Agricultural Lands Beyond 8km From Municipal Limits Not Capital Assets Under Section 2(14); NABARD Bonds Investment Timing Crucial for 54EC Exemption

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....The HC partially allowed the appeal, ruling on two key issues. First, it confirmed that lands in Egathur and Navalur Villages qualified as agricultural lands under s.2(14) of the Act, being situated beyond 8km from municipal limits, thus exempt from being considered capital assets. The HC held that "Municipality" encompasses all local bodies regardless of specific nomenclature. Second, regarding NABARD bonds investment for s.54EC deduction, the HC reversed the Tribunal's finding, determining that the assessee could claim exemption only to the extent of Rs. 8,55,54,167/- out of Rs. 10 Crores, as funds from a property sold on 13.02.2006 were not available for investment made on 26.11.2005.....