TMI Blog2015 (4) TMI 227X X X X Extracts X X X X X X X X Extracts X X X X ..... United Ltd. vs. Commissioner of Income Tax [1995 (9) TMI 51 - DELHI High Court] Insofar as relevance of Section 11 of the General Clauses Act is concerned, it needs to be noted that here the relevant amendment prescribing distance to be counted must be aerial has come into force w.e.f. 1st April, 2014. The need of amendment itself shows that, in order to avoid any confusion, the exercise became necessary. The Parliament noticed the Judgments being delivered and therefore, emphatically pointed out aerial distance as the relevant norm. This exercise to clear the confusion, therefore, shows that benefit thereof must be given to the assessee. It is settled law that, in such matters, when there is any doubt or confusion, the view in favour of the assessee needs to be adopted. The Circular No.3/240, dt.24.1.2014 shows vide clause no.4 amendment in definition of 'Capital Asset' and clause 4.5 dealing with applicability expressly stipulates that it takes effect from 1.4.2014 and therefore, prospectively applies in relation to the assessment year 201415 and subsequent assessment years. Hence, the question whether prior to the said assessment year 201415 the Authorities erred in com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was claimed as exempt on the ground that the land sold was agricultural land and not a capital asset according to Section 2(14) of the Act, urging that the land was situated beyond 8 kms. The claim was rejected by the Assessee Officer holding that the distance must be measured by shortest distance as per the crows flight or straight line method and not by the road distance. Thus, the income of ₹ 12,64,895/ was added to the income as short term capital gain. The assessee had also purchased land Patwari Halka No.38 admeasuring 2.02 hectares with the above mentioned individuals on 23 08 2007 for a consideration of ₹ 61,66,540/ and the same was resold for a consideration of ₹ 1,50,00,000/ with proportionate gain of ₹ 37,50,000/ claimed as exempt by a distance of 8 kms. The claim was rejected on the ground that the distance must be measured by shortest distance as per the crows flight or straight line method and the amount of ₹ 22,08,365/ was added as a short term capital gain. In appeal before the Commissioner of Income Tax, the appeal came to be dismissed. In the Appeal before the Income Tax Appellate Tribunal, Nagpur the appeal was allowed. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tance has to be measured by the approach road. The nature of the land whether agricultural or non-agricultural would be decisive to arrive at the conclusion on considering the facts as to whether capital gains were earned which are taxable. 8. Learned Advocate Shri Anand Parchure for the Revenue contended that Section 11 of the General Clauses Act indicates the legislative intention that the distance has to be computed aerially and not by the approach road. Shri Parchure submitted that the income generated from the urban property/capital asset is a business income and not the agricultural income. According to him, Section 11 of the General clauses Act will prevail, unless a different intention appears to the contrary. Shri Parchure contended that the business income cannot be equated with the agricultural income. When capital assets were sold, the income is business income and not the agricultural income. The only dispute involved in this appeal relates to measurement of distance for the purpose of non agricultural land within the meaning of section 2(14)(iii)(b) of the Income Tax Act. The assessee took stand that the distance should be taken through the approach road while the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee has earned business income and not the agricultural income, Section 11 of the General Clauses Act will prevail unless a different intention appears to the contrary. The impugned order appears well reasoned in the facts and circumstances to clearly indicate that any consideration received out of sale of the agricultural land cannot be treated as business income for the purpose of income tax. The distance between the municipal limits and assessed property/asset is to be measured having regard to the shortest road distance and not as per the crow's flies i.e. a straight line distance as canvassed by the Revenue. The learned Counsel for the respondent has contended in this regard that the decision has been rendered by the Mumbai Bench in the case of Laukik Developers (supra) in the context of the provisions of Section 80IB(10) and not in connection with the issue of determining a capital asset within the meaning of section 2(14). It is not in dispute that the view taken in the case of Laukik Developers (supra) was not challenged by the Revenue. 13. In the ruling in the case of DLF United Ltd. vs. Commissioner of Income Tax, (1995) 129 CTR (Del) 33, the Hon'ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not income. 14. Thus, the income out of transactions of immovable property in the nature of agricultural land is held as capital gain exempted under the Income Tax as arising from the agricultural land. We find the ruling in the case of DLF United Ltd. was challenged in S.L.P. (Civil) No...CC 1727 1729/98 and the Hon'ble Apex Court found that there was no merit in the S.L.P. And it was accordingly dismissed on merits. Thus, capital gain arising from the transaction in respect of agricultural land cannot be considered as business income. The ruling is squarely applicable to the facts and circumstances under our consideration in the present case as well. 15. Insofar as relevance of Section 11 of the General Clauses Act is concerned, it needs to be noted that here the relevant amendment prescribing distance to be counted must be aerial has come into force w.e.f. 1st April, 2014. The need of amendment itself shows that, in order to avoid any confusion, the exercise became necessary. The Parliament noticed the Judgments being delivered and therefore, emphatically pointed out aerial distance as the relevant norm. This exercise to clear the confusion, therefore, shows that be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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