$ 17 * IN HIGH COURT OF DELHI AT NEW DELHI Date of Decision: 16.01.2020 + W.P.(C) 8160/2019 GURUDWARA SAHIB PATTI DHALIWAL Petitioner Through: Mr. Karan Dewan, Advocate. versus CHIEF COMMISSIONER OF INCOME TAX Respondent Through: Mr. Ajit Sharma and Ms. Adeeba Mujahid, Advocates. CORAM: HON'BLE MR. JUSTICE VIPIN SANGHI HON'BLE MR. JUSTICE SANJEEV NARULA SANJEEV NARULA, J. (Oral): 1. present petition under Article 226 and 227 of Constitution of India is directed against order dated 27.12.2018 passed by Chief Commissioner of Income Tax (Exemptions), Delhi relating to Assessment Year (AY) 2012-13 whereby Petitioner s request for refund claim under Section 119(2)(b) of Income Tax Act (hereinafter, referred to as "Act") has been declined. 2. factual matrix giving rise to present petition is that Petitioner claims that land belonging to them, situated in khasra No. 1243 Handbast No. 248 of Village Arraichan, Tehsil Payal, District Ludhiana is agricultural in nature and is outside municipal limit of Municipal Council, Doraha, Tehsil Payal, Ludhiana. Petitioner further contends that W.P.(C) 8160/2019 Page 1 of 13 town Doraha is not notified as being in vicinity of urban area Doraha and therefore land is situated outside its municipal limits and is not capital asset. said land was compulsorily acquired by Government and Petitioner received compensation amount of Rs. 1,66,37,460/- and 20% tax amounting to Rs. 33,24,100/- was deducted at source pertaining to AY 2012-13 under Section 194 LA of Act. Petitioner claims that amount received is not taxable since land acquired was agricultural land and compensation received is exempted under Section 10(37) of Act. In order to seek refund, Petitioner filed belated refund claim under Section 19(2)(b) of Act of Rs. 33,24,100/-, contending that TDS certificate in Form 16 was not received on time and therefore return could not be filed earlier and accordingly requested that delay in claiming refund be condoned. On 28.06.2018, Office of Chief Commissioner of Income Tax (Exemptions), Delhi called upon Petitioner to submit details in support of correctness and genuineness of claim of refund along with supporting documents/evidence. In response thereto, Petitioner vide letter dated 05.07.2018 claimed that compensation is exempt under Section 10(37) of Act as same was in respect of agricultural land and was being used for agricultural purposes for more than two years prior to acquisition. On 13.07.2018, CIT (E), Delhi conveyed to Petitioner that exemption under Section 10(37) of Act is available only to individuals and HUFs and therefore Petitioner was called upon to explain and justify its eligibility to claim benefit under said provision. In reply to said communication, Petitioner vide letter dated 20.08.2018 stated that though exemption under Section 10(37) is not available to assessee trust, compensation amount received is still not taxable as land W.P.(C) 8160/2019 Page 2 of 13 in question is agricultural land situated outside municipal limits and hence is not capital asset. 3. Respondents thereafter on basis of local inquiries conducted by jurisdictional ITO ascertained that according to Patwari Report, land in question was categorized as Gairmumkin which means that same was not agricultural. Further, khasra No. 1242 fell within municipal limits and khasra NO. 1243 was outside municipal limits, but situated within 1 Km from local limits of Municipality of Doraha town having population of more than 25,000 as per 2011 census and, accordingly, land in question was considered as capital asset as per Section 2(14) of Act. In these circumstances, Petitioner was called upon to explain as to why compensation amount received on compulsory acquisition of land owned by Petitioner should be treated as exempt from tax, and also to further prove that claim made by Petitioner was correct and genuine. 4. Thereafter, since Respondent did not receive any reply from Petitioner, it proceeded to pass order dated 27.12.2018 rejecting Petitioner s application for condonation of delay for issue of belated refund. This order is impugned in present petition. 5. We have heard learned counsels for parties at considerable length and have also perused documents placed on record by Petitioner in support of its contentions. Petitioner has inter alia impugned order dated 27.12.2018 by contending that subject land acquired was agricultural in nature and could not be treated as capital asset. Learned counsel for W.P.(C) 8160/2019 Page 3 of 13 Petitioner has relied upon Section 2(14)(iii) and contended that Doraha town in Punjab has not been notified in list of towns-in notification No. 9447 dated 06.01.1994, as amended by notification No. 11186 dated 28.12.1999, and therefore compulsory acquisition of land could not be considered as capital asset, and therefore, Petitioner was entitled to benefit of exemption. It was further argued that vide verification dated 12.09.2018, SDM, Payal, Ludhiana has confirmed, that land acquired for construction of national highway was agricultural land since two years prior to date of acquisition. On strength of this certificate, it is claimed that land in question is agricultural land. Additionally, learned counsel for Petitioner also relied upon report dated 29.01.2019, issued by Halqa Patwari, Tehsil Payal, District Ludhiana, Punjab, to contend that land acquired falls outside municipal limits of Municipal Council, Doraha. 