2010 (11) TMI 1120

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....and the actual conditions and intended user were not appreciated by the CIT(A). Further, as per the Revenue the chitta adangal given by the Village Administrative Officer (VAO) clearly mentioned that out of 5.37 acres which was claimed by the assessee as agricultural land, 2.02 acres were barren and no cultivation was done during aperiod of two years immediately preceding the date of sale. 2. As stated in the grounds itself the total area of land sold by the assessee came to 5.37 acres. Out of this, in so far as land of 3.35 acres in survey No.395/5, comprised in the total 5.37 acres was concerned, AO agreed that it was agricultural in nature where paddy and banana was cultivated. However according to him, balance 2.02 acres, was barren ....

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....ural land in India, not being land situate- (a) in any area which is comprised within the jurisdiction of a municipality (whether non 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 kilometers, from the local limits of any municipality or cantonment board referred to in item (a). as the Central Govt. may, having regard to the extent of, and scope for, urbanizations of that ....

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....rom the Madurai corporation limit and not a capital asset. Thus profit arising on transfer of land is not exigible to capital gains. The addition made is therefore on a wrong premise and cannot be sustained." 3. Now before us, ld. DR strongly assailed the order of the CIT(A) and submitted that the land was not agricultural in nature and having been kept barren and purchased by a party with no intention of doing any agricultural activities, AO was justified in treating the surplus on sale there from as long term capital gains. Per contra, the ld. AR supported the order of the CIT(A). 4. We have perused the orders and heard the rival submissions. There is no dispute that the land was atleast 10.5 km. away from Madurai corporation limits....