TaxTMI 
TaxTMI 
2014 (1) TMI 1860
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....icultural land out of total 16 bigha for a consideration of Rs. 1.04 crores i.e. @ 26 lacs per bigha. This land was allotted to him by Govt. in 1972 on his retirement from defence services. Assessee claimed this land to be agricultural land which is out of scope of definition of capital asset u/s 2(14). He claimed that land is covered by exclusions in clause (iii) of section 2(14) and not covered by sub clauses (a) and (b) of this clause as it is situated in village Machwa where population is less than 10,000/-. This village Machwa is also out of Jaipur Municipal Corporation and it was more than 8 kms beyond the limits of Jaipur Municipal Corporation as on 6.01.1994 when the notification (P. B. Page 1) was issued under sub-clause (b), though now the distance is 2-3 kms. only due to extension of limits of Jaipur Municipal Corporation. The sale deed (P.B. page 5-10) was not registered till the end of 31.3.2008. He also purchased bonds eligible u/s 54 EC in Feb. 2008 for a sum of Rs. 50 lacs. The Assessing Officer however, mentioned in her order that the Property is situated within limits of Jaipur Municipal Corporation as per certificate of Tehsildar. Further, property is used for re....
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....of one piece of land but it was in respect of 5 pieces of land scattered in area of 2 kms. * The said land was very deep (3 to 4 kms.) from the main road and the assessee's land was only 250 mtrs. Further there is a lane approaching the assessee's land. * In the immediate vicinity of the assessee's land, multistoried buildings are being constructed. It is not the position of the other land. In view of the said reasons, the assessee contended that FMV of the land as on 1.4.1981 should have been taken by computing the same as per principle laid down in Jahanganj Cold Storage v. Asstt. CIT [2011] 45 SOT 74/9 taxmann.com 261 (Agra) (TM). Accordingly, the value comes to Rs. 18,87,477/- as per the following calculation below : Ld.CIT(A) however considered Rs. 10,000 per bigha i.e. Rs. 40,000/- as against the assessing officer's valuation of Rs. 10,800/- per bigha @ Rs. 2,700 per bigha. The assessee has taken ground no. 2 in this respect. Department has also taken ground no. 2 for increasing the price per bigha as on 1.4.1981 to Rs. 10,000/-. 3. Let us now come to the grounds of the assessee's appeal. As regards ground no.1, ld. A/R of the as....
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....ate per bigha. He submitted that neither the assessee nor the department should have any concern as to how the land could be used by the buyers. It was not a relevant factor for this section to see that how the buyer intended to use the land as held in the various decisions including CIT v. Manilal Somnath [1977] 106 ITR 917 (Guj.), M.S. Srinivasa Naicker v. ITO [2007] 292 ITR 481/[2008] 169 Taxman 255 (Mad.) and Manibhai Motibhai Patel v. CIT [1981] 131 ITR 120/6 Taxman 218 (Guj.). In such circumstances, the observation that the nearby locations are getting developed as multistory project has no relevance in the present case. He further submitted that the land was situated beyond the boundaries of 8 Kms. of the limits of JMC as on 6.1.1994 (i.e. the date of issuing relevant notification No. 9447/F. No. 164/3/87-ITA-I dated 06/01/1994) as per the certificate on page 11 and trace of the site plan being produced during the course of hearing. The land has now come nearer to the boundaries covered in the jurisdictional limit of JMC due to extensions after 1994. He submitted that the question which is to be decided in this case is whether the said land would be covered by sub clause (b)....
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....ame village Machwa. The Hon'ble Bench has decided the case in favour of the assessee on the similar basis as argued by ld. A/R. He also drew our attention towards the returns of income filed by the assessee in the subsequent years wherein agricultural income shown by the assessee in respect of the remaining part of land has been accepted by the department. 4. Ld. D/R on the other hand has supported the order of A.O. and ld CIT(A). He submitted that the land in question was capital asset u/s 2(14). He referred the findings given by the ld CIT(A) that 8 kms from the local limits was to be seen on the date of transfer and not on the date on which notification was published in official Gazette. He submitted that issue stands covered in the favour of Revenue by the decision of Hon,ble Cochin Tribunal in the case of Arun Sunny v. Dy. CIT [2009] 30 SOT 534 wherein it was held that the central government had issued the notification for the purpose of changing the character of the asset. The nature of the property had to be examined as on the date of transfer. Further, the transfer deed of the asset was executed during the year under consideration and therefore, the nature of the pro....
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....e not exempt from capital gains tax. It would imply that what is necessary is the position as on date of sale and not the position as on the date of acquisition. Further reliance was made on decision of Hon'ble Apex court in CIT v. Gemini Pictures Circuit (P.) Ltd. [1996] 220 ITR 43/85 Taxman 594 where it was held that mere fact that the land in question was agricultural land could not be a ground to claim exemption u/s 2(14) of IT Act when it was situated within 8 kms of the local limits of Municipal Corporation. Since the land sold by the assessee was a capital asset, therefore, the surplus realized by the assessee on ale of land was assessable as capital gain. He also referred the findings of the ld. CIT(A) that the central government has the authority under section 507(a) of the Municipal Corporation act to declare any portion of a rural area as an urban area. The moment the power is exercised under section 507(a), the need for notification u/s 2(14)(iii)(b) would not arise. Similarly the moment the Central Government feels that a particular area within 8 kms of the limits of the municipality has to be treated as an urban area, the need for exercise of power u/s 507(a) woul....
