2017 (11) TMI 2007 - HC - Income Tax

High Court instructs Tribunal on agricultural land exemption near city limits, stresses verification

The High Court directed the Tribunal to reconsider the exemption of agricultural land near municipal limits, instructing verification of the land's ... Nature of land sold - agricultural land as exempted u/s 2(14)(iii)(b) - Whether land was falling within 8 kms of the municipal limit? - HELD THAT:- Whether the distance of the land in question is more than 8 kilometer on the outskirts of Jaipur city is required to be re-verified by the Tribunal taking into consideration, the notification dt. 6th January, 1994 issued by the Income Tax Department and judgment of this Court in [2017 (9) TMI 1161 - RAJASTHAN HIGH COURT]. The Tribunal will consider both the notification and judgment and if required make a request to Revenue Authority not below Deputy Collector to verify the distance from the outskirts of Jaipur to the land in question. The matter is remitted back to the Tribunal only with a view to verify the distance. It is made clear that we have not expressed any opinion on merits and it will be open for the Tribunal to reconsider the same and take an independent view after taking into account the new facts after verification and it will not being influenced by the decision of this Court. Prima facie we are of the opinion, the proceedings which are initiated at Calcutta pursuant to our order seems to be misconstrued by the department. We take a serious note about the notice issued by the competent authority and also the lower authority requesting the higher authority u/s 263 which is also surprising to us. Issues:1. Tribunal's decision to exempt agricultural land under Section 2(14)(iii)(b) despite proximity to municipal limits.2. Deletion of expenditure addition due to lack of supporting documents.Analysis:1. The High Court addressed the first issue concerning the Tribunal's decision to exempt agricultural land under Section 2(14)(iii)(b) despite its proximity to the municipal limits. The Court noted the need for reconsideration by the Tribunal based on subsequent developments and evidence on record. The Court directed the Tribunal to verify whether the land in question was more than 8 kilometers from the outskirts of Jaipur city. The Tribunal was instructed to consider a specific notification issued by the Income Tax Department and a judgment of the Court, along with potentially seeking verification from the Revenue Authority to determine the distance accurately.2. Regarding the second issue of deletion of expenditure addition due to lack of supporting documents, the High Court emphasized the importance of proper verification and reconsideration by the Tribunal. The Court clarified that it had not expressed any opinion on the merits of the case. The Tribunal was granted the authority to reassess the situation independently after verifying the new facts and evidence. The Court highlighted that the Tribunal should not be influenced by the High Court's decision and must take an unbiased view based on the verified information.3. Additionally, the High Court expressed concerns about the proceedings initiated at Calcutta following their order, indicating a possible misunderstanding by the department. The Court raised issues regarding notices issued by the competent authority and lower authority under section 263, deeming them surprising. The Court took a serious view of the situation and emphasized the need for clarity and proper handling of proceedings. Ultimately, the appeal was disposed of, leaving the Tribunal to reevaluate the issues in light of the Court's directions and considerations.