2012 (10) TMI 564 - AT - Income Tax

Urban vs. Agricultural Land - Measurement of Municipal limits of Land - Held that - Once the statutory guidance of taking into account the extent and scope of urbanization of the area has to be reckoned while issuing any such notification then it would be incongruous to the argument of the Revenue that the distance of land should be measured by the method of straight line on horizontal plane or as per crow s flight because any measurement by crow s flight is bound to ignore the urbanization which has taken place. - Order of CIT(A) on the issue in the impugned orders are set aside and the appeals of the assessees are partly allowed for statistical purposes.

Summary

Issues involved:
1. Measurement of distance for determining if agricultural land falls within municipal limits for capital gain tax purposes.

Detailed Analysis:
The judgment involves appeals against the order of the CIT(A), Chennai, regarding the assessment year 2008-09. The issue at hand is whether the agricultural land sold by the assessee falls within the municipal limits of Pondicherry, thereby subjecting the profit to capital gain tax under section 45 of the Income Tax Act. The Assessing Officer relied on a map authenticated by the Registering Authority, which indicated that the land was within 8 kms of the municipal limits. The CIT(A) upheld this finding, leading to the appeals by the assessee.

The counsel for the assessee argued that the distance should be measured in terms of the approach road, not a straight line on a horizontal plane. Citing relevant notifications and a judgment by the Hon'ble Punjab & Haryana High Court, the counsel contended that the distance of agricultural land should be determined considering the approach road. The Departmental Representative supported the CIT(A)'s order, asserting its correctness.

Upon considering the submissions and the legal references provided by the counsel for the assessee, the tribunal found that both the CIT(A) and the Assessing Officer erred in relying solely on the map for distance measurement. Citing the judgment of the Hon'ble Punjab & Haryana High Court and a decision by the Mumbai Bench of the Tribunal, the tribunal emphasized that the distance of agricultural land should be measured in terms of the approach road, not a straight line or crow's flight. Consequently, the matter was remitted back to the Assessing Officer to determine the distance from the municipal limits of Pondicherry by road in both appeals.

The tribunal found no other issues pressed by the counsel for the assessee in the appeals. Therefore, the findings of the CIT(A) were set aside, and the appeals of the assessees were partly allowed for statistical purposes.