SANDEEP PREMCHAND AGARWAL,PUNE vs. INCOME TAX OFFICER,

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ITA 2957/PUN/2016Status: DisposedITAT Pune16 May 2018AY 2011-125 pages
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What did the Tribunal hold?

The Tribunal held that for the assessment year in question, the distance from municipal limits should be measured by road, not aerially. The amended provisions of Section 2(14)(iii) were held to be prospective and not applicable.

What were the facts?

The assessee sold agricultural land and claimed the receipts as non-taxable. The Assessing Officer and CIT(A) treated the receipts as taxable long-term capital gains, applying amended provisions of Section 2(14)(iii) of the Income Tax Act.

What were the issues?

Whether the sale of agricultural land is taxable as capital gains, and whether the amended provisions of Section 2(14)(iii) regarding distance from municipal limits apply retrospectively.

Which sections of the Income-tax Act were involved?

Section 2(14)(iii)

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Income Tax Appellate Tribunal, PUNE BENCH “SMC”, PUNE

Before: SHRI D. KARUNAKARA RAO, AM

For Appellant: Shri Harikrishan
For Respondent: Shri Pankaj Garg
Hearing: 14.05.2018Pronounced: 16.05.2018

आदेश / ORDER

PER D. KARUNAKARA RAO, AM

This appeal filed by assessee is directed against the order of Commissioner of Income Tax (Appeals)-6, Pune dated 02.09.2016 for assessment year 2011-12.

2 ITA No.2957/PUN/2016 A.Y.2011-12

2.

The assessee has raised following grounds in appeal:

“1.0) In the facts and circumstances of the case and in law, the learned C.I.T. [A] has erred in holding that the net receipts of Rs.39,69,220/ - on sale of agricultural land received by the appellant as taxable income under LTCG of the appellant. 1.1) In the facts and circumstances of the case and in law, the finding of the learned C.I.T.[A] that the net receipts of Rs.39,69,220/- on sale of agricultural land received by the appellant constitute taxable income under LTCG of the appellant being arbitrary, perverse and based on surmises and conjectures and therefore the same may please be vacated. The reasons given by the learned C.I.T.[A] in support of his said conclusion being devoid of merits and legally unsustainable and the same may please be deleted and the addition may please be deleted. 2) The appellant denies his liability to pay any interest u/s. 234B and 234C of the I.T. Act 1961 and hence the same may please be deleted. 3) The appellant craves the permission to add, amend, modify, alter, revise, substitute, delete any or all grounds of appeal, if deemed necessary at the time of hearing of the appeal.”

3.

The Ld. Counsel for the assessee referred to condonation application

filed by assessee and submitted that there is delay of 1 day in filing this

appeal. The delay is occurred inadvertently in filing appeal before Hon'ble

Income Tax Appellate Tribunal. Therefore, the Ld. Counsel of assessee

prayed for admitting the appeal for adjudication condoning the minor delay

in filing the appeal.

4.

After hearing both the sides and considering the contents of

condonation application filed by the assessee, I am of the opinion that the

minor delay of 1 day in filing appeal is required to be condoned and taken

up the appeal for adjudication.

5.

Briefly stated relevant facts of the case are that the assessee is

carrying on the business of transport and is also running a bar and

restaurant. The core issue raised in the ground No. 1 pertains to the

3 ITA No.2957/PUN/2016 A.Y.2011-12

manner of measuring the distance of 8 kms from the ‘municipal limits’.

There is no dispute on the fact that the said distance is beyond 8kms if the

same is measured by road. However, the distance is beyond 8kms, if the

same is measured ‘aerially/ crow’s flight. The assessment year under

consideration is A.Y. 2011-12 and pre-amended provision of section

2(14)(iii) of the Act apply. Despite the same, the Assessing Officer and

CIT(A) proceeded to apply the amended provisions of section 2(14)(iii) of the

Act and arrived at an illegal conclusion of the distance of land in question

from municipal limited. In the process, the CIT(A) ignored the judgment of

Hon'ble Jurisdictional High Court in the case of Commissioner of Income

Tax Vs. Nitish Rameshchandra Chordia reported as 374 ITR 531.

