The Assessing Officer has measured the 8 km from the municipal limit to the edge of my village, not to my field, and has measured it as the crow flies. Which is right?
For a year before assessment year 2014-15, neither. The Delhi High Court held that the distance under s.2(14)(iii)(b) had to be measured from the agricultural land itself to the outer limit of the municipality, by road and not by the straight line or aerial route, and dismissed the Revenue's appeal. The measuring-point holding — from the land, not from the village in which the land lies — still stands; the road-versus-aerial holding does not, because the Finance Act 2013 substituted item (b) with effect from assessment year 2014-15 so that the distance is now measured aerially.
Decided by the High Court (Dr. S. Muralidhar J and Vibhu Bakhru J) on 2015-09-14, reported as ITA 714/2015, High Court of Delhi at New Delhi. It bears on section 2(14), section 2(14)(iii), section 45, section 260A of the Income Tax Act 1961, in Capital Gains, Evidence & Burden of Proof and Capital Gains Exemptions matters.
Both halves of this case are useful, but they have to be used separately and the practitioner must know which half survives. The measuring-point holding is untouched by the amendment: item (b) still fixes the distance from the local limits of the municipality, and the Court's reasoning — endorsing the Tribunal's construction that 'in any area within such distance' means the LAND must be within that distance, not the village — is unaffected by the change from road to aerial measurement. That holding is worth a great deal, because a village can be several kilometres deep and an officer who measures to the near edge of the village will bring in land that is comfortably outside. The road-versus-aerial holding is superseded for assessment year 2014-15 onwards. Any authority in this line — this case, CIT v. Nitish Rameshchandra Chordia (Bom.), CIT v. Shabbir Hussain Pithawala (M.P.), CIT v. Lal Singh (P&H) — is now good only for earlier years, and citing it for a current-year assessment is the error that gets an appeal dismissed. The third thing the case is good for is evidence: the Court left standing a decision that preferred the assessee's certificate from a former Additional Director General, CPWD over the Tehsildar's and the municipal engineer's, so a properly qualified measurement certificate is worth obtaining.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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The assessment year was 2006-07. On 9 September 2005 the assessee sold 5.9625 acres at Village Ghata, Tehsil Sohna, District Gurgaon, and claimed the gain was not taxable because the land was agricultural land outside the definition of capital asset in s.2(14). He produced a patwari's certificate that in 2006 Ghata village was approximately 9 km from the Gurgaon Municipal Committee, and two architects' certificates putting the distance at 9.645 km. The Assessing Officer rejected these because the straight-line method had not been used, preferred certificates of the Tehsildar and of the Engineer of the Gurgaon Municipal Corporation putting the distance at 6.6 km, read the CBDT notification as requiring measurement by a straight line rather than by road, and added Rs 7,75,12,500 as long-term capital gains. The Commissioner (Appeals) rejected both sides' certificates, held that the distance under s.2(14)(iii)(b) has to be measured along the road and not as the crow flies, but held that it runs from the municipal limit to the AREA in which the land is situated, found the shortest road distance from the IFFCO junction to the northern outer limit of Ghata to be 7.17 km, and affirmed the addition. The Tribunal, by order dated 12 December 2014 in ITA No. 4733/Del/2011, held that the presumption that 'area' meant the village was without basis, that the land itself had to be within 8 km of the municipal limit, and on a certificate from a former Additional Director General, CPWD that the distance was 10.4 km held the land was outside clauses (a) and (b). The Revenue appealed under s.260A.
The appeal was dismissed and no substantial question of law was found to arise. For the purposes of s.2(14)(iii)(b) the distance had to be measured from the agricultural land in question to the outer limit of the municipality by road and not by the straight line or the aerial route, and it had to be measured from the land itself and not from the village in which the land is situated (paras 10 to 12).
The Court accepted the Tribunal's construction of the words 'in any area within such distance not being more than 8 kms. from the local limits of any municipality': what must lie within the prescribed distance is the land, not the village or the 'area' in some larger sense (paras 7 and 8). On the mode of measurement it followed the existing High Court line — CIT v. Lal Singh 325 ITR 588 (P&H), where the Punjab and Haryana High Court held there was no justification for preferring an Inspector's report that gave no khasra number and did not explain how the distance was measured over the Tehsildar's khasra-specific report; CIT v. Nitish Rameshchandra Chordia (2015) 57 taxmann.com 394 (Bom.), where the Bombay High Court held the distance is to be measured having regard to the shortest road distance and not as the crow flies; and CIT v. Shabbir Hussain Pithawala (2014) 226 Taxman 174 (M.P.), where the Madhya Pradesh High Court held the distance has to be measured in terms of the approach road and not by the straight line distance on a horizontal plane (para 9). Applying that line, the Court found no legal infirmity in the Tribunal's order (paras 10 and 11).
