COMMISSIONER OF INCOME TAX Vs. RAMAIAH REDDY M

JUDGEMENT

(1.) THIS is a reference under s. 256(1) of the IT Act, 1961. The Tribunal has referred the following three questions :

(2.) FOR the asst. yr. 1974-75, the assessee filed a return declaring an income of Rs. 5,040 with a net agricultural income of Rs. 2,000. The ITO noticed that the assessee had received a sum of Rs. 2,92,263 as compensation for acquisition of his land and the assessee had 28/98 shares in the compensation awarded and, accordingly, he brought to tax, long-term capital gains derived by the assessee. While so determining the ITO has separately taken into consideration the compensation awarded for the land acquired and also for malkies and trees. He has taken into consideration the fair market value as on 1st Jan., 1954, at Rs. 3,000 per acre as against the claim of the assessee that it should be Rs. 10,000 per acre.

(3.) THE Tribunal held that that part of the compensation should be regarded as agricultural income, which should not be considered as capital gains.