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TMI Blog1997 (9) TMI 68X X X X Extracts X X X X X X X X Extracts X X X X ..... , Amritsar (hereinafter referred to as "the Tribunal"), has referred the following question of law under section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), to this court for its opinion : "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in holding that capital gains arising on the transfer of agricultural lands si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,900. During the course of assessment proceedings, the assessee, through a letter, claimed that capital gains of Rs. 53,435 was not liable to tax. The Income-tax Officer did not agree with this contention and held that transfer of agricultural land within the municipal limits would attract capital gains and, therefore, is chargeable to income-tax. The assessee filed an appeal before the Appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore this court. Mr. Sanjay Bansal, learned counsel appearing for the Revenue, relying upon a judgment of this court in Tuhi Ram v. Land Acquisition Collector [1993] 199 ITR 490, contended that the sale of agricultural land situated within the municipal limits would come within the ambit of a capital asset and thus transfer of the same would attract capital gains tax. We find force in the sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with his business or profession. It, however, does not include agricultural land in India except the class of lands included in items (a) and (b) of section 2(14)(iii). In order to qualify for such exemption it is not enough that the land was once agricultural land. It must be agricultural land even at the time of sale or transfer. By the Finance Act, 1970, with effect from the assessment year 197 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arising from the transfer of any land referred to in item (a) or item (b) of sub-clause (iii) of clause (14) of section 2. The Explanation completely renders ineffective the ratio of the decision in Manubhai A. Sheth v. N. D. Nirgudkar [1981] 128 ITR 87 (Bom)." Following the view taken by this court in Tuhi Ram's case [1993] 199 ITR 490, it is held that the Tribunal was not right in law in hold ..... X X X X Extracts X X X X X X X X Extracts X X X X
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