TMI Blog1991 (8) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... ra Pradesh in Reference No. 18 of 1976, reported in [1979] 116 ITR 950 (AP) titled Addl. CIT v. G. M. Omarkhan. Out of the four questions referred to the High Court, only two have survived for a decision. On question No. 1, whether, on the facts and in the circumstances of the case, the lands acquired by the Government were agricultural lands, the answer has been in favour of the assessee holding that the lands acquired were agricultural lands. On question No. 4, whether, on the facts and in the circumstances of the case, the mere claim of the assessee for additional compensation can be taken into account for purpose of determining the capital gains derived by the assessee, the answer has gone in favour of the assessee and against the Rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, i.e., on March 12, 1970, and that event has been held to attract tax on account of the capital gains having arisen from that date and hence exigible to tax. On the question of the interpretation of "capital asset" in terms of section 2(14)(iii)(a) of the Income-tax Act, 1961, as it stood at the relevant time, the plea of the assessee was that his land was in an area which in terms meant a "village" and the population of that village was far below ten thousand. It was further maintained that the mere fact that the said area fell within the Municipality of Hyderabad, even though having population of more than ten thousand, was of no consequence. The High Court, interpreting section 2(14)(iii)(a) of the Act, opined on question No. 2 that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est. Therefore, the said provision bears an evident contrast and defining between land in an area within the jurisdiction of the municipality, etc., and lands outside it. The limit of population fixed is to identify the focal point where transactions in lands attract taxation. It is common knowledge that, in the entire country, local self-government is carried out under various statutes by means of municipalities, municipal corporations, cantonment boards, etc. After their initial set up, areas by means of those laws are added to and subtracted from and subsume as such for identity, not as a separate municipal unit but part of the already set up municipal unit. Such being the scheme of things, it is difficult to accept the plea of the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed a limit of population for such an unspecified or indefinite area within a municipality. It may be that a municipality may comprise of many villages, wards and streets and each assessee may claim that the limit of population is provided with reference to a village, ward or street. In such an event, the section will have no uniform application and will lead to many anomalies. Therefore, it is necessary to avoid such an interpretation of the section which leads to anomalies and which will make it invalid. We have to adopt such a construction which will make the section valid and certain." This, in our view, is the correct position and has aptly and pithily been put. Nothing more is needed to be said on the subject. The interpretation put ..... X X X X Extracts X X X X X X X X Extracts X X X X
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