2015 (7) TMI 89 - HC - Income Tax

Measurement of distance of the agricultural land - Held that - Distance of the agricultural land belonging to the assessee within the meaning of s. 2(14)(iii)(b) has to be measured in terms of the approach by road and not by the straight line distance on horizontal plane or as per crow s flight. See case of Satinder Pal Singh 2010 (1) TMI 752 - Punjab and Haryana High Court . - Decided against revenue.

Summary

Issues involved:
1. Interpretation of the distance requirement under section 2(14)(iii)(b) of the Income Tax Act.
2. Applicability of measuring distance by road versus horizontal plane for determining eligibility for tax benefits on land sale.

Detailed Analysis:
1. The case involved the interpretation of the distance requirement under section 2(14)(iii)(b) of the Income Tax Act. The respondent-assessee had claimed tax benefits for the sale of agricultural lands beyond municipal limits. The assessing authority disallowed the claim, leading to appeals and subsequent legal proceedings.

2. The main contention was whether the distance of the agricultural land from the municipal limit should be measured by road or as per the horizontal plane for the purpose of determining tax implications. The Tribunal referred to decisions from other High Courts and held that the distance by road should be considered, not the aerial distance. The Tribunal remanded the issue to the assessing officer to measure the distance accordingly.

3. The Department challenged the Tribunal's decision, arguing that the distance should be measured as per the horizontal plane, not by road, for the application of section 2(14)(iii)(b) of the IT Act. The High Court, after considering the arguments and the impugned order, noted that no contrary view from other High Courts was presented by the Department.

4. The High Court upheld the Tribunal's decision, emphasizing that the distance should be measured by road, as per the Punjab & Haryana High Court's decision. The Court found no substantial question of law arising from the appeal, as the Department failed to demonstrate that the land in question was within 8 kms from the municipal limit based on road distance.

5. Consequently, the High Court dismissed the appeal, affirming the Tribunal's decision that the distance of the agricultural land from the municipal limit should be determined by road measurement for the purpose of tax implications under section 2(14)(iii)(b) of the Income Tax Act.