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TMI Blog2010 (9) TMI 1133X X X X Extracts X X X X X X X X Extracts X X X X ..... ate government as per local laws, the central act will apply. Therefore once the impugned land is situated within the jurisdiction of the local limit of the GVMC, the impugned land cease to be the agricultural land and on its sale capital gain is to be computed. We therefore, find no infirmity in the order of the CIT(A) who has rightly computed the capital gain on sale of the impugned agricultural land. Regard to cost of acquisition - HELD THAT:- Generally, the fair market rate of the lands are much more than the rates notified by the registration department for the purpose of registration of a document. These rates are not regularly revised. We have also examined the basis for the adoption of the rate at ₹ 70 per sq.yd. by the assessees and we find that assessee has relied upon the sale deed executed on 25.3.1987 in which the land was sold at ₹ 100 per sq.yd., whereas the rates are to be determined as on 1.4.1981. Therefore, the basis taken by the assessees is not correct. Now it is a question of pure estimate and we therefore estimate the rate of land at ₹ 60 per sq.yd. keeping in view the rates adopted by the assessee and the revenue. Accordingly, we set a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the said 50 acres of land, the impugned 5 acres was sold during the relevant previous year. In the original return filed, the assessee has shown the long term capital gain amounting to ₹ 5,97,08,140/-. However while computing the long term capital gain, the assessee had adopted ₹ 9,85,00,000/- as the sale consideration of the land on the ground that out of total consideration received of ₹ 10 crores, ₹ 15 lakhs was attributable to the agricultural income. Subsequently in the revised return, the assessee claimed that land sold was agricultural land and therefore such sale do not attract capital gain. Consequently, she disclosed an income of ₹ 26,06,843/- only which represented interest income received from bank deposits. After scrutinizing, the assessing officer came to the following conclusions: (i) The land sold by the appellant was situated within the area of Greater Visakhapatnam Municipal Corporation (GVMC). The limits of the GVMC were extended by G.O. Ms.No.938, dt.21.11.2005 vide which the Grampanchayat of Paradesipalem was covered within the limits of GVMC. Thus, the assessing officer was of the view that the appellant s land fell within ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ufruct from land or trees of spontaneous growth since there are no history of agricultural operations in the said land. (v) Regarding the cost of the land, the appellant valued the cost as on 1.4.1981 at ₹ 70/- per sq.yd. For adopting the said rate, the appellant relied upon a sale deed of the sale of part of the same land in the year 1987. However, the assessing officer found that the SRO rate at the central part of Visakhapatnam city as on 1.4.1981 was only ₹ 35/- per sq.yd. Therefore, for determining the cost of acquisition, the assessing officer adopted the cost as on 1.4.1981 at ₹ 35/- per. Sq.yd. 4. Accordingly, the assessing officer recomputed the capital gain at ₹ 6,56,04,070/- after allowing the exemption u/s 54F of ₹ 3 crores. The assessee preferred an appeal before the CIT(A) but did not find favour with him. 5. Now the assessee is before us with the submission that the impugned land was not situated within the municipal limits of VMC (Visakhapatnam Municipal Corporation). He further contended that this case falls within the purview of clause (b) of 2(14)(iii) of the I.T. Act relating to a definition of agricultural land. He fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within area of a local limit of the GVMC for which no notification as specified in clause (b) is required to be issued by the central government. We have also examined the contention of the assessees that the GVMC was notified by the local laws and local laws cannot supersede the central laws. But we do not find any force in this argument because the municipality or the cantonment board are subject to local laws and within a state subject and are created by a notification by the state government. Central government has no jurisdiction to create a municipality, cantonment board in any state of the country. Central government is concerned with the central act. Once the municipality of the cantonment board is created by a notification by the state government as per local laws, the central act will apply. Therefore once the impugned land is situated within the jurisdiction of the local limit of the GVMC, the impugned land cease to be the agricultural land and on its sale capital gain is to be computed. We therefore, find no infirmity in the order of the CIT(A) who has rightly computed the capital gain on sale of the impugned agricultural land. 8. The next issue raised before us is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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