Income Tax Appellate Tribunal - Jaipur
Sh. Satya Dev Sharma , Jaipur vs Assessee on 23 January, 2014
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IN THE INCOME TAX APPELLATE TRIBUNAL
JAIPUR BENCH, JAIPUR
(BEFORE SHRI HARI OM MARATHA AND SHRI N.K. SAINI)
ITA No. 25/JP/2010
Assessment year : 2008-09
PAN: ABNPS 2913 E
Shri Satya Dev Sharma vs. The ITO
29, JLN Marg, Uniyara Garden Ward- 5(2)
Jaipur Jaipur
(Appellant) (Respondent)
ITA No. 123/JP/2012
Assessment year : 2008-09
PAN: ABNPS 2913 E
The ITO vs. Shri Satya Dev Sharma
Ward- 5(2) 20, JLN Marg, Uniyara Garden
Jaipur Jaipur
(Appellant) (Respondent)
Assessee by : Shri Sandeep Jhanwar
Department by: Shri D.C. Sharma
Date of Hearing: 23-01-2014
Date of Pronouncement: 30-01-2014
ORDER
PER HARI OM MARATHA, JM:-
These two cross appeals are filed by the assessee and department respectively against the order of ld CIT(A), Jaipur dated 01-11-2011 for the assessment year 2008-09. The major issue in the two appeals is in respect of taxation of capital gain on part of agricultural land sold by the assessee.
1.0 The brief facts of the issue are that the Assessee possessed 16 bigha of agricultural land at Village Machwa. The Government record in form of Girdawari shows that there were agricultural activities on the said land and various crops like wheat, 2 bajra etc. were grown on the said land as per this record (P.B. Page 17). Samwat 2064 is related with the assessment year under consideration i.e. A Y 2008-09. During the year, the Assessee sold 4 bigha of agricultural land out of total 16 bigha for a consideration of Rs. 1.04 crores i.e. @ 26 lacs per bigha. This land was allotted to him by Govt. in 1972 on his retirement from defence services. Assessee claimed this land to be agricultural land which is out of scope of definition of capital asset u/s 2(14). He claimed that land is covered by exclusions in clause (iii) of section 2(14) and not covered by sub clauses (a) and (b) of this clause as it is situated in village Machwa where population is less than 10,000/-. This village Machwa is also out of Jaipur Municipal Corporation and it was more than 8 kms beyond the limits of Jaipur Municipal Corporation as on 6.01.1994 when the notification (P. B. Page 1) was issued under sub-clause (b), though now the distance is 2-3 kms. only due to extension of limits of Jaipur Municipal Corporation. The sale deed (P.B. page 5-10) was not registered till the end of 31.3.2008. He also purchased bonds eligible u/s 54 EC in Feb. 2008 for a sum of Rs. 50 lacs. The Assessing Officer however, mentioned in her order that the Property is situated within limits of Jaipur Municipal Corporation as per certificate of Tehsildar. Further, property is used for residential/ commercial purpose and not for agricultural purpose. She further added that Inspector's report suggest that multi story project of leading builder is coming up adjacent to this land and the land has not been entered in the name of the purchasers. She has taken Market price of the property as on 1.4.1981 was Rs. 2700 per bigha on the basis of similar property sold. She also observed that the Provisions of section 50C are applicable in this case. After giving the aforesaid findings, the assessing officer computed the capital gain as under :
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- She applied provisions of section 50C and took circle rate. Accordingly, he applied Rs. 35 lacs per bigha and computed total sale consideration at Rs. 1,40,00,000/-.
- Purchase price : FMV as on 1.4.1981 on the basis of document dtd. 27.12.1980 @ Rs. 2,700/- per bigha and computed total cost of Rs.
10,800/- & indexed cost Rs.59,508/- (10,800 x 551/100).
- She accordingly computed Long Term Capital gain at Rs. 1,39,40,492/-. After allowing the deduction u/s 54EC of Rs.50,00,000/-, taxable capital gain has been taken at Rs.89,40,492/-.
