TMI Blog2010 (4) TMI 717X X X X Extracts X X X X X X X X Extracts X X X X ..... e order passed by the CIT(A)-VI, Hyderabad dated 5.10.2006 and pertains to the assessment year 2003-04. 2. Shri Rama Rao, learned counsel for the assessee submitted that the assessee sold agricultural land to the extent of 2 acres 20 quntas and claimed exemption from payment of capital gain tax. According to the learned counsel, the agricultural land cannot be considered to be a capital asset u/s 2(14) of the Income Tax Act. The learned counsel further submitted that the agricultural land is situated at Himayat Sagar Village, which falls under the Rajedranagar Mandal, R.R District According to the learned counsel, Rajendra Nagar Municipality was not notified by the Central Government, therefore the agricultural land which falls under Rajendranagar Mandal cannot be considered to be a capital asset within the meaning of u/s 2(14) of the IT Act. Further, the learned counsel submitted that the assessing officer brought the profit on sale of agricultural land for taxation, on the grounds that the agricultural land was located within the radius of 8 km., from the limits of Hyderabad Municipal Corporation. Referring to the decision of the Amristar Bench in DCIT Vs. Capital Local Are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. The learned departmental representative placed reliance onthe judgementsAp High Court CIT Vs. Bola Ramaiah (1987) (174 ITR 154) and submitted that when the land was situated within 8 km of the local limits of Hyderabad Municipal Corporation it is liable for capital gain irrespective of facts whether falls under Rajendranagar Mandal or otherwise. The learned departmental representative has also placed his reliance on the judgement of Apex High Court CIT Vs. Gemini pictures Circuit (P) Ltd (1996) (220 ITR 43) and submitted that mere fact that the land in question was agricultural land cannot be a ground to claim for exemption u/s 2(14) of the IT Act when it was situated within 8 kms of the local limits of the Hyderabad Municipal Corporation. 5. In view of the above judgements, the learned departmental representative submitted that the land sold by the assessee is a capital asset therefore the surplus realized by the assessee on sale of land is assessable as capital gain. The learned departmental representative placed reliance on the Apex Court in the case of G.M. Omar Khan Vs. CIT 1991 (196 ITR 269) (SC) and submitted that when the capital asset falls within the limits of Mun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 7. We have also carefully gone through the judgement of the Apex High Court in the case of Omar Khan cited supra. In the case before the Apex High Court, the assessee contended that the population of 10,000 has to be taken for a particular village or a street. Rejecting that contention, the Apex high Court held that the population of more than 10,000 has to be taken for the entire municipality or cantonment area and it cannot be restricted to any particular village or street. This is not the issue before us therefore this judgement of the Apex Court may not be of any assistance to the Revenue. 8. We have also carefully gone through the provisions of section 2(14)(iii) of the Act. Section 2(14)(iii) (b) clearly says that any area within such distance not being more than 8 kms from the local limits of any municipality, has to be treated as capital asset for the purpose of Income Tax Act. The Legislature used the word any municipality . When the legislature used any municipality , the question is can it be a Hyderabad Municipal Corporation or it be a Rajendra Nagar Municipality. This question of assessee s is important since Himayatsagar Village falls within Rajendra Nagar Man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to have read municipality mentioned in S.2(14)(iii) (b) to mean any municipality having 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 the previous year. 28. Now the municipality detailed in s.2(14)(iii)(a) is the municipality within the jurisdiction of which the area, in which the concerned land is situated is comprised and 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 the previous year. Both these conditions are concurrent and not mutually exclusive. The municipality must have jurisdiction over the land as well as it must have a population of more than ten thousand as per the last preceding census of which the relevant figures have been published before the last day of the previous year. And the primary requirement is that of jurisdiction of the municipality over the land. If a municipality does not have jurisdiction over the land. If a municipality does not have jurisdiction over the land, it is not the municipality mentioned in s.2(14) (iii) (b). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 2 (14) (iii). 11. The Tribunal further observed as follows at Para Nos. 77 to 84: 77. Now undisputedly, the land in question lies in village Khajurala, which falls in Tehsil Phagwara, District Kapurthala and is more than 2 kilometers in all directions, from the municipal limits of Phagwara Municipality. According to the notification, areas upto two kilometres away from the local limits of Phagwara Municipality stand notified as falling outside its local limits. The land in question is admittedly more than 2 kilometers from the local limits of Phagwara Municipality. It would not have fallen within the exemption provided by s. 2(14)(iii)(b) were it situate within 2 kilometers from the local limits of Phagwara Municipality. However, it is nobody s case that the land in question is situate in an area within 2 kilometers from the local limits of Phagwara Municipality. Rather, the AO case is that though admittedly, the land is beyond the municipal limits of Phagwara it is within 8 kilometers of the municipal limits of Jalandhar City and so, it is outside the exemption of s.2(14) . 78. When the area specified in col. (4) of the notification stands identified by the centr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dered in the light of provisions of s. 2(14)(iii) read with its cls. (a) and (b) as well as the notifications on the subject. No doubt the land falls within a distance of 8 kms. From the municipal limits in all directions as per the notification no. 9447/File No. 164/3/87 ITA 1, dt. 6th Jan. 1994 (reported in (1994) 116 CTR (St.) 113: (1994) 205 ITR (st.) 121) issued by Govt. in the context of cl. (b) of S. 2 14 (iii) of the IT Act. But the relevant land is outside the jurisdiction of Jalandhar District because it is in the jurisdiction of Kapurthala District nearer to its Tehsil Phagwara. As per the said notification the areas specified in Phagwara Municipality cannot be related with Jalandhar, against which the areas have been separately specified. Being outside the area of Jalandhar District all the bye laws which are applicable in that area are of Kapurthala District. Due to the said fact the purchase as well as the sale transactions of the said land were carried out through the offices of Land Revenue Authorities at Phagwara than at Jalandhar. For all the regulatory and administrative controls it falls within the jurisdiction of Kapurthala District. Therefore, the observation ..... X X X X Extracts X X X X X X X X Extracts X X X X
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