The distance has to be measured from the land in question itself and not from the village in which the land is situated.
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Handle my notice → Ask a CA on WhatsAppFor a year before assessment year 2014-15, neither. The Delhi High Court held that the distance under s.2(14)(iii)(b) had to be measured from the agricultural land itself to the outer limit of the municipality, by road and not by the straight line or aerial route, and dismissed the Revenue's appeal. The measuring-point holding — from the land, not from the village in which the land lies — still stands; the road-versus-aerial holding does not, because the Finance Act 2013 substituted item (b) with effect from assessment year 2014-15 so that the distance is now measured aerially. This was decided by the High Court (Dr. S. Muralidhar J and Vibhu Bakhru J) and bears on section 2(14), section 2(14)(iii), section 45, section 260A of the Income Tax Act 1961. It is reported as ITA 714/2015, High Court of Delhi at New Delhi. Both halves of this case are useful, but they have to be used separately and the practitioner must know which half survives. The measuring-point holding is untouched by the amendment: item (b) still fixes the distance from the local limits of the municipality, and the Court's reasoning — endorsing the Tribunal's construction that 'in any area within such distance' means the LAND must be within that distance, not the village — is unaffected by the change from road to aerial measurement. That holding is worth a great deal, because a village can be several kilometres deep and an officer who measures to the near edge of the village will bring in land that is comfortably outside. The road-versus-aerial holding is superseded for assessment year 2014-15 onwards. Any authority in this line — this case, CIT v. Nitish Rameshchandra Chordia (Bom.), CIT v. Shabbir Hussain Pithawala (M.P.), CIT v. Lal Singh (P&H) — is now good only for earlier years, and citing it for a current-year assessment is the error that gets an appeal dismissed. The third thing the case is good for is evidence: the Court left standing a decision that preferred the assessee's certificate from a former Additional Director General, CPWD over the Tehsildar's and the municipal engineer's, so a properly qualified measurement certificate is worth obtaining. If it applies to you, the first step is this: Fix the assessment year first. For assessment year 2014-15 and later, measure aerially — do not run the road argument. For earlier years, this case and the High Court line behind it govern and the road measurement applies.
The assessment year was 2006-07. On 9 September 2005 the assessee sold 5.9625 acres at Village Ghata, Tehsil Sohna, District Gurgaon, and claimed the gain was not taxable because the land was agricultural land outside the definition of capital asset in s.2(14). He produced a patwari's certificate that in 2006 Ghata village was approximately 9 km from the Gurgaon Municipal Committee, and two architects' certificates putting the distance at 9.645 km. The Assessing Officer rejected these because the straight-line method had not been used, preferred certificates of the Tehsildar and of the Engineer of the Gurgaon Municipal Corporation putting the distance at 6.6 km, read the CBDT notification as requiring measurement by a straight line rather than by road, and added Rs 7,75,12,500 as long-term capital gains. The Commissioner (Appeals) rejected both sides' certificates, held that the distance under s.2(14)(iii)(b) has to be measured along the road and not as the crow flies, but held that it runs from the municipal limit to the AREA in which the land is situated, found the shortest road distance from the IFFCO junction to the northern outer limit of Ghata to be 7.17 km, and affirmed the addition. The Tribunal, by order dated 12 December 2014 in ITA No. 4733/Del/2011, held that the presumption that 'area' meant the village was without basis, that the land itself had to be within 8 km of the municipal limit, and on a certificate from a former Additional Director General, CPWD that the distance was 10.4 km held the land was outside clauses (a) and (b). The Revenue appealed under s.260A. The matter was decided on 2015-09-14 by the High Court (Dr. S. Muralidhar J and Vibhu Bakhru J). On those facts the High Court held as follows. The appeal was dismissed and no substantial question of law was found to arise. For the purposes of s.2(14)(iii)(b) the distance had to be measured from the agricultural land in question to the outer limit of the municipality by road and not by the straight line or the aerial route, and it had to be measured from the land itself and not from the village in which the land is situated (paras 10 to 12).
The Court accepted the Tribunal's construction of the words 'in any area within such distance not being more than 8 kms. from the local limits of any municipality': what must lie within the prescribed distance is the land, not the village or the 'area' in some larger sense (paras 7 and 8). On the mode of measurement it followed the existing High Court line — CIT v. Lal Singh 325 ITR 588 (P&H), where the Punjab and Haryana High Court held there was no justification for preferring an Inspector's report that gave no khasra number and did not explain how the distance was measured over the Tehsildar's khasra-specific report; CIT v. Nitish Rameshchandra Chordia (2015) 57 taxmann.com 394 (Bom.), where the Bombay High Court held the distance is to be measured having regard to the shortest road distance and not as the crow flies; and CIT v. Shabbir Hussain Pithawala (2014) 226 Taxman 174 (M.P.), where the Madhya Pradesh High Court held the distance has to be measured in terms of the approach road and not by the straight line distance on a horizontal plane (para 9). Applying that line, the Court found no legal infirmity in the Tribunal's order (paras 10 and 11). In the words reproduced by the source cited on this page: "The distance has to be measured from the land in question itself and not from the village in which the land is situated." The decision followed or applied CIT v. Lal Singh 325 ITR 588 (P&H) — followed; CIT v. Nitish Rameshchandra Chordia (2015) 57 taxmann.com 394 (Bom.) — followed; CIT v. Shabbir Hussain Pithawala (2014) 226 Taxman 174 (M.P.) — followed.
