Income Tax Appellate Tribunal - Mumbai
Sunil G Mathreja, Mumbai vs Department Of Income Tax on 27 February, 2014
आयकर अपीलीय अिधकरण,
अिधकरण मुंबई Ûयायपीठ 'एफ' मुंबई ।
IN THE INCOME TAX APPELLATE TRIBUNAL " F" BENCH, MUMBAI
सव[ौी डȣ. मुमोहन, उपाÚय¢ एवं , नरे Ûि कुमार ǒबãलैáया, लेखा सदःय के सम¢
BEFORE SHRI D.MANMOHAN, VP AND SHRI N.K. BILLAIYA, AM
आयकर अपील सं./I.T.A. No.6562/Mum/2011
िनधा[रण वष[ / Assessment Year :2008-09
(िनधा[
The ACIT-21(2), बनाम Shri Sunil G. Mathreja,
बनाम/
C-10, 5 t h Floor, Trishul, Plot No. 5,
Vs.
B.K.C. Bandra(E), Road No. 6, Hatkesh Soc.
Mumbai-400 051 JVPD Scheme,
Vile Parle (W),
Mumbai-400 056
ःथायी ले खा सं . /जीआइआर सं . /PAN/GIR No. : ACXPM 8185B
(अपीलाथȸ /Appellant) .. (ू×यथȸ / Respondent)
आयकर अपील सं./I.T.A. No.6564/Mum/2011
िनधा[रण वष[ / Assessment Year :2008-09
(िनधा[
The ACIT-21(2), बनाम Shri Vishal G. Mathreja,
बनाम/
th
C-10, 5 Floor, Trishul, Plot No. 5,
Vs.
B.K.C. Bandra(E), Road No. 6, Hatkesh Soc.
Mumbai-400 051 JVPD Scheme,
Vile Parle (W),
Mumbai-400 056
ःथायी ले खा सं . /जीआइआर सं . /PAN/GIR No. : AAACPM 5761A
(अपीलाथȸ /Appellant) .. (ू×यथȸ / Respondent)
अपीलाथȸ ओर से/ Appellant by: Shri Ravi Prakash
Shri R.K. Sahu
ू×यथȸ कȧ ओर से/Respondent by: Shri N.R. Agrawal
सुनवाई कȧ तारȣख / Date of Hearing :27.02.2014
2 ITA Nos. 6562 & 6564/M/11
घोषणा कȧ तारȣख /Date of Pronouncement :07.03.2014
आदे श / O R D E R
PER N.K. BILLAIYA, AM:
These two appeals by the Revenue are against two separate orders of the Ld. CIT(A)-32, Mumbai dt.12.07.2011 pertaining to two separate assessees for A.Y. 2008-09. As common issues are involved in both these appeals, though quantum may differ, they were heard together and disposed of by this common order for the sake of convenience and brevity.
ITA No. 6562/M/2011- Shri Sunil G Mathreja2. The grievance of the Revenue reads as under :
1. "On the facts & in the circumstances of the case and in law, the Ld.CIT(A) has erred in deleting the addition amounting to Rs.1,80,43,6951- made by the AC by assessing the "Long Term Capital gain" in the hands of the assessee.
2. "The CIT(A) has failed to appreciate that the Dy.
Superintendent of land records has issued a certificate dated 13.12.2010 stating that the Valshind village is about 1600 to 1700 meters from the BNMC jurisdictional limit".
3. "The CIT(A) has failed to appreciate that as per the map submitted by the AC, there is a motorable road cutting the Mumbai Nashik Bhivandi Byepass, leading to Pise Dam as per which the overall road distance of the assessee's plot 3 ITA Nos. 6562 & 6564/M/11 from the municipal limits of BNMC is only 5.5 kms, and that the notification issued in respect of section 2(14)(iii)(b) is very clear that the distance of 8 kms from the municipal limits should be considered in all directions".
4. "The CIT(A) has failed to appreciate that the Dy Collector of Urban Land Development vide order dated 24.5.2007 has described the land as urban land and that no agricultural activity was carried on by the assessee and no agricultural income was declared by the assessee in his return of income for any of the preceding years".
3. The entire grievance of the Revenue can be summed up as relating to the sale of one piece of land which the assessee claimed to be an agricultural land whereas the Revenue's claim is that the said piece of land do not fulfill the conditions of the provisions of Sec. 2(14)(iii)(b).
4. Briefly stated the facts of the case are that during the course of the assessment proceedings, the Assessing Officer noticed that the assessee has shown long term capital gain on sale of agricultural land at Bhiwandi, which he claimed to be exempt from tax. For claiming it to be exempt from tax, the assessee drew support from the provisions of Sec. 10(37)(i) wherein it has been provided that in the case of an assessee being an individual or HUF any income chargeable under the head 'Capital Gain' arising from the transfer of agricultural land where such land is situated in any area referred to in item (a) or item (b) of sub clause (iii) of clause (14) of Sec. 2 is exempted from tax and is not to be included in the computation of total income. The assessee also relied 4 ITA Nos. 6562 & 6564/M/11 on the definition of capital asset given as per Sec. 2(14)(iii) wherein it is provided that capital asset means property of any kind held by an assessee whether or not connected with his business or profession but does not include agricultural land in India not being land situated (a) in any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee or by any other name) or a cantonment board and which has a population of not less than ten thousand according to the last preceding census of which the relevant figures have been published before the first day of the previous year ; or (b) in any area within such distance not being more than eight kilometers 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 urbanization of that area and other relevant considerations specify in this behalf by notification in the official gazette. To support his contention that the land is beyond 8 kilometers of Bhiwandi Nizampur Municipal Corporation (BNMC)., the assessee filed a certificate dt. 3.9.2007 from Shri Anant Bhiva Madhvi, Sarpanch of Sonale Gram Panchayat who certified that the said land of the assessee is 12 Kms from BNMC, 16 Kms from Thane Municipal Corpn. & 27 Kms from Brihanmumbai Municipal Corpn. The AO was of the firm belief that the land of the assessee is situated within 8 Kms from the Municipal limits of BNMC. Further no agricultural activity was carried out by the assessee on this land which is proved from the fact that the assessee has not declared any agricultural income in the preceding years in the return of income filed.
5 ITA Nos. 6562 & 6564/M/114.2. In order to verify the claim of the assessee, the AO sent a letter to the Dy. Supdt. Of Land Records, Maharashtra State, Jakat Naka, Bhiwandi. The Dy. Supdt. of Land Records vide his letter dt. 13.12.2010 certified that the land is only 1600 to 1700 meters from the Municipal limits of BNMC. In order to verify the genuineness of the certificate issued by the Sarpanch Shri Anant B. Madhvi, the AO issued summons u/s. 131 of the Act. Shri Anant B. Madhvi responded to this summon , whose statement was recorded in which Shri Anant B. Madhvi stated that the distance of 12 Kms certified by him is from the BNMC office and State Transport bus stand of Bhiwandi. The AO also confronted with the certificate received from Dy. Supdt. of Land Records to which Shri Anant B. Madhvi stated that he is totally ignorant of the jurisdiction of BNMC and its outer limits. After considering the statement of Sarpanch, the AO rejected the certificate issued by him. The AO issued a show cause to the assessee asking for his reply on the point that why the land sold by him should not be treated as a capital asset and liable for taxation under the head 'capital gain'. The AO also gave a copy of the certificate issued by the Dy. Supdt. of Land Records. The assessee filed a detailed reply vide letter dt. 28.12.2010 in which it was reiterated that the land sold was beyond 8 Kms distance from the jurisdiction of any municipality. It was further explained that the impugned land is situated at the point where nearest municipal corporation is that of Bhiwandi Nizampur Corporation and the property can be reached from two points one from its limit of octroi post situated near Sai Baba temple on Kalyan Bhiwandi road. The distance from octroi post near Sai Baba temple to the impugned land comes to 11.90 Kms. Thus the total distance from the limit from Bhiwandi Nizampur 6 ITA Nos. 6562 & 6564/M/11 Municipal Corporation and the impugned land is more than 8 Kms. It was further explained that the second approach to the impugned land is from the limit of Bhiwand Nizampur octroi post situated on old Agra road NH-3 from which the distance comes to 10.6 Kms. It was strongly contended that approaching the impugned land from either of the two routes, the distance is more than 8 Kms. In support of his contention, the assessee filed a certificate from M/s. Aryas Surveyers and Constructions Pvt. Ltd alongwith site plan giving point wise distance. The assessee also filed a map taken from Google maps.
4.3. In so far as the measurement of distance is concerned, the assessee strongly submitted that the distance is always measured having regard to the road distance and not as per crow's flight , straight line method. The assessee further stated that the certificate issued by the Dy. Supdt. of Land Records stating that the distance could be 1600 to 1700 mtrs is based on the scale of map i.e. crow's flight method therefore cannot be admitted as an evidence. The assessee also relied upon certain judicial decisions.
The entire submissions/contentions of the assessee did not find any favour from the AO. According to the AO, the Surveyors certificate has clearly ignored a motorable road in between the two toll nakas marked by him. In the opinion of the AO, there is a motorable road starting from Pise Dam cutting the Thane Bhiwandi Bypass and reaching the BNMC jurisdiction which joins at Brahman Pada Village, Pogaon which is the last village within the jurisdiction of BNMC, as certified by the Dy. Supdt. of Land Records. The AO also dismissed 7 ITA Nos. 6562 & 6564/M/11 the Google map stating that in the Google map, some of the states of our own country are shown as part of other neighboring countries.
The AO finally went personally to verify the actual distance of the land from the Brahman Pada of Pogaon Village from where he took the motorable road cutting the Mumbai Nashik Bhiwandi Bypass leading to Pise Dam. The distance was only 3.5 kms from which spot the impugned land was at a distance of 2 Kms. only. Thus the AO finally concluded that the road distance of assessee's land from the Municipal limits of BNMC is only 5.5. kms. Having come to this conclusion, the AO went on to tax capital gain on sale of land as per the provisions of law.
5. Aggrieved by this, assessee carried the matter before the Ld. CIT(A). Before the Ld. CIT(A), the assessee reiterated his contention that the impugned land was beyond 8 Kms. From the Municipal limits and relied upon the evidences already produced before the AO. Emphasizing on the certificate from Tahasildar, Bhiwandi who certified that the assessee is an agriculturist , copy of 7/12 extract showing that the land is agricultural and agricultural activity of producing gavat and rice was also carried out. The copy of 7/12 extracts was submitted for the first time before the Ld. CIT(A) stating that the AO never asked the assessee to submit the evidence of doing agricultural activity. The assessee also challenged the visit of the AO to the impugned land stating that the route considered by the AO is a private route which is not open to public and hence the same cannot be considered for measuring the distance from BNMC octroi naka.
8 ITA Nos. 6562 & 6564/M/115.1. After considering the facts and the submissions, the Ld. CIT(A) observed that the main reason for holding the land to be a capital asset by the AO is based on the measurement of the distance by the AO by considering the route which includes a road stretch of 3.5 kms. from the Bhiwandi Bye-pass leading to the Pise Dam which has been objected by the assessee stating that this route is a private road which is not open to public and therefore, the same cannot be considered for the purpose of computing the distance of 8 Kms. To resolve this issue, the assessee was asked to produce the certificate from the concerned authorities regarding the ownership and nature of usage of the said stretch road leading to the Pise Dam. In response to this, the assessee furnished a certificate dt. 21.6.2011 from the Dy. Hydraulic Engineer (Operations), Municipal Corporation of Greater Mumbai stating that " the road between Thane-Bhiwandi bye-pass to Yewai chowky is under ownership of MCGM and this road is maintained by MCGM. Plying of public vehicle is not permitted on this road. This road is MCGM's approach road for MCGM's chlorination plant . Considering the certificate, the Ld. CIT(A) was convinced that the said 3.5 kms. stretch of road from Bhiwandi Bye-pass leading to Pise Dam is not open for public plying of vehicles as a thorough fare and the said road is meant to be used for a limited purpose by MCGM officials. The Ld. CIT(A) finally concluded that the distance of the assessee's agricultural land is beyond 8 kms. from the outer limit of BNMC measured through the shortest road which is open for public use and hence the same would fall outside the definition of capital asset u/s. 2(14)(iii)(b) and therefore the sale proceeds of said land is not chargeable to capital gains.
9 ITA Nos. 6562 & 6564/M/116. Aggrieved by this, the Revenue is before us. The Ld. Departmental Representative strongly supported the findings of the AO. It is the say of the Ld. DR that the Ld. CIT(A) has accepted some additional evidence which is in violation of Rule 46A and therefore should not have been considered by the Ld. CIT(A) without affording any opportunity to the AO.
