TaxTMI 
TaxTMI 
2014 (12) TMI 599
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....acres at Village Ghata, Tehsil Sohna, District Gurgaon. It was claimed by the assessee that the capital gain from the sale of above land is not taxable because the land is agricultural land which does not fall within the definition of capital asset under Section 2(14). The assessee had claimed that the land does not fall within the jurisdiction of the municipality viz. Sohna Municipality. He also claimed that the distance of the land is more than 8 Kms. from Sohna Municipality and therefore, the assessee's case does not fall in clause (a) or (b) of Section 2(14)(iii). The Assessing Officer was of the opinion that the distance of the land is to be considered from the outer limit of Gurgaon municipality and not Sohna municipality. It was further contended by the assessee that the distance of the land from Gurgaon municipality is also more than 8 Kms., in support of which, the assessee produced the following letters/certificates:- "36. Whereas the appellant has relied on the following letters from the various authorities- - Certificate dated 22.12.2008 issued by Patwari, Tehsil Sohna to the appellant on his request wherein the distance of village Ghata was mentioned as approxima....
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....nd are accordingly rejected. It may be mentioned here that the appellant had pointed out a number of defects in these certificates relied upon by the AO vide his written submissions filed during the course of the appellate proceedings especially vide letter dated 25.02.2011. However, the same are not discussed here because these certificates have already been held as irrelevant for the decision of the issue being considered here." 5. He also did not accept any of the certificates furnished by the assessee. The relevant finding in this regard reads as under:- "38. With regard to the appellant's reliance on the Patwari's (Tehsil Sohna) letter dated 22.12.2008, it is seen that he has mentioned the distance of Village Ghata from Market Committee Sohna as 15 Kms and approximately 9 Kms from Gurgaon Municipal Committee. As already held above, the distance that is relevant for our purposes is from the outer limit of the Gurgaon Municipality. In this letter the distance mentioned is from Gurgaon Municipality, not from any specific point from local limits of the Municipality. Moreover, the distance mentioned is only approximate distance and not exact distance. Therefore, this letter i....
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....and DGDC Data Center, New Delhi. On the basis of the above certificate, he came to the conclusion that the land sold by the assessee was a capital asset in terms of provisions of Section 2(14)(iii)(b) of the Act. The assessee, aggrieved with the order of learned CIT(A), is in appeal before us. 7. We have heard the arguments of both the sides and perused relevant material placed before us. After considering the arguments of both the sides and the facts of the case, in our opinion, following four issues arise for determination:- (A) Whether the distance of the land is to be considered only from Sohna Municipal Corporation or it can be considered from any municipal corporation viz. Gurgaon which is admittedly nearer to the land than Sohna Municipal Corporation. (B) Whether the distance is to be considered as per aerial distance or as per road distance. (C) Whether the distance is to be considered from the outer limit of the municipal corporation up to the land or up to the outer limit of the village in which such land is situated. (D) In the light of outcome on the above three issues in (A), (B) & (C) to determine whether the land in question is capital asset within the....
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.... Punjab & Haryana High Court in the case of Smt. Anjana Sehgal vide Income Tax Appeal No.276 of 2004, wherein their Lordships held as under:- "A perusal of the above provisions makes it clear that what is intended to be covered in term 'Capital Asset' is agricultural land comprised within the jurisdiction of a municipality and within the specified distance from the local limits of municipality or other local bodies mentioned therein as specified in the notification. It is undisputed that the land in question is within the specified distance from Panchkula municipality which falls in the State of Haryana while land is in the State of Punjab. Thus land is urban land for the purpose of definition of 'capital asset' under Section 2(14). Concept of municipality as a unit of State or the fact that a State has no jurisdiction to make law beyond its territory have no relevance for the purpose of determining whether particular land was 'capital asset' or not for the purpose of taxing capital gain. If the land is adjacent to a municipality and is urban land covered under Section 2(14), even if municipality and the land fall in different States, the land will continue to be urban land. If ....
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....suring distance in terms of approach road rather than by straight line on horizontal plane. If principle of measurement of distance is considered straight line distance on horizontal plane or as per crow's flight then it would have no relationship with the statutory requirement of keeping in view the extent of urbanization. Such a course would be illusory. It is in pursuance of the aforesaid provision that Notification No.9447, dated 6-1-1994 has been issued by the Central Government. In respect of the State of Punjab, at item No.18, the Sub-Division, Khanna has been listed at serial No.19. It has, inter alia, been specified that area up to 2 Kms. from the municipal limits in all directions has to be regarded other than agricultural land. 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. Moreover, the ju....
