Smt. Chalasani Naga Ratna Kumari v. ITO

INCOME TAX ACT, 1961

--Capital asset--Agricultural landNo agricultural operations--Situated within 8 kms from the limits of GVMC--Agricultural land situated within 8 kms. from the limits of Greater Visakhapatnam Municipal Corporation (GVMC) was to be treated as capital asset on account of extension of boundary of VMC.--Assessee claimed certain piece of land situated beyond 8 kms. from the limits of Visakhapatnam Municipal Corporation (VMC), to be an agricultural land not being a capital asset. AO denied the claim on the ground that impugned piece of land was merely a vacant land not used for agricultural operation, therefore, same could not be treated as agricultural land. Held: Since impugned land was classified as agricultural land in revenue records and suitable for agricultural operations, whether or not agricultural operations were carried out by the assessee, the characteristics of land did not change from agricultural land to non-agricultural land. However, State Government vide Notification No. 937, dated 21-5-2005 had extended the boundary of VMC to newly incorporated boundary of Greater VMC (GVMC), distance was to be measured from the limits of GVMC. As impugned land was situated within 8 kms. from the limits of GVMC, same was to be treated as capital asset in spite of being classified as agricultural land.