Income Tax Appellate Tribunal - Hyderabad
B Vijaya Kumar, Hyderabad vs Assessee on 15 November, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCH "B", HYDERABAD
BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER
AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER
S. ITA No AY Appellant Respondent
No.
1. 721/H/12 2007-08 B. Vijay Kumar, Asst. Commissioner of
Hyderabad. Income-tax, Circle
(PAN - AHAPB 6(1), Hyderabad
6664L)
2 722/H/12 2007-08 Barlo Raghu -do-
Alekh, Hyderabad.
(PAN - AHJPA
1085F)
S. SA No. AY Applicant Respondent
No.
1. S.A. No. 2007-08 B. Vijay Kumar, Asst. Commissioner of
94/H/12 Hyderabad. Income-tax, Circle
(in ITA (PAN - AHAPB 6(1), Hyderabad.
No. 6664L)
721/H/12)
2. S.A. No. 2007-08 Barlo Raghu -do-
95/H/12 Alekh, Hyderabad.
(in ITA (PAN - AHJPA
No. 1085F)
722/Hyd/
12)
Appellant by : Shri K.C. Devdas
Respondent by : S/Shri A.K. Satapathy/
R. Laxman
Date of Hearing : 15/11/2012
Date of Pronouncement : /01/2013
ORDER
PER ASHA VIJAYARAGHAVAN, J.M.:
These SAs and appeals filed by two different assessees, who are father & Son. Since identical issues are involved in both these appeals, they were clubbed and heard together and, 2 SAs. 94 & 95/H/12 and ITA NOs 721 & 722. /Hyd/2012 Sri B. Vijay Kumar & B. Raghu Alekh therefore a common order is passed for the sake of convenience.
2. Since the corresponding appeals of the S.As. have been taken up for adjudication, the SA filed by the assessee are not required to be adjudicated by us.
3. Briefly the facts of the case are that the assessees are individuals. Sri B. Vijay Kumar and his son Sri Raghu Alekh, the Assessees, were entrusted with the work of procuring contiguous plot of land of about 10 acres land at village Jallapaii and Shahajadi Begum by PEBL, an Indian subsidiary of an Israeli company. During the previous year relevant to AY 2006-07, the assessee and his son arranged the land acre 8.02 guntas and acre 2.12 guntas respectively for the said company. One of the conditions of PEBL was that the land should be leveled, free of all impediments and contiguous. Since the land so arranged was rocky and not leveled, the assessees undertook leveling work. Both the assessees deployed 6 contractors from Chennai-Amar Enterprises, Mr. Rakesh Kumar, Rajsree Distributors, Mano Engg., Western International Devi Impex, Deval Impex and Westwin International to carry out the leveling work. For this purpose, separate agreements were signed with the developers. Another condition of PEBL, was that the land should be transferred and registered by the assessees to ensure a hassel free transaction. Accordingly, in the first stage, the land was transferred by the land owners (N. Srinivasa, N. Anjaiah and N. Raghupati and their children who are also joint owners of 3 SAs. 94 & 95/H/12 and ITA NOs 721 & 722. /Hyd/2012 Sri B. Vijay Kumar & B. Raghu Alekh land) in the name of the assessees by agreement of sale-cum- irrecoverable power of attorney dt. 18/01/2007. On the same day land was registered by the assessees as the GPA Holder in the name of PEBL. The total consideration received by Shri B. Vijay Kumar was Rs. 21,73,35,000/- and B. Raghu Alekh was Rs. 6,21,00,000/-. The consideration was receied by RTGS drawn in ING Vysya Bank, Banjara Hills Branch, Hyderabad and deposited in assessees' accounts Nos. 737010062402 and 737010067590 maintained in the same bank. As post dated cheques were issued to the land owners by the assessee's as soon as the amounts were received the same was disbursed to the land owners as also to the developers. Details of payments are as under:-
B. Vijay Kumar (Rs.)
Total consideration received from PEBL - 21,73,35,000
Less: Paid to land owners - 7,02,37,500
Balance consideration with assessee - 14,70,97,500
Less: Paid to developers - 12,97,65,563
Balance - 1,73,31,937
B. Raghu Alekh
Total consideration received from PEBL - 6,21,00,000
Less: Paid to land owners - 1,96,25,000
Balance consideration with the assessee - 4,24,75,000
Less: Paid to developers - 3,97,64,887
Balance - 27,10,113
4. The assessees filed returns of income showing short term capital gains by deducting from the full value of consideration 4 SAs. 94 & 95/H/12 and ITA NOs 721 & 722. /Hyd/2012 Sri B. Vijay Kumar & B. Raghu Alekh the amounts paid to land owners, registration charges and cost of improvement being the amount paid to developers. The returns were filed showing STCG as because the assessees became the owner of the land by virtue of agreement of sale and irrecoverable GPA and then transferred the land to PEBL.
Computation of incomes by the assessees:
B. Vijay Kumar:
Total sale consideration received 21,73,35,000 Less: Cost of land 7,02,89,500 Cost of improvement 13,89,95,500 20,92,85,000 Short term capital gain 80,50,000 Computation by AO Sale consideration as per sale deed dt. 24/01/07 21,73,35,000
b) purchase price as per GPA dt. 18/01/2007 7,02,37,500 Short term capital gain 14,70,97,500 B. Raghu Alekh:
Total sale consideration received 6,21,00,000 Less: Cost of land 1,96,25,000 Cost of improvement 4,01,75,000 5,98,00,000 Short term capital gain 23,00,000 Computation by AO Sale consideration as per sale deed dt. 24/01/07 6,21,00,000
b) purchase price as per GPA dt. 18/01/2007 1,96,77,000 Short term capital gain 4,24,23,000 5 SAs. 94 & 95/H/12 and ITA NOs 721 & 722. /Hyd/2012 Sri B. Vijay Kumar & B. Raghu Alekh
5. In both the above cases, the AO disallowed the cost of the improvement for the purpose of computation of capital gains on the following reasons:
i) that the assessee failed to produce the agreements with Chennai parties on the date of survey operation on 10/09/2009 and the same was produced on 18/09/2009 after survey.
ii) The AO observed that the purchase deed was executed on 18/01/2007 and registered on 24/01/2007 within a period of six days and it is not possible to carry out the leveling as claimed by the assessee within such a short span of time.
iii) that when the lands were not in possession of the assessee, which was handed over to him in January, 2007 after the sale agreement-cum-GPA was executed, it is not possible to carry leveling work between March 2006 to December 2006.
iv) Statement by Shri N. Srinvas, one of the land owners proves that the land was categorized as dry agricultural land as per the Pattadar passbook produced by him and, therefore, the Assessing Officer came to the conclusion that there was no physical barriers of the land.
v) Further, Sri N. Srinivas has claimed deduction u/s 54B by investing the proceeds in purchase of agricultural lands.
vi) leveling agreements are not registered and, therefore, no evidentiary value can be attached to the document as proof of carrying out the work.6
SAs. 94 & 95/H/12 and ITA NOs 721 & 722. /Hyd/2012 Sri B. Vijay Kumar & B. Raghu Alekh
vii) The assessee did not produce the Chennai parties for examination and, hence, burden of proof could not be discharged by the assessee. Further, enquiries caused in Chennai through the DDIT, Chennai did not any result, which showed that none of the parties through whom the assessee carried on leveling work were existent.
vii) It was observed by the AO that enquiries made with the banks in Chennai in which the said parties maintained accounts, showed negligible balance as the amounts were withdrawn, however, credits in some accounts were more than what was mentioned in the development agreement.
6. The AO relied on the statement of General Manager of PEBL recorded on 22/12/2009 wherein he had stated that the clause-3 in the registered sale deed indicating that the consideration was paid towards cost of land and cost of improvement, was not correct and the clause was inserted at the request of the assessee i.e. Shri Vijay Kumar. The AO examined one Sri N. Srinivas, the owner of the land, whose statement was recorded on 29/12/2009 wherein the owner stated that there was no leveling work on the land as agricultural operations were carried on by him on the same land. Therefore, the AO concluded that there was no physical barrier in the said land. Finally, the AO observed that the inspection of the land by the departmental authorities did not indicate any leveling work as being done in the land.
