ITO, WARD-3(3), GURGAON vs. ROHTASH SINGH S/O MANTRU RAM, SOHNNA GURGAON

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ITA 748/DEL/2019Status: DisposedITAT Delhi11 March 2022AY 2007-086 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the CIT(A)'s decision, finding no reason to interfere. The CIT(A) had confirmed through a remand report that the land was more than 8 km from the municipal limits, making it not a capital asset.

What were the facts?

The assessee sold land and received a significant payment, which was not offered to tax. The Assessing Officer (AO) initiated proceedings under section 148, considering the land to be within 8 km of Gurgaon's municipal limits and thus a capital asset. The CIT(A) deleted the addition after a remand report indicated the land was approximately 10 km away.

What were the issues?

Whether the land sold by the assessee qualifies as a 'capital asset' under Section 2(14) of the Income Tax Act, 1961, based on its distance from municipal limits.

Which sections of the Income-tax Act were involved?

Section 2(14),Section 143(3),Section 147,Section 148

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘F’, NEW DELHI

Before: SH. ANIL CHATURVEDI & SH. NARENDER KUMAR CHOUDHRY

For Appellant: Shri Sandeep Kumar, C.A
For Respondent: Shri Vipul Kashyap, Sr. D.R
Hearing: 09.03.2022Pronounced: 11.03.2022

This appeal filed by the Revenue is directed against the order dated 01.11.2018 passed by the Commissioner of Income Tax (Appeals) – 1, Gurgaon relating to Assessment Year 2007-08.

2.

Brief facts of the case as culled out from the material on record are as under:-

3.

Assessee is an individual who is stated to be engaged in providing security and allied services. Assessee filed his return of income for A.Y. 2007-08 on 23.07.2007 declaring income of Rs.3,00,567/-. AO has noted that it was noticed that assessee had sold land which was situated within 8 KM from the Municipal Limit of Gurgaon District in the year under consideration assessee had received a payment of Rs.2,40,80,848/- and the same was not offered to tax. Accordingly proceedings u/s 148 of the Act was initiated and notice u/s 148 of the Act was issued whereby Assessee was asked to file the return of income to which assessee submitted that the return of income filed on 23.07.2007 be considered to be in response to notice u/s 148 of the Act. Thereafter, case was taken up for scrutiny and assessment was framed u/s 143(3) r.w.s 147 of the Act vide order dated 27.03.2015 and the total income was determined at Rs.2,43,81,415/-.

4.

Aggrieved by the order of AO, assessee carried the matter before CIT(A) who vide order dated 01.11.2018 in Appeal No.66/15-16 allowed the appeal of the assessee. Aggrieved by the order of CIT(A), Revenue is now in appeal before us and has raised the following grounds :

1. “The Ld. CIT(A) has erred in deleting the addition of Rs. 2,40,80,848/- made by the Assessing Officer on account of Long Term Capital Gain whereas the Assessing Officer has clearly

mentioned in the assessment order that the land in question was within 8 KMs from the Municipal Limit of Gurgaon. 2. The Ld. CIT(A) has erred in not appreciating the facts that the Assessing Officer has made addition on the basis of certificate issued by the Revenue Authority that the land in question was within 8 KMs from the Municipal Limit of Gurgaon. 3. That the appellant craves for the permission to add, delete or amend grounds of appeal before or at the time of hearing of appeal.”

5. Before us, at the outset, Learned DR submitted that though various grounds have been raised by Revenue but the sole controversy is with respect to deleting the addition made by AO on account of Long Term Gains on sale of land.

6. AO had noted that assessee had sold a land which is situated within the 8 KMs from the Municipal limit of Gurgaon and had received the payment of Rs.2,40,80,848/-. Assessee was asked to show cause as to why the gains earned on sale of land be not brought to tax. Assessee inter alia submitted that the Agricultural Land was situated at village Barampur, Tehsil Sohna, District Gurgaon Haryana which is approximately 22 kms from any of the nearest municipality area having population of 10,000 and it was an agriculture land used for agriculture purposes. Assessee also filed a certificate obtained from Revenue administrative Officer, Tehsildar to support its contention about the distance. It was thus contended by the assessee that the land does not fall within the ambit of capital assets u/s 2(14) of the Act and therefore assessee was not liable to be taxed on the gains earned on sale of land. The submissions of the assessee were not found acceptable to AO. AO noted that the nearest Municipal Limit of Gurgaon District from which the assessee’s land was situated at one KM from the Municipal Limit of Gurgaon. AO thereafter treated the amount of Rs.2,40,80,848/- as Capital Gain and made its additions.

7. Aggrieved by the order of AO, assessee carried the matter before CIT(A). Before CIT(A), assessee filed a certificate of Naib Tehshildar of Gurgaon to support his contention that the land was situated more than 8 kms from the Municipality Limits. CIT(A) thereafter called for remand report and AO was also directed to conduct necessary enquiries. CIT(A) after considering the assessee’s reply to the remand report has given a finding in para 3.7 of his order that AO has confirmed that as per the last report, the distance of land sold by the assessee was approximately 10 KMs from the Municipal Limit in the Year 2006. CIT(A) therefore held the land to be not a capital asset and accordingly deleted the addition made by AO. Aggrieved by the order of CIT(A), Revenue is now before us.

8.

Before us, Learned DR supported the order of AO and further submitted that the matter may be remitted back to AO for verifying the distance of the land sold by the assessee from the nearest Municipality limits.

9.

Learned AR on the other hand supported the order of CIT(A) and objected the DR’s prayer of seeking second innings. He thus supported the order of CIT(A).

10.

We have heard the rival submissions and perused the material available on record. The issue in the present appeal is with respect to taxability of the land sold by the assessee. It is the assessee’s contention that the land that has been sold by the assessee is situated beyond 8 KMs of the Municipal Limit of Gurgaon District and therefore land is not a capital assets u/s 2(14) of the Act. On the other hand, it is Revenue’s contention that the distance of the land from the nearest Municipality Limit is less than 8 Kms. We find that CIT(A) had called remand report from the AO during the appellate proceedings and CIT(A) after considering the remand report of AO, assessee’s reply to remand report and after verifying the facts has noted at para 3.7 of his order that the AO has confirmed that as per the last report the distance of land sold by the assessee was approximately 10 Kms from the Municipal Limit in the Year 2006. CIT(A) therefore held the land to be not a capital asset within the meaning of Section 2(14) of the Act. Before us, no fallacy in the findings of CIT(A) has been pointed out by Revenue. In such a situation, we find no reason to interfere with the order of CIT(A). Thus the grounds of Revenue are dismissed.

11.

In the result, appeal of the Revenue is dismissed.

Order pronounced in the open court on 11.03.2022

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