M/S GANGA NURSING HOME,,ALLAHABAD vs. DCIT,, ALLAHABAD

PER SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER:

This appeal, filed by assessee, being ITA No.186/Alld./2013, is directed against an appellate order dated 08.03.2013 in Appeal No.170/DCIT/R1- I/Alld/10-11passed by learned Commissioner of Income Tax (Appeals), Allahabad (hereinafter called "theCIT(A)"),for assessment year(ay):2008-09, the appellate proceedings had arisen before learned CIT(A) from assessment order dated 22nd December, 2010 passed by learned Assessing Officer (hereinafter called "the AO") under Section 143 (3) of the Income-tax Act,1961(hereinafter

ITA No.186/ALLD/2013 Assessment Year: 2008-09 Ganga Nursing Home v. DCIT, Range-1, Allahabad called “ the Act”) .We have heard both the parties through video conferencing mode through virtual court. 2. The grounds of appeal raised by assessee in ITA No. 186/Alld./2013 in memo of appeal filed with Income-Tax Appellate Tribunal, Allahabad Bench , Allahabad(hereinafter called “ the tribunal”) , reads as under:- “1.That in any view of the matter order passed u/s 143(3) of Income Tax Act dated 22.12.2010 is bad both on the facts and in law and by such order incomeas determined at Rs. 70,05,590.00 is incorrect in the facts and circumstances of the case. 2. That in any view of the matter in the facts and circumstances of the case addition of Rs, 33,59,000.00 was made by invoking the provision of Section 50C is highly unjustified and unwarranted. 3. That in any view of the matter entire working of capital gain is totally incorrect in so far as sale consideration as considered by the assessing officer is highly objectionable as the provision of Section 50C of the income tax act in not applicable. The sale consideration as mentioned in the agreement is true and correct and sale consideration as considered by the assessing officer is nothing but only an artificial figure based on irrelevant consideration hence liable to be ignored. 4. That in any view of the matter sale consideration is respect of agricultural land received at Rs, 48,00,000.00 as mentioned in agreement is true and correct and no material brought on record by the department to show any excess amount received by the appellant hence the addition made by invoking provision of section 50C is unwarranted. 5. That is any view of the matter the two lower authorities were wrong in observing that the land in question is capital assets within the meaning of Section 2(14) of the income tax act when in real sense the land in question which was sold was agricultural land and the nature of the land is also recorded in government record as agricultural land and in this regard sufficient

ITA No.186/ALLD/2013 Assessment Year: 2008-09 Ganga Nursing Home v. DCIT, Range-1, Allahabad evidence placed on record but the same was not properly taken into account hence the addition is unwarranted. 6. That in any view of the matter the land in question located at distance more than 8 kms. away from Nagar Nigam as per government record brought on record but the Commissioner of income Tax (Appeals) failed to consider the fact judiciously hence the addition is unwarranted. 7. That in any view of the matter sale consideration received through bank channel and recorded in sale agreement, the contents of the document are not in dispute and no attempt was made by the department about verification of fact from purchaser hence the addition of Rs, 33,59,000.00 is totally incorrect and unwarranted. 8. That in any view of the matter findings and observations of two lower authorities in there orders about the nature of land, about distance, about sale consideration are totally incorrect and contrary to the facts of the case. 9. That in any view of the matter the appellant reserves his right to take any fresh ground of appeal hearing of appeal. 10. That in any view of the matter the interest as charged under different section is highly unjustified.” 2A. The assessee has also raised additional grounds of appeal before the tribunal, which are reproduced as hereunder: “ 1. That in any view of the sold land is an Agricultural Land within the definition of section 2(14)(iii) of the Act and is not a capital asset and hence capital gains as worked out by assessing officer at Rs. 33,88,780/- and confirmed by CIT(A) is highly unjustified. 2. That in any view of the matter addition under the head capital gains at Rs. 33,88,780/- as worked out by assessing officer and confirmed by CIT(A) is not correct and the finding and observation in the order are contrary to the actual facts of the case. 3. That in any view of the matter addition of Rs. 33,59,000/- as made by assessing officer and confirmed by CIT(A) by applying provision of section 50C of the Act is not correct since it is not a capital asset hence provision of section 50C is not applicable and moreover no 3

ITA No.186/ALLD/2013 Assessment Year: 2008-09 Ganga Nursing Home v. DCIT, Range-1, Allahabad evidence brought on record that any consideration received over and above the actual sale consideration by the assessee firm nor matter was referred to valuation officer for determining the value of said property hence simply on notional value addition as made is not correct. 4. That in any view of the matter it is settled law that income tax to be levied on real income and not artificial /notional value as done in present case hence both the lower authorities were wrong in confirming the addition.” 3. The brief facts of the case are that the assessee is a firm . The case of the assessee was selected for framing scrutiny assessment u/s 143(3) read with Section 143(2) of the 1961 Act. During the course of assessment proceedings under Section 143(2) read with Section 143(3) of the 1961 Act, the Assessing Officer observed that the assessee has sold agricultural land to Naini Educational Trust, Kareli, Allahabad. The Assessing Officer observed that the assessee has not declared Capital Gain on the sale of land. The assessee was asked by the Assessing Officer to explain the same. The assessee submitted before the Assessing Officer that the land was purchased at Newada, Samogar, Karchana, Allahabad in 2001 for construction of hospital and medical college. The assessee also submitted before the AO that the land is an agricultural land and is reflected in the balance sheet of the assessee under the head ‘Fixed Assets’. The assessee claimed that the said land is an agricultural land, which is not subject to capital gain tax. The Assessing Officer observed from the sale-deed(s) that the land is situated in semi urban area near the Railway Station and the land is situated on the Mirzapur Road and is having population within 1km. The Assessing Officer observed that the land is an urban agricultural land and the assessee has not complied with the provisions of Section 54B of the 1961 Act. Thus, the claim of the assessee was rejected by AO by invoking provisions of Section 54B of the 1961 Act, and the AO held that land in question is an urban agricultural land which is subject to capital gain tax. The Assessing Officer also observed that provisions of Section 50C are also applicable

