TaxTMI 
TaxTMI 
2012 (4) TMI 627
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.... 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) in the appellate order that the assessee had failed to establish the land hel....
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....tence 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 the Patwari and Tehsildar which is placed at page 106 of the paper book. The assessee also relied on the computer gene....
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....sh 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.. On the basis of these statements, the Assessing Officer has abruptly obtained a certificate without any basis and ....
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.....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 below have committed a fundamental error by holding that there is a distance of less than 8 kms. Such conclusions are....
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....n 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 controlled Area (section -4) The Government may, by notification in the Official Gazette, declare any area outside the limits of municipal town or any other area, which in its opinion has the potential for buil....
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.... 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 evidence in terms operations/incomes to indicate agricultural activities. Otherwise also the appellants are non agriculturist by profession. On account of non confirming use of non agricultural purposes for two years the appellants could only subject the land to confirming use as per the notification under consideration which is non agr....
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....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 while deciding the matter is as to what is the actual agricultural purpose and usage and not the mere possibility of usage of land; and (3) The determination of the character of a land is a matter which ought to be determined on the facts of which particular. The Ld. DR also relied on the decision of Hon'ble Supreme Court in the case of Smt. Sarifabibi Mohmed Ib....
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....osition, 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 process of evaluation and inference has to be drawn on a cumulative consideration of all relevant facts. Ld. DR submitted that HUDA should be considered as Municipal or local body for the purpose of Section 2 (14)(iii) of IT Act. For this Ld. DR submitted as under:- " Second issue is whether HUDA (Haryana Urban Development Authority) can be considered to be a Municipal Corporation or s....
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....s 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 doing all the functions which a municipal body is required to do. Section 29 of the Act declares that the HUDA Authority may transfer his responsibility to local bodies in certain cases. Section 29 Where any area has been developed by the Authority, the Authority may entrust the local authority discharging municipal function, within whose local limits the area so developed is situated, with the responsibility for the maintenance of the amenities which have been provided in the ....
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....ns 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 of building; (v) the alignment of buildings of any site; (vi) the architectural features of the elevation of frontage of any building to be re-erected on any site; (vii) the number of residential buildings which may be erected on plot or site; (viii) the amenities to be provided in relation to any site or buildings and the person or authority by whom or at whose expense such amenities are to be provided. (ix) The prohibitions or restrictions regarding erection of shops, workshops, warehouses or factories or buildings of a specified architectural feature or building designed for particular purposes in ....
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....l 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 leaves no doubt that the land in question was within the distance of 8 kms from the limit of municipal body existing at that point of time. Facts in the assessment order are not reproduced here for the sake of brevity but strong reliance is placed on the same. During the course of proceedings before the Hon'ble Tribunal, the appellants have tried to produce certain maps and its calculations of distance in order to claim that the distance was more than 9 kms. These self certified and self serving maps and the calculations were not submitted before the lower authorities and even before the Tribunal these were not submitted as 'additional evidences'. The same are, therefore, liable to be rejected without any consid....
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....ombay 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 land did not change on the date of the sale. It was submitted that though it is a matter of fact that impugned land is situated in the State of Haryana and is also situated in the controlled area as defined in Punjab Scheduled Roads and Controlled Areas Restricted of Un-regulated Development Act 1963, but, aforementioned statutory provisions have nothing to do to determine the character of the land as the preamble of the said Act shows that purpose of the said Act is for development of roads and not that because of introduction of the said Act, all land falling in the controlled area would not be agricultural land. Ld. AR also submitted that the other two Acts referred to by the learned DR, namely, Haryana Development and Regulations of Urban Area Act,....
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....ere 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 138. b) 204 ITR 631 (SC) Smt. Sarifabibi Mohmed Ibrahim vs. CIT It is submitted if the test as stated therein are applied it would be seen the land is an agricultural land for the following reasons: i) That land was classified in the revenue records as agricultural; ii) That land was actually or ordinarily used for agricultural purposes; iii) That no alternative use put to land; iv) That land was not developed by plotting and providing roads and other facilities; and, v) That land was not sold as yardage basis Thus the above judgment too cannot be applied to regard the land as non-agricultural land. In any case, detailed submission have been made in para 3.12 of synopsis. c) 220 ITR 43 (SC) CIT vs. Gemini Pictures Circuit (P) Ltd The above judgment has also no application since that was a case....
