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Income Tax Appellate Tribunal, DELHI BENCH “F” NEW DELHI
Before: SHRI I.C. SUDHIR & SHRI L.P. SAHU
2 Assessee by: S/Shri Ved Jain, CA & Shri Ankit Jain, N.Khanna & Ummed Kunthal, CAs Department by: Shri N.C. Swain, CIT(DR) Date of hearing : 11 .07.2016 Date of pronouncement: 08:08.2016 ORDER PER I.C. SUDHIR: JUDICIAL MEMBER These are three appeals, one filed by the assessee and the two filed by the Revenue against the order of the learned CIT(A). 2. In the appeal preferred by the assessee, following grounds have been raised:
1. He order passed by the ld. Assessing Authority is arbitrary, bad in law and against the facts of the case.
2. The Ld. Assessing Authority has arrived at incorrect conclusion that the agricultural land sold is within the municipal limits without having any substantial proofs of this effect in his possession.
3. The Ld. Assessing Authority has wrongly denied the exemption available under the Income-tax Act, 1961, on the sale of agricultural land ignoring the documentary evidences produced in this regard.
4. The Ld. Assessing Authority ignored the fact that the land sold was actually used for agricultural purposes.
5. The Ld. Assessing Officer didn’t take cognizance of the fact that the agricultural land has come within the purview of master plan of Gurgaon after the date of sale of land.
3 6. The Ld. Assessing Authority didn’t considered the evidence that the municipal of Gurgaon itself was established after the date of sale of land. 7. The assessee retains the right to add, amend or alter any or all grounds of appeal
8. It is most humbly prayed that the unjustified additions made may please be deleted in interest of justice.
The Revenue on the other hand raised following grounds:
Grounds in – Shri Satpal Singh Sehrawat:
1. On the facts and in the circumstances of the case the Learned CIT(Appeals) has erred in deleting Rs.20,08,16,878 in respect of sale of land, since as per the map supplied by the Mukhya Adhikari, Nagar Nigam, Gurgaon, distance of the land was 3.5 Km from Municipal limit of Gurgaon, whereas the road distance was 4 Km and subject land area of Chauma Khera Village was covered in the Zone-2 North of Gurgaon Municipal Corporation.
2. On the facts and in the circumstances of the case the impugned order passed by the Learned CIT(Appeals) is perverse both in facts and law.
3. The appellant craves leave to add, alter or amend any of the grounds of appeal before or during the course of the hearing of the appeal.
4 It is prayed that the order of the Learned CIT(Appeals) being contrary to the facts on record and the settled position of law, be set aside and that of the Assessing Officer be restored.
Grounds in – Satbir Singh Sehrawat:
1. 1. On the facts and in the circumstances of the case, the Learned CIT(Appeals) has erred in deleting capital gain of Rs.20,51,49,040 in respect of sale of land, ignoring the fact that as per information provided by the Mukhya Adhikari, Nagar Nigam, Gurgaon, distance was 3.5 K, from Municipal limit of Gurgaon, whereas the road distance was 4 KM and subject land area of Chauma Khera Village was covered in the Zone-2/North of Gurgaon Municipal Corporation.
2. On the facts and in the circumstances of the case the impugned order passed by the Learned CIT(Appeals) is perverse both in facts and law.
3. The appellant craves leave to add, alter or amend any of the grounds of appeal before or during the course of hearing of the appeal.
4. C.O. No. 88/Del/2015: It has been preferred by the assessee mainly in support of the first appellate order
5 5. The issues involved in all the three appeals being same are being heard together. The cross objection preferred by the assessee Satbir Singh Sehrawat is basically in support of the first appellate order in his case.
The brief facts leading to the present appeals are that the assessee during the year under consideration sold land situated in village Chama, Gurgaon and claimed exemption of the capital gain on the ground that the land being agricultural land and beyond 8 kilometres from the municipal limit, the same does not fall within the meaning of the capital asset.
The case of the assessee was reopened by the AO and notice under Section 148 dated 21.09.2010 was issued after recording reasons for reopening of the assessment. During the course of the reassessment, the assessee contended that the reopening is bad in law and in any case the agricultural land being situated beyond 8 kilometres from the municipal limit, the same is not chargeable to tax. The AO, however, not being satisfied with the reply of the assessee held that the land is not beyond 8 kilometres from the municipal limit and the same is chargeable to tax.
6 8. Aggrieved by the order of the AO, all the three assessees came in appeal before the learned CIT(A). The appeal in the case of Sh. Rishipal Singh Sehrawat was decided by the learned CIT(A) vide its order dated 18.03.2013. In this case the learned CIT(A) upheld the order of the AO holding that assessee has not been able to establish that the agricultural land is situated beyond a distance of 8 kilometres from the municipal limit.