7. Per contra, the Ld. Counsel for the assessee strongly submitted that the certificate filed by the assessee during the course of the Appellate proceedings was at the insistence of the Ld. CIT(A) which is covered by the powers conferred to the Ld. CIT(A) by virtue of Sec. 250(4) of the Act. It is the say of the Ld. Counsel that there is no violation of Rule 46A by the Ld. CIT(A).In support of this contention reliance was placed on the decision of the Tribunal in the case of Industrial Roadways 112 ITD 293. On merit of the case, the Ld. Counsel reiterated what has been submitted before the lower authorities and relied upon the evidences which were placed before the lower authorities.
8. We have heard the rival parties and carefully perused the orders of the lower authorities and the relevant material evidence brought on record. The entire dispute revolves around the issue whether the impugned agricultural land is situated within 8 kms from the limits of Municipality as alleged by the Revenue or it is beyond 8 kms as claimed by the assessee. The entire exercise of the AO depends only on one thing which is the physical verification of the distance done by the AO. However, it is not in dispute that while measuring the distance, the AO took an approach route which is owned by MCGM for maintenance 10 ITA Nos. 6562 & 6564/M/11 of chlorination plant. This is established by the certificate of the Dy. Hydraulic Engineer (Operations), Municipal Corporation of Greater Mumbai. It is also a fact that this certificate was submitted by the assessee before the Ld. CIT(A).
8.1. A perusal of the order of the Ld. CIT(A) shows that the Ld. CIT(A) invoking his powers u/s. 250(4) of the Act asked the assessee to furnish certain details. In response to which, the assessee filed this certificate. Therefore, in our understanding of the law, this cannot be termed as violation of Rule 46A. However, at the same time, even if there are no express provisions which could suggest that the Ld. CIT(A) is bound to give an opportunity to the AO in respect of the evidence gathered by virtue of Sec. 250(4) of the Act, in our considered view the principles of natural justice demand that nothing should be used against a person which has been collected behind the back of that person, therefore, in our humble opinion, this certificate of Dy. Hydraulic Engineer (Operations) need to be confronted to the AO for this limited purpose of whether the approach road taken by the AO is a private road or public road . We restore the matter back to the files of the AO. The assessee is directed to file a copy of the said letter of Dy. Hydraulic Engineer (Operations) before the AO. The AO is directed to verify the genuineness of the said letter and decide the issue of distance accordingly. We would like to make it very clear that the AO is only directed to verify the genuineness of this letter of Dy. Hydraulic Engineer (Operations) only. If the AO is satisfied with the genuineness of the letter, the impugned land shall be treated as an agricultural land exempt from capital gain tax.
11 ITA Nos. 6562 & 6564/M/119. In the result, these two appeals filed by the Revenue are allowed for statistical purpose.
Oder pronounced in the open court on 7th March, 2014 .
आदे श कȧ धोषणा खुले Ûयायालय मɅ Ǒदनांकः 07/03/2014 को कȧ गई Sd/ Sd/-
(D.MANMOHAN ) (N.K. BILLAIYA) उपाÚय¢/ Vice President लेखा सदःय / ACCOUNTANT MEMBER मुंबई Mumbai; Ǒदनांक Dated 07/03/2014 व.िन.स./ RJ , Sr. PS आदे श कȧ ूितिलǒप अमेǒषत/Copy षत of the Order forwarded to :
1. अपीलाथȸ / The Appellant
2. ू×यथȸ / The Respondent.
3. आयकर आयुƠ(अपील) / The CIT(A)-
4. आयकर आयुƠ / CIT
5. ǒवभागीय ूितिनिध, आयकर अपीलीय अिधकरण, मुंबई / DR, ITAT, Mumbai
6. गाड[ फाईल / Guard file.
स×याǒपत ूित //True Copy// आदे शानुसार/ ार BY ORDER, उप/सहायक उप सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपीलीय अिधकरण, अिधकरण मुंबई / ITAT, Mumbai 12 ITA Nos. 6562 & 6564/M/11 Date Initials
1. Draft dictated on: 03.03.2014 Sr. PS/PS
2. Draft placed before author: 04.03.2014 Sr. PS/PS
3. Draft proposed & placed JM/AM before the second member:
4. Draft discussed/approved by JM/AM Second Member:
5. Approved Draft comes to the Sr. Sr. PS/PS: PS/PS
6. Order pronounced on: Sr. PS/PS
7. File sent to the Bench Clerk:
8. Date on which file goes to Sr. the Head Clerk: PS/PS
9. Date on which file goes to AR
10. Date of dispatch of Order: