1969 (5) TMI 15

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..... st March, 1960, respectively. The assessee is a limited company and the assessee owned certain agricultural lands and carried on certain agricultural operations. Under a registered instrument dated 23rd March, 1948, M/s. Ranchi Zamindari Ltd., which had owned certain agricultural lands in the District of Ranchi, settled a portion of these lands with the assessee-company. It had been recited in the said deed that the said M/s. Ranchi Zamindari Ltd. had extensive landed property in the District of Ranchi and since the said company was long desirous of developing the various resources of the said property for the purpose of increasing agricultural production and whereas the assessee had expressed a desire to take lease of the lands for the afo .....

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..... an appeal before the Appellate Assistant Commissioner who held that the income derived by the assessee from the lands was agricultural income. He, however, held that the document which had transferred these lands to the assessee was a deed of lease and the assessee's interest in the land was not ownership in the land but only the leasehold rights therein. He was, therefore, of the opinion that these amounts were liable to be taxed under section 12B of the Indian Income-tax Act, 1922. He, accordingly, upheld the order of the Income-tax Officer. There was a further appeal before the Tribunal. The Tribunal held that the amounts realised from the transfers were not assessable under section 12B of the Indian Income-tax Act, 1922. Under secti .....

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..... is agricultural income. The lease with which we are concerned had transferred to the assessee certain rights in perpetuity. It also appears that the lease had not reserved any right of re-entry to the lessor. These rights which the assessee was holding had been transferred by the assessee out of which the surplus amounts have been realised, which is the subject-matter of this reference. Therefore, under sub-clause (iii) of section 2(4A) of the Income-tax Act, 1922, this land would be excluded from the definition of " capital asset ". In view of the nature of the lease and the interest of the assessee in the said lease as indicated hereinbefore we are of the opinion that the transfer of these interests held by the assessee under the lease .....

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