APP ELLANT AND F AMILY MEMBERS AS THE TERMS IN AFS WERE NOT ADHERED TO AND THERE WAS A NEW VEN DEE FOR THE SAID PROPERTY. THE CANCELLATION OF THE SAID AFS AND TERMS THEREON WERE PRESCRIBED IN THE ASC IPOA ENTERED BY THE FAMILY MEMBERS WITH M / S. NELL PROJECT DEVELOPERS PRIVATE LIMITED (NPDPL) ON 20.5.2008. SMT. JAYASREE AND SRI VISHNU VARDHAN WERE NEVER IN THE POSSESSION OF THE AGRICULTURAL PROPERTY AT ANY POINT OF TIME AND THE FACT THAT THE APPELLANT A ND FAMILY MEMBERS HANDED OVER THE POSSESSION OF THE PROPERTY TO NPDPL ON 20.05.2008 BY ITSELF A CON CL U S IVE EVIDENCE OF TRANSACTION IN THE FY 2008 -- 09 AND NON - APPLICABILITY OF SECTION 53A OF TRANSFER OF PROPERTY ACT IN THE FY 2007 - 08. THE TRANSACTION UNDERT AKEN BY THE ORIGINAL AFS ON 29.10.2007 WAS CANCELLED WITHIN 6 MONTHS I.E. 20.05.2008 AND MONIES WERE REPAID TO SMT. N. JAYASREE AND SRI N. VISHNU VARDHAN BY M / S. NPDPL. THE MONEY RECEIVED BY T HE APPELLANT AND FAMILY MEMBERS FROM SMT. N. JAYASREE AND SRI N. VISHNU VARDHAN ARE ONLY TO BE TREATED AS ADVANCE AND NOT AS INCOME. IN VIEW OF THE ABOVE, THE YEAR OF TAXABILITY SHOULD BE FY 2008 - 09 AND NOT FY 2007 - 08 . 8. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE CIT(A) OBSERVED AS UNDER: I.T.A. NO. 454 HYD/1 8 AND OTHERS MD. ABBAS QURESHI AND OTHERS 16 8.1 I HAVE CAREFULLY CONSIDERED THE CONTENTIONS MADE BY THE AR. FROM THE AFS DATED 29.10.2007 WITH SMT. N. JAYASREE AND SRI N. VISHNU VARDHAN SEPARATELY, IT IS SEEN IN THE LAST PARA OF PAGE N O.3 OF THE SAID AFS , IT WAS CLEARLY MENTIONED AS 'THAT THE VENDORS HEREBY DELIVER THE VACANT AND PEACEFUL POSSESSION OF THE SCHEDULE PROPERTY ON TODAY'. IT IS EVIDENT F R OM THE ABOVE THAT THE APPELLANT AND FAMILY MEMBERS HAVE HANDED O VER THE POSSE S SION OF THE PROPERTY TO SMT. JAYASREE AND SRI VISHNU VARDHAN ON 29.10.2007 ITSELF AN D THEREFORE SECTION 53A OF TRANSFER OF PROPERTY ACT COMES INTO OPERATION AND IT WILL BE CONSIDERED AS TRANSFER OF PROPERTY IN THE FY 2007 - 08 ITSELF. THE ARGUM ENTS OF THE AR THAT THE POSSESSION OF THE PROPERTY WAS NOT GIVEN TO SMT. N. JAYASREE AND SRI N. VISHNU VARDHAN IS ERRONEOUS AND MISREADING. 8.2 I N PAGE NO. 4 OF ASCIPOA, IT WAS STATED THAT OUT OF TOTAL SALE CONSIDERATION OF R S . 9.20 CRORES, M / S. NPDPL SH ALL PAY R S .3.40 CORES TO SMT. N. JAYASREE AND RS.4.60 CRORES TO SRI N. VISHNU VARDHAN THE CONFIRMATION PARTIES 1 & 2 FOR RELINQUISHING THE PROPERTY RIGHTS AND THE BALANCE SUM OF R S .1.20 CRORES SHALL BE PAID TO THE VENDORS I.E. APPELLANT AND FAMILY MEMBERS . IT IS EVIDENT FROM THE ABOVE THAT THE VENDEE IS MAKING PAYMENT DIRECTLY TO SMT. N. JAVASREE AND SRI N. V ISHN U VARDHAN ONLY BECAUSE THEY HAVE TAKEN OVER THE POSSESSION OF THE PROPERTY AND THE SAID PAYMENT WAS TOWARDS RELINQUISHING THEIR RIGHTS IN THE SAID PROPERTY. IT IS FURTHER EVIDENT THAT SMT. N. JAYASREE AND SRI N. VISHNU VARDHAN WERE PAID A SUM OF RS.8 CRORES BY M / S. NPDPL WHEREAS THEY HAVE GIVEN ONLY R S .7 CRORES TO THE APPELLANT AND FAMILY MEMBERS AS PER THE TERMS OF AFS. SMT. JAYASREE AND SH. VISHNU VARDHAN GOT R S . 