7. Aggrieved, the assessee carried the matter in appeal before the CIT(A) and submitted on two folds, i.e. i) regarding 7 SAs. 94 & 95/H/12 and ITA NOs 721 & 722. /Hyd/2012 Sri B. Vijay Kumar & B. Raghu Alekh carrying out of development work on land and claim of deduction of cost of improvement while computing capital gain and ii) legal claim that the land is a capital asset and therefore exempt from capital gain tax. The second claim was preferred as an additional evidence basing on the order of jurisdictional ITAT in the case of Srinivasa Pandit HUF ITA No. 56/H/07 dt. 23/04/2010.
8. Before the CIT(A), the learned AR of the assessee submitted that the development agreements were not produced at the time of survey on 10/09/2009 as the same were available with the CA. However, on 18/09/2009, these agreement were produced without any inordinate delay. Consideration was paid to the parties by bank transfer in the year 2007, as these agreements existed on the date of survey. It was explained that when a registered sale deed contained a recital about payment of leveling and other charges, it would indicate that there was a pre-existing arrangement and payments were made pursuant to the contract and nobody would make a wrong recital in an official document.
9. On the observation of the AO that the leveling work was completed within six days reckoned from the date of entering into the registered agreement cum sale and ending with the date of registration, it was submitted that the AO has not correctly appreciated the facts. It was explained that the assessee entered into agreements for the work of leveling with various parties on 20/03/2006, 03/04/2006, 10/04/2006, 18/05/2006, 22/05/2006 and 25/05/2006 vide various 8 SAs. 94 & 95/H/12 and ITA NOs 721 & 722. /Hyd/2012 Sri B. Vijay Kumar & B. Raghu Alekh agreements with parties. Therefore, it was not correct to hold that the leveling work was executed within six days. The dates 18/01/2007 and 24/01/2007 pertains to date of entering into agreement for sale and date of registration and has no relevance regarding period of work which was carried out prior to these formal documentation. Therefore, handing over possession for meeting the legal requirements and carrying on of work of leveling had no relation. The AR drawn the attention of the CIT(A) to the reply of Sri Srinivas, land owner to the question NO. 10:
"Q.No. 10. Please state as to whether any development works were carried out in your lands before lands were given possession to Mr. B. Vijay Kumar and Mr. Raghu Alekh ?
Ans.: I state that Mr. B. Vijay Kumar also purchased some lands and doing the work of removing the boulders in those lands. Since Mr. B. VijayKumar is purchasing our lands, he has carried out the work of removal of boulders, in our land also."
10. The AR relied on the statement made by Mr. N. Srinivasan at a later stage wherein he had stated that a portion of the land was cultivable and the balance land was rocky. The AR further submitted that the AO had erred in utilizing the statement of Shri Raghunath Reddy, employee of the purchaser company and on cross examination and reexamination it was proved that the statement made by him was not correct. Lastly, the subsequent spot inspection after sale could not throw any light about the condition of land at the time of sale. It was submitted by the AR that Assessing Officer took existence of google earth images before the CIT(A) for the first time to state that there was no improvement on the land. The 9 SAs. 94 & 95/H/12 and ITA NOs 721 & 722. /Hyd/2012 Sri B. Vijay Kumar & B. Raghu Alekh AR submitted that the basis on which the Assessing Officer came to a conclusion that the topography remained same all along was not known and satellite photography in Google earth is not live. It is not based on real time image and these are taken at intervals of few months to few years. The AR brought to the notice of the CIT(A) the disclaimer clause of Google earth, a print out of which was provided and the same is extracted below:
"Google and its licensors (including but not limited to tele atlas and its suppliers) makes no representations or warranties regarding the accuracy or completeness of any content or the product."
11. After considering the submissions of the assessee, the CIT(A) did not accept the claim of the cost of improvement and confirmed the order of the AO, who concluded that no development work involving expenses Rs. 4,01,75,000/- were incurred in the case of B. Raghu Alekh and Rs. 13,89,95,500/- in the case of B. Vijaykumar.
12. The CIT(A) also rejected the additional ground filed by the assessee that the sale of subject land being agricultural does not constitute a transfer of capital asset for being taxed in the head capital gain when the land is not a capital asset either within the meaning of section 2(14)(iii)(a) or 2(14)(iii)(b).
