TaxTMI 
TaxTMI 
2025 (6) TMI 1915
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....ral land. 3. The Hon'ble CIT(A) ought to have observed 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 ....
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....632/-, disallowed the same. 5. Ostensibly, the assessee during the course of the assessment proceedings came up with a new claim, 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....
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....tax. Accordingly, the A.O. based on his aforesaid deliberations, reworked out the LTCG on the sale of the subject agricultural land at Rs. 5,69,67,912/-. 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.....
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....m that the assessee had invested in agricultural lands an amount of Rs. 85 lacs. However, the CIT(A) after considering the reasons given by the A.O. in his "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 draw....
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....iii)(b) of the Act. The Ld. AR to support his contention had relied upon the order of ITAT, Hyderabad Bench "B" in the case of Shri Srinivas Pandit (HUF) Vs. ITO, Ward 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. A....
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....rily concluded that the exemption was to be allowed only to the extent of the value reflected in the corresponding registered sale deeds. 15. The Ld. AR further submitted 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 "Rajendranaga....
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.... 2(14)(iii) (b) clearly says that any area within such distance not being more than 8 kms from the local limits of any municipality, has to be treated as capital asset for the purpose of Income 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 t....
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....vious year. Both these conditions are concurrent and not mutually exclusive. The municipality must have jurisdiction over the land as well as it must have a population of more than ten thousand as per the last preceding census 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 amo....
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....om the local limits of Phagwara Municipality. It would not have fallen within the exemption provided by s. 2(14)(iii)(b) were it situate within 2 kilometers from the local limits of Phagwara Municipality. However, it is nobody's case that the land in question is situate 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....
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....of Jalandhar District because it is in the jurisdiction of Kapurthala District nearer to its Tehsil Phagwara. As per the said notification the areas specified in Phagwara Municipality cannot be related with Jalandhar, against which the areas have been separately specified. Being outside the area of Jalandhar District 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 p....
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....he facts and in the circumstances of the case, the view of the Appellate Tribunal that the expression "any Municipality or Cantonment Board referred to in item (a)" found in Section 2(14)(iii) (b) of the Income Tax Act is referable to Municipality in which the concerned land is situate, can be said to be tenable in law? The learned Tribunal while rendering the 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 a....
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....cipality", and had included 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). 27. Independent of the aforesaid, the Government of Andhra Pradesh had thereafter come up with (i). G.O.Ms No. 407, MA & UD (Elec. II) Dept. dated 31.08.2013; (ii). G.O.Ms No. 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 a....
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....ing in the periphery of GHMC i.e. erstwhile Hyderabad Municipal Corporation (HMC) - a Municipality notified by the Central Government vide its "Notification No. So.,dt. January, 06, 1994" for purpose of Section 2(14)(iii)(b) of the Act, therefore, no infirmity arises from the view taken by the CIT(A), who had rightly concluded that the subject agricultural land is to be held as a "capital asset" 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" und....
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....income under sub-section (4) of Section 139 of the Act applicable in his case. 31. Apropos the assessee's claim for exemption under Section 54B of the Act, we are of the view that no infirmity arises from the observation of the CIT(A). Although the CIT(A) had observed that as per the "agreements to sell" it was an established fact that the payments/investments made by the assessee in agricultural lands were higher than the sale consideration reflected in the sale deeds, but the value reflected in the registered sale deeds which were executed subsequent to the "agreements to sell" was only to be considered. Accordingly, we are of the view that the CIT(A) had adopted a fair approach and allowed the assessee's claim for exemption under Section 54B of the Act of Rs. 1,01,07,115/-, viz.(i). agricultural lands purchased by the assessee in his own name (as per the value stated in the registered sale deed): Rs. 29,50,155/-; and (ii). agricultural lands that were though purchased by the assessee from his own sources but the registered sale deeds were executed in the name of his wife: Rs. 71,56,960/-. We thus, in terms of our aforesaid observations, uphold the view taken by the CIT(A), wh....
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....diannaram Municipality Lr. No. GMC/C 1/754/2005 dated 28-2-2007. 7. Resolution No.2 dated 2-3-2007 of the Council of MCH. 8. Govt. Memo No. 12417/Elec.II/2005 M.A & U.D (Elec.II) Dept. dated 13-4-2007. G.O.Ms. No. 247 M.A & U.D (Elec.Il) Dept. dated 13-4-2007. 10. G.O.Ms. No. 248 M.A & U.D (Elec.Il) Dept. dated 13-4-2007. 11. G.O.Ms. No. 249 M.A & U.D (Elec.II) Dept. dated 10-4-2007. 12. G.O.Ms. No. 250 M.A & U.D (Elec.II) Dopt. dated 16-4-2007. 13. Ms. No. 251 M.A & U.D (Elec.II) Dopt. dated 16-4-2007. 14. G .Me. No. 252 M.A & U.D (Elec.Il) Dept. dated 16-4-2007. 15. G .Ms. No. 253 M.A & U.D (Elec.Il) Dept. dated 16-4-2007. 16. G O.Ms. No. 254 M.A & U.D (Elec.II) Dept. datod 16-4-2007. 17. G. .Ms. No. 255 M.A & U.D (Elec.II) Dept. dated 16-4-2007. 18. O.Mo. No. 256 M.A & U.D (Elec.Il) Dept. dated 16-4-2007. G.O.Ms. No. 257 M.A & U.D (Elec.II) Dept. dated 16-4-2007. 19. 20. G.O.Ms. No. 258 M.A & U.D (Elec.II) Dept. dated 16.4-2007. 21. G.O.Ms. No. 259 M.A & U.D (Elec.II) Dopt. dated 16-4-2007. 22. G.O.Ms. No. 260 M.A & U.D (Elec.II) Dopt. dated 16-4-2007. ORDER :- Vide roforencos 1" and 2nd read above, Government propose....
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....rect the State Government to consider the same before finally deciding the issue of Greater Hyderabad Municipal Corporation." 4. In pursuance of the Court orders in the reference 4th read above, Government in the reference 5th read above issued a show cause notice to the Council of Municipal Corporation of Hyderabad and to the Council of Gaddiannaram Municipality as to why their Resolution No. 144 dated 4-8-2005 and Resolution No. 35 dated Document 3 3-8-2005 respectively should not be cancelled in the larger public interest. 5. In the reference 6th read above, the Council of Gaddiannaram have resolved that they have no objection for cancellation of their Resolution No. 35 dated 3-8-2005 made earlier as referred in the show cause notices. 6. In the reference 7th read above, the Council of Municipal Corporation of Hyderabad have resolved that they have no objection for cancellation of their Resolution No. 144 dated 4-8-2005 made earlier as referred in the show cause notices. 7. In the reference 8th read above, Government after examining the petitions received as per the notification issued vide reference 2ªd read above, and those received subsequently as per the o....
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....AME OF THE GOVERNOR OF ANDHRA PRADESH) S.P. SINGH PRINCIPAL SECRETARY TO GOVERNMENT To The Commissioner, Printing, Stationary & Stores purchase Department, Hyderabad. The Council/ Special Officer, Municipal Corporation of Hyderabad The Commissioner, Municipal Corporation of Hyderabad The Commissioner & Director of Municipal Administration, Hyderabad The Council/ Special Officer of 12 Municipalities The Commissioners of 12 Municipalities The Collector & District Magistrate, Ranga Reddy/Medak The Director of Town and Country Planning, Hyderabad The Engineer-in-Chief (PH), Hyderabad The Director of Treasuries and Accounts, A.P Hyderabad The District Treasury Officer, Ranga Reddy/Medak Copy to: The P.S to Spl. Secy to C.M The P.S to M (MA) The P.S to Prl Secy, M.A & U.D Dept. The P.S to Secy. to M.A & U.D Dept. The Law Department. SFISC I/FORWARDED BY ORDER// SECTION OFFICER Document 5 GOVERNMENT OF ANDHRA PRADESH ABSTRACT Municipal Administration& Urban Development Department - Greater Hyderabad Municipal Corporation - A.P. High Court orders, dated 26.09.2013 in W.P.No. 26350 of 2013 and batch cases - Cancelation of Notification issued on merger of thirty six (36....