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TMI Blog2020 (3) TMI 472X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal had considered the census report as well as the population certificate of the village dated 02.06.2008 and other relevant documents and thereafter returned a finding of fact that at the time of sale, the land in question was situated at village Juchandra, the population of which was 5,912 which is less than the statutory requirement of 10,000. Thus, this condition being absent the sold land was rightly treated as agricultural land, not included within the ambit and meaning of capital asset. This is a finding of fact which has not been questioned by the revenue as perverse being contrary to the record as would be evident from the two questions which have been raised. On this finding of fact, we are of the opinion that Tribunal was justified in holding that the lands which were sold were agricultural lands, not forming part of capital asset within the meaning of Section 2(14) of the Act. - Decided in favour of assessee. - INCOME TAX APPEAL NO. 1223 OF 2017 - - - Dated:- 4-2-2020 - UJJAL BHUYAN, MILIND N. JADHAV, JJ. Mr. Tejveer Singh for the Appellant. Mr. N.M.Gandhi for the Respondents. P.C:- 1. Heard Mr. Tejveer Singh, learned standing counsel, r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aharashtra notifications dated 03.07.2009 and 31.05.2011 held that lands which were sold fell within the Municipal Corporation of Vasai Virar and, therefore, could not be treated as agricultural land to take the same outside the purview of the Act. It was held that the such land was to be treated as capital asset and the profits on sale of such land was to be included in the total income of the assessee. 6. Assessee preferred appeal before the Commissioner of Income Tax (Appeals)-3,Thane, against the aforesaid order of assessment. By the appellate order dated 21.01.2016 the first appellate authority upheld the findings of the Assessing Officer and dismissed the appeal of the assessee. 7. Aggrieved by the same, assessee preferred further appeal before the Tribunal. By the impugned order dated 25.08.2016 Tribunal allowed the appeal of the assessee by holding that the land sold was agricultural land situated at village Juchandra and became urban land only on and from 31.05.2011 being part of Vasai-Virar Municipal Corporation. Tribunal also held that the population of village Juchandra was 5,912 as per latest census. Therefore vide the impugned order Tribunal allowed the appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as 5,912 which is less than the statutory figure of 10,000 and therefore land situated within Juchandra village would stand excluded from the meaning of capital asset. Third contention is that even though village Juchandra became part of the Vasai-Virar Municipal Corporation on and from 31.05.2011, the said Municipal Corporation actually started functioning as a Municipal Corporation w.e.f. the assessment Year 2012-13. Therefore, Tribunal was fully justified in treating the sale transaction pertaining to the land in village Juchandra as sale of agricultural land and thus exempt from payment of income tax. 13. Submissions made by learned counsel for the parties have been considered. 14. Before adverting to the order passed by the Tribunal it would be apposite to refer to the relevant statutory provisions. Section 2 of the Act is the definition section. Sub-section (14) thereof defines capital asset . Though sub-section (14) is quite longish, only that portion which is relevant for the present application would be referred to. Briefly stated, sub-section (14) defines capital asset to mean property of any kind held by an assessee, whether or not connected with his business or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... areas and the expression any area is a fraction of the larger area. Therefore, the expression any area would refer to a smaller area within the municipality. This is because the population of the municipality has to be more than the population of any area ; certainly more than 10,000. 17. Having discussed the legal provisions as above, we may now advert to the relevant facts. 18. There is no dispute that Government of Maharashtra had issued draft notification on 14.09.2006 proposing to form a city having a corporation to be called Municipal Corporation of the city of Vasai-Virar. The schedule given comprised of 53 villages including the village of Juchandra at Serial No. 19. After hearing claims and objections, Government of Maharashtra issued notification dated 03.07.2009 constituting the Municipal Corporation of the city of Vasai-Virar specifying the date of such constitution as 03.07.2009. The said corporation included the village of Juchandra as per final notification. It appears that an objection was made thereafter for excluding all the 53 villages including the village of Juchandra. After considering the matter, Government of Maharashtra issued notification dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e village became part of the larger urban area on and from 03.07.2009. 21. Having noted that, we may once again revert back to the requirements of Clause (iii)(a) of sub-section (14) to Section 2 of the Act. For land to be excluded from capital asset, it has to be agricultural land in India; such land to be not agricultural must fulfill two conditions viz. it must be land situated in any area which is comprised within the jurisdiction of a municipality or cantonment board and which has a population of not less than 10,000. These two conditions are pre-conditions and must be read conjunctively. In other words, if both the conditions are present then it would not be agricultural land and would be treated as capital asset. However, inversely speaking, if either of the two conditions are absent then the land would be agricultural land and excluded from capital asset. Though we have held the land in question to be within the jurisdiction of a municipality we find the second condition to bring the land outside the ambit of agricultural land i.e. that the area has a population which is not less than 10,000 absent. In this connection, Tribunal had considered the census report as well as ..... 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