Road distance governs capital asset classification of agricultural land, and no substantial question of law arose on appeal.

For determining whether agricultural land falls within the capital asset definition under Section 2(14)(iii)(b), the relevant distance from municipal limits is to be measured by road distance, not aerial or straight-line distance. The Court noted that the Department produced no contrary authority and did not show that the land was within 8 kilometres by road. As the Tribunal's remand concerned factual measurement and no substantial question of law was made out under Section 260A, interference was not warranted.

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Issues: Whether, for the purpose of determining whether agricultural land falls within the definition of capital asset under Section 2(14)(iii)(b), the distance from municipal limits is to be measured by road distance or aerial distance, and whether the appeal under Section 260A gave rise to any substantial question of law.

Analysis: The impugned order accepted the view that the relevant distance has to be measured by road and not by straight-line or aerial distance, relying on precedent of another High Court. The Department did not place any contrary authority before the Court, nor was it shown that the land was within 8 kilometres of the municipal limits when measured by road. On that basis, the Tribunal's remand for factual measurement did not disclose any substantial legal question warranting interference under Section 260A.

Conclusion: The distance for the purpose of Section 2(14)(iii)(b) is to be measured by road distance, and no substantial question of law arose in the appeal. The challenge failed.

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