6. Ms. Adeeba Mujahid, learned senior standing counsel for Respondent on other hand, argued that Petitioner is not entitled to claim exemption on income earned from agricultural land, as provided under Section 10 (37), income is chargeable under head capital gains arising from transfer of agricultural land which becomes exempt only if such capital gain arises in case of assessee being individual or HUF. She submits that, in fact, this aspect is no more in controversy as Petitioner has accepted this factual position and only question that arises for consideration before Court is whether land in question is agricultural land, or not. She further submitted that certificate relied upon by Petitioner is of no avail, as same was never produced before W.P.(C) 8160/2019 Page 4 of 13 Tax Authorities at any point of time. Moreover, certificate relied upon by Petitioner is not credible, as same is only typed notarized copy and does not bear any signatures of Issuing Authority. She further submitted that regardless of authenticity of said document, since matter has been examined by jurisdictional ITO and report has been furnished by AO after verification of records from Municipal Office, Doraha; at this stage, Petitioner cannot be permitted to rake up issues relating to facts, by invoking writ jurisdiction of this Court, particularly, when opportunity given to Petitioner to tender documentary evidence to controvert reports, was not availed. 7. We have given due consideration to contentions urged by respective counsels. 8. Petitioner - Gurudwara Sahib Patti Dhaliwal filed application under Section 19(2)(b) of Act before Chief Commissioner of Income Tax (Exemptions), Delhi on 30.06.2017. In said application, request was made for condonation of delay along with return for AY 2012-13 filed in ITR-5 under status of APOP, claiming refund of Rs. 33,24,100/- on account of TDS under Section 194LA at rate of 20% on amount of Rs. 1,66,37,460/- received on agricultural land acquired by Government. 9. In application seeking condonation of delay, assessee, inter alia, submitted that belated refund claim of return was filed before ITO (E), Jalandhar on 21.03.2016, on account of fact that PAN of assessee was lying with said ITO. However, since territorial jurisdiction over W.P.(C) 8160/2019 Page 5 of 13 case vested with ITO, Ward-5, Khanna, PAN as well as belated refund claim of return was transferred from Jalandhar to Khanna and request for approval of belated refund claim was made to Principal CIT-II, Ludhiana. During processing of file, office of Principal CIT- II, Ludhiana noticed that since assessee society was registered under Section 12A and 12AA, jurisdiction over belated refund claim vested with ITO (E), Jalandhar and relevant documents and PAN of society were orderred to be transferred to exemption ward, Jalandhar by Principal CIT-II, Ludhiana vide letter dated 26.04.2017 and same came before ITO (E), Jalandhar. report was called for from CIT (E), Chandigarh, who vide letter dated 17.05.2018, observed as under: .the assessee field application u/s 119(2) (b) of I T Act for condonation of delay alongwith filing of return for A.Y. 2012-13 filed in ITR-5 under status of AOP claiming refund of Rs. 33,24,100/- in respect of TDS u/s 194LA @20% on amount of Rs. 1,66,37,460/- received on agricultural land acquired by Government. assessee is registered u/s 12AA of Act vide this office order No. 2869 dated 29.07.2016 applicable from A.Y. 2016-17 and onwards. SDM, Payal, Ludhiana furnished Form-16 for TDS at Rs. 33,27,492/- for A.Y. 2012-13. On verification by AO from Municipal Corporation Office, Doraha, it was enquired that some portion (i.e. Khasra No. 1243) has been compulsory acquired by Government for Nation Highway, Further on verification from villagers, it was gathered that land does not belong to any individual or HUF rather belongs to Gurudwara Sahib Patti Dhaliwal (Trust). As section 10(37) of I T Act is only applicable to individual or HUF, thus claim of assessee for exemption u/s 10(37) of Act is not genuine. Further, as per information collected by AO from W.P.