Law:

Section:

Section 2(14) of the Income-tax Act, 1961 - Capital gains - Capital assets - Assessment year 1974-75 - Whether it is population of municipality, as a whole and not of any part area of it, that has to be taken into account for purpose of section 2(14)(iii)(a) to determine whether property in a particular area is exigible to capital gains - Held, yes - Whether section 2(14)(iii)(a) is applicable to rural area of Union Territory of Delhi, and capital gain arising on transfer of such agricultural land is chargeable to tax - Held, yes - Whether section 507 of DMC Act, 1957 has any bearing on applicability of section 2(14)(iii)(a) - Held, no FACTS On reference at the instance of the revenue, the issue arising for consideration was as to whether agricultural land in village Nangal Dewat, Delhi, constituted a capital asset within the meaning of section 2(14)( iii)(a) and was chargeable to capital gain tax on its transfer. Although the issue has been decided by the same High Court in respect of land situated in the same village in the cases CIT v. Pyare Lal [1998] 231 ITR 785 and CIT v. Deepchand (unreported), the assessee contended that these decisions needed reconsideration as the Court had not taken into consideration a vital fact that during the relevant period there was no notification under section 507 of DMC Act, 1957 declaring rural area of the village as forming part of urban area and that, therefore, the village continued to be rural area beyond the control of MCD and, thus, would not fall within the ambit of section 2(14)(iii )(a). HELD In the aforenoted decisions of the same High Court, it has been held that it is the population of the municipality, as a whole and not of any part area of it, that has to be taken into account for the purpose of section 2(14 )(iii)(a ) to determine whether property in a particular area is exigible to capital gains. Section 1(2) of DMC Act, read with section 2(10) thereof, provides that the DMC Act extends to entire Union Territory of Delhi, comprising rural and urban areas. Village Nangal Dewat, being within the Union Territory of Delhi, falls within the municipal area for the purpose of levy of capital gains tax under the…

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