The Commissioner of Income Tax, Faridabad v. M/s Shri Sadhwa (HUF)

CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL. HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Ms. Urvashi Dhugga, Advocate for the appellant. AJAY KUMAR MITTAL, J.

The revenue has filed the present appeal under Section 260A of the Income Tax Act, 1961 (in short “the Act”) against the order dated 22.11.2006 passed by the Income Tax Appellate Tribunal, Delhi Bench “I”, New Delhi (hereinafter referred to as “the Tribunal”) in ITA No. 1281/Del/2005 for the assessment year 1997-98 proposing to raise the following substantial questions of law:-

(i) Whether, on the facts & circumstances of the case, the Hon'ble ITAT is right in holding the land in question to be agricultural land not subject to capital gains tax, even though the distance of the said land from municipal limits was not measured in accordance with the ITA No. 247 of 2008 -2- General Clauses Act? (ii) Whether, on the facts & circumstances of the case, the Hon'ble ITAT is right in relying upon the order of the Hon'ble Punjab & Haryana High Court in the case of Jaswanmt Rai Vs. CWT (107 ITR 477) wherein the facts are entirely different? (iii) Whether, on the facts & circumstances of the case, the Hon'ble ITAT is right in dismissing the appeal of the Revenue on the basis of non- filing of appeal by the Department in the case of the brother of the assessee, even though it is settled law that each proceeding is independent and the principle of res judicata does not apply to the income tax proceedings?

Facts necessary for deciding the present appeal may be noticed. The assessee filed its return on 28.11.1997 declaring an income of Rs.11,56,630/- as income from other sources. He filed a computation sheet along with the return submitting that agricultural land of HUF comprised in khasra Nos. 1926, 1927, 1928 and 1932 located in Wazirabad, Tehsil and District Gurgaon was sold for Rs.1,92,53,906/-. It was claimed that the said land was situated beyond 8 kms from municipal limits of Gurgaon. The assessee along with the return had submitted a certificate dated 27.10.1997 issued by the Tehsildar stating that the land in question was at a distance of about 8.5 kms from the ITA No. 247 of 2008 -3- municipal limit. The assessee had claimed that since the agricultural land in question was more than 8 kms from municipal limits of Gurgaon, no capital gain arose on the sale of such agricultural land. An exparte assessment was framed under Section 144 of the Act by the Joint Commissioner of Income Tax on 28.3.2000 holding the assessee liable to capital gains on the sale of the land. The Assessing Officer held that the land sold by the assessee was located within radius of 8 kms of Gurgaon municipality and was a capital asset, the sale proceeds of which were taxable under the head “capital gains”. Accordingly, the Assessing Officer made an addition of Rs.1,87,53,906/- on account of capital gains. Feeling aggrieved, the assessee filed an appeal before the CIT (A) who vide order dated 20.12.2004 allowed the appeal and deleted the addition made by the Assessing Officer. On further appeal by the revenue, the Tribunal vide order dated 22.11.2006 upheld the order of the CIT (A). Hence, the present appeal by the revenue.

We have heard learned counsel for the revenue. Learned counsel for the revenue submitted that the land was situated less than 8 kms from the municipal limits of Gurgaon and, therefore, the gain arising on its sale was liable to be taxed as capital gain. The learned counsel further submitted that the Tribunal was not justified in adjudicating the issue in favour of the assessee on the basis of an order passed in the case of the brother of the assessee, Gurdial Singh, who was a co-sharer. It was argued that the findings recorded in one case are not necessarily to be binding on the department in the case of other assessee and principles of res judicata are not applicable. Reliance was placed by learned counsel for the revenue on the ITA No. 247 of 2008 -4- judgment of the Apex Court in C.K. Gangadharan and another v. Commissioner of Income Tax, [2008] 304 ITR 61 (SC) in support of her submission.

We have thoughtfully considered the submission of learned counsel for the revenue and do not find any merit. The CIT (A) relying upon certificate dated 24.6.2004 issued by the Executive Engineer held that the distance of the land sold was 8.625 kms from municipal limits of Gurgaon. The report of Tehsildar dated 16.3.2004 depicting the land in question to be at a distance of 7.5 kms from municipal limits of Gurgaon on which reliance had been placed by the revenue was not accepted. He further relied upon the order of the CIT (A) passed in the case of the brother of the assessee, Gurdial Singh, where it was held to be beyond 8 kms from municipal limits. The CIT (A) accordingly held that the land which was sold was agricultural land being outside 8 kms of municipal limits and, therefore, no capital gain was payable thereon. The Tribunal affirmed the finding of the CIT (A).

On appreciation of evidence independently by the CIT (A) and the Tribunal, a finding has been recorded that the land was situated beyond 8 kms. Additionally, the department in the case of the brother of the assessee who was a co-sharer in the same land had accepted it to be beyond 8 kms of municipal limits of Gurgaon. The said finding of fact concurrently recorded by the CIT (A) and the Tribunal has not been shown to be perverse in any manner. Thus, the pronouncement in C.K. Gangadharan's case (supra) is of no help to the case of the revenue. ITA No. 247 of 2008 -5-

In view of the above, no substantial questions of law as claimed arise in this appeal.