TaxTMI 
TaxTMI 
TaxTMI 
2025 (6) TMI 1915
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....ved that the sale proceeds of such agricultural land would not come within the purview of capital gain liable for Income Tax. 4. The Hon'ble CIT(A) ought to have observed that land in question was outside the Municipal limits of Rajendranagar Municipality and therefore not liable to capital gain tax in the light of decision of various judicial decisions. 5. The Hon'ble CIT(A) ought to have directed the assessing officer to allow further claim of expenditure towards cost of acquisition of Rs. 70,17,970/- (indexed cost of acquisition) while calculating long term capital gain. 6. In the facts and circumstances of the case, the Hon'ble CIT(A) ought to have directed the assessing officer to allow entire claim of the assessee amounting to Rs. 3,14,19,300/- u/s.548 of the IT Act. 7. The Hon'ble CIT(A) is not justified with regard to further restricting the claim u/s.548 to Rs. 1,01,07,115/- as against Rs. 1,17,15,000/- allowed by the assessing officer. 8. The Hon'ble CIT(A) without giving any enhancement notice ought not to have restricted the deduction u/s.54B to Rs. 1,01,07,115/- as against Rs. 1,17,15,000/-allowed by the assessing officer. 9. The Hon'....
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....aim, wherein based on a revised statement of computation of income that was filed with the A.O. on 29.08.2010, it was claimed by him that as the agricultural land situated at Village: Manchirevula was not a "capital asset" within the meaning of Section 2(14) of the Act, therefore, the profit/gain arising on the transfer of the same was not exigible to tax. For the sake of clarity, the claim of the assessee that the gain arising on the transfer of agricultural land situated at Village: Manchirevula was not liable to be taxed is culled out as under: "(i) The agricultural land sold is situated at Manchirevula village, Rajendranagar Mandal, R. R. Dist and the sale of land under consideration was made through Rajendranagar Revenue authorities. (ii) The said agricultural land is within the Rajendranagar Mandal and Rajendranagar Muncipality. Rajendranagar Municipality is not a notified Municipality for the purpose of treating agricultural land as a capital asset for the purpose of Section 2(14) of the I.T. Act, 1961. (iii) Rajendranagar Municipality is not a municipality notified by Central Government as envisaged u/s 2(14)(iii)(a) of the I.T. Act, 1961. As the nearest municipality ....
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....-. 7. Aggrieved, the assessee carried the matter in appeal before the CIT(A). Apropos the assessee's claim that as the agricultural land was situated within the municipal limits of Rajendranagar Municipality which was not a notified municipality under Section 2(14)(iii)(b) of the Act, therefore, the same cannot be treated as a "capital asset", the CIT(A) did not find favour with the same. The CIT(A) relied upon the judgment of the Hon'ble Punjab and Haryana High Court in the case of CIT Vs. Smt. Anjana Sehgal, ITA No. 276 of 2004; dated 01.03.2011, wherein it was held that the land will be held as "urban land" if the same falls within the distance of 8 Kms. from the limits of any notified municipality. The CIT(A) observed that the aforesaid judgment in the case of Anjana Sehgal (supra) was followed by the jurisdictional ITAT, Hyderabad in the case of Gousia Begum Vs. Dy. CIT in ITA No.1024/Hyd/2011, dated 16.01.2012. Also, the CIT(A) had drawn support from the judgment of the Hon'ble High Court of Andhra Pradesh in CIT Vs. Bolla Ramaiah (1988) 174 ITR 154 (AP), wherein under similar circumstances, it was held that capital gains arising on the sale of land situated within 8....
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....remand report" dated 04.07.2012 (supra), observed that the eligible amount of the assessee's claim for exemption under Section 54B amounted to Rs. 29,50,155/-. At the same time, the CIT(A) accepted the assessee's claim for exemption under Section 54B, i.e the investments in two properties which though were made by him vide registered sale deeds but in the name of his wife amounting to Rs. 71,56,960/-. Accordingly, the CIT(A) based on his aforesaid observations allowed the assessee's claim for exemption under Section 54B of Rs. 1,01,07,115/- (Rs. 71,56,960/- + Rs. 29,50,155/-). 10. Apropos the assessee's claim for deduction of the cost of improvement of Rs. 39,20,100/- and Rs. 15,80,000/-, the CIT(A) observed that in the absence of any documentary evidence to substantiate the aforesaid claim for deduction, the same did not merit acceptance. At the same time, the CIT(A) was of the view that as the assessee had at the time of purchase of the subject land incurred the commission expenditure of Rs. 10 lac through two cheques drawn on ABN Amro Bank, viz. (i). Cheque No. 625970, dated 20.08.2002: Rs. 5,00,000/-; and (ii). Cheque No. 626178, dated 28.08.2002, directed the A.O. to allow th....