(C) 8160/2019 Page 6 of 13 Tehsil officer, according to Patwari s report, Khasra No. 1242 & 1243 mentioned in Fard/Jamabandi 2011-12, Village Arraichan, Payal, Ludhiana is Gairmumkin which means land is not agricultural. Accordingly, this land is to be considered as capital as per section 2(14) of I.T. Act. Keeping in view above, application of assessee for condonation of delay is not recommeneded. (Emphasis supplied) 10. During pendency of application, Petitioner filed petition [CWP No. 10533 of 2018 (O & M)] before High Court of Punjab and Haryana at Chandigarh, which was disposed of with direction to Respondent to consider Petitioner s application dated 30.06.2017 as expeditiously as possible. Accordingly, Office of Chief Commissioner of Income Tax (Exemptions), Delhi vide letter dated 28.06.2018 gave opportunity to assessee to furnish documents/information in support of its application for condonation of delay. Further specific comments were asked for from CIT (E), Chandigarh on his letter dated 09.04.2018. In response thereto, Authorized Representative of Petitioner filed reply dated 05.07.2018 and reiterated his contentions. assessee was given another opportunity vide letter dated 13.07.2018 to furnish details regarding: (a) certified copy of certified issues by SDM that such land, during period of two years immediately preceding date of transfer, was being used for agricultural purposes by assessee. (b) As exemption u/s 10(37) is available only to Individual and HUFs, please explain as to how trust is eligible for benefit under this section. 11. In response thereto, assessee filed reply dated 16.08.2018 and W.P.(C) 8160/2019 Page 7 of 13 explained as under: (i) Agricultural land vide Khasra No. 1243 hadbast No. 248 of village Arraichan owned by Gurudwara Sahib Patti Dhaliwal, acquired by Competent Authority cum-Sub-Divisional Magistrate, Payal,Distt. Ludhiana. (ii) said Kharsa No. 1243 of Hadbast No. 248 of Village Arraichan was situated outside Municipal Limit of Municipal Council, Doraha, Tehsil Payal, Distt Ludhiana, hence, not capital asset. (iii) Though, exemption u/s 10 (37) is not available to Trust but it is certainly not taxable, agricultural land being situated outside Muncipal Limit of Doraha as per certificate referred above. 12. Since Petitioner has conceded that exemption under Section 10 (37) is not available to them, only question that survives for our consideration is whether land in question is capital asset. If land is not agricultural land, it falls within meaning of capital assets as per Section 2 (14) (a) of Act and would attract capital gains on income derived from such asset. It would thus be appropriate to refer to aforesaid provision which is extracted hereinbelow: (14) "capital asset" means (a) property of any kind held by assessee, whether or not connected with his business or profession; (b) any securities held by Foreign Institutional Investor which has invested in such securities in accordance with regulations made under Securities and Exchange Board of India Act, 1992 (15 of 1992), but does not include W.P.(C) 8160/2019 Page 8 of 13 (i) any stock-in-trade [other than securities referred to in sub-clause (b)], consumable stores or raw materials held for purposes of his business or profession ; (ii) personal effects, that is to say, movable property (including wearing apparel and furniture) held for personal use by assessee or any member of his family dependent on him, but excludes (a) jewellery; (b) archaeological collections; (c) drawings; (d) paintings; (e) sculptures; or (f) any work of art. Explanation 1. For purposes of this sub-clause, "jewellery" includes (a) ornaments made of gold, silver, platinum or any other precious metal or any alloy containing one or more of such precious metals, whether or not containing any precious or semi- precious stone, and whether or not worked or sewn into any wearing apparel; (b) precious or semi-precious stones, whether or not set in any furniture, utensil or other article or worked or sewn into any wearing apparel. Explanation 2. For purposes of this clause (a) expression "Foreign Institutional Investor" shall have meaning assigned to it in clause (a) of Explanation to section 115AD; (b) expression "securities" shall have meaning assigned to it in clause (h) of section 2 of Securities Contracts (Regulation) Act, 1956 (42 of 1956); (iii) agricultural land in India, not being land situate (a) in any area which is comprised within jurisdiction of municipality (whether known as municipality, municipal corporation, notified area committee, town area committee, town committee, or by any other name) or cantonment board W.P.(C) 8160/2019 Page 9 of 13 and which has population of not less than ten thousand ; or (b) in any area within distance, measured aerially, (I) not being more than two kilometres, from local limits of any municipality or cantonment board referred to in item (a) and which has population of more than ten thousand but not exceeding one lakh; or (II) not being more than six kilometres, from local limits of any municipality or cantonment board referred to in item (a) and which has population of more than one lakh but not exceeding ten lakh; or (III) not being more than eight kilometres, from local limits of any municipality or cantonment board referred to in item (a) and which has population of more than ten lakh. Explanation. For purposes of this sub-clause, "population" means population according to last preceding census of which relevant figures have been published before first day of previous year; (iv) 6 per cent Gold Bonds, 1977, or 7 per cent Gold Bonds, 1980, or National Defence Gold Bonds, 1980, issued by Central Government; (v) Special Bearer Bonds, 1991, issued by Central Government ; (vi) Gold Deposit Bonds issued under Gold Deposit Scheme, 1999 or deposit certificates issued under Gold Monetisation Scheme, 2015 notified by Central Government. Explanation. For removal of doubts, it is hereby clarified that "property" includes and shall be deemed to have always included any rights in or in relation to Indian company, including rights of management or control or any other rights whatsoever; (Emphasis supplied) 13. Respondents have relied upon report of Halqa Patwari which makes it clear that acquired land in khasra No. 1242 and 1243 was W.P.