TaxTMI 
TaxTMI 
2012 (4) TMI 627
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....old that the Assessing Officer was not justified either on facts or in law to .have made addition of Rs. 8.36 crores as a long term 'capital gain' in respect of gain arising on the transfer of an 'agricultural land', within the meaning of section 2(14)(iii)(b) of the Income Tax Act, 1961. 3. That the learned Assistant Commissioner of Income Tax has failed to appreciate that, the assessee had transferred the land which fell to his share on the death of his father who had acquired the said land in the year 1995-96 as an agricultural land and continued to remain as such with him too, and such a land being not a capital asset, as defined in section 2(14)(iii)(b) of the Income Tax Act, 1961 could not be held to be a capital asset more particularly when no attempt had been made for the change of user. 4. That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that, the land held by the assessee was situated in a village Tigra measured 25 kanals and 3 marlas i.e. about 15000 sqr. yds. and could not.be treated to be non-agricultural land or an urban land. 5. That the finding of the learned Commissioner of Income Tax (Appeals....
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.... (when the sale took place) as, such a road was only completed in September 2008 and was not in existence on 6th September 2007. 10. That the learned Commissioner of Income Tax (Appeals) has further erred in sustaining levy of interest u/s 234B of the Income Tax Act, 1961. It is thus prayed that the addition sustained by the learned Commissioner of Income Tax (Appeals) of Rs. 8.36 crores be deleted and it be held that no interest u/s 234B of the Income Tax Act, 1961 was leviable." 3. In both the appeals, the issue involved is whether the land sold was a capital asset or not within the meaning of section 2(14)(iii)(b) of the Incometax Act, 1961 (Act). The main dispute is that whether or not the impugned land situated in Village Tigra adjoining to Village Samspur in the Tehsil of Gurgaon at the time of sale was beyond 8 kms. from municipal limits of Gurgaon. The assessee put forth the contention that such land was not a capital asset within the meaning of Section 2 (14) (iii) (b) of the Act as it was located beyond 8 kms. from the municipal limits of Gurgaon and in support of such contention the assessee has relied on the certificate dated 13.10.2010 issued by th....
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....imated distance by stating that the land in question was 7 - 8 kms. from the municipal corporation limit. Shri Jagdish Chander, Patwari has also not stated the population of the Village Tigra. Similarly, the Tehsildar, Shri Pankaj Setia has also shown his ignorance that whether the land is situated in the municipal limit or not. Shri Setia has also stated that on the basis of photostat copy of the certificate, he cannot comprehend whether it is issued by our office or not. The statement that certificate was not issued by him has no adverse inference as it was counter signed by Shri Vijay Kumar Naib, Tehsildar and not by Shri Setia. Only for reason that Shri Setia was confronted on the basis of a photocopy, he could not comprehend whether it was issued by his office or not. In the statement, Shri Vijay Kumar, Naib Tehsildar has also not stated about the distance of the village from municipal corporation, Gurgaon. Ld. AR also submitted that subsequent statements recorded by the Assessing Officer are vague and unspecific and are also not based on any valid material. These statements are contrary to the certificate dated 13.10.2010 where the distance stated to be approximately 8.5 kms.....
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....and distance by the then road existed at the time of sale of the land, from Village Kanhai to Village Tigra was of 4.4 kms. Thus, the distance of Village Tigra from the municipal limits as per the then existed road was 9.1 kms. and not 7.7 kms. Ld. AR also pleaded that further distance of the land in question was one more kilometer from Village Tigra on the date of sale. The distance shown in the Shizra's maintained as per the Punjab Revenue Act is to be reduced by 0.7 Kms. on account of the shortening of the road, thus the actual distance of the land at the time of the sale as per revenue shizra was 9.260 kms. Ld. AR also pleaded that in view of the decision of Punjab and Haryana High Court in the case of CIT vs. Satinder Pal Singh cited supra, the distance has to be measured on the basis of approach by road. On the basis of approach by road, the distance comes to 8.40 kms. Ld. AR also pleaded that the road situated between Badshahpur to Ghata Village was completed only in September, 2008. This fact was also brought to the notice of Assessing Officer. The second certificate obtained by the Assessing Officer was based on the basis of Badshahpur to Ghatta road. The authorities b....
