TaxTMI 
TaxTMI 
2013 (10) TMI 594
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....9,39,511/- u/s 54F invested in construction of new and independent residential house property. (4) The ld. and ld. CIT(A) both erred in charging interest u/s 234B & 234C. 2.1 The brief facts leading to the controversy are that during the assessment proceedings the AO noted that the assessee had purchased the land measuring 8 bigha for Rs. 64,000/- and 1 bigha 7 biswa at consideration of Rs. 29,700/- plus stamp duty. Both these adjoining lands were purchased by the assessee on 20-04-1990 and 4-07-1992 respectively. The land was situated at village Machwa, Tehsil Jaipur. The assessee sold the entire land through registered sale deed for a consideration of Rs. 2,80,85,000/- on 10-04-2007. The stamp valuation authority valued the land at Rs. 2,83,40,000/-. The assessee claimed the Long term capital gain arising from sale of the land as exempt income because the land in question is an agricultural land as per provision of Section 2(14)(iii)(b) of the Act. In order to confirm/ verify the location of the land, a notice u/s 133(6) of the Income Tax Act, 1961 was issued by the AO to the Tehsildar, Tehsil Jhotwara, District, Jaipur on 22-12-2010. The AO found from the information received....
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....t, the agricultural land in any area within the distance, not being more than 8 kms from the local limits of any municipality or cantonment board is excluded from the definition of the capital assets. He has further submitted that sub clause (b) mandates that Central Govt. after considering the scope of urbanization of a particular area specify this by notification in the official gazette. The notification in the official gazette in this regard is necessary to bring the agricultural land which does not fall under the jurisdiction of municipality but falling within 8 kms from the local Municipal Limits. The ld. AR has referred the explanation 2 to the Notification No. 9447 dated 6-01-1994 and submitted that it has been clarified in the notification itself that reference to the Municipal Limits or the limit of Cantonment Board in the Schedule to this Notification is to the limits as existing on the date on which the notification is published in the official gazette. Therefore, until and unless the said notification is amended or withdrawn, the Municipal limits as exists on the date of notification are relevant for the purpose of considering the distance of 8 kms. The ld. AR of the as....
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....ded the limits of 8 kms having regard to the extent and scope for urbanization of the area and therefore, the legislature was very much conscious about the expansion of the Municipal Limits while fixing the distance of 8 kms from the local limits of the municipality or cantonment board. The notification dated 6-01-1994 provides the distance of 8 kms from the limits of municipality and the said limits cannot be reduced if subsequently the limits of municipality are extended. 2.6 He has further contended that in the present case, there is no dispute that the land of the assessee is within 2 kms from the Municipal Limits and therefore, this land does not fall under the exclusion clause of Section 2(14)(iii)(b). He has supported the findings of the ld. CIT(A) and submitted that the position as on the date of sale is relevant and not at the time of acquisition or at the time of notification. He submitted that at the time of sale when the land in question is within the limits as provided u/s 2(14)(iii)(b) then the same will be treated as capital asset. 2.7 We have considered the rival submissions as well as the materials on record. The question arises for our consideration and adjudica....
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....ts as on the date of the sale of land then it would render the notification issued by the Central Govt. as ineffective and unworkable/otios. As it is made clear by explanation 2 of the said notification that Municipal Limits is to be considered as existing on the date on which notification is published in the official gazette, therefore, the date of notification is relevant and material point to determine the distance of 8 kms from Municipal Limits. There is no amendment or withdrawal of the said notification except a recent amendment has been brought in the statute by the Finance Act 2013 whereby the requirement of said notification has been dispensed with for invoking sub-clause (b) of clause (iii) of Section 2(14) of the Act w.e.f. 01-04-2014. Thus it is discernible from the notification dated 06-01-1994 and the recent amendment in the statute whereby the said notification has been dispensed with that the distance of 8 kms has to be considered from the Municipal Limits as exists on the date of notification for the purpose of invoking sub-clause (b) of clause (iii) of Section 2(14) of the Act. Accordingly we hold that the land in question which was located beyond 8 kms from the M....