2013 (8) TMI 760 - AT - Income Tax

Tax Tribunal affirms land as agricultural, transfer date, road distance crucial

The Tribunal upheld the Commissioner of Income Tax (Appeals)'s findings that the land was agricultural, the transfer occurred on 20.04.2007, and the ... Land to be agricultural land or not – Non cultivation – Held that:- the land in question was acquired in the year 1959. Even the Village Administrative Officer had certified the same to be agricultural but not cultivated for more than two years as in the year 2007. Hence, it is held that once a parcel of land is agricultural, the mere fact that it is lying uncultivated for a short span of time would not change its nature in the absence of any other material contrary to the same. Therefore, no merit in the argument raised by the Revenue – Decided against the Revenue. Date of agreement to sale land – Date of execution of the agreement – Held that:- On 20.4.2007, the assessee had executed unregistered agreement with the vendee delivering possession of the property in question. Even in the agreement dated 20.8.2007, the parties reiterated that possession had already been exchanged on 20.4.2007 – Relying upon the judgment in the case of Bakthavatsalam Gowtham [2013 (8) TMI 759 - ITAT CHENNAI], it has been held that as per sec.2(47)(v) of the Act, mere parting of possession of an immovable property under sec.53A of the Act in case of unregistered agreement amounts to a valid transfer - Merely because an agreement to sale has not been registered, which otherwise is in the nature of agreement referred to in section 53A cannot be taken out of ambit of section 2(47)(v) of the Act when parting of the possession of immovable property has taken place. Distance of land from the municipal limit for deciding the land to be agricultural land – Method to be adopted - Method of straight line on horizontal plane or as per crow's flight - Contention of the Revenue that the land fell within the notified area as the distance was within 4.5 KMs by following ‘crow fly’ method - Assessee’s specific contention was that actual road distance between municipality and the land transferred was 5.1 kms ie. more than the notified area limit of 5 KMs – Held that:- The reckoning of urbanization as a factor for prescribing the distance is of significant which would yield to the principle of measuring distance in terms of approach road rather than by straight line on horizontal plane - Once the statutory guidance of taking into account the extent and scope of urbanization of the area has to be reckoned while issuing any such notification then it would be incongruous to the argument of the Revenue that the distance of land should be measured by the method of straight line on horizontal plane or as per crow's flight because any measurement by crow's flight is bound to ignore the urbanization which has taken place – Reliance has been placed upon the judgment in the case of Radhasoawami Satsang v. CIT(1992) [1991 (11) TMI 2 - SUPREME Court] – Decided against the Revenue. Issues Involved1. Whether the land in question was agricultural in nature.2. Whether the Commissioner of Income Tax (Appeals) admitted additional evidence in violation of Rule 46A of Income-tax Rules.3. Determination of the date of transfer of land.4. Method for measuring the distance to determine the nature of the asset transfer under section 2(14) of the Income Tax Act.Detailed Analysis1. Nature of the LandThe Revenue argued that the land was not agricultural, while the assessee contended otherwise. The JCIT had previously held that the land was agricultural before being converted to non-agricultural use for housing layout. The Village Administrative Officer also certified the land as agricultural, though it was uncultivated for over two years in 2007. The Commissioner of Income Tax (Appeals) and the Tribunal agreed that the mere fact the land was lying uncultivated for a short period did not change its nature. Therefore, the Tribunal found no merit in the Revenue's argument that the land was not agricultural.2. Admission of Additional EvidenceThe Revenue contended that the Commissioner of Income Tax (Appeals) admitted additional evidence (a letter dated 07.07.2007) without giving the Assessing Officer a reasonable opportunity to examine and rebut it, violating Rule 46A of the Income-tax Rules. However, the Tribunal noted that the letter was not taken into account in the Commissioner's decision, and thus no prejudice was caused to the Revenue. This argument was rejected.3. Date of Transfer of LandThe Revenue argued that the agreement to sell the land was executed on 20.08.2007, not 20.04.2007. The Tribunal found that the assessee had executed an unregistered agreement on 20.04.2007, delivering possession of the property. The agreement dated 20.08.2007 reiterated that possession had already been transferred on 20.04.2007. The Tribunal cited the case law of Bakthavatsalam Gowtham, which held that parting of possession under an unregistered agreement amounts to a valid transfer under section 2(47)(v) of the Act. Therefore, the Tribunal upheld the Commissioner's finding that the transfer occurred on 20.04.2007.4. Measurement of DistanceThe Revenue argued that the land fell within the notified area as the distance was within 4.5 kilometers using the 'crow fly' method. The assessee contended that the actual road distance was 5.1 kilometers, exceeding the 5 kilometers limit. The Tribunal referred to the case law of Satinder Pal Singh, which rejected the 'crow fly' method, stating that the distance should be measured by the approach road considering urbanization factors. The Tribunal affirmed that the actual road distance should be used, which supported the assessee's position.ConclusionThe Tribunal dismissed the Revenue's appeal, affirming the Commissioner of Income Tax (Appeals)'s findings that the land was agricultural and the transfer occurred on 20.04.2007. The method of measuring distance using the actual road distance was upheld, and the additional evidence issue was found to be non-prejudicial. The assessee's cross-objections were deemed infructuous as they supported the Commissioner's order.