ITO, Chandigarh V. M/s Bassi International Enterprises (India) Pvt. Ltd., Chandigarh

ITA 76/CHANDI/2011

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 1308 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 29-03-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 21-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAI SHREE SHARMA
• Assessee Lawyers: ATUL MANDHAR
• Keywords: Capital asset
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES B CHANDIGARH BEFORE SHRI D.K.SRIVASTAVA, ACCOUNTANT MEMBER AND MS SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 76/CHD/2011 ASSESSMENT YEAR: 2007-08 THE ITO, VS M/S BASSI INTERNATIONAL ENTERPRISES WARD-1(3), (INDIA) PVT LTD, CHANDIGARH CHANDIGARH PAN NO. AACCB0687K (APPELLANT) (RESPONDENT) APPELLANT BY : SMT JAI SHREE SHARMA RESPONDENT BY: SHRI ATUL MANDHAR ORDER PER SUSHMA CHOWLA, JM THE APPEAL BY THE REVENUE IS AGAINST THE ORDER OF CIT(A), CHANDIGARH DATED 31.8.2010 RELATING TO ASSESSMENT Y EAR 2007-08 AGAINST THE ORDER PASSED UNDER SECTION 143(3) OF THE I.T. A CT. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUND OF A PPEAL:- 1. ON THE FACTS AND CIRCUMSTANCES, THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS IN DELETING THE ADDITION OF RS. 39,53,511/- ON ACCOUNT OF LONG TERM CAPITAL GAIN. 2 3. THE ONLY ISSUE RAISED IN THE PRESENT APPEAL IS A GAINST THE DELETION OF ADDITION MADE ON ACCOUNT OF LONG TERM CAPITAL GAIN. THE ASSESSEE HAD CLAIMED TO HAVE SOLD THE LAND AT VILLAGE DEVI NAGAR , TEHSIL DERABASSI, DISTRICT MOHALI FOR RS. 50 LAKHS. NO CAPITAL GAIN WAS SHOWN FROM THE SAID SALE OF LAND ON THE PLEA THAT THE LAND WAS AGR ICULTURAL LAND. THE ASSESSEE FURNISHED A CERTIFICATE FROM THE PATWARI T HAT THE ABOVE LAND WAS BEYOND 500 METERS OUTSIDE MUNICIPAL AREA OF DERABAS SI. THE ASSESSING OFFICER HELD THE SAID LAND TO BE WITHIN 8 KMS OF MU NICIPAL LIMIT OF DERABASSSI AND HENCE LIABLE FOR CAPITAL GAIN AND CO MPUTED THE INCOME FROM CAPITAL GAINS ON THIS ACCOUNT. BEFORE THE CIT( A), THE PLEA OF THE ASSESSEE WAS THAT THE SAID AGRICULTURAL LAND WAS NO T A CAPITAL ASSET IN VIEW OF THE PROVISIONS OF SECTION 2(14)(III) OF THE INCO ME TAX ACT. THE CIT(A) HELD THAT THE SAID LAND WAS NOT CAPITAL ASSE T IN PURVIEW OF THE PROVISIONS OF THE SECTION 2(14)(III) OF THE ACT OBS ERVING AS UNDER:- 5. I HAVE CONSIDERED THE RIVAL CONTENTIONS. I FIND T HAT THE ASSESSING OFFICER IS NOT JUSTIFIED IN TREATING THE AGRICULTURAL LAND AS CAPITAL ASSET. SECTION 2(14)( III) OF THE INCOME TAX ACT, 1961 HAS TAKEN OUT THE FOLLOWING AGRICULTURAL LAND FROM THE AMBIT OF CAPITAL ASSET. AGRICULTURAL LAND IN INDIA IS NOT A CAPITAL ASSET P ROVIDED IT IS NOT SITUATED: I. IN ANY AREA WITHIN THE TERRITORIAL JURISDICTION OF A MUNICIPALITY OR A CANTONMENT BOARD HAVING A POPULATION OF 10,000 OR MORE; AND II. IN ANY AREA SPECIFIED BY THE GOVERNMENT VIDE NOTIFICATION NO. 9447, DATED JANUARY 6, 1994. 6. THE CENTRAL GOVERNMENT HAS ISSUED NOTIFICATION NO. 9447 DATED 6.1.1994 AS AMENDED BY NOTIFICATION NO. 11186 DATED 28.12.1999 IN THIS REGARD. HOWEVER,, ONLY TH OSE AGRICULTURAL LANDS SITUATED IN INDIA SHALL BE EXCLU DED WHICH DOES NOT SATISFY THE ABOVE CONDITIONS OF BEIN G URBAN LAND AND ARE USED FOR AGRICULTURAL PURPOSES. 7. IN THE CASE UNDER APPEAL, THE LAND IN QUESTION IS S ITUATED IN VILLAGE DEVI NAGAR TEHSIL DERABASSI. DISTT. SAS NAG AR, WHICH IS NOT WITHIN THE LIMIT OF MUNICIPAL 3 CORPORATION/COUNCIL OF DERABASSI. THIS FACT HAS BE EN VERIFIED BY THE AREA PATWARI OF DERABASSI. THUS, T HE CLAUSE (A) OF SECTION 2(14)(II) IS NOT APPLICABLE O N THE AGRICULTURAL LAND SOLD BY THE APPELLANT. 8. THE APPELLANTS LAND ALSO DOES NOT FALL UNDER THE C LAUSE (B) OF SECTION 2(14)(III), AS IN THE CENTRAL GOVT NOTIF ICATION, THERE IS NO MENTION OF THE MUNICIPALITY OF DERABASS I. THE CONDITION OF 8 KM APPLIED BY THE ASSESSING OFFICER IS ONLY THE OUTER LIMIT BEYOND WHICH THE CENTRAL GOVT. CANN OT GO WHILE NOTIFYING AREAS FOR THIS PURPOSES. SINCE NONE OF THE TWO CONDITIONS OF SECTION 1(14)(III) ARE APPLICABLE , THE AGRICULTURAL LAND WILL NOT BE TREATED AS A CAPITAL ASSET. 9. THIS ISSUE HAS BEEN DEALT WITH BY THE HON'BLE ALLAH ABAD HIGH COURT IN THE CASE OF CIT VS. SANJEEDA BEGUM, ( 2006) 154 TAXMAN 346(ALL.), WHERE THE ASSESSEES LAND WAS SITUATED IN A VILLAGE WHICH WAS NOT OUTSIDE MUNICIP AL LIMIT AND IT WAS NOT COVERED BY GOVERNMENT NOTIFICATION I SSUED UNDER SECTION 2(14)(III)(B). THE ASSESSING OFFICER DID NOT ACCEPT ASSESSEES PLEA AS LAND WAS UNDER REGULATED AREA OF DISTRICT FOR WHICH CIRCLE RATE HAD BEEN FIXED BY MA GISTRATE AND WAS SITUATED VERY NEAR TO THE CITY. IT WAS HEL D THAT CAPITAL GAINS WERE NOT EXIGIBLE TO TAX AS PER SECTI ON 2(14)(III) SINCE IT WAS RURAL AGRICULTURAL LAND. F URTHER, IT WAS TO BE INTERPRETED THAT UPTO 8 KM OF ANY AREA NO T FIGURING IN THE NOTIFICATION WOULD BE CATEGORIZED A S URBAN LAND, IT WOULD LEAD TO ANOMALOUS SITUATION WHERE ON E WOULD FIND THAT LIMITS OF HEAVILY PERIPHERAL URBANI ZED AREAS LIKE MOHALI WOULD BE 1 TO 6 KM, LUDHIANA WOUL D BE 2 TO 4 KM BUT DERABASSI AND OTHER UNLISTED LESSER URBANIZED AREAS WOULD BE 8 KM. 4. THE LD. DR PLACED RELIANCE ON THE ORDER OF THE A SSESSING OFFICER. THE LD. AR FOR THE ASSESSEE PLACED ON THE ORDER OF CIT(A). 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORDS. THE FACTUAL ASPECTS CONSIDERED BY THE CIT(A) HAVE NOT B EEN REBUTTED BY THE LD. DR FOR THE REVENUE. IN THE ENTIRETY OF FACTS AN D CIRCUMSTANCES WE ARE IN CONFORMITY WITH THE OBSERVATIONS OF THE CIT(A) T HAT IN VIEW OF THE PROVISIONS OF SECTION 2(14)(III) OF THE ACT, THE AG RICULTURAL LAND OWNED BY THE ASSESSEE IS NOT A CAPITAL ASSET AND HENCE, THE SALE CONSIDERATION 4 RECEIVED ON ITS TRANSFER IS NOT EXIGIBLE AS INCOME FROM CAPITAL GAINS. THUS, THE GROUND OF APPEAL RAISED BY THE REVENUE IS DISMISSED. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 31 ST DAY OF MARCH, 2011. SD/- SD/- (D.K.SRIVASTAVA) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 31 ST MARCH, 2011 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR