Law: Income Tax Act, 1961

Section: 2,2(IA),45,256.

Income-tax---Reference---Capital gains ---Transer of agricultural lands---Law applicable---Effect of amendment of S.2(1A) with retrospective effect from 1-4-1970--Question whether capital gains could be levied on gains arising on transfer of agricultural land---Question of law---Indian Income Tax Act, 1961, Ss. 2(IA), 45 & 256. Held, that the High Court rejected the application to direct reference in view of the decisions of Manubhai A. Sheth v. N.D. Nirgudkar, Second ITO (1981) 128 ITR 87 (Born.) and J. Raghottama Reddy v. ITO (1988) 169 ITR 174 (AP). However, an Explanation had been inserted in clause (IA) of section 2 of the Income Tax Act, 1961, by the Finance Act, 1989, with retrospective effect from April 1, 1970, to overcome the effect of those decisions. This being so, the question whether the Income-tax Appellate Tribunal was right in law in upholding the order of the Commissioner of Income-tax (Appeals) directing the Income-tax Officer to exclude the capital gains arising from the transfer of agricultural lands from the assessment had to be referred to the High Court. Manubhai A. Sheth v. N.D. Nirgudkar, Second ITO (1981) 128 ITR 87 (Bom.) and J. Raghottama Reddy v. ITO (1988) 169 ITR 174 (AP) ref. ORDER Leave granted. This appeal is against the High Court's order rejecting the application made…

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