It was decided by the High Court on 2015-09-14 and is reported as ITA 714/2015, High Court of Delhi at New Delhi. Binding within that High Court's jurisdiction. Persuasive elsewhere. A High Court decision binds the assessing officer, the Commissioner (Appeals) and the Income Tax Appellate Tribunal within that state, and is persuasive elsewhere. If your assessment is in a different jurisdiction, check whether your own High Court has taken the same view before relying on it. On section 2(14), section 2(14)(iii), section 45, section 260A, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The appeal was dismissed and no substantial question of law was found to arise. For the purposes of s.2(14)(iii)(b) the distance had to be measured from the agricultural land in question to the outer limit of the municipality by road and not by the straight line or the aerial route, and it had to be measured from the land itself and not from the village in which the land is situated (paras 10 to 12). It arises in Capital Gains, Evidence & Burden of Proof and Capital Gains Exemptions matters, on section 2(14), section 2(14)(iii), section 45, section 260A of the Income Tax Act 1961, and was decided by Dr. S. Muralidhar J and Vibhu Bakhru J. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Whatever the year, take the measuring point separately as its own ground: the distance runs from the land in question to the outer limit of the municipality, not from the village boundary. That ground survives the Finance Act 2013. Obtain a measurement certificate from a qualified source and have it identify the land by khasra or survey number. In CIT v. Lal Singh, discussed at para 9, the Tehsildar's khasra-specific report was preferred over an Inspector's report that gave no khasra number and did not explain how the distance was measured. Check the population limb as well as the distance limb: after the substitution, item (b) has three bands — 2 km where the municipality's population exceeds 10,000 but not 1 lakh, 6 km where it exceeds 1 lakh but not 10 lakh, and 8 km where it exceeds 10 lakh. A blanket '8 km' assertion by the officer is often wrong on its own terms. Do not treat the distance point as answering whether the land is agricultural at all. Character under the Sarifabibi line and situation under s.2(14)(iii) are two separate grounds and both have to be pleaded.
Superseded by amendment. Superseded IN PART, and only from assessment year 2014-15. The Finance Act 2013 substituted item (b) of s.2(14)(iii) with effect from 1 April 2014 so that the distance is 'measured aerially', with three population-linked bands of 2, 6 and 8 kilometres. The substituted text was read for this entry as reproduced in two judgments post-dating it — the Madras High Court in PCIT v. British Agro Products (India) Pvt. Ltd. (T.C.A. Nos. 499 and 500 of 2023, 9 May 2025), which sets out s.2(14)(iii) as it stood for assessment years 2017-18 and 2018-19, and the Bangalore Tribunal in M/s. Jayanti Botanical Gardens v. ITO (ITA No. 36/Bang/2020), which sets out the parallel words in the proviso to s.2(1A)(c). Both read 'measured aerially'. So the road-versus-aerial holding in this case, and the same holding in Chordia, Pithawala and Lal Singh, is confined to years up to assessment year 2013-14. What is NOT superseded is the separate holding that the distance runs from the land itself and not from the village in which it lies; nothing in the amendment touches that, and it remains available for current years. Later treatment of the judgment as such was not checked — indiankanoon's search endpoint returned HTTP 429 on the citator queries attempted. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
Read in full from the indiankanoon print view. The order is short and its paragraphs are numbered. Two separate phrase-fragment checks were run on the operative paragraph 10 and both returned the sentences word for word. The quoted extract from the Assessing Officer's order at para 5 is itself garbled in the source ('the PWD was of the view that the distance had to be calculated', a sentence spliced into a quotation about the CBDT notification); nothing in the holding turns on it. The report does not state the amount of the gain finally assessed. The judgment was delivered on 14 September 2015, before any High Court had had occasion to apply the substituted item (b), and the Court was not asked about and did not consider the Finance Act 2013 amendment. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The appeal was dismissed and no substantial question of law was found to arise. For the purposes of s.2(14)(iii)(b) the distance had to be measured from the agricultural land in question to the outer limit of the municipality by road and not by the straight line or the aerial route, and it had to be measured from the land itself and not from the village in which the land is situated (paras 10 to 12).
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