TaxTMI 
TaxTMI 
2012 (12) TMI 610
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....sions that are not put to the appellant erred in not looking into the decisions that are relied upon by the assessee and further erred in not appreciating the fact that in one such decision (292 ITR 481) their lordships has also considered the decision of Hon'ble Supreme Court in the case of Sarifa Bibi Mohd. Ibrahim (204 ITR 631) and still it is held that the land is agricultural in spite of the fact that the purpose for which it is sold is not agricultural and there by violated the principles of binding precedents. 4. The learned CIT(A) erred in assuming that once the land fall within the limits of the Hyderabad Airport Development Authority (HADA) constituted under A.P. Urban Areas (Development) Act it is a 'municipality' under section 2(14)(iii) of the Income Tax Act, 1961 failing to appreciate that HADA is not a 'municipality' as defined under section 2(14)(iii) of IT Act it loses its character of agriculture. 5. The learned CIT(A) erred in not holding that the notified authority Hyderabad Airport Development Authority is not a municipality nor it is Municipality being called so to fall within the definition U/s. 2(14)(iii) (a) of IT Act 1961. ....
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....rred to as 'Ramky', has submitted a proposal dated 8.12.2006 to the Hyderabad Urban Development Authority (HUDA) for the development of the integrated township in a joint venture with them on the land for which acquisition notice was given by the Government of Andhra Pradesh including the above mentioned land. It was further noticed that the assessee had registered an irrevocable power of attorney in favour of Ramky on 5.5.2007 to receive the possession of the said land and enter into and to hold, defend, management and administer the property and deal with the property in any manner as Ramky may agree upon with any third party/ developer and to have the property developed by the construction of the project, as per the scheme or arrangement, as agreed by Ramky with HUDA/any third party developer and if need be to execute an irrevocable power of attorney in favour of the developer. 4. The Assessing Officer also noted that the Government of Andhra Pradesh had issued orders for development of the above said land into Integrated Township vide its order bearing GO Rt No. 93 dated 16.5.2007. It was noted that the assessee had sold impugned land admeasuring 20.07 acres, by entering int....
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....nsferred by the assessee was a capital asset within the meaning of sec. 2(14) of the Act, liable to be taxed u/s. 45 thereof. 6. In response to the show cause notice issued in this regard, the assessee vide her letter dated 24.12.2010, objected to the treatment proposed to be given by the Assessing Officer. It was claimed that the reasons cited to this effect in the show cause letter are not relevant. However, the Assessing Officer found the objections of the assessee untenable. He reiterated that consequent to the Government notification regarding constitution of a Local Authority by the name HADA and inclusion of Village Srinagar in the limit thereof, the status of the land was that of a capital asset. He noted that by way of the said notification, the area had been declared as a Special Development Area in and around the Shamshabad International Airport, for which Special Planning Control, high level of infrastructural and managerial inputs, status of Special Investment Zone, etc. had been specified. 7. The Assessing Officer also noted that the assessee had filed a petition before the Hon'ble High Court of Andhra Pradesh on 1.8.2006: praying them to quash the acquisition n....
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..... He noted that in the case of Deoki Nandan & Sons v. CIT (115 Taxman 513), the Hon'ble Delhi High Court have held that the Faridabad Administrative Complex was akin to a Municipality. The Assessing Officer observed that the HADA also had a population of more than 10,000 as per Census, 2001. He also referred to the decision of the Hon'ble Madras High Court in the case of S. Hidaytullah Sahib v. CIT (158 ITR 20), as also that of the Hon'ble A.P. High Court in the case of CIT v. G. M. Omar Khan (116 ITR 950), which was upheld by the Hon'ble Supreme Court also later, as reported in 196 ITR 269. Accordingly, he observed that the land sold by the assessee was a non agricultural land and, therefore, a capital asset as per s. 2(14) of the Act, liable to capital gains u/s. 45 of the Act. 9. The Assessing Officer noted that the assessee's contention is further not acceptable on account of the fact that the nature of the land sold had changed to non agricultural asset after the Government notification regarding the development thereof into a Township. He observed that the same was no longer agricultural land at the time of transfer, as the notification for development preceded the same. H....