1 CRORE PROFIT UPON T R ANS F ER OF THE SAID PROPERT Y BY THEM TO M/S NPDPL. THEY WERE MENTIONED AS CONFIRMIN G PA RTIES IN THE ASCIPOA BECAUSE THE AFS ENTERED BY THE ASSESSE E AND FAMILY ME M BERS W I TH SMT. JAYASREE AND VISHNU VARDHAN WAS NOT A SAL E DEED. IT A MATERIAL AND IMPORTANT FACT THAT SMT. N. JAYASREE AND SRI N. VISHNU VARDHAN HAVE DECLARED R A .1 CRORE AS STCG ON THE SAID TRANSACTI ON IN THE RETURNS FILED FOR THE AY 2009 - 10. IF THE TRAN S FE R O F THE L AND HAD NOT TAKEN PLACE TO SMT. N. JAYASREE AND SRI N. VI.SHNU VARDHAN IN THE FY 2007 - 08, THE ISSUE OF ARISING OF CAPITAL GAINS IN THEIR HANDS IN THE FY 2008 - 09 WOULD NOT ARIS E. THE ARGUMENT OF THE AR THAT THE VENDORS I.E. APPELLANT AND THE FAMILY MEMBERS HAVE DELIVERED THE PHYSICAL POSSESSION OF THE PROPERTY TO M / S NPDPL VIDE PARA 3.1 OF THE AS C IPOA INDICATES I.T.A. NO. 454 HYD/1 8 AND OTHERS MD. ABBAS QURESHI AND OTHERS 17 THAT THE TRANSFER HAS OCCURRED ONLY IN THE A Y 2008 - 09 IS DEVOID OF ANY MERIT SINCE THIS IS IN REFERENCE TO THE CLAUSE OF CANCELLATION OF AFS DATED 29 . 1 0.2007 CONTAINED IN PARA - IL OF THE ASCIPOA. FROM THE ABOVE, IT IS EVIDENT AND CLEAR THAT THE IMPUGNED TRANSFER OF PROPERTY HAD TAKEN P LACE IN THE FY 2007 - 08 AND T HEREFORE, THE CAPITAL GAINS IS LIABLE TO BE BROUQHT TO TAX IN THE AY 2 - 008 - 09. 8.3 IN VIE W OF THE ABOVE, GROUNDS NO:( I II) AND (IV) OF APPEAL ARE DISMISSED. 9. AS REGARDS DOCUMENTS/C L AIM/DEDUCTIONS/EXPENSES S UBMITTED BUT NOT ALLOWED, THE LD. AR SUBMITTED AS UNDER: IT WAS SUBMITTED BY THE AR THAT THE APPELLANT AND FAMILY MEMBERS ARE FARM LA BOURERS AND NOT EDUCATED AND COULD NOT RETAIN MANY OF THE EXPENSES VOUCHERS/BILLS ETC. INCURRED IN PROPER FORMAT INSPITE OF HAVING GENUINELY INCURRED EXPENSES FOR THE UPKEEP OF THE AGRICULTURAL PROPERTY. THEY HAVE UNDERTAKEN DEMOLITION OF THEIR HOME WAY B A CK IN THE YEAR 2008 AND CONSTRUCTED THE EXISTING STRUCTURE AND IN THE PROCESS LOST SOME OF THE BILLS/VOUCHERS THAT WOULD HAVE POSITIONED THEM TO CLAIM BENEFITS UNDER INDEXATION, SECTION 54B AND SECTION 54F OF THE ACT. THE SCRUTINY U/S.148 HAD TAKEN PLACE A FTER MUCH PASSAGE OF TIME RESULTING IN DESTRUCTION OF MANY BILLS/VOUCHERS. INSPITE OF ADVERSE SITUATIONS, THE APPELLANT AND FAMILY MEMBERS WERE ABLE TO OBTAIN PRIMARY EVIDENCE/CIRCUMSTANTIAL PROOFS/AFFIDAVITS OF VENDORS WHOEVER TRACEABLE FOR THE PERIOD AY 2008 - 09 AND 2009 - 10. AND HENCE THEIR CLAIMS OF INDEXATION AND BENEFITS U/S.54B AND 54F SHOULD BE GIVEN. 10. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE CIT(A) OBSERVED AS UNDER: 9.1 I HAVE CAREFULLY CONSIDERED THE I SS UE AND T HE SUBMISSIONS MADE BY THE AR. AS MENTIONED ABOVE, THE APPELLANT AND FAN - LILY MEMBERS DECLARED CAPITAL GAINS ON THE SAID TRANSFER OF CAPITAL ASSET IN THE AY 20 0 9 - 10 AND CLAIMED DEDUCTION U/S.54B AND 54F. HOWEVER, THEY HAVE CONTESTED THAT NO CAPITAL GAINS A RISES ON THE SAID TRANSFER, AS DISCUSSED ABOVE, IT WAS HELD BY ME HAVING REGARD TO FACTS AND CIRCUMSTANCES OF THE CASE THAT THE ASSET UNDER TRANSFER IS A CAPITAL ASSET AND CAPITAL GAINS IS LIABLE TO BE BROUGHT TO TAX IN AY 2008 - 09 AND NOT AY I.T.A. NO. 454 HYD/1 8 AND OTHERS MD. ABBAS QURESHI AND OTHERS 18 2009 - 10. THERE FORE, THE ISSUE OF ALLOWING THE DEDUCTIONS U/S 54B AND 54F I N THE AY 2008 - 09 DOESN'T ARISE. IN ANY CASE, EVEN ON MERITS, THE CLAIMS ARE NOT ALLOWABLE AS UNDER: - (I) THE AO HAS GIVEN DETAILED REASONS FOR DISALLOWANCE OF CLAIM U/S.54B AS THE APPELLANT HAS NOT PRODUCED ANY EVIDENCE IN - SUPPORT OF THE CLAIM U/S.54B. I AM IN AGREEMENT WITH THE AO IN REGARD TO HIS FINDINGS. IN ANY CASE , ONCE THE PROPERTY TRANSFERRED IS