2.0 Before ld CIT(A) the assessee raised the following plea :
• The captioned land is not a Capital Asset within the meaning of section 2(14) as it is an agricultural land under clause (iii) of this section and not covered by exclusions of agricultural land given in sub clauses (a) & (b) of this clause (iii) of section 2(14). Ld CIT(A) has not accepted this plea and assessee has taken ground no. 1 in this respect.
Alternatively • The provisions of section 50C do not apply in assessee's case as the transaction was not registered. The word 'assessable' has been included in section 50C w.e.f. 1.10.2009 only and as per the decision of Hon'ble Jaipur Bench of ITAT itself, the provisions of section 50C would not apply where the transaction of transfer of land is not registered. Ld CIT(A) accepted this plea and directed to alter the sale consideration as received by the assessee. The department has come in appeal before us against the relief so allowed. • Regarding Cost of acquisition, the assessee contended that the cases quoted by the AO are not comparable for the following reasons :
o The said land was already in the possession of the buyers.
o The said transfer was not in respect of one piece of land but it was in respect of 5 pieces of land scattered in area of 2 kms. o The said land was very deep (3 to 4 kms.) from the main road and the assessee's land was only 250 mtrs. Further there is a lane approaching the assessee's land.
o In the immediate vicinity of the assessee's land, multistoried buildings are being constructed. It is not the position of the other land. In view of the said reasons, the assessee contended that FMV of the land as on 1.4.1981 should have been taken by computing the same as per principle laid down in 133 TTJ 278 4 (TM) (Agra). Accordingly, the value comes to Rs.18,87,477/- as per the following calculation below :
1,04,00,000 x 100 = 18,87,477 551 Ld.CIT(A) however considered Rs. 10,000 per bigha i.e. Rs. 40,000/- as against the assessing officer's valuation of Rs.10,800/- per bigha @ Rs.2,700 per bigha. The assessee has taken ground no. 2 in this respect. Department has also taken ground no. 2 for increasing the price per bigha as on 1.4.1981 to Rs.10,000/-.
3.0 Let us now come to the grounds of the assessee's appeal. As regards ground no.1, ld. A/R of the assessee Shri Sandeep Jhanwar pointed out a typographical error in drafting of ground and requested to read the same by adding word 'not' in the forth line after the words 'assesse is' and before the words 'covered in' and also to add words '(a) and' after the words 'sub clause' and before the words '(b) of' and accordingly the corrected ground would read as under :-
Under the facts and circumstances of the case ld. Commissioner of Income Tax (Appeals), Jaipur has erred in confirming the findings of the assessing officer that the agricultural land transferred by the assessee is capital assets within the meaning of section 2(14)(iii) of the Income tax Act, 1961, which according to assessee is not covered in the exclusion under sub-sub clause (a) and (b) of section 2(14)(iii). He has accordingly erred in upholding the chargeability of long term capital gain on the transfer of agricultural land by the assessee.] As far as the findings of the Assessing Officer that the land is covered in JMC, the ld.
A/R submitted that the same is wrong. The letter of Tehsildar appended by the AO in her order (AO page 10) itself says that the land is within 8 KMs of the boundaries of the JMC. Further, the notification appended by AO in her order at Page 11 contains the name of the village Machera and not Machwa. Machera has been misunderstood by AO 5 as Manchwa. He submitted that the ld. CIT(A) has, however, given finding that the land is situated at 2 to 3 KMs. from the JMC boundary and it is within 8 kms from the JMC boundaries (Page 13 of the order). He accordingly requested to ignore these findings of AO as the same are absurd. He further submitted that the findings of AO that the land in question is used for residential/ commercial purpose is also wrong for the reasons that the land was used by the assessee for agricultural and as per the Government record, agricultural activities were being carried on the said land during the year under consideration (PB Page 17). He also submitted that this finding of AO is contradictory as far as, the AO herself has said that the buyers of the land have done plotting on the land. The assessee referred certain electricity bills also in support of agricultural activities on the land. The ld. A/R submitted that the land is an agricultural land. The assessee sold it as such charging rate per bigha. He submitted that neither the assessee nor the department should have any concern as to how the land could be used by the buyers. It was not a relevant factor for this section to see that how the buyer intended to use the land as held in the various decisions including CIT Vs Manilal Somnath 106 ITR 917 (Guj.), M.S. Srinivasa Naicker Vs ITO (292 ITR 481) and Manibhai Motibhai patel Vs CIT (131 ITR 120) (Guj.). In such circumstances, the observation that the nearby locations are getting developed as multistory project has no relevance in the present case.
