NO CAPITAL GAINS UNDER SEC.45 of Income tax- Section 2(14)(iii)(a): Agricultural land -By the date of publish of census in the year 1983 , the village is not covered in Municipality - subsequent changes in the year 1987 by becoming Municipality does not make no differences and as such sale of agricultural land sold in that area in the year 1991 - 1912 can not be considered as capital gain - their lordships of High court held that From a perusal of the provision extracted above, it becomes clear that it is only when two factors exist side by side, that a land which is otherwise agricultural in nature would cease to be so. The first is that the land must be located within the limits of the Municipality or other local area. The second is that the population of the Municipality or other local area must be not less than 10,000, according to the last preceding census, of which therelevant figures have been published, before the first day of theprevious year.There are certain peculiar circumstances in the instant case. The transaction took place in the year 1991-92. The Municipality came into existence in the year 1987. However, the last preceding census figures were published in the year 1983. It is, no doubt, true that even in 1983, the population of Mallapur Village, in which the lands are situated, was more than 10,000. However, by that time, it was not part of the Municipality. The mere fact that as on the date of sale, the Village became part of the Municipality and the population exists 10,000 does not make much difference. = I.T.T.A. No. 86 of 2001 01-07-2014 The Commissioner of Income Tax.... APPELLANT Smt.Surjeet Kaur (died) and others....RESPONDENTS = 2014 -July-Part- http://judis.nic.in/judis_andhra/filename=11596

NO CAPITAL GAINS UNDER SEC.45 of Income tax- Section 2(14)(iii)(a): Agricultural land -   By the date of publish of census in the year 1983 , the village is not covered in Municipality - subsequent changes in the year 1987 by becoming Municipality  does not make no differences and as such sale of agricultural land sold in that area in the year 1991 - 1912  can not be considered as capital gain -their lordships of High court held that From a perusal of the provision extracted above, it becomes clear that it is only when two factors exist side by side, that a land which is otherwise agricultural in nature would cease to be so.  The first is that the land must be located within the limits of the Municipality or other local area.   The second is that the population of the Municipality or other local area must be not less than 10,000, according to the last preceding census, of which the relevant figures have been published, before the first day of theprevious year.There are certain peculiar circumstances in the instant case.  The transaction took place in the year 1991-92.  The Municipality came into existence in the year 1987.  However, the last preceding census figures were published in the year 1983.  It is, no doubt, true that even in 1983, the population of Mallapur Village, in which the lands are situated, was more than 10,000. However, by that time, it was not part of the Municipality. The mere fact that as on the date of sale, the Village became part of the Municipality and the population exists 10,000 does not make much difference.  =

whether the land sold by the respondent in
the year 1991 attracts the capital gains tax, under the Act.
     
      The respondent owned Acs.16.00 of land in Mallapur
Revenue Village of Uppal Mandal, Ranga Reddy District.  She
sold that land through five sale deeds, between 12.06.1991 and
09.02.1992 in favour of various individuals.
In the returns filed for
the assessment year 1992-93, the transactions were reflected.
The Assessing Authority took the view that the respondent is
under obligation to pay capital gains under Section 45 of the Act.
The basis for this was that the land was treated as capital asset
and the sale proceeds thereof were treated as capital gains.=

  The respondent filed an appeal before the Commissioner of
Income Tax (Appeals).  She pleaded that the land held by her
was agricultural in nature and that it cannot be treated as capital
asset under Section 2(14)(iii)(a) of the Act.
The appeal was dismissed.
Thereupon, she filed I.T.A.No.354/Hyd/96 before the
Income Tax Appellate Tribunal, Hyderabad Bench A (for short
the Tribunal).
The appeal was allowed on 22.02.2001 and the
contention of the respondent was accepted.  Hence, this appeal
by the Department. =
the census figures referable to Section
2(14)(iii)(a) of the Act are only of the year 1983 and though the
population of Mallapur in that census was more than 10,000,
Kapra Municipality, of which Mallapur is a part, was not formed at
all and that the obligation to pay the capital gains tax arise only
when both the factors exist in respect of a land.
whether the land is covered by Section
2(14) (iii)(a) of the Act, which reads as under:

Section 2(14)(iii)(a): 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;

 From a perusal of the provision extracted above, it
becomes clear that it is only when two factors exist side by side,
that a land which is otherwise agricultural in nature would cease
to be so.  
The first is that the land must be located within the limits
of the Municipality or other local area.  
The second is that the
population of the Municipality or other local area must be not less
than 10,000, according to the last preceding census, of which the
relevant figures have been published, before the first day of the
previous year.
There are certain peculiar circumstances in the instant
case.  The transaction took place in the year 1991-92.  The
Municipality came into existence in the year 1987.  
However, the
last preceding census figures were published in the year 1983.  
It
is, no doubt, true that even in 1983, the population of Mallapur
Village, in which the lands are situated, was more than 10,000.
However, by that time, it was not part of the Municipality. The
mere fact that as on the date of sale, the Village became part of
the Municipality and the population exists 10,000 does not make
much difference.  
It is too well-settled that the provisions of the
taxation statute must be construed strictly and the benefit of
ambiguity, if any, must accrue to the assessee.
 The Tribunal proceeded on the same lines and took the
view that the land sold by the respondent cannot be treated as
capital asset.  We are in agreement with the view expressed by
the Tribunal.
The appeal is accordingly dismissed.  There shall be no
order as to costs.

2014 -July-Part- http://judis.nic.in/judis_andhra/filename=11596


THE HONBLE SRI JUSTICE L.NARASIMHA REDDY and THE HONBLE SRI JUSTICE CHALLA KODANDA RAM                          

I.T.T.A. No. 86 of 2001

01-07-2014

The Commissioner of Income Tax.... APPELLANT  
     
Smt.Surjeet Kaur (died) and others....RESPONDENTS  
     
COUNSEL FOR THE APPELLANT:- Sri J.V.Prasad      

COUNSEL FOR RESPONDENTS:-Sri Y.Ratnakar      

<Gist:

>Head Note:

?Cases Referred:

THE HONBLE SRI JUSTICE L.NARASIMHA REDDY        

AND

THE HONBLE SRI JUSTICE CHALLA KODANDA RAM          

I.T.T.A. No. 86 of 2001


JUDGMENT: (per the Honble Sri Justice L.Narasimha Reddy)

      In this appeal, presented under Section 260A of the Income
Tax Act (for short the Act), the only question that arises for
consideration is as to whether the land sold by the respondent in
the year 1991 attracts the capital gains tax, under the Act.
        
      The respondent owned Acs.16.00 of land in Mallapur
Revenue Village of Uppal Mandal, Ranga Reddy District.  She
sold that land through five sale deeds, between 12.06.1991 and
09.02.1992 in favour of various individuals.  In the returns filed for
the assessment year 1992-93, the transactions were reflected.
The Assessing Authority took the view that the respondent is
under obligation to pay capital gains under Section 45 of the Act.
The basis for this was that the land was treated as capital asset
and the sale proceeds thereof were treated as capital gains.

      The respondent filed an appeal before the Commissioner of
Income Tax (Appeals).  She pleaded that the land held by her
was agricultural in nature and that it cannot be treated as capital
asset under Section 2(14)(iii)(a) of the Act.  The appeal was
dismissed.  Thereupon, she filed I.T.A.No.354/Hyd/96 before the
Income Tax Appellate Tribunal, Hyderabad Bench A (for short
the Tribunal).  The appeal was allowed on 22.02.2001 and the
contention of the respondent was accepted.  Hence, this appeal
by the Department. 

      Sri J.V.Prasad, learned Standing Counsel for the appellant,
submits that the land in question was undisputedly within the
limits of Kapra Municipality and thereby, it deserve to be treated
as capital asset.  He places reliance upon Section 2 (14) (iii)(a) of
the Act. He further submits that even if one takes into account,
the factor of population, mentioned in the said provision, the land
would become a capital asset and that the view taken by the
Tribunal cannot be sustained in law.

      Sri Y.Ratnakar, learned counsel for the respondent, on the
other hand, submits that the census figures referable to Section
2(14)(iii)(a) of the Act are only of the year 1983 and though the
population of Mallapur in that census was more than 10,000,
Kapra Municipality, of which Mallapur is a part, was not formed at
all and that the obligation to pay the capital gains tax arise only
when both the factors exist in respect of a land.  He submits that
the Tribunal has taken correct view of the matter and that the
present appeal deserves to be dismissed.
      Section 45 of the Act makes capital gains, taxable.  Various
accruals that can be treated as capital gains, are furnished
therein. The word capital asset is defined under Section 2 (14) of
the Act.  The agricultural lands per se stand excluded from the
capital gains, since they are not included in it. However, in the
context of defining the term capital asset, such of the agricultural
lands that are within the jurisdiction of a Municipality subject to
certain conditions are skipped the character of the agricultural
land, in the context of capital gains.

      In the instant case, the Tribunal perused the record
pertaining to the land and was satisfied that it was being put to
agricultural use, at the relevant point of time.  The only
controversy is as to whether the land is covered by Section
2(14) (iii)(a) of the Act, which reads as under:

Section 2(14)(iii)(a): 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;

      From a perusal of the provision extracted above, it
becomes clear that it is only when two factors exist side by side,
that a land which is otherwise agricultural in nature would cease
to be so.  The first is that the land must be located within the limits
of the Municipality or other local area.  The second is that the
population of the Municipality or other local area must be not less
than 10,000, according to the last preceding census, of which the
relevant figures have been published, before the first day of the
previous year.

      There are certain peculiar circumstances in the instant
case.  The transaction took place in the year 1991-92.  The
Municipality came into existence in the year 1987.  However, the
last preceding census figures were published in the year 1983.  It
is, no doubt, true that even in 1983, the population of Mallapur
Village, in which the lands are situated, was more than 10,000.
However, by that time, it was not part of the Municipality. The
mere fact that as on the date of sale, the Village became part of
the Municipality and the population exists 10,000 does not make
much difference.  It is too well-settled that the provisions of the
taxation statute must be construed strictly and the benefit of
ambiguity, if any, must accrue to the assessee.

      The Tribunal proceeded on the same lines and took the
view that the land sold by the respondent cannot be treated as
capital asset.  We are in agreement with the view expressed by
the Tribunal.

      The appeal is accordingly dismissed.  There shall be no
order as to costs.

      The Miscellaneous petitions filed in this appeal shall also
stand disposed of.
_____________________  
L.NARASIMHA REDDY,J    
________________________  
CHALLA KODANDA RAM,J    
Dt:01.07.2014

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