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.... of the State Govt. In the present case, land falls in the State of Haryana. In the State of Haryana there are three important legislations which deal with the manner in which land is used. (i) Punjab Scheduled Roads and Controlled Areas Restriction of Un-regulated Development Act 1963. (Here-in-after called Land Control Act 1963) (ii) Haryana Development and Regulations of Urban Area Act 1975. (iii) Haryana Urban Development Authority Act 1977 - (Here-in-after called HUDA Act 1977) The first Act i.e. Land Control Act 1963 empowers the State Govt. through the Director Town and Country Planning to declare areas around the scheduled roads enumerated in the Act or in other area which has potential for urbanization to be declared as "controlled area". Once any area is declared as "controlled area" land use in that particular area is controlled and has to be in accordance with the plans made by Director of Town Country Planning or any other person so authorized. As far as the present case is concerned land in question fell in the "controlled area" is not disputed. Controlled Area is defined as below as per this Act: Declaration of co....
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....#39; land. The appellants' land, therefore, as per the Notification issued by Haryana Govt. under Punjab Land Controlled Act, 1963 on the date of sale was undisputedly commercial land. This is the reason that it was sold at the rate of more than 8 crores per acre. Non Confirming use of Land and consequences thereof are also defined in this Notification (supra) as below: (m) 'Non-conforming use' in respect of any land or building in a controlled area means the existing use of such land or building which is contrary to the major land use specified for that part of the area in the development plan; X. Discontinuance of non conforming uses:- (1) If a non-conforming use of land has remained discontinued continuously for a period of two years or more, it shall be deemed to have been terminated and the land shall be allowed to be re-used or redeveloped only according to the conforming use. The Appellants have admitted and also as evidenced by Khasra Girdawari in the Paper Book filed by assessee that no agricultural activity/production took place at least two years prior to the date of sale. Beyond these two years also there is no ev....
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....d area. Out of the remaining land, land of around 1 acre was sold as far as back year 2004 to another builder called ATS Property Pvt. Ltd. This is also an indicator of the actual usage of land in the year 2004. The appellants were left with land measuring just about 3 acres. In the aforesaid factual and circumstantial background judicial precedents on the aforesaid subject are required to be looked into to cull out principles/propositions/guidelines on the issue and then to determine whether the land was agricultural land or not?" Ld. DR also relied on the order of the Hon'ble Supreme Court in the case of CIT of Wealth Tax vs. Officer Incharge (Court of Wards) reported in 105 ITR 133 (SC) and pleaded that in that case, Hon'ble Supreme Court analysed the subject matter in totality and has held the broad propositions that (i) If land which is capable of being subjected to agriculture process can be held to be agricultural land then in that case practically every type of land including that covered by building would be eligible to be called agricultural land and this would obviously defeat the purposes of exemption given; (2) What is really required to be shown wh....
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....of measurement suggests that the intention of the petitioner was trading activity in land. That being the position, the stock-in-trade in terms of land measured in yards suggests that the land was never intended to be used for agricultural purpose when it was brought into the partnership assets, it was converted into the plots and it had been given measurement in yards. That being the position, the land ceased to have the character of the agricultural land used for agricultural purpose. Since the land has lost the character of agricultural land used for agricultural purpose, the reading down applied by the Bombay High Court of the Explanation inserted in the 1970 offers no guideline as the land has lost its character of being an agricultural land." Ld. DR also relied on the recent decision of ITAT Cochin Bench dated 21.10.2011 in the case of M.K. Abdul Rehman reported in 49 SOT 206. Ld. DR also relied on the decision of ITAT, Hyderabad Bench 'B' in the case of Suresh Kumar D. Shah reported in 49 SOT 341. Ld. DR finally pleaded that to decide the type land, parameters laid down in the case of Hon'ble Supreme Court in Sarifabibi, cited supra have to be considered by a ....
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....rovement Trust, the Faridabad Complex Administration the Haryana Urban Development Authority or other authority legally entitled to, or entrusted by the Government with, the control or management of a municipal or local fund; Section 13 of the Act defines object and functions of the HUDA Authority. The object and function are as below: Section 13 The objects of the Authority shall be to promote and secure the development of all or any of the areas comprised in the urban area and for that purpose, the Authority shall have the power to acquire by way of purchase, transfer, exchange or gift, hold, manage, plan, develop and mortgage or otherwise dispose of land and other property, to carry out of itself or through any agency on its behalf, building,engineering, mining and other operations, to execute works in connection with supply of water, treatment and disposal of sewage, sullage and storm water, control of pollution and any other services and amenities and generally to do anything, with the prior approval, or on direction, of the State Government, for the purpose of this Act. From the object and purposes of the act, it is clear that HUDA was doin....
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....imate locations and extents of land use proposed in the sector for such things as public building and other public works and utilities, roads, housing, recreation, industry, business, markets, schools, hospitals and public and private open spaces and other categories of public and private uses; (b) specify the standards of population density and building density, (c) show every area in the sector which may, in the opinion of the Local Development Authority, be required to be declared for development or redevelopment; and (d) in particular, contain provisions regarding all or any of the following matters, namely:- (i) the division of any site into plots for the erection of buildings; (ii) the allotment or reservation of land for roads, open spaces, gardens, recreation-grounds, schools, markets, and other public purpose; (iii) the Development of any area and the restrictions and conditions subject to which development may be undertaken or carried our; (iv) the erection of building on any site and the restrictions and conditions in regard to the open spaces to be maintained in or around buildings and height and character o....
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....h Court for in the case of Deoki Nand and Sons (2001) 115 Taxman 513. In this judgement, Hon'ble Delhi Court has categorically held that Faridabad Administration Complex created under Faridabad Complex (Regulation and Development) Act, 1971 was held to be akin to a municipality for the purpose of section 2(14)(iii)(a) of the I.T. Act." On the issue whether the land situated within or outside 8 kms., the Ld. DR submitted as under:- "Third parameter whether location of land is within or outside 8 kms from the local limit of municipal corporation existing municipal corporation boundary existing on the date of sale. The assessee has claimed that the land was outside 8 kms of the municipal limit of the municipal body existing on the date of sale. The Tehsildar certificate produced by the assessee during the course of assessment proceedings has been proven to be incorrect by the A.O. The A.O. has carried out substantial inquiries with the concerned authorities as well as their superior authorities who were competent to certify the distance and the relevant evidence is part of the assessment order as well as assessment records the same leave no scope for dispute. This leav....
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.... agricultural land and the other condition is either of two conditions, namely, (i) agricultural land, if situated in a municipal area comprising a population of less than 10000, (ii) it should be at a distance of more than 8 kms from any municipal limit. Ld. AR submitted that land in question is agricultural land and it has so been described in the title deed registered for transfer of this land and it also stands as agricultural land in the revenue record as on the date of the sale. It was submitted by him that the mere fact that no agricultural activity was carried out for the last two years cannot be a basis to suggest that the land was not an agricultural land since the character of the land remained the same. Ld. AR referred to the decision of Bombay High Court in the case of CIT vs. Smt. Debbie Alemao 331 ITR 59, according to which if the land is shown in the revenue record to be used for agricultural purposes, and no permission was ever obtained for non-agricultural use by the assessee, then, the same should be considered to be agricultural land. It was submitted that permission for change of land use was granted only on 15th May, 2008 and, therefore, the character of the l....
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.... D. Patel vs. CIT 127 ITR 671 ii) CWT vs. Officer-in-Charge (Court of Wards) 105 ITR 133 (SC) 7. Ld. AR further submitted that as per the decision of Hon'ble Madras High Court in the case of M/s M.S. Srinivasa Naicker vs. ITO reported in 211 CTR 222 (Mad), the fact that the purchaser intended to put a different use to the land is an irrelevant consideration. 8. So far as it relates to case law relied upon by the learned DR, the same have been distinguished by the learned AR as under:- Sr. No. Name of Judgments Rebuttal of the Assessee a) 105 ITR 133 (SC) CIT vs. Officer in Charge (Court of Wards) It is submitted that in this case it was held that entries in revenue record are however good prima facie evidence that land is an agricultural land. It was held that, if there is a connection with agricultural purpose then the land is an agricultural land. In the instant case, the khasra girdawari establishes that there was actual cultivation of crops, jawar, gehun, bajra on the said land and as such the land was an agricultural land even in terms of judgement of Apex Court in the case of CIT vs. Officer in charge (Court of Wards reported in 105 ITR 13....
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....of section 45 of the Act as defined in section 2(14)(iii)(b) of the Act. g) 49 SOT 206 (Coch) M.K. Abdul Rehman vs K.M. Anees-ul-Haq This judgement has also no application since here the land was located in a well developed and fast developing area. It is submitted in the instant case, it will be seen that page 249 of the Paper Book that, motorable work had even not been completed upto the date of sale much less the land being located in developed area. h) 49 SOT 341 (Hyd) Suresh Kumar D. Shah vs. DCIT This judgment is also not applicable as land in question was a barren land surrounded by rocky mountains and not fit for agricultural operations. In fact, no agricultural operations were carried on for the last 10 years. In the instant case, agricultural operations were carried for more than 10 years. 9. It was further submitted that the decision of the court should be considered to be an authority for what it actually decides and, not what can be logically or remotely deduced therefrom and reliance was placed on the following decisions:- a) Goodyear India Ltd. vs. State of Haryana 188 ITR 402 (SC) b) Padmasundara Rao v. State of Tamil....
