Agriculture land situated beyond 8 kms is not Capital Asset & Section 50C not applies

If an agriculture land is situated beyond 8 kms. from the local limit of any municipal or cantonment area, whose population is more than Rs.10 lakhs, then that would not fall within the ambit of definition ‘capital assets. This demarcation of the geographical situation of the land is to be seen from the boundary notified by the CBDT in its gazette notification. It was brought to the notice of the ld.CIT(A) that the CBDT has notified boundary from where it is to be measured vide notification no.9447 dated 6.1.1994. Thereafter, it has not been revised, and from that boundary limit, geographical situation of the mainland was beyond 8 kms. Hence, it was not a capital asset. As far as admission of additional evidence is concerned, if the ld.CIT(A) has entertained the notification no.9447 for determining the geographical situation of the land of the assessee, then to our mind, this type of material can be considered by the ld.CIT(A) under Rule sub-rule (4) of Rule 46A, and there cannot be any violation at the end of the ld.CIT(A). Considering all these aspects, we are of the view that the ld.CIT(A) has considered the issue analytically and recorded a categorical finding that the land in dispute was situated beyond 8 kms. and it was not a capital asset on whose transfer capital gain can be assessed in the hands of the assessee. ITAT do not find any error in the order of the ld.CIT(A). Accordingly, the appeal of the Revenue is dismissed. In the result, both appeals of the Revenue and COs of the assessee are dismissed.

In the present case as the agricultural land at Village Amiyapur, Dist. Sub.DistGandhingar is not a capital assets as per provisions of section 2(14)(iii) of the Act and hence, sale of such agricultural land is not subject to capital gain tax, therefore, the addition made by the AO by invoking the deeming provision of section 50C of the Act on account of capital gain of Rs. 2,54,59,000/- in the hands of the appellant is not tenable on facts and as per law as well as on the basis of judicial pronouncements relied upon by the appellant and thereby deleted. Thus, this ground of appeal is allowed.

FULL TEXT OF THE ITAT JUDGEMENT

Please become a Premium member. If you are already a Premium member, login here to access the full content.