Agricultural land classification under income tax law required fresh verification of distance from municipal limits.

Land sold by the assessee was examined for whether it qualified as agricultural land outside the definition of a capital asset under section 2(14) of the Income-tax Act, with distance from municipal limits being the critical factor. Additional evidence, including a Talati certificate, was admitted, but the Revenue had not had an opportunity to test that material. As the existing record was insufficient for a conclusive finding on the land's character and taxability, verification by the Assessing Officer was required. The matter was remanded for fresh examination of the additional evidence and a decision in accordance with law.

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Issues: Whether the land sold by the assessee was agricultural land falling outside the definition of capital asset under section 2(14) of the Income-tax Act, 1961, and whether the matter required remand for verification of additional evidence relating to the distance of the land from municipal limits.

Analysis: The dispute turned on the character of the land and its proximity to municipal limits. The assessee produced additional evidence, including a certificate from the Talati, and the additional evidence was admitted on record. Since the Revenue had not earlier been given an opportunity to examine the new material, the existing record was considered insufficient for a conclusive finding on the nature of the land and its taxability. In these circumstances, verification by the Assessing Officer was found necessary.

Conclusion: The issue was remanded to the Assessing Officer for examination of the additional evidence and for fresh decision in accordance with law. The assessee succeeded only to the extent of obtaining remand.

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