ITA No.186/ALLD/2013 Assessment Year: 2008-09 Ganga Nursing Home v. DCIT, Range-1, Allahabad as the assessee has sold the land at lower rates than the circle rate. The Assessing Officer computed the capital gain, vide assessment order dated 22.12.2010 passed by AO u/s 143(3) , as detailed hereunder:-

“

Sr. No Address of property sold along with date of Value as per the Stamp (A)-(B) Rs Value as per the sale Sale Valuation authority (B) Amount in purview of deed (A) Rs Rs 50C of the I.T.Act, 1961 1. Land at Newada,Samogar, Karchhana, 4600000 6884000 2284000 Al1ahabad 27/12/2007. Sale Deed 1

2 Land at Newada, Samogar, 200000 1275000 1075000 Karchhana,Allahabad 27/12/2007.SaleDeed2 Total 4800000 8159000 3359000

The amount of Rs 3359000 is required to be added in the total value of capital gain u/s 50 C ofthe I.T. Act, 1961. Calculation of long-term Capital gain Sale Consideration (for the whole land) - Rs 4800000 Less Indexed cost of land Land purchased in 2001 -Rs 1091070*551/426=Rs 1411220_ -Rs 1411220 Long term capital gain Rs. 3388780 Amount of difference required to be added u/s 50C Rs. 3359000

Total Capital Gain -Rs 6747780 The amount of Rs. 6747780 is added in the total income of the assessee as long-term capital gain. Penalty notice u/s 271(1)(c) of the I.T. Act, 1961 is issued on this point.”

ITA No.186/ALLD/2013 Assessment Year: 2008-09 Ganga Nursing Home v. DCIT, Range-1, Allahabad decided appeal against the assessee, vide appellate order dated 08th March , 2013, by holding as under:- “4. Decision Admission of additional evidence: 4.1 I have considered the application of the appellant for the admission of additional evidence in the form of certificate issued by Tehsildar Karchana mentioned in the foregoing paras and the report of the A.O.. The appellant has submitted that they were under impression that the A.O. had accepted their plea that land in question was not an urban land, therefore, they could not furnish the evidences produced before the CIT(A). I understand that this may be treated as sufficient cause for admitting the additional evidence as submitted by the appellant. The case of the appellant falls in the category of sub-clause (c) of the Rule 46(A)(1). Therefore, the application of the appellant for the admission of additional evidence is allowed. 4.2 The moot question to be decided in this case is whether the land in dispute falls in the category of capital asset as defined u/s 2(14) of the Act or is an agricultural land situate beyond the distance of 8 kms from the local limits of any municipality or municipal corporation or notified area committee or town area committee or town committee or cantonment board and which has a population of not less than 10,000 according to the last preceding census of which the relevant figures have been published before the 1st day of the previous year. Whether the agricultural land is within such distance, not being more than 8 kms., from the local limits of any municipality etc., as the Central Govt. may, having regard to the extent of, and scope for, organization of that area and other relevant considerations, specify in that behalf by notification in the official gazette. I have perused the notification issued by the Central Government for the purposes of sub-clause (b) of clause (iii) of Section 2(14) submitted by A.O. for Allahabad the notification is in respect of “areas up to a distance of 8 kms. from the municipal limits in all directions”. As narrated above conflicting reports were submitted by the revenue authorities including SDM Karchana. Therefore, to find the truth. I directed to A.O to issue a summons to SDM Karchana to reconcile the differences in the report and elicit the truth about the distance of the land in question from the municipal 6

ITA No.186/ALLD/2013 Assessment Year: 2008-09 Ganga Nursing Home v. DCIT, Range-1, Allahabad limits of Allahabad. The final report submitted by the SDM Karchana to the A.O. has also reference to the application submitted by Smt. Maya Gupta, the partner of the firm. This report has been signed by the concerned revenue authorities which includes the member of survey team. Tehsildar karchana, Lekhpal, Sri Naveen Kumar Srivastava (designated not clear) in addition to the SDM Karchana, Allahabad. As per this report the distance of land Aarazi No 318 is 7.800 km. But by other routes the distance of this land is 8.900kms and 13.400 kms. It is pertinent to mention here that distance by the shortest route is relevant for deciding the dispute at hand. There may be no. of routes to approach to a particular place. But as per the report, the distance of Aarazi no 318 is 7.800 kms. Only. Other routes cannot be considered relevant for resolving the issue because then one can talk of many other routes showing different distances. This may be noted here that the distance of 7.800kms is not aerial distance which has been proposed to be introduced by the Finance Act, 2013 which will be effective from 01.04.2014. The distance of 7.800kms is as per route chart no. 1 of the enclosed map according to which the distance of Aarazi on 327 has been shown 7.200 kms. And the distance between Aarazi No .327 and Aarazi no. 318 is 600 mtrs. So the total distance of Aarazi no. 318 is 7.800 kms. , which is less than 8 kms. The A.R. for the appellant has argued that the report of the SDM signed by other authorities talk of the distance of all plots of village Samogara. As may be seen the submission of the appellant is not correct as the report gives accurate distance of land in question from the municipal limits. Moreover, the final report of the revenue authorities is a piece of credible evidence, cannot be brushed aside by general remarks. All other earlier reports issued by Tehsildar Karchana or SDM Karchana deserved to be discarded for the want of comprehensive survey. I hold that the A.O. has rightly invoked the provisions u/s 50C to determine the sale consideration when the declared sale value was less than the value assessed for stamp duty purposes. All other objections raised by the appellant are also disposed of in view of the facts discussed above. The contention of the appellant that the distance of 7.8kms. is interpretation of the A.O. and not that of the authority is also dismissed in the light of the certificate issued by the revenue authorities wherein it is clearly mentioned that by map 1 the distance to the land in question is precisely 7.800kms.from the municipal limits. The appellant has raised the objections about the

ITA No.186/ALLD/2013 Assessment Year: 2008-09 Ganga Nursing Home v. DCIT, Range-1, Allahabad measurement of distance taken by revenue authorities without giving any substantial evidence to differ from that. In view of the above discussion, the addition as made by the A.O. is confirmed and the grounds of appeal are dismissed.”

Thus, as could be seen above, the ld. CIT(A) was pleased to dismiss appeal filed by the assessee, vide appellate order dated 08th March, 2013. 5 Still aggrieved by the appellate order passed by ld. CIT(A), the assessee filed an appeal before the tribunal . This appeal was heard by Division Bench through video conferencing mode through Virtual Court. The Ld. counsel for the assessee opened arguments before the Bench and submitted that the assessee is a firm. It was submitted that the cases of the assessee were selected by Revenue for framing scrutiny assessment(s) under Section 143(3) read with Section 143(2) of the 1961 Act every year , and the returned income was accepted by Department over the years, and the additions have been made only during the impugned ay under consideration. The Ld. counsel for the assessee submitted that the land in question is not a capital asset as defined u/s 2(14) of the 1961 Act. It was also submitted by ld. Counsel for the assessee that Section 50C was invoked by Revenue while bringing to tax capital gains on sale of agricultural land, which was not correct. It was submitted by ld. Counsel for the assessee that the Assessing Officer brought to tax the land sold by the assessee by treating the same as urban land. Our attention was drawn by ld. Counsel for the assessee to the assessment order passed by the Assessing Officer. Our attention was also drawn by ld. Counsel for the assessee to the appellate order passed by ld.CIT(A), and it was submitted by ld. Counsel for the assessee that ld.CIT(A) has confirmed the assessment order passed by the Assessing Officer and additions as was made by the AO stood confirmed by ld. CIT(A). The Ld. counsel for the assessee submitted that the land in

ITA No.186/ALLD/2013 Assessment Year: 2008-09 Ganga Nursing Home v. DCIT, Range-1, Allahabad question was agricultural land which was more than 8kms. from the Municipal limits of Allahabad , and hence the same cannot be brought to tax within the provisions of the 1961 Act. Our attention was also drawn by ld. Counsel for the assessee to Page No. 23, 23A, 23B,23C and 23Dof the paper-book filed by the assessee, which are reports of the Tehsildar, SDM and maps of the land.The ld. Counsel for the assessee submitted that the route map is enclosed in the paper book and distance of the plot sold was more than 8kms. from the municipal limits of Allahabad. The ld. Counsel for the assessee relied upon the decision of Hon'ble Madras High Court in the case of CIT v. Smt. Sakunthala Rangarajan , reported in (2016) 389 ITR 103(Mad. HC) and decision of .Hon’ble Madras High Court in the case of CIT v. K.R.N. Prabhakaran(HUF) , reported in (2017)393 ITR 175(Mad. HC). It was submitted by ld. Counsel for the assessee that the land route is to be adopted for calculating the distance of the property from the Municipal Limit ,and not the aerial route to compute the distance between Municipal Limit and the property , because amendment was made by the Finance Act ,2013 w.e.f. 01.04.2014, which amendment as per ld. Counsel for the assessee is prospective . The ld. Counsel for the assessee submitted that the distance of the property from Municipal limit from the shortest route is 8.9kms, while the distance from the other approachable road is 13.400 kms , which both are more than 8 km , and there are only two routes to reach the aforesaid property. The ld. Counsel for the assessee submitted that since distance between the municipal limit of Allahabad and the property in question is more than 8 kms, and hence the said land is not a capital asset u/s 2(14) of the 1961 Act and hence the capital gain is not chargeable to tax as the land in question is purely agricultural land and population of area is less than 10000. Thus, It was reiterated by ld. Counsel for the assessee that the land in question is agricultural land which is beyond 8 kms from the municipal limit and hence the same is not taxable. It was also submitted by ld. Counsel for the assessee that Section 50C has no applicability and it was wrongly applied by the 9

