SH. AJAY MAHESWARI,MEERUT vs. ITO, MEERUT

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ITA 2373/DEL/2013Status: DisposedITAT Delhi05 May 2017AY 2009-106 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that for assessment years prior to 2014-15, the distance between municipal limits and agricultural land should be measured by the shortest road distance, as clarified by CBDT Circular No. 17 of 2015. The orders of the lower authorities were set aside.

What were the facts?

The assessee sold agricultural land and claimed exemption from capital gains, arguing the land was agricultural as per Section 2(14)(iii). The AO and CIT(A) rejected this, measuring the distance from the municipality using the straight-line/aerial method instead of the approach road.

What were the issues?

The primary issue was the method of measuring the distance between agricultural land and municipal limits for the purpose of defining agricultural land as a capital asset.

Which sections of the Income-tax Act were involved?

Section 2(14)(iii)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH: ‘A’ NEW DELHI

Before: SHRI G.D. AGRAWAL, HON’BLE & SHRI K.N. CHARY

Hearing: 03.05.2017Pronounced: 05.05.2017

ORDER PER K. NARSIMHA CHARY, J.M. This is an appeal by the assessee challenging the order dated 11.02.2013 in appeal no. 367/2011-12 passed by the Ld. CIT (A)-Meerut confirming the order of the AO.

2.

Brief facts of the case are that during the assessment year 2009-10 on 20th August, 2008 the assessee sold agricultural land measuring 0.40025 Hect. Situated in Khasra No. 713, Village- Abupur, Pargana-Jalalabad, Tehsil Modinagar (Ghaziabad) for a sum of Rs. 57,43,800/- to M/s SRM University and claimed exemption from capital gain since such land happens to be an agricultural land defined u/s 2(14)(iii) of the Act. AO reckoned

the distance by following the straight-line or aerial distance, instead of accepting the plea of the assessee that the distance has to be reckoned with reference to approach roads. In the appeal preferred by the assessee, Ld. CIT (A) also agreed with the AO on the ground that if the concept of an approach road is accepted it will give rise to a host of doubts as to the definition of approach road, whether a pedestrian track would qualify as an approach road, whether such approach road has to be a public or could also be a private road, whether the road was existent in the past and if so whether before at the time of or after the date of the transfer of the asset and finally, whether a plot of land contiguous to another plot which has approach road and is owned by the vendee will qualify as capital asset, and so on and so forth.

3. Aggrieved by this approach of the authorities below, challenging the impugned order, the assessee is before us stating that they committed error in their approach to reckon the distance in terms of Section 2(14) of the Act and the addition made under that assumption is bad under law.

4.

It is the argument of the Ld. AR that the authorities below committed an error in rejecting the contention of the assessee that the distance has to be reckoned with reference to the approach road but not on applying the straight-line or aerial method. He further submitted that pursuant to the order dated 30.03.2015 in of 2013 in the case of Smt. Maltibai R Kadu, the Board the CBDT issued a Circule no. 17 of 2015 on 6th October, 2015 giving clarification that for the period prior to the AY 2014-15 the distance between the Municipal limited and the agricultural land has to be measured having regard to the shortest road distance, and it is only in relation to the AY 2014- 15 and thereafter the distance could be measured aerially. Per contra, the Ld. DR vehemently relied upon the orders of the authorities below.

5.

Admittedly this matter relates to the AY 2009-10. The Circular no. 17 of 2015 on 6th October, 2015 reads as follows:

Circular No. 17/2015

F.No.279/Misc./l 40/2015-1TJ Government of lndia Ministry of Finance Department of Revenue Central Board of Direct Taxes New Delhi, 6th October, 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- aiia. 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, 3 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.

2. 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 Sml. 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 years. 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.

3.

Being a settled issue, no appeals may henceforth be filed on this ground by die 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. Sd/- (D.S. Chaudhry) CIT (A&J). CBDT, New Delhi 6. Admittedly the Circular was not available before the authorities below when they passed the orders. There was no occasion for them to decide the issue in accordance with the instructions contained in this circular. We are, therefore, of the considered opinion that in view of the specific instructions contained in this circular that for the period prior to the AY 2014- 15 the distance between the municipal limit and agricultural land has to be measured having regard to be shortest road distance, it is just and proper to set aside the orders of the authorities below and restore the matter to the file of the AO for considering the plea of the assessee in the light of this circular. While disposing 4 of the matter afresh, the AO will take into consideration the contentions and the evidence, if any, put forth by the assessee before him.

7.

In the result, the appeal of the assessee is allowed for statistical purpose.

Order pronounced in the open court on 05th May, 2017

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