He further submitted that the land was situated beyond the boundaries of 8 Kms. of the limits of JMC as on 6.1.1994 (i.e. the date of issuing relevant notification No. 9447/F. No. 164/3/87-ITA-I dated 06/01/1994) as per the certificate on page 11 and trace of the site plan being produced during the course of hearing. The land has now come nearer to the boundaries covered in the jurisdictional limit of JMC due to extensions after 1994. He submitted that th question which is to be decided in this case is whether the said land 6 would be covered by sub clause (b) of clause (iii) of section 2(14). He submitted that Under clause (b) power is given to Government to notify the area from the limit of Municipalities etc. having population of not less than 10,000/. Accordingly, the Government, on 6.1.1994 has notified certain area. He referred the relevant extracts of notification No. 9447/F. No. 164/3/87-ITA-I dated 06/01/1994 at PB Page 1. He submitted that as per this notification, for Jaipur, the area notified was the area of 8 Kms. from the boundaries of Jaipur Municipal Corporation at Entry No. 19.7. The Explanation (2) of the notification clearly indicates that the Municipal Limits as existing on the date of issue of notification are to be referred [PB Page 4]. He submitted that there is no ambiguity in the language of notification. The notification is issued within the powers given to the Government. He submitted that as per the powers given to the government under this clause, it is to notify the extended area under sub-clause (b). The area which is notified as on a particular date has to be frozen or static. It cannot be dynamic. The law also had given the power to include the area within the meaning of capital asset, where, there is a scope of extension of limits in the near future. Had the limits been extended to the land, it would have been covered within clause (a) itself. He stated that otherwise also, the government has specifically given the date of reckoning the limit of 8 Kms. in the explanation (2) to the notification as stated above. He referred his following specific submissions made in the written submissions against each and every observation of the ld. CIT(A) :
CIT(A)'s findings Submission
Argument of the assessee that the • There is no ambiguity in the
limits prescribed by notification dtd. language of the notification and
06.01.1994 have been frozen. If this therefore, rules of interpretation
argument is accepted, it would render does not apply. The explanation of
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several decisions of High Courts and notification dtd. 06.01.1994 clearly
Tribunals to nullity. states that the referred limits in the
schedule to this notification are
those limits which are existing on
the date of on which the notification
It was not the intention of the was published in the Official
legislature to freeze the limits as these Gazette i.e. 06.01.1994.
would change with increasing
urbanization. • CIT(A) has not quoted any such
judgement. The judgements quoted
by him are on different line of law
which have no application in the
The assessee has failed to interpret the facts of the assessee's case.
section 2(14)(iii) in its right Applicability of all the judgements
perspective. quoted by the CIT(A) is separately
analysed and annexed to these
synopsis.
• As far as the intention of legislature
is concerned, we may submit that
the Central Government notified the
distance of 8 kms in said notification
keeping in mind the potential of
growth of the city in the near future.
In fact the boundaries of JMC have
still not covered the land of the
assessee.
• From the above discussion, it is
quite clear that CIT(A) has erred in
applying the provisions of section
2(14)(iii) and decisions of Hon'ble
High Courts and Tribunals.
The legislature has used the word "any • We may submit that the legislature
municipality". When the Legislature has used word "any municipality" to
used "any municipality", it would be cover those municipalities under the
safe to infer that limits of municipality clause (a) of section 2(14)(iii). As
would not remain static and may such there is no relevance of the said
change with the increasing findings/observations.
urbanization.
The Central Government has the • The provisions of section 2(14)(iii)
authority u/s 507(a) of the Municipal are independent of the said
Corporation Act to declare any portion provisions quoted by the CIT(A).
of a rural area as an urban area. The Only those Municipal Limits are
moment the power is exercised u/s covered in section 2(14)((iii) where
507(a), the need for notification u/s the population is not less than
2(14)(iii)(b) would not arise. Similarly 10,000/-. As such there is no
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the moment the Central Government relevance of the said findings.
feels that a particular area within 8 kms
• "Capital asset" has been defined u/s
of the limits of municipality has to be
2(14) of Income Tax Act, 1961.
treated as an urban area, the need for
exercise of power u/s 507(a) would • Imposition of capital gain on
also cease. Thus two provisions are in transfer of capital asset is a matter of
a way complimentary to each other and Income tax as required by section
at times overlap. 45. Income Tax Law is a whole law in itself.
