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TMI Blog1985 (11) TMI 104X X X X Extracts X X X X X X X X Extracts X X X X ..... gh Court in Manu Bhai A. Sheth Ors. vs. Union of India (1981) 22 CTR (Bom) 41 : (1981) 128 ITR 87 (Bom). which is to the effect that no capital gains tax could be levied in respect of sale of agricultural lands falling within the municipal limits. Thereafter he referred to the decision of the Jaipur Bench of the Tribunal in the case of the assessee herself in which the following observations were made by the learned Bench: "We have given our careful consideration on the submissions. In our opinion, the assessee deserves to succeed. In view of the Bombay High Court decision holding that income from sale of agricultural lands is agricultural income and is not taxable. We follow the said decision of Bombay High Court decision in the case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 84 in the case of Mangala Industry decided on 25th May, 1985 wherein we had held that the capital gains are leviable on sales of agricultural land within the municipal limits. 3. On behalf of the assessee reference was made to a number of authorities. The basic decision in this behalf is the decision of the Bombay High Court in Manu Bhai A. Sheth wherein it was held that no capital gains tax is leviable in respect of sale of agricultural land within municipal limits which was actually used for agricultural purposes. Next reference was made to a decision of the Nagpur Bench of the same High Court in the case of CIT Vidarbha vs. Smt. Godawari Devi (1978) 113 ITR 589 (Bom) for the proposition that once the High Court has taken a decision str ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Bombay High Court had decided the issue in a writ petition. If the assessee wanted a similar decision, he could move the High Court by way of writ but the Tribunal had no jurisdiction to question the validity of the provision of the Act. 4. We have considered all these and some other authorities decided on the subject. The Bombay High Court decision does not actually hold that the amendment made in cl. (iii) of sub-s. (14) of s. 2 of the Finance Act, 1970 was Ultra vires. It rather decides that since the agricultural income could not be taxed by the Union Govt., capital gains on sale of agricultural land which were nothing but a consolidated income which would arise to the assessee from the agricultural use of such land in the forthcom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale being to exploit the commercial or non-agricultural use of the land, the same would attract the liability to capital gains. The authorities below have not considered the matter from this angle at all. The ITO has subjected the sale to capital gains tax on the short ground that it is situated within the municipal area. The AAC has deleted if following the decision of the Bombay High Court decision in Manu Bhai AA. Sheth Ors. vs. Union of India (1981) 22 CTR (Guj) 4 : (1981) 128 ITR 87 (Bom). According to that decision, no capital gains tax was leviable in respect of agricultural land which was sought to be sold as such. The proper order in the circumstances would be to ascertain the purpose for which the land was purchased by the ven ..... X X X X Extracts X X X X X X X X Extracts X X X X
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