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....factor was so present and therefore, the land was to be held as non-agricultural for the purpose of capital gains tax. Accordingly, considering that the land had been held for more than 36 months by the assessee the receipt of Rs. 14,12,25,000 was brought to long term capital gains tax. 11. On appeal, the CIT(A) confirmed the finding of the Assessing Officer. Against this the assessee is in appeal before us. 12. The learned AR submitted that the assessee sold lands admeasuring 20.07 acres in Sy. Nos.224, 225, 226, 230 and 231 at Srinagar (V) for Rs.14,12,25,000 during the year relevant to A.Y.2008-09, and claimed the same to be exempt on the ground that the said lands were agricultural lands, not covered by the definition of Capital Asset u/s 2(14) of the Act. The AR submitted that the agricultural lands in question were located in Srinagar village, comprised in the area within the jurisdiction of Gram Panchayat of Mankhal and as such they were situated in an area outside any municipality or cantonment board, having a population of not less than ten thousand, and also beyond the distance notified by the Central Government from the limits of any such municipality or cantonment....
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....ecial Court [2006] 4 SCC 214, wherein it was observed that the fact that the agricultural land in question was included in urban area, by itself, was not enough to conclude that the user of the same had been altered. The AR further submitted that there is no development in the subject area even as on date and agriculture is being carried out in the area even as on date. In view of the above facts and law, the lands sold by the assessee were agricultural in nature at the point of time when they were sold. 15. The AR further submitted that the impugned sale was, in fact, not voluntary but was made under certain compelling circumstances. The Government of Andhra Pradesh issued a notification u/s 4(1) of the Land Acquisition Act, 1894 for compulsory acquisition of the land pertaining to the assessee along with other tracts of land in the vicinity. As the assessee was not interested in parting with her agricultural land, she, along with others, challenged the Acquisition Notification before the High Court of Andhra Pradesh and obtained a stay. The Government was seriously pursuing the case and a Special Counsel had been entrusted with the job of taking necessary steps to get the stay....
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....he jurisdiction of a municipality. The fact that all the expressions enlisted after the word municipality are placed within the brackets starting with the words 'whether known as' clearly indicates that such expressions are used to denote a municipality only, irrespective of the name by which such municipality is called. 17. The AR submitted the word "Capital Asset" is defined in Section 2(14) to mean property of any kind held by an assessee, whether or not connected with his business or profession, but does not include- (iii) agricultural land in India, not being land situate- (a) in any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee, or by any other name) or a cantonment board and which has a population of not less than ten thousand according to the last preceding census of which the relevant figures have been published before the first day of the previous year; or (b) in any area within such distance, not being more than eight kilometres, from the local limits of any municipality or cantonment board referred to in item (....
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....lification criteria to be elected as members, powers, authorities and responsibilities of municipalities etc., are contained under Part-IXA of the Indian Constitution and Art. 243R therein categorically states that all the members of the municipality shall be directly elected by the people of the respective territorial wards. The said article is extracted hereunder: "243R. Composition of Municipalities.- (1) Save as provided in clause (2), all the seats in a Municipality shall be filled by persons chosen by direct election from the territorial constituencies in the Municipal area and for this purpose each Municipal area shall be divided into territorial constituencies to be known as wards. (2) The Legislature of a State may, by law, provide- (a) for the representation in a Municipality of- (i) persons having special knowledge or experience in Municipal administration; (ii) the members of the House of the People and the members of the Legislative Assembly of the State representing constituencies which comprise wholly or partly the Municipal area; (iii) the members of the Council of States and the members of the Le....
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....cipality and as such the agricultural lands falling within the said Town Panchayat would not constitute a capital asset as per the definition under section 2(14)(iii) of the Act. The relevant portion of the decision is extracted hereunder: "But as per the Act, the provisions of section 2(14) are attracted if the land falls within 8 km. of the municipality and nothing else. Therefore, in our opinion also the assessing officer has stretched the definition of municipality in his own manner. Even though Sholinganallur Town Panchayat is notified for Urban Agglomeration, it is not a Municipality. This definition will not at all fall in the definition of capital asset given in section 2(14)(iii)(b) of the Act. Admittedly, Perumbakkam and Arasankalani villages are separate Panchayats having population of less than 10,000 as stated above. Admittedly, the lands sold were agricultural lands and these were agricultural lands and doing cultivation was done thereon till the date of sale. A Panchayat is entirely different from a Municipality. Thus, Sholinganallur Town Panchayat cannot come within the purview of Municipality. The population of both the villages is less than 10,000. Both the vil....
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....15,394 (1991) 18,737 (2001) The population trend of other important villages in HADA area are: Sl. No. Village 1981 1991 2001 1. Raviral 2219 2921 3232 2. Nadergul 4935 6089 5534 3. Narkhuda 2520 3234 2616 4. Pedda Shapur 2466 3144 2616 5. Jukal 1709 2043 1355 6. Palmakole 3351 4757 3926 7. Turka Yamjal 3690 6230 2151 8. Mailardevpally 2529 9945 21210 9. Gaganpahad 1887 3908 5386 10. Mamidpally 4600 5478 3494 11. Mankhal 6066 7701 3598 12. Tukkuguda 2843 3223 4309 13. Pahadi Sharif 2565 2853 3506 Area and economy is predominantly agriculture based. Percentage of cultivable area to total area: 59% Percentage of irrigated area to total cultivable area: 47% Existing Work Force - Total Workers- 51.29%; Male-56.35%; Female-45.83% The work force is predominantly agriculture (primary sector) based which is above 90% while in secondary sector it is below 8% while the tertiary sector work force is a marginal 2%. In the Draft Master Plan la total work force of ....
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....s of the facts of that case, applying the relevant tests laid down by the Supreme Court in Sarifabibi's case 204 ITR 631. The crucial facts which were against the claim of the assessee were as under: (i) The Appellate Assistant Commissioner and the Tribunal had found that the lands were situated in a heavy industrial zone. (ii) The said lands had not in fact been used or intended to be used for agricultural purposes at the relevant time since several years. (iii) The Appellate Assistant Commissioner also recorded a finding of fact, based on relevant evidence, that at least 10 acres of the land out of 25 acres was in fact used for non-agricultural purposes for seven years prior to the date of transfer of the land. 27. The AR submitted that in the decision in the case of Sarifabibi Mohmed Ibrahim v. CIT 204 ITR 631, the Hon'ble Supreme Court approved as many as 13 tests laid down by the High Court in CIT v. Siddharth J. Desai 139 ITR 628 (Guj) for ascertaining the character of land at the time of sale. At the same time, the Supreme Court held that whether a land is an agricultural land or not is essentially a question of fact, which has to be answe....
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....ence was adjacent to 4 five star hotels and the person to whom the land was sold, was said to be a sister concern of one of those hotels. While coming to the conclusion, the High Court made a cumulative consideration of the facts vis-a-vis the tests laid down and the facts which weighed in favour of the assessee were as under: (i) the subject land was situated in a village and at a distance of about 15 kms. from the municipal limits. (ii) All documents produced by the assessees showed that the said land was agricultural. (iii) The assessees had neither converted nor made any plans nor taken any steps towards the conversion of the said land into non-agriculture. (iv) The subject land had continued to be put to agricultural use and that it was always used for agricultural purpose. 29. The AR also submitted that the Hon'ble High Court observed that as the assessees had satisfied most of the tests which were laid down by the Hon'ble Supreme Court in the case of Sarifabibi, the lands in question were agricultural in nature. This decision was followed in the case of CIT v. Smt. Debbie Alemao 331 ITR 59 (Bom), where the assessee had claimed exe....
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....ere is no development in the said area and agriculture is still being carried out in the vicinity. (ix) Whether the land itself was developed by plotting and providing roads and other facilities - NO (x) Whether there were any previous sales of portions of the land for non-agricultural use - NO (xi) Whether permission was obtained because the sale or intended sale was in favour of non-agriculturist ; if so, whether the sale or intended sale to such non-agriculturist was for non-agricultural or agricultural user - NO (xii) Whether the land was sold on yardage or on acreage basis - ACREAGE BASIS. (xiii) Whether an agriculturist would purchase the land for agricultural purposes at the price at which the land was sold and whether the owner would have ever sold the land valuing it as a property yielding agricultural produce on the basis of its yield - NOT APPLICABLE since the sale in the Assessee's case was in consequence of notification for compulsory acquisition and as such it was not voluntary. 31. The AR submitted that, as is evident from the above facts, the impugned land satisfies almost all the guidelines laid down by the Hon'ble Supreme ....
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....ing that the said land can be put to some other purpose, purchases the land for a higher price and thereafter, changes the use, for the first holder, the property would not change its character so long as he himself does not change the use or put the land to some other use after getting the conversion of use from the competent authority/officer." 33. The AR submitted that inflation or escalation in price of the agricultural land would not change the basic character of the land. This view was upheld by the Hon'ble High Court of Bombay, in the case of CIT v. Minguel Chandra Pais (supra), wherein it was held that the price paid is not decisive to say whether the land is agricultural or not. Further, it was held in the case of CIT v. Smt. Debbie Alemao 331 ITR 59 (supra), that the use to which the purchaser would put could not be a factor for the inference that the land is not agricultural in the hands of the assessee at the time of transfer. Reliance is also placed on the decision of the Hon'ble High Court of Madras in the case of M.S. Srinivasa Naicker v. ITO (supra). The AR submitted that in view of the above factual and legal position, HADA is not a Municipality. And therefore t....
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....ent Agreement", amply establishes that at the time of sale the land under consideration had undergone a change in respect of its use. It was no more an agricultural land being transacted for future agricultural use anymore, but a valuable "Capital asset". The Hon'ble Rajasthan High Court m the case of Mahaveer Enterprises v. UOI (244 ITR 789) have considered the following as a relevant tests, which can act as .guidelines in determining the nature or the character of land as agricultural or otherwise: (1) The proximity of the land, to building and building sites; (2) Sale of land for non-agricultural purposes; (3) Sale of land by a measure with reference to square yards and not acres; (4) Price being such as to be non-viable, if the land is put to agricultural use by the purchaser, while it is more consistent with the price fetched for urban plots than for agricultural land. (5) Character of the land. (6) The purpose for which the land was held by the present owner. A firm which holds it may well be presumed to have held it as stock in trade and not for carrying out agricultural operations. (7) As regards use of the land for a....
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.... The DR further placed reliance on the judgement of Apex court in the case of Sarifa Bibi Mohd Ibrahim & Ors. v. CIT (204 ITR 631) where their Lordships have clearly opined that whether a particular land is agricultural or not is essentially a matter of fact. In this regard their observation is that several tests evolving in the decisions on this issue are "more in the nature of guidelines". The question, therefore, has to be answered in each case, having regard to the facts and circumstances of that case. They had observed that there may be factors both for and against a particular point of view, and therefore, the question has to be answered on a consideration and evaluation of all of them. The inference, accordingly, has to be drawn on a "cumulative consideration" of all of the relevant factors. On a consideration of the relevant facts in the case of the present assessee, it becomes abundantly clear that almost all of the tests laid down lead to the conclusive inference that the agricultural land sold by the assessee was not an agricultural land at the time of sale. The DR submitted that under similar facts even the Cochin Bench of the ITAT have taken a similar view in the case ....
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....mission filed by the Ld. AR. 42. The question as to whether a land is agricultural land or not is essentially a question of fact. The question has to be answered in each case having regard to the facts and circumstances of that case. There may be factors both for and against a particular point of view. We have to answer the question on a consideration of all of them, a process of evaluation and the inference has to be drawn on a cumulative consideration of all the relevant facts. It may be stated here that not all the factors or tests would be present or absent in any case and that in each case one or more of the factors may make appearance and that ultimate decision will have to be reached on a balanced consideration of the totality of the circumstances. 43. The expression 'agricultural land' is not defined in the Act, and now, whether it is agricultural land or not has got to be determined by using the tests or methods laid down by the Courts from time to time. 44. The Hon'ble Supreme Court in the case of Smt. Sarifabibi Mohmed Ibrahim (204 ITR 631) has approved the decision of a Division Bench of the Hon'ble Gujarat High Court in the case of CIT v. Siddharth J. Desai [1....
