Distance of Land to Be Measured as per Old Notification if Municipal Limits Are Extended Without New Notification | ITAT

Case Details: Ashish Gupta vs. Income-tax Officer - [2024] 163 taxmann.com 739 (Delhi-Trib.)

Judiciary and Counsel Details

• Shamim Yahya, Accountant Member & Ms Madhumita Roy, Judicial Member
• Subodh Gupta & Mukesh Agarwal, CAs for the Appellant.
• Kanv Bali, Sr. DR for the Respondent.

Facts of the Case

The assessee, an individual, sold land that he treated as agricultural land and did not disclose the capital gains in his return of income. The Assessing Officer (AO) noted that the said land was situated within 5 km of the municipal limits of Ghaziabad and asked the assessee to furnish a computation of capital gain on the transfer of this property.

The assessee responded that the said land is agricultural and does not fall within the meaning of capital assets as per provisions of section 2(14). AO rejected the assessee’s contention and held that the said land is about 5 km from the municipal limits of Ghaziabad. The asset transferred by the assessee during the year is held to be a capital asset within the meaning of Section 2(14), which was chargeable to capital gain tax.

Aggrieved by the order, the assessee preferred an appeal to the CIT(A). The CIT(A) upheld the AO’s order, and the matter then reached the Delhi Tribunal.

ITAT Held

The Tribunal held that the assessee’s argument that the distance of about 5 km from Dasna Flyover, Govindpuram, as confirmed by the Income Tax Inspectors and Tehsildars, was in February/March 2016. The assessee argued that the distance of the land in question should be reckoned as existing on Notification No. 9447 dated 06.01.1994, when the municipal limits were up to Hapur Chungi (near the Income Tax Office), from where the distance was 8.7 km approx. as per the IT Inspector’s report.

The assessee also referred to the response from Ghaziabad Nagar Nigam, which enclosed a Notification dated 31.08.1994 stating that municipal limits were extended to Govindpuram and Dasna Drain on 31.08.1994 after its upgrading from Municipal Council (Nagar Palika) to Municipal Corporation (Nagar Nigam) on the same date.

The Tribunal ruled that an exemption under section 2(14)(iii)(b) requires a mandatory notification by the Central Government. Since no notification was issued after January 6, 1994, the expansion of municipal limits from Hapur Chungi to Dasna Flyover on August 31, 1994, is irrelevant and should be disregarded.

Therefore, the land in question was undoubtedly beyond 8 km from the Municipal corporation’s limits. Accordingly, the assessee’s appeal was allowed.

List of Cases Reviewed

• Smt. (Dr.) Subha Tripathi v. Deputy Commissioner of Income Tax, Circle-6, Jaipur [2013] 34 taxmann.com 286 (Jaipur – Trib.)
• CIT v. Madhukumar-N.HUF, Karnataka High Court, ITA 396 of 2009 dated 29.03.2012
• ITO v. Akash Deep Farms Pvt Ltd, ITAT Ahmedabad, ITA 561/Ahd/2017 dated 10.12.2018 (para 8) – followed.