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2015 (9) TMI 755 - HC - Income TaxComputation of capital gain - whether sale of the said land is not taxable because the land was agricultural land which did not fall within the definition of capital asset under Section 2(14)? - Whether distance up to the land should be considered or up to the village within which such land is situated? - Held that - The Court is of the view that for the purposes of Section 2 (14) (iii) (b) of the Act, the distance had to be measured from the agricultural land in question to the outer limit of the municipality by road and not by the straight line or the aerial route. The distance has to be measured from the land in question itself and not from the village in which the land is situated. ITAT fairly concluded that the land had to be within the distance of 8 Kms. from the outer limit of the Gurgaon municipality and not from the outer limit of ITA 714/2015 Page 5 of 6 the village Ghata in which the land was located. On the strength of the certificate produced by the Assessee from the former Additional Director General, CPWD that the distance of the land from the outer limit of the Gurgaon Municipality was 10.4 Kms, the ITAT held that the land owned by the Assessee did not fall within Clauses (a) or (b) of Section 2 (14) (iii). - Decided against revenue.
Issues:
1. Condonation of delay in re-filing the appeal. 2. Taxability of capital gains from the sale of agricultural land. 3. Interpretation of Section 2(14)(iii)(b) of the Income Tax Act regarding the distance criterion for exemption of agricultural land as a capital asset. Issue 1: Condonation of delay in re-filing the appeal The High Court, in CM No. 19310/2015, condoned the delay of 65 days in re-filing the appeal based on the reasons stated in the application, thereby disposing of the application. Issue 2: Taxability of capital gains from the sale of agricultural land The case involved an appeal by the Revenue against the ITAT's order regarding the taxability of capital gains from the sale of agricultural land. The Assessing Officer (AO) contended that the land sold was a capital asset, resulting in the addition of a specific amount to the Assessee's income as long-term capital gains. The CIT (A) and the ITAT affirmed this view, rejecting the Assessee's arguments based on the interpretation of Section 2(14) of the Income Tax Act. Issue 3: Interpretation of Section 2(14)(iii)(b) regarding the distance criterion for exemption of agricultural land The key issue was the interpretation of Section 2(14)(iii)(b) of the Act concerning the distance criterion for exempting agricultural land as a capital asset. The dispute revolved around whether the distance should be measured from the land itself to the outer limit of the municipality by road or as the crow flies. The ITAT held that the distance should be calculated from the outer limit of the municipality, not the village where the land is situated. The High Court concurred with this interpretation, citing relevant case law and holding that the ITAT's decision was legally sound. The Court emphasized that the distance should be measured from the land in question to the outer limit of the municipality by road, not by a straight line or aerial route. In conclusion, the High Court dismissed the appeal, stating that no substantial question of law arose and affirming the ITAT's decision. The judgment clarified the correct interpretation of the distance criterion for exempting agricultural land as a capital asset under Section 2(14)(iii)(b) of the Income Tax Act.
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