IN THE HIGH COURT OF JUDICATURE AT MADRAS

Dated : 06.08.2014

Coram

The Honourable Mr.Justice R.SUDHAKAR

and

The Honourable Mr.Justice G.M.AKBAR ALI

Tax Case (Appeal) Nos.566 and 567 of 2013

& M.P.Nos.1 and 1 of 2014

Mrs.Sakunthala Vedachalam

... Appellant in T.C.(A) No.566/2013/

Respondent

Mrs.Vanitha Manickavasagam

... Appellant in T.C.(A) No.567/2013/

Respondent

-vs-

The Assistant Commissioner of Income Tax,

Business Circle XIV, Chennai - 600 034.

... Respondent in both TCA's/Appellant

Appeals filed under Section 260A of the Income Tax Act, 1961

against the order of the Income Tax Appellate Tribunal, Chennai B

Bench, dated 11.4.2013 in ITA.Nos.2164 & 2165/Mds/2012 against the

orders Commissioner of Income Tax (Appeals) XII, 121, Mahatma Gandhi

Road, Nungambakka,Chennai-34 dated 22.08.2012 in ITA Nos.200 &

201/2010-11.

and

against the orders of the Assistant Commissioner of Income-Tax

Business Circle-XIV, Chennai-34 dated 28.12.2010 and made in PA

No./GIR Nos.AAAPV 9914C & AAAPV9265C

For Appellants

:Mr.C.Ramakrishnan

for Mr.R.Sivaraman

For Respondents:

Mr.J.Narayanasamy

Standing Counsel for Income Tax Dept.

C O M M O N J U D G M E N T

(Judgment of the Court was delivered by G.M.AKBAR ALI,J.)

The appellants/assessees, who are mother and daughter, sold their

agricultural

lands

situated

at

Mahabalipuram

Village,

Thirukkalikundram Taluk, Kancheepuram District vide document

https://hcservices.ecourts.gov.in/hcservices/

Nos.7970/2007 and 519/2008 for a sale consideration of Rs.25,20,000/-

and 64,80,000/- respectively. They claimed exemption from tax on

capital gain on the ground that they were agricultural lands.

However, the Assessing Officer observed that though the lands were

claimed to have been agricultural lands, the assessees have not

furnished any evidence in support of their claim. Hence, he deputed

one Inspector to examine the lands, who, in turn, reported that the

lands were dry lands and no agricultural activities were undertaken

by the assessees. Hence, the Assessing Officer rejected their claim

holding that the lands sold were not agricultural lands and brought

the entire sale consideration to tax under the head "Long Term

Capital Gains". The Assessing Officer also invoked the provisions of

Section 50C of the Income Tax Act and adopted the guideline value for

such assessment. Aggrieved by the order of the Assessing Officer,

the assessees preferred appeals before the Commissioner of Income Tax

(Appeals).

2. Before the Commissioner of Income Tax (Appeals), the assessees

furnished a copy of the Adangal extract and also claimed that there

were casuarina crops grown in those lands as shown in the chitta

adangal, which indicates that the lands were agricultural lands.

Since there was an additional evidence filed, the same was forwarded

to the Assessing Officer for his verification with a request to

submit a remand report. The Commissioner of Income Tax (Appeals)

found that in the remand report dated 18.5.2012 the Assessing Officer

confirmed that the lands were agricultural lands, as casuarina crops

were grown as certified by the Tahsildar .

3. On going through the various provisions of the Act, the

Commissioner of Income Tax (Appeals) also found that once the lands

were classified as agricultural lands as per the revenue records,

namely, Chitta and Adangal, and the lands, which were not falling

within the territorial limits of any Municipality or cantonment or

within the distance of not more than 8 km from outer limits of the

nearest municipality/cantonment, the same squarely fell within the

definition of agricultural lands and therefore they were exempted

from capital gains tax. Accordingly, the appeals filed by the

assessees were allowed. Aggrieved by the order of the Commissioner of

Income Tax (Appeals), the Revenue filed appeals before the Income Tax

Appellate Tribuna