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TMI Blog2015 (7) TMI 1372X X X X Extracts X X X X X X X X Extracts X X X X ..... ate of Punjab. Thus, the land is urban land for the purpose of definition of capital asset under section 2(14). The concept of municipality as a unit of State or the fact that a State has no jurisdiction to make law beyond its territory have no relevance for the purpose of determining whether a particular Land was capital asset or not for the purpose of taxing capital gains. If the land is adjacent to a municipality and is urban land covered under section 2(14), even if municipality and the land fall in different States, the land will continue to be urban land. If such land is excluded from the definition of capital asset , the purpose of the statutory scheme will not be achieved. We find that the judgments of Anjana Sehgal [ 2011 (3) TMI 695 - PUNJAB AND HARYANA HIGH COURT] and Khazan Singh [ 2014 (6) TMI 261 - PUNJAB HARYANA HIGH COURT] were delivered on 01. 03. 2011 and on 20. 02.14 whereas the decisions of various benches of the Tribunal, relied upon by the AR, are of the year 2009, 2010 and 2012. Clearly, the Benches of the Tribunal did not have the benefit of the order of the Hon ble High Court. Hon ble Court has decided the issue against the assessee. Judicial decision and p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eement, that initially the agreement was not registered, that later on the assessee registered the purchase agreement by way of confirmation deed executed dt. 26. 7. 2006. Before the AO, the assessee submitted that agricultural land was situated beyond 8 Kms from the municipal limit. In his support, the assessee filed a certificate dated 18. 9. 99 issued to him by Thane Urban Agglomeration and Agricultural Deptt. , that Nighu village was 8 kms beyond Thane Municipal Corporation(TMC), that the population was 12357. After considering the submission of the assessee, the AO held that the assessee had not declared any income from capital gains from sale of plots, that during course of assessment proceedings he had stated that the sale consideration pertaining to HUF of ₹ 52. 29 lacs was wrongly credited to his individual account, that the plot was purchased by him in his individual capacity. The AO directed the assessee to prove the claim that the disputed plot of land was jointly held by the assessee and the HUF and that the Nighu village was not within 8 kms of the Navi Mumbai Municipal Corporation(NMMC). He asked the assessee to justify the claim that plot of agricultural land ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 kms from TMC, that though it was within 8 kms of NMMC it was not the jurisdictional municipality, that AO had not brought on record any evidence that the area fell within the specified limits as per notification of 1994. He relied upon the decisions of Capital Local Area Bank Ltd. (29 SOT 394) and R. Thanigaimalai (ITA 35/Bang/20 11 AY 05-06 dated 25. 5. 12) 5. We have heard the rival submissions and perused the material before us. Undisputed fact of the case are that the assessee had purchased plots of lands in Nighu village in the year jointly with the HUF, that the plots were sold during the year under consideration for Rs. , that the assessee did not disclose L TCG on sale of plots of land as he was of the opinion that the land was not within 8 km. of municipal limit, that the FAA deleted the addition made by the assessee , that the FAA held that Nighu village was beyond 8 kms. from TMC and that NMMC did not have jurisdiction over the village. It is true that vide notification dated Nighu was separated from NMMC and it was a separate panchayat area. The population of the village more than 10000. The short question to be decided is whether the distance of 8 kms. is to be take ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... does not include- (iii) agricultural land in India, not being land situate- (a) in any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee, or by any other name) or a cantonment board and which has a 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 the previous year; or (b) in any area within 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, specified in this behalf by notification in the Official Gazette. " 8. The notification dated January 6, 1994, issued by the Central Government is as under (see [1994] 205 ITR (St) 121, 122): "Now. therefore, in exercise of the powers conferred by item (B) of clause (ii) of the proviso to sub-clause (c) of clause (1 A) and item (b) of sub-clause (iii) of clause (14) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee. The relevant extract thereof is as under (see[1970) 75ITR (St) 17, 69) : "Sub-clause (a) seeks to amend clause (J 4) of section 2 of the Income-tax Act which defines the term 'capital asset'. The amendment seeks to bring within the term 'capital asset' agricultural land situated within the limits of any municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee or by any other name) or a cantonment board having a population of 10, 000 or more according to the last census for which the figures have been published before the first day of the previous year. Further, agricultural land situated in areas lying within a distance not exceeding 8 kilometers from the local limits of such municipalities or cantonment boards will also be covered by the amended definition of 'capital asset', if such areas are, having regard to the extent of and scope for their urbanisation and other relevant considerations, notified by the Central Government in this behalf. The effect of the proposed amendment will be that capital gains arising from the. transfer of agricultural land situated in mun ..... 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