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....at 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 Nadu 255 ITR 153 (SC) c) CIT v. Sun Engineering Works P. Ltd. 198 ITR 297 (SC) d) ITO v. Smt. Gurinder Kaur 102 ITD 189 (Del) 10. So far as it relates to 13 tests described in the decision of Hon'ble Supreme Court in the case of Smt. Sarifabibi Mohmed Ibrahim vs. CIT (supra), the submissions of the learned AR are as under:- Sr. No. Test as per Apex Court As per Revenue Rebuttal of the Assessee 1) Whether the land was classified in the revenue records as agricultural and whether it was subject to the payment of land revenue? No evidence for payment of land revenue As per Revenue . As per control Act 1963 declared as "Controlled Area". Land undisputedly part of HUDA notified area. Fell in the commercial area of sector 65 as per the notification issued in Feb 2007, which is prior to date of sale. The land of the appellant is located In the state of Haryana wh....
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.... 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 the Paper Book) 4) Whether the income derived from the agricultural operations carried on in the land bore any rational proportion to the investment made in purchasing the land? No relation with market pnce. Land was sold @ more than 8 crore per acre. Even purchase cost was wholly disproportionate to potential agricultural income. The submission of the revenue is misconceived. It is submitted that investment in the land was merely about Rs. 2 lacs per acre which itself shows that, the land was acquired for agricultural purposes and that too in 1995-96. It may be appreciated that, it is highly incredulous to suggest that, since a notification was issued 12 years later from the date of purchase of land therefore the land was not acquired for agricultural purposes and that too prior to six months of sale of land. 5) Whether, the permission under section 65 of the Bombay Land Revenue Code was obtained for the non-agricu....
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....) 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 was in the notified area and notified as commercial land. The area is amongst the fastest growing are in India. The land was located in a village Tigra and it was notified for commercial purposes only 6 months prior to sale. 9) Whether the land itself was developed by plotting and providing roads and other facilities? HUDA, the government agency was carrying out massive development Factually incorrect. The land was not developed by plotting and providing roads and other facilities. 10 Whether there were any previous sales of portions of the land for non-agricultural use? Yes, sold in the past to a builder/developer. It is although true that portion of the land in the year 2000 had been acquired and also sold yet the fact above does not alter the nature of the land as agricultural activities had been carried out even after the sale of land. 11 Whether permission under section 63 of the Bombay Tenancy and Agricultural Lands Act, 1948 was obtained b....
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....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 page 3. According to this certificate the impugned land is agricultural land and it is situated in Village Tigara which has a population of less than ten thousand and its distance from Municipal limit of Gurgaon is approximately 8.5 Kms. To verify the veracity of the certificate, the Assessing Officer has conducted enquiry by summoning and recording the statements of land revenue authorities and the final outcome of the same is certificate dated 7/8.12.2010, the contents of which have also been reproduced in the assessment order at page 6. According to this certificate, the distance of the impugned land from municipal limit of Gurgaon via road from Ghata to Badshahpur is stated to be 7.7 Km. This certificate also clarify the fact that sale of land by the assessee was prior to the event of Gurgaon being made Municipal Corporation. This certificate was confronted by the Assessing Officer to the assessee and the assessee was asked to explain as to why the impugned land should not be considered to be as capital ....
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....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 assessee for information and rebuttal. The said confirmation dt. 7.12.2010 reads as under. 6. It is most humbly and respectfully submitted the aforesaid confirmation as obtained is based on no material other them a mere assertion made and is contrary to the earlier confirmation dated 13.10.2010 placed on record and was given by the same Tehsildar. It is also not known it is submitted with respect on what basis, has now the Patwari has stated that before the Municipal Corporation came into existence, the said area of situation was 7.7 Km away from the Municipal limits of Nagar Palika. In fact no site map or any basis has been placed on record and is contrary to the earlier confirmation. It is evident that there is no basis to exactly state that it was 7.7 Km only beyond the Municipal limits. In fact the assessee is placing on record as Annexure-C to support that it was 8.4 Km at the time, when the assessee had sold the land. The following details would establish that the land was situated beyond 8 Km from the Municipal ....