ITA No.186/ALLD/2013 Assessment Year: 2008-09 Ganga Nursing Home v. DCIT, Range-1, Allahabad authorities below. Further, it was submitted by ld. Counsel for the assessee that if it is held that Section 50C is applicable, then the authorities below , did not refer the matter to DVO for valuing the property as no report of DVO was called by authorities below. It was submitted that affidavit was filed by assessee averring that no consideration over and above the stated consideration in sale deed(s) of Rs. 48 lacs was received . The prayers were made by ld. Counsel for the assessee to refer the matter to DVO. The ld. Counsel for the assessee has also submitted an synopsis of short facts of the case. The ld. Counsel for the assessee has also submitted in paper book, request for admission of additional evidences, which are by way of an Affidavit dated 20th January, 2021 executed by Mrs. Maya Gupta, partner of the assessee firm, which is placed at paper book at page number 16-18. In her affidavit, She has reiterated the contentions as are raised by ld. Counsel before us, by mainly averring that no cash whatsoever was received over and above the sale consideration of Rs. 48,00,000/- , the sale consideration was received through banking channel, and as certified by Tehsildar and SDM, the distance between municipal limits and the land in question is more than 8 kms and that the character of land is agricultural. 5.2 On the other hand the Ld. DR submitted before the Bench that this land is within 7.2km from the municipal limit of Allahabad and hence capital gain arising on the sale of land are taxable, as the said land is capital asset as defined u/s 2(14) of the 1961 Act. The ld. DR drew our attention to the certificate issued by the SDM, which is placed in paper book at page 23A to contend that the land is within 8 kms from the municipal limit of 8Kms. It was submitted by ld. DR that village Newada is on the main Mirzapur road and is only 7.2kms. from the outside limits of Allahabad Municipal Corporation, and hence the said land is within 8kms. of the limits of municipal corporation , hence gain arising on the sale of land are taxable. It was submitted by ld. DR that ld. CIT(A) has rightly brought to tax capital gains arising on sale of land. It was fairly submitted by Ld. DR that so far as applying the 10

ITA No.186/ALLD/2013 Assessment Year: 2008-09 Ganga Nursing Home v. DCIT, Range-1, Allahabad aerial distance for computing whether the land is within 8 kms. from municipal corporation is concerned , an amendment was brought by Finance Act , 2013 in Section 2(14) of the 1961 Act, and Nagpur Bench of Hon’ble Bombay High Court vide order dated 30.03.2015 in ITA No. 151 of 2013 in the case of Smt. Maltibai R Kaduhas held the said amendment prescribing distance to be measured aerially , applies prospectively i.e. in relation to assessment year 2014-15 and subsequent assessment years. Presently, we are concerned with ay:2008-09. It was submitted by ld. DR that Department has accepted the above decision of Hon’ble Bombay High Court. The ld. DR drew our attention to CBDT circular number 17/2015 , dated 06 October, 2015 in F.No. 279/Misc./140/2015-ITJ ,and it was submitted that the aforesaid amendment to Section 2(14) of the 1961 Act is prospective and department has accepted the said decision of Hon’ble Bombay High Court, and thus the said amendment shall be applicable for ay: 2014-15 and subsequent ay’s. It was submitted that Plot Nos. 326 and 327 were also owned by assessee and our attention was drawn to sale deeds, which are placed in paper book at page numbers 45-104. It was submitted that the aforesaid plots are on main Mirzapur road and are less than 7.2kms. from the boundary of the municipal limits of Allahabad. The ld. DR submitted that road distance from shortest route is to be taken. The ld. DR has submitted an paper book containing 5 pages which are placed on record in file. 5.3 It was submitted by ld. counsel for the assessee in rejoinder that conflicting reports were given by the authorities below and it was submitted that the decision of ld. CIT(A) was not correct and it is an agricultural land , and the population of Newada is less than 10000, and hence the capital gains arising on sale of aforesaid land cannot be brought to tax. 6.We have considered rival contentions and perused the material on record, including cited case laws. We have observed that the assessee is a firm. The case of

ITA No.186/ALLD/2013 Assessment Year: 2008-09 Ganga Nursing Home v. DCIT, Range-1, Allahabad the assessee for impugned ay: 2008-09 was selected for framing scrutiny assessment by the AO under the provisions of Section 143(2) read with Section 143(3) of the 1961 Act. The assessee has sold land during the year under consideration and disputes have arisen between the rival parties , as to the chargeability to tax of gains arising on the sale of land as to the whether the said land is a capital asset within the inclusive definition of Section 2(14) , and also as to the quantum amount of capital gains chargeable to tax by invoking provisions of Section 50C of 1961 Act. It is the claim of the assessee that the land in question was an agricultural land. The first effective dispute has arisen between the rival parties as to whether the said land is within eight kilometers from the limits of municipal corporation of Allahabad , and thus falls within the inclusive definition of Capital Asset u/s 2(14). Before proceeding further, it will be profitable to identify the land sold by the assessee and other terms of the sale as are relevant for adjudicating the dispute between rival parties. The assessee has sold land for a total consideration of Rs. 48,00,000/- , vide two sale deeds both executed on the same date viz. 27th December , 2007. The said two sale deeds were executed by assessee in favour of Naini Educational Trust, C-654, Kareli, Allahabad . The said sale deeds are placed in paper book filed by assessee with tribunal, at page number 45-104.On perusal of the aforesaid two sales deeds , it is observed that vide first sale deed dated 27th December 2007, the assessee has sold 3.9726 hectares of land. The land use mentioned in the sale deed is agriculture. The total sale consideration as is mentioned in the first sale deed is Rs. 46,00,000/- , while the circle rate mentioned is Rs. 68,84,000/- , on which the stamp duty was paid @10%. The description of land sold as is mentioned in this first sale deed is property number Aarazi No. 243/1, 261/1, 265, 306, 314/13, 317/4, 318/4, 322, 326/1 and 328, situated at Ward Aarel, Neweda, Samogar, Tehsil Karchanna, District Allahabad , the total area of the said property as is mentioned in the sale deed comes to 11.918 hectares and 12

