TMI Blog1997 (5) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... cision of the Appellate Assistant Commissioner, that capital gains arising from the transfer of agricultural land located within the municipal limit is not liable to capital gains tax ?" The respondent-assessee is a dealer in petrol and diesel and is assessed in the status of a Hindu undivided family. The assessment year involved is 1971-72, the previous year of which ended on March 31, 1971. The agricultural land measuring 25 kanals, 1 marla, situated within the municipal limits of Muktsar was purchased by the assessee on January 1, 1957, for Rs. 8,000. This land was acquired by the Punjab Government for a public purpose, i.e., for construction of a water works by issuing notification under section 4 of the Land Acquisition Act, 1894, pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee, or by any other name) or a cantonment board and which has a population of not less than ten thousand according to the last preceding census of which the relevant figures have been published before the first day of the previous year ; or (b) in any area within such distance, not being more than eight kilometres, from the local limits of any municipality or cantonment board referred to in item (a), as the Central Government may, having regard to the extent of, and scope for urbanisation of that area and other relevant considerations, specify in this behalf by notification in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ltural land in India except the class of lands included in items (a) and (b) of section 2(14)(iii). In order to qualify for such exemption, it is not enough that the land was once agricultural land. It must be agricultural land even at the time of sale or transfer. By the Finance Act, 1970, with effect from the assessment year 1970-71, certain specified lands situate in urban areas or semi-urban areas were brought within the definition of capital asset. When a capital asset is sold and if profit or gain results from such a sale, it is chargeable, not because it is revenue, but because the statute specifically charges the resulting capital gain by including it as income. Although land is the source of income, income is derived not by the use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their vicinity notified by the Central Government became a capital asset bringing it within the purview of tax on "capital gains". Three conditions, namely, (i) the land being agricultural situated within the municipal area ; (ii) having a population of not less than ten thousand according to the last preceding census ; and (iii) relevant figures of which had been published before the first day of the previous year were to be satisfied before the agricultural land could be treated as a capital asset. The Tribunal concluded that it was an agricultural land situated within the municipal area but did not record any finding regarding the population of the municipal area and the publication of the figures of the preceding census before the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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