13. The CIT(A) was of the opinion that no revised return was filed before the AO and the assessee is not entitled to exclude capital gain admitted in the return filed earlier. For this 10 SAs. 94 & 95/H/12 and ITA NOs 721 & 722. /Hyd/2012 Sri B. Vijay Kumar & B. Raghu Alekh proposition he relied on the decision in the case of Goetz (India) Ltd., 284 ITR 323 (SC) wherein the Hon'ble Supreme Court held that the AO has no power to entertain a claim which is made otherwise than by way of a revised return. Further, on the merits of the additional ground raised, the CIT(A) relied upon the decision of the Hon'ble P&H Court in the case of Rockman Cycle Industries Ltd. Vs. CWT & Anr. [2010 - TMI - 207740, in WT Appeal No. 6 to 8 of 2004, dt. 13/01/2010] also supports the view that the change in the land use is indeed the determining factor and the CIT(A) held that the contention of the assessee that the land sold by him during the year could not be considered as a capital asset, is not justified.
14. Aggrieved, the assessee is in appeal before us.
15. The learned counsel for the assessee Shri K.C. Devdas made the following submissions:
i) The Assessing Officer should not have completely ignored the retraction and clarification made by Shri L. Raghuram Reddy in the course of cross examination on 31/12/2009.
ii) Similarly, the Assessing Officer should not have ignored the clarification made by Shri N. Srinivas on 31/12/2009.
iii) The conclusion drawn by the Assessing Officer that these retractions/clarifications made by the deponents under undue influence is not corroborated and are only presumptions.11
SAs. 94 & 95/H/12 and ITA NOs 721 & 722. /Hyd/2012 Sri B. Vijay Kumar & B. Raghu Alekh
iv) The Assessing Officer should have taken judicial notice of the clause in the registered sale deed and wrongly ignored the bifurcation of the consideration towards cost of land and cost of improvement.
v) the observation of the Assessing Officer that the Chennai Parties could not be traced by the Department cannot be drawn as an adverse inference as the parties had left the place of work immediately after the work was completed. However, the amounts were paid to these parties by bank transfers and credited to their accounts.
vi) The development work was done over a period of few days and not done within six days.
vii)The spot inspection by the department and the google images do not have any evidentiary value. The learned counsel pointed out that the assessee never accompanied the Assessing Officer while taking photographs of the land and it is possible that the Assessing Officer had not identified the land properly.
viii) The Assessing Officer should have appreciated that the transaction is with an Indian company, which is subsidiary of a foreign company.
ix) Both Shri Raghurami Reddy and Shri N. Srinivas are departmental witnesses, who were examined behind the back of the assessee. For this proposition, the learned counsel relied on the decision in the case of Kishinchand Chellaram Vs. CIT, [1980] 125 ITR 713 and submitted that the evidence which is to be used against the assessee is not admissible unless an opportunity to 12 SAs. 94 & 95/H/12 and ITA NOs 721 & 722. /Hyd/2012 Sri B. Vijay Kumar & B. Raghu Alekh controvert the same is given to the assessee, which was not exercised in the present case before us.
x) Shri N. Srinivas has given sworn statement that the development work was carried on.
16. The learned counsel for the assessee relied on the following case laws:
i) CIT Vs. Malabar Plantations Ltd., 53 ITR 140 (SC)
ii) CIT Vs. Dr. V.K. Bhaskaran Nair and Another, 116 ITR 873.
17. The learned counsel reiterated the submissions placed before the CIT(A) at pages 51 to 61 of the paper book and relied on the decision in the case of Srinvais Pandit, (HUF) in ITA No. 56/Hyd/2006 dated 23/04/2010 and submitted that the agricultural land transferred by the assessee does not constitute a capital asset within the meaning of section 2(14) of the IT Act based on the location of the subject land.
18. The learned DR Shri A.K. Satapathy on the other hand relied upon the orders of the lower authorities. As regards the burden of proof, the learned DR relied on the decision of TCI Vs. CIT, 256 ITR 701 and pointed out that the burden is on the assessee to prove the factum of incurring expenditure.
