IN THE INCOME TAX APPELLATE TRIBUNAL "NAGPUR", BENCH, (E-COURT), MUMBAI
BEFORE SHRI R.K.GUPTA, JM & SHRI D.KARUNAKARA RAO, AM
I T A N o.1 64/Nag/ 20 12
( Ass ess me nt Year 2008-09 )
Shri Prakash Laxminarayan Vs.
ACIT, Cir-5, Nagpur-440 001
Soni, 74, Shriniketan, Ramdaspeth, Nagpur-12
P AN No . : AEWPS 2001 P
(Appellant)
..
AN D
( Respondent)
I T A N o.1 65/Nag/2012
( Ass ess me nt Year 2008-09 )
Shri Rahul Prakash Soni, 74, Shriniketan, Ramdaspeth, Nagpur-12
P AN No . : AETPS 696 5 H
Vs. ACIT, Cir-5, Nagpur-440 001
(Appellant)
Assessee by
Revenue by
Date of Hearing
Respondent)
Mr. Bhupendra Shah
Dr. Millind Bhusari
15thMarch., 2013
Date of Pronouncement :
O R D E R
Per Bench :
10th April, 2013
These two appeals have been preferred by two different assessees before the ITAT Nagpur Bench,
Nagpur, against the order of leaned
CIT(A)-II, Nagpur (Maharashtra) relating to assessment year 2008-09, which has been heard through
E-Court, Mumbai.
2. Si n c e common issues are
involved in both the cases, therefore, for
the sake of convenience, both these cases have been heard and disposed of by this consolidated order.
3. In both the appeals, the
aforesaid assessees have raised the ground
against the action of the learned CIT(A) in regard to confirming the action of the AO in holding and maintaining
that the agricultural land held by these
two assessees are capital asset within the meaning
ITA Nos.164 &165/Nag/2012 of Section2(14)(ii)(b) by adopting the ariel
distance by straight line method
instead of road distance.
4. Brief facts giving rising to
both these appeals are that during the course
of assessment proceeding, the AO noted that these two assessees have sold lands, in which they were
having 1/4th share. The lands were
purchased on 17-8-2007 admeasuring 2.58 hectare, which was sold on 31-1-2008 for a total consideration
of Rs.1,88,13,156/-. These two partners
were having 1/4thshare in the above stated land which was situated in Mouza Khadka village.
The AO found that as per the
straightline method, the distance of the agricultural lands sold are situated beyond 8 KMs from the Municipal Limits
of the City of Nagpur. Therefore, he
viewed that the land in question is capital asset within the meaning of Section 2(14)(iii)(b) of the
Act. Accordingly, he brought the gain
to tax by computing capital gain.
5. Being aggrieved, both these
assessee preferred appeal before the
CIT(A), wherein the CIT(A) after passing a detailed order held that the findings of the AO are correct. Hence,
both these assessee are now in appeals
here before the Tribunal.
6. Having heard the rival
parties and perusing the material on record,
we found that on similar facts in case of Sanjay Nagorao Paidlewar & Nitish Rameshchandra Chordia
Vs. ACIT, listed under ITA Nos.112
& 113/Nag/2012, which was decided on 22-3-2013, wherein
after considering the arguments of both the parties in detail, the Tribunal has taken a view that the distance from
municipal limit has to be adopted by taking approach road distance and
not on the basis of straight-line method
or crow's flight.The issue has been discussed at great length and found that this is squarely
covered by the decision of various
Hon'ble High Courts and various benches of the Tribunal. The findings of the Tribunal have been recorded
in para 9 to 21, which are as under :-
"9. We have heard rival submissions and considered them carefully.
We have also considered the written submissions filed on behalf of both the
parties i.e. assessees and department and have also perused the relevant material
on record, on which our attentions were drawn. We have also taken into
consideration the various case laws relied upon by the learned AR as well as
learned CIT DR. After considering the submission and perusing the material on
record, we found that the issue in respect to whether the agricultural land in
question is an asset within the meaning of Section 2(14) or not, have already
been decided by the Hon'ble Punjab and Haryana High Court in the case of Satinder
Pal Singh(Supra). This decision of the Hon'ble Punjab and Haryana High Court
has been consistently followed by various benches of the Tribunal in various
parts of the country. One of us has also taken into considering this issue
while sitting in Jaipur Benches of the
Tribunal and found that the decision of the Hon'ble Punjab and Haryana High
Court has to be followed and the distance has to measured through approach road
and not through the crows flight distance.
