Law: Income Tax Act, 1961

Section: 256

(a) Income-tax-----Reference---Law applicable to assessment---Amendment of law with retrospective effect after decision of Tribunal---High Court must apply law as amended---Indian Income Tax Act, 1961, S. 256. When a question is referred to the High Court for its opinion under subsection (1) or subsection (2) of section 256 of the Income Tax Act, 1961, and subsequently the relevant provisions of the Act are amended retrospectively it has to answer the question on the basis of law as it exists after the amendment or is deemed to have existed in view of the amendment, but not on the basis of law as it existed when the Tribunal passed the order out of which the reference arose. CIT (Addl.) v. M.J. Devida (1977) 109 ITR 484 (AP) and Sterling Foods v. CIT (1991) 190 ITR 275 (Kar.) fol. (b) Income-tax--- ----Capital gains---Agricultural income---Law applicable to assessment---Income derived from sale -of agricultural land referred to in section 2(14) (iii)---Not agricultural income---Capital gains arising on sale of such lands is assessable---Indian Income Tax Act, 1961, Ss. 2(1-A), 2(14)(iii) & 45. Section 2(1-A) of the Income Tax Act, 1961, was amended by the Finance Act, 1989, with retrospective effect from April 1, 1970. By the amendment an Explanation was added to section 2(1-A). A perusal of the Explanation makes it clear that the Explanation is in the nature of a declaration. It declares that the revenue derived from land shall not include and shall be deemed never to have included any income arising from the transfer of any land referred to in item (a) or item (b) of subsection (iii) of clause (14) of section 2. Consequently, income derived from the sale of such agricultural lands cannot be treated as agricultural income. Capital gain arising on sale of such agricultural lands is taxable under section 45. Raghottama Reddy (J.) v. I.T.O. (1988) 169 ITR 174 (AP) held no longer good law. Manubhai A. Sheth v. N.D. Nirgudkar, Second I.T.O. (1981) 128 ITR 87 (Bom.) and CIT v. Mrs. Kamla S. Asrani (1991) 189ITR 359 (Bom.) ref. JUDGMENT The respondent-assessee are entitled to one-sixth share each in the Matruka lands of their father. Part of the agricultural land…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492