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आयकर अपीलीय अिधकरण,च"डीगढ़ "यायपीठ “ए” , च"डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “A”, CHANDIGARH HEARING THROUGH: PHYSICAL MODE "ी आकाश दीप जैन, उपा"य" एवं "ी िव"म "सह यादव, लेखा सद"य BEFORE: SHRI. AAKASH DEEP JAIN, VP & SHRI. VIKRAM SINGH YADAV, AM आयकर अपील सं./ िनधा"रण वष" / Assessment Year : 2015-16 Kulwant Singh बनाम The ITO VPO Raipur Khurd, Sector 84 Ward 6(5) Mohali Mohali "थायी लेखा सं./PAN NO: BMQPS2415E अपीलाथ"/Appellant ""यथ"/Respondent िनधा"रती क" ओर से/Assessee by : Shri Sudhir Sehgal, Advocate राज"व क" ओर से/ Revenue by : Shri Anil Sharma, JCIT, Sr. DR सुनवाई क" तारीख/Date of Hearing : 30/01/2024 उदघोषणा क" तारीख/Date of Pronouncement : 26/04/2024 आदेश/Order PER VIKRAM SINGH YADAV, A.M. :
This is an appeal filed by the Assessee against the order of the Ld. CIT(A)-2, Chandigarh dt. 02/01/2019 pertaining to Assessment Year 2015-16. 2. In the present appeal, the Assessee has raised the following grounds of apepal:
That the Ld. CIT(A)-2 has erred in giving his findings that the agricultural land sold by the Assessee is not capital asset as per provisions of Section 2(14) of the Act and as such long term capital gain arising out of sale of the same was liable to be taxed.
That the Ld. CIT(A)-2 has also erred in giving his findings that certificate filed from the competent authorities does not in any case certify that it conform the definition of agriculture land as per provisions of the Income Tax Act, 1961 and further, the certificate from the Revenue Authorities should have been accepted by the authorities below.
3. That the Agricultural Land was not a capital asset as the population of the village in which agriculture land is located is less than one thousand as per, latest census for which evidence was led before the CIT(A).
4. That the learned CIT(A) has erred in confirming the action of the Assessing Officer in denying the benefit U/s 54B of the Act in respect of land purchased in the name of the wife of the Assessee and the same is, thus, not in the name of the third person. 5. That the benefit U/s 54B ought to have been given as per Judgment of Punjab and Harvana Hiah Court in the case of CIT Vs. Gurnam Sinqh 327 ITR 278 and the land had been purchased in the Joint name of wife and self, since the assessee had not been keeping good health. 6. That the submissions filed during the course of hearing has not been considered properly. 7. That the Appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off.
Briefly the facts of the case are that the assessee has sold agricultural land situated at Village- Raipur Khurd, HB No. 2, Mohali alongwith other co-owners on 14.05.2014 for Rs. 5,92,88,000/- in which assessee's share being 7/18th was Rs. 2,30,56,445/-. The AO held that the agricultural land sold by the assessee was within municipal limits of Mohali and as such was Capital Asset u/s 2(14) of the Act and liable to be taxed. Subsequent to the sale of land, the assessee purchased 4 pieces of agricultural land in his name & his wife's name, as per details given below:
S.N0 Document Location of agriculture Area of la Type of land Sale consideration Purchase (assessee's submitted (Rs.) land Share )(Rs.) /Sal e deed 1 20.06.2014 Raipur khurd, 4bighas 16 Agriculture 1,0128000/-(with 50,64,000/- (50% khasra No. 927 biswa stamp duty share) 2. 11.08.2014 Kartarpur HB No. 2 kanal 17 Agriculture 32,41800/- 32,41,800/- (full 156 marla (with stamp share) duty) 3 08.04.2015 NalinaKhurd HB 32 kanal Agriculture 49,9200/-(with In wife's name No. 297 stamp duty) 4. 08.04.2015 Kartarpur HB No. 48 bigha Agriculture 1,44,58,500/- 72,29,250/- (50% 156 (with stamp duty) share)
The assessee claimed deduction u/s 54B of the Act in respect of sale 3.1 consideration invested by him for further purchase of land. The AO gave the benefit of deduction u/s 54B of Rs. 83,05,800/- in respect of agricultural land purchased by assessee in his own name. During the assessment proceedings, the assessee could not furnish documentary evidence regarding cost of acquisition of agricultural land sold by him. Hence, the AO calculated long term capital gains by taking cost of acquisition as "Nil" at Rs. 1,47,50,645/-.
