TMI Blog1991 (6) TMI 38X X X X Extracts X X X X X X X X Extracts X X X X ..... red firm, the assessee is entitled to have the unabsorbed depreciation carried forward and set off in its hands ?" It is the common case of the parties that the second question, in the light of the recent ruling of the Supreme Court in Garden Silk Weaving Factory v. CIT [1991] 189 ITR 512 requires to be answered in favour of the assessee. We, accordingly, answer the question in the affirmative and in favour of the assessee. Coming to the first question : The case of the assessee briefly stated is: The assessee was the owner of a building known as "Murali Sadan" with 24 cents of land and also the land lying contiguous to the said land and measuring 94 cents in extent. These properties were sold in court auction which was conducted during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..." From the plain and unambiguous language employed in the section, it is clear that, if the agricultural land is situated outside the jurisdiction of municipality then no tax on any profits or gains arising from the transfer of such land will be chargeable under the head "capital gains". The question, therefore, is : Whether the agricultural land of the assessee sold in public auction can be said to be situate in an area which is comprised within the jurisdiction of a municipality. The case of the Revenue is that it is, because the Guruvayur townshi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciation of inhabitants of a limited area for local governmental or other public purposes. (Black's Law Dictionary). The above definition more or less is reflected in the provisions contained in Chapter III of the Kerala Municipalities Act, 1960. The council constituted under section 7 with the assistance of the standing committee of the council, chairman, commissioner, etc., will administer the provisions of the Act. The council consists of such number of members as are prescribed. They are called councillors. They are elected by the residents of the area coming within the jurisdiction of the municipality. The chairman and vice-chairman of the municipality are elected by the members of the council. The commissioner is appointed by the Gover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... township committee are not elected representatives of the residents of the area. That the Central Government also has understood the position thus is obvious from the draft notification dated February 8, 1991, published in the Gazette issued under section 2(14)(iii)(b) of the Income-tax Act. We shall now read that part of this notification which is relevant here : "In pursuance of item (B) of clause (ii) of the proviso to sub-clause (c) of clause (1A) and item (b) of sub-clause (iii) of clause (14) of section 2 of the Income-tax Act, 1961 (43 of 1961) and in super-session of the notification of the Government of India in the erstwhile Ministry of Finance (Department of Revenue and Insurance) No. S. O. 77(E), dated the 6th February, 1973, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be areas within the jurisdiction of municipality mentioned in section 2(14)(iii) (a). The Kerala State Legislature which enacted the Guruvayur Township Act also has understood the meaning of the word "municipality" in the same way in which the Central Legislature has understood and that it is so can be seen from section 2(25), Explanation I of the Kerala Land Reforms Act. The Explanation aforesaid provides that, in calculating the total extent of the land of a kudikidappukaran for the purposes of this clause, three cents in a city or major municipality shall be deemed to be equivalent to five cents in any other municipality, and three cents in a city or major municipality or five cents in any other municipality shall be deemed to be equival ..... X X X X Extracts X X X X X X X X Extracts X X X X
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