The Hon'ble Punjab and Haryana High Court in the case of Satinder Pal Singh
(supra) has held that the distance of agricultural
land belonging to the assessee within the meaning of Section2(14)(iii)(b) has
to be measured in terms of approach road and not by a straight line distance on
horizontal plane or as per crows flight.
Copy of the order is also placed in the compilation at pages 1 & 2.
10. The contention raised by learned CIT(A) that the reckoning of
urbanization as a factor for prescribing the distance is of significance which
would yield to the principle of measuring distance in terms of approach road rather
than by straight line on horizontal plane, this contention of learned CIT(A)
has also been considered by the Hon'ble Punjab and Haryana High Court and has observed
that the principle of measurement of distance is considered as straight line
distance on horizontal plane or as per crow's flight then it would have no relationship
with the statutory requirement of
keeping in view the extent of urbanization. Such a course would be illusory,
which is in pursuance of the aforesaid provision that Notification No.9447
dated.6thJanuary, 1994 has been issued by the Central Government. In respect of
the State of Punjab, at item No.18, the sub-division Khanna has been listed at serial
No.19. It has inter alia been specified that area upto 2 kms. from the municipal limits in all directions
has to be regarded as other than
agricultural land. Once the stator guidance of taking into account the extent
and scope of urbanization of the area has to be reckoned while issuing any such
notification then it would be incongruous to the argument of the Revenue that
the distance of land should be measured by the method of straight line on horizontal
plane or as per crow's flight because any measurement by crow's flight is bound
to ignore the urbanization which has taken place. The decision of the Mumbai
Bench in the case of Laukik Developers Vs DCIT, reported in (2007) 108 TTJ
(Mumbai) 364, was also taken into
consideration by the Hon'ble Punjab and Haryana High Court and found that the
decision of the Tribunal has attained
finality.
11. In case of Laukik Developers (supra), the Mumbai Bench of the
Tribunal has observed that once the principle of measuring distance has been
settled namely that the distance of the agricultural land belonging to the
assessee-respondent has to be measured in terms of by approach road and not by
a straight line distance on horizontal plane or as per crow's flight.
Accordingly, the Hon'ble Punjab and
Haryana High Court held that the distance has to be measured by approach road and not by
straight line distance on horizontal plane or as per crow's flight. In case of
Laukik Developers (supra), the assessee disputed that the distance for the purpose of Section 80IB(10) has to be
measured through straight line distance on horizontal plane and not by approach
road. The Mumbai Bench of the Tribunal
has held that the issue regarding distance to be measured with regard to road
distance or a straight line distance is covered with the decision of the Pune Tribunal
in the case of Mangalam Inorganics (P) Ltd (supra), wherein it was held that the distance between
the municipal limits and assessee's
industrial undertaking has to be measured having regard to the road distance
and not as per the crow's flight i.e., a straight-line distance as canvassed by
the Revenue.
12. In case of ITO Vs. Ashok Shukla, decided in ITA No.207/Indore/2012,
for assessment year 2008-09, vide order dated 31-8-2012, the issue was in respect
to whether the assessee was entitled to exemption from capital gain on sale of
agricultural land. This issue was examined in detail and it was found that the Tehsildar
and Patwari have given a report that the land in question was agricultural land
and the distance is 9.7 kms from the municipal limit. This distance was through the approach
road and not by straight line distance method. Thereafter discussing the issue
on merit and having taking into consideration the decision of the Tribunal in
the case of Laukik Developers (supra) and considering the decision of the
Hon'ble Gujarat High Court in the case of Balkrishna Hariballabhadas Vs. CIT,
reported in 138 ITR 245, which was
relied upon by the learned DR and found that the measurement has to be adopted by
the approach road and not by straight line method. Reliance was also placed on
the decision of the Hon'ble Punjab andHaryana High Court in the case of Satinder
Pal Singh (supra). 13. In case of ACIT Vs. M/s Shagun Infrastructure Pvt. Ltd.,
decided in ITA No.209/Nag/2009, for assessment year 2006-07, vide order dated
27-6-2011, the Nagpur Bench of the Tribunal has held that the land in question
which was situated more than 8 kms. from
the local municipal limit and is clearly agricultural land in terms of Section
2(14)(iii) of the Act,, therefore, any income from such land including profit
arising from sale of such agricultural land is not assessable as income.
