ITO Ward - 1, Nirmal V. Mitesh Kumar Dhananiwala, Nirmal

ITA 943/HYD/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66605 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2012
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 16-05-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M H NAIK
• Assessee Lawyers: P PRASAD
• Keywords: Capital asset; Cost of acquisition
• Section: 2(14); 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 943/HYD/2011 ASSESSMENT YEAR: 2005-06 INCOME-TAX OFFICER-WARD-1, APPELLANT NIRMAL. VS. MITESH KUMAR DHANANIWALA, RESPONDENT HYDERABAD. (PAN ABPPD 7462D) APPELLANT BY : SHRI M.H. NAIK RESPONDENT BY : SHRI P. PRASAD DATE OF HEARING : 05/11/2012 DATE OF PRONOUNCEMENT : 20 /12/2012 ORDER PER ASHA VIJAYARAGHAVAN, J.M.: THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF CIT-VI, HYDERABAD, DATED 15/02/2011 FOR A SSESSMENT YEAR 2005-06. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSE SSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF TRADING IN CO TTON AND ITS ALLIED PRODUCTS AND FILED THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION ADMITTING AN INCOME OF RS. 92,690/- A PART FROM AGRICULTURAL INCOME OF RS. 65,000/-THE ASSESSEE HAD CLAIMED EXEMPTION OF CAPITAL GAINS AMOUNTING TO RS. 25,75,0 00/- ON ACCOUNT OF SALE OF AGRICULTURAL LANDS. TO VERIFY TH E GENUINENESS OF THE SAME, THE AO ISSUED A NOTICE U/S 148 DT. 13/10/ 2008 AND IN REPLY TO THE NOTICE, THE ASSESSEE HAD STATED THAT T HE RETURN OF INCOME ALREADY FILED FOR THE AY 2005-06 MAY BE TREA TED AS THE ITA NO. 943/HYD/11 MITESH KUMAR DHANANI WALA 2 RETURN FILED IN RESPONSE TO THE NOTICE ISSUED U/S 1 48. SUBSEQUENTLY, THE CASE WAS TAKEN UP FOR SCRUTINY AN D NOTICES WERE ISSUED TO THE ASSESSEE. DUE TO THE NON-APPEARA NCE OF THE ASSESSEE BEFORE THE AO AND NON PRODUCTION OF INFORM ATION WITH RESPECT TO THE AGRICULTURAL LOANS, THE AO PROCEEDED TO OBTAIN THE SAME FROM MRO, RAJENDRANAGAR, FOR THE FYS 2001-02 T O 2004-05, AND THE MRO CLARIFIED THAT NO CROPS WERE GROWN IN T HE SAID LANDS. THE AO CONDUCTED ENQUIRIES THROUGH THE INSPECTOR AN D IT WAS REPORTED BY THE INSPECTOR THAT THE NEIGHBORS OF THE LAND HAD INFORMED THAT NO AGRICULTURAL ACTIVITIES WERE BEING DONE FOR MANY YEARS AND THAT THE LANDS WERE NOT FERTILE AND SUITA BLE FOR CULTIVATION. THE AO HAD ISSUED A SHOW CAUSE NOTICE TO THE ASSESSEE DATED 14/12/2009, GIVING OPPORTUNITY TO TH E ASSESSEE TO OFFER HIS EXPLANATION AS TO WHY THE LAND SHOULD NOT BE TREATED AS A CAPITAL ASSET AND THE INCOME DERIVED OUT OF THE S ALE OF THE LAND SHOULD NOT BE TREATED AS A CAPITAL GAIN. IN THE ABS ENCE OF ANY REPLY FROM THE ASSESSEE, THE AO COMPLETED THE ASSES SMENT U/S 144 DISALLOWING THE EXEMPTION CLAIMED UNDER CAPITAL GAINS AMOUNTING TO RS. 23,75,000/- AND THE INCOME ADMITTE D AS AGRICULTURAL INCOME OF RS. 65,000/- WAS TREATED AS INCOME FROM OTHER SOURCES. 3. AGGRIEVED, THE ASSESSEE PREFERRED THE APPEAL BEF ORE THE CIT(A) AND FILED WRITTEN SUBMISSIONS. 4. THE ASSESSEE GAVE DETAILS OF AGRICULTURAL LAND H OLDING, WHICH WERE EXTRACTED BY THE CIT(A) IN A TABULAR FORM AT P AGE 4 OF HIS ORDER AND THE SAME ARE REPRODUCED BELOW: S.NO. LAND SITUATED AT SURVEY NO. EXTENT OF LAND NATURE OF LAND 1. MANCHIREVULU VILLAGE, RAJENDRA NAGAR MANDAL 505 3 ACRES 24 GUNTAS WET LAND ITA NO. 943/HYD/11 MITESH KUMAR DHANANI WALA 3 2 KADTHAL, BHAINSA, NIRMAL 223 3 ACRES 13 GUNTAS WET LAND 5. THE ASSESSEE ALSO STATED THAT HE HAD CARRIED ON AGRICULTURAL ACTIVITY IN THE LANDS AND HAS BEEN REGULARLY RETURN ING/REPORTING AGRICULTURAL INCOME AND GAVE DETAILS AS UNDER:- S.NO. AY AGRICULTURAL INCOME RETURNED RS. RETURN OF INCOME FILED ON INWARD NO. TOTAL INCOME RETURNED RS. 1 2001 - 02 95000 05/01/03 5485 145000 2 2002 - 03 95000 05/01/03 5487 145000 3 2003 - 04 98000 06/01/04 5486 163000 4 2004 - 05 95000 28/10/04 4231 171590 6. IT WAS CONTENDED BY THE AR OF THE ASSESSEE THAT IN THE PAST AGRICULTURAL INCOME RETURNED BY THE ASSESSEE HAS BE EN ACCEPTED BY THE DEPARTMENT. THE ASSESSEE DURING THE YEAR SOL D LANDS SITUATED AT MANCHIREVULA VILLAGE, RAJENDRANAGAR MAN DAL, RR DT. AND THE ASSESSEE CLAIMED EXEMPTION FROM THE TAX ON CAPITAL GAINS AS THE LAND SITUATED BEYOND 15 KMS FROM RAJENDRANAG AR MUNICIPALITY. IT WAS CLAIMED THAT THE ASSESSEE HAD ALSO CARRIED ON AGRICULTURAL OPERATIONS FROM 1997 TO 2003 AND PRODU CED CERTIFICATE ISSUED BY THE DY. COLLECTOR, RR DT. AND THE AO HAD ACCEPTED THE TRANSFER OF THE AGRICULTURAL LANDS AT BHAINSA, NIRMAL, BUT DID NOT CONSIDER THE SAME FOR THE PURPOSE OF GR ANTING EXEMPTION FOR TRANSFER OF LAND AT RAJENDRANAGAR MAN DAL. 7. FURTHER, THE AR OF THE ASSESSEE SUBMITTED THAT T HE AO DID NOT PROVIDE A COPY OF CLARIFICATION PAPER/DOCUMENT GIVEN BY THE MRO AND COMPLETED THE ASSESSMENT WITHOUT CALLING FO R THE CONTENTIONS/OBJECTIONS OF THE ASSESSEE. THE AR FURT HER SUBMITTED THAT RS. 65,000/- IS TO BE TREATED AS AGRICULTURAL INCOME AND NOT INCOME FROM OTHER SOURCES. ITA NO. 943/HYD/11 MITESH KUMAR DHANANI WALA 4 8. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, HELD THAT THE LAND WAS PUT TO CULTIVATION AND THIS IS STRENGTHENED BY THE CERTIFICATE OF THE MRO AND ALSO THE AGRICULTURAL INCOMES RETURNED BY THE ASSESSEE OVER A PERIOD OF YEARS. REFERRING THE DECISION OF THE HONBLE APEX C OURT IN THE CASE CWT VS. OFFICER IN CHARGE (COURT OF WARDS), 19 76 IND LAW SC 502, THE CIT(A) OPINED THAT NO STRAIGHT JACKET F ORMULA TO COVER ALL SITUATIONS CAN BE DEVISED AND THAT WHETH ER OR NOT A PARTICULAR LAND IS AGRICULTURAL MUST, IN THE ULTIMA TE ANALYSIS, DEPENDS UPON THE FACTS AND CIRCUMSTANCES OF EACH CA SE AND THAT IN EACH CASE SUCH CONCLUSION WILL HAVE TO BE REACHE D UPON A BALANCED CONSIDERATION OF THE DIVERSE FACTORS. THE CIT(A) HELD THAT IN THE ASSESSEES CASE IT COULD BE SEEN THE LA ND IS METTA AS PER PATTADAR PASS BOOK AND HAD BEEN PUT TO AGRICULT URAL OPERATIONS AND INCOMES HAD BEEN RETURNED FROM THE S AME AND THIS ADMISSION OF AGRICULTURAL INCOME WAS EVEN ACCE PTED BY THE AO FOR ALL THE YEARS. HE OBSERVED THAT ONLY WHEN TH E LAND WAS PUT TO SALE AT A HIGHER VALUE THE QUESTION OF AGRICULTU RAL OPERATIONS WAS RISEN BY THE AO. RELYING ON THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF SIDDARTHA J DESAI VS. CIT, 139 ITR 628, THE CIT(A) HELD THAT THOUGH THE QUANTITY O F YIELD WAS NOT MUCH AS RETURNED BY THE ASSESSEE IN THE RETURNS OF INCOME FILED OVER A PERIOD OF YEARS, THE NATURE OF EXPLOIT ATION OF THE LAND FOR THE MAJOR PART OF THE PERIOD OF HOLDING BY THE ASSESSEE CONCERNED INDICATES NOT ONLY THE PHYSICAL CHARACTER ISTICS OF THE LAND BUT ALSO ITS USE FOR AGRICULTURAL OPERATIONS. THE CIT(A) FURTHER HELD THAT IT COULD ALSO BEEN THAT THE LAND HAD NOT BEEN PUT TO AGRICULTURAL OPERATIONS IN THE YEAR OF SALE AND EVEN THE REPORT OF THE INSPECTOR IN THE YEAR 2009, SHOWED THAT THE LAND WAS NOT CONVERTED FOR ANY OTHER USE BY THE BUYER AS THE AGR ICULTURAL OPERATIONS WERE DONE BY THE PURCHASER OR NOT IS IMM ATERIAL TO THE FACTS OF THE PRESENT CASE. ITA NO. 943/HYD/11 MITESH KUMAR DHANANI WALA 5 9. THE CIT(A) ALSO RELYING UPON THE DECISION OF THE JURISDICTIONAL BENCH OF ITAT, HYDERABAD IN ITA NO. 93/HYD/08 DT. 05/06/2009 IN THE CASE OF LATE K. RENUKA AND ALSO T HE DECISION IN THE LAVLEEN SINGHAL VS. DCIT, 11 TTJ 326, HELD THA T IN THE PRESENT CASE LAND WAS PURCHASED, HELD AND SOLD AS A GRICULTURAL LAND ONLY AND AGRICULTURAL OPERATIONS WERE ALSO HEL D ON THE SAME AS PER THE AGRICULTURAL INCOME RETURNED AND ACCEPTE D BY THE DEPARTMENT OVER A PERIOD OF YEARS AND, HENCE, THE D ENIAL OF THE SAME THAT THE ASSESSEE HAD NOT PUT THE LAND TO AGRI CULTURAL OPERATIONS IS NOT ACCEPTABLE, AS THE ASSESSEE HAD B EEN SHOWING AGRICULTURAL INCOME REGULARLY IN ITS RETURN OF INCO ME, EVEN THOUGH HE HAD NOT SHOWN SUCH INCOME LAND WISE. FURTHER, TH E CIT(A) HELD THAT THE ASSESSEE COULD ALSO REBUT THE CERTIFICATE OF THE MRO THROUGH THE CERTIFICATE ISSUED BY THE DY. COLLECTOR /TAHASILDAR OF RAJENDRANAGAR MANDAL AND IT COULD ALSO BE SEEN THAT THE ASSESSEE HAD PURCHASED THE LAND IN THE YEAR 1995 AND HAD HEL D TILL 2004 WHICH IS A FAIRLY LONG PERIOD AND CANNOT BE CONSIDE RED AS OF A TEMPORARY CHARACTER OR BY WAY OF STOP GAP ARRANGEME NT. THE CIT(A) OBSERVED THAT THE CERTIFICATE ISSUED BY THE DY. COLLECTOR ALSO SHOWED THAT THE LAND IS 15 KMS. AWAY FROM THE RAJENDRANAGAR MUNICIPALITY. IN VIEW OF THE ABOVE O BSERVATIONS, THE CIT(A) HELD THAT THE AO IS NOT JUSTIFIED IN TRE ATING THE LAND IN QUESTION AS NON AGRICULTURAL LAND AND DISALLOWING T HE EXEMPTION CLAIMED BY THE ASSESSEE. 