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2010 (9) TMI 1133 - ITAT VISHAKAPATNAMexemption u/s 054F - sale of agricultural land - capital asset u/s 002(14) - land not situated within the municipal limits of 8 kms notified by the central government vide notification no.9447 - HELD THAT:- In the instant case, the impugned land is admittedly situates within area of a local limit of the GVMC for which no notification as specified in clause (b) is required to be issued by the central government. We have also examined the contention of the assessees that the GVMC was notified by the local laws and local laws cannot supersede the central laws. But we do not find any force in this argument because the municipality or the cantonment board are subject to local laws and within a state subject and are created by a notification by the state government. Central government has no jurisdiction to create a municipality, cantonment board in any state of the country. Central government is concerned with the central act. Once the municipality of the cantonment board is created by a notification by the state government as per local laws, the central act will apply. Therefore once the impugned land is situated within the jurisdiction of the local limit of the GVMC, the impugned land cease to be the agricultural land and on its sale capital gain is to be computed. We therefore, find no infirmity in the order of the CIT(A) who has rightly computed the capital gain on sale of the impugned agricultural land. Regard to cost of acquisition - HELD THAT:- Generally, the fair market rate of the lands are much more than the rates notified by the registration department for the purpose of registration of a document. These rates are not regularly revised. We have also examined the basis for the adoption of the rate at ₹ 70 per sq.yd. by the assessees and we find that assessee has relied upon the sale deed executed on 25.3.1987 in which the land was sold at ₹ 100 per sq.yd., whereas the rates are to be determined as on 1.4.1981. Therefore, the basis taken by the assessees is not correct. Now it is a question of pure estimate and we therefore estimate the rate of land at ₹ 60 per sq.yd. keeping in view the rates adopted by the assessee and the revenue. Accordingly, we set aside the order of the CIT(A) and restore the matter to the file of the A.O. with a direction to recompute the capital gain after having adopted the cost of acquisition of the land at ₹ 60 per sq.yd.
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