TMI Blog2013 (10) TMI 594X X X X Extracts X X X X X X X X Extracts X X X X ..... It is not the mere potentiality but its actual condition and intended user which have to be seen for the purpose of exemption. The determination of character of land, according to the purpose for which it is meant or set apart and can be used, is a matter which ought to be determined on the facts of each particular case - the issue has not been examined by the lower authorities by considering this aspect of actual use of the land in question by the assessee and the purchaser because it has been treated as capital asset by invoking the provisions of sub-clause (b) of clause (iii) of Section 2(14) of the Act. Therefore, this issue is required to be examined after verification of the relevant facts - Following decision of Sarifabibi Mohmed Ibrahim And Others Versus Commissioner of Income-Tax [1993 (9) TMI 10 - SUPREME Court] and CIT v. Raja Benoy Kumar Sahas Roy [1957 (5) TMI 6 - SUPREME Court] - Decided partly in favour of assessee. - IT Appeal No. 1129 (JP.) OF 2011 - - - Dated:- 24-5-2013 - B.R. JAIN AND VIJAY PAL RAO, JJ. For the Appellant : Rajnish Agarwal. For the Respondent : Subhash Chandra. ORDER:- PER: VIJAY PAL RAO Vijay Pal Rao, Judicial Membe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g term capital gain amounting to ₹ 2,81,76,361/- claimed by the assessee was not an exempt income. The AO proposed to tax the Long term capital gain to which the assessee has objected and submitted that as per CBDT Notification No.9447 dated 6-01-1994, the condition of 8 kms has to be considered as exists at the time of said notification and therefore, for determination of the location of an agricultural land the municipal limits exists as on the date on which notification is published in official Gazette shall be considered. The AO did not accept the contention of the assessee and assessed the tax on Long term capital gain arising from sale of land. 2.2 On appeal, the assessee has raised the similar contentions and also relied upon the Notification No.9447 dated 6-01-1994 as well as following decisions. 1. Karnail Singh v. State of Haryana [2010] 326 ITR 501 2. CIT v. Satinder Pal Singh [2010] 229 CTR 82 (P H.) 3. Sant Ram v. Union of India [2010] 328 ITR 77 (P H.) 4. Lavleen Singhal v. Dy. CIT [2007] 111 TTJ 326 (Delhi) 5. Dy. CIT v. Capital Local Area Bank Ltd. [2009] 29 SOT 394 (ASR) 2.3 The ld. CIT(A) did not agree with the contention of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . AR relied on the following decisions. 1. Jasti Vayunandana Rao v. Department of Income Tax [IT Appeal No. 122 (Vizag.) of 2010 dated 29-10-2010] 2. Jasti Veera Sampuranamma v. Department of Income Tax [IT Appeal Nos. 260 and 261 (Vizag.) 2011 dated 9-9-2011] 3. CIT v. Madhukumar N. (HUF) vide IT Appeal No.396(207) dated29-03-2012 Thus the ld. AR of the assessee submitted that identical issue has been considered and decided by the ITAT Vishakhapatnam Bench wherein it has been held that to bring the land within the purview of clause (b) of Section 2(14)(iii) of the Act, the Central Govt. is required to issue a Notification in the official gazette and if the land was initially situated beyond 8 kms from the Municipal Limits but later on due to expansion of the limits, it falls within 8 kms and then in the absence of any notification as required u/s 2(14)(iii)(b) of the Act, it would not cease to be an agricultural land. The ld. AR has also referred to the Finance Act, 2013 wherein amendment has been brought in Section 2 (14) of the Act whereby earlier notification No. 9447 dated 6-01-1994 has been taken away and the conditions for exclusion of agricultural land fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd not falling in the definition of capital asset in terms of Section 2(14)(iii)(b) of the Act. There is no dispute that Jaipur Municipality has been duly notified vide said notification dated 6-01-1994 and as on the date of said notification, the land in question was beyond 8 kms from the Municipal Limits exists at that point of time. The dispute arises because of the expansion of Municipal Limits and thereby the said distance from the Municipal Limits as on the date of sale of the land in question is only 2 kms and thereby the authorities below have treated the land in question as not falling under the exclusion clause of Section 2(14)(iii)(b) of the Act. There is no quarrel on the point that as per sub-clause (b) of clause (iii) of Section 2(14), the notification of the Central Govt. is mandatory to bring the land in the definition of capital asset which is not located within the limits of the Municipality but located within the distance of 8 kms from the local limits. So far, the agricultural land which is located in the limits of Municipal Limits, the same will be treated as capital asset and no further requirement is to be examined. Since the land in question is located outsi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clause (b) of clause (iii) of Section 2(14) of the Act and it was accordingly held in threshold that the land in question falls within the distance of 8 kms from the Municipal Limits, therefore, the other aspect of the issue whether the land in question can be termed as an agricultural land and not falling under the definition of expression asset by reason of it continued as an agricultural land by satisfying all the requirements. There are certain tests to be adopted for ascertaining whether a particular land is exempt from the purview of definition of expression asset in terms of Section 2(14)(iii) of the Act. The most important aspect is the objects for exempting the agricultural land which is to encourage cultivation of land and agricultural operation. Therefore, for the purpose of granting exemption, a restricted meaning has to be given to the expression 'agricultural land' as contemplated u/s 2(14)(iii) of the Act. It is settled proposition as held by the Hon'ble Supreme Court in the case of Smt. Sarifabibi Mohmed Ibrahim v. CIT [1993] 204 ITR 631 that what is really required to be shown is the connection with an agriculture purpose and user and not the mere possi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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