TaxTMI 
TaxTMI 
2016 (9) TMI 809
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....he details thereof along with a certificate from the Patwari, Gurgaon certifying that the land in question was situated at a distance beyond 8 Kilometers from the Municipal Cantonment limits. Subsequently, the Tehsildar, Tehsil Sohna, (Haryana) was requested by the AO to authenticate and validate the fact as to whether the land in question was approximately 10 Kilometers from the local limit of the Gurgaon Committee Area or not, as claimed by the assessee in its certificate from the Patwari. In response to the request of the AO, the Tehsildar of Tehsil Sohna, (Haryana) in his report dated 29/12/2008 reported that the aforesaid agriculture land was situated approximately 6.6 k.m. from the local limits of Municipal Corporation of Gurgaon. Relying on the report of the Tehsildar, the AO opined that it the land in question was a "capital asset" within the meaning of section 2(14) of the Income Tax Act and therefore any gain arising out of transfer of such "capital asset" was to be taxed as per the provisions of section 45 of the Income Tax Act, 1961. The AO calculated the indexed cost of acquisition at Rs. 31,64,472/- and since the assessee was owner of ½ share of land, the propo....
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....er are also relevant and they also are being reproduced for a ready reference: "5. After examining the concept of municipality, I now turn to Section 2(14)(iii) of the Act. Consider that what sections 2(14)(iii)(a) and (b) of the Income Tax Act obviously envisage is one single municipality and not more than one. When the land under consideration admittedly falls outside the Sohna municipality, as notified by the Central Government in accordance with section 2(14)(iii)(b) of the Act, there is no question of it being considered within the limits of the Delhi City Municipality, as referred by the AO in his remand report. It is noteworthy that upto the AY 1969-70, the exclusion from 'capital asset' in sec. 2(14)(iii) of the Act was in respect of agricultural land in India. This exclusion, with effect from the said assessment year, was narrowed down as a result of substitution of new sub-clause (iii) in section 2(14) from the AY 1970-71, by the Finance Act, 1970. As a result of this substitution, all agricultural lands in India are no longer outside the purview of "capital asset" and only those agricultural lands in India are falling outside the scope of "capital asset", as do not fal....
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....servation in page 5 of the order that the land being within 8 kms. of municipal limits of Gurgaon Municipal Corporation, it was capital asset within the meaning of sec. 2(14) of the I.T. Act. This issue does not survive as the same has been dealt by me in the earlier paragraphs of this order as well as by the AO in his remand report where he agrees that the said land is situated beyond eight kilometers of the Municipal limits of Gurgaon. If this be the facts of the case, the action of the AO in taxing the sale proceeds as capital gain does not hold good." 5. Aggrieved, the Department is in appeal and has raised the following grounds of appeal: 1. On the facts and circumstances of the case and in law, the order of the ld. CIT (A) is wrong, perverse, illegal and against the provisions of law which is liable to be set aside. 2. The ld. CIT(A) has erred on facts and in law in deleting addition of Rs. 5,59,17,764/- on account of long term capital gains arising out of sale of land, ignoring that the provisions of sec. 2(14)(iii) of the Income Tax Act, 1961 are clearly applicable in this case. The land in question is situated about 6 kms from the local limit of Municipal Corporatio....
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.... of Gurgaon Nagar Nigam and the Executive Engineer, Provicial Division No. 1 PWD B&R Branch of Gurgaon against which it is informed that the actual PWD road has been lost in HUDA sectors and part of it only exists at some places and the nearest possible distance of the land from the limit of Gurgaon Municipal Committee is measured by road at more than 8 kms. whereas, by way of additional evidence, it has been informed by the assessee that the land is situated around 19 kms. from the Municipal limits of Sohna and, vide order sheet entry dt. 29.04.2010, it has been admitted by the AR of the assessee herself that the said land is situated about 6 kms from the local limit of Municipal Corporation of Delhi. The assessee is confusing the jurisdiction of Tehsil with Municipality. The Municipality has no extended jurisdiction once the boundary of jurisdiction of Municipality ends and there is no jurisdiction left for the lands situated outside the boundary. The legislature's intent is to exclude the land from the purview of agricultural land on the basis of urbanization and in this case the distance is to be taken from the limits of Municipal Corporation of Delhi which is less than 8 kms."....