NOT HELD TO BE AGRICULTURAL LAND, THE ISSUE OF ALLOWING DEDUCTION U/S.54B DOES NOT ARISE. (II) AS REGARDS THE CLAIM U/S.54F, AS ELABORATED IN DETAIL BY THE AO, IT IS SEEN THAT THE APPELLANT HAD NOT FURNISHED PRIMARY EVIDENCES SUCH AS MUNICIPAL APPROVAL, MUNICIPAL TAX BILLS, WATER OR ELECTRICITY BILLS ETC. IN SUPPORT OF THE CO NTENTION OF CONSTR UCTION OF A HOUSE. EVEN WITH REGARD TO THE ALLEGE D BUYING OF LAND, THE APPELLANT CLAIMED IT AT RS.37.50 LAKHS AS PER THE AFS DATED 30.04.2008 WHERE AS IT IS ONLY FOR RS.6 LAKHS AS PER THE SALE DEED. THE APPELLANT DID NOT PRODUCE THE SAID AFS DATED 14.02.20 08, THOUGH HE CLAIMED RS. 37.50 LAKHS AS THE PURCHASE CONSIDERATION. IT IS NOT HARD TO VISUALIZE THE REASON FOR NONPRODUCTION OF THE SAID AFS AS ONLY THE GUIDE LIN E VALUE GIVEN BY WAY OF CHEQUE WOULD HAVE BEEN MENTIONED IN THE SALE DEED, WHEREAS THE REAL CO NSIDERATION INCLUDING MAY BE CASH PAYMENT WOULD HAVE BEEN MENTIONED IN THE AFS. 9.2 IN VIEW OF THE ABOVE, THE DEDUCTION U/S,54F IS ALSO NOT AVA ILABLE TO THE APPELLANT EVEN ON MERITS. T HUS DEDUCTIONS U/S 54B AND 54F ARE NOT ALLOWABLE FOR THE CLAIM MADE IN THE AY 2009 - 10. IN THE RESULT, THE GROUNDS OF APPEAL FOR THE AY 2008 - 09 ARE DISMISSED AND THE ACTION OF THE AO IN BRINGING THE SAID TRANSACTION TO CAPITA L GAINS TAX IN THE AY 2008 - 09 IS UPHELD. 1 1 . WITH REGARD TO THE AY 2009 - 10, THE CIT(A) OBSERVED THAT THE A O , STATED THAT THE ADDITION ON ACCOU NT OF CAPITAL GAINS IS BEING MADE ON 'PROTECTIVE BASIS'. HOWEVER, THE FACT IS THAT T HE A SSESSEE S THEMSELVES DECLARED CAPITAL GAINS ON THE SAID TRANSACTION IN THE AY 2009 - 10 AND MADE CLAIMS OF DEDUCTION U/S 54B AND 54F AND RETURNED NI L CAPITAL GAINS. IT APPEARS THAT NO CLAIM WAS MADE DURING THE ASSESSMENT PROCEEDINGS WITHDRAWING THE ADMISSION OF CAPITAL GAINS MADE IN THE REVISED I.T.A. NO. 454 HYD/1 8 AND OTHERS MD. ABBAS QURESHI AND OTHERS 19 RETURN OF INCOME. IT CAN BE SEEN THAT ON ONE HAND THE APPELLANTS THEMSELVES DECLARED CAPITAL GAINS IN THE AY 2009 - 10 AND ON T HE OTHER HAND THE ARISING OF CAPITAL GAINS IS BEING CHALLENGED IN THE GROUNDS OF APPEAL FOR THE AY 2009 - 10 (IN FACT THE SAME SET OF GROUNDS AND ARGUMENTS WERE MADE IN THE APPEALS FOR BOTH THE YEARS I . E. AY 2008 - 09 & 2009 - 10). SINCE IT HAS BEEN HELD BY ME THAT THE SAID LANDS ARE NOT AGRICULTURAL LANDS A N D ARE CAPITAL ASSETS AND THE CAPITAL GAINS ARISES IN THE AY 2008 - 09 AS DISCUSSED IN THE PRECEDING PARAS, THE GROUNDS OF APPEAL NO. (I) & (II) OF THE AY 2009 - 10 ARE DISM ISSED. AS REGARDS THE YEAR OF TAXABILITY , SINCE THE APPELLANT HIMSELF OFFERED CAPITAL GAINS IN THE AY 2009 - 10, THE GROUNDS NO. (III) & (IV) OF APPEAL ARE DISMISSED AS INFRUCTUOUS. AS REGARDS THE CLAIM OF DEDUCTION U/S 54B AND 54 F IN THE AY 2009 - 10, CONTEST ED IN GROUND NO. (V) - OF APPEAL, IT IS DISMISSED AS PER THE DISCUSSION IN PARA N O .9.1 ABOVE. IN THE RESULT, APPEAL FOR THE AY 2009 - 10 IS DISMISSED. 1 2 . AS REGARDS THE APPEALS OF OTHER FOUR A SSESSEES , THE CIT(A) HELD THAT SINCE THE FACTS ARE SIMILAR, THE GROUNDS OF APPEAL FOR THE AY 2008 - 0 9 & 2009 - 10 ARE DISMISSED AS PER THE ABOVE DISCUSSION. 13. AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS, WHICH ARE COMMON IN ALL TH E APPEALS UNDER CONSIDERATION FOR AY 2008 - 09 : 1. THAT, THE ORDER OF THE TEAMED CIT(A) IS NOT ONLY PERVERSE BUT IS ERRONEOUS ON FACTS AND IN THE LAW AND IS PREJUDICIAL TO THE APPELLANT. 2. THAT SMT, MAHMOODA BEGUM IS THE ABSOLUTE OWNER OF THE AGRICULTURA L PROPERTY FOR SY. NO. 737, 738 AND 242 TOTAL ADMEASURING TO AN EXTENT OF AC 1 - 01 GUNTAS, SITUATED IN NARSINGI VILLAGE, NARSINGI GRAM PANCHAYAT, I.T.A. NO. 454 HYD/1 8 AND OTHERS MD. ABBAS QURESHI AND OTHERS 20 RAJENDRA NAGAR MANDAI, RANGA REDDY DISTRICT VIDE REGISTERED DOCUMENT NO 3641/98 DATED 12 NOVEMBER 1998 AND VIDE REGISTERED DOCUMENT 2130/99 DATED 26 MAY 1999. THE ADANGAL AND PAHANI ARE MUTATED ON HER NAME. 3. THAT, THE LEARNED CIT (A) FAILED TO NOTE THAT THERE WAS NO TRANSFER DURING THE FINANCIAL YEAR 2007 - 2008 RELEVANT TO THE ASSESSMENT YEAR 2008 - 2009 AS THE AG REEMENT OF SALE OF 29 - 10 - 2007 WAS NOT REGISTERED AND NO POSSESSION OF THE LAND WAS GIVEN AS COULD BE SEEN FROM THE SUBSEQUENT AGREEMENT - CUM GP A OF 20 - 05 - 2008. 4. THAT, WITHOUT PREJUDICE TO THE AFORESAID GROUND THE LEARNED CIT(A) FAILED TO NOTE THAT TH E LAND IN QUESTION WERE AGRICULTURAL LANDS AND THEREFORE NOT A CAPITAL ASSET WITHIN THE MEANING OF SECTION 2(14) OF THE IT ACT, 1961 ON THE BASIS OF EVIDENCE TENDERED BY THE APPELLANT. 5. THAT, ANY OTHER GROUND(S) THAT MAY ARISE AT THE TIME OF HEARING . 13.1 THE APPEALS RAISED IN AY 2009 - 10, WHICH ARE COMMON IN ALL THE APPEALS, AS UNDER: 1. THAT, THE IMPUGN ASSESSMENT ORDER IS CONTRARY TO THE PRINCIPALS OF NATURAL JUSTICE. 2. THAT, SMT. MAHMOODA BEGUM IS THE ABSOLUTE OWNER OF THE AGRICULTURAL PROPERT Y FOR SY. NO. 237, 238 AND 242 TOTAL ADMEASURING TO AN EXTENT OF AC 1 - 01 GUNTAS, SITUATED IN NARSINGI VILLAGE, NARSINGI GRAM PANCHAYAT, RAJENDRA NAGAR MANDAI, RANGA REDDY DISTRICT VIDE REGISTERED DOCUMENT NO 3641/98 DATED 12 NOVEMBER 1998 AND VIDE REGISTER ED DOCUMENT 2130/99 DATED 26 MAY 1999. THE ADANGAL AND PAHANI ARE MUTATED ON HER NAME. 3. THAT, THE LEARNED CIT (A) HAVING COME TO A CONCLUSION THAT THERE WAS NO TRANSFER IN THE ASSESSMENT YEAR 2009 - 2010 OUGHT TO HAVE CANCELLED THE PROTECTIVE ASSESSED FO R THE AY 2009 - 2010. 4. THAT, THE LEARNED CIT (A) ERRED IN UPHOLDING THAT NO EVIDENCE WAS FILLED BY THE APPELLANT THAT THE LAND IN QUESTION WERE AGRICULTURAL LANDS. I.T.A. NO. 454 HYD/1 8 AND OTHERS MD. ABBAS QURESHI AND OTHERS 21 5. THAT, THE LEA RNED CIT (A) FAILS TO NOTE THAT THE LANDS IN QUESTION WERE NOT CAPITAL ASSETS BUT AGRICULTURAL LANDS AND THEREFORE NOT LIABLE FOR CAPITAL GAINS. 6. THAT, THE LEARNED CIT (A) ERRED IN, DISALLOWING THE EXEMPTION UNDER SECTION 54B OF INCOME TAX ACT, 1961. 7. THAT, THE LEARNED CIT (A) ERRED IN DISALLOWING THE EXEMPTION UNDER SECTION 54F OF INCOME TAX ACT, 1961. 8. THAT, ANY OTHER GROUND(S) THAT MAY ARISE AT THE TIME OF HEARING. 14. THE LD. AR SUBMITTED THAT THE ASSESSEES WIFE MAHMOODA BEGUM IS THE OWNER AND BY HIBA, SHE HAS TRANSFERRED THE PROPERTY RIGHT TO HER HUSBAND, 3 SONS AND RETAINED 39% TO HERSELF. LD. AR SUBMITTED THAT ASSESSEE HAS ENTERED INTO AGREEMENT OF SALE WITH SMT. M. JAYAS H REE AND MR. M. VISHNU VARDHAN ON 29/10/2007, THIS AGREEMENT WAS NOT REGISTERED. AS PER THE AGREEMENT OF SALE, THE ASSESSEE AND HIS FAMILY MEMBERS HA VE RECEIVED PART PAYMENT OF RS. 2.79 CRORES FROM M. JAYASHREE UP TO FEBRUARY, 2008 AND PART PAYMENT OF RS. 4.21 CRORES UP TO FEBRUARY, 2008 FROM M. VISHNU VARDHAN. NO DOUBT, IN AGREEMENT OF SALE, IT IS MENTIONED AS HANDING