TaxTMI 
TaxTMI 
2010 (4) TMI 717
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....l Government, therefore the agricultural land which falls under Rajendranagar Mandal cannot be considered to be a capital asset within the meaning of u/s 2(14) of the IT Act. Further, the learned counsel submitted that the assessing officer brought the profit on sale of agricultural land for taxation, on the grounds that the agricultural land was located within the radius of 8 km., from the limits of Hyderabad Municipal Corporation. Referring to the decision of the Amristar Bench in DCIT Vs. Capital Local Area Bank Ltd. (2009) 29 SOT 394 the learned counsel further submitted that the sale of the land was made through Rajendranagar Revenue Authorities and not through the Revenue Authorities in Hyderabad District. Therefore the land in question cannot be considered to be an asset within the meaning of Sec.2(14) of the IT Act simply because it was said to be situated within 8 kms from the radius of Hyderabad Municipal Corporation. According to the learned counsel, the agricultural land does fall within the Revenue District of Hyderabad District. The agricultural land which falls within the Rajendranagar Revenue Mandal, does not form part of Hyderabad Municipal Corporation, there....
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.... situated within 8 kms of the local limits of the Hyderabad Municipal Corporation. 5. In view of the above judgements, the learned departmental representative submitted that the land sold by the assessee is a capital asset therefore the surplus realized by the assessee on sale of land is assessable as capital gain. The learned departmental representative placed reliance on the Apex Court in the case of G.M. Omar Khan Vs. CIT 1991 (196 ITR 269) (SC) and submitted that when the capital asset falls within the limits of Municipal Corporation as notified by the Central Govt. it has to be treated as capital asset therefore the assessing officer has rightly got the same for taxation. 6. We have considered rival submissions on either side and also perused the material available on record. Admittedly, the assessee sold two acres and 20 quntas of agricultural land which situated at Himayatsagar village in Rajendranagar Mandal. Rajendranagar is also one of the Municipal Corporation. However, the same was not notified by the Govt. of India u/s 2(14)(iii) of the IT Act. The contentions of the assessee counsel is that Himayatsagar Village falls within Rajendranagar Revenue Mandal, therefor....
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....on 2(14)(iii) of the Act. Section 2(14)(iii) (b) clearly says that any area within such distance not being more than 8 kms from the local limits of any municipality, has to be treated as capital asset for the purpose of Income Tax Act. The Legislature used the word 'any municipality'. When the legislature used 'any municipality', the question is can it be a Hyderabad Municipal Corporation or it be a Rajendra Nagar Municipality. This question of assessee's is important since Himayatsagar Village falls within Rajendra Nagar Mandal. If it is Hyderabad Municipal Corporation, then it may fall within 8 kms as contended by the Revenue. If it is Rajendra Nagar Municipality, then admittedly, Himayatsagar Village is situated beyond the Rajendra Nagar Municipality. Moreover, Rajendra Nagar Municipality was not notified by the central Govt. for the purpose of provisions of sec.2(14)(iii) of the IT Act. These issues were not considered by either the Apex high Court or A.P. High Court in Gemini Pictures (P) Ltd. (Supra), G.M. Omar Khan (Supra) and in Bolla Ramaiah (supra). Therefore, these judgements may not be of any assistance to the Revenue. 9. The Amritsar Bench of the Tribunal had an occ....
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....nd not mutually exclusive. The municipality must have jurisdiction over the land as well as it must have a population of more than ten thousand as per the last preceding census of which the relevant figures have been published before the last day of the previous year. And the primary requirement is that of jurisdiction of the municipality over the land. If a municipality does not have jurisdiction over the land. If a municipality does not have jurisdiction over the land, it is not the municipality mentioned in s.2(14) (iii) (b). In Municipal Corporation for the City of Bombay Vs. CIT (1984) 16 ITR 165 (Bom) it has been held inter alia, to the effect that jurisdiction of a municipality does not extend outside its prescribed area of jurisdiction. 29. "From the above, it becomes amply clear that the 'municipality' referred to in s.2(14) (iii) (b) of the IT Act is the very one referred in s.2(14) (a). To reiterate, s.2(14)(iii)(b) is unambiguous in as much as it uses the expression 'referred to in item (a)'. Taking any other interpretation of the section, as has been done by the AO in the present case, would amount to nothing other than gross misreading and misinterpretation o....
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....d by s. 2(14)(iii)(b) were it situate within 2 kilometers from the local limits of Phagwara Municipality. However, it is nobody's case that the land in question is situate in an area within 2 kilometers from the local limits of Phagwara Municipality. Rather, the AO case is that though admittedly, the land is beyond the municipal limits of Phagwara it is within 8 kilometers of the municipal limits of Jalandhar City and so, it is outside the exemption of s.2(14)". 78. When the area specified in col. (4) of the notification stands identified by the central govt. with Phagwara Municipality, the AO could not hold de hors the notification to bring it within the governance of Jalandhar Municipality. 79. Now a notification u/s 2(14) (iii) of the IT Act is issued specifying areas as falling outside the local limits of a municipality 'having regard to the extent of, any scope for urbanisation of the areas concerned and other relevant consideration'. 80. Urbanizations of an area, then falls within the exclusive domain of the concerned municipality exercising regulatory as well as administrative control over such area. It is such concerned municipality, id est, the parent municipality....
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....specified in Phagwara Municipality cannot be related with Jalandhar, against which the areas have been separately specified. Being outside the area of Jalandhar District all the bye laws which are applicable in that area are of Kapurthala District. Due to the said fact the purchase as well as the sale transactions of the said land were carried out through the offices of Land Revenue Authorities at Phagwara than at Jalandhar. For all the regulatory and administrative controls it falls within the jurisdiction of Kapurthala District. Therefore, the observation of the AO that it becomes a capital asset being falling within 8 kms of municipal limit of Jalandhar cannot be upheld in view of the notification and the peculiar placement of the land". 83. The AO in this regard held as follows: "Even if it is admitted that it is beyond the municipal limits of Phagwara, however, the land in question is within 8 km of the municipal limits of Jalandhar City and on this very ground also the land in question is outside the exemption provided u/s 2(14) of the IT Act". 84. The conclusion of the AO, therefore, as seen in the preceding Paras, is a non est conclusion, arrived at in oblivion of the....