INCOME TAX OFFICER, WARD-1(1), JABALPUR vs. SMT. SHEELA RANI JAIN, JABALPUR

IN THE INCOME TAX APPELLATE TRIBUNAL JABALPUR BENCH, JABALPUR BEFORE SHRI SANJAY ARORA, HON‟BLE ACCOUNTANT MEMBER & SHRI MANOMOHAN DAS, HON'BLE JUDICIAL MEMBER I.T.A. No. 195/JAB/2018 (Asst. Year: 2009-10) Income Tax officer, vs. Sheel Rani Jain, 1025, Ward-1(1), Jabalpur Pandariba Road, Dixitpura Ward, Jabalpur, (MP) [PAN: AEUPJ2838K] (Appellant) (Respondent) Appellant by : Sh. Shiv Kumar, Sr. DR Respondent by : None

Date of hearing : 11/10/2022 Date of pronouncement : 09/11/2022

O R D E R Per Sanjay Arora, AM: This is an Appeal by the Revenue agitating the Order dated 09/07/2018 by the Commissioner of Income Tax (Appeals)-1, Jabalpur („CIT(A)‟, for short), allowing the Assessee‟s appeal contesting her assessment under section 143(3) read with section 263 of the Income Tax Act, 1961 („the Act‟ hereinafter), dated 27/02/2015, for Assessment Year (AY) 2009-10.

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ITA No. 195/JAB/2018 (AY: 2009-10) ITO v. Sheel Rani Jain (a) in an area comprised within the jurisdiction of a municipality (whether known as municipality, municipal corporation, notified area committee, town area committee, town committee, or by any other name), or cantonment board, which has a population of not less than ten thousand (as per the last published census); or (b) in any area within the distance, not being more than 8 km., from the local limits of the municipality or cantonment referred to in item (a) as the Central Government (CG) may specify in this behalf by notification in the official gazette. 3. In the facts of the case, the Assessing Officer (AO) found the subject land, situate at Village/s Lamti and Deorikala, to be at a distance of 7.2 km. from the local limits of Nagar Palika of Panagar, and which had a population of 25,143 as per the last (2001) census prior to the relevant previous year. He, accordingly, subject the entire capital gain arising on the sale thereof, being short-term capital gain, determined at rs. 4,04,105 after allowing deduction u/s. 54B at rs. 20,56,795, to tax. In appeal, relief stood allowed to the assessee by the ld. CIT(A) on the basis that the Panagar Municipality stands not specified by the CG vide it‟s Notification u/s. 2(14)(iii)(b), referring to that issued on 06/01/1994. A distance of 8 kms. from the municipal limit (in all directions) stands specified in respect of the Jabalpur Municipal Corporation, though the distance of the subject land from the local limits thereof was 18 km, so that the same was not a capital asset under the Act. Aggrieved, the Revenue is in appeal, raising the following grounds: “1. Whether on the fact and in the circumstances of the case, the ld. CIT(A) has erred in deleting the addition of Rs. 4,04,105/- made by the AO on account of short term capital gain without appreciating the fact that the AO has rightly taken the distance from nearest municipal limit of Panagar Nagar Palika. 2. The appeal is being filed as the case falls under exceptional clause of para 10(c) of the Board‟s Instruction No.03/2018 dated 11/07/2018. 3. Any other ground that may be adduced at the time of hearing.”

ITA No. 195/JAB/2018 (AY: 2009-10) ITO v. Sheel Rani Jain of abundant opportunity of being heard through notices of hearing at the address available on record as well as that of the Revenue, including per email.

4.2 Coming to the merits of the matter, without doubt, the Revenue‟s plea, as canvassed per its Gd.1, is valid in principle. It is the nearest Municipality, subject of course to it having, as per the last census, a population of not less than ten thousand, from the limit of which the distance is to be reckoned u/s. 2(14)(iii)(b) for determining the status of an agricultural land as being a capital asset under the Act or not so. If not so read, the condition would become meaningless and inoperable as every land would fall outside the maximum 8 km. limit from some Municipality. So, however, an agricultural land, to be regarded as a capital asset u/s. 2(14)(iii), is to be either located within the territorial jurisdiction of a municipality (Cl.(a)) or, within a maximum distance of 8 km. from a Municipality as may be specified by Notification by the CG (Cl.(b)), generally referred to as „urban agricultural land‟. The subject land in the instant case is neither located within the local limits of Panagar Municipality (Nagar Palika) nor within the specified distance of a notified municipality. As such, we find no infirmity in the ld. CIT(A) regarding it as not a capital asset on that basis (refer para 6.1.5/pg. 20 of his order). He has for the purpose referred to the Notification dated 06/01/1994, also reproducing the same. He has however not stated if the said Notification is the latest such. We say so in view of the considerable time that has elapsed, with urban India expanding at a rapid pace since 1994, even as the law (s.2(14)(iii)), removing the requirement for the Notification by the CG, stood amended only w.e.f. 01/4/2014. There is also no basis on record for the stated distance of 18 km. of the subject land from the limits of the Jabalpur Municipal Corporation (MC), with reference to which, apparently the nearest notified municipal corporation, the agricultural land under reference has been found by him as an agricultural land u/s. 2(14)(iii) and, thus, not a capital asset. In fact, the said distance stands mentioned variously at 15 km. (pg.5) and 18 km. (pgs. 9, 19) of his order. It is also not clear

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ITA No. 195/JAB/2018 (AY: 2009-10) ITO v. Sheel Rani Jain from his order if the said distance of 15 km/18 km from the local limits of the MC – which change from time to time, is as obtaining as on the date of transfer and, further, if it is the shortest distance by road, an aspect of the matter which has, for years prior to AY 2014-15, attained finality with the Board Circular 17/2015, dated 06/10/2015. It is, in view of apparently two Villages, in fact even not clear if the land sold is a single, or more than one, piece of land.