(C) 8160/2019 Page 10 of 13 Gairmumkin in nature, and same was not agricultural. relevant portion of report is reproduced hereunder: Khasra No. 1242 as per copy of Jamabandi for year 2011 situated as village Harraichan is Gair Mumkin Land and Land measuring (6-10) comprised in khewat No. 634 Khasra No.1243 is also Gair Mumkin land as mentioned in Fard and meaning of Gair Mumkin is property is not under cultivation. Khasra No. 1242 falls within boundary of Municipal Council Doraha as stated by Nagar Council Department and Khasra No. 1243 is situated out of boundary of Municipal Council (Emphasis supplied) 14. We are not inclined to give any weightage to notarized typed copy of certificate produced by Petitioner, ostensibly from Office of Sub Divisional Magistrate, Payal, since veracity of report is highly questionable. This is not just for reason that Petitioner has not produced original or certified copy of certificate, but essentially for reason that said certificate was never produced earlier for more than two years during proceedings before CIT (Exemptions), New Delhi. Further, we have no reason to doubt genuineness or authenticity of report of Halqa Patwari, which forms basis for Respondent to arrive at conclusion that land in question cannot be categorized as agricultural land. This factual issue cannot be agitated in writ proceedings. 15. agricultural land which is excluded from definition of capital asset is land which is described under Sub Clause (iii). In present case, we are concerned with Sub Clause (iii) (b) (II) which provides that agricultural land is exempted from purview of capital gains unless W.P.(C) 8160/2019 Page 11 of 13 area is within distance, measured aerially, not being more than 6 Kms from local limits of any municipality or cantonment board referred to in item (a) (land situated in in any area which is comprised within jurisdiction of municipality whether known as municipality, municipal corporation, notified area committee, town area committee, town committee, or by any other name or cantonment board and which has population of not less than ten thousand) and which has population of more than one lakh but not exceeding 10 lakh. report received by Respondent states that khasra No. 1243 is outside municipal limit, but is situated within 1 Km from local limits of municipality of Doraha Town and has population of more than 25,000 as per 2011 census. Thus, according to this report, land in question cannot be considered to be agricultural land. Petitioner has not been able to furnish any documentary evidence to contradict aforesaid report. Further, when report was called from CIT (E), Chandigarh vide letter dated 13.08.2018 on assessee s application dated 16.08.2018, CIT (E) Chandigarh vide letter dated 07.12.2018 forwarded his comments and inter alia on question of land being agricultural or not stated as follows: c. On perusal of report submitted by AO through his Range Head, it was revealed that documents i.e. copy of Notification of Gazette of India, Extraordinary in support of its version that Khasra No. 1243 was acquired by SDM. Payal, Distt. Ludhiana, revealed that vide column 7 (which demonstrates nature of land to be acquired) nature of land has been specified as vyavsyik and not agriculture land against Khasra No. 1243. This evidence clearly leads to conclusion that land which has been acquired by SDM was of commercial nature and not agricultural one. applicable failed to provide certified copy certificate issued by SDM W.P.(C) 8160/2019 Page 12 of 13 that such land during period of 02 years immediately preceding date of transfer of land was being used for agricultural purpose by Gurudwara. d. Information gatherd by AO from Tehsil Officer/ Patwari show that land at Khasra No. 1242 and 1243 mentioned in Fard/Jamabandi 2011-12, Village, Arraichan, Payal, has been specified as Gair Mumkin which means that land is not cultivable or not and agricultural land. (Emphasis supplied) 16. In view of foregoing, documentary material shown to us by Respondent leads to conclusion that land in question would be categorized as capital asset. Therefore, assessee cannot claim benefit of exemption to agricultural land and hence, compensation received by assessee in pursuance of land acquisition proceedings, is subject to tax and refund has been rightly rejected, as being barred by limitation. 17. We do not find any infirmity in impugned order. petition is dismissed. There shall be no order as to costs. SANJEEV NARULA, J VIPIN SANGHI, J JANUARY 16, 2020 nk W.P.(C) 8160/2019 Page 13 of 13 Gurudwara Sahib Patti Dhaliwal v. Chief Commissioner of Income-tax