TaxTMI 
TaxTMI 
2017 (5) TMI 361
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....the assessees's husband against order passed by the CIT-1, Visakhapatnam dated 2.1.2012 and the same is disposed by passing a separate order. 3. The brief facts of the case extracted from ITA No.187/Vizag/2014 are that the assessee is an individual, running a milk diary. The assessee has sold 1.02 acres of land to M/s. Hemadri Enterprises Pvt. Ltd. on 25th May'07 for a consideration of Rs. 3,57,96,000/-. Subsequently, a survey was conducted on 7.8.2008. Consequent to the survey, assessee was admitted a short term capital gain of Rs. 89,09,341/- after claiming deduction on account of payment to unauthorized occupants of Rs. 1,28,35,000/- and cost of compound wall of Rs. 25 lakhs and commission amount of Rs. 80,34,579/-. The assessment u/s 143(3) of the Act was completed by A.O., disallowing the amount of Rs. 47,75,000/- out of claim of compensation to vacate the land of Rs. 1,28,35,000/- and an amount of Rs. 14,79,066/- out of commission expenditure claimed of Rs. 80,34,579/-. Subsequently, the Ld. Commissioner has initiated proceedings u/s 263 of the Act and directed the A.O. to re-do the assessment after enquiries. The A.O. by order dated 29.5.2012 consequent to the order u/s 263....
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....ssee was admitted and called the A.O. to give comments on the additional grounds and also requested to give a factual report. The A.O. by a letter dated 14.3.2014 submitted that "The Authorised representative of the assessee has submitted that the said land is not a capital asset in view of the provisions of section 2(14)(iii)(b) of the Act. But it is pertinent to bring it in your kind notice that the said land is situated within the ambit of 8 kms. of Anakapalle Municipality, which was established in the year 1877. This Thummapala hamlet where the land is situated is about 3 kms. from Anakapalle. 7. Further, there are two conditions enumerated in section 2(14)(iii)(b) of the Act to ascertain whether the land should be treated as a capital asset or not. In this aspect, it is submitted that as per the last two census reports of 2001 & 2011, the population of Anakapalle Municipality are 85,799 & 86,612 and as per census of 2011, the population of Thummapala hamlet is 28,187. Hence, the claim of the assessee is not tenable and the said land is very much capital asset as per the condition laid down in section 2(14)(iii) of the Act. In view of the above, it is requested that the case m....
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....gainst the order made under Section 263 was dismissed. On the facts and in the circumstances of the case the learned Commissioner (Appeals) ought to have appreciated the fact that the appeal before ITAT challenging the order of the Commissioner in exercise of powers under Section 263 is still pending adjudication before the Honourable Tribunal and ought to have set aside the impugned order as the same is passed without even affording an opportunity to the assessee contrary to the directions of the Commissioner. 3. On the facts and in the circumstances of the case the learned Commissioner Income Tax (Appeals) erred in law and facts of the case in confirming the order disregarding the fact that the attempt to reopen the assessment by approving the reopening of the original assessment under Section 147, made futile by dropping of the proceedings commenced pursuant to the notice under Section 147, therefore, ought not to have initiated proceedings under Section 263 of the Income-tax Act, 1961 that to Assessing Officer passing impugned order without affording fresh opportunity as directed by the Commissioner. 4. On the facts and in the circumstances of the case the learned Commissio....
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....e of Smt. Chalasani Naga Ratna Kumari Vs. ITO in ITA No.639/Vizag/2013 dated 23.12.2016 and submitted that once a land is agricultural land as per the revenue records, assessee need not carry agricultural operations for the year under consideration and submitted that the land situated in Thummapala hamlet of Kottavaru village is an agricultural land as per the revenue records. For that he referred page 41 of the paper book (Adangal/pahani). 15. The Ld. Counsel for the assessee also submitted that the land is not converted from agricultural to non-agricultural, for that he has filed a certificate issued by the Dy. Tahsildar (RTI C.No.125/16A dated 24.5.2016). He also submitted that the land sold by the assessee is outside the purview of the GVMC limits of Visakhapatnam. For that he has filed a certificate issued by the O/o Zonal Commissioner, Anakapalle Zone (RTI No.1311/G2/2016 dated nil) and submitted that the impugned land is an agricultural land and no capital gains can be taxed in view of section 2(14) of the Act. 16. On the other hand, the Ld. D.R. has submitted that the assessee has failed to prove that he has carried out the agricultural operations, therefore, the land is ....
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....icipality. It also stated that as per the Gazette notification no.9447 dated 6.1.1994 and an amendment notification no.11186 dated 28.12.1999 issued by the Central Government, Anakapalle was not a notified municipality. Further, as per GOMS no.375 dated 30.7.2013, issued by the Government of Andhra Pradesh, area covered under the Anakapalle municipality were included in the limits of the Greater Visakhapatnam Municipal Corporation. From the above letter, it is clear that the land sold by the assessee is situated in Thummapala hamlet of Kottavaru village. It is also clear that the Anakapalle municipality is not notified as per the Gazette notification as mentioned above. However, the Anakapalle municipality included the limits of Greater Visakhapatnam Municipal Corporation by GOMS 375 dated 30.7.2013. So far as GVMC limits of Anakapalle municipality is concerned, assessee has filed a letter issued by RTI No.1311/G2/2016 dated nil, wherein, it is clear that the Thummapala hamlet of Kottavaru village near Amla college, is not merged with GVMC Visakhapatnam as per GOMS no.375/MA&UD dated 30.7.2013. From the paper book filed by the assessee at page no.2 vide certificate dated 12.7.2006 ....
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....board, which has a population of more than 10,000. In the present case, the land sold by the assessee not situated in any of the places as mentioned above. In fact the land situated in a hamlet village is not even situated in a village. Therefore, section 2(14)(iii)(a) has no application. 21. So far as application of section 2(14)(iii)(b) of the Act is concerned to attract the capital gains, the land must situate within 8 kms. from the notified municipality. In the present case, the land is situated 3 kms. away from Anakapalle municipality, however, the Anakapalle municipality is not a notified municipality as per the notification dated 6.1.1991 and amended notification no.11186 dated 28.12.1999, therefore, section 2(14)(iii)(b) of the Act has also no application. 22. The only point for consideration is whether the assessee is to carry agricultural operations in the land. In this context, the Ld. Counsel for the assessee has submitted that the land is an agricultural dry land. To that effect, he filed a revenue record and it clearly shows that it is a dry and cultivatable land. So far as carrying agricultural operations in the year under consideration is concerned, it is submitte....
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...., urbanisation of that area and other relevant considerations, specify in this behalf by notification in the Official Gazette (iv) 6(r) per cent. Gold Bonds, 1977, or 7 per cent. Gold Bonds, 1980, or National Defence Gold Bonds, 1980, issued by the Central Government (v) Special Bearer Bonds, 1991, issued by the Central Government (vi) Gold Deposit Bonds issued under the Gold Deposit Scheme, 1999 notified by the Central Government " 16. Once the Tribunal has accepted that the classification of lands as per the revenue records are agricultural lands, which are evidenced by the adangal and the letter of the Tahsildar and satisfies other conditions of Section 2(14) of the Income Tax Act, we are of the view that the Tribunal has misdirected itself as stated above. 17. Yet other reason given by the Tribunal is that the adjacent lands are put to commercial use by way of plots and therefore, the very character of the lands of the assessees is doubted as agricultural in nature. The manner in which the adjacent lands are used by the owner therein is not a ground for the Tribunal to come to a conclusion that the assessees' lands are not agricultural in nature. The reason given ....
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....nue records, suitable for agricultural operations where agricultural operations carried or not, the character of the land cannot change from agricultural to non agricultural land. The relevant portion of the order is extracted below: 8. Having heard both the sides and considered materials on record, we find that the A.O. computed capital gains on transfer of lands for the reason that the lands sold by the assessee are not agricultural lands and liable for capital gains. The A.O. further observed that the lands are situated within 8 kms. from the limits of GVMC and hence, previous limits of Visakhapatnam Municipal Corporation is irrelevant to determine the distance. Since, as on the date of transfer of lands, the extended limits of GVMC has been notified by the Govt. of Andhra Pradesh, the distance from the extended limits of GVMC has to be considered to determine whether the particular land is situated within 8 kms. from such distance or not. The assessee claims that the lands are agricultural lands and agricultural operations were carried out till 2007 and after which there were disputes and as a result agricultural operations could not be carried out. We find force in the argume....
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....d u/s 2(14)(iii) does not apply to agricultural land situated within the Panchayat limits. 26. Keeping in view of the above and also by considering the facts and circumstances of the case, the impugned land sold by the assessee not attract the capital gains tax and no capital gain can be taxed. We also observed that the assessing officer has not at all examined before passing the order u/s 143(3) of the Act whether the capital gain attracts or not. After survey proceedings, assessee filed the return and same is accepted without making any enquiry. It is the duty of the A.O. to conduct an enquiry before assessing particular income has to be taxed or not. In this case, such enquiry was not made by the A.O. In view of the above, we are of the opinion that the A.O. is not correct in taxing exempt income as a capital gain. We find that the Ld. CIT(A) without considering the facts of the case and without examining whether the impugned land is an agricultural land or not, the ground raised by the assessee is dismissed. Thus, we reverse the order passed by the CIT(A) and the ground raised by the assessee is allowed. 27. In the result, the appeal filed by the assessee in ITA No. 187/Vizag....