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....rd 7(4), Hyderabad, ITA No.56/Hyd/2007, dt.23.04.2010. The Ld. AR submitted that the Tribunal in its order, had observed, that since Rajendranagar Municipality is admittedly not notified by the Central Government, therefore, the agricultural land in the case before them could not have been treated as a "capital asset" by taking the distance from the limits of Hyderabad Municipality. Elaborating further on his contention, the Ld. AR submitted that the Tribunal in its order had drawn support from the view taken by the co-ordinate Bench of the ITAT, Amritsar in the case of DCIT Vs. Capital Local Area Bank Limited 123 TTJ (ASR) 918 (2009). Further, the Ld. DR submitted that the order of the ITAT in Shri Srinivas Pandit (HUF) (supra) had been upheld by the Hon'ble High Court vide its order dated 04.07.2013, Pages 1 and 2 of APB. The Ld. AR had drawn our attention to the judgment of the Hon'ble High Court of Andhra Pradesh in the case of CIT Vs. Sri Srinivas Pandit (HUF) in ITA No.195 of 2013, dt.04.07.2013. The Ld. AR submitted that the Hon'ble High Court in its order had approved the view taken by the Tribunal, and observed that as there was nothing before them which would ....
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....tted that the authorities below had erred in not appreciating the facts in the right perspective, and had most arbitrarily restricted the assessee's claim for exemption u/s 54F to an amount of Rs. 1,62,00,000/- 16. Apart from that, the Ld. AR submitted that both the authorities below have without any justification scrapped the assessee's claim for deduction of the indexed cost of improvement amounting to Rs. 82,50,632/-. 17. Per contra, Dr. Sachin Kumar, the learned Senior Departmental Representative (for short "ld. DR") relied upon the orders of lower authorities. The Ld. DR submitted that on 16.04.2007, GHMC was formed, by merging 12 Municipalities and 8 Gram Panchayats with the Municipal Corporation of Hyderabad. It was submitted by him that "Rajendranagar Municipality" was, inter alia, one of the 12 municipalities that was merged into GHMC. Elaborating further on his contention, the Ld. DR submitted that as on the date when the assessee had sold the agricultural land i.e. on 07.09.2007 the "Rajendranagar Municipality" was no more in existence and had merged with GHMC, therefore, there was no substance in the ld. AR's claim that the A.O. had erred in treating the agricultural....
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....ncome Tax Act. The Legislature used the word 'any municipality'. When the legislature used 'any municipality', the question is can it be a Hyderabad Municipal Corporation or it be a Rajendra Nagar Municipality. This question of assessee's is important since Himayatsagar Village falls within Rajendra Nagar Mandal. If it is Hyderabad Municipal Corporation, then it may fall within 8 kms as contended by the Revenue. If it is Rajendra Nagar Municipality, then admittedly, Himayatsagar Village is situated beyond the Rajendra Nagar Municipality. Moreover, Rajendra Nagar Municipality was not notified by the central Govt. for the purpose of provisions of sec.2(14)(iii) of the IT Act. These issues were not considered by either the Apex high Court or A.P. High Court in Gemini Pictures (P) Ltd. (Supra), G.M. Omar Khan (Supra) and in Bolla Ramaiah (supra). Therefore, these judgements may not be of any assistance to the Revenue. 9. The Amritsar Bench of the Tribunal had an occasion to consider this issue specifically in DCIT Vs. Capital Local Area Bank Ltd., (123 TTJ (Asr)918 (2009). After considering the provisions of sec.2(14)(iii) and the concept of municipality Amritsar ....
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....sus of which the relevant figures have been published before the last day of the previous year. And the primary requirement is that of jurisdiction of the municipality over the land. If a municipality does not have jurisdiction over the land. If a municipality does not have jurisdiction over the land, it is not the municipality mentioned in s.2(14) (iii) (b). In Municipal Corporation for the City of Bombay Vs. CIT (1984) 16 ITR 165 (Bom) it has been held inter alia, to the effect that jurisdiction of a municipality does not extend outside its prescribed area of jurisdiction. 29. "From the above, it becomes amply clear that the 'municipality' referred to in s.2(14) (iii) (b) of the IT Act is the very one referred in s.2(14) (a). To reiterate, s.2(14)(iii)(b) is unambiguous in as much as it uses the expression 'referred to in item (a)'. Taking any other interpretation of the section, as has been done by the AO in the present case, would amount to nothing other than gross misreading and misinterpretation of s.2(14)(iii) (b)". 10. Amritsar Bench further observed as follows at Para Nos. 73, 74 and 75: 73. Now, as per s.2(14)(iii)(b), the central govt. is required t....
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....te in an area within 2 kilometers from the local limits of Phagwara Municipality. Rather, the AO case is that though admittedly, the land is beyond the municipal limits of Phagwara it is within 8 kilometers of the municipal limits of Jalandhar City and so, it is outside the exemption of s.2(14)". 78. When the area specified in col. (4) of the notification stands identified by the central govt. with Phagwara Municipality, the AO could not hold de hors the notification to bring it within the governance of Jalandhar Municipality. 79. Now a notification u/s 2(14)(iii) of the IT Act is issued specifying areas as falling outside the local limits of a municipality 'having regard to the extent of, any scope for urbanisation of the areas concerned and other relevant consideration'. 80. Urbanizations of an area, then falls within the exclusive domain of the concerned municipality exercising regulatory as well as administrative control over such area. It is such concerned municipality, id est, the parent municipality, or jurisdictional municipality of the area, which has to carry out the urbanization of the area. Area situate within the local limits of a Gram Panchayat, when inc....