19. We have heard the arguments of both the parties and perused the record. It is relevant to reproduce the conclusions drawn by the AO while disallowing the cost of the improvement for the purpose of computation of capital gains:
13SAs. 94 & 95/H/12 and ITA NOs 721 & 722. /Hyd/2012 Sri B. Vijay Kumar & B. Raghu Alekh
a) The incurrence of expenditure of Rs. 16 crores towards development work within six days was not possible.
b) Though the assessee contended that the development work was carried out between March, 2006 to December, 2006, the seller stated that negotiations for sale itself started in December, 2006 and the possession was only given after sale in January, 2007.
c) The claim regarding existence of a hillock was proved to be incorrect from the statement of Sri Srinivas.
d) The pattedar pass book furnished by Sri N. Srinivas, HUF showed that Ac. 4.01 guntas had been categorized as dry agricultural land. Sri N. Srinivas, HUF had claimed deduction u/s 54B.
e) The contractors at Chennai were not registered and even the payments to them were not in terms with the alleged development agreements.
f) The Chennai parties were not in existence and were not found filing returns of income.
g) The assessee and his son failed to discharge the onus of proving that development work had been executed by them and even the technical ability to carry out such works could not be proved.
h) The bank accounts of the persons of the contractors, with whom the said development agreements were entered into showed withdrawals and transfer of amounts immediately after the receipt of the amounts from the assessee and his son.
i) Even the bank account opening forms of the Chennai parties did not show that they were engaged in the works 14 SAs. 94 & 95/H/12 and ITA NOs 721 & 722. /Hyd/2012 Sri B. Vijay Kumar & B. Raghu Alekh of the civil contracts or had expertise to carry out such works.
j) The statement of Sri L. Raghu Rami Reddy showed that no development work was carried out in the entire land purchased by PEBL and that the clause regarding development had been inserted at the request of the assessee and his son.
k) The physical inspection itself showed that the lands were not developed and still contained toddy trees.
20. The Assessing Officer has noted that for carrying out the development works of removing the rocks, boulders etc., heavy machinery, such as JCBs, Dozers etc., are required. However none of the parties mentioned above were filing their returns of income and therefore were indeed not into the activity of carrying out such development works. He concluded that the said parties did not even have any machinery or technology to carry out such works proving that the story of entering into development agreement was only a make believed arrangement. Even before us, the assessee and his son failed to discharge the onus of proving that development work had been executed by them and even the technical ability to carry out such works could not be proved. Hence, we confirm the order of the CIT(A) on this count.
21. With regard to the second issue as additional ground raised before the CIT(A) that the sale of subject land being agricultural does not constitute a transfer of capital asset for being taxed in the head capital gain when the land is not a 15 SAs. 94 & 95/H/12 and ITA NOs 721 & 722. /Hyd/2012 Sri B. Vijay Kumar & B. Raghu Alekh capital asset either within the meaning of section 2(14)(iii)(a) or 2(14)(iii)(b), we find that similar issue came up for consideration before this Tribunal in the case of Smt. Gousia Begum and others, vide its order dated 16.1.2012 in ITA No. 1024/Hyd/2011 and others, wherein the Bench held as follows:
"12. The next effective grievance of the assessee in this appeal relates to computation of capital gains, treating the land sold by the assessee as non- agricultural land.
13. Learned counsel for the assessee, reiterating the contentions urged before the lower authorities submitted that the land sold, being agricultural in nature and falling outside the notified area, does not represent the capital asset of the assessee. In this behalf, he placed reliance on the decision of the Hyderabad Bench of the Tribunal in the case of Shri Srinivas Pandit(HUF) V/s. ITO Ward 7(4), Hyderabad dated 23.4.2010 in ITA No.56/Hyd/2007 for assessment year 2003-04. Further, it is submitted that the land sold is an agricultural land, and the consideration received on the sale of land in question was utilized for the purchase of agricultural lands only, and as such the assessee is very much entitled for relief under S.54B of the Act, and the lower authorities were not justified in rejecting the claim of the assessee. He submitted that the lower authorities were not justified in treating the lands of the assessee giving rise to the capital gains in dispute, as of non-agricultural nature. It is submitted that even though there were disputes about the ownership of the property sold, the lands sold were in the possession of the assessee, who was carrying on agricultural operations on the same. He also submitted that the assessee has also filed before the assessing officer, an affidavit of the Village Revenue Officer, who mentioned that due to pressure of work, he had not filled in the column of 'cultivation' in the Pahani Patrika. The assessing officer did not give due weightage to this valuable piece of evidence, and proceeded to determine the lands in question as of non-agricultural nature. He also disputed the conclusion of the assessing officer in denying the assessee the relief under S.54B on the ground that payment of advances for purchase of land would not entitle the assessee to relief under S.54B, and submitted that the assessee ultimately 16 SAs. 94 & 95/H/12 and ITA NOs 721 & 722. /Hyd/2012 Sri B. Vijay Kumar & B. Raghu Alekh concluded the transaction of purchase within time allowed by the statute, and possession of the lands in question was taken on 10.7.2009, viz. within a period of two years, and consequently, the assessee is entitled to relief under S.54B of the Act. He also disputed the rate taken into consideration by the assessing officer, for arriving at the cost of acquisition, by adopting the market value of the land as on 1.4.1981 at Rs.10,000 per acre as against Rs.1,40,000 per acre pleaded by the assessee, and submitted that the rate of Rs.1,40,000 per acre disclosed by the assessee is quite reasonable.
14. The Learned Departmental Representative on the other hand, strongly supported the orders of the lower authorities. He submitted that the lands in question were not of agricultural nature, and they were not put to cultivation, as clearly evident from the material taken into consideration by the assessing officer. He further submitted that even though the land in question was outside the specified area of 8 KMs of Rajendranagar Municipality, it is within specified area of 8 KMs of the Hyderabad Municipal Corporation, and hence, notwithstanding the fact the land in question falls within the Revenue jurisdiction of Rajendranagar Mandal and more than 8 KMs away from the Rajendranagar Municipal limits, it is an urban land since it falls within 8 KMs of Hyderabad Municipal Corporation limits, and as such, it is a capital asset giving rise to capital gains on its sale. He submitted that if the property is within the specified area of 8 KMs of any municipality, not necessarily within the jurisdiction of the Revenue authority, the property assumes the character of urban land. He placed reliance on the unreported decision dated 1.3.2011 of the Hon'ble Punjab and Haryana High Court in the case of CIT V/s. Smt. Anjana Sehgal (Income-tax Appeal No.276 of 2004), duly filing a copy thereof before us, in support of this proposition. He also submitted that mere payment of advances for purchase of lands, would not entitle the assessee to relief under S.54B of the Act, and what is required to be complied with to fulfil the conditions prescribed under S.54B is the actual purchase of the agricultural lands within the time stipulated. He also submitted that the cost of acquisition arrived at and reported by the assessee is excessive, and the assessee could not substantiate the claim in this behalf, by producing necessary evidence in the form of comparable cases of the relevant time, notwithstanding opportunity given by the assessing officer for that purpose.17
SAs. 94 & 95/H/12 and ITA NOs 721 & 722. /Hyd/2012 Sri B. Vijay Kumar & B. Raghu Alekh