During the appellate proceedings before the ld CIT(A), the ld AR on behalf of the assessee submitted that the agricultural land sold by the assessee was outside the Municipal Limit of Mohali during F.Y. 2014-15. In support of his contentions, the assessee furnished certificates of Patwari- Vill. Raipur Khurd, attested by Tehsildar, Sarpach & Namberdar of Village- Raipur Khurd. The assessee also placed on record certificate of Town Planner, Municipal Corporation, SAS Nagar in support of his claim.
4.1 The submissions of the assessee alongwith documentary evidences furnished during the appellate proceedings were considered by the ld CIT(A). As per his findings in the impugned order, during F.Y. 2014-15, the assessee sold his agricultural land situated at Village- Raipur khurd alongwith two co-owners for Rs. 5,92,88,000/- out of which the assessee's share was Rs. 2,30,56,445/-. Subsequently, the assessee invested the sale consideration of above said land, in purchase of 4 pieces of land in his name & his wife's name (2 pieces in F.Y. 2014-15 8s one each in 2015-16 8s 2016-17), on which he claimed deduction u/s 54B of the Act. The AO allowed the benefit of deduction u/s 54B to the extent of the consideration for land purchased by the assessee' in his name(that in wife's name excluded) within two years of sale amounting to Rs. 83,05,800/- and added the remaining amount of Rs. 1,47,50,645/- to the returned income of the assessee. There is no evidence that the sold land existed in the wife's name so exclusion is justified. Further, the issue as to whether the assessee would be entitled to avail benefit u/s 54B in case of property purchased in name of any third party including the taxpayer's wife was before Punjab & Haryana High Court in case of CIT, Faridabad vs. Dinesh Verma [2015] 60 taxman.com461, dated 06.07.2015, wherein the Court held that an assessee can purchase an asset or a part thereof in the name of his wife but he would not be entitled then to the benefit of Section 54B. Similarly in case of Kamal Nath Kamboj vs ITO [2017]397 ITR 240(P& H), the jurisdictional High Court laid down that section 54B nowhere suggests that the legislature intended to advance the benefit of the section to an assessee who purchases land even in the name of third person. The case related to claims of exemption based on purchase of agricultural land purchased in the name of his wife. The court specified that the new asset had to be in the name of assessee himself.
4.2 The ld CIT(A) further held that having made claims u/s 54B during the course of assessment proceedings(that was duly adjudicated by the AO and credit given for land purchased in his own name), the assessee, during the appellate proceedings clearly has adopted another tack. He is attempting to canvass, alternately, that the land sold was agricultural land and therefore income on its sale was not taxable. He furnished certificate from Patwari, Village -Raipur Khurd, in which it is certified that the agricultural land sold by the assessee was used for agricultural purposes & the said land is outside the jurisdiction of municipal committee. The said report does not certify that the land in question was being used for agricultural purposes in the two years immediately preceding the date of transfer, which is a prerequisite condition for claiming deduction u/s 54B of the Act. In any case this aspect ought to have been examined by the AO at the time of according deduction u/s 54B of the Act. The assessee also submitted a certificate from Town Planner, Municipal Corporation, SAS Nagar, which clarifies that the land does not fall within the limits of Municipal Corporation, SAS Nagar. Not only is the said clarification inconsequential for purposes of section 54B but for the claims that it was a capital asset also. It is also the case that the I.T Act excludes agricultural land from the ambit of classification as capital asset in the following manner: "agricultural land in India, not being land situate: (a) in any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee, or by any other name) or a cantonment board and which has a population of not less than ten thousand; or (b) in any area within the distance, measured aerially.: (1) not being more than two kilometres, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than ten thousand but not exceeding one lakh; or (II) not being more than six kilometres, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than one lakh but not exceeding ten lakh; or (III) not being more than eight kilometres, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than ten lakh."