10. WITH RESPECT TO THE DISALLOWANCE OF AGRICULTURA L INCOME RETURNED OF RS. 65,000/-, THE CIT(A) OBSERVED THAT THE AR OF THE ASSESSEE CONTENDED THAT EVEN THOUGH THE ASSESSEE HA D SOLD THE AGRICULTURAL LANDS SITUATED AT MANCHIREVULA VILLAGE AND BHAINSA IN THE YEAR 2004, THE ASSESSEE WAS STILL HOLDING THE L ANDS PURCHASED BY HIM IN 1996 AT KADTHAL VILLAGE, NIRMAL TALUK, AD ILABAD, WHEREIN HE WAS HOLDING 6 ACRES AND 7 GUNTAS IN SURV EY NO. 113/A, ITA NO. 943/HYD/11 MITESH KUMAR DHANANI WALA 6 87, 87/A AND 88. FURTHER, THE CIT(A) OBSERVED THAT TT WAS CONTENDED THAT THE AO WAS UNDER THE VIEW THAT AS TH E ASSESSEE HAD SOLD THE AGRICULTURAL LANDS IN THE YEAR 2004 IT SELF THERE IS NO POINT OF GETTING ANY INCOME FROM AGRICULTURAL OPERA TIONS. HOWEVER, IT WAS SUBMITTED BEFORE HIM THAT THE ASSES SEE HAD PURCHASED THE LANDS AT KADTHAL VILLAGE IN THE YEAR 1996 ITSELF AND HAD GROWN MANGO ORCHID. IN THIS CONNECTION, THE ASS ESSEE HAD PRODUCED BEFORE THE CIT(A) THE LOAN OBTAINED BY HIM BY MORTGAGING THE SAID LAND TO SBH, NANDED BRANCH AND DETAILS IN RESPECT OF THE AGRICULTURAL OPERATIONS HELD ON THE SAID LAND. THE ASSESSEE HAD ALSO PRODUCED BEFORE THE CIT(A) THE LA ND HOLDING CERTIFICATE HELD IN HIS NAME. IN VIEW OF THE ABOVE FINDINGS, THE CIT(A) HELD THAT AS THE ASSESSEE COULD PROVE THAT H E STILL HOLDS AGRICULTURAL LANDS IN HIS NAME AND HAD BEEN EARNING INCOME THEREFROM, THE DISALLOWANCE OF AGRICULTURAL INCOME MADE BY THE AO OF RS. 65,000/- IS HEREBY DELETED. 11. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVEN UE IS IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUN DS OF APPEAL: 1. THE ORDER OF THE CIT(A) IS ERRONEOUS IN LAW, FAC TS AND BOTH. 2. THE CIT(A) HAD FAILED TO APPRECIATE THE CONTENTS OF THE REPORT SUBMITTED BY THE INSPECTOR OF INCOME-TAX WHO REPORTED THAT THE NEIGHBOURS HAVE TESTIFIED THAT NO CULTIVATION WAS UNDERTAKEN ON THESE LANDS FOR LONG YEARS AS THE LANDS WERE NOT FERTILE AND SUITABLE FOR CULTIVA TION. THIS FACT IS ALSO REINFORCED BY THE PAHANI OBTAINED FROM THE STATE REVENUE DEPT. WHERE NO AGRICULTURAL PRODUCE WAS IND ICATED FOR THE FYS 2001-02 TO 2004-05. 12. WE HAVE HEARD THE ARGUMENTS OF BOTH THE PARTIES AND PERUSED THE RECORD AS WELL AS GONE THROUGH THE ORDE RS OF THE AUTHORITIES BELOW. WE FIND THAT SIMILAR ISSUE HAS B EEN DECIDED BY THE T HE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF SMT. GOUSIA BEGUM AND OTHERS, VIDE ITS ORDER DATED 16.1. 