COMMISSIONER OF INCOME TAX Vs. JITENDRA RAMNIKLAL

JUDGEMENT

(1.) THE question referred to us in this reference is one which does not pose any problem. Upon the mere facts being stated, the view taken by the Tribunal must be confirmed and the reference answered accordingly. The question is as to whether the agricultural land situate within the area specified by the Central Government by an appropriate notification not being more than 8 kms. from the local limits of any municipality falls within the definition of 'capital asset' as embodied in s.2(14) of the IT Act, 1961, as it stood at the material time in the asst. year 1972 73. Clause (b) of s.2(14)(iii) provides that agricultural land within any area within such distance would fall within the definition of 'capital asset', provided the Central Government, having regard to the extent of and scope for urbanisation of that area, and other relevant considerations, specifies that area by a notification in the Official Gazette. Thus, the municipality or cantonment is required to be specified in the notification before it can be said that the agricultural land situate beyond its limits but within 8 kms. thereof is 'capital asset'. In the present case, the lands in question were sold by a registered document executed on 30th March, 1971. The document was registered on 30th July, 1971.

(2.) THE transaction was, therefore, completed on 30th July, 1971. Till that date, no such notification as is envisaged by S. 2(14)(iii)(b) was issued, which was issued after a lapse of about one and half years on 6th Feb., 1973. Since the notification itself was not in existence, it cannot be said that the land so situate would fall within the definition of 'capital asset'. The following questions referred to us are, therefore, answered in the manner indicated hereunder : Questions Answer