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....sale was in favour of a non-agriculturist? If so, whether the sale or intended sale to such non-agriculturists was for non-agricultural or agricultural user? 12. Whether the land was sold on yardage or on acreage basis? 13. Whether an agriculturist would purchase the land for agricultural purposes at the price at which the land was sold and whether the owner would have ever sold the land valuing it as a property yielding agricultural produce on the basis of its yield?" 45. A reference could be made to the case of CWT v. Officer-in-charge (Court of Wards) (105 ITR 138) (SC) wherein the Constitution Bench of the Hon'ble Supreme Court stated that the term 'agriculture' and 'agricultural purpose' was not defined in the Indian IT Act and that we must necessarily fall back upon the general sense in which they have been understood in common parlance. The Hon'ble Supreme Court has observed that the term 'agriculture' is thus understood as comprising within its scope the basic as well as subsequent operations in the process of agriculture and raising on the land all products which have some utility either for someone or for trade and commerce. It will be seen that the t....
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....f the decision of the Supreme Court was that what is to be determined is the character of the land according to the purpose for which it was meant or set apart and can be used. It is, therefore, obvious that the assessee had abundantly proved that the subject land sold by them was agricultural land not only as classified in the Revenue records, but also it was subjected to the payment of land revenue and that it was actually and ordinarily used for agricultural purpose at the relevant time. 48. We may also refer to the case of CIT v. Manilal Somnath [1977] 106 ITR 917 (Guj), wherein the Division Bench of the Hon'ble Gujarat High Court observed that the potential non-agricultural value of the land for which a purchaser may be prepared to pay a large price would not detract from its character as agricultural land on the relevant date of sale. 49. We may also refer to the case of Gopal C. Sharma v. CIT [1994] 116 CTR (Bom) 377 : [1994] 209 ITR 946 (Bom), in which, the case of Smt. Sarifabibi Mohamed Ibrahim & Ors. v. CIT (supra) was referred to and relied, amongst other cases. In this case, the Division Bench of the Bombay High Court has stated that the profit motive of the asse....
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....ees had also purchased it for nonagricultural purposes, were totally irrelevant consideration for the purposes of application of s. 54B. 10. It is seen from the aforesaid decision that the agricultural land sold by the assessee with an intent to purchase another land within two years had also been permitted to claim exemption under s. 54B of the IT Act, 1961. In the instant case, even though there was no sale as such, the assessee owned agricultural land within the limits of Tirunelveli Corporation and he had not put up any construction thereon, the assessee is entitled to claim exemption from the WT Act for the assessment of wealth-tax. That the land in question is adjacent to the hospital is totally irrelevant." 51. Adverting to the facts of the present case, the land in question is classified in the Revenue records as agricultural land and there is no dispute regarding this issue and actual cultivation has been carried on this land and income was declared in the return of income filed by the assessee for the past several years as agricultural income. It is also an admitted fact that the assessee has not applied for conversion of this agricultural land for non-agricultural ....
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....as (Development) Act, 1975, came before the Hon'ble jurisdictional High Court in the case of K. Satyananda Patnaik & Ors. v. HUDA in W.P. No. 26688/2007 and Ors. The Hon'ble High Court vide common judgement dated 28.4.2010 held as follows: "The two enactments referred to above, no doubt, control the use, to which a piece of land can be put. However, their respective purposes and objectives are totally different from each other. The 1975 Act is intended exclusively for the systematic development of urban areas. It has no application for the areas outside the defined jurisdiction of the particular UDA. One of the important steps under that Act is to prepare and publish master plan for the urban development area. The master plan in turn, would stipulate the use to which the respective areas shown in it can be put. These include commercial, residential, industrial, recreational uses, etc., and each of the areas are called zones. The types of construction that can be made in the respective zones are also enlisted. Once an area is shown in a particular zone in the master plan, it cannot be put to a different use (Section 15). For example, in the residential zone, establishment of an i....
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....of clearance/permission under the 2006 Act as a condition precedent for releasing of layouts; and (b) The land has been put to non-agricultural use before the 2006 Act came into force, such clearance/ permission shall not be insisted." 53. The provisions of Andhra Pradesh Agricultural Land (conversion for non-agricultural purposes) Act, 2006 also prescribed the procedure for conversion of agricultural land into non-agricultural land. Being so, whenever the agricultural land to be treated as non-agricultural land, the same has to be converted in accordance with the provisions of Andhra Pradesh Agricultural Land (conversion for non-agricultural purposes) Act, 2006. Further, HADA was formed by the notification under Urban Area (Development) Act, 1975 with a view to promoting and securing planned development of the area in and around the proposed international Airport at Shamshabad. The State Government have declared the areas covered by GO MS 352 (MA) dated 30.7.2001 fall under the jurisdiction of HADA which is a statutory body. HADA Board consists of Special Chief Secretary to Government, Transport, Roads and Buildings Department as the Chairman, the Principal Secretary t....
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.... nature of the crop and the person who cultivated the land are duly mentioned at the relevant point of time when the lands were sold by the assessee and where nothing is brought on record to show that the land was put in use for non-agricultural purposes by the assessee. In view of the decision of the Hon'ble High Court in the case of Gopal C. Sharma v. CIT (209 ITR 946) (Bom), it is also clear that the profit motive of the assessee in selling the land without anything more by itself can never be decisive to say that the assessee used the land for non-agricultural purposes. We may also refer to a decision of the Hon'ble Supreme Court in the case of N. Srinivasa Rao v. Special Court [2006] 4 SCC 214 where it was observed that the fact that agricultural land in question is included in urban area without more, held not enough to conclude that the user of the same had been altered with passage of time. Thus, the fact that the land in question in the instant case is brought in special zone cannot be a determining factor by itself to say that the land was converted into use for non-agricultural purposes. 55. Recently the Karnataka High Court in the case of CIT v. Madhukumar N. (HUF) [....
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.... No. 11186 dated 28.12.1999 clearly clarifies that agricultural land situation in rural areas, areas outside the Municipality or cantonment board etc., having a population of not less than 10,000 and also beyond the distance notified by Central Government from local limits i.e. the outer limits of any such municipality or cantonment board etc., still continues to be excluded from the definition of 'capital asset'. Accordingly, in view of sub-clause (b) of section 2(14)(iii) of the Act even under the amended definition of expression 'capital asset', the agricultural land situated in rural areas continues to be excluded from that definition. And as in the present case, admittedly, the agricultural land of the assessee is outside the Municipal Limits of Rajarhat Municipality and that also 2.5 KM away from the outer limits of the said Municipality, assessee's land does not come within the purview of section 2(14)(iii) either under sub clause (a) or (b) of the Act, hence the same cannot be considered as capital asset within the meaning of this section. Hence, no capital gain tax can be charged on the sale transaction of this land entered by the assessee. Accordingly, we quash the assess....
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....s, therefore, agricultural land. 58. Further the word "Capital Asset" is defined in Section 2(14) to mean property of any kind held by an assessee, whether or not connected with his business or profession, but does not include- (iii) agricultural land in India, not being land situate- (a) in any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee, or by any other name) or a cantonment board and which has a population of not less than ten thousand according to the last preceding census of which the relevant figures have been published before the first day of the previous year; or (b) in any area within such distance, not being more than eight kilometres, from the local limits of any municipality or cantonment board referred to in item (a), as the Central Government may, having regard to the extent of, and scope for, urbanization of that area and other relevant considerations, specify in this behalf by notification in the Official Gazette; 59. It is very clear from the above that the gain on sale of an agricultural land would b....
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....ed hereunder: "243R. Composition of Municipalities.- (3) Save as provided in clause (2), all the seats in a Municipality shall be filled by persons chosen by direct election from the territorial constituencies in the Municipal area and for this purpose each Municipal area shall be divided into territorial constituencies to be known as wards. (4) The Legislature of a State may, by law, provide- (c) for the representation in a Municipality of- (v) persons having special knowledge or experience in Municipal administration; (vi) the members of the House of the People and the members of the Legislative Assembly of the State representing constituencies which comprise wholly or partly the Municipal area; (vii) the members of the Council of States and the members of the Legislative Council of the State registered as electors within the Municipal area; (viii) the Chairpersons of the Committees constituted under clause (5) of article 243S: Provided that the persons referred to in paragraph (i) shall not have the right to vote in the meetings of the Municipality; (d) the manner of election of the Chairperson of a Municipality." Further,....
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....encies but must be legally independent entities. Next, they must function in a defined area and must ordinarily, wholly or partly, directly or indirectly, be elected by the inhabitants of the area. Next they must enjoy a certain degree of autonomy, with freedom to decide for themselves questions of policy affecting the area administered by them. The autonomy may not be complete and the degree of dependence may vary considerably but, an appreciable measure of the autonomy there must be. Next, they must be entrusted by statute with such Governmental functions and duties as are usually entrusted to municipal bodies, such as those connected with providing amenities to the inhabitants of the locality, like health and education services, water and sewerage, town planning and development, roads, markets, transportation, social welfare services, etc. Broadly they may be entrusted with the performance of civic duties and functions which would otherwise be Governmental duties and functions. Finally, they must have the power to raise funds for the furtherance of their activities and the fulfilment of their projects by levying taxes, rates, charges, or fees. This may be in addition to moneys p....
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....ort, Roads and Buildings Department) as Chairman, the Principal Secretary to Government (Municipal Administration and urban Development Department); the managing Director of APIIC, and the Vice chairman, HUDA as members. The Vice-Chairman, HUDA is also the Vice-Chairman of HADA. Thus, all the members entrusted with carrying out the objects of the Authority were nominated by the Government of AP and none of them is directly elected member, which is against the provisions of Part-IXA of the Constitution of India read with those of AP Municipalities Act. As submitted by the AR that the above provisions of the Constitution leave no room for any doubt that 'Municipality' is a constitutional body concerning urban self-government; the creation of which is mandatory. The provisions governing the constitution, composition and functioning of municipalities are contained in part IX-A of the Constitution and the relevant laws laid down by the respective state governments, AP Municipalities Act,1965 in the instant case, should be in consistency with such provisions. The term 'Municipality' is defined u/s. 2(22) of AP Municipalities Act,1965 to mean a municipality of such grade as may be declare....
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....come-tax Act so as to bring within the scope of taxation capital gains arising from the transfer of agricultural land situated in certain areas. For this purpose, the definition of the term "capital asset" in section 2(14) has been amended so as to exclude from its scope only agricultural land in India which is not situate in any area comprised within the jurisdiction of a municipality or cantonment board and which has a population of not less than ten thousand persons according to the last preceding census for which the relevant figures have been published before the first day of the previous year. The Central Government has been authorised to notify in the Official Gazette any area outside the limits of any municipality or cantonment board having a population of not less than ten thousand up to a maximum distance of 8 kilometres from such limits, for the purposes of this provision. Such notification will be issued by the Central Government, having regard to the extent of, and scope for, urbanisation of such area, and, when any such area is notified by the Central Government, agricultural land situated within such area will stand included within the term "capital asset". Agricultu....
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....ification, suspend any of the powers of local authority relating to the control on development and use of land and buildings under the Hyderabad Municipal Corporations Act, 1955; the Andhra Pradesh Municipalities Act, 1965, the Andhra Pradesh Gram Panchayats Act, 1964, the Andhra Pradesh Panchayat Samithis and Zilla Parishads Act, 1959 and transfer such powers to the Authority. (2) Where such powers are transferred to the Authority, the Authority shall be deemed to be the local authority concerned; the Chairman of the Authority shall be deemed to be the Standing Committee of the Municipal Corporation or the Chairman of the Municipality or the Sarpanch of the Gram Panchayat or President of the Panchayat Samithi or Chairman of the Zilla Parishad as the case may be and the Vice-Chairman of the Authority shall be deemed to be the Executive Authority and the Authority shall strictly exercise the powers transferred to it under sub-section (1) within the area under the territorial jurisdiction of the local authority concerned." 69. As per the above section, only in the event of suspension of any of the powers and functions of a local authority of any area and subsequent delegation t....
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....d buildings department as the Chairman, the Principal Secretary to Government, Municipal Administration and urban Development Department; the managing Director of APIIC, and the Vice chairman, HUDA as members. The Vice-Chairman, HUDA is also the Vice-Chairman of HADA. Thus, all the members entrusted with carrying out the objects of the Authority were nominated by the Government of AP and none of them is directly elected member, which is against the provisions of Part-IXA of the Constitution of India read with those of AP Municipalities Act. The Hon'ble High Court of Kerala, while dealing with the similar issue, held, in the case of Commissioner of Income-tax v. Murali Lodge 194 ITR 125, as under: "But all local authorities cannot be called municipalities. Only those local authorities which have all the trappings of a municipality can be treated as a municipality within the meaning of the section. Therefore, to find a solution to the problematic dispute, we have to give a meaning to the word "municipality" which stands undefined in the Act. Generally understood, 'municipality' means a legally incorporated or duly authorised association of inhabitants of a limited area for local g....
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....ver an area comprised in more than one local authority, whether municipality or panchayat, and in such event makes it mandatory for such authority to consult the local authorities concerned while preparing Master/ Zonal Development plans both at initial stage and after preparation of draft plan, before submission to Government. 74. As per the above section, only in the event of suspension of any of the powers and functions of a local authority of any area and subsequent delegation thereof to a Special Area Authority, it would be deemed to be such local authority, to the limited extent of performing/exercising the functions/powers so entrusted. In the instant case, the village in which the agricultural land was located was comprised in the area within the jurisdiction of Gram Panchayat of Mankhal village and as such the Special Area Authority, being HADA, shall be deemed to be such Gram Panchayat, to the extent of execution of the delegated functions, if any. As per Part-IX of the Indian Constitution, Panchayat refers to rural self government, as distinct from municipality, which refers to urban self-government and as such agricultural land located within the jurisdiction of a vi....
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....d the fulfilment of their projects by levying taxes, rates, charges, or fees. This may be in addition to moneys provided by Government or obtained by borrowing or otherwise. What is essential is that control or management of the fund must vest in the authority. Held, allowing the appeals, ii) that the assessee was not a local authority within the meaning of section 3(31) of the General Clauses Act. Firstly, the members of the respondent Corporation are not wholly or partly, directly or indirectly, elected by the inhabitants of the area. The second essential attribute, which is lacking in the present case, is that the respondent does not have the functions and duties which are usually entrusted to the municipal bodies such as providing civic amenities to the inhabitants of the locality like health, education, town planning, markets, transportation etc. Finally, and which is more important, the respondent does not have the power to raise funds by levying taxes, rates, charges or fees. In the case of the respondent-Corporation, the Act does not enable it to levy any tax, cess or fee. It is the income from the sale of the forest produce which goes to augment its funds. It has no pow....
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....l limits of Hyderabad Municipality (GHMC) is covered by the amended definitions of 'capital asset'. Central Government in exercise of such powers has issued the above notification, as amended latest by Notification No. 11186 dated 28.12.1999 clearly clarifies that agricultural land situation in rural areas, areas outside the Municipality or cantonment board etc., having a population of not less than 10,000 and also beyond the distance notified by Central Government from local limits i.e. the outer limits of any such municipality or cantonment board etc., still continues to be excluded from the definition of 'capital asset'. Accordingly, in view of sub-clause (b) of section 2(14)(iii) of the Act even under the amended definition of expression 'capital asset', the agricultural land situated in rural areas continues to be excluded from that definition. And as in the present case, admittedly, the agricultural land of the assessee is outside the Municipal Limits of Hyderabad Municipality and that also 8 km away from the outer limits of this Municipality, assessee's land does not come within the purview of section 2(14)(iii) either under sub clause (a) or (b) of the Act, hence the same c....