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2017 (3) TMI 1892 - AT - Income TaxNature of land sold - agricultural land or capital asset - distance of agricultural land from the nearby municipality - Addition of amount received from sale of agricultural land under the head “capital gain” - On the basis of information obtained from MMRDA, the Assessing Officer concluded that the assessee’s claim that the agricultural land cannot be treated as capital asset under section 2(14)(iii) is not acceptable - whether the distance between the agricultural land sold by the assessee is within the prescribed limit of 8 kms. of municipal limit as provided under section 2(14)(iii)? - HELD THAT:- Distance measured by the competent authority is by the method of shortest road distance. On a reading of section 2(14)(iii) of the Act, we have noted that the distance as per sub–clause (b) is to be measured aerially. However, such amendment brought to the statute is effective from 1st April 2014. By way of further clarification, the CBDT has issued Circular no.17 of 2015 dated 6th October 2015, wherein, it has been clarified that the measurement of the distance aerially is to be applied from the assessment year 2014–15 and not to the prior assessment years. Thus keeping in view the letter dated 2nd February 2016 of the competent authority and the CBDT circular referred to above, prima–facie it appears that the agricultural land situated at Village Vardoli may not be coming within the definition of capital asset in terms of section 2(14)(iii) of the Act. Therefore, the assessee’s claim of exemption, at least, in respect of the agricultural land situated at Village Vardoli appears to be valid. However, since the certificate issued by the competent authority specifying the distance have not been examined keeping in view the CBDT circular referred to above, we are inclined to set aside the impugned order of the learned Commissioner (Appeals) and restore the matter back to the file of the AO to verify assessee’s claim on the basis of the certificate issued by the competent authority as well as CBDT Circular no.17 of 2015. We must observe, the Assessing Officer should afford reasonable opportunity of being heard to the assessee and pass a speaking order dealing with the objections / submissions of the assessee on the issue. Assessee’s appeal allowed for statistical purposes.
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