OVER OF POSSESSION AS TODAY. BUT, SHE SUBMITTED REFERRING TO THE SALE DEED, THE ACTUAL POSSESSION OF THE PROPERTY WAS WITH THE ASSES SEE ONLY. THEREFORE, TITLE WAS NOT PASSED DURING THE AY 2008 - 09 U/S 53A AS PRESUMED BY THE AO. 14.1 FURTHER, SHE SUBMITTED THAT ASSESSEE ALONG WITH FAMILY MEMBERS AND CONSENTING PART IES I.E. M. JAYASHREE AND M. VISHNU VARDHAN SOLD THE PROPERTY IN THE AY 2009 - 10, AS THE CONSENTING PARTIES PAID CONSIDERABLE AMOUNT BUT COULD NOT PAY THE BALANCE AMOUNT. THE CONSENTING PARTIES ARRANGED THIS SALE BY BR INGING THE NEW PURCHASER. SINCE THE PROPERTY WAS WITH THE ASSESSEE AND THEY PAID THE CONSIDERABLE AMOUNT, THE S ALE I.T.A. NO. 454 HYD/1 8 AND OTHERS MD. ABBAS QURESHI AND OTHERS 22 WAS COMPLETED AS PER THE TERMS AND CONDITIONS MENTIONED IN THE SALE AGREEMENT DATED 20/05/2008. THEREFORE, THE YEAR OF CHARGEABILITY OF CAPITAL GAIN FALLS IN AY 2009 - 10 ONLY. 14.2 WITH REGARD TO AGRICULTURAL LAND, SHE BROUGHT TO OUR NOTICE THE PAHANI WHICH IS PLACED IN PAGES 52 - 76 OF THE PAPER BOOK, WHICH SHOWS THAT ASSESSEE WAS DOING AGRICULTURE IN THE ABOVE SAID LAND. 14.3 WITH REGARD TO SITUATION OF LAND, SHE BROUGHT TO OUR NOTICE THE GRAM PANCHAYAT CERTIFICATE , WHICH IS PLACED AT PAGE 78 OF PAP ER BOOK. SHE SUBMITTED THAT THE LAND SITUATED IN RAJENDRA NAGAR MANDAL AND NOT IN RAJENDRA NAGAR MUNICIPALITY. SHE FURTHER SUBMITTED THAT AS PER GO NO. 261, DATED 16/04/2007, 12 MUNICIPALITIES WE RE BROUGHT UNDER GHMC, WHICH INCLUDE RAJENDRA NAGAR MUNICIPAL ITY (P L ACED AT PAGES 95 - 98 OF PAPER BOOK.) SHE BROUGHT TO OUR NOTICE THE GO NO. 407, DATED 31/08/2013, THE RAJENDRA NAGAR MANDAL, IN WHICH, THE NARSINGI VILLAGE IS PART OF ABOVE MANDAL AND THIS RAJENDRA NAGAR MANDAL WAS BROUGHT WITHIN GHMC. SHE ALSO BROUGH T TO OUR NOTICE, THE GO NOS. 410, & 416, AS PER WHICH, OTHER VILLAGES OF RAJENDRA NAGAR MANDAL WERE BROUGHT UNDER GHMC. SUBSEQUENTLY, IN GO NO. 12, DA T ED 07/01/2014, THE GOVT. HAS CANCELLED THE GO NOS. 407, 410 & 416, WHICH IS PLACED IN PAGE 79 OF PAPER BO OK, WHICH INCLUDE S THE NARSINGI VILLAGE. EVEN AS PER NOTIFICATION NO. SO 9447), DATED 06/01/1994, THE RAJENDRA NAGAR IS NOT NOTIFIED. THEREFORE, SHE SUBMITTED THAT THE NARSINGI VILLAGE IS PART OF RAJENDRA NAGAR MANDAL AND NOT PART OF RAJENDRA NAGAR MUNICIP ALITY, WHICH WAS NOT NOTIFIED BY CBDT, THIS VILLAGE IS OUTSIDE THE PURVIEW OF GHM C LIMITS. SHE RELIED ON THE CASE LAW, CIT VS. MADHUKUMAR N. (HUF), [2012] 208 TAXMAN 394 (KAR.) TO SUBMIT THAT THE NARSINGI VILLAGE DOES NOT COME UNDER NOTIFIED AREA, THE LAND I.T.A. NO. 454 HYD/1 8 AND OTHERS MD. ABBAS QURESHI AND OTHERS 23 SITUATED IN THIS VILLAGE IS NOT CAPITAL ASSET WITHIN THE MEANING OF SECTION 2(14) (III)(B) OF THE ACT. SIMILAR VIEW W AS HELD IN THE CASE OF SRINIVAS PANDIT (HUF) VS. ITO, ITA NO. 56/HYD/2007, ORDER DATED 23/04/2010, WHICH WAS CONFIRMED BY HONBLE JURISDICTIONAL HIGH COURT IN ITTA NO. 195 OF 2013. 14.4 WITH REFERENCE TO AY 2008 - 09, SHE SUBMITTED THAT AO HAS TREATED THE SALE IN AY 2008 - 09 AND AGAIN THE SAME TRANSACTION WAS BROUGHT TO TAX IN AY 2009 - 10 ON PROTECTIVE BASIS. THE SAME TRANSACTION WAS BROUGHT TO TAX TWICE. SHE SUBMITTED THAT THE AGREEMENT OF SALE WAS CANCELLED SUBSEQUENTLY AN D THE SAME WAS PART OF THE SALE DEED DATED 20/05/2008 AND THE ASSESSEE HAS CONFIRMED THE DELIVERY OF POSSESSION IN THE ABOVE AGREEMENT, IT CLEARLY SHOWS THAT THE ASSESSEE HAS ACTUALLY SOLD THE LAND ONLY IN THE AY 2009 - 10. 14.5 FURTHER, LD. AR OF THE ASSE SSEE RELIED ON THE DECISION IN THE CASE OF SMT. RAJA RAVI RAMANA, PATNA HC, 201 ITR 1032 FOR EXEMPTION U/S 54B & 54F OF THE ACT. 15. LD. DR, ON THE OTHER HAND, SUBMITTED THAT THE LAND WAS TRANSFERRED MULTIPLE TIMES. THE ASSESSEE HAS TRANSFERRED THE LAND IN AY 2008 - 09 AND RECEIVED SUBSTANTIAL AMOUNT AND ALSO HANDED OVER THE POSSESSION OF THE PROPERTY AS PER THE AGREEMENT OF SALE. HE SUBMITTED THAT THESE FACTS WERE ELABORATELY DISCUSSED BY LD. CIT(A) IN HIS ORDER IN PARA 4.4 AND AO IN PAGE 2 OF HIS ORDER. F URTHER, HE SUBMITTED THAT THE CERTIFICATE SUBMITTED BY LD. AR AS ADDITIONAL EVIDENCE IS NOT PROPER AND CANNOT BE RELIED UPON. HE SUBMITTED THAT THERE WAS NO AGRICULTURAL ACTIVITY DURING THIS YEAR AND THIS LAND CANNOT BE CONSIDERED AS AGRICULTURAL LAND AND HE RELIED ON THE CASE OF SMT. SANTIBIBI MOHAMMED IBRAHIM VS. CIT, 204 ITR 631 (SC). FURTHER, H E RELIED ON THE ORDERS OF REVENUE AUTHORITIES. I.T.A. NO. 454 HYD/1 8 AND OTHERS MD. ABBAS QURESHI AND OTHERS 24 16. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE NOTICE THAT ASSESSEE HAS ENTERED INTO UNREGISTERED AGREEMENT OF SALE WITH TWO CONSENTING PARTIES OF THE SALE DEED DATED 20/05/2008. AS PER AGREEMENT O F SALE, THE TERMS OF AGREEMENT SHOWS THAT ASSESSEE HAS RECEIVED AN ADVANCE AND AGREED TO HAND OVER THE LAND TO THE PURCHASERS. THE PURCHASERS ( CONSENTING PARTIES) ON THEIR PART MADE SEVERAL PART PAYMENTS TO THE EXTENT OF ABOUT 80% OF THE AGREED SALE CONSIDERATION. THE QUESTION BEFORE US IS, WHETHER THE PROVISIONS OF SECTION 53A OF TRANSFER OF PROPERTIES ACT CAN BE INVOKED IN THE ABOVE SITUATION. THE AO HAS INVOKED SECTION 53A TO TREAT THE ABOVE TRANSACTION AS TRANSFER WITHIN THE MEANING OF SECTION 2(4 7 )(V) OF THE ACT IN THE AY 2008 - 09. IN OUR CONSIDERED VIEW, THE LANGUAGE USED IN DRAFTING THE AGREEMENT OF SALE IS GENERAL IN NATURE AND ADOPTED STAN DARD FORMAT. CAN THE SELLER DO ANY ACT WITHOUT PROTECTING HIS INTEREST. THE SELLER WILL NEVER ACT ON THE TERMS OF THE AGREEMENT WHEN IT IS NOT IN HIS FAVOUR. CAN THE SELLER HAND OVER THE LAND ON RECEIPT OF INITIAL ADVANCE ?. NO SELLER WILL HANDOVER THE LAN D WITHOUT PROPER PROTECTION. THE PROTECTION UNDER LAW IS AVAILABLE EVEN IF THE LAND IS HANDED OVER TO THE PURCHASER PROVIDED THE AGREEMENT OF SALE IS PROPERLY REGISTERED. IN ORDER TO INVOKE SECTION 53A FOR ENFORCEMENT, THE AGREEMENT HAS TO BE REGISTERED. A S PER SECTION 17 OF THE REGISTRATION ACT, IT ENUMERATES THE DOCUMENTS OF WHICH REGISTRATION IS COMPULSORY. THE AMENDED SECTION (1A) OF SECTION 17 PROVIDES THAT THE DOCUMENT CONTAINING CONTRACTS TO TRANSFER FOR CONSIDERATION, ANY IMMOVABLE PROPERTY, FOR THE PURPOSE OF SECTION 53A OF THE TP ACT, 1 88 2, SHALL BE REGISTERED. THERE WAS SIMULTANEOUS AMENDMENT TO THE PROVISIONS OF SECTION 49 OF THE TP ACT BY DELETING THE WORDS OR AS EVIDENCE OF PART PERFORMANCE OF A CONTRACT FOR THE I.T.A. NO. 454 HYD/1 8 AND OTHERS MD. ABBAS QURESHI AND OTHERS 25 PURPOSE OF SECTION 53A. THE C UM ULATIVE EFFECT OF THESE AMENDMENTS ARE THAT WHERE A PERSON CONTRACTS TO TRANSFER FOR CONSIDERATION ANY IMMOVABLE PROPERTY IN WRITING AND THE TRANSFEREE HAS IN PART PERFORMANCE OF THE CONTRACT, TAKEN POSSESSION OF THE SAID PROPERTY, THE BENEFIT OF SECTION 5 3A WOULD NOT BE AVAILABLE TO HIM UNLESS THE DOCUMENT IS REGISTERED. IN SHORT, THE SELLER CANNOT ENFORCE THE AGREEMENT. THEREFORE, SELLER INTEREST IS NOT PROTECTED. 16.1 IN THE GIVEN CASE, NO DOUBT, THE ASSESSEE HAS RECEIVED CONSIDERABLE CONSIDERATION BY THE END OF AY, STILL, THE OTHER PORTION OF THE SALE CONSIDERATION IS NOT PROTECTED SINCE THE ASSESSEE HAS NOT REGISTERED AGREEMENT OF SALE. IT CLEARLY SHOWS THAT NO PRUDENT SELLER WILL LET G O HIS OWNERSHIP WITHOUT PROPER PROTECTION. MERELY BECAUSE IN THE CLAUSE OF AGREEMENT OF SALE, IT IS MENTIONED THAT THE PO SSESSION WILL BE HANDED OVER TODAY, WHEN THE ASSESSEE RECEIVED ONLY INITIAL ADVANCE, IT DOES NOT MEAN THAT ASSESSEE HAS HANDED OVER THE POSSESSION OF THE PROPERTY. THE REGISTERED SALE DEED CLEARLY IN DICATES THAT THE POSSESSION WAS HANDED OVER BY THE ASSESSEE TO NEW P URCHASER SUBSEQUENT TO RECEIPT OF WHOLE CONSIDERATION AGREED BY THE ASSESSEE IN THE UNREGISTERED AGREEMENT OF SALE. THEREFORE, CONSIDERING THE PRACTICAL AND REGULAR CUSTOMS I N THE REAL EST ATE BUSINESS, IN OUR VIEW, ASSESSEE HAS NOT HANDED OVER THE POSSESSION TILL THE RECEIPT OF WHOLE CONSIDERATION AS PER AGREEMENT WITH THE CONSENTED PARTIES. HENCE, IN OUR VIEW, THE TRANSFER WITHIN THE MEANING OF SECTION 2(14)(V) OF THE ACT WAS NOT TAKEN PL ACE IN AY 2008 - 09. THEREFORE, THE ADDITION MADE BY THE AO IN AY 2008 - 09 ON CAPITAL GAINS IS DELETED. 17. COMING TO THE AY 2009 - 10, AS DISCUSSED ABOVE, THE TRANSFER OF OWNERSHIP TAKEN PLACE ONLY IN AY 2009 - 10 AND I.T.A. NO. 454 HYD/1 8 AND OTHERS MD. ABBAS QURESHI AND OTHERS 26 ALREADY AO HAS MADE PROTECTIVE ASSESSMENT IN THIS AY. IN OUR VIEW ALSO, THE ACTUAL TRANSFER TAKEN PLACE ONLY IN AY 2009 - 10. 17.1 WITH REGARD TO OTHER GROUND, WHETHER THE LAND IS AGRICULTURAL LAND AND WHETHER THIS LAND IS CAPITAL ASSET OR NOT, IN OUR VIEW, LET US DEAL FIRST ISSUE OF CAPITAL ASSET . LD. AR BROUGHT BEFORE US THE VARIOUS GOS OF AP GOVERNMENT, ON BRINGING THE VARIOUS MUNICIPALITIES WITHIN GHMC. WE NOTICE THAT RAJENDRA NAGAR MANDAL WHICH IS PART OF RANGA REDDY DISTRICT. IN GO NO. 407 DATED 31/08/2013, THE N ARSINGI VILLAGE, WHICH IS PART OF RAJENDRA NAGAR MANDAL WAS BROUGHT UNDER GHMC. BUT, SUBSEQUENTLY, THE ABOVE GO 407 WAS WITHDRAWN IN GO NO. 12 DATGED 07/01/2014. IT CLEARLY INDICATES THAT THE RAJENDRA NAGAR MANDAL IN WHICH NARSINGI VILLAGE IS PART OF ABOVE MANDAL WAS ATTACHED TO GHM C BRIEFLY. BUT AT THE TIME OF SALE I.E. AY 2009 - 10, IT WAS NEVER PART OF GHMC. 17.2 FURTHER, THE PARTICULAR LAND CAN BE CONSIDERED AS CAPITAL ASSET ONLY WHEN IT IS PART OF NOTIFICATION OF THE CBDT. THE LAST CBDT NOTIFICATION BROUGHT BEFORE US I.E. SO 9447, IS DATED 06/01/1994. AS SUBMITTED BY LD. AR THE LAND SITUATED OUTSIDE THE NOTIFIED AREA AS PER NOTIFICATION IS NOT CAPITAL ASSET. WE NOTICE THAT IN THE CASE OF CIT VS. MADHUKUMAR N. (HUF), (SUPRA), THE HIGH COURT OF KARNATAKA HAS HELD AS UNDER: S. 2( 1 4)(III)(B) OF THE ACT COVERS THE SITUATION WHERE THE SUBJECT LAND IS NOT ONLY LOCATED WITHIN THE DISTANCE OF 8 KMS. FROM THE LOCAL LIMITS, WHICH IS COVERED BY CLAUSE (A) TO S 2[ 1 4 ] [III] OF THE ACT, BUT ALSO REQUIRES THE FULFILMENT OF THE CONDITION THAT THE CENTRAL GOVERNMENT HAS ISSUED A NOTIFICATION UNDER THIS CLAUSE FOR THE PURPOSE OF INCLUDING THE AREA UPTO 8 KMS., FROM THE MUNICIP AL LIMITS, TO RENDER THE LAND AS A 'CAPITAL ASSET '. IT IS