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Income Tax Appellate Tribunal, HYDERABAD BENCHES “A”, HYDERABAD
Before: SHRI RAMA KANTA PANDA & SHRI K. NARASIMHA CHARY
ORDER PER K. NARASIMHA CHARY, J.M: Aggrieved by the order dated 07/08/2023 passed by the learned Commissioner of Income Tax (Appeals)- National Faceless Appeal Centre (NFAC), Delhi (“Ld. CIT(A)”), in the case of Goldgreen Land Holdings Private Limited (“the assessee”) for the assessment year 2017-18, assessee preferred this appeal.
Brief facts of the case are that the assessee filed the return of income on 16/10/2017 declaring taxable income of Rs. 861/-, agricultural income of Rs. 8,64,591/- and exempted income on sale of agriculture land Rs. 4,42,42,234/-. During the course of assessment proceedings the learned Assessing Officer proposed to tax on the gain of Rs. 5,35,52,434/- arised on sale of agriculture land Situated at Vattinagulapally and Janwada Villages, by enclosing screen shot maps showing the distance of the property from the limits of Municipality as less than the prescribed limit.
3. Assessee submitted that such screen shot shows the distance between University of Hyderabad and Continental Hospitals to ORR, which is adjacent to the farm land of the assessee and there is no access to the said land shows a distance of 7.34KMs and 7.35KMs respectively is not correct and the distance is actually more than 8KMs; that the aerial distance from the University of Hyderabad to the gate of farm land is 9.32 KMs and from that of Continental Hospitals to farm gate is 8.1 7KMs; that the Greater Hyderabad Municipal Corporation is the civic body formed by merging 12 municipalities and 8 Gram Panchayats in the Municipal Corporation of Hyderabad for the convenience of administration. Serilingampally is one of the municipalities that is merged with Municipal Corporation of Hyderabad; that, therefore, the areal distance of 6 KMs from the boundaries of Serilingampally should be considered for the purpose of Sec.2(14) of the Income Tax Act, 1961 (‘the Act’); that the population of Serilingampally Municipality is about 3.10 lakhs as per the census 2011; and, therefore, the actual aerial distance is much more than the required 6 KMs.
4. Learned Assessing Officer, however, did not agree with the assessee that the land is situated at more than 8 KMs from the Municipal limit in view of the Google Map of the land sold. Assessee preferred appeal before the learned CIT(A) and made elaborate submissions. Learned CIT(A), however, dismissed the appeal, solely basing on the Google Maps as relied by the learned Assessing Officer. Hence, assessee preferred appeal before us contending that the learned CIT(A) failed to appreciate the contentions raised by the assessee before him or the entries in the land revenue record showing the impugned land as agricultural land or in not considering that the holding period of such land shall be calculated from 2009 in terms of section 48 of the Act. Further grievance of the assessee is that indexed cost of acquisition is not granted to the assessee and the Revenue authorities failed to adhere to the provisions of section 50C (2) of the Act and ignored the fact that the reference value of the land at Janwada village has drastically dropped as the subject agricultural land was located under the G.O. 111 issued by Government of Telangana.
Learned AR is very vehement in his submission that in spite of submitting elaborate written submissions raising various legal and factual contentions, learned CIT(A) passed a very cryptic order without appreciating the fact that the approach of the learned Assessing Officer in adopting the wrong co-ordinates in the Google Maps and the learned CIT(A) did not assign any reason whatsoever to discard the revenue record as against the lopsided approach of the learned Assessing Officer.
Learned DR vehemently relied on the orders of the Revenue authorities and submitted that there is nothing wrong in the learned Assessing Officer, relying on the Google Maps.