ITA No.186/ALLD/2013 Assessment Year: 2008-09 Ganga Nursing Home v. DCIT, Range-1, Allahabad the assessee has sold its 1/3 share in the aforesaid property viz. 3.9726 hectares . It is stated in the sale deed that the assessee is absolute owner of the aforesaid property and is having absolute rights to sell this property. It is also stated in the sale deed that the government circle rate is Rs. 7,00,000/- per acre and hence for 3.9726 hectares, the circle rates comes to Rs. 68,84,000/-. It is also stated in the first sale deed that stamp duty is paid on circle rate. It is observed that vide second sale deed also dated 27th December 2007 , the assessee has sold 0.2856 hectares of land. The land use mentioned in the sale deed is agriculture. The total consideration as is mentioned in the second sale deed is Rs. 2,00,000/- , while the circle rate mentioned is Rs. 12,75,000/- , on which the stamp duty was paid @10%. The description of land sold as is mentioned in this second sale deed is property number Aarazi No. 327/1, situated at Ward Aarel, Neweda, Samogar, Tehsil Karchanna, District Allahabad , the total area of the said property as is mentioned in the sale deed comes to 0.857 hectares and the assessee has sold its 1/3 share in the aforesaid property viz. 0.2856 hectares . It is stated in this sale deed that the land is situated on Mirzapur Road. It is stated in this sale deed that the assessee is absolute owner of the aforesaid property and is having absolute rights to sell this property. It is also stated in this sale deed that the government circle rate is Rs. 12,00,000/- per acre, but since it is situated on Mirzapur Road, the circle rate is higher by 50% , and hence for 0.2856 hectares, the circle rates comes to Rs. 12,75,000/-. It is also stated in this second sale deed that stamp duty is paid on circle rate. Now, before proceeding further, it will be profitable at this stage to reproduce provisions of Section 2(14)(iii) of the 1961 Act , as were applicable for the ay: 2008-09, which are reproduced hereunder: “Definitions. 2. In this Act, unless the context otherwise requires,—

ITA No.186/ALLD/2013 Assessment Year: 2008-09 Ganga Nursing Home v. DCIT, Range-1, Allahabad *** *** 14) "capital asset" means property of any kind held by an assessee, whether or not connected with his business or profession, but does not include— (i)*** (ii)*** [(iii) agricultural land in India, not being land situate— (a) in any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee, or by any other name) or a cantonment board and which has a population of not less than ten thousand according to the last preceding census of which the relevant figures have been published before the first day of the previous year ; or (b) in any area within such distance, not being more than eight kilometres, from the local limits of any municipality or cantonment board referred to in item (a), as the Central Government may, having regard to the extent of, and scope for, urbanisation of that area and other relevant considerations, specify in this behalf by notification in the Official Gazette;]”

Thus, as can be seen from the provisions of Section 2(14)(iii) of the 1961 Act, the capital assets mean property of any kind held by an assessee, whether or not connected with the business or profession of the assessee, but will, inter-alia, not include agricultural land in India, not being a land situated with in any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee, or by any other name) or a cantonment board and which has a population of not less than ten thousand according to the last preceding census of which the relevant figures have been published before the first day of the previous year, or in any area within such distance, not being more than eight kilometres, from the local limits of any municipality or cantonment 14

ITA No.186/ALLD/2013 Assessment Year: 2008-09 Ganga Nursing Home v. DCIT, Range-1, Allahabad board referred to in item (a), as the Central Government may, having regard to the extent of, and scope for, urbanisation of that area and other relevant considerations, specify in this behalf by notification in the Official Gazette. It will be relevant at this stage to CBDT notification No. (SO 9447) (File No. 164/3/87- ITA.I) , dated 06.01.1994 , issued in exercise of powers conferred by item (B) of clause(ii) of the proviso to sub-clause (c) of clause(1A) and item (b) of sub-clause (iii) of clause (14) of section 2 of the 1961 Act and in suppression of the notification of the Government of India No. S.O.77(E), dated 6th February, 1973 , the Central Government having extent of , and scope for urbanization of the areas concerned and other relevant considerations, specified the areas for the purposes of the above mentioned provisions of the 1961 Act, which inter-alia , included the areas up to a distance of 8 kms. from the municipal limits of Allahabad in all directions. Thus, in nut-shell for the purposes of holding whether the agricultural land shall fall within the definition of capital asset as specified in Section 2(14) of the 1961 Act, the agricultural land not only falling within Municipal limits of Allahabad shall be included, but also the agricultural land falling within distance of 8 kms. from the municipal limits of Allahabad in all directions , shall also be included. It is undisputed that the population within Allahabad Municipal limits as per last census of 2001 was 1.05 Million which is much higher than 10000(Source: Ministry of Housing and Urban Affairs). Coming back, such distance between the municipal limits and he agricultural land is to be measured having regard to the shortest road distance. Reference is drawn to CBDT circular no. 17/2015, dated 06th October, 2015, wherein Revenue has accepted this position and acceded that the amendment made by Finance Act, 2013 w.e.f. 01.04.2014 prescribes the measurement of the distance to be taken aerially , but the said amendment is to be applied prospectively from assessment year 2014-15 and subsequent assessment years. The above view was taken by Nagpur Bench of Hon’ble Bombay High Court in the case of Smt. Maltibai R. Kadu(supra), which decision has been accepted by 15