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....rict all the bye laws which are applicable in that area are of Kapurthala District. Due to the said fact the purchase as well as the sale transactions of the said land were carried out through the offices of Land Revenue Authorities at Phagwara than at Jalandhar. For all the regulatory and administrative controls it falls within the jurisdiction of Kapurthala District. Therefore, the observation of the AO that it becomes a capital asset being falling within 8 kms of municipal limit of Jalandhar cannot be upheld in view of the notification and the peculiar placement of the land". 83. The AO in this regard held as follows: "Even if it is admitted that it is beyond the municipal limits of Phagwara, however, the land in question is within 8 km of the municipal limits of Jalandhar City and on this very ground also the land in question is outside the exemption provided u/s 2(14) of the IT Act". 84. The conclusion of the AO, therefore, as seen in the preceding Paras, is a non est conclusion, arrived at in oblivion of the settled law on the subject, statutory as well as precedent. The learned CIT(A) has ergo, correctly dissented from the conclusion of the AO that falling within 8 kms....
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....decision has followed the decision of Amritsar Bench of the Tribunal in the case of DCIT Vs. Capital Local Area Bank Ltd., reported in 123 TTJ (Asr) 918 (2009). There is no statement in the appeal papers that the aforesaid judgment and order of the Amritsar Bench of the Tribunal has been challenged or upset. Therefore, we cannot admit the appeal to unsettle the settled issue. The Appeal is accordingly dismissed. No order as to costs." 22. We respectfully follow the aforesaid judgment of the Hon'ble High Court in the case of CIT Vs. Sri Srinivas Pandit (HUF) (supra), wherein the order of the Tribunal disposing off the assessee's appeal for A.Y 2003-04 stands approved. The Tribunal in its order had observed, that as the agricultural land in the case before them was situated within Rajendranagar Mandal and Rajendranagar is a separate Municipal Corporation, which though was not notified by the Central Government for the purpose of Section 2(14)(iii)(b) of the Act, the subject agricultural land could not be held to be a "capital asset" based on the fact that the same is situated within the notified distance of 8 Kms from the Hyderabad Municipality i.e a separate municipality. How....
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....o. 410, MA & UD (Elec. II) Dept., dated 03.09.2013; and (iii). G.O.Ms No. 416, MA & UD (Elec. II) Dept., dated 05.09.2013, wherein orders were issued notifying the inclusion of areas covered by 36 Gram Panchayats which, inter alia, included Gram Panchayat of Village: Manchirerevula (Rajendranagar Manda) into the limits of GHMC. However, pursuant to the Hon'ble High Courts orders, dated 26.09.2013 in W.P. No. 26350 of 2013 and batch cases, the Government vide G.O.Ms No. 12, dated 07.01.2014 canceled the merger of the aforesaid 36 Gram Panchayats into GHMC, Page 5-6 of APB. It was, thus, the G.O.Ms No. 407, 410 & 416 MA & UD (Elec. II) Dept. of the Government of Andhra Pradesh ordering the inclusion of 36 Gram Panchayats into GHMC that had been canceled, and not the G.O.Ms No. 261, dated 16.04.2007 abolishing the 12 Municipalities (including "Rajendranagar Municipality") and including their the areas covered by the said erstwhile municipalities in the limits of "Hyderabad Municipal Corporation" (HMC) so as to constitute the "Greater Hyderabad Municipal Corporation" (GHMC). For the sake of clarity, Government of Andhra Pradesh - G.O.Ms No. 12 and Notification, dated 07.01.2014, (Page ....
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...." if the same was located within 8 Kms radius from the municipal limits of GHMC. However, we are of the view that as the distance of the subject agricultural land at Village: Manchirevula from the municipal limits of GHMC is neither discernible from the record; nor any details establishing the same was there before the CIT(A), therefore, the matter requires to be restored to the file of A.O. The A.O. is directed to verify the distance of the subject agricultural land at Village: Manchirevula from the municipal limits of GHMC on the date of sale i.e. on 07.09.2007. In case, the agricultural land is found to be within the notified area limit of 8 Kms. from the municipal limits of Hyderabad Municipality (now known as GHMC), then the view taken by the CIT(A) that the same is a "capital asset" under Section 2(14)(iii)(b) of the Act will stand approved. 30. Apropos the merits of the case, we find no infirmity in the view taken by the CIT(A) who had based on the documentary evidence as was available before him, viz. (i). registered sale deed dated 23.07.2011: Rs. 90 lacs; and (ii). unregistered construction agreement dated 18.04.2008: Rs. 72 lacs, had after observing that the assessee ha....