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Income Tax Appellate Tribunal, DELHI BENCH “F”: NEW DELHI
Before: SHRI AMIT SHUKLA & SHRI PRASHANT MAHARISHI
O R D E R PER PRASHANT MAHARISHI, A. M. 1. This is an appeal filed by the assessee against the order of the ld CIT(A)- 2, New Delhi dated 09.01.2018 for the Assessment Year 2009-10. 2. The assessee has raised the following grounds of appeal:- “1. The assessing officer has erred in law and on merits of case was not justified in initiating proceedings u/s 147 of the Income Tax Act, 1961 as there was no reason to believe with learned AO of escaping the assessment at the time of issuing of the notice. The very base taken by the learned AO is vague, wrong, farfetched and against the facts of the case. Hence, the proceedings initiated under section 147 are not valid as it was not based on reason to believe; rather reason to believe is erroneous and untenable.
2. That under the facts and circumstances of the case, the learned CIT(A) has erred in law and on merits of case was not justified in sustaining addition of Rs. 3400000/- on sale of agriculture land though it complies with all the conditions mentioned in Section 2( 14) (iii) of the Income Tax Act 1961. Further in clause b of above section, Central Government is empowered to specify the name of municipality having regard to the extent of, and scope for urbanization of that area etc.. In fact said notification comprises only one municipality, namely Ghaziabad which is in the vicinity of Page | 1 the impugned land. Undisputedly it is situated at a distance of more than 8 kms away from the limits of municipality of Ghaziabad; hence it is a rural agriculture land and as per law it is not a subject matter of taxation.
3. Further the learned CIT (A) has erred in law as well as on merits of case was not justified to measure the distance of impugned land from the outer limit of ‘Loni’ Nagar Palika as he was of the view that it can be judged from any municipality nearest to impugned land. However facts are contrary to it, it can only be measured from the municipality of Ghaziabad which is covered in notification no SO 10(E) dated 06.01.1994 and not the Nagar Palika of ‘Loni' as it is not included in above notification.”
Brief facts of the case shows that assessee is an agriculturist who sold as agricultural land at Narayannagar , Rampur Ghaziabad on 29/4/2008 ₹ 34, 00, 000/–. The assessee did not file any return of income or originally. Therefore, notice under section 148 of the income tax act was issued on 10/3/2016. The reason being that according to the AR information that assessee sold immovable property situated at Ghaziabad for a sum of ₹ 34 lakhs on 29/4/2008 and the impugned land is a capital asset being situated within municipal limits of Ghaziabad Nagar Nigam. This fact was also confirmed by SR oh – IV, Ghaziabad through his office letter dated 13/12/2012 in response to the query of the learned assessing officer dated 5/12/2012.
In response to the notices issued by the learned assessing officer none appeared. Therefore notice under section 144 of the act was issued on 13/6/2016 and assessee did not comply with the learned assessing officer and therefore the learned assessing officer was of the view that assessee has no plausible explanation to offer with regard to the short-term capital gain liability on sale of immovable property for ₹ 34 lakhs. Accordingly, the assessment under section 144 read with section 147 of the income tax act was passed on 28/6/2016 determining the total assessed income of assessee at ₹ 34 lakhs.
The assessee aggrieved with the order of the learned assessing officer preferred an appeal before the learned commissioner of income tax (appeals) – 2, Noida. Before the learned commissioner of income tax appeals the assessee furnished and application for admitting of the additional evidence under rule 46A (3) of the income tax rules 1962 Page | 2 which were admitted by the learned commissioner of income tax appeals) number 4.9 of his order. With respect to the merits of the addition the assessee submitted before him that the impugned land sold by the assessee is not a capital asset as it is an agricultural land and further the population of the village where the agricultural land is situated is about 3000 during the financial year 2008 – 9 which is also certified by the gram pradhan. Further the land is also situated beyond 8 km of the Minister limit of Nagar Nigam of Ghaziabad therefore according to the assessee all the conditions for holding that same is not a capital asset are fulfilled. The learned commissioner of income tax obtained remand report from the assessing officer dated 5/12/2017 where the AO reiterated the facts stated in the assessment order. He also obtained the rejoinder, which was submitted by the assessee on 26/12/2017 reiterating the same facts. Thereafter the learned commissioner held that that only issue to be decided in the present appeal is whether the impugned agricultural land false beyond 8 km of distance from the outer limit of the nearest municipality or not. To decide this issue he obtained the distance based on the Google Maps distance locator to find the distance from the Loni Nagar palika and the Ghaziabad Nagar Nigam tow nearest Municipalities near the village of Narainanagar, Alias Rampur. According to that he found that the distance between the immovable property to Loni Nagar Palika is 8.8 Kms. and to Ghaziabad Nagar Nigam is 17.5 km. Based on the above he found that even if it is considered that the Loni is extended up to a small radius of only 3 km the village Narainnagar will be only 5.8 km away from the outer limit of the Loni Nagar Palika. Therefore he held that according to the provisions of section 2 (14) (iii)(b) of the act the impugned plot of land is a capital asset and therefore the assessee is liable to pay capital gain over sale of such land. He further held that the said land was purchased in the year 1988 through 3 different purchase dates and granted the cost of acquisition as mentioned in those purchase deeds at indexed cost. Therefore, he upheld the chargeability of the capital gain on the sale of impugned land.
Assessee aggrieved with the order of the learned commissioner of income tax appeals has preferred appeal before us. It is submitted that Loni is not included in the notification number SO 10 (E) dated 6/1/1994 and therefore distance from Loni cannot be measured in any eventuality for ascertaining whether the land in question is a rural agricultural land honourable agricultural land. It was further stated that the circular provides that the distance of 8 km can be measured in respect of Ghaziabad municipal limits only. He further relied upon the decision of the coordinate bench in case of Pratibha Jain versus ACIT (ITA number 5028/del/2011 and Sri Bali Ram versus ITO ITA number 6152/Del/2016. His main argument is that that Loni is not covered in the notification number 9447 dated 6/1/1994 issued by the central board of direct taxes hence it is not a capital asset and not liable for long-term capital gain.
The learned departmental representative relied upon the orders of the lower authorities and submitted that the land is situated within the specified distance from the municipality and therefore it is a capital asset in transfer of which it is chargeable to the capital gain. 8. We have carefully considered the rival contention and perused the orders of the lower authorities. Undisputedly the assessee is an agriculturist and sold a rural agricultural land at Village Narainanagar alias Rampur Ghaziabad. The central government has issued a notification number SO 9447 dated 6/1/1994, which provides for the name of the states and the name of municipality et cetera. According to that Ghaziabad the specified serial number 20 of the State UP. Loni is not specified in any of the municipality mentioned at serial number 1 to 59 of that notification in the list of state of UP. Therefore, it is apparent that for holding whether the impugned land is a capital asset or not the distance of this land has to be measured only from municipal limit of Ghaziabad and not from Loni. As it has been stated by the learned commissioner appeals that the distance from the Ghaziabad Ministry per limit of the impugned land is 17.5 km and therefore it is not a capital asset and capital gain is not chargeable on sale of this agricultural land. In the remand report, also it is apparent that the impugned land is situated beyond 8 km from Ghaziabad Nagar Nigam. Page | 4