• No other law or provisions should be applied unless an express or implied reference is made in income tax law.
• Hence, the findings of CIT(A) that the section 507(a) of Munciapl Corporation Act and section 2(14)(iii) of Income Tax Act are not valid.
Notifications issued by the Central The notification is not overruling the Government are instances of provisions of law as the Government is subordinate legislation and that in the authorized to specify the area under the absence of an express or implied said clause (b) of section 2(14)(iii). The provision subordinate legislation could area has been specified by the not have overruled the statutory government on the basis of boundaries provisions. of municipal corporation existing as on the date of notification.
The onus is on the assessee to show • The assessee has produced the that the character of the lands changed extracts of Girdawari report for land after the acquisition of the capital asset in question showing that the land by the assessee and that the lands were was actually being cultivated at the agricultural lands at the time of transfer time of transfer (PB Page 17). of the asset.
• The balance land is still being used for agriculture.
• The rate charged by assessee is Rs.26 lacs per bigha (PB Page 6).
Bigha is used for measurement of agricultural land only. As such there is no intention of assessee to change the land use and assessee was not concerned of the use of the land by the buyer. This is clearly indicated from the sale deed.
• The land is still lying as such and no 9 plotting has been done on the same.
On this basis, he submitted that, the interpretation taken by the ld CIT(A) makes the whole notification as invalid and the decisions of Courts given on that basis becomes nullity. The notification does take few municipal areas of the country and distances in all cases are separately determined. Distance of 8 kms. is only an outer limit and not a benchmark. He accordingly concluded that the claim of the assessee is as per law and this ground of appeal deserves to be allowed. The ld. A/R also drawn our attention towards the decision of Jaipur Bench of ITAT in the case of Smt. Subha Tripathi Vs. DCIT (58 SOT 139) wherein the same question arose for the same assessment year in respect of land situated in the same village Machwa. The Hon'ble Bench has decided the case in favour of the assessee on the similar basis as argued by ld. A/R. He also drew our attention towards the returns of income filed by the assessee in the subsequent years wherein agricultural income shown by the assessee in respect of the remaining part of land has been accepted by the department.
4.0 Ld. D/R on the other hand has supported the order of A.O. and ld CIT(A). He submitted that the land in question was capital asset u/s 2(14). He referred the findings given by the ld CIT(A) that 8 kms from the local limits was to be seen on the date of transfer and not on the date on which notification was published in official Gazette. He submitted that issue stands covered in the favour of Revenue by the decision of Hon,ble Cochin Tribunal in the case of Arun Sunny Vs DCIT (002 ITR 380) wherein it was held that the central government had issued the notification for the purpose of changing the character of the asset. The nature of the property had to be examined as on the date of transfer. Further, the transfer deed of the asset was executed during the year under 10 consideration and therefore, the nature of the property whether it was a capital asset or not, had to be examined for the year under consideration. He submitted that ld CIT(A) has correctly held that once the property was found to be a capital asset on the date of transfer, the transaction became liable for capital gains taxation and the date of notification could not be used for any other purpose. He further mentioned that the date of notification was relevant only in deciding the nature of the property. He placed reliance on the decision of Hon'ble Madras High court in the case of M. Venkatesan Vs CIT (144 ITR 886) where referring to the scope of section 45, it was held that "taxation or exemption from taxation depends upon the subject of transfer answering or not answering the definition of capital asset at the time of transfer and at no other point of time." He further submitted that normally when the area of the municipality is extended looking to the urbanization on account of pressure of population, then slowly there agricultural lands are converted into urban areas and they form part of such urban areas. It is true that even after forming of municipal areas, there might exist some lands which may be under cultivation, but that becomes an urban area with the passage of time. He submitted that section 2(14)(iii)(b) clearly stipulates 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 I.T. Act. The legislature has used the word "any municipality". When the legislature used "any municipality", it would be safe to infer that limits of municipality would not remain static and may change with the increasing urbanization. Though the assessee claimed that the agricultural land was beyond 8 kms radius