2012 IN ITA ITA NO. 943/HYD/11 MITESH KUMAR DHANANI WALA 7 NO. 1024/HYD/2011 AND OTHERS, WHEREIN THE COORDINAT E BENCH HELD AS UNDER:- 12. THE NEXT EFFECTIVE GRIEVANCE OF THE ASSESSEE I N THIS APPEAL RELATES TO COMPUTATION OF CAPITAL GAINS, TREATING T HE LAND SOLD BY THE ASSESSEE AS NON- AGRICULTURAL LAND. 13. LEARNED COUNSEL FOR THE ASSESSEE, REITERATING T HE CONTENTIONS URGED BEFORE THE LOWER AUTHORITIES SUBMITTED THAT T HE LAND SOLD, BEING AGRICULTURAL IN NATURE AND FALLING OUTSIDE TH E NOTIFIED AREA, DOES NOT REPRESENT THE CAPITAL ASSET OF THE ASSESSE E. IN THIS BEHALF, HE PLACED RELIANCE ON THE DECISION OF THE HYDERABAD BENCH OF THE TRIBUNAL IN THE CASE OF SHRI SRINIVAS PANDIT(HUF) V /S. ITO WARD 7(4), HYDERABAD DATED 23.4.2010 IN ITA NO.56/HYD/20 07 FOR ASSESSMENT YEAR 2003-04. FURTHER, IT IS SUBMITTED T HAT THE LAND SOLD IS AN AGRICULTURAL LAND, AND THE CONSIDERATION RECE IVED ON THE SALE OF LAND IN QUESTION WAS UTILIZED FOR THE PURCHASE OF A GRICULTURAL LANDS ONLY, AND AS SUCH THE ASSESSEE IS VERY MUCH ENTITLE D FOR RELIEF UNDER S.54B OF THE ACT, AND THE LOWER AUTHORITIES WERE NO T JUSTIFIED IN REJECTING THE CLAIM OF THE ASSESSEE. HE SUBMITTED T HAT THE LOWER AUTHORITIES WERE NOT JUSTIFIED IN TREATING THE LAND S OF THE ASSESSEE GIVING RISE TO THE CAPITAL GAINS IN DISPUTE, AS OF NON-AGRICULTURAL NATURE. IT IS SUBMITTED THAT EVEN THOUGH THERE WERE DISPUTES ABOUT THE OWNERSHIP OF THE PROPERTY SOLD, THE LANDS SOLD WERE IN THE POSSESSION OF THE ASSESSEE, WHO WAS CARRYING ON AGR ICULTURAL OPERATIONS ON THE SAME. HE ALSO SUBMITTED THAT THE ASSESSEE HAS ALSO FILED BEFORE THE ASSESSING OFFICER, AN AFFIDAV IT OF THE VILLAGE REVENUE OFFICER, WHO MENTIONED THAT DUE TO PRESSURE OF WORK, HE HAD NOT FILLED IN THE COLUMN OF 'CULTIVATION' IN TH E PAHANI PATRIKA. THE ASSESSING OFFICER DID NOT GIVE DUE WEIGHTAGE TO THI S VALUABLE PIECE OF EVIDENCE, AND PROCEEDED TO DETERMINE THE LANDS I N QUESTION AS OF NON-AGRICULTURAL NATURE. HE ALSO DISPUTED THE CONCL USION OF THE ASSESSING OFFICER IN DENYING THE ASSESSEE THE RELIE F UNDER S.54B ON THE GROUND THAT PAYMENT OF ADVANCES FOR PURCHASE OF LAND WOULD NOT ENTITLE THE ASSESSEE TO RELIEF UNDER S.54B, AND SUBMITTED THAT THE ASSESSEE ULTIMATELY CONCLUDED THE TRANSACTION O F PURCHASE WITHIN TIME ALLOWED BY THE STATUTE, AND POSSESSION OF THE LANDS IN QUESTION WAS TAKEN ON 10.7.2009, VIZ. WITHIN A PERI OD OF TWO YEARS, AND CONSEQUENTLY, THE ASSESSEE IS ENTITLED TO RELIE F UNDER S.54B OF THE ACT. HE ALSO DISPUTED THE RATE TAKEN INTO CONSI DERATION BY THE ASSESSING OFFICER, FOR ARRIVING AT THE COST OF ACQU ISITION, BY ADOPTING THE MARKET VALUE OF THE LAND AS ON 1.4.1981 AT RS.1 0,000 PER ACRE AS AGAINST RS.1,40,000 PER ACRE PLEADED BY THE ASSE SSEE, AND SUBMITTED THAT THE RATE OF RS.1,40,000 PER ACRE DIS CLOSED BY THE ASSESSEE IS QUITE REASONABLE. ITA NO. 943/HYD/11 MITESH KUMAR DHANANI WALA 8 14. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND, STRONGLY SUPPORTED THE ORDERS OF THE LOWER AUTHORIT IES. HE SUBMITTED THAT THE LANDS IN QUESTION WERE NOT OF AGRICULTURAL NATURE, AND THEY WERE NOT PUT TO CULTIVATION, AS CLEARLY EVIDENT FRO M THE MATERIAL TAKEN INTO CONSIDERATION BY THE ASSESSING OFFICER. HE FURTHER SUBMITTED THAT EVEN THOUGH THE LAND IN QUESTION WAS OUTSIDE THE SPECIFIED AREA OF 8 KMS OF RAJENDRANAGAR MUNICIPALI TY, IT IS WITHIN SPECIFIED AREA OF 8 KMS OF THE HYDERABAD MUNICIPAL CORPORATION, AND HENCE, NOTWITHSTANDING THE FACT THE LAND IN QUESTIO N FALLS WITHIN THE REVENUE JURISDICTION OF RAJENDRANAGAR MANDAL AND MO RE THAN 8 KMS AWAY FROM THE RAJENDRANAGAR MUNICIPAL LIMITS, IT IS AN URBAN LAND SINCE IT FALLS WITHIN 8 KMS OF HYDERABAD MUNICIPAL CORPORATION LIMITS, AND AS SUCH, IT IS A CAPITAL ASSET GIVING RISE TO C APITAL GAINS ON ITS SALE. HE SUBMITTED THAT IF THE PROPERTY IS WITHIN T HE SPECIFIED AREA OF 8 KMS OF ANY MUNICIPALITY, NOT NECESSARILY WITHIN T HE JURISDICTION OF THE REVENUE AUTHORITY, THE PROPERTY ASSUMES THE CHA RACTER OF URBAN LAND. HE PLACED RELIANCE ON THE UNREPORTED DECISION DATED 1.3.2011 OF THE HON'BLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF CIT V/S. SMT. ANJANA SEHGAL (INCOME-TAX APPEAL NO.276 O F 2004), DULY FILING A COPY THEREOF BEFORE US, IN SUPPORT OF THIS PROPOSITION. HE ALSO SUBMITTED THAT MERE PAYMENT OF ADVANCES FOR PU RCHASE OF LANDS, WOULD NOT ENTITLE THE ASSESSEE TO RELIEF UND ER S.54B OF THE ACT, AND WHAT IS REQUIRED TO BE COMPLIED WITH TO FU LFIL THE CONDITIONS PRESCRIBED UNDER S.54B IS THE ACTUAL PURCHASE OF TH E AGRICULTURAL LANDS WITHIN THE TIME STIPULATED. HE ALSO SUBMITTED THAT THE COST OF ACQUISITION ARRIVED AT AND REPORTED BY THE ASSESSEE IS EXCESSIVE, AND THE ASSESSEE COULD NOT SUBSTANTIATE THE CLAIM I N THIS BEHALF, BY PRODUCING NECESSARY EVIDENCE IN THE FORM OF COMPARA BLE CASES OF THE RELEVANT TIME, NOTWITHSTANDING OPPORTUNITY GIVE N BY THE ASSESSING OFFICER FOR THAT PURPOSE. 15. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE DO NOT FIND MERIT IN THE CONTENTION OF THE ASSESSEE. THE LAND IN QUES TION GIVING RISE TO CAPITAL GAIN WAS, IN FACT, URBAN LAND THOUGH AGRICU LTURAL OPERATIONS HAVE BEEN CARRIED OUT ON THEM. THE ASSESSEE PLACED BEFORE THE LOWER AUTHORITIES PAHANI PATRIKA, VRO'S CERTIFICATE AND DETAILS OF ELECTRICITY BILL/SLAB PASS BOOK ETC. WE HAVE HELD O N THAT BASIS IN EARLIER PARAS THAT THE ASSESSEE DERIVED AGRICULTURA L INCOME. BUT, THE QUESTION STILL REMAINS WHETHER THE IMPUGNED LAND CO ME WITHIN THE MEANING OF 'CAPITAL ASSET'. THE LAND IS SITUATED AT NARSING VILLAGE OF RAJENDRA NAGAR MANDAL, R.R. DISTRICT WHICH IS WITHI N THE MUNICIPAL LIMITS OF