Geetha Venugopal, Tambaram vs Department Of Income Tax

अपीलाथ क ओर से / Appellant by : Shri. S. Dasgupta, IRS, JCIT. यथ क ओर से / Respondent by : Shri. J. Radhakrishnan, Advocate

सन ु वाई क तार ख/Date of hearing : 28.04.2015 घोषणा क तार ख /Date of Pronouncement : 19.06.2015

आदे श / O R D E R

PER CHANDRA POOJARI, ACCOUNTANT MEMBER

This appeal by Revenue is directed against the order of the

Commissioner of Income Tax (Appeals)-IX, Chennai, dated 28.12.2012

for the assessment year 2009-10.

:- 2 -: I.T.A.No.636/Mds/2013.

2. The sole issue raised by the Revenue in this appeal is with

regard to treating the land acquired by the Government owned by the

assessee is agricultural land and therefore is not a capital asset for the

purpose of charging capital gains tax.

2.1 The brief facts of the case are that the assessee is an individual

filed a return of income on 19.01.2010 admitting a total income of

E2,09,960/- and the case was selected for scrutiny. The assessee had

owned some agricultural lands at Kolappakkam Village Block No.1,

Sriperumbudur Taluk. The said lands were acquired by the

Government for the purpose of airport extension. The total

compensation paid by the Government was E53,00,890/- and

E1,36,97,192 to the assessee with a total TDS deducted of

E24,27,521/-. The assessee claimed exemption from Capital Gains

u/s.10(37) of the Income Tax Act as the asset transferred was

agricultural land and agricultural land is not a capital asset within the

definition contained in section 2(14) of the Act.

2.2 The Assessing Officer observed that the lands belonging to the

assessee were acquired by the Government of Tamilnadu for the

extension of second runway of Chennai Airport. The lands with Survey

Nos.272, 271/1 are situtated at No.75, Kolapakkam Village, Block No.1, :- 3 -: I.T.A.No.636/Mds/2013.

Sriperumbudur taluk. The nearest municpolaity is pallavaram and the

Kolapakkam is 14.4 kms and from Meenambakkam it is 14.6 kms. The

Government had paid a consideration of E2,14,25,603/-. The assessee

filed the return of income admitting a taxable income of E2,09,960/-

for the assessment year 2009-10 after claiming the amount of

E2,14,25,603/- as exempted income u/s.10(37) of the Act. According

to the assessee, the above lands acquired by the Government of

Tamilnadu will not be failing in the definition of sec. 2(14) of the Act.

During the scrutiny, the Assessing Officer denied the claim made by

the assessee and treated the profits from the sale (the compensation

received) of the lands, i.e E2,12,41,412/- as capital gains and brought

to tax. While doing so, the Assessing Officer has relied on the decision

rendered by the Hon'ble Apex Court in the case of Smt. Sarifabibi

Mohd. Ibrahim vs. CIT 204 ITR 631 (SC). The Assessing Officer has

applied the test and laid down by the Hon'ble Apex Court and

concluded the assessment by treating the lands acquired by the Govt

of Tamilnadu are capital assets u/s.2(14) of the Act. Against this, the

assessee went in appeal before the Commissioner of Income Tax

(Appeals). The Commissioner of Income Tax (Appeals) observed that

the said land is situated beyond 10kms from nearest Municaplity limits

i.e. Pallavaram Municipality, Kanchipuram Dist, and the population of :- 4 -: I.T.A.No.636/Mds/2013.

the Kolapakkam is 2594. It is clearly seen that the said lands neither

form part of Chennai Metro Development Authority (CMDA) nor

situated in any area with a population of 10,000. Further the said

lands are located away from the limits notified by the Central

Government for the purpose of Section 2(14) of Income Tax Act, 1961,

and the fact was not disputed by the Assessing Officer. The lands as

seen from Revenue records suggest that said lands at survey No.272,

271/1 are situated at No.75, Kolapakkam village, Block No.1,

Sriperumbudur taluk is classified as agricultural land. The Assessing

Officer has not brought anything on record that the said lands are not

agricultural lands. The assessee has submitted basic evidences that

the land is agricultural land by furnishing copies of adangal. When the

assessee submitted overwhelming evidences suggesting that the land

is agricultural, the burden is on the Assessing Officer to prove that the

land is non-agricultural one. In the absence of any finding contrary to

the evidences submitted by the assessee, the Assessing Officer is not

justified in treating the said lands as non-agricultural lands and the

Commissioner of Income Tax (Appeals) deleted the addition made by

the Assessing Officer. Against this, the Revenue is in appeal before us.

