KALPAKA OIL MILLS Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) PURSUANT to the direction issued by this court in O.P. No. 615 of 1977E, the Income-tax Appellate Tribunal, Cochin Bench, has referred the following questions to us for our opinion :

(2.) WAS the Appellate Tribunal justified in law in holding that the value of the plot of 5'3380 acres of land of the assessee compulsorily acquired by the Government can be assessed to capital gains ? "

(3.) ON July 30, 1971, the Income-tax Officer issued a notice under Section 148 of the Income-tax Act, calling upon the assessee to file the return of its income for the assessment year 1964-65. This notice disclosed that income said to have escaped assessment represented the " Capital gains " arising from the acquisition of the aforesaid property of the assessee. The assessee filed the return of income declaring a total loss of Rs. 1,92,233. In the return, the assessee had shown 50 cents of the land acquired as non-agricultural land and the remaining land as agricultural land. For the purpose of computing the " capital gains ", the assessee thus had taken into account only the value of about 50 cents of land and the buildings thereon because, according to it, that alone can be treated as " capital assets " within the meaning of Section 2(14)(iii) of the Income-tax Act, 1961 (for short "the Act").