14. In case of ACIT Vs. Gaurav Khandelwal, decided in ITA No.195/Agra/2010,
for assessment year 2006-07, the Agra Bench of the Tribunal following the decision
of Mumbai Bench in case of Laukik Developers (supra) and the decision of Hon'ble
Punjab and Haryana High Court in the case of Satinder Pal Singh (supra), held
that the distance of 8kms has to be measured by approach road distance and not
by straight line distance on horizontal plane. Similar view has been expressed
in case of Shri Mainraj Vs. ACIT, decided in ITA No.1371/Mds/2011, for assessment
year 2007-08 vide order dated 18-8-2011. In this case also it has been held
that the distance has to be measured by approach road and not through crow's flight
or straight line method. In case of Smt. Savithri Ammal Vs. ITO, decided in ITA
No.487/Mds/2012, vide order dated 12-7-2012 again it has been held that the
distance has to be measured as per the approach road and not by straight line
method. Similar view has been expressed in case of ITO Vs. Shri Chaganlal Lalji
Aswin Business, decided in ITA No.857/Mds/2011,
for the assessment year 2007-08, vide order dated 18-2-2011. In case of ITO Vs.
M/s Ranjit Rattan Mehra (HUF), decided in ITA No.442/Asr/2011 for assessment year 2008-09, the Amritsar Bench of
the Tribunal has taken a view that the
distance of 8 kms has to be measured through the approach road and not through
the straight line method. While holding so, the decision of the Hon'ble Punjab
and Haryana High Court in case of Satinder Pal Singh (supra), was taken into
consideration and another decision of the same High Court in case of CIT Vs.
Lal Singh & Others, reported in (2010) 228 CTR 575 was also taken into
consideration and has allowed the issue in favour of the assessee by holding
that the distance of 8km has to be measured through approach road and not by straight
line method on horizontal plane. 15. We
have also taken into consideration various arguments of learned CIT DR and
found that since the issue is covered by the decision of the various Benches of
the Tribunal as well by Hon'ble Punjab
and Haryana High Court, therefore, in view of the consistency the view taken by
various benches has to be followed. There is no contrary decision is available
on the same facts and, therefore, it cannot be said that the decision of the
Hon'ble Punjab and Haryana High Court has only persuasive value. If there is
any contrary decision is available either by the Hon'ble High Court or by any other benches of the Tribunal, then of
course it can be said that the decision of other benches have persuasive value.
In view of the aforesaid facts and circumstances of the case, we held that distance
of 8 kms. has to be measured through approach road and not by straight line
distance on horizontal plane or crow's flight. Hence, this issue is decided in
favour of the assessees.
16. Regarding the issue in regard to whether the sale consideration out
of agricultural income is assessable as business income or not, once we have
held that this was an agricultural land and, therefore, any consideration out
of sale of agricultural land, which is not assessable as the land was situated
beyond 8 kms., therefore, the direction of the learned CIT(A) that the surplus
may be treated as business income, has
become now meaningless. Even and otherwise, this issue is also decided by
various High Courts including the Hon'ble Bombay High Court. Though learned CIT(A)
has placed reliance on the decision of the Hon'ble Bombay High Court in case of
Gopal Ramnarayan Kasat, reported in 9 Taxman.com
236 (Bom), however, in a latest decision the Hon'ble Bombay High Court in the case of CIT Vs. Smt.
Debbie Alemao, reported in (2011) 331 ITR 59, has held that the land which was shown
as agricultural land in the revenue records and never sought to be used for
non-agricultural purposes by the assessee till it was sold has to be treated as
agricultural land, even though no agricultural income was shown by the assessee
from this land and, therefore, no capital gain was taxable on the sale of the
said land.
