Landmark Judgment :Distance from the metropolitan area isn’t relevant to classify a land as rural agricultural land

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Landmark Judgment :Distance from the metropolitan area isn’t relevant to classify a land as rural agricultural land

Kolkata ITAT in Naiyer Sultan v. ITO – [2019] 106 taxmann.com 191 has held that distance from the metropolitan area isn’t relevant to classify a land as rural agricultural land
Assessee had sold a land and gain arising from its sale was claimed to be exempt on ground that said land was an agricultural land and not a capital asset within meaning of section 2(14).
In support of this claim, a certificate issued by concerned Tehsildar was submitted by assessee showing that land sold was located 20 km. away from limit of Chennai Municipal Corporation.
Based on this certificate as well as provisions of section 2(14)(iii) claim of assessee for exemption was allowed by Assessing Officer (AO). However, subsequently, he reopened assessment on ground that on basis of information received in form of a communication from DDIT (Inv.) which stated that area of Chennai Metropolitan region was much larger than what was stated by Tehsildar in his report. Land sold by assessees was situated at about 3 kms. from Chennai Metropolitan area, thus, same was not rural agricultural land.
The Kolkata ITAT held that location of land from local limits of Chennai Municipal Corporation was relevant to decide as to whether said land was an agricultural land within meaning of clause (iii) of section 2(14) and distance of land from Chennai Metropolitan area was not relevant in this context. Therefore, impugned reopening of assessment was unjustified

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