THE DCIT, (CENTRAL)-1, BHOPAL vs. SMT. SMITA PANDEY, BHOPAL

PER MANISH BORAD, AM.

The above captioned appeal is filed at the instance of Revenue

pertaining to Assessment Year 2013-14 and is directed against the

orders of Ld. Commissioner of Income Tax (Appeals)-3 (in short

‘Ld.CIT(A)’], Bhopal dated 29.03.2017 which is arising out of the

order u/s 143(3) of the Income Tax Act 1961(In short the ‘Act’)

dated 27.03.2015 framed by DCIT(Central)-I, Bhopal.

Smt. Smita Pandey ITA No.414/Ind/2017 2. The case was called up but none appeared on behalf of the

assessee. In the past also on 27.4.2018 and 10.10.2018 notices of

hearing were served through departmental representative as the

notice sent to the assessee was returned back un served. Even the

notice of hearing to be served through the departmental

representative could not be served as the premises at the addressed

mentioned in the assessment order was found locked and for this

reason the Inspector of the Income Tax Department affixed the

notice at the assessee’s premises. In the given facts it was decided

to hear the revenue’s appeal in the absence of assessee.

“On the facts and in the circumstances of the case, learned CIT(A)-2 has erred in :-

4 The only issue raised by the revenue relates to deletion of

addition of Rs.1,33,08,531/- made by Learned Assessing Officer (In

short ‘Ld.A.O’) on account of undisclosed long term capital gain. 2

Smt. Smita Pandey ITA No.414/Ind/2017 5. Ld. Departmental Representative vehemently argued and

supporting the orders of Ld. A.O.

perused the records placed before us.

Ld.CIT(A) of Rs.1,33,08,531/- made by the Ld.A.O on account of

undisclosed Long Term Capital Gain. Brief facts relating to this

ground are that the assessee purchased 5.71 hectare agriculture

land located at Shivangaon, Amrawati on 8.5.2008 at a cost of

Rs.11,55,540/-. On 27.08.2012 this agriculture land was sold to

Shri Hemant Dhirajlal Sangani, Smt. Minakshi Dhirajlal and Shri

Prateek Hemant Sangvi for total consideration of Rs.1,50,00,000/-

In the return of income filed by the assessee for Assessment Year

2013-14 the Long Term Capital Gain of Rs.1,33,08,531/- was

shown and the deduction for the same amount was claimed u/s

54B of the Act. We observe that the assessee has contended before

the lower authorities that the alleged land was an agricultural land

not falling under the category of capital assets as provided u/s

2(14) of the Act and the gain from the sale thereof was not liable to 3

Smt. Smita Pandey ITA No.414/Ind/2017 tax but as there was no column in the income tax return she

bonafidely declared the transaction under the head capital and

claimed deduction u/s 54B of the Act. Now the question before us

is that whether the agricultural land measuring 5.71 hectare

located at Shivangaon, Amarawati is an agricultural land and is not

falling under the head ‘capital assets’ as defined u/s 2(14) of the

Act?.

Capital Gain at Rs. 1,33,08,531/- observing as follows after duly

considering the submissions made by the assessee;

“8.1 The submissions of the learned A.R. on the above grounds of appeal are as under:-

8.1.1 Submission (or ground 2 A. Y 2013-14)

Ld AO has vide above Para added Rs. 13308531/- on account of Long term capital Gain on sale of Agricultural land. Appellant had sold her Agricultural land admeasuring 5.71 hectare situated at Village Shivangaon , District Amrawati in net consideration of Rs. 15000000/-. Ld AO has treated the sale of Rural Agricultural land as being of Capital assets on account of non submission of any evidence, Submission of mere certificate from sarpanch regarding population of the village, Non deposit of capital gain in capital gain account scheme etc.

