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Income Tax Appellate Tribunal, AHMEDABAD – BENCH ‘D’
Before: SHRI RAJPAL YADAV & SHRI RIFAUR RAHMAN
आयकर अपील�य अ�धकरण, अहमदाबाद �यायपीठ - अहमदाबाद । IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD – BENCH ‘D’
BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI RIFAUR RAHMAN, ACCOUNTANT MEMBER
आयकर अपील सं./ ITA No.2395/Ahd/2018 �नधा�रण वष�/Asstt. Year: 2013-14 Shri Kamleshbhai Naranbhai Patel Vs. ITO, Sabarkantha Wrd-4 4, Kamleshwar Park Society Himatnagar. Odhav Ahmedabad Ahmedabad 380 097. Pan : bokpp 8568 r
अपीलाथ�/ (Appellant) �त् यथ�/ (Respondent)
Assessee by : Shri P.F. Jain, AR Revenue by : Shri Vinod Tanwani, Sr.DR सुनवाई क� तार�ख/Date of Hearing : 19/06/2019 घोषणा क� तार�ख /Date of Pronouncement: 20/06/2019 आदेश/O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER:
Assessee is in appeal before the Tribunal against order of the ld.CIT(A)-2, Ahmedabad dated 2.11.2018 passed for the Asstt.Year 2013-14.
The assessee has taken ten grounds of appeal, which are argumentative and descriptive in nature. In brief his grievance revolves around two fold viz. (a) no capital gain deserves to be assessed in the hands of the assessee on transfer of land comprised in Block No.516, Survey No.330/1-334/4/2, Bhuvaldi,
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Ahmedabad, and (b) if gain is taxable, then not the sum as computed by the AO.
Brief facts of the case are that the assessee had purchased alleged agriculture land on 29.3.2007 along with 14 co-owners for a consideration of Rs.1,23,00,000/-. Subsequently on 15.10.2010, 12 co-owners sold their shares to the assessee and other two co-owners. Thus, all three land owners thereafter sold this land on 26.3.2013 for a consideration of Rs.1,71,00,000/-. The assessee has 1/3rd share. For the purpose of charging stamp duty, the sub-Registrar has valued the property for payment of stamp duty on transfer of this land at Rs.4,72,71,900/-. The AO got information about this through annual information wing. He issued a notice under section 148 of the Act on 6.5.2016. In response to this notice, the assessee wrote a letter to the AO that return filed on 31.3.2016 be treated as filed in response to the notice under section 148. During the assessment proceedings the assessee filed a reply to the AO vide letter dated 28.8.2017. It is pertinent to take note of this letter, which reads as under:
1) "I have sold Agriculture land situated At: village Bhiwaldi, which was purchase by me on 29/03/2007 and 15/10/2010 and same was sold on 26/03/2013. On receipt of the notice I have filed my return of income on 31/03/2016 declaring total income from capital gain Rs.1378330/- and tax on total income Rs.469980/- paid wide challan no.00001, BSR code: 0292036 dated 31/03/2016.
2) I have sold agriculture land situated At: village Bhuvaldi,TA Dascroi having population is less than ten thousand and distance from local limit of municipality is more than eight km hence not liable for capital gain tax but under wrong impression I have paid capital gain tax and filed
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my return stated as above. In the circumstances request your honour to refund of tax paid by me.
3) Provisions of section 50C is applicable for sale of capital assets but I have sold agriculture land hence provision of section 50C not applicable. I hope this will suffice your requirement.”
But the AO has rejected the contentions of the assessee on the ground that since he himself has recognized capital gain assessable in his hand while filing the return on 31.3.2016, therefore no exemption for the assessee for levy of capital gain tax. The ld.AO did not accept contention of the assessee that he has wrongly filed return recognizing the capital gain taxable in his hand. Basically, this gain is exempt from tax. He determined taxable income vide assessment order dated 22.12.2017. Dissatisfied with the finding of the AO, the assessee carried the matter in appeal before the ld.CIT(A). The ld.CIT(A) concurred with the AO and rejected the contentions of the assessee. The relevant finding of the ld.CIT(A) on this issue reads as under:
“2.4. l do not agree with the submission of the appellant that the land is a agriculture land, and therefore, not amenable to capital gain on its sale as appellant himself has filed return of income on 31/03/2016 and declared the gain on sale of land under the head capital gain. It is seen that the land at Block No.516, S. No.330/1-334/4/2, Bhuvaldi, Ahmedabad, the capital gain of which is under dispute has been inspected by Junior Engineer Shri Nikhil Roy on 14/11/2007 for the purpose of valuation of the property. The engineer has reported that the land is within 8 Km from municipal limit which is evident from the google map also. Therefore, the appellant's contention that the land is beyond 8 Km from the municipal limit is not tenable. Appellant has filed return of income on 31/03/2016 and shown the land as a capital asset. The definition of agriculture land has also been
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redefined by Finance Act, 2013 which has come into effect from 01/04/2013 as under:-
"(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; or
(b) in any area within the distance, measured aerially:
(i) not being more than two kilometres, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than ten thousand but not exceeding one lakh; or
(ii) not being more than six kilometres, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than one lakh but not exceeding ten lakh; or
(iii) not being more than eight kilometres, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than ten lakh.