ITA No.186/ALLD/2013 Assessment Year: 2008-09 Ganga Nursing Home v. DCIT, Range-1, Allahabad Revenue. In the said judgment, the Hon’ble Bombay High Court has held that the distance between the municipal limit and agricultural land is to be measured having regard to the shortest road distance. The ld. DR has fairly conceded to this position and stated before the Bench, that relevant ay under consideration before the Bench is ay: 2008-09 and the distance between Municipal Limits of Allahabad and the land in question is to be measured having regard to the shortest road distance, and not aerial distance . Proceeding further, it is observed that there was some conflicting certificates issued by Tehsildar/SDM with regard to the distance between Municipal limits of Allahabad and the land in question. The copies of certified maps are also been placed on record in file. As is emerging from the records, there are three different road routes available from municipal limits of Allahabad to land in question, but we have to consider the shortest road distance between the municipal limits of Allahabad and the land in question. The certificates issued by the various authorities , certifying the distance between municipal limits of Allahabad and land in questions , are detailed hereunder: Certificate dated 04th February, 2011, issued by Shri Ashish Kumar Mishra, Tehsildar , Karchana, Allahabad certifying that Gata No. 243/1, 261/1, 265, 306, 317/13,318/4, 322 , 326/1, 327/1 and 329 Village Newada, Samogar, Pargana Arail, Tehsil Karchana are located in District Allahabad . The aforesaid land are located 13 kms from Municipal Limits of Allahabad, and the Village Samogar has present population of 5000. The said certificate is reproduced hereunder:

ITA No.186/ALLD/2013 Assessment Year: 2008-09 Ganga Nursing Home v. DCIT, Range-1, Allahabad

ITA No.186/ALLD/2013 Assessment Year: 2008-09 Ganga Nursing Home v. DCIT, Range-1, Allahabad

The above certificate was produced by assessee before the authorities below. The ld. CIT(A) directed AO to make enquiries to unravel truth. The AO made enquiries from the Nagar Nigam and the office of Tehsiladar , Karchana. The AO gathered information from enquiries so made that the land in question is well within 8 kms from the municipal limits of Allahabad Nagar Nigam and hence the same is to be treated as urban agricultural land, which is a capital asset within the provisions of Section 2(14) of the 1961 Act , and the capital gains arising from sale thereof are subject to income-tax. The AO forwarded copies of information provided by Allahabad Nagar Nigam dated 06.10.2012 and Tehsildar Karchana dated 08.10.2012 to ld. CIT(A). The AO was informed on behalf of Officer-in- charge(Nazul) that the limit of Municipal Corporation of Allahabad is upto Sargam Talkies at Mirzapur Road and upto Chhvan Railway. The AO was informed that Village Newada, Samogar is not within the Municipal limits of Allahabad. The AO also enclosed copies of Gazette. The AO also enclosed a certificate dated 08th October, 2012 issued by Tehsildar, Karchana, Allahabad to the effect that according to the official Gazette, Revenue village Newada, Samogar, Pargana Arail, Tehsildar –Karchana is in district Allahabad and Village Samogar is within 4.5 to 5kms from the Municipal limits. These reports were confronted by ld. CIT(A) to the assessee. The AO also submitted to ld. CIT(A) that the Tehsildar Karchana has denied the issuing of certificate date 04.02.2011 furnished by the assessee. In this respect , the AO forwarded to ld. CIt(A), letter dated 15.10.2012 issued by the said authority. The said certificate issued by Tehsildar Karchana is reproduced hereunder :

ITA No.186/ALLD/2013 Assessment Year: 2008-09 Ganga Nursing Home v. DCIT, Range-1, Allahabad

ITA No.186/ALLD/2013 Assessment Year: 2008-09 Ganga Nursing Home v. DCIT, Range-1, Allahabad

The ld. CIT(A) confronted these documents to the assessee. The assessee denied the truth of the certificate issued by Tehsildar dated 15.10.2012 and the assessee defended the earlier certificate dated 04.02.2011 submitted by it to the AO . The assessee submitted before ld. CIT(A) that the certificate dated 04.02.2011 is registered at S.No. 320 dated 13.01.2011. The assessee prayed before ld. CIT(A) to reject the certificate produced by the AO. The assessee submitted a certificate dated 18.12.2012 issued by SDM, Karchana addressed to Smt. Maya Gupta , the partner of the assessee firm and submitted that Aarazi Nos. 318, 243, 306 and 317 , Aarazi No. 318 is the remotest distance of which from the municipal limits , as per map no. 2 , by the road is 8.900 kms and as per map no. 3 , the distance is 13.400 kms. The said documents including maps are reproduced hereunder:

