Law:

Section:

Section 2(14) of the Income-tax Act, 1961 - Capital asset - Assessment year 1972-73 - Assessee sold agricultural land situated within 8 kilometers of municipal limits by document executed on 30-03-1971 and registered on 30-07-1971 - Whether since notification issued under section 2(14) covering land in question was not in existence at relevant time, said land could not be treated as capital asset and, therefore, surplus realised out of sale of said land could not be charged to capital gains - Held, yes Circulars and Notification: Notification No. 8.0.77(B) dated 06-02-1973. FACTS The assessee sold land in question by a registered document executed on 30-03-1971 which was registered on 30-07-1971. The Tribunal held that the said land could not be treated as non-agricultural land only because it was within eight kilometres of the municipal limits as the land was sold before the notification dated 06-02-1973, covering the land in question and that the surplus realised out of the sale of the land could not be charged to capital gains On reference: HELD Since the said notification itself was not in existence, it could not be said that the land so situated would fall within the definition of "capital asset". Therefore, the Tribunal was right in law in holding that the land was not a capital asset or that the land could not be treated as non-agricultural land only because it was within eight kilometres of the municipal limits as the land was sold on 30-07-1971, i.e. before the notification dated 06-02-1973, covering the land in question; and that the surplus realised out of the sale of the land could not be charged to capital gains. Note: The reference was decided in favour of the assessee. B.R. Shah and R.P. Bhatt for the Applicant. J.P. Shah for the Respondent. JUDGMENT M.P. Thakkar, J.-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 Income-tax Appellate 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…

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