Explanation: For the purposes of this sub-clause, "population" means the population according to the last preceding census of which the relevant figures have been published before the first day of the previous year."
In view of the above, the contention of the appellant that the above land was agriculture land is not acceptable. The above fact is also reinforced as the jantri value of the above property has been reported by the Sub-Registrar is at Rs.4,72,71,900/- and the DVO has also revalued the property at Rs.4,30,04,000/- taking the comparable instances in the same locality.
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2.5. The appellant has contended that it has been owner of the property from 29/03/2007 and only certain right has been added on 15/10/2010 after 12 co-owners have relinquished their rights. Therefore, even if capital gain is to be computed, the date of acquisition has to be taken as 29/03/2007, I do not agree with the contention of the appellant, as appellant-was owner of only 1/15th of land on 29/03/2007. He has purchased 4/15th of land on 15/10/2010 which amounts to buying a new property. In view of-the above, the appellant's contention is rejected and the stand taken by AO is upheld. The related grounds of appeals are accordingly dismissed.”
Before us while impugning order of the ld.Revenue authorities, the ld.cousnel for the assessee took us through the definition of “capital asset” provided in section 2(14)(iii) of the Income Tax Act, 1962. According to him, as per this definition if an agriculture land is situated beyond 8 km. of municipal limit then it will not fall within the ambit of “capital asset” on whose transfer capital gain is leviable in the hands of the assessee. While taking us through the finding of the ld.CIT(A) recorded in para 2.4 extracted (supra), he contended that the ld.CIT(A) has rejected the contentions of the assessee by assigning two reasons; (a) in his first reason, the ld.CIT(A) has observed that definition of “agriculture land” has been redefined by the Finance Act, 2013. He took cognizance of this definition by ignoring the fact that it is applicable from 1.4.2013 whereas the assessee has transferred the land on 26.3.2013. The transaction of the assessee falls within the assessment year 2013-14 and not 2014- 15. The Board has issued a circular bearing no.17 of 2015 explaining that this changed definition will be applicable from the assessment year 2014-15. In the second reasoning, the ld.CIT(A) has observed that Engineer Shri Nikhil Roy has inspected the
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property on 14.11.2007 for the purpose of valuation. He has reported that the land is situated within 8 kms. from municipal limit which is evident from Google map also. This finding of the ld.CIT(A) is factually incorrect. Firstly, Junior Engieer Shri Nikhil Roy is not a competent person to give any certificate determining geographical situation of the assessee’s property form the municipal limit. Revenue official under the Gujarat Land Revenue Code 1879 is the competent officer for issuing such certificate. The assessee has annexed such certificate from Talati-cum- mantry of this village and certificate is available on page no.20 of the paper book. He took us through this certificate, which reads as under:
“Running English Version of Certificate in Gujarati from Gram Panchyat dtd. 22/11/2017 certifying the distance of agricultural land of aJQove 10 kms. from the Municipal limit.
BHUVALADI GRAM PANCHYAT Village-Bhuvaladi, Tal.Daskroi,Ahmedabad-382430
JavakNo. Date:-22/12/2017
CERTIFICATE
The Certificate is given hereto that
The Population of Village- Bhuvaladi is 7829 as per Population Census 201, Moje-Bhuvaladi Ta.Daskroi From the limit ofAhmedabad Municipality Corporation, it is away about 10 K.M.
The land of Moje-Bhuvaladi Revenue Block No.516-G New No. 614 is in the limit of Bhuvaladi which is hereby Certified by issuing this Certificate and the impugned land is Agricultural Land.
