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2015 (6) TMI 1067 - AT - Income TaxLong term capital gain - sale of agriculture land situated within 8 Kms from the municipal limit - nature of land sold - Held that - The Survey department of the state Government and the Thasildar of the relevant Zone have consistently certified that the land is situated beyond 8 Kms from the Corporation limit of Coimbatore. The genuineness of the letters from the State Government authorities is also not in dispute. Moreover, the Ld. CIT (A) in his detailed order, has held that the land sold by the assessee is an agricultural land and situated beyond 8 Kms from the Corporation municipal limit, thereby the capital gain arising from the sale of the aforesaid land is exempt from capital gain tax as per the provisions of the Act. In this situation we do not have any hesitation to confirm the order of the Ld. CIT (A). - Decided against revenue
Issues Involved:
1. Whether the agricultural land sold by the assessee was situated within 8 kilometers of the municipal limits of Coimbatore. 2. The applicability of capital gains tax on the sale of the agricultural land. Detailed Analysis: Issue 1: Location of the Agricultural Land The primary contention revolves around whether the agricultural land sold by the assessee was within 8 kilometers of the Coimbatore municipal limits. The Revenue argued that the land was within this limit, thus subject to capital gains tax, while the assessee claimed it was beyond the 8-kilometer limit and therefore exempt. The Assessing Officer (AO) issued a notice under Section 148 based on the belief that the land was within the 8-kilometer limit. However, the assessee provided multiple certificates from various state authorities, including the Tahsildar and the Inspector of Survey and Land Records, confirming that the land was beyond 8 kilometers from the municipal limits. The AO relied on a report from the Investigation Wing, which stated that the distance from the land to the municipal limits was measured from "City Bakery," which was considered within 8 kilometers. However, this measurement was disputed by the certificates from state authorities, which consistently measured the distance from a different starting point, beyond Ramakrishna Mills, and found the distance to be over 8 kilometers. The CIT (A) reviewed these certificates and found them credible, noting that they were issued by competent state authorities. The CIT (A) concluded that the land was indeed beyond the 8-kilometer limit, thus supporting the assessee's claim. Issue 2: Applicability of Capital Gains Tax Given the resolution of the first issue, the applicability of capital gains tax hinges on whether the land qualifies as a "capital asset" under Section 2(14)(iii) of the Income Tax Act, which excludes agricultural land situated beyond 8 kilometers from municipal limits. The CIT (A) determined that the land was agricultural and beyond the 8-kilometer limit, thus exempting it from capital gains tax. This decision was based on the certificates from the Tahsildar and the Inspector of Survey and Land Records, which confirmed the land's location. The Revenue's appeal argued that the Investigation Wing's report should supersede the state certificates. However, the Tribunal upheld the CIT (A)'s decision, emphasizing the credibility and consistency of the state authorities' certificates over the Investigation Wing's report, which lacked proper authentication and clear evidence. Conclusion: The Tribunal concluded that the land sold by the assessee was agricultural and situated beyond 8 kilometers from the Coimbatore municipal limits. Therefore, the capital gain arising from the sale was exempt from taxation. The appeal by the Revenue was dismissed, confirming the CIT (A)'s order. Order Pronounced: The appeal of the Revenue was dismissed, and the order was pronounced on 22nd June 2015 at Chennai.
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