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.... arrangement? Assessee is a non agriculturist and land was primarily purchased for investment in the fast developing area It is submitted that the aforesaid land had been acquired by the husband of the assessee in the year 1995-96 for agricultural purposes. It is submitted after his death on 24.07.2002 the land devolved upon the assessee. It is evident from the revenue records that Sll1ce year 1995-96 upto 2005 i.e. for approximately 10 years agricultural activities were carried out either by the assessee or her husband. Therefore, user of the land was for agricultural purposes and was for long period and not by way of temporarily character or stop-gap arrangement. It must be appreciated that the notification referred is dated 5.02.2007 whereas the land was sold by the appellant in September' 2007 i.e. six months after development plan was notified by the state government. Thus the suggestion land was primarily purchased for investment in the fast developing area is factually incorrect. In fact, change of land use was obtained by the purchaser only on 15.05.2008 and, such land fell within the jurisdiction of municipal limits of Gurgaon on 10.08.2008 (see page 126-129 of t....
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.... date of date. Mere fact that no agricultural activity was carried out does not alter the nature of land. In fact, as stated above assessee has not taken any steps to alter the nature of land till the date of sale as would be evident from sale deed wherein too has been stated that the land was an agricultural land (see page 98-99 of Paper Book). It is submitted from the year 1995-96 upto 2005 i.e. for approximately 10 years agricultural activities were carried out either by the assessee or her husband therefore land was used for agricultural purposes. It must be appreciated that the notification referred is dated 5.02.2007 whereas the land was sold by the appellant in September' 2007 i.e. six months after development plan was notified by the state government. In fact, change of land use was I obtained by the purchaser only on 15.05.2008 and fell within the jurisdiction of municipal limits of Gurgaon on 10.08.2008 (see page 126-129 of the Paper Book) 8) Whether the land was situate in a developed area? Whether its physical characteristics, surrounding situation and use of the lands in the adjoining area were such as would indicate that the land was agricultural? Yes, it....
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.... 11. Ld. AR also submitted that the decision of the Hon'ble Delhi High Court in the case of Deoki Nandan and Sons (supra) relied upon by the learned DR has no application to the facts of the case as it related to Assessment Year 1972-73 i.e., after the substitution of the provisions of Section 2 (14) (iii) (a) of the Act, Faridabad Administration Complex is not a municipality, but is akin to municipality and the land in question was hence a capital asset on the date of transfer. In this manner, the learned AR has concluded his rejoinder. 12. We have carefully considered the rival submissions. We have also carefully gone through the assessment order, order passed by the Ld. CIT (A) and the documents and case law referred by both the parties. Careful perusal of assessment order will reveal that the main case of the Assessing Officer is that the land sold by the assessees is capital asset as it is situated within the distance of 8 Kms from the limit of Gurgaon Municipality. For arriving at such conclusion, ld Assessing Officer has disbelieved the certificate dated 13th October, 2010 issued by Tehsildar, Gurgaon which has been reproduced in the Assessment order at pag....
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....re land is situated approximately 8.5 Km beyond from the municipal limits. A copy of the said certificate though is on your record, yet the same is being refurnished as Annexure-B. In fact the assessee's son, Sh. Rohit S.Kumar who was also 1/3rd co-owner of the aforesaid land also took precaution to verify the same by physically measuring the distance of the land, from the municipal limits and found it to be more than 8.5 Km away from the municipal limits from all sides. This is also supported by the site plans of the situation of land situated at Village Tigra which was beyond 8 Kilometers from the Municipal limits of Gurgaon. The details of measurement is explained as per aforesaid site plan in para 6 herebelow: 5. Sir, now in the course of proceedings, it appears to the assessee, in order to deny the legitimate claim of the assessee, you have proceeded to record the statements of Patwari and of Tehsildar, behind the back of the assessee, copies of the such statements have however not been provided by you to the assessee, instead a copy of confirmation dt. 7.12.2010 as obtained by you from Patwari and. Tehsildar (on -the same sheet) has however been furnished to the ....
