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TMI Blog2005 (11) TMI 387X X X X Extracts X X X X X X X X Extracts X X X X ..... me as taxable income by claiming it to be exempt. The Assessing Officer asked the assessee to furnish a Certificate from the Municipal Corporation as to what was the distance from the Municipal Corporation of the land sold. The assessee filed following three certificates : ( i )From the Director (Panchayat), Government of NCT of Delhi certifying that the Bajitpur Thankran is a rural village falling within the Panchayat limits having population less than 10,000 and located at more than 8 kms. away from the nearest urbanized village. ( ii )From the consolidated officer north west Kanjhawala, Delhi certifying that village Bajitpur Thankran is not urbanized under the provision of Delhi Municipal Corporation Act, 1957 and that the land is utilized for agricultural purposes. ( iii )From the Sub-Registrar, Sub-District Pitampura, Delhi certifying that corporation tax is being levied on the same rate, i.e., at the rate of 5 per cent of all type of immovable properties (rural agricultural land or urban land) falling within the limits of Delhi Municipal Corporation Act for the purpose of registration of sale deeds. 3. The assessee also filed a copy of Delhi Gazette wherein Bawana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... treated the capital gain as taxable on sale of rural agricultural land merely on the ground that the land transferred had been subjected to corporation tax @ 5 per cent as per provision of section 147 of the Delhi Municipal Corporation Act, 1957, in spite of the fact that the assessee furnished a certificate from the office of the Sub-Registrar, Sub-District VI (North West) Pitampura, Delhi-34 which reads as under : "This is to certify that Corporation tax is being levied on the same rate, i.e. 5 per cent on all type of immovable properties (Rural Agricultural Land or Urban) falling within the limits of Delhi Municipal Corporation Act, 1957 for the purpose of Registration of Sale Deed." It was stated that the Assessing Officer had not challenged and accepted the certificate issued by Director, Panchayat, Government of NCT of Delhi in respect of Village Bajitpur Thankran, therefore, the addition made was illegal. It was further stated that the agricultural land in village Bajitpur Thankran was purely an agricultural land and the assessee had been declaring agricultural income from year to year in his return of income which was being accepted by the department. The reliance wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imit having population of less than 10,000 as well as within the jurisdiction of Municipal Corporation of Delhi, the situation was squarely covered by the decision of the Hon ble Delhi High Court in the case of Sheo Ram ( supra ). Learned CIT held that in view of the ratio laid down by the Hon ble Delhi High Court in the aforesaid referred to case, the land was not intended to be covered as a capital asset within the meaning of section 2(14)( iii ) of the Income-tax Act, 1961. He, therefore, deleted the addition made by the Assessing Officer. Now the department is in appeal. 6. The learned Departmental Representative strongly supported the order of the Assessing Officer and submitted that land in question falls in the Municipal Corporation, so it was an asset liable to be taxed for the capital gain. Therefore, the Assessing Officer rightly assessed the gain on the sale of agricultural land situated in the area in Delhi Municipal Corporation as short-term capital gain and the learned CIT(A) was not justified in observing that capital gain could not be charged on transfer of such asset. The reliance was placed on the following case laws : ( i ) S. Hidhayathullah Sahib v. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... population of not less than ten thousand according to the last preceding census of which the relevant figures have been published before the first day of previous year; or ( b )In any area with such distance, not being more than eight kilometers, from the local limits of any municipality or cantonment board referred to in item ( a ), as the Central Government may, having regard to the extent of, and scope for, urbanization of that area and other relevant considerations, specify in this behalf by notification in the Official Gazette." 9. In the instant case, it is not in dispute that the land in question was situated in the jurisdiction of Municipal Corporation of Delhi since the village Bajitpur Thankran where the land was situated falls in Narela Tehsil which itself falls in one of the zones of Municipal Corporation of Delhi. As per the sub-clause ( a ) of clause ( iii ) of section 2(14) it is clear that the agricultural land in India means the land which is not situated in any area which is comprised within the jurisdiction of "Municipality, Municipal Corporation, Notified Area Committee, town area committee, town committee or by any other name or a cantonment board and whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Hon ble Andhra Pradesh High Court in the aforesaid referred to case. The Hon ble Supreme Court in the said case also approved the judgment of the Hon ble Madras High Court in the case of S. Hidhayathullah Sahib ( supra ) wherein the Hon ble High Court had observed as under : "A close reading of section 2( 14 )( iii )( a ) suggest that it is the population of the municipality that has to be taken into account for the purpose of that section and not the population of any area within the municipality. If the Legislature meant to fix a minimum limit of population of any area within the municipality of cantonment board, it would have specified a particular area, such as village, ward, street, etc., and since the Legislature had left the area in a municipality undefined, it would have prescribed the limit of population such as unspecified or undefined or undefined area within the municipality." The Hon ble High Court further held : "That the expression "which has got a population of more than 10,000 in section 2( 14 )( iii )( a ) would qualify only "the municipality or cantonment" and not the expression "area" and therefore, the capital gains arising out of the sale of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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