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TMI Blog1991 (6) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... unal was justified in law in holding that no capital gains arose on the transfer of plots of land, building and tubewells therein by the assessee ? 3. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in upholding the order of the Commissioner of Income-tax (Appeals) deleting the capital gains of Rs. 15,49,581 on the transfer of plots of land, building and tubewells therein included by the Income-tax Officer in the total income of the assessee-company ?" We reframe the second and third questions as follows : "2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that no capital gains arose on the transfer of plots of land by the assessee ? 3. Whet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appeals) and contended that the lands sold were all along utilised for purposes of cultivation of sugarcane. It was pointed out that the land revenue had been debited in the respective accounts. Reliance was placed on the decision of the Calcutta High Court in the case of Sutton and Sons [1981] 127 ITR 57. It was further contended that the Income-tax Officer was wrong in coming to the conclusion that capital gains arose on the transfer of agricultural lands and structures thereon. A copy of the assessment order passed by the Agricultural Incometax Officer, Champaran, Motihari, was produced before the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals), after considering the submissions made before him, held that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the lands so transferred were agricultural lands The departmental representative submitted that, after the amendment of section 2(14) of the Income-tax Act, 1961, with effect from April 1, 1970, the agricultural land situated in municipal or other urban areas came under the definition of "capital assets". The learned departmental representative urged that the Commissioner of Income-tax (Appeals) had not examined the fact whether the agricultural lands were situated within the municipal or urban or notified area. The learned departmental representative further submitted that, in view of the aforesaid fact, the order of the Commissioner of Income-tax (Appeals) on this point should not be sustained. Learned counsel for the assessee, on the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gest that the assessee produced several varieties of crops on the disputed lands and derived income out of the sale proceeds of those crops. It was an undisputed fact that the assessee was debiting the land revenue paid by it in its accounts regularly. In this view of the matter, it can be held that the lands so transferred by the assessee during the relevant previous year were agricultural lands. The learned departmental representative, however, argued that the amended provision of section 2(14) which came into force with effect from April 1, 1970, had application to the facts of the case. However, we find that no material could be brought by the Income-tax Officer on record from which it can be inferred that the agricultural lands were si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pect of the land decisive. Section 2(14)(iii) which deals with the agricultural land has been amended by the Finance Act, 1970, with effect from the assessment year 1970-71. Before the said amendment, agricultural income arising from the transfer of agricultural land was exempt from tax but, by the amendment, the capital asset being the agricultural land which is situated in the urban areas specified in the sub-clause or in their vicinity notified by the Central Government would come within the purview of the capital gains tax. It was, therefore, absolutely necessary for the Tribunal to find out whether having regard to the amendment effected in section 2(14)(iii), the land in dispute would come within the mischief of the aforesaid amendmen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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