15. We have considered the rival submissions. We do not find merit in the contention of the assessee. The land in question giving rise to capital gain was, in fact, urban land though agricultural operations have been carried out on them. The assessee placed before the lower authorities pahani patrika, VRO's Certificate and details of electricity Bill/slab pass Book etc. We have held on that basis in earlier paras that the assessee derived agricultural income. But, the question still remains whether the impugned land come within the meaning of "capital asset". The land is situated at Narsing Village of Rajendra Nagar Mandal, R.R. District which is within the municipal limits of Rajendra Nagar. According to the learned counsel for the assessee, Rajendra Municipality is not notified by the Central Government and therefore the agricultural lands which fall under the jurisdiction of the Rajendra Nagar Mandal cannot be considered as capital asset within the meaning of section 2(14) of the Income-tax Act. But, the fact is that this is urban land akin to the Hyderabad Municipality situated within 8 KM from the local limits of Hyderabad Municipal Corporation. In similar circumstances, the jurisdictional High Court in the case of CIT vs. Bola Ramaiah (174 ITR 154) held that the capital gains arising out of sale of land situated within 8 KM of local limits of Hyderabad Municipality, is liable for tax on capital gains irrespective of the fact whether it falls under the limits of Rajendra Nagar Mandal or otherwise. Further, mere fact that the land in question was agricultural land cannot be a ground to claim for exemption under section 2(14) of the Act as the land is situated within the local limits of Hyderabad Municipal Corporation. Further, it was held recently by the Hon'ble Punjab & Haryana High Court in the case of CIT vs. Smt. Anjana Sehgal (supra) that the expression "from the local limits of any municipality" used in section 2(14)(iii)(b) of the Income-tax Act denotes "any municipality or municipality of the District in which the land is situated". Further, capital gains arising from the transfer of agricultural land situated in municipal or other urban areas or notified adjoining areas will be liable to income-tax. In this view of the matter, and considering the facts and the circumstances of the present case, in our considered view, the lower authorities are justified in determining the land in question, as capital asset liable for income-tax. With regard to determination of cost of acquisition of the land disposed of, we are of the opinion that considering the proximity of the land to the city, it is reasonable to fix the value of as on 1.4.1981 at 18 SAs. 94 & 95/H/12 and ITA NOs 721 & 722. /Hyd/2012 Sri B. Vijay Kumar & B. Raghu Alekh Rs.30,000 per acre, instead of Rs.10,000 determined by the Assessing Officer, as against Rs.1,40,000 claimed by the assessee. One of the reasons for which the claim of the assessee for relief under S.54B was rejected by the assessing officer was that what was paid by the assessee was only an advance for purchase, and unless it is actual purchase of land, assessee would not be entitled for relief under S.54B. There is some merit in this reasoning of the assessing officer. However, in terms of S.54B of the Act, assessee has to purchase the agricultural land within a period of two years. Hence, though mere payment of advance does not entitle the assessee for relief under S.54B of the Act, if ultimately whole transaction of purchase of land was completed within a period of two years as contemplated under S.54B of the Act, assessee is entitled for relief under S.54B of the Act. In this view of the matter, we set aside the orders of the lower authorities, and restore this issue to the file of the assessing officer for verifying whether the assessee has purchased the agricultural lands within a period of two years, so as to qualify for relief under S.54B of the Act, and accordingly re-decide this issue in accordance with law and after giving reasonable opportunity of hearing to the assessee. Grounds of the assessee on this issue are allowed for statistical purpose."
22. Respectfully following the said decision of the coordinate bench in the case of Smt. Gousia Begum and Others, we incline to hold that the land in dispute cannot be considered as agricultural land so as to hold that it is exempt from capital gains. Therefore, we dismiss the additional ground raised by the assessees.
19SAs. 94 & 95/H/12 and ITA NOs 721 & 722. /Hyd/2012 Sri B. Vijay Kumar & B. Raghu Alekh
23. In the result, both the appeals and Stay Petitions under consideration are dismissed.
Pronounced in the open court on 31/01/2013.
Sd/- Sd/-
(CHANDRA POOJARI) (ASHA VIJAYARAGHAVAN)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Hyderabad, Dated: 31 st January, 2013
kv
Copy to:-
1) S/Shri B. Vijay Kumar and B. Raghu Alekh, 6-3-
688/1, No. 2D, Usha Mansion, Officer's Colony, Punjagutta, Hyderabad.
2) ACIT, Circle 6(1), Hyderabad
3) The CIT (A)-IV, Hyderabad
4) The CIT-III, Hyderabad
5) The Departmental Representative, I.T.A.T.,
Hyderabad.
20
SAs. 94 & 95/H/12 and ITA NOs 721 & 722. /Hyd/2012 Sri B. Vijay Kumar & B. Raghu Alekh Description Date Intls S. N o.
1. Draft dictated on Sr.P.S. /P.S
2. Draft placed bef ore author Sr.P.S/PS Draft proposed & placed before the JM/AM 3 second M ember 4 Draft discussed/approved by JM/AM second M ember 5 Approved Draft comes to the Sr.P.S. /P.S Sr.P.S./PS
6. Kept for pronouncement on Sr. P.S./P.S.
7. Fil e sent to the Bench Cl erk Sr.P.S. /P.S 8 Date on which file goes to the Head Clerk 9 Date of Di spatch of order