Law: Income Tax Act, 1961

Section: 2,256,10

Income-tax--Capital gains ---Capital asset---Definition---Agricultural land----Definition excluding from exemption agricultural land situate within stipulated limits of Municipal Corporation---Levy of capital gains tax on transfer of agricultural land---No material available regarding situation of agricultural land--­Tribunal justified in directing Assessing Officer to re-do assessment. The assessee sold some lands and tire Income-tax Officer computed the capital gains and levied tax on the sale of lands. The Appellate Assistant Commissioner held that the Central Government had no authority to levy tax on income arising on sale of agricultural lands. The Revenue contended before the Tribunal that the lands were situated within the stipulated limits of the Municipal Corporation and hence the Appellate Assistant Commissioner was not correct in holding that capital gains arising on sale of such land was not liable to tax. The Tribunal set aside the assessment with a direction to re­do the assessment in accordance with law. On a reference: Held, since no material was available with regard to the situation of the agricultural lands it was not possible to decide whether the sale value was liable to capital gains tax. Accordingly, the Tribunal was justified in directing the Income-tax Officer to re-do the assessment in accordance with law. Manubhai A. Sheth v. N.D. Nirgudkar, Second ITO (1981) 128 ITR 87 (Bom.) ref. JUDGMENT S. JANARTHANAM, J.--The assessee---Sri P. Balasubramaniam-- is an assessee both in the status of a Hindu undivided family and an individual for the assessment year 1981-82. R.A. No. 73 of 1987 is in respect of the individual assessment, whereas R.A. No. 74 of 1987 is in respect of the Hindu undivided family. During the accounting year relevant to the assessment year, the assessee sold some lands, which resulted in capital gains. The Income-tax Officer computed the capital gains arising in the case of the Hindu undivided family at Rs.70,364 and in the case of the individual at Rs.58,700 and levied tax thereon. Aggrieved by the above orders of the Income-tax Officer, the assessee filed appeals before the Appellate Assistant Commissioner, claiming…

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