Capital gains

Capital asset — If land which is sold is situated in an area which is comprised within the jurisdiction of a municipality, etc, then the said land is squarely covered by cl (a) of s 2(14)(iii) and would fall in the category of “Capital assets” even if it is held to be agricultural land. However, the assessee would be entitled for an exemption under s 54B on the reinvestment made by him in the purchase of another agricultural land subject to fulfilment of certain conditions, as held by VisakhapatnamTrib in Krishna Murthy Vallu v ITO — In favour of: The revenue (partly).

The AO is not required to make a reference to the valuation officer if the assessee did not object before the AO for adopting the sales value determined for stamp duty purposes for computing the short-term capital gain as per the provisions of s 50C.

Decided on: 8 August 2011.