Law:

Section:

Section 45, read with section 2(14), of the Income-tax Act, 1961 - Capital gains - Chargeable as - Assessment year 1968-69 - Assessee purchased certain land in 1940 - Land was cultivated till 1953 and thereafter in 1966, it was acquired by Government for purpose of construction of building - Assessee claimed that land in question was agricultural land and, therefore, capital gain arising out of compulsory acquisition could not be brought to tax under section 45 - Income-tax Officer rejected assessee's claim and taxed capital gains arising from acquisition of land under section 45 - AAC as well as Tribunal, confirmed assessment - On instant reference, it was seen that land in question was a house-site and not mere agricultural land - Besides, acquisition itself was for non agricultural purpose - Moreover, assessee had claimed compensation at rate at which no one would purchase agricultural land - Whether, in aforesaid circumstances, it could be concluded that land in question was not agricultural land and therefore, capital gain arising from acquisition was liable to be taxed under section 45 - Held, yes Section 5(1), read with section 2(m), of the Wealth-tax Act, 1957 - Exemption - Position prior to 1-4-1993 - Assessment year 1968-69 - Whether, on aforesaid facts, it could be said that land in question was capital asset, and consequently, it could not be exempt from tax under section 5(1), read with section 2(m) - Held, yes FACTS The assessee and his brother purchased certain lands in 1940. At the time of purchase, both these lands had been leased out to one 'P' who was cultivating them. The said 'P' continued to cultivate the lands as lessee under the assessee and his brother right upto 1953. After 1953, there was no cultivation of the assessee's land. His brother also did not cultivate his land, but built a house thereon. In 1966, the land was acquired by the Government, for the purpose of construction of a building. Not being satisfied with the compensation awarded in the acquisition proceedings, the assessee appealed in the city civil court and thereafter in the High Court, which ultimately decided the compensation. In the income-tax assessment proceedings…

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