17. Facts in the case in hand are similar. The land in question was
shown as agricultural land in the revenue record. Whether there was any
agricultural income or not, is not the moot question to decide the issue,
however, the important factor is to be decided as to whether the character of the
land is agriculture or not. Undisputedly,
in the revenue record and as per the Patwari certificate, the land in question
is agricultural land. Therefore, the sale consideration was not taxable on the
sale of said land i.e. either on account of capital gain or on account of
business income.
18. Even we found that this issue has been decided by the Hon'ble Apex
Court while confirming the order of the Hon'ble Delhi High Court in the case of DLF United Limited,
217 ITR 337. The facts in the case of DLF United Limited (supra) were that the
DLF limited purchased agricultural land from various farmers in the ear and
shown exemption, however, the AO treated the sale consideration as revenue
receipt. Upto the stage of Tribunal, the order of AO was confirmed, however,
the Hon'ble Delhi High Court held that the land in question was of agricultural
land and therefore, any receipt on account of sale of agricultural land is not taxable.
This decision of the Hon'ble Delhi High Court has been confirmed by the Hon'ble
Apex Court, whereby it has been held that even and otherwise we see no merit in
the Special Leave Petition and the same are accordingly dismissed on the ground
of delay as well as on merits. Copies of these orders are placed in the
compilation.
19. This issue has also been considered in various other decision i.e.
in case of Hindustan Industrial Resources Limited Vs. ACIT, reported in 335 ITR
77, wherein it was held that in view of
the finding of the Tribunal that the land in question was agricultural land at
the time of purchase by the assessee as also at the time of acquisition, the
land was clearly agricultural land irrespective of the fact that the assessee
intended to use the land for industrial purposes and did not carry out any
agricultural operations and, therefore, no capital gains could be charged on acquisition
thereof under the Land Acquisition Act, 1894. While holding so, the decision in
the case of DLF United Limited (supra),
was taken into consideration by the Hon'ble Delhi High Court.
20. In case of Shri Satyanarayan O. Agrawal Vs. ADCIT, decided in ITA No.169/Nag/2012 for assessment
year 2007-08, similar view also was taken following the various case laws and ultimately
it was held that the consideration received out of sale of agricultural land
was not taxable.
21. Since this issue has already been decided by various benches of the
Tribunal and the Hon'ble Bombay High Court as well as the Hon'ble Delhi High
Court and the decision of the Hon'ble Delhi High Court in the case of DLF
United Limited (supra), which has been confirmed by the Hon'ble Supreme Court, therefore, we hold that any consideration
received out of sale of agricultural land, cannot be treated as business income
for the purpose of capital gain or for the purpose of business income, whatever the case may be. In view of the
aforesaid facts and circumstances of the case, we allow this ground in favour
of all the assessees."
Since facts are similar, therefore, following the above decision of the Tribunal in the case of Sanjay Nagorao
Paidlewar & Nitish Rameshchandra
Chordia Vs. ACIT, listed under ITA Nos.112 & 113/Nag/2012, decided on 22-3-2013, we allow
this ground of these two assessees in
both the appeals by holding that the distance of 8km has to be measured through approach road and
not by straight line method on
horizontal plane and if through approach road the distance is taken, then it is seen that the distance
is beyond 8 km from the municipal limit.
Accordingly, we hold that no capital gain is payable as the agricultural land sold is not a capital
asset within the meaning of Section
2(14)(iii)(b) of the Act.
Resultantly, appeals of both the assessees are allowed.
Order pronounced in the open court on this 10thday of Apr. 2013.
Sd/- Sd/-
(D.KARUNAKARA RAO) (R.K.GUPTA)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Mumbai; Dated :
pkm, PS
10/04/ 2013.
Copy of the Order forwarded to :
1. The Appellant
2. The Respondent.
3. The CIT(A),Nagpur.
4. CIT
5. DR, ITAT, Mumbai/Nagpur
6. Guard file.
//True Copy//
8
ITA Nos.164 &165/Nag/2012
BY ORDER,
(Asstt. Registrar)
ITAT, Mumbai