ITA No.186/ALLD/2013 Assessment Year: 2008-09 Ganga Nursing Home v. DCIT, Range-1, Allahabad

ITA No.186/ALLD/2013 Assessment Year: 2008-09 Ganga Nursing Home v. DCIT, Range-1, Allahabad

ITA No.186/ALLD/2013 Assessment Year: 2008-09 Ganga Nursing Home v. DCIT, Range-1, Allahabad

ITA No.186/ALLD/2013 Assessment Year: 2008-09 Ganga Nursing Home v. DCIT, Range-1, Allahabad

ITA No.186/ALLD/2013 Assessment Year: 2008-09 Ganga Nursing Home v. DCIT, Range-1, Allahabad The ld. CIT(A) forwarded the documents submitted by assessee to AO for its comments. The AO submitted that land in question is approachable from two sides, one is via Nasika through a diversion road to the right and the other from Jaiswal Nagar, some 2-3 kms ahead from the former diversion. The AO made spot enquiries and submitted report to ld. CIT(A) that the land is question is 6.5 Kms via first diversion and 8 kms from the later diversion. The AO also submitted diagrams before the ld. CIT(A). Vide letter dated 29th January , 2013, the AO was again asked by ld. CIT(A) to conduct the inquiry directly by confronting conflicting reports received from the revenue authorities. The AO finally submitted investigation report dated 4th March 2013 , that summons were issued to SDM Karchana for ensuring accuracy in view of conflicting reports. The Naib Tahsildar appeared on behalf of SDM Karchana before the AO and filed a letter detailing therein the description of said plots from the limits of Allahabad Nagar Nigam. It was submitted by the AO that the farthest plot is 7.8Kms by road. The AO submitted copy of report submitted by SDM Karchana, which report dated 14.12.2012 was signed by survey team , Tehsildar Karchana , Lekhpal and one more person Naveen Kumar Srivastava (designation not clear) along with SDM Karchana. The said report dated 14.12.2012 is reproduced hereunder:

ITA No.186/ALLD/2013 Assessment Year: 2008-09 Ganga Nursing Home v. DCIT, Range-1, Allahabad

ITA No.186/ALLD/2013 Assessment Year: 2008-09 Ganga Nursing Home v. DCIT, Range-1, Allahabad

In this report it is clear that the authorities have considered the application of Smt. Maya Gupta, partner of the assessee firm in measuring the distance of the plots in question with the municipal limits of Allahabad. The AO had reported that as per certificate , the Aarazi No. 327 is on main road of Mirzapur is the remotest plot in Village Newada , Samogra. Its distance is 7.200 Kms from the limits of Allahabad Nagar Nigam. The said plot has been shown in the map, route chart number 1 by the points A&B. Aarazi No. 318 is on the south of plot no 327 , 600 meters by the map. The total distance of the plot number 318 is 7.800 Kms. However, by second road route, the total distance is 8.900 kms from the Nagar Nigam , while by third road route , the distance of plots is 13.400 kms from Municipal limits of Allahabad. We have carefully gone through these certificates, maps, contentions of the assessee, the orders of authorities below, and it is an accepted position that for impugned ay: 2008-09 , we have to considered shortest road distance to measure the distance between the land in question and the Municipal limits of Allahabad, and not the aerial routes. So far as considering the shortest road distance , we have observed that there are three road routes to reach the land in question from Allahabad Municipal limits , and we are concerned with the shortest road route which is via Main Mirzapur road, and on perusal of the report dated 14.12.2012 which was signed by survey team , Tehsildar Karchana , Lekhpal and one more person Naveen Kumar Srivastava (designation not clear) along with SDM Karchana as well on perusal of maps, it is very clear that the shortest road route is from the Main Mirzapur Road . The Aarazi No 326 and 327 are on the main Mirzapur Road. The other plots are contiguous to these plots except Aarazi no. 243. As per this report dated 14.12.2012 , via Main Mirzapur Road, the distance of Aarazi No 327 which is on main Mirzapur Road is 7.200 Kms from Nagar Nigam Limit i.e. SargamTalkies(ADA Mod), Naini , Allahaabad , which is also reflected as Point A and Point B in the map. We have also observed from this certificate that 27

