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Income Tax Appellate Tribunal, NAGPUR BENCH, NAGPUR
Before: SHRI G.D. AGRAWAL & SHRI MAHAVIR SINGH
PER BENCH :
This appeal by the Revenue for the assessment year 2010-11 is directed against the order of learned CIT(A)-II, Nagpur dated 30th September, 2014.
The first issue in this appeal of the Revenue is against the order of learned CIT(A) deleting the addition of short term capital gain made by the Assessing Officer treating the profit from sale of agricultural land as short term capital gain instead of declared by the assessee as capital receipt. For this, Revenue has raised following ground Nos.1 & 2:-
“1. On the facts and in the circumstances of the case and in law, the ld.CIT(A) has erred in interpreting definition of distance given in section 2(14)(iii)(b) of the I.T. Act as ‘the distance to be
2 ITA-476/Nag/2014 measured through nearest approach road’ when the only condition given in the said provision is that the land should be situated within such distance not being more than 8 Kms from any municipal limits.
On the facts and in the circumstances of the case and in law, the ld.CIT(A) has erred in deleting the addition of Rs.44,94,650/- made by the AO treating the profit arising on sale of agricultural land as short term capital gain when as per map of “Vision and Development Plan” for Nagpur Metropolitan Area 8 Km from Nagpur City Municipal Limit.”
We have heard rival contentions and gone through the facts and circumstances of the case. We find that the assessee has claimed the receipts from sale of agricultural land at Dongargaon (Khasra No.77/3, Nagpur (Rural), Nagpur) as exempt u/s 2(14)(iii) of the Act. The assessee sold this agricultural land on 9th July, 2009 for a sale consideration of `1.10 crores and accordingly, the assessee’s share comes to `55 lakhs. This asset was purchased in financial year 2007-08 for a sum of `10,05,350/-. According to the Assessing Officer, this agricultural land is within 8 Km limit of the local limits of the municipality and, therefore, it will not be treated as capital asset. Hence, he added the same to the return of income of the assessee and assessed the short term capital gain at `44,94,650/-. Aggrieved, assessee preferred appeal before the CIT(A), who deleted the addition by holding that the asset is outside from the local limits of 8 Km. and, for this, he observed in paragraph 6.2 as under :-
“6.2 Since the above issue is squarely covered in favour of the appellant by various judicial pronouncements it is held that the distance of 8 Km has to be measured through nearest approach road method. Since evidences have already been submitted by the appellant before the Ld.AO to establish that the property in question is situated beyond 8 Kms. from the city municipal limits as measured by approach road method, and since no contrary evidence has been brought on record, it is held that the said agricultural land is not a capital
3 ITA-476/Nag/2014 asset as it is situated beyond 8 Km from the Nagpur city corporation limit.”
Aggrieved, now Revenue is in second appeal before the Tribunal.
After going through the facts and circumstances, we find that the Revenue now before us could not controvert the above finding of the learned CIT(A) and hence, this issue of the Revenue’s appeal is dismissed.
The next issue in this appeal is against the order of learned CIT(A) deleting the addition made by the Assessing Officer of deemed rent u/s 23(4) of the Act in relation to two houses. For this, Revenue has raised following ground No.3 :-
“3. On the facts and in the circumstances of the case and in law, the ld.CIT(A) has erred in deleting the addition of Rs.2,08,540/- against deemed rent on property when assessee shows two house properties.”
Brief facts relating to this issue are that the Assessing Officer observed from the fixed asset schedule that it has three residential houses as under :-
(i) Building at Nagpur ….W.D.V. at 49,08,076 (ii) House at Sakoli….W.D.V. at 10,26,230 (iii) Flat …… W.D.V. at 2,14,000
According to the Assessing Officer, the assessee can treat the self-occupied property in relation to one house only and accordingly, he allowed the flat at Nagpur. Accordingly, he took the ALV u/s 23(4) of the Act with respect to other two properties and calculated the income from house property at `2,08,540/- after allowing deduction of interest of `1.50 lakhs. Aggrieved, assessee preferred appeal before learned
4 ITA-476/Nag/2014 CIT(A). Learned CIT(A) deleted the entire addition by observing in paragraph 10 as under :-
“10. I have considered the facts of the case. There is merit in the submission of the appellant that the annual value of such building at Nagpur would be Nil u/s 23(2)(b) of the I.T. Act. Also the ld.AO has not rebutted the submissions of the appellant that the bungalow is used by the appellant for storing material used for its business and is therefore used for purpose of its business. In view of the above facts, additions made by the ld.A.O. amounting to `2,08,540/- is hereby deleted. This ground is therefore allowed.”
We have gone through the facts and circumstances of the case. We find that the Assessing Officer has rightly assessed the ALV of the other two house properties and now before us, learned counsel for the assessee could not controvert the observations of the Assessing Officer because it is as per provisions of Section 23(4) of the Act. Accordingly, we uphold the addition and reverse the findings of the learned CIT(A). This issue of Revenue’s appeal is allowed.
In the result, the appeal of the Revenue is partly allowed. Decision pronounced in the open Court on 08.03.2018.
Sd/- Sd/- (G.D. AGRAWAL) (MAHAVIR SINGH) PRESIDENT JUDICIAL MEMBER
Dated : 08.03.2018 VK.
Copy of the order forwarded to :
The Appellant 2. The Respondent 3. Concerned CIT 4. The CIT(A) 5. D.R. Assistant Registrar