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....djacent land as stated in the said certificate. This singular fact shows there has not been correct appreciation by Patwari and the Tehsildar, who has merely endorsed the certificate of Patwari. 14. In the present case as the assessee is claiming exemption from capital gain on the basis that the impugned land is not a 'capital asset.' Therefore, initial burden is on the assessee to prove that the land in fact is not capital asset. To fall outside the scope of "capital asset" the land has to fulfill the condition as discussed in Section 2 (14)(iii). The first condition is that it should be agricultural land and the second condition is that it should be situated either within the jurisdiction of any municipality, etc. which has a population of less than ten thousand according to the last preceding census of which figures have been published before the first day of the previous year or in any area which is at a distance of more than eight kilometers from the local limits of any municipality, etc. as the Central Government may having regard to the extent of, and scope for, urbanization of that area and other relevant consideration, specify in this behalf by notification in off....
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.... the claim of the assessee that at the time of sale the distance as computed by the assessee was not correct. The Assessing Officer has relied upon an evidence which was objected to by the assessee on a specific ground and that ground of the assessee has not been shown to be incorrect. There is a force in the contention of the assessee that the position as on the date of sale has to be seen and later development, if any, will become of no consequence as the question to be determined is that whether or not on the date of sale the land falls within the parameters of agricultural land as specified in Section 2 (14) (iii). Later, the assessee has also obtained, under the Right To Information Act, a certificate from the Executive Engineer of HUDA, according to which the road from which the distance was measured at 7.7 Kms was completed only in September, 2008 which is beyond the date of sale made by the assessee. The said certificate cannot be deemed as additional evidence as right from the beginning it has been the contention of the assessee that on the date of sale the road on the basis of which the distance has been measured at 7.7. Kms. did not exist at the time of sale. The certifi....
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....id land was 3 kms from the Main Golf Course Road and, therefore, the land was located in prime residential/commercial area of Gurgaon. Reliance has been placed on the home page of the website of Splender Group and he asked the assessee to show cause as to why the land should not be treated as non-agricultural land. The assessee objected to such move of the Assessing Officer by letter dated 29th December, 2010 in which it was submitted that land should be considered to be agricultural land as per Notification No.SO 10 (E) dated 6th January, 1994 as amended by Notification No.SO1302 dated 28th December, 1999 and the land is agricultural land within the meaning of Section 2 (14) (iii) of the Act. The Assessing Officer turned down both these objections. He held that the land sold by the assessee was not a rural as it was situated within the statutory limit of 8 kms from the municipal limits and after the notification dated 5th February, 2007, the character of land remained no more rural as from the plan it was abundantly clear that the land was residential in nature. He also turned down the plea of the assessee regarding application of the Notification issued by Central Government acco....
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....t, it can be mentioned that the land has been described in the revenue record as agricultural and the land was actually and ordinarily being used by the assessee for agricultural purposes at or about the relevant time and such user was for a longer period since 1995-96. The purchase price of the said land in the hands of the assessee was quite rational, proportional to the investment made as it has been mentioned in the rejoinder that the land was purchased for a sum of Rs. 2 lac per acre in 1995-96. The permission for conversion of the land from agricultural character was not obtained by the assessee, but it was obtained by the purchaser much after the purchase of land. The said land was never put to alternative use by the assessee either permanently or temporarily. The land entered in the revenue record was actually used by the assessee for agriculture and it is not a case where the land has never been actually cultivated. The land has been shown to be existed in village Tigra though according to the development plan it may have been specified to be residential. The assessee did not develop this land by plotting and providing rights, etc., and other facilities. Only one portion o....
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....s for setting up any plant or machinery or of the like nature so as to lead to an inference that the nature and character of the land had been changed from agricultural to industrial. The mere fact that the appellant/assessee did not carry out any agricultural operation did not alter the nature and character of the land. In any event, this discussion is not relevant in the backdrop of the clear finding given by the Tribunal that on the date of the purchase and as also on the date of acquisition, the land in question was agricultural land. Having come to such a conclusion, the Tribunal ought not to have gone into question of intention of the appellant/assessee and definitely not into the question of intention of the land acquiring authority, the latter being a wholly irrelevant consideration. 10. In these circumstances, we decide the question in favour of the appellant/assessee and against the revenue. The appeal is allowed with costs. The impugned order passed by the Income-tax Appellate Tribunal is set aside." 21. From the above observations of their lordships of jurisdictional High Court, it will be clear that the intention of the purchaser of the land is wholly irrelevant con....