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Sd/-illegible Stamp of Talati-cum-Mantry Bhuvaladi Gram Panchayat Tal.Daskroi, Dist.Ahmedabad
Apart from the above, distance for determination of geographical location of assessee’s land from municipal limit is required to be taken from limit notified by the Central Government in its gazette under Income Tax Act. Copy of such notification issued on 6.1.1994 is available in the paper book on page no.29 onwards. In other words, municipal limit of Ahmedabad city existed as on 6.1.1994 is to be taken as a point for measuring distance upto the boundary of this village. The order of the CIT(A) is totally silent about this aspect. He just made a general reference about Google-map and observation of the Junior Engineer while valuing the value of the property, whereas it is a critical factor which determines what is the right of the assessee and whether capital gain taxable in the hands of the assessee or not.
Next fold of contentions, he submitted that distance is to be measured by road not by crow-flights. He has placed on record copy of Board circular which was taken into consideration the judgment of Hon’ble Bombay High Court. This circular has been considered by the ITAT in IIA No.3337/Ahd/2015. He has placed on record copy of the Tribunal’s order. He also pointed out that this circular has been considered by the Division Bench of ITAT in the case of in ITA No.2138/Ahd/2012 where one us was author (Judicial Member). On the strength of these documents, he
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contended that the assessee has sold agriculture land. In order to prove status of the land, the assessee has produced copy of the Form No.7/12 i.e. documents maintained by the State Revenue Officials exhibiting record of rights of the landholders under Gujarat Land Revenue Code, 1879. This fact, according the ld.counsel for the assessee has not been disputed by the AO. Thus, he emphasized that the assessee sold agriculture land which was situated beyond 8 kms. from municipal limit, and on sale of this land, if any profit arose to the assessee, then it is not taxable.
On the other hand, the ld.DR contended that certificate of Junior Engineer is available on record who observed that situation of this land is within 8 kms. Contrary to this, the assessee has annexed certificate of Talati-cum-mantry on page no.20, but he gave his opinion on estimate basis. In his opinion, this land is situated about 10 kms. away from the municipal limit. He further contended that talati-cum-mantry is an elected officer and not revenue official and therefore this certificate should not be considered.
We have considered rival contentions and gone through the record carefully. An identical situation came up before the Tribunal in the case Akashdeep Farms P.Ltd. in ITA No.2138/Ahd/2012 wherein the Tribunal took note of the notification issued by the Central Government under section 2(14) on 6.1.1994. This aspect was noted by the Tribunal while taking cognizance of the finding recorded by the CIT(A). In order appreciate the controversy in present case, we deem it appropriate to take note of this notification as well as discussion
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made by the Tribunal on an identical issue in the case Akashdeep (supra) reads as under:
“INCOME-TAX ACT, 1961 : NOTIFICATION UNDER SECTION 2(IA)(C), PROVISO. CLAUSE (II)(B) AND SECTION 2(14)(III)(B): URBANISATION OF AREAS
Notification No. [SO 9447J (File No. 164/3/87-ITA.I), dated. 6-1- 1994
Whereas a draft notification was published by the Central Government in exercise of the 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 (]4j, of section 2 of the Income-tax Act, 196I (43 of 1961J, in the Gazette of India, Extraordinary, Part II, section 3, subsection (ii], dated February 13, 1991, under the notification of the Government of India in the Ministry of Finance (Department of Revenue] No. S.O. 91 (E], dated February 8, 1991, for specifying certain areas for the purposes of the said clauses and objections and suggestions were invited from the public within a period of 45 days from the date the copies of the Gazette of India containing such notification became available to the public;
And whereas copies of the said Gazette were made available to the public on February 13, 1991;
And whereas the objections and suggestions received from the public on the said draft notification have been considered by the Central Government;
Now, therefore, in exercise of the powers conferred by item (B) of clause (ii] of the proviso to sub-clause (c) of clause (JA] and item (b) of sub-clause (iii] of clause (14] of section 2 of the Income-tax Act, 1961 (43 of 1961], and in supersession of the notification of the Government of India in the erstwhile Ministry of Finance (Department of Revenue and Insurance] No. S.O. 77(E], dated February 6, 1973, the Central Government having regard to the extent of, and scope for urbanisation of the areas concerned and other relevant considerations, hereby specifies the areas shown in column (4] of the schedule hereto annexed and falling
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outside the local limits of municipality or cantonment board, as the case may be, shown in the corresponding entry in column (3] thereof and against the State or Union Territory shown in column (2] thereof for the purposes of the above mentioned provision of the Income-tax Act, 1961 (43 of 1961].
. Gujarat 1. Ahmedabad Area upto a distance of 8 kms. From the municipal limits in all directions
Expln1(2) - the reference to municipal limits or the limit of cantonment board in the schedule to this notification is to the limits as existing on the date on which the notification is published in the official Gazette."
From the above, it is clear that the land situated within 8 kilometers from Ahmedabad municipal corporation limit is urban land and to be treated as capital asset. However land situated outside 8 km limit will be agricultural land not to be treated as capital asset. For computing the distance of 8 km, the municipal limit is also defined. Since municipal limit is dynamic and changing over a period of time, an explanation is given at the end of the aforesaid notification that municipal limit is the limit as existing on the date of publication of the notification and not the limit on the date of transaction or as on date. The notification is published on 6-1-1994 and therefore the municipal limits as on 6-1-1994 Is to be taken for computing 8 km road distance to decide whether agricultural land is a capital asset or not. The municipal limit on the date of transaction is not relevant as far as application of this notification is concerned. Appellant submitted that prior to 2006, the municipal limit of Ahmedabad Municipal Corporation was very restricted and form that limit, both the villages in which agricultural lands were situated are much beyond 8 km distance. Since notifications with regard to Ahmedabad municipal Corporation limits are available from which assessing officer can work out the distance of these agricultural lands. In view of the clear provisions in the notification referred earlier, it is held that the municipal limits relevant for computing distance is the municipal limit existing on the date of issue of this notification i.e. 6-1-1994. Assessing officer is therefore directed to compute the road distance of
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the agricultural lands from the municipal limits of AMC as on 6-1 -1994. If the distance is within 8 km, appellant is liable for capital gains and if the distance is beyond 8 km, the agricultural lands sold will be outside the purview of capital asset and hence no capital gains can be charged on the same. This ground is accordingly disposed off.”
Before us, limited dispute is whether the distance for identifying the geographical location of the agriculture land is to be taken by road or by aerial. Second fold of dispute is whether the municipal limit enhanced by the State Government is to be considered as starting point or it is to be taken from notification issued by the Central Government dated 6.1.1994. The ld.CIT(A) has held that notification issued on 6.1.1994 by the Central Government is to be considered.
Ld.DR relied upon the order of the AO. On the other hand, the ld.counsel for the assessee contended that Hon’ble Punjab & Haryana High Court in the decision referred by the ld.CIT(A) in the case of CIT Vs. Satinder Pal Singh, 229 CTR 82 has held that distance requires to be computed for identifying the geographical location of the agriculture land from the municipal limit is concerned, it is to be measured by road, and if the distance is beyond 8 KMs, then that land would not fall within the definition of capital asset. He further pointed that Hon’ble Bombay High Court has also concurred with this view in the decision of CIT Vs. Nitish Rameschandra Chordia, 57 taxmann.com 394. He placed on record copy of this decision. In this decision, the Hon’ble Bombay High Court has specifically laid down that the distance is to be measured by road and not as per crow’s flight. The ld.counsel for the assessee pointed out after this decision of the Hon’ble Bombay High Court, the Board has issued circular bearing nos.17/2015 and accepted the decision. He placed on record copy of the circular.
We have duly considered rival contentions and gone through the record carefully. The definition of “capital asset” has been provided in section 2(14) of the Act. Sub-clause (a) and (b) of Section 2(14)(iii) contemplates that if an agriculture land is in India, and it is situated at a distance of more than 8 KMs. from the local limit of any municipality cantonment board, then, that land would not fall within the ambit of definition “capital asset”. In other words, if the land which is not forming part of capital asset sold by an assessee, then, no gain as such would be considered, as accrued to the assessee. In the present case, the
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ld.AO has observed that if the distance of geographical situation of the assessee’s land is being measured from municipality limit, by way of crow’s flight, then, it is within the municipal limit. In various authoritative pronouncements, as discussed by the ld.CIT(A), it has been held that the distance is to be measured by road and not by aerial route. At this stage, it is important to take note of the Board Circular bearing No.17/2015. It reads as under:
“CBDT CIRCULAR NO -17/2015, Dated: October 06, 2015
Subject:- Measurement of the distance for the purpose of section 2(14)(iii)(b) of the Income-tax Act for the period prior to Assessment year 2014-15
"Agricultural Land” is excluded from the definition of capital asset as per section 2(14)(iii) of the Income-tax Act based, inter-alia, on its proximity to a municipality or cantonment board. The method of measuring the distance of the said land from the municipality, has given rise to considerable litigation. Although, the amendment by the Finance Act, 2013 w.e.f. 1.04.2014 prescribes the measurement of the distance to be taken aerially, ambiguity persists in respect of earlier periods.
The matter has been examined in light of judicial decisions on the subject. The Nagpur Bench of the Hon. Bombay High Court Vide order dated 30.03.2015 in ITA 151 of 2013 in the case of Smt. Maltibai R Kadu has held that the amendment prescribing distance to be measured aerially, applies prospectively i.e. in relation to assessment year 2014-15 and subsequent assessment year. For the period prior to assessment year 2014-15, the High Court held that the distance between the municipal limit and the agricultural land is to be measured having regard to the shortest road distance. The said decision of the High Court has been accepted and the aforesaid disputed issue has not been further contested.
Being a settled issue, no appeals may henceforth be filed on this ground by the officers of the Department and appeals already filed, if any, on this issue before various Courts/Tribunals may be withdrawn/ not pressed upon. This may be brought to the notice of all concerned.
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[F. No. 279/Misc./140/2015-ITJ]
(D S Chaudhry) CIT (A&J), CBDT”
Thus, if the finding of the ld.CIT(A) is being examined in the light of the circular, then one thing is clear that the distance is to be measured by roads in this accounting year. The land sold by the assessee is situated beyond 8 KMs. of the municipal limit.
Next objection of the AO was that the State Government has enhanced the municipal limit in 2006 and the distance is to be measured from new boundary of the Ahmedabad Municipal Corporation Limit. AMC limit was extended upto Sarkhej since 2006. The ld.CIT(A) has examined this aspect, and has observed that perusal of sub-clause (b) of section 2(14)(iii) would indicate that the municipal limit is to be taken from the area which has been notified by the Central Government in its gazette notification. Central Government has notified the area on 6.1.1994, and from that notification, the agriculture land of the assessee was situated beyond a distance of 8KMs.”
In the light of the above, let us examine the facts of the present case. Both the Revenue authorities have not disputed that the land sold by the assessee was not agriculture land. Dispute is about its geographical situation and applicability of amendment carried out in the definition of “agriculture land” by way of Finance Act, 2013. As far as applicability of amendment carried out in the definition of agriculture land way of Finance Act, 2013 is concerned, Board has already considered this aspect in the circular no.17 of 2015 and opined that it will be applicable only from the assessment year 2014-15. We have extracted this circular while taking cognizance of the finding recorded by the Tribunal in Akashdeep (supra). Similarly, Board has explained that distance between municipal limit and agriculture land is to be
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measured having regard to the shortest road distance and not by way of crow’s flight.
Third aspect is that even if the assessee has included gain on transfer of this land in his return of income, he has every right to plead that gain is not taxable and it be excluded from his taxable income. Duty of the AO is to determine right tax liability in the hands of the assessee, and not on the basis of erroneous admission. Therefore, even if the assessee has admitted initially about the taxability, and later on realize his right then his right has to be given effect and adjudicated upon. The only circumstance, which has left for consideration is, whether the land situates beyond 8 kms. from the municipal limit or not. The assessee is relying upon the certificate issued by Talati. The Talati is Revenue official appointed by the State Government. His duty is to maintain accounts and record all rights in a particular village. The “illegible” written on page no.20 notes signature i.e. Talati- cum-mantry, Bhuvaladi Gram Panchayat, which means, he is a revenue official-cum-accountant for this gram panchayat. He is not an elected person rather he is competent person to give certified copy of land record and other certificates. We do not find any merit in the contention of the ld.DR that he is not a revenue official rather an elected person in the gram panchayat. Talati is akin to Patwari in other parts of India. He is a village accountant and as contemplated in sections 16 and 17 of the Gujarat Land Revenue Code 1879. Thus, cognizance could be taken on the basis of his certificate. The ld.CIT(A) has just made a bald reference to Google-map etc., but has not pin-pointed what was the distance given in the Google-map in 1994 when the Central
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Government has issued notification for the purpose of section 2(14) of the Income Tax Act. His observation that this is evident from Google-map also is just an observation without any scientific look to the data recorded as on 6.1.1994. Therefore, we are of the view that the land transferred by the assessee was not a “capital asset” within the meaning of section 2(14) and gain arising from such transfer is not taxable in his hand.
As far other alternative contention is concerned, we do not deem it necessary to adjudicate them because we have held that on transfer of this agriculture land, long term capital gain is not leviable in the hands of the assessee.
So far as charging of interest under section 234A/B/C is concerned, it is consequential in nature.
In the result, appeal of the assessee is partly allowed.
Order pronounced in the Court on 20th June, 2019.
Sd/- Sd/- (RIFAUR RAHMAN) (RAJPAL YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER