AI Drafter 
TaxTMI 
TaxTMI 
2016 (5) TMI 245
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....terms of Section 271 (1) (c) of the Income Tax, 1961. 3. The Assistant Commissioner of Income Tax, Company Circle VI(3) failed to appreciate that the land changed its character from agricultural to urban due to specific conversion by the buyer after completion of legal formalities. The recharacterization is only was urbanized only after the sale to the buyer. At the time of sale, the land was an agricultural land. 4. The Assistant Commissioner of Income Tax, Company Circle VI(3) failed to appreciate the fact that vide Central Government Notification No.SO 10 (E) dated 06.01.1994 as amended by Notification No.SO 1302 dated 28.12.1999 the land sold was situated outside the specified limits of the notified distance of 8 Kms from Chennai limit and 5 Kms from Chengalpattu municipality limit. The Central Government Notification is binding on the Assessing Officer 5. The Assistant Commissioner of Income Tax, Company Circle VI(3) erred in concluding that the land is an urban land by placing reliance on a report obtained from an Inspector of Department of Town Planning Authority the Central Government Notification. 6. The Assistant Commissioner of Income ....
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....nd outside the specified area and not a capital asset. The Assessing Officer alleged that assessee could not produce any documentary evidence of situation of land outside the specified area. Further based on report and verification of town planning master book, the survey numbers of land specified in the sale deed fall under the category of urbanised land and any sort of activity can be carried on the land without obtaining conversion certificate, and also no onus of proof was submitted that agricultural operations carried with supporting lease agreement or land user confirmation. On perusal of the Registered sale deed dated 15.10.2005 the land was sold to ''M/s. Hiranandani Realtoss Pvt. Ltd,'' Mumbai for the purpose of promoting real estate business and as per the notification circular No.310(F. No.164/15/18-IT(A1) dated 29.07.1981, the area fall in the Municipality of Chengalpattu as notified by Central Government. The sale deed was executed by the assessee company to develop in the name of ''M/s. S.M.L. Developers'' and provisions of capital gains are attracted. The ld. Assessing Officer considered the submissions, findings, notification and Government report and treated the la....
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....income. The ld. Commissioner of Income Tax (Appeals) considering the submissions made a elaborate observations that assessee contention that land is agricultural land and has accepted the addition and paid taxes and also not challenged the assessment order and the ld. Authorised Representative also argued the case without any evidence on record that property is beyond 15kms from Chennai Municipal Corporation and 25 kms from Municipality limit of Chengalpattu to substantiate that land is not capital asset and there is no certificate or evidence of the property fall outside the distance of 8kms from Municipal limits of Chennai. The property was sold to M/s. Hiranandani Realtors (P) Ltd for real estate activities and used for agricultural operations by cultivation and received income of ;17,500/- and offered as income from other source and the land was used for agricultural purpose before sale to builder. The assessee could not substantiate its claim with any documentary evidence of situation of land outside distance of 5 kms from Chengalpattu Municipality and the decision relied by the Jurisdictional High Court in the case of M.S. Srinivasa Naicker vs. ITO (2007) 292 ITR 481 are dist....
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.....2011 were it was observed at para 7 as under:-. '13. Now coming to the apprehension of the Commissioner of Income-tax that the land might be liable for capital gains taxation, the only ground relied on by him is the order issued by the Tamil Nadu Government in G.O. No.287 dated 8-7- 2004, stating that the area is 'urbanisable land'. The Government Order has only stated that the land is urbanisable; that is in near future this agricultural area may be transformed into an urban settlement. But, till the date of sale of the land by the assessee in the previous year relevant to the assessment year under appeal, no notification was issued, declaring Egathur and Navalur villages as urban area. The State Government has not issued any such notification making its intention absolute. The earlier notification issued by the State Government clarifying the villages to be urbanisable was in contemplation of its developmental activities and schemes. That has nothing to do with the administration of Income-tax law. The Central Board of Direct Taxes has not issued any notification declaring Egathur and Navalur villages as notified areas for the purpose of section 2(14) of the Income-tax ....