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TMI Blog1992 (8) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... agricultural income. The Income-tax Officer did not accept the plea that the income is agricultural income within the meaning of the term as held by the Bombay High Court in Manubhai A. Sheth v. N. D. Nirgudkar, Second ITO [1981] 128 ITR 87 on the ground that the Department has not accepted the said judgment of the Bombay High Court and filed a special leave petition in the Supreme Court. On appeal, the Appellate Assistant Commissioner upheld the order of assessment passed by the Income-tax Officer. On further appeal to the Tribunal, it was held that the above question had to be considered in the light of the decision of the Bombay High Court cited supra (see [1981] 128 ITR 87) and for consideration of the issue whether the agricultural lan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M. J. Devda [1977] 109 ITR 484 (AP), the question that fell for consideration of our High Court was whether in directing reference under section 256(2) of the Income-tax Act, 1961, the High Court should take note of the amendment of law with retrospective effect. In that case, the Income-tax Officer imposed penalty under section 271(1)(a) of the Income-tax Act for delay in filing the return for the assessment year 1966-67. While computing the penalty, the tax paid under section 140A on self-assessment was not deducted by the Income-tax Officer. But the assessee got relief from the Appellate Assistant Commissioner and the Appellate Tribunal. The application of the Revenue for referring the question, as to whether the Tribunal was correct in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It was held that if the question had already been referred to the High Court, under sub-section (1) of section 256, at the time of answering the question, the High Court would be bound to apply the amended law because the court has to decide how the questions referred should be answered. This judgment of our High Court was dissented from by the Bombay High Court in CIT v. Mrs. Kamla S. Asrani [1991] 189 ITR 359. In that case, the Tribunal decided that the income derived by the assessee by way of capital gains from the sale of agricultural land would not be considered as income from agriculture and, therefore, not taxable as capital gains. In view of the law as it existed before the amendment, referred to above, the Tribunal declined to refe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld be the duty of the High Court to apply the law so amended if it applied. It further held that the application of the relevant law to a problem raised by reference before the High Court is not normally excluded merely because at the date when the Tribunal decided the question, the relevant law was not or could not be brought to its notice. From the above discussion, it follows that when a question is referred to the High Court for its opinion under sub-section (1) or sub-section (2) of section 256 of the Income-tax Act and, subsequently, the relevant provisions of the Act are amended retrospectively, it has to answer the question on the basis of the law as it exists after the amendment or deemed to have existed in view of the amendment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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