THE ITO, WARD-3(1)(3), AHMEDABAD vs. M/S. RHEA J. RANA, AHMEDABAD

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ITA 482/AHD/2015Status: DisposedITAT Ahmedabad22 November 2017AY 2006-078 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the distance between the agricultural land and the municipal limit should be measured by the shortest road distance for the period prior to AY 2014-15. Based on the findings that the land was 8.8 km away, it was not a capital asset.

What were the facts?

The Assessing Officer (AO) treated the sale of agricultural land as a capital asset and taxed the capital gains. The assessee claimed the land was not a capital asset as it was beyond 8 km from the municipal limit. The CIT(A) deleted the addition, finding the land was indeed beyond 8 km.

What were the issues?

Whether the agricultural land sold by the assessee was a capital asset as per Section 2(14) of the Income Tax Act, 1961, based on its distance from the municipal limits.

Which sections of the Income-tax Act were involved?

Section 2(14),Section 45,Section 143(3),Section 147,Section 148

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, AHMEDABAD “B” BENCH

Before: Shri Rajpal Yadav & Shri Amarjit Singh

For Appellant: Shri Arti Shah, A.R
For Respondent: Shri Mudit Nagpal, Sr. D.R, Shri Arti Shah, A.R

आदेश/ORDER PER : AMARJIT SINGH, ACCOUNTANT MEMBER:-

This Revenue’s appeal for A.Y. 2006-07, arises from order of the CIT(A)-9, Ahmedabad dated 03-12-2014, in proceedings under section 143(3) r.w.s. 147 of the Income Tax Act, 1961; in short “the Act”.

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2.

The revenue has raised following grounds of appeal:- “1. The CIT(A) has erred in law and on facts in deleting the Capital Gain of Rs.1,32,41,740/- by adopting the distance through approach road whereas without any dispute arial distance as per local authority is less than 8 Kms. 2. On the facts and circumstances of the case, the Ld. Commissioner of Income tax (A) ought to have upheld the order of the Assessing Officer. 3. It is, therefore, prayed that the order of the Ld. Commissioner of Income tax (A) may be set-aside and that of the Assessing Officer be restored.” 3. The brief facts of the case is that assessment u/s. 143(3) r.w.s. 147 of the act was made on 10th October, 2013 determining the total income at Rs. 1,34,77,900/- as against the total income of Rs. 236160/- declared by the assessee in the original return of income. The assessing officer observed that assessee had purchased agricultural land at village Behrampura, Tehsil Sohna, Dist: Gurgain, Haryana at cost of Rs. 2,16,566/- in May, 1998. As per the purchase deed, the assessee has sold the aforesaid agricultural land vide sale deed dated 22nd December, 2005 for Rs. 1,35,48,388/-. The assessee had not shown capital gain on sale of aforesaid agricultural land on the ground that the land was situated at village Behrampur, having population of only 1472 and the sold land was situated beyond 12 kilometers from municipal limit of Sohna. It was claimed that sold agricultural land was not covered by definition of capital asset u/s. 2(14) of the act. The assessing officer has stated that during the financial year 2009-10 the investment wing of income tax at New Delhi had carried out verification on major land transaction in and around Gurgaon, Haryana. It was stated that assessee had purchased the part of agricultural land located at' Khewat/Khata no. 24/72, Rect no. 2, Killa no. 21/2(2-0), 22/2(2-0) Rect no. 15, Killa No.

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1(8-0), 2(8-0), 3(8-0), 8(8-0), 9(9-0), 10/1(3-18), 13(6-2), Rect no. 16 Killa no. 5(7-0), fields 10 measuring 62 kanal 0 marla to the extent of 320/1240 share i.e. 15 Kanal 0 Maria situated within the revenue estate of Village Behrampur, Tehsil Sohna, Distt. Gurgaon (HARYANA) for Rs.2,16,566/- in May, 1998. This land was sold by the assessee on 22.12.2005 for the sale consideration of Rs.1,35,48,388/-. Thereafter, the assessing officer has issued notice u/s. 148 of the act on 15th March, 2013 . The assessee has not responded to the notice issued u/s. 148 of the act. Thereafter, the assessing officer has obtained information from the District Town Planner, Gurgaon and the Tehsilar, Sohna Tehsil vide letter dated 20th August, 2013 which is reproduced as under:- "Ms. Rhea J Rana is assessed to tax in my ward and that the re-assessment proceedings for the A.Y. 2006-07 are ongoing. 2. You are requested to:- I. Clarify clearly whether the agricultural land located at Khewat/Khata no. 24/72, Rect no. 2, Killa no. 21/2(2-0), 22/2(2-0) Rect no. 15, Killa No. 1(8- 0), 2(8-0), 3(8-0), 8(8-0), 9(9-0), 10/1(3-18), ' 13(6-2), Rect no. 16 Killa no. 5(7-0), fields 10 measuring 62 kanal 0 marla to the extent of 320/1240 share i.e. 16 Kanal 0 Maria situated within the revenue estate of Village Behrampur, Tehsil Sohna, Distt. Gurgaon (HARYAN A) was, in the financial year 2005-06, within 8 Kms distance from the Municipality limits of Tehsil Sohna. II. Mention the population of Sohna town as per the census 2001. 3. The information sought above is under the powers vested in the undersigned by the provisions of section 133(6) of the Income-tax Act 1961 and is requested to reach my office within 15 days of receipt of this letter."

The District Town Planner Gurgaon, vide his memo No.3847 dated 12.09.2013 has clarified that the land bearing Rect No.2, Killa no.21/2(2-0), 22/2(2-0) Rect No. 15, Killa No.l(S-O), 2(8-0), 3(8-0), 8(8-0), 9(9-0), 10/1 (3-18), 13(6-2), Rect No.16 killa no. 5(7-0), measuring 62-K 0-M falling in the revenue estate of village

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Behrampur, Tehsil Sohna, District Gurgaon falls within the 8 km of MC limit in financial year 2005-06. On receipt of this memo No.3847 dated 12.09.2013 from the District Town Planner Gurgaon, the assessee, vide letter cum notice dated 27.09.2013 was show caused as below: "As you are aware that your assessment for the A. Y.2006-07 was re-opened u/s 147 of the Income-tax Act and that a notice dated 15/03/2013 u/s 148 of the Income-tax Act was duly served upon you on the address mentioned above. You have however, not filed your return of income in response to the said notice dated 15/03/2013. It is therefore, intended to finalise your reassessment proceedings on the basis of the material available on record. 2. During the financial year relevant to the A.Y. 2006-07, you had, on 22/12/2005, sold agricultural land located at Khewat/Khata no. 24/72, Rect no. 2, Killa no. 21/2(2-0), 22/2(2-0) Rect no. 15, Killa No. 1(8-0), 2(8-0), 3(8-0), 8(8-0), 9(9-0), 10/1(3-18), 13(6-2), Rect no. 16 Killa no. 5(7-0), fields 10 measuring 62 kanal 0 mar/a to the extent of 320/1240 share i.'e. 16 Kanal 0 'Maria situated within the revenue estate of Village Behrampur, Tehsil Sohna, Distt. Gurgaon (HARYANA) for Rs. 1,35,48,388 being your part of sale consideration. 3. A letter dated 20/8/2013 was sent to the Town Planner, Gurgaon u/s 133(6) of the Income-tax Act requesting him to clarify whether the said land during the F. Y. 2005-06, was beyond 8 Kms from the municipality limits of Gurgaon. The District Town Planner, Gurgaon, vide his memo no. 3847 dated 12/9/2013 (Copy enclosed) has conveyed that the said land was, during the financial year 2005-06, within 8 Kms of the Municipality Limits of Gurgaon. Therefore, in the light of the clarification given by the Dist. Town Planner, Gurgaon, it is intended to treat the said land as a capital asset within the meaning of section 2(14) of the Income-tax Act 1961 and to tax the gains accordingly. Objection, if any, may be raised in writing within seven days of receipt of this notice. This may please be treated as a notice u/s 142(1) of the Income-tax Act."

Thereafter, the assessing officer stated that nothing has been heard from the assessee, therefore, after taking into consideration the confirmation received from District Town Planner, Gurgaon, he concluded that assesse has sold the aforesaid land which was situated within 8 kilometers of municipal limit, therefore, the sale transaction was taxed u/s. 45 of the income tax act. Consequently,

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addition Rs. 13241740/- under the head long term capital gain was made in the case of the assessee.

4.

Aggrieved assessee filed appeal before the ld. CIT(A) against the impugned addition. The ld. CIT(A) has deleted the addition by stating as under:- “2.4 I have carefully considered the submissions made by the appellant on this issue. After careful consideration of overall facts of the case 1 am in agreement with the contention of appellant.' Vide letter dt9.6.2014 appellant filed paper book with additional evidence. While going through the request for admitting additional evidence the appellant has mentioned about A.O's non-granting of proper opportunity. After careful consideration I find that the contention of appellant is correct. I have also gone through case records and I have noticed that the A.O has not noticed that the notice containing final opportunity, had been served only on 3/10/2013 giving opportunity to furnish reply in 7 days, which actually gave appellant only 4 days to respond. From the notice it is emerged that the A.O had given opportunity to appellant in his notice vide letter dtd. 27/09/2013 giving opportunity to appellant to file its reply in 7 days from its receipt. The letter has been received by appellant on 03/10/2013. It is clearly evident that the A.O has hurriedly completed the assessment without checking the date of receipt of notice by appellant, and without giving adequate opportunity. This is not appreciable and not desirable way of passing assessment order, in such a high demand assessment. Hence, in order to give appellant proper opportunity, additional evidence filed by appellant is admitted. 2.5 In order to give fresh opportunity to appellant the remand report has been asked from ITO.Ward-5(3) vide letter dated 18/09/2014. The A.O has carried out enquires after receiving of additional evidence, and after carrying out extensive enquiries through District Revenue Authorities. The A.O has submitted his remand report vide letter dated 10/11/2014 duly forwarded by Additional CIT. In the remand report the additional CIT.Range-5 has mentioned that "on the additional evidence produced by the assessee contending that Village Behrampur of Tehsil Sohna is not part of Municipal Corporation of Gurgaon, an Inspector, Shri Rishab Sharma, was deputed from this office to verify the same. The Dy.Commissioner of Gorgaon was also requested to assist in the same. The Dy. Commissioner of Gurgaon, after obtaining a map from the Commissioner, Town Planning, Gurgaon, and requesting the Tehsildar, Gurgaon and Sohna for measurement of distance, has informed that the distance between the land at Behrampur Village and Municipal limit of Gurgaon is 8.8 Kms, measured through the shortest possible route." 2.6 After carefully going through facts of the case, detailed submission of appellant, remand report filed by A.O and case records, I am inclined to agree with the contention of appellant. As per the facts as emerged, the appellant has

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sold agricultural land situated outside Municipal limit of Sohna District as evidently clear vide report of the Dy. Commissioner, Gurgaon vide report No.2916/S.K.2 dtd. 5.11.2014 has informed this office that distance between the above mentioned land and M.C. limits of Gurgaon is 8.8 kilometers. 2.7 In view of above facts the addition made by A.O on this issue is not maintainable, hence, A.O is directed to delete the addition of Rs.1,34,77,900/-. This ground of appeal is allowed.”

5.

During the course of appellate proceedings before us, ld. departmental representative has placed reliance on the order of assessing officer. On the other hand, ld. counsel has furnished paper book containing information pertaining to filing of return of income, detail of agricultural land, certificate issued by Tehsildar, copy of purchase deed, copy of sale deed, submission made before the ld. CIT(A) etc. The ld. counsel has also placed reliance on the decision of Co-ordinate Bench of Ahmedabad in the case of the assessee vide ITA No. 482/Ahd/2015.

6.

We have heard both the parties and perused the material on record carefully. We observed that in this case, the notice u/s. 148 was served on the assessee on 3rd October, 2013 and the assessee could not get adequate opportunities to respond because the assessing officer has passed the assessment order u/s 143(3) of the act on 10th October 2013. Thereafter, the ld. CIT(A) has given fresh opportunity to the assessee by calling remand report from ITO vide letter dated 18th September, 2014. The assessing officer has carried out verification and inquiries on the basis of additional evidences received through remand report. The assessing officer has reported in the remand repot that village Behrampur, Tehsil Sohna was not on

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municipal corporation of Gurgaon and further it was reported by the assessing officer that the distance between land of Behrampur village and municipal limit was 8.8 kilometers. Therefore, aforesaid agricultural land was not capital asset as per section 2(14)(iii) of the act. We have also perused the CBDT Circular no. 17/2015 dated 06- 10-2015 stating that Nagpur Bench of the Hon’ble Bombay High Court in the case of Smt. Maltibhai R Kadu vide ITA No.151 of 2013 has held amendment prescribing distance to be measured aerially apply prospectively in relation to assessment year 2014-2015 and subsequent year. For the period prior 2014-15 the distance between municipal limit and agricultural land is to be measured having regarding to the shortest road distance. We have considered above facts and details findings of the Ld. CIT(A). Since the distance between municipal limit and agricultural land of the assessee as elaborated supra is more than 8 kilometers , therefore, capital gain on sale of aforesaid agricultural land is not arisen in the case of the assessee. Therefore, we do not find any error in the findings of ld. CIT(A). Accordingly, the appeal of the revenue is dismissed.

7.

In the result, the appeal of the revenue is dismissed.

Order pronounced in the open court on 22-11-2017

Sd/- Sd/- (RAJPAL YADAV) (AMARJIT SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad : Dated 22/11/2017

I.T.A No. 482/Ahd/2015 A.Y. 2006-07 Page No 8 ITO vs. Ms. Rhea J. Rana

आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, अहमदाबाद

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