Measurement of Distance to determine if agricultural land is situated within 8 km of municipal limits

Suraj R. Agrawal

Brief of the case-  Delhi High Court held in the case of CIT vs. Vijay Singh Kadan that to determine whether the “agricultural land” is situated within 8 km of the municipal limits so as to constitute a “capital asset”, the distance has to be measured in terms of the approach road and not by the straight line distance on horizontal plane or as per crow’s flight.

Facts of the case:

1. During the course of the assessment proceedings, the Assessing Officer (‘AO’) noted that on 9th September, 2005, the Assessee had sold a property admeasuring 5.9625 acres located at Village Ghata, Tehsil Sohna, District Gurgaon.
2. The stand of the Assessee was that the capital gain from the sale of the said land is not taxable because the land was agricultural land which did not fall within the definition of capital asset under Section 2(14) of the Act.
3. Accordingly, the AO held that as per Section 2(14)(iii)(b) of the Act, the agricultural land sold by the Assessee was a capital asset.
4. AO accordingly made an addition of Rs 7,75,12,500/- to the income of the Assessee as long term capital gains.

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Issue put before Delhi High Court:

“Whether distance up to the land should be considered or up to the village within which such land is situated?”

Contentions of Appellant: