2016 (5) TMI 1165 - HC - Income Tax

Agriculture land - measurement of distance - Held that - The distance is more than 9 kms and treating the land sold as agricultural land and thus no substantial question of law is arising in this appeal.

Issues Involved:
1. Determination of whether the land sold qualifies as agricultural land.
2. Distance of the land from the municipal limits.
3. Applicability of capital gains tax on the sale of the land.
4. Competency of the Tehsildar to issue a certificate regarding the distance of the land from the municipal limits.

Issue-wise Detailed Analysis:

1. Determination of whether the land sold qualifies as agricultural land:
The assessee claimed exemption from capital gains on the sale of land by asserting it was agricultural land. The Assessing Officer initially denied the exemption, arguing that the assessee, being an advocate, did not personally engage in agricultural activities. However, the Tribunal and the Commissioner of Income Tax (Appeals) found that agricultural operations were conducted by the assessee's brother, and there is no legal requirement for the land to be self-cultivated to qualify as agricultural land. The Tribunal noted that the land was recorded as agricultural in the revenue records and was used for agricultural purposes until the sale.

2. Distance of the land from the municipal limits:
The central issue was whether the land was situated beyond 8 kilometers from the municipal limits, as required by Section 2(14)(iii) of the Income Tax Act for it to be considered agricultural land. The Tehsildar, the Executive Engineer, and the Income Tax Inspector all provided certificates and reports confirming that the land was more than 9 kilometers from the municipal limits. The Tribunal and the High Court upheld these findings, dismissing the Revenue's contention that the Tehsildar was not competent to issue such a certificate.

3. Applicability of capital gains tax on the sale of the land:
The Revenue argued that the land should not be treated as agricultural and thus should be subject to capital gains tax. The Tribunal and the High Court, however, concluded that the land met all the conditions under Section 2(14)(iii) to be classified as agricultural land. They emphasized that the land's use, location, and distance from the municipal limits were consistent with the statutory requirements for agricultural land, thereby exempting it from capital gains tax.

4. Competency of the Tehsildar to issue a certificate regarding the distance of the land from the municipal limits:
The Revenue questioned the Tehsildar's authority to certify the land's distance from the municipal limits. The Tribunal and the High Court dismissed this objection, affirming that the Tehsildar, as a revenue officer, is competent to issue such certificates. This view was supported by multiple judicial precedents, including decisions from the Punjab & Haryana High Court, which recognized the Tehsildar's authority in such matters.

Conclusion:
The High Court dismissed the Revenue's appeals, affirming the Tribunal's decision that the land in question was agricultural and situated beyond the prescribed municipal limits, thereby exempting it from capital gains tax. The Court found no substantial question of law arising from the Revenue's appeal and upheld the certificates and reports provided by the Tehsildar and other authorities. The judgment emphasized that the classification of land as agricultural depends on its use, location, and compliance with statutory requirements, not on the profession of the landowner.

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