of JMC as on 06.01.94, the AO had found that the land in question was within 2 to 3 kms radius of JMC. For this he placed reliance on the decision of Hon'ble Andhra Pradesh High Court in the case of CIT Vs Bolla Ramaiah (174 ITR 154) wherein it was 11 held that when the land was situated within 8 kms of local limits of municipal corporation, it was liable for capital gain. It was held that it was unnecessary to go into the question whether the land were agricultural lands or not on the date of acquisition, because even if it were agricultural lands, they were not exempt from capital gains tax. It would imply that what is necessary is the position as on date of sale and not the position as on the date of acquisition. Further reliance was made on decision of Hon'ble Apex court in CIT Vs Gemini Pictures Circuit (P.) Ltd (220 ITR 43) where it was held that mere fact that the land in question was agricultural land could not be a ground to claim exemption u/s 2(14) of IT Act when it was situated within 8 kms of the local limits of Municipal Corporation. Since the land sold by the assessee was a capital asset, therefore, the surplus realized by the assessee on ale of land was assessable as capital gain. He also referred the findings of the ld. CIT(A) that the central government has the authority under section 507(a) of the Municipal Corporation act to declare any portion of a rural area as an urban area. The moment the power is exercised under section 507(a), the need for notification u/s 2(14)(iii)(b) would not arise. Similarly the moment the Central Government feels that a particular area within 8 kms of the limits of the municipality has to be treated as an urban area, the need for exercise of power u/s 507(a) would also cease. Thus two provisions are in a way complimentary to each other and at times overlap. Therefore it is not required that central Government should keep on issuing notification. It has further been submitted that notification cannot override the provisions of law. For this reliance was placed on the decision of Kerala High Court in the case of Alexander George Vs CIT(262 ITR 367) where the question arose whether a particular land could be treated as agricultural land with reference to Notification in 1973 when it was found to be outside notified area on a subsequent notification in1994 then it was held that since at the 12 time of transfer, it was within the notified area, therefore the liability could not be avoided. It was accordingly concluded that the onus was on the assessee to show that the character of the lands changed after the acquisition of the capital asset by the assessee and that the lands were agricultural lands at the time of transfer of the asset. The material date with reference to which the question whether the particular asset which had been sold was agricultural land or not was to be decided was the date of sale. In other words, the assessee should further prove that it was agricultural land at the time of transfer. He further referred the relevant para of the order of ld. CIT(A) wherein he had noticed that the land sold by the assessee was within the distance of 8 kms from the municipal limits of Jaipur Municipal corporation as per the Tehsildar, Jaipur Tehsil vide his letter dated 24.12.2010. Further, the inspector sent by the AO also reported that land in question was located within 2 to 3 kms from the Jaipur Municipality and a large number of residential towers had come up in the adjoining areas. Accordingly, the land sold by the assessee was within 8 kms for Jaipur Municipal Corporation and therefore not an agricultural land but an urban land and the capital gain earned on sale of such land was liable to be taxed. He accordingly submitted that the Ld. CIT(A) had correctly upheld the action of the AO to treat the same as capital asset within the meaning of section 2(14)(iii)(b) of I.T. Act, 1961.
5.0 In the rejoinder, the ld. A/R referred our attention towards annexure to his written submissions wherein he has already submitted that various case laws referred by the authorities are not relevant in the following manner : -
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Arun Sunny vs. Dy. CIT [2 ITR 380 (ITAT, Cochin Bench)] Facts Decision Relevance in present case • Assessee purchased a • Whether an asset is • By applying this case property in 1975 for Rs. liable for capital gains into present case, 9,000/-. tax and the question as notification prevailing to what would be the on the date of transfer • He sold this property on amount of capital gain will be applied to find 19.01.2006 for Rs.
are two different things. out whether the land in 11,02,71,200/-
question is capital
• The date of notification
• This property became asset or not
is relevant only in
capital asset by virtue of
deciding the nature of
notification dtd. 06.01.1994.
the property. On the
• Hence assessee applied the date of transfer it is
FMV of property as on found that the asset is a
06.01.1994 instead of capital asset eligible for
01.04.1981being no FMV capital gain, the
can be assigned when the relevance of the
property was not at all notification is complete.
capital asset.
• The statutory date for
the FMV cannot be
substituted with a
subsequent conversion
date determined by
Central Government
through a notification.
Alexander George vs. CIT [262 ITR 367 (Ker)]
Facts Decision Relevance in present case
Assessee was the owner of 2.47 • In the present case, CIT(A)
acres of land at Thrikkakara It was held by the did not apply this case
Panchayat. Hon'ble High Court of
Govt. acquired his land by Kerela that proceeding is law in correct manner.
invoking urgency clause . to be completed on the
basis of law that was In 262 ITR 367 it was
Possession was taken on existing at that time (i.e.
29.01.1985 and compensation at the time of transfer). held that notification prevailing
was paid on 01.04.1986. on the date of transfer
On the date of transfer, will be applicable on the
notification dt. 6.02.1973 was
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prevailing as per which land was transaction.
capital asset.
In 1993, another notification was
issued de-notifying the place at
which assessee's land was
situated and consequently
making assessee's land non-
capital asset.
Assessee contended that since the
notification de-notifying such
place came into force during the
pendency of appeal, so land is
not a capital asset
M. Venkatesan vs. CIT [144 ITR 886 (MAD)]
Facts Decision Relevance in present
case
• Assessee owns a land • Tax treatment of the • In the present case, situated in town having assessee's transaction, CIT(A) did not applied population of more than therefore to be this case law in correct 10000 considered in the light manner.
of amended provision
• He sold such land on • In 144 ITR 886 it was
since that was the law in
4.03.1970 held that the law in
force during the
force at the time of
• Hitherto all agricultural relevant A.Y.
transfer will be
lands were outside the
• In other words, taxation applicable on the
purview of capital asset.
or exemption from transaction
However, Amendment in
taxation depends upon
section 2(14)(iii) came
the subject of transfer
w.e.f. 1.04.1970 treating the
answering or not
agricultural lands situated
answering the definition
within the limits of
of capital asset at the
municipalities and other
time of transfer and at
local authorities with a
no other point of time.
population of 10000 or
more.
• Assessee contended that his
land is not capital asset
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Ranchhodbhai Bhaijibhai Patel vs. [CIT 81 ITR 446 (GUJ)] Facts Decision Relevance in present case • In this case assessee got the • If the land is being used • In the present case converted agricultural land for agricultural purpose, land is being used for into non-agricultural by it is agricultural land agricultural purpose taking permission from otherwise following will Collector as required by be considered:-
Bombay Tenancy Act to Intention of the
sell the construction
owner of land
company
Development & use
of lands in the
adjoining area and
the surroundings
Situation of the land
Physical
characteristics of
land
Land is assessed for
agricultural purpose
Measurement of
land (i.e. in sq.
ft./acre/bigha)
Therefore, land in question
was held to be capital asset.
CIT vs. Bolla Ramaiah & Ors. [174 ITR 154 (AP)]
Facts Decision Relevance in present
case
• Assessee owned an • It was held that when the • But in present case,
agricultural land situated land under requisition is land is not situated
either within the municipal acquired, it vests in the within 8 kms of the limits or within 8 km from State on the date of local limits of publication of the Municipality on the 16 the local limits. acquisition notification date of transfer in the Official Gazette, • This land was proposed to so 12.3.1970 was held to be acquired and a be the date of transfer.
notification dtd. 12.02.1970 was published on 12.3.1970. • Assessee's land fall either within the • Agricultural lands situated municipal limits or within the limits of a within 8 kms of the local municipality or within 8 limits. Hence land in kms of the limits of any question was held to be municipality was made a capital asset.
