2024 (3) TMI 1413 - AT - Income Tax

Agricultural land classification requires re-examination of distance calculation from municipal limits under CBDT Circular 3/2014

Laxmiben Amratbhai Patel Versus The ITO, Ward – 3, Navsari.

The ITAT Surat remitted the matter back to the assessing officer for re-examination of the distance calculation for agricultural land classification. The ... Capital gain computation - treatment of deemed Capital Gain u/s 50C, and the classification of the piece of land as an agricultural asset not subject to capital gains tax - CIT(A) confirmed the action of assessing officer on the basis of CBDT Circular No. 3/2014 by holding that areal distance of shortest possible route has to be taken as the crow flies - HELD THAT:- Before us, the objection of revenue is that the documents and evidences have never been examined by the assessing officer, therefore, considering the above facts, we deem it fit and proper to set aside the order of the CIT(A) and remit the matter back to the file of the assessing officer on limited issue to examine the fact about the distance of land sold by the assessee by considering the aforesaid in case the distance of location of land is more than 8.00 KM from municipal limits, allow relief to the assessee. AO shall allow reasonable and fair opportunity to the assessee. The assessee is also directed to make compliance in time. For statistical purposes, the appeal of the assessee is treated as allowed. The appeal in this case pertains to the Assessment Year (AY) 2012-13 and challenges the order passed by the Commissioner of Income Tax (Appeals) and the assessment order by the Assessing Officer under section 144 r.w.s. 147 of the Income Tax Act, 1961. The core issues raised by the appellant include the jurisdiction of the Assessing Officer under section 147, the treatment of deemed Capital Gain under section 50C, and the classification of the piece of land as an agricultural asset not subject to capital gains tax.The appellant contested the jurisdiction of the Assessing Officer to reopen the assessment under section 147 and argued that the addition of Rs. 2,09,62,630 on account of alleged deemed Capital Gain under section 50C was arbitrary and without legal basis. The appellant claimed that the piece of land sold was agricultural and therefore not a 'capital asset' under section 2(14) of the Act. Additionally, the appellant argued that the assessing authorities failed to consider the specific exclusion of agricultural land from the definition of a capital asset under section 2(14)(iii)(b) of the Act.Upon review, the Commissioner of Income Tax (Appeals) upheld the Assessing Officer's actions, citing the application of section 50C and the failure of the appellant to offer capital gains on the sale of the property. The Commissioner also noted discrepancies in the distance of the land from the city limits as per the shortest route, as required by the law. The appellant's submissions, including evidence such as a certificate from the Gram Panchayat, Google Maps, and case law precedents, were considered but ultimately not accepted by the Commissioner.During the appeal before the Tribunal, the appellant's counsel argued that the assessing officer did not consider relevant documents and evidence before making the addition under section 50C. The appellant provided additional evidence to support the agricultural nature of the land, including Google Maps showing the location and distance from the city limits. The appellant requested the deletion of the addition based on the merit of the case and relied on previous case law presented before the Commissioner.The Revenue's representative contended that the appellant's failure to file a return of income and respond to notices justified the addition made by the Assessing Officer. The Revenue argued that the matter should be remitted back to the assessing officer for fresh adjudication, as the evidence submitted before the Tribunal was not examined by the assessing officer.After hearing both parties, the Tribunal decided to set aside the Commissioner's order and remit the matter back to the assessing officer to examine the distance of the land from the municipal limits. The Tribunal directed the assessing officer to allow relief to the appellant if the distance exceeded 8.00 KM from the municipal limits and instructed the appellant to comply with any requirements. The appeal was treated as allowed for statistical purposes.In conclusion, the Tribunal's decision focused on the need for a fresh examination of the factual elements concerning the distance of the land from the municipal limits to determine the applicability of section 50C and the classification of the land as an agricultural asset exempt from capital gains tax. The Tribunal's decision highlights the importance of proper assessment procedures and the consideration of all relevant evidence in determining tax liabilities.