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2007] 292 ITR 387 [2007] 160 TAXMAN 211 (PUNJ. & HAR.) HIGH COURT OF PUNJAB AND HARYANA, CHANDIGARH BENCH Commissioner of Income-tax, Patiala v. Gurcharan Singh ADARSH KUMAR GOEL AND RAJESH BINDAL, JJ. IT REFERENCE NOS. 34 AND 35 OF 1990 JULY 4, 2006 Section 55, read with section 2(14), of the Income-tax Act, 1961 - Capital gains - Cost of acquisition - Assessment years 1974-75 and 1975-76 - Whether date of valuation of capital asset will be date when agricultural land became capital asset - Held, yes - Assessee sold some agricultural land during assessment years 1974-75 and 1975-76 and declared cost price thereof at rate of Rs. 25,000 per acre as on 28-2-1970 - Assessing Officer adopted cost as on 1-1-1954 at rate of Rs. 5,000 per acre and calculated capital gain accordingly - Assessee's case was that land in question, which was agricultural in nature, became capital asset only with effect from 28-2-1970, when amendment in section 2(14) was made - Whether Assessing Officer was justified in doing so - Held, no CASE REFERRED TO CIT v. Bai Shirinbai K. Kookka [1962] 46 ITR 86 (SC) [Para 3]. Dr. N.L. Sharda for the Respondent. JUDGMENT 1. In compliance to the direction of this Court in ITC Nos. 122 and 123 of 1982, dated 31-8-1988, the following question of law was referred to this Court by the Income-tax Appellate Tribunal, Chandigarh Bench, Chandigarh, arising out of order passed in ITA Nos. 1176-1177 of 1979 for the assessment years 1974-75 and 1975-76 : "Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in upholding the decision of the AAC that the cost of acquisition of the agricultural land should be ascertained as on 28-2-1970 for capital gain purposes and not as on 1-1-1954?" The brief facts are that the assessee sold some agricultural land during the assessment year in question and declared the cost price thereof at the rate of Rs. 25,000 per acre as on 28-2-1970. The Assessing Officer rejected this figure and adopted the cost as on 1-1-1954 at the rate of Rs. 5,000 per acre and calculated capital gain arising therefrom accordingly. In appeal filed by the assessee against the order of assessment the…

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