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2015 (7) TMI 1372 - ITAT MUMBAINature of land sold - capital asset u/s 2(14) or agricultural land - Addition on sale of land by treating the same as agricultural land - whether the distance of 8 kms. is to be taken from TMC [Thane Municipal Corporation] or NMMC [Navi Mumbai Municipal Corporation] - whether CIT (A) was justified in not appreciating the provisions of section 2(14)(iii)(b) of the Act correctly in as much as he held that the capital gain on the sale of land, even though situated within 5 Kms. of Navi Mumbai Municipal Corporation will not be taxable? - HELD THAT:- What is intended to be covered in the term "capital asset" is agricultural land comprised within the jurisdiction of a municipality and within the specified distance from the local limits of municipality or other local bodies mentioned therein a specified in the notification. As undisputed that the land in question is within the specified distance from the Panchkula municipality which falls in the State of Haryana while the land is in the State of Punjab. Thus, the land is urban land for the purpose of definition of "capital asset" under section 2(14). The concept of municipality as a unit of State or the fact that a State has no jurisdiction to make law beyond its territory have no relevance for the purpose of determining whether a particular Land was "capital asset'" or not for the purpose of taxing capital gains. If the land is adjacent to a municipality and is urban land covered under section 2(14), even if municipality and the land fall in different States, the land will continue to be urban land. If such land is excluded from the definition of “ capital asset", the purpose of the statutory scheme will not be achieved. We find that the judgments of Anjana Sehgal [2011 (3) TMI 695 - PUNJAB AND HARYANA HIGH COURT]and Khazan Singh [2014 (6) TMI 261 - PUNJAB & HARYANA HIGH COURT] were delivered on 01. 03. 2011 and on 20. 02.14 whereas the decisions of various benches of the Tribunal, relied upon by the AR, are of the year 2009, 2010 and 2012. Clearly, the Benches of the Tribunal did not have the benefit of the order of the Hon'ble High Court. Hon'ble Court has decided the issue against the assessee. Judicial decision and proprietary stipulate that in such matter the wisdom of higher forum should prevail. So following the decisions of the Hon'ble P& H High Court we are reversing the decisions of the FAA. - Decided in favour of revenue.
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