:- 5 -: I.T.A.No.636/Mds/2013.

3. We have heard both the parties and perused the material on

record. In this case, the land with survey Nos.272, 271/1 are situated

at No.75, Kolapakkam village, Block No.1,Sriperumbudur Taluk. The

nearest municipality is Pallavaram and the Kolapakam is 14.4 kms

and from Mennambakkam/Chennai it is 14.6 kms. The assessee

received a consideration of E2,14,25,603/- on acquisition by

Government of Tamil Nadu. According to the assessee, it is non

capital asset so as to bring it to Capital Gain Tax as the property falls

beyond an area which is comprised within the jurisdiction of a

municipality or a cantonment board 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

previous year. In other words, land does not fall under such-clause

(a) to sec 2(14) (iii) of the Act as land is outside the notified

municipality. Now, we have to see whether the land fall in clause (b)

to sec 2(14)(iii) of the Act, as Central Government may, having regard

to the extend to the scope of urbanization that area and other relevant

consideration specified in this behalf by notification in the official

gazette. The notification issued by the Central Government u/s.2(1A)

(c) proviso (ii)(B) and 2(14) (3b) vide No.9447, (F.No.164/(3)/87/ITA-

I, dated 06.01.1994, as amended by notification No.11186 dated 28th :- 6 -: I.T.A.No.636/Mds/2013.

December, 1999 provided that agricultural land situated in area lying

within the distance not exceeding 8 km from the local limits of

municipality, it covered by amended definition ''Capital Assets". The

Central Government in exercise of such powers as issued before

notification as amended by notification 11186, dated 28.12.1999,

clearly clarifying that agriculture land situated in local area, outside

municipality or contentment board etc. having population of less than

ten thousand and also beyond distance notified by Central Government

from local limits i.e. outside limits of other such municipality or

contentment board etc. still continues to be excluded from the

definition ''Capital Asset". Accordingly, land situated in local areas

continues to be excluded from the definition. In the present case,

admittedly the impugned land is outside municipal limit of Chennai and

also 8kms away from outer limit of this municipality and also any other

municipality. The assessee land does not come within the preview of

section 2(14)(iii) of the Act either under sub-clause u/s.(a) or (b) of

the Act. Hence, it cannot be considered as Capital Asset within the

meaning of the section and no capital gain can be charged on the

transfer of this land by the assessee. Mere inclusion of land within

jurisdiction of Airport Development Authority by State government

notification does not change the character of land if the land still :- 7 -: I.T.A.No.636/Mds/2013.

continues to be agricultural land at the point of acquisition of land by

Government. Accordingly, we inclined to confirm the order of the

Commissioner of Income Tax (Appeals) in this issue.

4. In result, the appeal of the Revenue in ITA

No.636/Mds/2013 is dismissed.

Order pronounced on Friday, the 19th day of June, 2015, at Chennai.

Sd/- Sd/-

(वी. दग ु ा" राव) (चं पज ू ार ) V. DURGA RAO (CHANDRA POOJARI) या#यक सद य / JUDICIAL MEMBER लेखा सद य/ ACCOUNTANT MEMBER

चे#नई/Chennai. $दनांक/Dated:19.06.2015. KV

आदे श क त'ल(प अ)े(षत/Copy to: 1. अपीलाथ /Appellant 2. यथ / Respondent 3. आयकर आयु+त (अपील)/CIT(A) 4. आयकर आयु+त/CIT 5. (वभागीय त न.ध/DR

6. गाड फाईल/GF.