RAJENDRA NAGAR. ACCORDING TO THE LEARNED COUNSEL FOR THE ASSESSEE, RAJENDRA MUNICIPALITY IS NOT NOTIFIED BY THE CENTRAL GOVERNMENT AND THEREFORE THE AGRICULTURAL LANDS WHI CH FALL UNDER THE JURISDICTION OF THE RAJENDRA NAGAR MANDAL CANNO T BE CONSIDERED AS CAPITAL ASSET WITHIN THE MEANING OF SECTION 2(14 ) OF THE INCOME- TAX ACT. BUT, THE FACT IS THAT THIS IS URBAN LAND A KIN TO THE ITA NO. 943/HYD/11 MITESH KUMAR DHANANI WALA 9 HYDERABAD MUNICIPALITY SITUATED WITHIN 8 KM FROM TH E LOCAL LIMITS OF HYDERABAD MUNICIPAL CORPORATION. IN SIMILAR CIRCUMS TANCES, THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. BO LA RAMAIAH (174 ITR 154) HELD THAT THE CAPITAL GAINS ARISING OUT OF SALE OF LAND SITUATED WITHIN 8 KM OF LOCAL LIMITS OF HYDERABAD M UNICIPALITY, IS LIABLE FOR TAX ON CAPITAL GAINS IRRESPECTIVE OF THE FACT WHETHER IT FALLS UNDER THE LIMITS OF RAJENDRA NAGAR MANDAL OR OTHERW ISE. FURTHER, MERE FACT THAT THE LAND IN QUESTION WAS AGRICULTURA L LAND CANNOT BE A GROUND TO CLAIM FOR EXEMPTION UNDER SECTION 2(14) O F THE ACT AS THE LAND IS SITUATED WITHIN THE LOCAL LIMITS OF HYDERAB AD MUNICIPAL CORPORATION. FURTHER, IT WAS HELD RECENTLY BY THE H ON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. SMT. ANJA NA SEHGAL (SUPRA) THAT THE EXPRESSION 'FROM THE LOCAL LIMITS OF ANY MUNICIPALITY' USED IN SECTION 2(14)(III)(B) OF THE INCOME-TAX ACT DENOTES 'ANY MUNICIPALITY OR MUNICIPALITY OF THE DI STRICT IN WHICH THE LAND IS SITUATED'. FURTHER, CAPITAL GAINS ARISING F ROM THE TRANSFER OF AGRICULTURAL LAND SITUATED IN MUNICIPAL OR OTHER UR BAN AREAS OR NOTIFIED ADJOINING AREAS WILL BE LIABLE TO INCOME-T AX. IN THIS VIEW OF THE MATTER, AND CONSIDERING THE FACTS AND THE CIRCU MSTANCES OF THE PRESENT CASE, IN OUR CONSIDERED VIEW, THE LOWER AUT HORITIES ARE JUSTIFIED IN DETERMINING THE LAND IN QUESTION, AS C APITAL ASSET LIABLE FOR INCOME-TAX. WITH REGARD TO DETERMINATION OF COS T OF ACQUISITION OF THE LAND DISPOSED OF, WE ARE OF THE OPINION THAT CONSIDERING THE PROXIMITY OF THE LAND TO THE CITY, IT IS REASONABLE TO FIX THE VALUE OF AS ON 1.4.1981 AT RS.30,000 PER ACRE, INSTEAD OF RS .10,000 DETERMINED BY THE ASSESSING OFFICER, AS AGAINST RS. 1,40,000 CLAIMED BY THE ASSESSEE. ONE OF THE REASONS FOR WHI CH THE CLAIM OF THE ASSESSEE FOR RELIEF UNDER S.54B WAS REJECTED BY THE ASSESSING OFFICER WAS THAT WHAT WAS PAID BY THE ASSESSEE WAS ONLY AN ADVANCE FOR PURCHASE, AND UNLESS IT IS ACTUAL PURCHASE OF L AND, ASSESSEE WOULD NOT BE ENTITLED FOR RELIEF UNDER S.54B. THERE IS SOME MERIT IN THIS REASONING OF THE ASSESSING OFFICER. HOWEVER, I N TERMS OF S.54B OF THE ACT, ASSESSEE HAS TO PURCHASE THE AGRICULTUR AL LAND WITHIN A PERIOD OF TWO YEARS. HENCE, THOUGH MERE PAYMENT OF ADVANCE DOES NOT ENTITLE THE