"capital asset" w.e.f. 1.4.1970 i.e. applicable for A.Y. 1970-71. • Section 47(viii) exempted sale of agricultural lands effected before 1.3.1970 (the date of introduction of the Finance bill in the Parliament) . • Assessee contended the acquisition was completed before 1.3.1970 and the land was agricultural land on the date of acquisition 6.0 We have heard the rival submission and have carefully perused the available
material on record. We find that in the case of Smt. Subha Tripathi Vs. DCIT (58 SOT
139), this Bench has already considered the similar matter in respect of land situated in the same village Machwa for the same assessment year. This Bench has found that the land is situated out of the limit of Jaipur Municipal Corporation and therefore, was not covered in sub-clause (a) of section 2(14)(iii). It has been held by this Bench that for the purpose of application of sub-clause (b) of clause (iii) of section 2(14) and to measure 8 KMs from the radius of Jaipur Municipal Corporation, the relevant date would be the date of notification i.e. 6.1.1994 and not the date of sale of land in question. We find that the 4 bigha land in question was part of total 16 bigha land of the assessee allotted to him 17 by the Government in lieu of his retirement from defense services. As per the Government record in form of Girdawari which can be said to be conclusive evidence in this respect, the land was being cultivated by the assessee during the year under consideration and subsequently also. The assessee has shown Agricultural Income in the return of income of the previous year and also in the subsequent years which has been accepted. To further support this, assessee has also referred certain electricity bills showing consumption of electricity for agricultural use. These documents clearly suggest that agricultural activities were there on the said land during the relevant year. The use of land differently by the buyers on a subsequent date of inspection is not a relevant factor for us. In this view of the matter, following the order of this Bench in the case of Smt. Subha Tripathi vs. DCIT we allow this ground of the assessee's appeal. 7.0 Though the above decisions goes to decide the non-taxability of the entire capital gain, still for the sake of disposing off the ground raised by the both the assessee and department, we are proceeding to decide Ground No. 2 of assessee's appeal and also Ground No. 2 of the departmental appeal. The issue involved is that on what basis Fair Market Value of the assessee's land should be considered as on 01.04.1981 for the purpose of computation of capital gain. The AO quoted an alleged comparable instance wherein the rate has been Rs.2,700/- per bigha and total cost was considered at Rs.10,800/- for 4 bigha of land. It has been taken on the basis of enquiry from Dy. Inspector General, Registrar & Stamps, Jaipur who was called upon by the AO to provide the same. Dy. Inspector General, Registrar & Stamps, Jaipur furnished a copy of sale deed of agricultural land at similar location executed on 27.12.1980. As per this sale deed, the total sale consideration was Rs. 16,000/- for 6 bigha. Accordingly the fair 18 market value of the property as on the date of transaction works out to Rs. 2,666/- per bigha. Considering the same, the fair market value of the land in question as on 1.4.1981 was estimated by the AO at Rs. 2,700/- per bigha resulting total value of land 10,800/- (2700*4). Hence amount of Rs. 10,800/- was adopted as the fair market value of the land in question on 1.04.1981. The assessee raised objections that the comparable case cited by the AO was distinguishable due to the following reasons:
a) The land sold by SH. Panna S/o Sh. Mahadev Jat consisted of Khasra No. 226, 246, 244, 245 & 233. These khasras of land were scattered over an area of 2 kms. on the other hand, the land of appellant was a big single chunk of land and it was compatible for residential use after plotting.
b) The land of the appellant was in close proximity to the state highway (nearly 500mt.) whereas in the comparable case cited by the AO, the land was 3 to 4 kms away from the main road.
c) The land sold by Sh. Panna S/o Sh. Mahadev Jat was already in possession of the buyers and they were cultivating the land for past many years.
The assessee submitted that all these factors make a lots of difference in the value of land. There cannot be any basis to make suitable adjustment for the above factors in case of land. According to the assessee when no comparable case is found, the Fair Market Value of the captioned land should be computed on the basis of reverse indexation in the manner approved by Third Member Judgment of ITAT Agra in the case of Jahanganj Cold storage Vs ACIT (133 TTJ 278). Accordingly, the value comes to Rs.18,87,477/-. After considering the objections raised by the assessee, the ld. CIT(A) found that the case sited by ld. AO was not comparable. He however made his own estimation and adopted a rate of Rs.10,000/- per bigha and took the Fair Market Value as on 1.4.1981 of the total land at Rs.40,000/-.
198.0 We have heard the rival parties and considered the material on record. We find that value of land differs drastically due to its surroundings, distance from road, disputes, possession etc. There is no dispute on the issue that the in the instances quoted by the ld. AO, the buyers were already in the possession of land in question which is major factor which affects the rates of the transaction and attached obligations. Further, there are issues regarding proximity from road and scattered land. We also find that AO has given a finding that multistoried projects have been developed near the assessee's land and the buyer of the assessee's land is also developing some project on this land. No such development of the comparable land has been brought on record by the AO. Ld. CIT(A) also agreed that the instance quoted by the AO is not comparable. However, he has taken a arbitrary value without any basis. In these facts and circumstances, where no comparable case is available, the best way to estimate the cost would be to compute the Fair Market Value on the basis of reverse calculation considering the cost inflation index as held in Third Member Decision of ITAT Agra (Supra) in which one of us was also a party. Accordingly, the estimation made by the assessee in this respect had to be accepted. We thus allow this ground of appeal of the assessee and reject the ground of the departmental appeal.
9.0 Ground no. 3 of the assessee's appeal is against rejecting the agricultural income of Rs.42,000/-. As already found by us, the assessee has shown evidences of land being cultivated. The agriculture income has been accepted in the previous year and also in the subsequent years. In these facts and circumstances, size of land, government records of crop and the amount of agricultural income shown, we find no reason to reject the assessee's claim. We accordingly allow this ground of the assessee's appeal also. 20 10.0 Now we come to the remaining ground no.1 of department's appeal which is against holding that the provision of section 50C would not apply as the land was sold by the assessee through agreement and the sale deed was not registered. The AO had observed that land has been developed and is in the possession of the buyers and sale consideration has been received in toto by the assessee. Further, assessee has claimed that the property has not yet been registered and hence, provisions of section 50C are not applicable. In this regard, AO observed that the registration of sale property has not been made only to evade the stamp duty payments on the sale. Therefore, section 50C would be applicable on the sale of property and accordingly applicable DLC rates i.e. 1,40,00,000/- would be applied on such transfer. Accordingly, the AO took the sale consideration of Rs. 1,40,00,000/- as per section 50C instead of actual sale consideration of Rs. 1,04,00,000/-. In the first appeal, ld CIT(A) made a reliance on the decision of Hon'ble Jodhpur Tribunal in the case of Navneet Kumar Thakkar Vs ITO (298 ITR 042) where it was held that to attract section 50C, the property under transfer from the assessee to another person should have been assessed for stamp valuation purpose at a higher value than that received or accruing to the assessee. Unless the property transferred have been registered by sale deed and for the purpose the value had been assessed and stamp duty have been paid by the parties, section 50C could not come into operation. Further reliance was made on the decision of Hon'ble Jaipur Tribunal in the case of Vijaylaxmi Dhaddha Vs ITO(20 DTR 365) and Hon'ble Lucknow Tribunal in the case of Carlton Hotel Pvt Ltd. (122 TTJ 515) have held that if the property sold is not registered then section 50C would not have any application. Accordingly, Ld. CIT(A) held that in the present case, the sale deeds had not been registered and the buyers had not paid any 21 stamp duty therefore section 50C would not have any application and directed the ld. AO to adopt the sale consideration at Rs. 1,04,00,000/- instead of Rs. 1,40,00,000/-. 11.0 We have heard the rival parties and perused the material on record. The present case is for A Y 2008-09, i.e. prior to amendment made in the provisions of section 50C to take into consideration the transfers which have not been registered for stamp duty purpose. In view of the various decisions quoted by the ld. CIT(A), we are in agreement with his order and confirm the same. This ground of the departmental appeal is also rejected.
12.0 In the result, the appeal of the assessee is allowed and the appeal of the revenue is dismissed.
Order pronounced in the open Court on 30 -01-2014.
Sd/- Sd/-
(.N.K. SAINI) (HARI OM MARATHA)
ACCOUNTANT MEMBER JUDICIAL MEMEBR
Jaipur
Dated: 30th JAN 2014
*Mishra
Copy forwarded to:- By Order
1. Shri Satya Dev Sharma Jaipur
2. The ITO , Ward- 5 (2), Jaipur
3. The ld. CIT(A)
4. The ld. CIT
5. The DR
6. The Guard File (ITA No.25/JP/12) A.R., ITAT, Jaipur
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