COMMISSIONER OF INCOME TAX FARIDABAD V. KHEACHERU SINGH

ITA/496/2010

AI Insights

The case involved an appeal by the Commissioner of Income Tax, Faridabad against the order of the Income Tax Appellate Tribunal, Delhi, which had upheld the deletion of a short term capital gain addition of Rs.1,25,78,000 by the CIT(A). The primary legal contention was whether the distance of 8 kilometers from the municipality for agricultural land to be considered a capital asset should be measured using the straight line method or the road distance method. The appellant argued for the straight line method as the correct yardstick, contrasting with the ITAT's acceptance of the road distance method. The High Court's decision to dismiss the appeal was influenced by the prospective application of the amendment to Section 2(14)(iii) of the Income Tax Act, 1961, as clarified by the CBDT's circular.

• Counselvise Citation: [2017] 140 COUNSELVISE.COM (IT) 728924 (HC-MISC)
• Appeal Type: Others
• Pronouncement Date: 04-12-2017
• Assessment Year: misc
• Other Referred Cases: Manglam Inorganics (P) Ltd. vs. ACIT, Laukik Developers vs. DCIT, The Commissioner of Income Tax-III, Nagpur vs. Smt. Maltibai R. Kadu
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Assessee Lawyers: TAJENDER JOSHI
• Keywords: Capital asset; Evidence confrontation; Municipality Limits; Short Term Capital Gain; Straight Line Method; Urban complex; Road distance method
• Section: 54B; 2(14); 260A; 45

Judgement Text

"ITA No.496 of 2010 (O&M) -1- ----- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH 203 ITA No.496 of 2010 (O&M) Date of decision: December 04, 2017 The Commissioner of Income Tax, Faridabad ....Appellant versus Khacheru Singh (since deceased) through his LRs ....Respondents CORAM: HON'BLE MR. JUSTICE AJAY KUMAR MITTAL HON'BLE MR. JUSTICE AMIT RAWAL ***** Present: Mr. Tajender K. Joshi, Sr. Standing Counsel for the appellant-Revenue. ****** AJAY KUMAR MITTAL, J. (Oral) 1. The appellant-Revenue has filed the instant appeal under Section 260A of the Income Tax Act, 1961 (in short, “the Act”) against the order dated 30.11.2009 (Annexure A-III) passed by the Income Tax Appellate Tribunal, Delhi Bench 'B', New Delhi in ITA No.2953/Del/2009, for the assessment year 2006-07, claiming the following substantial questions of law:- “(i) Whether, on the facts and in the circumstances of the case, the Ld. ITAT was right in law in upholding the order of the Ld. CIT(A) in deleting the addition of Rs.1,25,78,000/- made by the Assessing Officer on account of short term capital gain even though the lands in question was situated within eight kilometers from the municipality (i.e. 7275 meters) and also the land in question falls in the Gurgaon Manesar Urban Complex in Sector-83, which is an urban Sonia Kinra 2018.01.09 10:52 I attest to the accuracy and integrity of this document ITA No.496 of 2010 (O&M) -2- ----- area as such was a capital asset not exempt within the meaning of Section 2(14) and Section 54B of the Income Tax Act, and hence was liable for capital gain tax u/s 45? (ii) Whether, on the facts and in the circumstances of the case, the Ld. ITAT was right in law in upholding the order of the Ld. CIT(A) in deleting the addition of Rs.1,25,78,000/- made by the Assessing Officer on account of short tem capital gain by relying upon the judgment of Hon'ble Pune Tribunal in the case of Manglam Inorganics (P) Ltd. vs. ACIT and of Hon'ble Mumbai Tribunal in the case of Laukik Developers V/s DCIT (2008) 303 ITR 356 (Mumbai) disregarding the fact that facts in the cited cases were different from the facts of the present case? (iii) Whether, on the facts and in the circumstances of the case, the Ld. ITAT was right in law in upholding the order of the Ld. CIT(A) in holding that the road distance method is the correct yardstick for the measurement of agricultural lands from the concerned Municipality limits instead of crow fly i.e. straight line method which is the most scientific, logical and in accordance with the spirit of the Income Tax Act, 1961? (iv) Whether, on the facts and circumstances of the case, the Ld. ITAT was right in law in upholding the findings recorded by the Ld. CIT(A) that the Assessing Officer had failed in confronting the evidence of the District Town Planner, Gurgaon with the assessee as such it cannot be used against the assessee as it was gathered at his back are perverse and contrary to the evidence available on record as for the said purposes case was fixed for 26.08.2008 and 12.09.2008 and 15.09.2008 and Sh. K.C. Gupta, assessee's Counsel attended and confronted with the letter of District Town Planner, Gurgaon?” 2. At the outset, learned Sr. Standing counsel for the Sonia Kinra 2018.01.09 10:52 I attest to the accuracy and integrity of this document ITA No.496 of 2010 (O&M) -3- ----- appellant-Revenue submitted that the issue involved in this appeal relates to whether for calculating the distance of 8 kms. from any municipality for an agricultural land to be considered as capital asset, the straight line method has to be applied or road distance method is correct. It was stated that similar issue had been adjudicated by the Nagpur Bench of the Mumbai High Court in ITA No.151 of 2013 titled as The Commissioner of Income Tax-III, Nagpur vs. Smt. Maltibai R. Kadu wherein it has been held that the amendment to Section 2(14)(iii) by the Finance Act, 2013 effective from 01.04.2014 prescribing distance to be measured aerially, applies prospectively i.e. in relation to assessment year 2014-15 and subsequent assessment years. According to the learned counsel, the present case relates to assessment year 2006-07 and therefore, the said amendment is not applicable. He pointed out that in the light of Circular No.17/2015, dated October 06, 2015 issued by the Central Board of Direct Taxes, Ministry of Finance, Government of India, he has instructions to withdraw the present appeal. 3. Dismissed as withdrawn. (AJAY KUMAR MITTAL) JUDGE (AMIT RAWAL) December 04, 2017 JUDGE sonia gugnani Whether speaking/reasoned? Yes Whether reportable? Yes Sonia Kinra 2018.01.09 10:52 I attest to the accuracy and integrity of this document "