ITA No.186/ALLD/2013 Assessment Year: 2008-09 Ganga Nursing Home v. DCIT, Range-1, Allahabad Aarazi No. 318 is on the south of Aarazi No. 327 , 600 meters by the map. The total distance of the Aarazi No. 318 is 7.800 Kms. From the municipal limits of Allahabad . We have to consider shortest road route, and hence we are not concerned with the other two road routes which are not the shortest road routes. Unfortunately, the assessee is relying vide certificate dated 18.12.2012 issued by Tehsildar , Karchana who in turn is relying on afore-stated report dated 14.12.2012, but mentioning the longer road routes number 2 and 3 to reach the land in question, but there is no whisper of road route number 1 via Main Mirzapur road to reach the land in question. Thus, we reject the reliance of the assessee on this report dated 18.12.2012. The ld. CIT(A) has passed well reasoned and speaking order, after detailed inquiries and principles of natural justice were duly complied with as the assessee was confronted with the all the material . It is also observed that ld. CIT(A) relied upon the certificates, reports and maps submitted by Land Revenue and Survey authorities who are Government Authorities assigned with duties of maintaining of land records and other relevant records connected thereto with measurement of land distance . Their reports can not be brushed aside lightly and has to be given weightage , although there is no doubt that conflicting reports were issued by these authorities, but the conclusive report dated 14.12.2012 made it very clear that there are three road routes to reach the land in question, while the shortest road route is from Main Mirzapur Road , and the distance of Aarzai No. 318 is only 7.800 Kms., which is well within 8 kms. . The Aarazi No 326 and 327 are on the main Mirzapur Road. The other plots are contiguous except Aarazi no. 243. The distance of Aarazi No 327 which is on main Mirzapur Road is 7.200 Kms from Nagar Nigam Limit i.e. SargamTalkies(ADA Mod), Naini , Allahabad , which is also reflected as Point A and Point B in the map. The decision relied upon by assessee in the case of CIT v. K.R.N. Prabhakaran(HUF) (supra) in fact supports the stand of Revenue as the Revenue is relying upon the certificates/reports issued by land revenue and survey authorities and are not 28

ITA No.186/ALLD/2013 Assessment Year: 2008-09 Ganga Nursing Home v. DCIT, Range-1, Allahabad relying on the report of the AO or any other officer/wing of Income-tax Department. The decision relied upon by assessee in the case of Smt. Sakunthala Rangarajan(supra) also does not support the assessee, as the distance measured by land revenue and survey authorities in the instance case were by access/approach road and it was not straight line or horizontal . Thus, we hold that the land in question is within 8kms from the Municipal limits of Allahabad and is a capital asset as defined u/s 2(14) and capital gains arising on the sale of land shall be chargeable to income-tax within the provisions of the 1961 Act. This effective issue is decided against the assessee. We order accordingly. So far as contentions of the assessee as to applicability of the Section 50C of the 1961 Act, we are of the considered view that Section 50C creates a deeming fiction wherein if the consideration received or accruing as a result of the transfer by assessee of capital asset being land or building or both is less than the value adopted by stamp valuation authorities for the purposes of stamp duty in respect of such transfer, then for the purposes of Section 48 of the Act, the value so adopted by stamp valuation authority shall be deemed to be the full value of consideration received or accruing as a result of such transfer. The assessee has sold land, description of which is Aarazi No. 243/1, 261/1, 265, 306, 314/13, 317/4, 318/4, 322, 326/1 , 327/1 and 328, situated at Ward Aarel, Neweda, Samogar, Tehsil Karchanna, District Allahabad . Thus, Section 50C shall be applicable in the instant case. Proceeding further , it is irrelevant whether the assessee has actually received lower consideration than the valuation adopted by stamp valuation authorities for the purposes of stamp duty , as it is by deeming fiction it will be deemed that the value so adopted by stamp valuation authority shall be deemed to be the full value of consideration for the purposes of Section 48 of the 1961 Act for computing capital gains chargeable to tax. The aggregate sale consideration of the land in question vide two sale deeds both dated 27.12.2007 was Rs. 48,00,000/- , while the stamp duty value as adopted by valuation 29

ITA No.186/ALLD/2013 Assessment Year: 2008-09 Ganga Nursing Home v. DCIT, Range-1, Allahabad authorities were Rs.81,59,000/- , thus Rs. 81,59,000/- shall be deemed to be full value consideration of land in question for the purposes of Section 48 of the 1961 Act for computing capital gains chargeable to income-tax. However, if the assessee disputes that the said value adopted by the stamp valuation authorities for the purposes of payment of stamp duty exceeds the fair market value of the property, then the matter will be referred by AO to the valuation authority for computing the fair market value. Reference is drawn to provisions of Section 50C(2) and 50C(3) of the 1961 Act. The assessee has challenged before us the value so adopted by stamp valuation authorities and has stated that fair market value is much lower than the said value as adopted by stamp valuation authorities and has claimed that the actual sale consideration of Rs. 48 lacs was the real consideration. In fairness to both the parties and in the interest of justice ,we are remanding the matter back to the file of the AO for limited purposes of referring the matter to DVO for determining the fair market value of property , in accordance with provisions of Section 50C(2) and 50C(3) , for the purposes of ascertaining the full value of consideration of land in question for the purposes of Section 48 ,in order to bring to tax income chargeable to capital gain tax , of the which the assessee is liable to pay in accordance with the provisions of the 1961 Act. We order accordingly. 7. In the result, appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced in the open court on 10/09/2021at Allahabad through virtual Court through Video Conferencing

Sd/- Sd/- [VIJAY PAL RAO] [RAMIT KOCHAR] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 10/09/2021 kd

ITA No.186/ALLD/2013 Assessment Year: 2008-09 Ganga Nursing Home v. DCIT, Range-1, Allahabad Copy forwarded to:

By order Assistant Registrar

ITA No.186/ALLD/2013 Assessment Year: 2008-09 Ganga Nursing Home v. DCIT, Range-1, Allahabad