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....lowing manner : - 6. We have heard the rival submission and have carefully perused the available material on record. We find that in the case of Smt. (Dr.) Subha Tripathi (supra), this Bench has already considered the similar matter in respect of land situated in the same village Machwa for the same assessment year. This Bench has found that the land is situated out of the limit of Jaipur Municipal Corporation and therefore, was not covered in sub-clause (a) of section 2(14)(iii). It has been held by this Bench that for the purpose of application of sub-clause (b) of clause (iii) of section 2(14) and to measure 8 KMs from the radius of Jaipur Municipal Corporation, the relevant date would be the date of notification i.e. 6.1.1994 and not the date of sale of land in question. We find that the 4 bigha land in question was part of total 16 bigha land of the assessee allotted to him by the Government in lieu of his retirement from defense services. As per the Government record in form of Girdawari which can be said to be conclusive evidence in this respect, the land was being cultivated by the assessee during the year under consideration and subsequently also. The assessee has shown....
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....g single chunk of land and it was compatible for residential use after plotting. (b) The land of the appellant was in close proximity to the state highway (nearly 500mt.) whereas in the comparable case cited by the AO, the land was 3 to 4 kms away from the main road. (c) The land sold by Sh. Panna S/o Sh. Mahadev Jat was already in possession of the buyers and they were cultivating the land for past many years. The assessee submitted that all these factors make a lots of difference in the value of land. There cannot be any basis to make suitable adjustment for the above factors in case of land. According to the assessee when no comparable case is found, the Fair Market Value of the captioned land should be computed on the basis of reverse indexation in the manner approved by Third Member Judgment of ITAT Agra in the case of Jahanganj Cold Storage (supra). Accordingly, the value comes to Rs. 18,87,477/-. After considering the objections raised by the assessee, the ld. CIT(A) found that the case sited by ld. AO was not comparable. He however made his own estimation and adopted a rate of Rs. 10,000/- per bigha and took the Fair Market Value as on 1.4.1981 of the t....
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....as claimed that the property has not yet been registered and hence, provisions of section 50C are not applicable. In this regard, AO observed that the registration of sale property has not been made only to evade the stamp duty payments on the sale. Therefore, section 50C would be applicable on the sale of property and accordingly applicable DLC rates i.e. 1,40,00,000/- would be applied on such transfer. Accordingly, the AO took the sale consideration of Rs. 1,40,00,000/- as per section 50C instead of actual sale consideration of Rs. 1,04,00,000/-. In the first appeal, ld CIT(A) made a reliance on the decision of Hon'ble Jodhpur Tribunal in the case of Navneet Kumar Thakkar v. ITO [2008] 110 ITD 525 where it was held that to attract section 50C, the property under transfer from the assessee to another person should have been assessed for stamp valuation purpose at a higher value than that received or accruing to the assessee. Unless the property transferred have been registered by sale deed and for the purpose the value had been assessed and stamp duty have been paid by the parties, section 50C could not come into operation. Further reliance was made on the decision of Hon'....
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....n of notification dtd. 06.01.1994 clearly states that the referred limits in the schedule to this notification are those limits which are existing on the date of on which the notification was published in the Official Gazette i.e. 06.01.1994. CIT(A) has not quoted any such judgement. The judgements quoted by him are on different line of law which have no application in the facts of the assessee's case. Applicability of all the judgements quoted by the CIT(A) is separately analysed and annexed to these synopsis. As far as the intention of legislature is concerned, we may submit that the Central Government notified the distance of 8 kms in said notification keeping in mind the potential of growth of the city in the near future. In fact the boundaries of JMC have still not covered the land of the assessee. From the above discussion, it is quite clear that CIT(A) has erred in applying the provisions of section 2(14)(iii) and decisions of Hon'ble High Courts and Tribunals. We may submit that the legislature has used word "any municipality" to cover those municipalities under the clause ....
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....the time of transfer). By applying this case into present case, notification prevailing on the date of transfer will be applied to find out whether the land in question is capital asset or not Relevance in present case In the present case, CIT(A) did not apply this case law in correct manner. In 262 ITR 367 it was held that notification prevailing on the date of transfer will be applicable on the transaction. Document 4 Arun Sunny vs. Dy. CIT [2 ITR 380 (ITAT, Cochin Bench)] Facts Decision Relevance in present case Assessee purchased property in 1975 for Rs. 9,000/-. a He sold this property on 19.01.2006 for 11,02,71,200/- Rs. • This property became capital asset by virtue of notification dtd. 06.01.1994. Hence assessee applied the FMV of property as on 06.01.1994 instead of 01.04.1981being no FMV can be assigned when the property was not at all capital asset. Whether an asset is liable for capital gains tax and the question as to what would be the amount of capital gain are two different things. The date of notification is relevant....