Smt. Smita Pandey ITA No.414/Ind/2017 It is submitted here that the LD AO has either not gone through properly reply of the Appellant or gone in a hap hazard manner in taken decision regarding nature of above land. Appellant has, in his reply dated 09.03.2015 specifically said :-

" it is submitted that the Assessee has sold 5.71 hec rural Agricultural land situated at Shivangaon, Amrawati to shri Hemant Dhirajlal sangani and Smt Minakshi Dhirajlal sangani on 27.08.2012 for an amount of Rs. 9000000/- and Rs. 6000000/- aggregating to Rs. 15000000/-. The rural Agricultural land which was sold as being used or agricultural Purposes by the Assessee. Sir in regard to capital Gain on sale a such land it is submitted that this land is not a capital assets defined in section 2(14) of the Income tax act hence capital gain on such land is not attracted. For reference, Copy of certificate issued by the Gram Panchayat is enclosed herewith.

Sir, it is further submitted that the assessee wants to show this transaction in her return but in return there is column for sale of capital assets only and hence the same was shown as capital assets. Since the Agricultural land is not under capital assets ,to nullify the gain arising on sale, exemption u/s 54 B coloumn was filled up so that the resultant amount of gain comes to nil"

It is further submitted here that for arriving at some conclusion Ld. AO was expected to examine these basic factors given u/s 2(14) of the Income Tax act 1961 which decide whether a asset is capital asset or not:-

Capital asset means property of any kind held by the assessee, whether or not connected with his business or profession, but does not include-

Smt. Smita Pandey ITA No.414/Ind/2017 (i) any stock-in-trade, consumables, store, raw materials held for the purposes of his business or profession;

(ii) personal effects, that is to say, movable property (including wearing apparel, jewellery and furniture) held for personal use by the assessee or any member of his family dependent on him;

(iii) Agricultural land in India, not being land situated-

(a) In any area which is comprised within the jurisdiction of a municipality (whether known as municipality, municipal corporation, notified area committee, town area committee, town committee or 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 kilometers, 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. "

The expression "agricultural land" is not defined either in the Constitution or in the Income-tax Act. It, therefore, must be given the meaning which it ordinarily bears in English language and as understood in ordinary parlance.

The determination of the character of a particular piece of land, according to the purpose for which it is meant or set apart and can 6

Smt. Smita Pandey ITA No.414/Ind/2017 be used, is a matter which ought to be determined on the facts of each particular case. What is really required to be shown is the connection with an agricultural purpose and user and not the mere possibility of user of the land, by some possible future owner or possessor, for an agricultural purpose. It is not the mere potentiality, but its actual condition and intended user, which has to be seen. If there is neither anything in its condition, nor anything in evidence to indicate the intention of its owner or possessor, so as to connect it with an agricultural purpose, the land cannot be termed "agricultural land". Entries in Revenue records are, however, good prima facie evidence but they are not conclusive on the point.

There are various criteria which may be applied to find out if the land in a particular case is agricultural or not. Some of them are:

(i) Classification and assessment of the land to land revenue;

(ii) Whether agricultural operations are carried on;

(iii) Character of adjoining land. If the surrounding lands are agricultural lands, the presumption would be in favour of holding that the land in question was also agricultural land [Addl. CIT vs. Tarachand Jain (1980) 123 ITR 567 (Pat) TC 20R. 730].

According to the definition of capital asset as it stands even now, it shall be seen that agricultural land by and large does not fall within the definition; it is only the specified land which is included in the definition of capital asset and all other agricultural land is outside the purview of capital gains.

The agricultural land which is covered under the definition of a capital asset is the one which is situated in any area which is 7

Smt. Smita Pandey ITA No.414/Ind/2017 comprised within the jurisdiction of a municipality or a Cantonment board etc. 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 1st day of the previous year.

This definition contemplates that in order to bring an agricultural land within the definition of a capital asset. two conditions must be satisfied:

(i) The land must be situated in any area which is comprised within the jurisdiction of a municipality or cantonment board;

(ii) The population of the area where the land is situated should not be less than 10,000 according to the last preceding census.