We have gone through the record in the light of the submissions made on either side. As could be seen from the impugned order, the assessee made elaborate submissions before the learned CIT(A), as are reproduced by the learned CIT(A) in his order, and read as under,-
“Ground No. 1 That the Order dated 18.12.2019 passed u/s 143(3) by the assessing officer, ward 2(2), Hyderabad is contrary to facts and law. We are herewith submitting the facts that the land is agricultural land situated beyond 8 Km from the local municipal limits of nearest municipality. We are enclosed documentary evidence i.e..distance map and copies of financial statements from 2012 to 2017 of the assessee and copy of agreements, bank statements and sale deeds. Ground No. 2 That the assessing officer has erred both in law and facts in upholding the addition of Rs.5,35,52,434/- despite the fact that the agriculture land is situated beyond the limits specified u/s. 2(14) of the Act. a) The AO has measured the distance from the University of Hyderabad and from the Continental Hospitals to ORR which is far away to the farm land of the assessee and shows a distance of 7.34 KMs and 7.35KMs respectively is not correct and the distance is actually more than 8 KMs. Moreover there is no access to the farm land of the assesse from the ORR. b) The aerial distance from the University of Hyderabad to the gate of farm land is 9.32 KMs and from that of continental Hospitals to farm gate is 8.17KMs. c) Greater Hyderabad Municipal Corporation is the civic body formed by merging 12 municipalities and 8 gram panchayats in the Municipal Corporation of Hyderabad for the convenience of administration. Serilingampally is one of the municipalities which are merged with Municipal Corporation of Hyderabad. Therefore the areal distance of 6KMs from the boundaries of Serilingampally should be considered for the purpose of Sec.2(14) of the Act. d) The population of Serilingampally Municipality is about 3.10 lacs as per the census 2011. Accordingly, the actual aerial distance is much more than the required 6KMs defined by the Act. e) Also the assessee has already submitted a communication received from the concerned authorities Stating that the distance of these agriculture lands are about 12KMs and the said lands will not cover under Serilingampally limits. f) The assessee is continuously accounting the income from agriculture activity and disclosing the same in its financial statements. g) Since the agriculture lands situated in Janwada falls within the purview of G.O.No.111 and all construction/commercial activities are prohibited in this area as this area is considered as catchment area for the Surrounding lakes. Due to this reason the value of land is much less than the market value as fixed under Sec.50C of the Income Tax Act. Therefore the land is sold at the purchase price only. h) The assessing officer has measured the aerial distance up to ORR (Express way) which is far away from the land instead of measuring the distance up to agriculture land. i) The assessing officer has not considered the actual location of agriculture land as the land sold was at different locations and in different survey numbers and also sold to different persons vide different documents. The A.O also not considered the location of agriculture land sold to Mrs. Shriya Bhupal which is situated in two different survey numbers and one of the survey numbers is far away from ORR. j) The assessing officer has failed in measuring the aerial distance from the points mentioned in his order dated 18.12.2019 to the actual location of different agriculture lands. k) We are herewith submitting the copies of purchase and sale deeds along with certificate issued by the Panchayat secretary certifying the land is agricultural land. We are also enclosed the certificate issued by the Dy. Commissioner, GHMC the lands are beyond 8 km from the nearest municipal limits. Ground No. 3 That the assessing officer has erred in measuring the aerial distance up to ORR (Express way) where there is no access to the agriculture land and the point on ORR is also far away from the agriculture land. The submissions made in the Ground No. 1 and Ground No.2 can be considered as submissions for Ground No 3. Ground No.4 That the Assessing officer has erred in ignoring the certificate issued by the concerned authorities stating that the distance of the agriculture lands are about 12 KMs and the said lands will not come under Serilingampally limits.
Copy of certificate issued by the Dy. Commissioner, GHMC certifying that the land situated beyond 12km’s from the municipal limits is enclosed. Ground No. 5 That the Assessing officer has erred both in law and facts in upholding the order while considering the 500 value Rs. 1,66,25,000/- on sale of agriculture land admeasuring Ac. 6.26 at Janwada Village instead of purchase value ofRs.83,12,500/- as mentioned in the sale deed dated 29.12.2016. a. During the financial year 2009-10 the assessee has entered into an agreement for purchase of agriculture land admeasuring Ac.6.26 situated at sy.no.202/aa, 202/ee and 202/p, Mirzaguda Village, Janwada Mandal, Rangareddy District for a total sale consideration of Rs.83,12,500/-. Accordingly, the assessee has paid the total sale consideration of Rs.83,12,500/- vide cheque no.233369 dated 16.06.2009. The assessee has recorded the land in the books of account under fixed assets. The assessee has taken the possession of the agriculture land and the same was mentioned in the agreement of sale. The assessee has carried out the agriculture activity on the said land from the financial year 2009-10 onwards. The assessee also derived the agriculture income from the said land and accounted the same in the books of account as well as in the return of income filed since 2009. We are herewith enclosing copy agreement along with the copy of bank statement showing the payment of entire sale consideration Hence the provision of 50 C are not applicable in our case. Ground No.6 The assessing officer has erred in treating the exempted capital gains on sale of agriculture land as short term capital gain chargeable to tax.
1. During the financial year 2009-10 the assessee has entered into an agreement for purchase of agriculture land admeasuring Ac.6.26 situated at sy.no.202/aa, 202/ee and 202/p, Mirzaguda Village, Janwada Mandal, Rangareddy District for a total sale consideration of Rs.83,12,500/-, Accordingly, the assessee has paid the total sale consideration of Rs.83,12,500/- vide cheque no.233369 dated 16.06.2009. The assessee has recorded the land in the books of account under fixed assets. The assessee has taken the possession of the agriculture land and the same was mentioned in the agreement of sale. The assessee has carried out the agriculture activity on the said land from the financial year 2009-10 onwards. The assessee also derived the agriculture income from the said land and accounted the same in the books of account as well as in the return of income filed since 2009.
2. Since, the assessee has taken the possession of the property and paid the entire sale consideration during the year 2009, it is deemed to be the transfer under the provisions of sec 53A of the transfer of property Act. The assessee has sold the said property during the year 2016-17, the gain on sale of agriculture land should not be considered as short term capital gain.
3. Similarly, during the financial year 2009-10 the assessee has entered into an agreement for purchase of agriculture land admeasuring Ac. 13.29 situated at Vattinagulapally Village, Rajendranagar Mandal, Rangareddy District for a total sale consideration of Rs.2,55,28,500/-. Accordingly, the assessee has paid the total sale consideration of Rs.2,55,28,500/- vide cheque no.233370 dated 17.06.2009. The assessee has recorded the land in the books of account. The assessee has taken the possession of the agriculture land and the same was mentioned in the agreement of sale. The assessee has carried out the agriculture activity on the said land from the financial year 2009-10 onwards. The assessee also derived the agriculture income from the said land and accounted the same in the books of account as well as in the return of income filed since 2009.
Since, the assessee has taken the possession of the property and paid the entire sale consideration during the year 2009, it is deemed to be the transfer under the provisions of sec 53A of the transfer of property Act. Out of Ac.13.29, the assessee has sold Ac 6.00 during the year 2016-17 for a total sale consideration of Rs.6,00,00,000/-. As explained above, the gain on sale of agriculture land should not be considered as short term capital gain. Additional Submissions: 1. The Ld.A.O., identified the capital gain as STCG with reference to the regular conveyance deed (viz.,Purchase deeds executed on dt. 11.03.2016 & 01.04.2016) by which the assessee is acquired the impugned property and the Regd. Conveyance deeds (viz., Sale Deeds executed on dt.29.12.2016 & 03.03.2017) by which the same were sold by it. However, the agreement of sale dt. 17.06.2009, by which the assessee took delivery of POSSESSION over both properties, viz., land located in both the places, viz., Janwada and Vattinagulappaly after making the payment of entire consideration through the banking channel and this factual position, is not disputed by the Ld.A.O., also. (Enclosed Agreements of sale and Bank statement). In fact, the assessee Company has accounted these agriculture lands under FIXED ASSETS and derived income out of these assets and accounted the same as Agriculture Income in the books of accounts. (Enclosed Financial Statements from 2012-13 to 2016-17.) 1. In this context, kind attention is invited to the CONCEPT OF PART PERFORMANCE referred to in Sec.53A of T.P.Act, 1882 read with Sec.2(47)(v) of I.T.Act, 1961, as per which the PART PERFORMANCE would fall within the ambit of Sec.45 of the Act, 2. GENERAL POWER OF ATTORNEY: Conveyance of immovable property by a GPA constitutes transfer of capital asset- PACE DEVELOPERS & PROMOTERS ( P, LTD.) V. Govt, of NCT(20130215) Taxman 554(Delhi). Where the developer took possession of the assessee land and started development work, the said transaction was to be treated as transfer of right in property covered under Sec.2(47)(v)- Bertha T.T. Almeida V. ITO (2015) 229 Taxman 159(Bom).
Ona fair and reasonable interpretation and on adopting principle of purposive construction, it can be said that possession contemplated by sub clause (v) of Sec.2(47) need not necessarily be sole and exclusive possession, once it is held that the transaction of the nature referred to in sub clause (v) of Sec,2(47) as taken place on a particular date, the actual date of taking physical possession need not be probed into; it is enough if the transferee has, by virtue of the transaction a right to enter upon and exercise the acts of possession effectively- JASBIR SINGH SARKARIA, IN RE(2007) 164 Taxman 108(AAR-New Delhi).
2. The word TRANSFER is as indicated in the I.T.Act is required to be considered and not SALE as indicated in the Transfer of Property Act. Transfer as defined in the Act is to be given a simple meaning. Therefore, transfer of immovable property of the value exceeding Rs.100/- can be said to have been effected on the date of execution of the document- CIT V.Mormasji MancharjiVaid (2001) 250 ITR 542 (Guj.).(FB).
In view of the mandatory provisions and also judicial precedents, a few of which are recorded above for ready reference, it may kindly be noticed that the ‘transfer’ of the land properties under review, was deemed to have been concluded in favour of the assessee- company by virtue of the aforesaid two Agreements of sale.
1. Further, the term used in Sec.2(42A) is only “held” and not “owned”. By virtue of Sec.2(47)(v) of the I.T.Act, read with Sec.53A of the T.P.Act, 1882, the properties referred to above are wholly and exclusively held by the assessee right from the date of agreements of sale, dt. 17.06.2009 by the DOCTRINE OF PART PERFORMANCE. Hence it could be deemed that the assessee has been holding rights over the properties right from the above date viz., 17.06.2009 only and this vital legal position was not taken into account by Ld.A.0O., in proper prospective. If the above analogy is considered as per the mandatory provisions vis-a-vis judicial precedents, referred to above, the period of holding would work out to 7 years 6 months and 7 years 8 months and thereby the ‘transfer has to be characterized as ‘Long Term Capital Gain’ only and not Short Term Capital Gain. Thus without PREJUDICE to the claim that the IMPUGNED TRANSFER OF BOTH THE LANDS would not fall within the scope of Sec.45 of the Act, and even for the sake of argument, the capital gain, is chargeable, would take the characteristics of LONG TERM CAPITAL GAIN ONLY AND NOT SHORT TERM CAPITAL GAIN and this legal issue may kindly be taken note of and accordingly, the issue of INDEXED COST OF ACQUISITION may be considered. Ground No.7 For the above grounds which are mutually exclusive and any other ground that may be raised at or before the date of final hearing, it is prayed that the addition of Rs. 5,35,52,434/- be deleted Submissions:
1. That in the facts and circumstances of the case prevalent in the record, the Ld.CIT(A) may direct the Ld.A.O., to allow the indexed cost of acquisition by holding the same as Long Term Capital Gain as sought for, without prejudice to the claim that the IMPUGNED TRANSFER OF BOTH THE LANDS WOULD NOT FALL WITH IN THE SCOPE OF Sec.2(14) read with Sec.45 of the Act.
2. Taking cognisance of the fact that the case is taken up for Limited Scrutiny as recorded in the preamble of the asst, order, dt.18.12.2019, the Ld.A.O., formulated the addition towards Capital Gains without the prior approval of the Pr.CIT as laid down by the CBDT’s executive instructions and non- adherence to such mandatory requirements, the impugned addition of Rs.5,25,55,595/- towards STCG may be NON EST. IN LAW. In this context, kind attention is invited to the CBDT's circular Letter No. Mo.225/162/2016/ITA. II.dt. 11.07.2016 wherein it instructed that prior approval of the Pr.CIT is obligatory for converting the Limited Scrutiny cases into Complete Scrutiny cases and due to non- appearance to the guidelines of the CBDT which are statutory and binding upon the A.O., the impugned addition cite supra may be Non Est. in law. For the reasons recorded in the Memorandum of written submissions, annexed herewith, it is humbly requested that the aforesaid prayers may be kindly entertained WITHOUT PREJUDICE TO THE BASIC CLAIM that the impugned transfer would not fall within the scope of Sec.2(14) read with Sec.45 of |.T.Act and thereby Capital Gains tax would not attract in the instant case for the assessment year under review, viz., A.Y.2017-18. The assesse has deposited an amount of Rs. 20,00,000/- (Rupees Twenty lakhs Only) against the impugned tax demand for the Assessment year 2017-18 (the copy of the letter and income tax chalan is herewith enclosed) We request you to kindly consider the above and give appropriate directions to the Assessing Officer.”
Having referred to these written submissions, the learned CIT(A) gave his findings stating that,-
“5.4 The appellant has filed written submission before me. I have gone through the written submission. Submission has been made that the land is situated at more than 8kms from the Municipal limit same is not acceptable as the Assessing Officer has annexed the Google Map of the land sold. As per Section 2(14)(iii), amendment has been brought in the definition of agricultural land as capital asset retrospectively from 1.4.1970. Hence the Assessing Officer is correct in taking the aerial survey route of the land from the Google Map. Hence, the addition of the Assessing Officer is confirmed as the Income Tax Act is quite clear in this regard. The appeal of the appellant is dismissed.”
In the paper book assessee furnished so much of information including the letter dated 07/11/2019 from the O/o. Dy. Commissioner, GHMC giving the distance of the lands from the nearest municipal limits. Learned CIT(A) did not refer to any of the facts involved in this matter, nor did he give any reasons for discarding the revenue record submitted by the assessee on this aspect.
For these reasons, we are of the considered opinion that the order of the learned CIT(A) is very cryptic and requires to be set aside to the file of the learned CIT(A) for passing the order with reference to the merits of the case in the light of the material produced by the assessee. We hold and direct so. Learned CIT(A) will pass an order, after affording an opportunity of being heard to the assessee.
In the result, appeal of the assessee is treated as allowed for statistical purposes.
Order pronounced in the open court on this the 22nd day of March, 2024.