2022 (4) TMI 1099 - AT - Income Tax

Capital gain on land sold - Nature of land sold - whether the assessee s land in question is located within 6 kms of aerial distance or outside 6 kms of aerial distance from the municipal limits of Tambaram Municipality and that of the land in question which is in village Varadarajapuram? - HELD THAT - JCIT has calculated the aerial distance of Varadarajapuram village from the outer limit of Tambaram Municipality measured aerially as seen from the google map positioning of GPS. Further, we noted that in the same directions, the JCIT has referred to one letter of Tahsildar dated 22.12.2017, wherein the Revenue Tahsildar has only made approximation of the land in question from the outer limit of Tambaram Municipality We have also gone through the web documents filed by assessee in her paper-book at pages 1 to 3 and particularly page 3, the land in question, when measured aerially the distance from outer limit of Tambaram Municipality is 8.14 kms (5.06 miles). Even the VAO vide his certificate dated 22.11.2017 has certified that the aforementioned land is situated beyond 7 kms from Tambaram Municipality. In entirety of facts and going through these evidences we are of the view that the land situated in village Varadarajapuram is beyond 6 kms of outer limit of Tambaram Municipality. Hence, we are of the view that the aforesaid land was not taxable because land did not fall within the distance of 6 kms from the outer limit of Tambaram Municipality measured aerially. Hence, we find no infirmity in the order of CIT(A) and the same is confirmed. - Decided against revenue.

Summary

Issues Involved:
1. Determination of whether the land in question is located within 6 kilometers of aerial distance from the municipal limits of Tambaram Municipality.
2. Classification of the land as agricultural land or capital asset under Section 2(14)(iii) of the Income Tax Act, 1961.
3. Taxability of the sale proceeds from the land under Long Term Capital Gains.

Detailed Analysis:

Issue 1: Determination of Aerial Distance
The primary issue was whether the land in question was located within 6 kilometers of aerial distance from the municipal limits of Tambaram Municipality. The Revenue argued that the land was within 4.17 kilometers based on measurements from Google maps and the JCIT's directions under Section 144A of the Act. The JCIT and the Tahsildar both indicated that the land was within 4 kilometers approximately. However, the CIT(A) relied on the certificate from the Village Administrative Officer (VAO) and Google map evidence provided by the assessee, which showed the aerial distance to be 8.14 kilometers. The Tribunal confirmed the CIT(A)'s finding that the land was beyond 6 kilometers from the municipal limits, thus falling outside the specified limits under Section 2(14)(iii)(b).

Issue 2: Classification of the Land
The classification of the land as either agricultural land or a capital asset was crucial. The AO, supported by the JCIT's directions, classified the land as a capital asset, arguing that it did not fit the definition of agricultural land and fell within the specified limits from the municipal boundary. Conversely, the CIT(A) concluded that the land was agricultural based on the VAO's certificate and other evidence, thus not liable to capital gains tax. The Tribunal upheld the CIT(A)'s conclusion that the land was indeed agricultural and situated beyond 6 kilometers from the municipal limits.

Issue 3: Taxability under Long Term Capital Gains
The Revenue contended that the land should be taxed under Long Term Capital Gains as it was within the specified limits and thus a capital asset. The CIT(A) disagreed, holding that the land was agricultural and outside the 6-kilometer limit, exempting it from capital gains tax. The Tribunal supported this view, confirming that the land did not fall under the definition of a capital asset as per Section 2(14)(iii) and hence, the sale proceeds were not taxable under Long Term Capital Gains.

Conclusion:
The Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s order that the land in question was agricultural, located beyond 6 kilometers from the Tambaram Municipality limits, and thus not subject to capital gains tax. The Tribunal's decision was based on the aerial distance evidence provided by the assessee and the VAO's certification, which outweighed the Revenue's approximations and Google map measurements. The judgment was pronounced on 25th February 2022 at Chennai.