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Issues:
1. Taxation of income from sale of agricultural land as capital gains or business income. Analysis: The judgment involves four appeals related to two assessees with a common issue of taxing income from the sale of agricultural land. The assessees received land post-dissolution of a firm and sold part of it, leading to a dispute on whether it should be taxed as capital gains or business income. The Income Tax Officer (ITO) initially taxed the income as capital gains but later considered it as business income based on the assessees' activities. The Appellate Assistant Commissioner (AAC) set aside the assessment orders, directing the ITO to re-examine and determine the appropriate tax head. The Tribunal found the AAC's orders legally incorrect, emphasizing that the AAC cannot go beyond the case record and should not direct fresh material collection for enhancing assessments. The Tribunal reversed the AAC's orders, stating that the assessees' activities did not constitute a business, as they did not intend to carry out land development as a business venture. In determining the taxability of the income, the Tribunal analyzed the definition of capital asset under section 2(14) of the Income Tax Act. The assessees argued based on precedents like Sercon Pvt. Ltd. vs. CIT, but the Tribunal clarified that agricultural land within municipal limits and intended for non-agricultural use qualifies as a capital asset. As the assessees converted the land into plots for non-agricultural purposes, the income from the sale was deemed liable for capital gains tax. The Tribunal upheld the ITO's decision to tax the income as capital gains, rejecting the argument that the land sale constituted a business activity. The Tribunal quashed the AAC's orders in the first two appeals and modified the later two appeals to tax the sales as capital gains, partially allowing all appeals in this regard.
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