ASSESSEE FOR RELIEF UNDER S.54B OF THE ACT, IF ULTIMATELY WHOLE TRANSACTION OF PURCHASE OF LAND WA S COMPLETED WITHIN A PERIOD OF TWO YEARS AS CONTEMPLATED UNDER S.54B OF THE ACT, ASSESSEE IS ENTITLED FOR RELIEF UNDER S.54B OF THE ACT. IN THIS VIEW OF THE MATTER, WE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES, AND RESTORE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR VERIFYING WHETHER THE ASSESSEE HAS PURCHASED THE AGRICULTURAL LANDS WITHIN A PERIOD OF TWO YEARS, SO AS TO QUALIFY FOR RELIEF UN DER S.54B OF THE ACT, AND ACCORDINGLY RE-DECIDE THIS ISSUE IN ACCORD ANCE WITH LAW AND AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO T HE ASSESSEE. GROUNDS OF THE ASSESSEE ON THIS ISSUE ARE ALLOWED F OR STATISTICAL PURPOSE. ITA NO. 943/HYD/11 MITESH KUMAR DHANANI WALA 10 13. SINCE THE ISSUE UNDER CONSIDERATION IS IDENTICA L TO THAT OF THE DECISION OF COORDINATE BENCH IN THE CASE OF SMT. GO USIA BEGUM AND OTHERS(SUPRA), RESPECTFULLY FOLLOWING THE SAME WE S ET ASIDE ORDER OF THE CIT(A) AND REMIT THE ISSUE TO THE FILE OF TH E AO TO DECIDE THE SAME DE-NOVO IN THE LIGHT OF THE SAID DECISION OF THE COORDINATE BENCH IN THE CASE OF SMT. GOUSIA BEGUM A ND OTHERS (SUPRA) AFTER PROVIDING REASONABLE OPPORTUNITY OF H EARING TO THE ASSESSEE. THUS, THIS GROUND OF APPEAL IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 14. WITH RESPECT TO THE SECOND ISSUE OF DISALLOWANC E OF AGRICULTURAL INCOME OF RS. 65,000/- TREATING THE SA ME AS INCOME FROM OTHER SOURCES, IT IS OBSERVED THAT THOUGH THE ASSESSEE HAS SOLD THE AGRICULTURAL LAND SITUATED AT MANCHIREVULA VILLAGE AND BHAINSA IN THE YEAR 2004, THE ASSESSEE WAS STILL HO LDING THE LANDS PURCHASED BY HIM IN 1996 AT KADTHAL VILLAGE, NIRMAL TALUK, ADILABAD, WHEREIN HE WAS HOLDING 6 ACRES AND 7 GUNT AS IN SURVEY NO. 113/A, 87, 87/1, 87/A AND 88. BEFORE US, THE A SSESSEE HAD PRODUCED A PAPER BOOK WHEREIN AT PAGES 56 TO 57 CON TAINS PATTADAR PASS BOOK OF LAND AT KADTHAL VILLAGE. WE A RE SATISFIED THAT THE ASSESSEE IS STILL HOLDING AGRICULTURAL LAN D IN HIS NAME, THEREFORE, WE UPHOLD THE ORDER OF THE CIT(A) IN DEL ETING THE ADDITION OF RS. 65,000/- MADE BY THE AO TREATING TH E AGRICULTURAL INCOME AS INCOME FROM OTHER SOURCES. 15. IN THE RESULT, APPEAL OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT 20 TH DECEMBER, 2012. SD/- SD/- (CHANDRA POOJARI) (ASHA VIJAYARAGH AVAN) ACCOUNTANT MEMBER JUDICIAL MEMBE R HYDERABAD, DATED: 20 TH DECEMBER, 2012 ITA NO. 943/HYD/11 MITESH KUMAR DHANANI WALA 11 KV COPY TO:- 1) ITO, WARD 1, LAITAMBA COMPLEX, OLD BUS STAND, NIRMAL, DT. ADILABAD (A) 504 106. 2) MITESH KUMAR DHANANIWALA, D.NO. 7-2-83, NIRM AL. 3) CIT(A)-VI, HYDERABAD 4) CIT-V HYD. 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., H YDERABAD.