Case Law Details
Mohideen Sharif Inayathulla Sharif Vs ITO (ITAT Chennai)
Ground- The Ld. Commissioner of Income-tax (Appeals)-13, Chennai failed to independently apply his mind that the village in which this land is situated is more than 5 kilometers from the nearest municipal limits. A mere misstatement or confusion with regard to the identical name of 2 villages cannot form the basis for making an huge addition under the head Capital Gains under the surmise and suspicion that this village could be within 5 kilometers from the nearest municipal limits.
Upon careful consideration, the undisputed fact that emerges are that the assessee’s land is situated at Village No.92, Eachangaranai which is located near Sri Esani Angala Parameshwari Amman Temple and Avigna. The name of Village no. 92 has since been changed to No.94, Eachangaranai which is evidenced by certificate of VAO as placed on record. Another locality having similar name i.e., Eachankarania is located near Bethesda IPA Church. The Ld. AR has submitted that the land is situated near Avigna which is approx. 9.90 Kms from Chengalpattu Village in comparison to second Eachankarania which is very close to Chengalpattu. In support, the copy of Google map has been placed on record which shows that shortest route between these two points is 9.90 Kms. The exact location of the land is also certified in various certificates issued by Village Administrative Officer (VAO), the copies of which have been placed on record. Quite clearly, the assessee’s land is situated beyond 5 Kms since notification, as referred to by the assessee during appellate proceedings, has been accepted by Ld. CIT(A) and according to notification, the relevant area is 5 Kms. and not 8 Kms. Therefore, the assessee’s land could not be considered as non-agricultural land and the same would be out of ambit of ‘capital asset’ as defined in Sec.2(14). The fact that land continues to be agricultural land in revenue record could also not be controverted before us. This being the case, the assessment of capital gains, would have no legs to stands. By deleting the impugned additions, we allow the appeal.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
1. Aforesaid appeal by assessee for Assessment Year (AY) 2011-12 arises out of the order of learned Commissioner of Income Tax (Appeals)-13, Chennai [CIT(A)] dated 27-02-2020 in the matter of assessment framed by Ld. Assessing Officer [AO] u/s.143(3) r.w.s. 147 of the Act on 27-12-2018. The grounds raised by the assessee read as under: –
1. The Order of the Ld. Commissioner of Income-tax (Appeals)-13, Chennai in ITA No.169/2018-19/CIT(A)-13/AY 2011-12 dated 27-02-2020 for the assessment year 2011/12 is against law, weight of evidence and probabilities of the case.
2. The Ld. Commissioner of Income-tax (Appeals)-13, Chennai is wrong in confirming the addition made by the assessing officer of Rs.1,32,89,469 under the head Capital Gains.
3. The Ld. Commissioner of Income-tax (Appeals)-13, Chennai is wrong in not accepting the submissions made and the documentary evidence produced by the appellant to establish the genuineness of his claim that the land in question is an agricultural land in terms of Section 2(14) of the Income tax Act, 1961.
4. The Ld. Commissioner of Income-tax (Appeals)-13, Chennai failed to appreciate the fact that the land in question is an agricultural land as per the revenue records.
5. The Ld. Commissioner of Income-tax (Appeals)-13, Chennai failed to understand that the purpose for which the land was purchased by the buyer will have no bearing on the fact that the land was an agricultural land at the time of sale. In other words, it is of no consequence as to what the buyer proposes to use the land as.
6. Various Judicial decisions have categorically confirmed that the revenue records are ultimate proof of the land being an agricultural land and that its subsequent use is non consequential
7. The Ld. Commissioner of Income-tax (Appeals)-13, Chennai failed to independently apply his mind that the village in which this land is situated is more than 5 kilometers from the nearest municipal limits. A mere misstatement or confusion with regard to the identical name of 2 villages cannot form the basis for making an huge addition under the head Capital Gains under the surmise and suspicion that this village could be within 5 kilometers from the nearest municipal limits.
8. The Ld. Commissioner of Income-tax (Appeals)-13, Chennai has misinterpreted the judicial decisions referred to therein in the appellate order which are in fact in favour of the appellant.
As evident the grievance of the assessee is assessment of capital gain at Rs.132.89 Lacs as stated to be arising out of sale of certain agricultural land.
2. The Ld. AR submitted that there was mistake as to exact location of the land since there were two villages having same name i.e., Village No.92, Eachangaranai which is located near Sri Esani Angala Parameshwari Amman Temple and Avgina and another locality with the name of Eachankaranai which is located near Bethesda IPA Church. The Ld. AR submitted that the land was situated near Avigna which is approx. 9.90 Kms. from Chengalpattu Village in comparison to second Eachankarania which is very close to Chengalpattu. The Ld. AR placed on record certificates and other documents in support of the fact that the distance was more than prescribed limit and therefore, the land was an agricultural land. Accordingly, no capital gains would arise on sale thereof. The Ld. DR, on the other hand, submitted that certificate certifies that the land is exactly within 8 kilometers and therefore, the land would be an capital asset. The Ld. DR submitted that difference of even a single meter, here and there, would materially alter the character of the land.
3. We find that as per the provisions of Sec.45, any gains arising on transfer of capital asset would be chargeable to capital gains. The term ‘capital asset’ as defined in Sec.2(14), would inter-alia, exclude agricultural land in India, not being land situated —(a) in any area which is comprised within the jurisdiction of a municipality or a cantonment board and which has a population of not less than ten thousand; or(b) in any area within the distance, measured aerially,—(i) not being more than two kilometers, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than ten thousand but not exceeding one lakh; or (ii) not being more than six kilometers, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than one lakh but not exceeding ten lakh; or (iii) not being more than eight kilometers, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than ten lakh.
Having heard rival submissions and after going through the orders of lower authorities, our adjudication would be as under.
4. In the above background, during assessment proceedings, it transpired that the assessee sold certain land situated at Eachankarania Village for sale consideration of Rs.137 Lacs to an entity namely M/s Mahindra World City Developers Ltd. The sale took place through assessee’s general power of attorney holder Shri Rajasekran. It came to light that the assessee received amount of Rs.128 Lacs from Shri Rajasekran. The assessee did not offer any capital gain on sale of land on the ground that it was an agricultural land. In support, the assessee submitted extract of Google map which indicated that the land was at a distance of 4.70 Km from nearest Chengalpattu Municipality having population of 62579. Accordingly, the assessee submitted that the land was agricultural land. However, Ld. AO noted that as per power of attorney, the land was sold for non-agricultural purposes. Further, the definition of agricultural land as put forth by the assessee did not pertain to AY 2011-12 and the amendment was effective only from 01-04-2014. Prior to its substitution, item (b) read as under: –
(b) in any area within such distance, not being more than eight kilometres, from the local limits of any municipality or cantonment board referred to in item (a), as the Central Government may, having regard to the extent of, and scope for, urbanisation of that area and other relevant considerations, specify in this behalf by notification in the Official Gazette;
Since the distance between nearest municipality and the land was less than 8 Km, the land was to be treated as non-agricultural land. Finally, adopting 50C value, Ld. AO computed Long Term Capital Gains of Rs.132.89 Lacs.
5. During appellate proceedings, it was submitted that the land continues to be agricultural land as evidenced by certificate issued by Village Administrative Officer (VAO) which state that the land continue to be classified as wet agricultural land in revenue record even as on 1312-2018. Further, the reliance of Ld. AO on google map to measure the distance, was not correct. The actual distance was 8 Km as certified by VAO, the copy of which was filed during appellate proceedings. It was also submitted that the distance as notified for Chenglepet Municipality was 5 KM as per notification No. (SO 9447) dated 06-01-1994, the copy of which was also furnished.
The Ld. CIT(A) noted that the assessee furnished two Google maps showing two routes from Chengalpattu to Eachankarania, the one being 4.7 Km and other being 5.7 Km. The Ld. CIT(A) concurred that as per notification, the areas up-to 5 Kms. from the municipal limits in all directions, was to be considered. Since, as per Google map, there was a road, which showed distance of 4.7 Km, the land was capital asset and the stand of Ld. AO in computing the gains was to be upheld. Aggrieved, the assessee is in further appeal before us.
6. Upon careful consideration, the undisputed fact that emerges are that the assessee’s land is situated at Village No.92, Eachangaranai which is located near Sri Esani Angala Parameshwari Amman Temple and Avigna. The name of Village no. 92 has since been changed to No.94, Eachangaranai which is evidenced by certificate of VAO as placed on record. Another locality having similar name i.e., Eachankarania is located near Bethesda IPA Church. The Ld. AR has submitted that the land is situated near Avigna which is approx. 9.90 Kms from Chengalpattu Village in comparison to second Eachankarania which is very close to Chengalpattu. In support, the copy of Google map has been placed on record which shows that shortest route between these two points is 9.90 Kms. The exact location of the land is also certified in various certificates issued by Village Administrative Officer (VAO), the copies of which have been placed on record. Quite clearly, the assessee’s land is situated beyond 5 Kms since notification, as referred to by the assessee during appellate proceedings, has been accepted by Ld. CIT(A) and according to notification, the relevant area is 5 Kms. and not 8 Kms. Therefore, the assessee’s land could not be considered as non-agricultural land and the same would be out of ambit of ‘capital asset’ as defined in Sec.2(14). The fact that land continues to be agricultural land in revenue record could also not be controverted before us. This being the case, the assessment of capital gains, would have no legs to stands. By deleting the impugned additions, we allow the appeal.
7. The appeal stands allowed in terms of our above order.
Order pronounced on 07th March, 2022.