The appeal of Sh. Satpal Singh Sehrawat was decided by the learned CIT(A) vide order dated 28.02.2013. In this appeal the learned CIT(A) held that the agricultural land is situated beyond 8 kilometres from municipal limit and hence the same is exempt from tax.
The appeal of the third brother, Sh. Satbir Singh Sehrawat was decided by the learned CIT(A) vide order dated 14.03.2014. In this order the learned CIT(A) agreed with the assessee and held that the agricultural land being beyond 8 kilometres from the municipal limit of Gurgaon the gain arising on such land is not chargeable to tax.
In the case of Sh. Rishipal Singh Sehrawat the assessee is in appeal whereas in the other two cases viz., Sh. Satpal Singh Sehrawat and Sh. Satbir Singh Sehrawat, the Revenue is in appeal.
It was contended by the learned AR that the land is agricultural land and is situated beyond 8 kilometres from the municipal limit. It was submitted that during the course of the assessment proceedings, the AO has made independent and direct enquiry invoking his power under section 133(6) of the Income Tax Act. In response thereto, the learned Commissioner, Municipal Corporation, Gurgaon has submitted its reply. As per this reply the distance of the agricultural land sold by the assessee is 8200 metres i.e. more than 8 kilometres. In support thereof the learned AR invited attention to the reply placed in the paper book at page No. 50. It was further submitted that the AO having received the reply has rejected the same by merely observing that he is of the strong view that the sale of land is covered under the Capital Gains head of income. It was contended that the AO having called for the information from the Commissioner, Municipal Corporation and Commissioner, Municipal Corporation having certified the distance, the AO was not justified in ignoring the same. It was also contended that this land was sold on 30.11.2006 and as on that date the municipal limit of Gurgaon was limited and accordingly the distance has to be measured from the outer limit of the Municipality of Gurgaon as on 30.11.2006.
8 12.1 It was further contended by the Learned AR that the learned CIT(A) has arbitrarily rejected the contention of the assessee in the case of Sh. Rishipal Singh Sehrawat. Attention was also invited to the order passed by the learned CIT(A) in the case of Sh. Satpal Singh Sehrawat and Sh. Satbir Singh Sehrawat, whereby the learned CIT(A) has rightly appreciated the facts and has held that the land is beyond 8 kilometres from the outer limit of Municipality of Gurgaon.
In reply the learned DR supported the order passed by the AO.
We have considered the arguments advanced by the parties and perused the Paper Book filed by the assessee. The dispute in the present case is about the location of the agricultural land. During the course of the assessment proceedings, the assessee on being called upon submitted necessary evidences in support of its contention that the agricultural land is situated beyond a distance of 8 kilometres from the outer limit of Municipality of Gurgaon. The AO not being satisfied with the reply of the assessee made direct enquiry from the District Commissioner, District Gurgaon vide its letter dated 10.05.2011 asking the following information:- “1. Whether the above mentioned plots are situated under the identified area of municipality of Gorgon at the time of transfer of land i.e. 30/11/2006.
9 2. If the said plots are not situated in area of Municipality at the time of transfer, kindly mention the minimum distance (In Km.) of the above plot from the nearest boundary line of Gurgaon Municipality / Nagar Palika which ever was effective at that time. 3. Mention the distance of the above plot of land (in Km.) from nearest boundary of Delhi Municipality. 4. Please mention the Circle Rates of the said land for F.Y. 1980-1981 and F.Y. 2006-2007.”
14.1 The AO thereafter sent a reminder vide letter dated 30.05.2011. In response to the AO’s letter, the Commissioner, Municipal Corporation, Gurgaon submitted its reply. In its reply the Municipal Commissioner, Gurgaon confirmed that as on 30.11.2006 the village was not within the limit of Municipal Corporation, Gurgaon. It also confirmed that the land under consideration is at a distance of 8200 metres from Municipal Corporation, Gurgaon. It was further stated that the distance of the land from the nearest boundary of Delhi Municipality was 12000 metres. The AO having got this reply still has thought fit not to agree with the contention of the assessee that the land sold is beyond 8 kilometres from the municipal limit of Gurgaon.
10 14.2 On going through the assessment order, we note that the AO has ignored the above reply by making casual observation that the said report is not of any qualified person and cannot be relied upon in the absence of any authentic proof for the same. Thereafter the AO has held on the basis of his strong view that the land is liable for capital gains. 14.3 On going through the above facts it is evident that the assessee had submitted the necessary evidences in support of its contention. The AO thereafter has made enquiry independently from the Municipal Corporation, Gurgaon. In this enquiry the contention of the assessee has been found correct and the AO has rejected the same without bringing any further material or evidence. We are of the view that there was no reason for the AO to ignore this reply which was received from a government authority. The contention of the AO that this reply is not that of an expert and without evidences cannot be appreciated. The Municipal Corporation is the right authority and it was the Assessing Officer, who had made an enquiry from the Municipal Corporation. There is also no reason to doubt the report submitted by the Municipal Corporation.
14.4 From the Paper Book we note that the AO has also made enquiry before the reopening of the assessment calling for information under Section 11 133(6) from the Commissioner, Municipal Corporation, Gurgaon. In response thereto vide letter dated 09.12.2009 the Municipal Corporation, Gurgaon has provided all the information including the map of the area of the Municipal Corporation. In this map old municipal limit was also shown. Thus the contention of the AO that the reply submitted by the Municipal Corporation is without any evidence cannot be appreciated. Thus AO in this case has made enquiry twice, first he made enquiry in November, 2009 and again he made enquiry in May, 2011. In both these enquiries nothing adverse came on record. We are of the view that Municipal Corporation having confirmed the distance beyond 8 kilometres, there was no reason for the AO to disbelieve the same. In this regard we note that the learned CIT(A) in the cases of Sh. Satpal Singh Sehrawat and Sh. Satbir Singh Sehrawat has rightly appreciated the facts and recorded the findings as under:- “4.2 I have carefully considered the submissions made by the appellant. I have also carefully considered the arguments put forth by the ld. AR and the assessment order passed by the AO. I have also taken note of the certificate of Jt. Commissioner-II, Municipal Corporation of Gurgaon dt. 04.11.2011, notice issued by the AO to the District Commissioner, Gurgaon u/s 133(6) of the Act vide F. No. DCIT/Cir-24(1)/2010-11/135 dt. 10.05.2011 and the reply from the office of the District
12 Commissioner, Gurgaon dt. 18.07.2011, mentioned supra. In my considered opinion, there was no option left for the AO, but to treat the concerned piece of land as “Agricultural Land”, once he received a reply from the office of the District Commissioner, Gurgaon in response to his notice u/s. 133(6), stating that the said land was at a distance of more than 8 kilometres from the outer limits of Gurgaon and 12 kilometres from the outer limits of Delhi. The AO should not have dismissed summarily the reply received from a Government Authority on flimsy grounds. He was neither authorized, nor technically competent to reject the reply of the District Commissioner, Gurgaon on his own judgment. These issues are issues of facts, which can be determined only by authenticated documents from Land Revenue Records and from Land Revenue Authorities. The fanciful idea of measuring the distance through the speedometer of a car has no value, as the AO would not have any idea as to what is the outer limit of the Municipal Corporation of Delhi and that of Gurgaon. Therefore, such “evidences” do not have much weight. In the light of the above mentioned facts and circumstances of the case, I am of the considered opinion that the land sold by the appellant was agricultural land as on the date of sale i.e. 30.11.2006 and was not a “Capital Asset” within the mean of the Income Tax Act Section 2(14). Therefore, there is no question of charging the receipt of sale consideration of such land under the head Capital Gains. The addition of Rs.20,08,16,878/- is hereby deleted.”
14.5 During the course of the hearing the learned DR could not give any justification for tinkering with the findings recorded by the learned CIT(A). We are of the view that the AO having made necessary enquiry and enquiry having supported the contention of the assessee, the AO was not justified in ignoring the same and thus we direct the AO to delete the addition made on this account. Accordingly the appeal of the assessee in the case of Sh. Rishipal Singh Sehrawat is allowed and that of the Revenue’s appeals in the cases of Sh. Satpal Singh Sehrawat and Sh. Satbir Singh Sehrawat are dismissed. In consequence, the cross-objection preferred in support of the first appellate order in the case of Shri Satbir Singh Sehrawat has become infructuous and the same is accordingly disposed off. Order pronounced in the open court on 08 .08.2016 Sd/- Sd/- ( L.P. SAHU ) ( I.C. SUDHIR ) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 08 /08/2016 Mohan Lal Copy forwarded to: 1) Appellant 2) Respondent 3) CIT 4) CIT(Appeals) 5) DR:ITAT ASSISTANT REGISTRAR
14 Date Draft dictated directly on computer 08 .08.2016 Draft placed before author 08 .08.2016 Draft proposed & placed before the second member Draft discussed/approved by Second 08.08.2016 Member. Approved Draft comes to the Sr.PS/PS 08.08.2016 Kept for pronouncement on 08.08.2016 File sent to the Bench Clerk 08.08.2016 Date on which file goes to the AR Date on which file goes to the Head Clerk. Date of dispatch of Order.