Law:

Section:

Section 4 of the Income-tax Act, 1961-Capital or revenue receipt-Assessee, doing colonising business, developed a certain colony-To solve sewage problem of this colony it built a septic tank nearby-For discharge of effluent water from such tank, it bought another land near said colony-This land was used by assessee for agricultural purposes and it never developed said farmland into residential plots-Subsequently, government acquired said farmland and assessee received compensation-Whether surplus realised by assessee by way of excess of compensation over cost of land was a capital receipt in assessee's hand and not its business profits-Held, on facts, yes Section 2(1) of the Indian Income-tax Act, 1922 [corresponding to section 2(1) of the Income-tax Act, 1961]-Agricultural income-Whether receipt arising from sale of agricultural land is not "income" within meaning of section 2(1) and hence cannot be treated as an "agricultural income"-Held, yes Section 254 of the Income-tax Act, 1961-Appellate tribunal-Orders of-For assessment year 1961-62, tribunal took a certain receipt by assessee to be agricultural income exempt from tax-Whether, on same facts and circumstances, it was legally undesirable and improper for tribunal to take a different view for next assessment year-Held, on facts, no Facts The assessee, engaged in the colonising business, used to purchase lands, mostly agricultural, and develop and sell them as residential plots. During the period 1950-56, it developed a colony RG. Subsequently, between 26-10-1956 and 20-4-1957, it purchased more lands near its colony. Part of this land was later on acquired by the Government pursuant to notification and the assessee was paid compensation during the accounting year ending 30-9-1960. After adjusting the cost of said land, the assessee showed a sum of Rs. 1,65,660 as profits from this transaction in its books. During the assessment proceedings for the assessment year 1961-62, the assessee claimed that this sum should not be included while computing its income from business inasmuch as it represented capital receipt/profit by sale of agricultural land and as such was not taxable. The assessee explained that it…

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