CONTENDED THAT LAND IN QUESTION IS LOCATED, WITHIN 8 KMS. I.E. WITHIN THE MUNICIPAL LIMITS OF MUNICIPAL COUNCIL IN THE ABSENCE OF ANY NOTIFICATION ISSUED UNDER CLAUSE (B) TO SECTION 2[14][III] OF T HE ACT, IT CANNOT BE LOOKED IN AS A CAPITAL ASSET WITHIN THE MEANING OF SECTION 2(L4)(III)(H) OF THE ACT ALSO AND THEREFORE THOUGH THE I.T.A. NO. 454 HYD/1 8 AND OTHERS MD. ABBAS QURESHI AND OTHERS 27 TRIBUNAL MAY NOT HAVE SPELT OUT THE REASON AS TO WHY THE SUBJECT LAND CANNOT BE CONSIDERED AS A 'CAPITAL ASSET' BY GIVING THIS VERY REASON, THE CONCLUSION ARRIVED AT BY THE TRIBUNAL IS NEVERTHELESS CORRECT. 17. 3 IN THE CASE OF SRINIVAS PANDIT (HUF) VS. ITO (SUPRA), THE COORDINATE BENCH OF THIS TRIBUNAL HELD AS UNDER: IN THIS CASE ALSO ADMITTEDLY THE ENTIRE TRANSACTIONS WAS MADE THROUGH RAJENDRA NAGAR REVENUE AUTHORITIES AND NOT THROUGH HYDERABAD REVENUE AUTHORITIES. THEREFORE, AS FOUND BY THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF CAPITAL LOCAL AREA BANK LTD. (SUPRA), THE JURISDICTIONAL MUNICIPALITY IS RAJENDRA NAGAR MUNICIPALITY AND NOT THE HYDERABAD MUNICIPALITY. SINCE RAJENDRA NAGAR MUNICIPALITY IS NOT ADMITTEDLY NOTIFIED BY THE CENTRAL GOVERNMENT, THE AGRICULTURAL LAND IN QUESTION CANNO T BE TREATED AS CAP ITAL ASSET BY TAKING THE DISTANCE FROM THE LIMITS OF HYDERABAD MUNICIPALITY. BY RESPECTFULLY FOLLOWING DECISIONS OF THE COORDINATE BENCH CITED SUPRA. WE HOLD THAT THE LAND IN QUESTION CANNO T BE TREATED AS CAPITAL ASSET WITHIN THE MEANING OF SEC. 2(14)(III) (B) OF THE IT ACT. ACCORDINGLY, ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE. WHEN THE REVENUE HAS APPEALED AGAINST THE SAID ORDER OF THE TRIBUNAL BEFORE THE AP HIGH COURT, THE HONBLE HIGH COURT UPHELD THE ORDER OF TRIBUNAL AND DISMISSED THE APPEAL O F THE REVENUE. 1 8 . RESPECTUFLLY F OLLOWING THE SAID DECISIONS, WE HOLD THAT THE LAND IN QUESTION CANNOT BE TREATED AS CAPITAL ASSET WITHIN THE MEANING OF SEC. 2(14)(III) OF THE IT ACT. 1 9 . THE ASSESSEE HAS RAISED OTHER GROUNDS AND SINCE WE HAVE HELD THAT THE LAND IN QUESTION CANNOT BE TREATED AS CAPITAL ASSET, THE OTHER GROUNDS RAISED ARE ACADEMIC IN NATURE, AND HENCE, THE SAME ARE NOT REQUIRED TO BE ADJUDICATED. 20 . IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE FOR AY 2008 - 09 AND 2009 - 10 ARE ALLOWED. I.T.A. NO. 454 HYD/1 8 AND OTHERS MD. ABBAS QURESHI AND OTHERS 28 2 1 . AS THE FACTS AND GROUNDS ARE MATERIALLY IDENTICAL IN ALL OTHER APPEALS TO THAT OF APPEALS IN ITA NO. 454/HYD/18 AND 455/HYD/2018, FOLLOWING THE CONCLUSIONS DRAWN THEREIN, WE ALLOW THESE APPEALS. 2 2 . TO SUM UP, ALL THE APPEALS UNDER CONSIDERATION A RE ALLOWED. PRONOUNCED IN THE OPEN COURT ON 15 TH MARCH , 201 9. SD/ - ( P. MADHAVI DEVI ) JUDICIAL MEMBER SD/ - ( S. RIFAUR RAHMAN ) ACCOUNTANT MEMBER HYDERABAD, DATED 15 TH MARCH , 201 9. KV COPY FORWARDED TO: 1. MOHAMMED ABBAS QUERSHI AND OTHERS, H.NO. 6 - 2, NARSINGI, RAJENDRA NAGAR, RR DIST., TS 2 . ITO 8(1), 6 TH FLOOR, SIGNATURE TOWER, KONDAPUR, HYDERABAD. 3 . CIT (A) - 2 , HYDERABAD 4. PR. CIT 2 , HYDERABAD 5. THE DR, ITAT, HYDERABAD 6. GUARD FILE S.NO. DESCRIPTION DATE INTLS 1. DRAFT DICTATED ON SR.P.S./P.S 2. DRAFT PLACED BEFORE AUTHOR SR.P.S/PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.P.S./PS SR.P.S./P.S 6. KEPT FOR PRONOUNCEMENT ON SR. P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER