INCOME TAX ACT, 1961

Section 2(14)

Capital gains - Capital assets - Agricultural land outside urban limits -

Assessee sold a land and claimed that the same could not be brought within tax regime as it was an agricultural land being outside urban limits. AO did not accept such claim and relying upon Government of Maharashtra Notifications, dated 3-7-2009 and 31-5-2011 held that land which was sold fell within the Municipal Corporation of Vasai-Virar and, therefore, could not be treated as agricultural land. It was further, held that such land was to be treated as 'capital asset' and the profit on sale of such land was to be included in the total income of the assessee. Held: It was found the land sold by assessee was situated at a village 'J', which remained as a rural area and became urban land on and from 31-5-2011. Further, the Municipal Corporation started collecting taxes from the assessment year 2012-13 onwards. Besides, the revenue records disclosed the village 'J' as a separate entity till 31-5-2011. Accordingly, the land sold by the assessee was agricultural land since the sale transaction had taken place prior to 31-5-2011. Further, it was found that at the time of sale, the population of the said village was 5,912 that was less than the statutory requirement of 10,000. Thus, the land which was sold by assessee was an agricultural land, not forming part of capital asset within the meaning of section 2(14).

REFERRED :

FAVOUR : In assessee's favour

A.Y. :

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