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2017 Supreme(Raj) 2551
RAJASTHAN HIGH COURT (JAIPUR BENCH)
K.S. Jhaveri, Vijay Kumar Vyas, JJ.
Commissioner Of Income Tax - Appellant
Versus
Shri Satya Dev Sharma - Respondent
Income Tax Appeal No. 75 of 2014
Decided On : 11-09-2017
Mr. K.D. Mathur for Mr. R.B. Mathur, Advocates, for the Appellant; Mr. Sanjay Jhanwar, Advocate, for the Respondent
The municipal limits existing on the date of issue of Notification No. 9447 dated 06.01.1994 under section 2(14)(iii)(b) should be considered for the purpose of determination of agricultural land instead of the municipal limits existing on the date of sale/transfer.
Headnote:
INCOME TAX - Section 50C - Applicability - Transfer of agricultural land - Municipal limits - Notification - Interpretation - Held, the municipal limits existing on the date of issue of Notification No. 9447 dated 06.01.1994 under section 2(14)(iii)(b) should be considered for the purpose of determination of agricultural land instead of the municipal limits existing on the date of sale/transfer.
Fact of the Case:
The assessee, an individual, sold agricultural land situated beyond 8 kilometers from the municipal limits on the date of sale. However, the land was within 8 kilometers from the municipal limits on the date of issue of Notification No. 9447 dated 06.01.1994 under section 2(14)(iii)(b) of the Income Tax Act, 1961. The Assessing Officer (AO) held that the land was not an agricultural land and added the sale proceeds to the assessee's income. The Commissioner of Income Tax (CIT)(A) deleted the addition made by the AO. The Revenue appealed to the Tribunal, which dismissed the appeal.
Finding of the Court:
The Tribunal held that the municipal limits existing on the date of issue of Notification No. 9447 dated 06.01.1994 under section 2(14)(iii)(b) should be considered for the purpose of determination of agricultural land instead of the municipal limits existing on the date of sale/transfer.
Issues: Whether the municipal limits existing on the date of issue of Notification No. 9447 dated 06.01.1994 under section 2(14)(iii)(b) should be considered for the purpose of determination of agricultural land instead of the municipal limits existing on the date of sale/transfer.
Ratio Decidendi: The Court held that the Tribunal was justified in holding that the municipal limits existing on the date of issue of Notification No. 9447 dated 06.01.1994 under section 2(14)(iii)(b) should be considered for the purpose of determination of agricultural land instead of the municipal limits existing on the date of sale/transfer. The Court relied on the decision of the Supreme Court in State of Tamil Nadu and another v. India Cements Ltd. and another, (2011) 40 VST 225 (SC), which held that circulars issued by the Revenue are binding on the departmental authorities and they cannot be permitted to repudiate the same on the plea that it is inconsistent with the statutory provisions or it mitigates the rigour of the law.
Final Decision: The Court dismissed the appeal of the Revenue.
JUDGMENT
ORDER
K.S. Jhaveri, J. - By way of this appeal, the assessee has challenged the judgment and order of the Tribunal whereby the Tribunal has dismissed the appeal of the department and allowed the appeal of assessee.
2. While admitting the matter on 14.07.2016, the Court framed the following substantial questions of law:-
"1. Whether on the facts and in circumstances of the case, the ITAT was justified in law in holding that the municipal limits existing on the date of issue of Notification No. 9447 dated 06.01.1994 under section 2(14)(iii)(b) should be considered for the purpose of determination of agricultural land instead of the municipal limits existing on the date of sale/transfer.
2. Whether on the facts and circumstances of the case, the ITAT was justified in law in holding that agriculture land sold by the assessee is not a capital asset under section 2(14) (iii)(b) as it was situated beyond 8 Kms. from the municipal limits on the date of issue of Notification No. 9447 dated 06.01.1994 despite the fact that the land was undisputedly situated within 8 Kms from the municipal limit on the date of sale."
3. Following decision was passed on 24.07.2017, in D.B. Income Tax Appeal No. 328/2011, Commissioner of Income Tax v. Shri Sher Singh Sunda by this Court which reads as under:-
"1. By way of this appeal, the appellant has challenged the judgment and order of the Tribunal whereby the tribunal has dismissed the appeal of the department and the C.O. of the assessee is partly allowed.
2. While admitting the appeal, this court on 13.04.2012 framed the following substantial question of law:-
"Whether the Hon''ble ITAT was right in law in deleting the addition of Rs. 65.00 lacs made under section 50C after having held that the transaction was transfer under section 2(47) of I.T. Act read with Section 50(c) and where the value of the property was assessed for the purpose of Stamp Duty payment and the transaction was covered by explanation 2 to Section 50C of the I.T. Act, 1961?"
3. For the sake of convenience, Section 50(C) Explanation 2 which is strongly relied upon by the appellant and Section 2(47) of the Income Tax Act is reproduced as under:-
"50C. (1) Where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted or assessed 86 [or assessable] by any authority of a State Government (hereafter in this section referred to as the "stamp valuation authority") for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed 86[or assessable] shall, for the purposes of section 48, be deemed to be the full value of the consideration received or accruing as a result of such transfer.
(2) Without prejudice to the provisions of sub-section (1), where-
(a) the assessee claims before any Assessing Officer that the value adopted or assessed 86[or assessable] by the stamp valuation authority under sub-section (1) exceeds the fair market value of the property as on the date of transfer;
(b) the value so adopted or assessed 86[or assessable] by the stamp valuation authority under sub-section (1) has not been disputed in any appeal or revision or no reference has been made before any other authority, court or the High Court, the Assessing Officer may refer the valuation of the capital asset to a Valuation Officer and where any such reference is made, the provisions of sub-sections (2), (3), (4), (5) and (6) of section 16A, clause (i) of sub-section (1) and sub-sections (6) and (7) of section 23A, sub-section (5) of section 24, section 34AA, section 35 and section 37 of the Wealth-Tax Act, 1957 (27 of 1957), shall, with necessary modifications, apply in relation to such reference as they apply in relation to a reference made by the Assessing Officer under sub-section (1) of section 16A of that Act. 87.
[Explanation 1].- For the purposes of this section, "Valuation Officer" shall have the same