In this case Appellant had already submitted uses, distance and population of the Village. We failed to understand why Ld AO has not relied on the certificate issued by the Sarpanch . Gram panchayat is very much appropriate agency for certifying population and surpanch ,being head of the Gram panchayat, is very much appropriate authority of issuing population as well as land uses certificate. We failed to understand LD AO expectation of getting certificate from any higher Authority in this respect. Here LD AO should have decided land nature on the basis of situation and population which is already given in the web site of revenue department of Maharashtra govt where the land situation is shown as 40 KM from Municipal corporation limits and population is 2294 as per year 2011 census .Annexure "E" Enclosed.

In view of the above It is submitted that the land sold by the Appellant is not a capital assets.

Smt. Smita Pandey ITA No.414/Ind/2017 It is, therefore, requested that the addition of income of Rs. 13308531/- by Ld. A.O may kindly be deleted.

I have considered the facts of the case, the written submissions of the learned AR, the various decision cited and also perused the case record. The appellant assessee has claimed to have sold 5.71 hectare agricultural land to Shri Hemant Dhirajlal Sangani, Smt Minakshi Dhirajlal and Shri Prateek Hemant Sangvi located at Shivangaon, Amravati on 27.08.2012 for a total sale consideration of Rs. 1,50,00,000/-. During the course of assessment proceedings it is seen by the A.O that the assessee filed return for A.Y 2013- 14 but has not offered capital gain on the sale of the above land however it was seen that in the computation of income the appellant assesse had calculate capital gain of Rs. 1,33,08,531/- and claimed deduction u/s 54B of the LT Act.

8.2 The A.O vide query letter dated 23.09.2014 asked the appellant to furnish complete details of the transaction. In response to the query the appellant filed certificate from Gram panchayat which was not accepted by the A.O. But during the appellate stage the appellant assessee first filed a sheet having Google navigation and detail of the population of the area Shivangaon (place where the said land of the appellant exists) and then the appellant assessee filed a certificate of Tehsildar of Shivengaon dated 06.03.2017. Which gives clear-cut finding that the above mentioned place is 27 km from Amravati and has total population of 2294 as per govt. record.

In view of the material evidence filed by the appellant it is clear that the above land fulfills the conditions to be an agricultural land as the same is more than 8 km away from the city and has population less than 10,000. Thus the contention of the appellant assessee is found to be correct and the addition of Rs. 1,33,08,531/- made by the A.O on 9

Smt. Smita Pandey ITA No.414/Ind/2017 account of Long term Capital gain u/s 50C is hereby deleted.

The ground of appeal for A.Y 2013-14 is allowed”.

rebutted by Ld. Departmental Representative. It is clearly

emanating from the records that the agriculture land is located 27

Km away from the municipal limit of city Amarawati and issituated

in a village having population of 2294 persons and this fact has

been certified by the Tehsildar of Shivangaon vide letter dated

6.3.2017. Therefore it is not disputed that the alleged agricultural

land do not fall under the head capital gain assets as provided in

Section 2(14) of the Act and therefore the capital gain arised in the

sale of said agricultural land is not liable to tax. No interference is

therefore called for in the finding of Ld. CIT(A). Ground No.2 raised

by the revenue stands dismissed.

CIT(A) has not taken the remand report from the Assessing Officer

with regard to the certificate of the Tehsildar of Shivangaon, we

find that the assessee has provided the certificate of Gram

Panchayat during the course of assessment proceedings itself.

Smt. Smita Pandey ITA No.414/Ind/2017 Further the certificate of Tehsildar of Shivangaon dated 6.3.2017

clearly shows the location of the agricultural land which has been

duly examined by the first appellate authority and therefore there

remained no reason for Ld. CIT(A) to call for a remand report.

Therefore Ground No.1 of the revenue is dismissed.

The order pronounced in the open Court on 02.01.2019.

Sd/- Sd/-

( KUL BHARAT) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER �दनांक /Dated : 2nd January, 2019 /Dev Copy to: The Appellant/Respondent/CIT concerned/CIT(A) concerned/ DR, ITAT, Indore/Guard file. By Order, Asstt.Registrar, I.T.A.T., Indore