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....te as obtained by you on 7.12.2010, the burden is upon you to establish the correctness of such a certificate, in place of certificate already granted to the assessee and had been placed on record. It is submitted that it is not known as to whether the earlier certificate made available to the assessee by the Tehsildar was ever confronted to either of them and what had been the response made in respect thereof by them. Thus, it is prayed that in order to do substantial justice, you may please summon them at the cost of the assessee u/s 131 of the Act and assessee is willing to bear the cost in respect thereof. 8. It may further be added here in the said certificate dt. 7.12.2010 it has been stated that, the assessee's land is adjacent to Badshapur Ghata Road, which is factually incorrect, since between Badshapur Ghata Road and the assessee's land situated at Village Tigra there is a green belt declared by HUDA which land, on the date of sale, did not belong to the assessee and was owned by the Government i.e. HUDA and thus it is not on adjacent land as stated in the said certificate. This singular fact shows there has not been correct appreciation by Patwari and th....
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....ance of the assessee's land is less than 8 Kms, the evidence which exists on the record is the certificate dated 13th October, 2010 submitted by the assessee according to which the distance is 8.5 Kms. The second evidence is colleted by the Assessing Officer according to which the distance is 7.7 Kms. By furnishing the certificate dated 13th October, 2010 the assessee had discharged the initial onus laid upon him/her. In order to verify, the Assessing Officer had obtained another certificate. The said certificate was confronted to the assessee and the assessee in turn had pleaded that the distance which has been specified in the said certificate was measured from the road which did not exist at the time of sale. This submission of the assessee, as pointed out earlier, has even been recorded in the assessment order. The Assessing Officer does not give any credence to the said submission. The assessee also described how the distance at the time of sale was more than 8 Kms. No material whatsoever has been brought on record by the Assessing Officer to disprove the claim of the assessee that at the time of sale the distance as computed by the assessee was not correct. The Assessing ....
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....of the impugned land as on the date of sale has to be held to be more than 8 Kms, therefore, the assessee has proved one of the essential conditions to show that the land owned by him or her was situated at a distance of more than 8 Kms from the end of the municipal limits of Gurgaon. 18. Now, coming to the question whether or not the assessee's land can be specified to be agricultural land within the meaning of Section 2 (14) (iii). For holding that the impugned land was not rural agricultural land, ld. Assessing Officer has relied upon the letter issued by District Town Planner, Gurgaon dated 28th December, 2010 which is reproduced in the assessment order at page 14 in which it is stated that Sector 65 was included in Final Development Plan, Gurgaon-Manesar Urban Complex 2021 AD which was published on 5th February, 2007 which is much prior to the date of sale which is 6th July, 2007. He also referred to the fact that the land was sold to M/s Splendeur Land Base Ltd. and the internet search has revealed that such land has been used for development of trade tower by the name of Splender Trade Tower and the location of the said land was 3 kms from the Main Golf Course Road an....
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....fter, from October, 2005 to 2006, some part of the and has been cultivated. From October, 2006 to March, 2007, only one portion of the land has been cultivated. Therefore, practically it can be said that except some part of the land the cultivation was not done by the assessee from October, 2005 to March, 2007. Thus, it is not a case where the assessee did not carry out agricultural operation for a long period and it was self-cultivated land of the assessee. Rather, it has been the contention of the assessee that it was used by the assessee for a long period for cultivation and the assessee has never sought conversion of the said land for any purpose other than agricultural. 20. Now, coming to the 13 tests laid down by Hon'ble Supreme Court in the case of Smt. Sarifabibi Mohmed Ibrahim vs. CIT (supra). While discussing the rejoinder a table has been reproduced in the above part of this order, in which the assessee has controverted the contention of the revenue that even applying the aforementioned tests, the land does not lose the character of agricultural land. These tests are not discussed in detail for the sake of brevity, but, it can be mentioned that the land has been d....
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....so because the Tribunal clearly held that at the point of time when the assessee purchased the said land, it was agricultural land. There is no dispute with regard to this. The Tribunal also noted that the Award passed on 1-4-1992 by the District Collector (Land Acquisition), Greater Noida, Bulandshar, was a document which established beyond doubt that the land in question was agricultural land. Thus, on the date of purchase, the land in question was agricultural land and on the date of acquisition, the character of the land continued to be agricultural. When these two clear findings have been returned, it is apparent that in the transitional period, that is, between purchase and acquisition, the nature and character of the land did not change. The fact that the appellant/assessee intended to use the land for industrial purposes did not in any way alter the nature and character of the land. The further fact that the appellant/assessee did not carry out any agricultural operations did not also result in any conversion of the agricultural land into an industrial land. It is nobody's case that the appellant/assessee carried out any operations for setting up any plant or machinery ....