6.

Before me, the Ld. Counsel for the assessee explained the above

issue and submitted the issue stands covered by the ratio laid down by the

Hon'ble Jurisdictional High Court in the case of Commissioner of Income

Tax Vs. Nitish Rameshchandra Chordia (supra). He further stated that

the amended provision of section 2(14)(iii) is only applicable for assessment

year 2014-15 onwards prospectively and the same has no application in

the assessment year under consideration. Thereby, the measurement of the

distance of land from municipal limits needs to be done by road distance

only and not aerially. In this regard, he brought our attention to ratio laid

down by the Hon'ble Jurisdictional High Court as well as contents of

relevant Para 11 and 12 of the judgment.

7.

On the other hand, the Ld. DR for the Revenue relied heavily on the

order of Assessing Officer and CIT(A). He further submitted that the

distance given by the Town Planning Authority has been considered by

Assessing Officer while denying the fact the land in question cannot be

considered as agricultural land.

4 ITA No.2957/PUN/2016 A.Y.2011-12

8.

On hearing both the parties, I am of the opinion that the only issue

for adjudication relates to agricultural land in question is located within 8

Kms from municipal limits or otherwise. Another related question is if the

amended provisions of section 2(14)(iii) of the Act apply to the assessment

year 2011-12. In the ratio laid down by the Hon'ble Jurisdictional High

Court, I find the conclusion of the said judgment helps the assessee and

the same is extracted as under:

“Where agricultural land sold by assessee was situated beyond 8 Kms from municipal limits when measured through road distance, profit from sale of said land was not taxable.”

I also perused the contents of Para 12 of the said judgement and find

the said judgment is relevant for prospective application of the amended

provision only. The contents of Para 12 is extracted as under:

“12. We have carefully considered and applied out mind to the rival submissions and the rulings cited at the bar. We agree with the submission that the amendments in the taxing statute, unless a different legislative intention is clearly expressed, shall operate prospectively. In our view , if the assessee has earned business income and not the agricultural income, Section 11 of the General Clauses Act will prevail unless a different intention appears to the contrary……”

Therefore, it is settled legal proposition that for the assessment year

prior to amendment, the measurement of distance is required not to be

done aerially and in alternative that would be done by road. Therefore, I am

of considered view that decisions taken by Assessing Officer and CIT(A) are

not in tune with the settled legal proposition. There are numbers of

decisions favouring the assessee in this issue. Then, the Assessing Officer

is directed to follow the ratio laid down by the Hon'ble Jurisdictional High

Court in the case Commissioner of Income Tax Vs. Nitish

Rameshchandra Chordia (supra).

5 ITA No.2957/PUN/2016 A.Y.2011-12

9.

Considering the judgment cited above, ground No.1 raised by assessee is allowed. Since the ground No. 1 is allowed, the adjudication of other grounds on merit becomes academic exercise. Accordingly, other grounds raised by assessee on merit are dismissed as academic.

In the result, appeal of the assessee is partly allowed. 10.

Order pronounced on 16th day of May, 2018.

Sd/- (डी.क�णाकरा राव/D. Karunakara Rao) लेखा सद�य / ACCOUNTANT MEMBER

पुणे / Pune; �दनांक / Dated : 16th May, 2018. SB आदेश क� ��त�ल�प अ�े�षत / Copy of the Order forwarded to : अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The CIT(Appeals)-6, Pune. 4. The Pr. CIT-5, Pune. 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “एक-सद�य” ब�च, पुणे / DR, ITAT, “SMC” Bench, Pune. गाड� फ़ाइल / Guard File. 6.

// True Copy // आदेशानुसार / BY ORDER,

�नजी स�चव /Private Secretary आयकर अपील�य अ�धकरण, पुणे / ITAT, Pune.

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