Income Tax - How do you measure Distance?
HOW do you measure the distance from a municipal town to an agricultural land? Is it as the crow flies or as a man walks?
"Agricultural Land" is excluded from the definition of capital asset as per section 2(14)(iii) of the Income-tax Act based, inter-alia, on its proximity to a municipality or cantonment board. The method of measuring the distance of the said land from the municipality, has given rise to considerable litigation. Although, the amendment by the Finance Act, 2013 w.e.f. 01.04.2014 prescribes the measurement of the distance to be taken aerially, ambiguity persists in respect of earlier periods.
The Nagpur Bench of the Bombay High Court in a case reported as has held that the amendment prescribing distance to be measured aerially, applies prospectively i.e. in relation to assessment year 2014-15 and subsequent assessment year. For the period prior to assessment year 2014-15, the High Court held that the distance between the municipal limit and the agricultural land is to be measured having regard to the shortest road distance.
The CBDT informs that the High Court judgement has been accepted and the disputed issue has not been further contested.
Board informs the field that being a settled issue, no appeals may henceforth be filed on this ground by the officers of the Department and appeals already filed, if any, on this issue before various Courts/Tribunals may be withdrawn/ not pressed upon.
CBDT Circular No.17/2015, Dated: October 06, 2015