By K. B. Bhujle Advocate
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CIT vs. Nitish Rameshchandra Chordia; 374 ITR 531 (Bom):
On 10/04/2007, the assessee purchased agricultural land and sold it on 15/04/2008. The assessee claimed the profit as exempt on the ground that the land sold was agricultural land and not a capital asset according to section 2(14) of the Income-tax Act, 1961, urging that the land was situated beyond 8 kms. of the municipal limits. The Assessing Officer rejected the claim holding that the distance must be measured by the shortest distance as the crow flies or the straight line method and not by the road distance. The Tribunal allowed the assesses claim.
On appeal by the Revenue, the Bombay High Court upheld the decision of the Tribunal and held as under:
“i) The amendment in the taxing statute, unless a different legislative intention is clearly expressed, shall operate prospectively. If the assessee has earned business income and not the agricultural income, section 11 of General Clauses Act, 1897, will prevail unless a different intention appears to the contrary. The relevant amendment prescribing that the distance to be counted must be aerial came into force w.e.f. 01/04/2014. The need for the amendment itself showed that in order to avoid any confusion, the exercise became necessary. This exercise to clear the confusion, therefore, showed that the benefit thereof must be given to the assessee.
ii) In such matters, when there is any doubt or confusion, the view in favour of the assessee needs to be adopted. Circular No. 3 of 2014, dated 24/01/2014, dealing with applicability expressly stipulates that it takes effect from 01/04/2014, and, therefore, prospectively applies in relation to the A. Y. 2014-15 and subsequent assessment years. Hence, the question whether prior to the A. Y. 2014-15 the authorities erred in computing the distance by road did not arise at all.”