4.3 The matter is clearly factually indeterminate. Under the circumstances, we only consider it proper that the matter is restored back to the file of the AO to determine the issue with reference to the distance of the subject land from the extant local limits of the Jabalpur MC. If the same is more than 8 kms., i.e., the limit specified in the Notification for the Jabalpur MC, the subject land would be an agricultural land under the Act and, thus, not a capital asset, so that no capital gain shall arise on the sale thereof, else it shall. As we are remitting the matter, it would only be proper to require the AO to examine the aspect of the 1994 Notification as being the latest issued by CG in the matter, i.e., up to March, 2009, whereat the transfer in the instant case takes place. The burden of proof in the matter, i.e., the said distance, including the related aspects afore-stated, would be on the Revenue. The location of the subject land/s, if not on record, would though have to be provided by the assessee, and is liable to be verified by the Revenue. Though, ordinarily, the claim for exemption of income is on the assessee, in the instant case we observe that no question was raised in respect of the distance of the land under reference (from Jabalpur MC), either by the AO or the ld. CIT(A). We have though considered it appropriate to make our order subject thereto inasmuch as there is nothing on record to exhibit the same, or even a mention of the source w.r.t. which the said distance, since accepted by the first appellate authority, has been stated, as well as, as afore-stated, the basis for working out the said distance. Further, once the assessee relies on a Notification, as she does before the ld. CIT(A), it is for the Revenue to state, where

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ITA No. 195/JAB/2018 (AY: 2009-10) ITO v. Sheel Rani Jain so, if and why it is not applicable. Our reservation in its respect, which arises due to lapse of considerable time, remains unaddressed due to non-mention of the same as being the latest by the ld. CIT(A), as well as the non-clarification by the ld. Sr. DR on being questioned in its respect during hearing.

4.4 The AO shall, accordingly, determine each of these aspects, of course upon confronting the relevant material to the assessee and hearing her thereon, i.e., where the same is/are contrary to her claim/s, adversely impacting the status of the subject land as held by the ld. CIT(A), and finally decide the issue of the status of the subject land u/s. 2(14)(iii) by rendering definite finding/s of fact. We are conscious when we do so, that the remittance by us, as well as the terms thereof, do not arise out of the Revenue‟s Grounds before us. There is, however, no estopple against law. It is, accordingly, the correct legal position that is relevant, and not the view that the parties may take of their rights in the matter (CIT v. C. Parakh & Co. (India) Ltd. [1956] 29 ITR 661 (SC); Kedarnath Jute Mfg. Co. Ltd. v. CIT [1971] 82 ITR 363 (SC)). The Tribunal is the final fact-finding body under the Act, and is to, accordingly, deal with and determine questions which arise out of the subject-matter of the appeal in the light of the evidence, and consistently with the justice of the case (CIT v. Walchand & Co. (P.) Ltd. [1967] 65 ITR 381 (SC)). The Tribunal is, thus, in deciding an appeal before it, not confined to the grounds set forth in the memorandum of appeal or even that taken with its leave (rule 11 of the Income Tax (Appellate Tribunal) Rules, 1963). As explained by the Apex Court in Hukumchand Mills Ltd. v. CIT [1967] 63 ITR 232 (SC), even rules 11 & 27 of the Tribunal Rules are not exhaustive of the powers of the Tribunal, but only procedural in character, which do not control or circumscribe it‟s powers. We, accordingly, do not find ourselves constrained by law; rather, are enabled by it, and duty bound thereunder to, in securing the cause of justice, restore the matter back with clear directions, delineating the aspects that require determination upon, of course, observing the principles of natural justice. We cannot though help note

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ITA No. 195/JAB/2018 (AY: 2009-10) ITO v. Sheel Rani Jain the cavalier approach by the first appellate authority, but for which this remittance by us may not have been necessary. 4.5 We decide accordingly. 5. In the result, the Revenue‟s appeal is allowed for statistical purposes. Order pronounced in the open Court on November 09, 2022 Sd/- Sd/- (Manomohan Das) (Sanjay Arora) Judicial Member Accountant Member Dated: 09/11/2022 vr/- Copy to: 1. The Assessee: Smt. Sheel Rani Jain, 1025, Pandariba Road, Dixitpura (Nehru Ward), Jabalpur, 482 002 (MP) 2. The Revenue: Income Tax officer, Ward-1(1), Jabalpur 3. The Principal CIT-1, Jabalpur 5. The Sr. D.R., ITAT, Jabalpur 4. The CIT(Appeals)-1, Jabalpur. 6. Guard File. By order

(VUKKEM RAMBABU) Sr. Private Secretary, ITAT, Jabalpur.

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