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.... report of the Asstt. Engineer, Gurgaon is concerned, no name of the Assistant Engineer is mentioned who has issued this report. A letter was written by the A.O. to Assistant Engineer, Gurgaon for attending his office on 23.7.11. Nobody attended the A.O.'s office on that date, therefore, the veracity of the letter, itself is not beyond doubt. Moreover, from the letter it is not clear by which road and from which point the distance of 9.94 Km has been measured. Therefore, this letter filed by the appellant also cannot be relied upon." 15. Learned CIT(A), in paragraph 34 also, has recorded the finding that the distance is to be measured from the local limit of the municipality to the area in which land is situated. The same is also reproduced below for ready reference:- "34. I have carefully considered the observations of the AO and the submissions of the appellant on the issue. The facts of the judgment relied upon by the appellant are different in as much as the issue before the Hon'ble High Court was whether the CIT(A) and the ITAT had correctly relied upon the report of the Tehsildar as against the report of the departmental inspector. The issue whether the distance is to b....
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.... had it been explained how the distance of the land from the municipal limits was measured. On the other hand, the Commissioner (Appeals) has rightly relied upon the report given by the Tehsildar on the application of the Assessing Officer himself and it could not be discarded." 17. The learned counsel for the assessee has also relied upon the decision of the ITAT, Amritsar Bench in ITO Vs. Ranjit Rattan Mehra (HUF) vide ITA No.442/Asr/2011, wherein the ITAT held as under:- "Therefore, no new facts are emerging and the earlier distance certificate of the Distt. Town Planner, Gurgaon also does not serve any purpose as the same is describing the measurement from the village Fazilpur Jharsa to the Gurgaon Municipal Committee limits and not from the point of limitation of assessee's land to the Gurgaon Municipal Limits. The assessee's evidence is well more relevant and specific to the point of actual distance involved in the present case." 18. Learned DR, on the other hand, has stated that from the plain reading of Section 2(14)(iii)(b), it is evident that the distance from the local limit of the municipality is to be considered up to the area within which the land is situated....
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....would fall within the ambit of clause (b) of Section 2(14)(iii). Therefore, in effect, the land should be within the distance of 8 Kms. from the local limit of the municipality and not from the outer limit of the village in which such land falls. (D) Final determination of distance of the land from Gurgaon Municipality. 20. In assessment proceedings before the Assessing Officer, the assessee has given four certificates i.e., from Patwari, Tehsil Sohna, from the SDO, Gurgaon and from two experts viz., Shri I.D. Rustogi and M/s Chotani & Associates. The Assessing Officer had rejected all these certificates and learned CIT(A) had also agreed with the finding of the Assessing Officer in this regard. The Assessing Officer has relied upon two certificates, one from Executive Engineer, Municipal Corporation, Gurgaon and other from Tehsildar, Village Sohna. During appellate proceedings, the assessee produced two more certificates, one from Patwari, Tehsil Sohna countersigned by Tehsildar and the other from Assistant Engineer, Municipal Corporation, Gurgaon. The Assessing Officer also filed a certificate from Surveyor on behalf of Directorate of Survey (Air). The CIT(A) finally decide....
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....icate the distance of the land from outer limit of Gurgaon municipal boundary. 22. The assessee has produced the certificate dated 31st January, 2011 from Tehsildar, Sohna in which the distance of the land from Rajeev Chowk, Gurgaon, i.e., the outer limit of Gurgaon municipal area is certified to be approximately 9 Kms. by road. Copy of the certificate is at page 88 of the assessee's paper book. During remand proceedings, the Assessing Officer summoned the Tehsildar, Shri Sunder Singh and recorded his statement on 24th March, 2011. In question No.4, the Assessing Officer asked Shri Sunder Singh the basis of his certificate in which he has certified the distance of the land to be 9 Kms. He stated that from Rajeev Chowk committee area, which is the outer limit of Gurgaon municipal corporation, he travelled by his bike up to the land of the applicant viz. Shri R.S. Kadan and found that the distance of the land was 9 Kms. Learned CIT(A) rejected the certificate of the Tehsildar on the ground that he has taken the distance up to the land and not up to the area. We have already decided this issue above and have taken the view that the distance up to the land has to be taken. No other ....
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....ficate from Shri I.D. Rustogi, former Additional Director General, CPWD, in our opinion, the distance of the land from Gurgaon Municipal Corporation is established to be beyond 8 Kms. In view of the above, we hold that the land sold by the assessee does not fall within the ambit of either clause (a) or (b) of Section 2(14)(iii). We, therefore, hold that the land sold by the assessee was agricultural land and therefore, out of the purview of capital asset, hence, not chargeable to capital gain tax. ITA No.4733/Del/2011 - Revenue's appeal - 26. The only ground raised in this appeal by the Revenue reads as under:- "On the facts and in the circumstances of the case and in law, the ld.CIT(A) has erred in ; i) deleting the additions of Rs. 27,66,016/- on account of amount forfeited (balance) out of advance money received under forfeiture clause, made by the AO under the head income from other sources without considering the fact that this amount remained to be adjusted against the cost of acquisition of the asset." 27. The Assessing Officer made the addition with the following finding:- "6.1 As mentioned earlier, the assessee has forfeited the advance money of Rs. 77,51....