Agricultural land beyond municipal limits was not taxable as capital gains where the revenue failed to rebut the distance evidence.

Agricultural land situated beyond the prescribed municipal distance was not treated as an urban capital asset where the assessee produced municipal material showing the land was more than 8 kilometres from the municipal limits and the village population was below 10,000. The revenue did not rebut that evidence with cogent material, and the inference that two village names referred to the same village was unsupported by concrete proof. On those facts, the short-term capital gain addition on sale of land was not justified and was deleted.

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Issues: Whether the addition made on account of short-term capital gain on sale of land was sustainable when the assessee claimed that the land was agricultural land situated beyond 8 kilometres from the municipal limits.

Analysis: The land was shown to be situated at village Jani Vankad, Nani Daman. The assessee produced municipal material indicating that the land was more than 8 kilometres away from the Daman Municipal limits and that the village population was below 10,000. The record did not disprove these facts. The finding that Jani Vankad and Nani Vankad were the same village was not established by concrete evidence, and the inference drawn by the lower authorities was held to rest on insufficient material.

Conclusion: The addition on account of short-term capital gain was not justified and was deleted.

Final Conclusion: The appeal succeeded on the substantive tax issue and the assessment addition was set aside.

Ratio Decidendi: When the assessee substantiates that the land sold is agricultural land situated outside the prescribed municipal distance and the revenue fails to rebut that evidence with cogent material, the land does not attract capital gains as an urban capital asset.

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