4.3 The ld CIT(A) held that the present certificate from the authorities (claimed to be competent to issue such certificates), doesnot in any case certify that it conforms to the definition of agricultural land as per the provisions of the I.T Act. The finding of the AO, who on the basis of maps, had come to the conclusion that the said land was a capital asset u/s 2(14) of the Act and LTCG arising out of sale of the same was liable to be taxed subject to other provisions of the Act, remains intact. In light of the above discussion, there are no grounds to interfere with the AO's finding that the land sold by the assessee was capital asset, and the relief on capital gains has been rightly restricted to the land bought by the assessee in his own name.
Against the aforesaid findings and directions of the ld CIT(A), the assessee is in appeal before us.
During the course of hearing, the Ld. AR submitted that the assessee has sold rural agricultural Land at Vill Raipur Khurd alongwjth other co-owners for Rs. 5,92,88,000/- on 14.05.2014. The share of the Assessee was 7/18 i.e Rs. 2,30,56,445/-. The AO held that the land in question was within the municipal limits of Mohali and thus the land was capital assets as per provisions of sec 2(14) of the Act and liable to capital gains. The AO gave the benefit of purchase of agricultural land in the name of the Assessee as per the provisions of sec 54B of the Act.
6.1 It was submitted that the Land sold by the Assessee was not a capital Asset and was purely in the nature of Rural Agriculture Land as per Section 2(14)(iii) of the Income Tax Act 1961. It was submitted that as per the definition of agriculture land, it is clear that any Land which is outside the Municipal Limits and has population of less than 10000, the said land would be agricultural land and not covered by the provisions of sec 2(14)(iii)(a) of the Act.
6.2. It was submitted that the Assessee has filed the following documents before the department in order to prove the same: a) Verification report by Patwari (land Record Officer) and Sarpanch b) Certificate of limitation as issued by Municipal Corporation SAS nagar, Mohali. c) Relevant page of District Census Handbook as issued by Directorate of Census Operations Punjab, wherein it is clear that the total population of Vill Raipur Khurd was only 907 persons. 6.3 It was submitted that the Patwari (Land Record Officer) has given the certificate as under: " The said land has been sold by Mr Kulwant Singh S/o Sh. Jagir Singh. Mr. Kulwant Singh was used to cultivate produce from this agriculture land. This, Rakba was used to cultivate crops. This Rakba is outside the Municipal Committee at Village Raipur Khurd, Mohali. Report is produced."
6.4 It was further submitted that the Municipal Corporation SAS Nagar has issued the limitation certificate as under:
"In regard of above cited subject it is hereby informed against your application dated 30.11.2018 that village Raipur Khurd. SAS Nagar (Mohali) i f falls out o f the Municipal Corporation as per Governments's Notification No. 14/261/2009- 2SS1/153866/31 dated 28.01.2014." 6.5 Reliance was placed upon the following case laws wherein it has been held that the area which is outside the municipality and having population less than 10000, the land would not be a capital asset as per the provisions of sec 2(14)(iii)(a) of the Act: a) DCIT vs Capital Area bank Ltd. as reported in 123 TTJ 918 b) K. Parameshwaran vs. Income Tax Officer 2 ITD 371 c) Income Tax Officer vs Narain Singh 12 TTJ 396 d) Income Tax Officer vs. Chander HUF (2011) 47 SOT 17 (Chennai) e) Income Tax Officer vs. Uppala Bhatkavatsala Rao 12 Taxman 40 6.6 It was further submitted that it has even been held by various Hon'ble Courts that the certificate by the officials of the Land revenue department is more reliable than that of any Income Tax Department. Reliance in this regard is being placed in the following cases: a) CIT vs K.R.N Prabhakaran HUF (Madras HC) as reported in 393 ITR 175 wherein it has been held as under: "Report of Inspector of Survey and Land Records more reliable than that of Income Tax Department Valuer" b) CIT vs Lal Singh & Ors as reported in 325 ITR 588 (P&H HC)
Land situated beyond 8 kms from municipal limits. Report of Tehsildar certified that the assessee's land was 8 kms away from the municipal limits. Report of the IT Inspector, without mentioning the Khasra number and without showing how the distance of the land was measured could not be accepted. c) CIT vs Dr. R. Rangarajan in Appeal No. 410/Mds/2015 dated 03.08.2016 (Madras HC) CIT vs Smt Sakunthala Rangarajan in Appeal No.411/Mds/2015 order dated 27.07.2017 (Madras HC):
31. On the facts and circumstances of this case, we also wish to state that in the matter giving weightage to the evidence, report of the departmental inspection vis-a-vis certificates of the Village Administrative Officer, Deputy Surveyor, Ambattur Taluk and General Manager, Metropolitan Transport Corporation (Chennai) Ltd's, for the purpose of Section 2(14)(iii)(b) of the Income Tax Act, certificates of the Revenue Authorities and Public Transport Corporation Ltd., on the measurement of distance, by the approach road, should be given weightage and accepted, unless the contrary is proved.
6.7 It was submitted that the Ld. CIT(A) has stated that, the certificates as filed by the Assessee does not conforms to the definition of agricultural land as per the provisions of I T Act. Further he has stated that the AO on the basis of the maps has come to the conclusion that the Land is capital asset. In this regard it is submitted that the certificates as issued by the Land record Officers, duly proves that the fact that the land is outside the purview of definition of capital asset. Rather, the AO has merely reproduced a screen shot of google map and has not stated anywhere as to how it proves anything adverse in the case of the Assessee. So, it cannot be denied that the impugned land in question is a rural agricultural land which is outside the purview of definition of sec 2(14) of the Act and is not subject to capital gain tax.
6.8 Without prejudice to the above, even if for the sake of arguments it is accepted that the impugned land in question is a capital asset and is subject to capital gain tax, even then the Assessee has duly invested the sale proceeds further in agricultural land and he is duly eligible to avail the exemption as per the provisions of sec 54B of the Act.
6.9 The Assessing Officer has not accepted the partial Investment made by the Assessee in the purchase of Agricultural land in the name of his wife. In this regard we rely upon the following Judgments of the Hon'ble Courts wherein it has been held that even the Investment in the name of family members of the Assessee is eligible for claiming exemption as per the provisions of sec 54B of the Act:
Sh Jhanda Singh vs ITO in order dated 25.02.2019 a) b) Laxmi Narayan vs CIT as reported in 89 taxmann.com 334 (Raj HC) c) CIT V/s Shri Kamal Wahal, ITA. No.4/2013 dated 11.1.2013 DEL-HC CIT V/s Ravinder Kumar Arora I.T.A. No.l 106/2011 order dated 27.9.2011 DEL-HC d) e) Shri Raja Ram Patidarvs ITO in ITA No. 371/Ind/2015 order dated 28.09.2018 f) CIT Vs. Gurnam Singh (P&H) (2010) 327 ITR 278 ACIT Vs. Deepak Kumar Dhawan (2014)23 TTJ 600 (Ind) g) h) DIT Vs. Jennifer Bhide (2011) 15 Taxmann.com 82 (Kar.)
6.10 It was submitted that the Ld. CIT(A) has stated that the certificates as filed by the Assessee do not certify that the Land in question was used for agricultural purposes and thus the Assessee is not entitled to exemption u/sec 54B of the Act- In this regard it is submitted that the AO has already given the part benefit of provisions of sec 54B of the Act, so the CIT(A) has erred in holding that it is not proved as to whether the land in question was used for agricultural purpose or not.
The Ld. DR has vehemently argued the matter and relied on the order of the authorities below.
We have heard the rival contentions and purused the material available on record. Firstly, we find that there is no restriction in assessee pleading before the ld CIT(A) by way of an alternate ground that the land sold being an agriculture land falls outside the definition of a capital asset u/s 2(14)(iii) of the Act and the sale proceeds arising from the sale thereof cannot be brought to tax. The same being a legal ground and infact emerging from the findings of the AO where the AO has held that even though the land is an agricultural land, the same falls within the municipal limits of Mohali and thus exigible to tax.
It is the submission of the assessee that the agricultural land sold by the assessee was outside the Municipal Limit of Mohali during F.Y. 2014-15 and secondly, the population of the village was only 907 persons and thus, the agriculture land so sold doesn’t qualify as capital asset and cannot be brought to tax. In support of his contentions, the assessee furnished certificates of Patwari- Vill. Raipur Khurd, attested by Tehsildar, Sarpach & Namberdar of Village- Raipur Khurd, a certificate of Town Planner, Municipal Corporation, SAS Nagar and copy of Punjab census 2011 in support of his claim. The ld CIT(A) has taken note of these documentation being issued by the Competent authorities and at the same time held that the said certificates doesn’t confirm to the definition of agricultural land which can be excluded as per the provisions of section 2(14)(iii) of the Act.
If we look at the definition of agricultural land - Section 2(14)(iii) of the Income Tax Act 1961 defines the agricultural land as under:
“(iii) agricultural land in India, not being land situate—
(a) in any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee, or by any other name) or a cantonment board and which has a population of not less than ten thousand; or (b) in any area within the distance, measured aerially,—
(I) not being more than two kilometres, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than ten thousand but not exceeding one lakh; or (II) not being more than six kilometres, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than one lakh but not exceeding ten lakh; or (III) not being more than eight kilometres, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than ten lakh.
As per section 2(14)(iii)(a), for an agricultural land to fall outside the scope of the definition of a capital asset, the agriculture land should not be situated in any area which is comprised within the jurisdiction of a municipality and such area should have population of not less than 10,000 accordingly to the last preceding census of which the relevant figures have been published before the first day of the previous year. The Bombay High Court in case of PCIT vs Anthony John Pereira (supra) has held that the use of the word “and” between the two conditions is indicative of the legislative intent that the two requirements of section 2(14)(iii)(a) would have to be read conjunctively. It has been held by the Bombay High court that both the requirements and conditions would have to be fulfilled to bring the land outside the scope and ambit of agriculture land to be treated as capital asset, otherwise, even if one is not fulfilled or is not present, it would be an agricultural land which would not be included within and treated as capital asset.
In the instant case, the assessee has submitted the necessary documentation issued by the Competent authorities that the agriculture land at Village Raipur Khurd was not situated within the jurisdiction of municipality of Mohali as per Government notification dated 28/01/2014 and secondly, the assessee has also submitted that the population of Village Raipur Khurd was 907 persons as per latest published Census of Punjab 2011 which is less than the prescribed threshold of 10000 persons as so provided in the statue. We thus find that both the conditions are cumulatively satisfied in the instant and the agriculture land so sold qualify for exclusion and cannot be classified as capital asset in terms of section 2(14)(iii)(a) of the Act. Further, given that population of Village Raipur Khurd was 907 as per latest census, even as per section 2(14)(iii)(b), one of the essential conditions of population exceeding the threshold is not satisfied and the subject agriculture land will stand excluded and cannot be classified as capital asset. In light of the same, long term capital gains on sale of the agriculture land, being not a capital asset cannot be brought to tax and the addition so made is hereby directed to be deleted. Ground no. 1-3 are allowed in favour of the assessee.
In light of aforesaid discussion, ground no. 4 & 5 have become infructious and the same are hereby dismissed.
In the result, the appeal of the assessee is partly allowed.