COMMISSIONER OF INCOME TAX Vs. KRISHNARJUNAN R

JUDGEMENT

(1.) THE question that is required to be considered by us really needs reading of the text of Section 143 of the Income-tax Act, 1961. Although the following two questions expect an answer, what survives is only question No. 1. THE two questions are as follows :

(2.) QUESTION No. 2 relating to receipts as a result of the sale of urban agricultural land, whether can be treated as capital gains or not, gets covered in more than one way. The decision of this court in CIT v. T. K. Sarala Devi [1987] 167 ITR 136 considers the basic question as regards the source of the amount. If the source of the amount is the realisation of the ca'pital assets -- agricultural land -- it cannot be considered as anything other than capital gains and would not be income derived from agricultural land and, therefore, not chargeable under the Act. This court by its decision in CITv. T. K. Sarala Devi [1987] 167 ITR 136 has correctly found out the fallacy that when the land is sold, the sale proceeds cannot be understood to be revenue but capital, obviously because it cannot be understood as income derived from the land as the land itself is realised when it is sold.

(3.) QUESTION No. 1 requires introduction of the factual matrix. The assessment year is 1981-82. The assessee came to be assessed by resort to summary procedure under Section 143(1) of the Act by the Income-tax Officer by order dated April 30, 1983, on the basis of a total income of Rs. 33,700. At this time in the return a transaction of sale of the land admeasuring 1 acre and 15.325 cents sold at Rs. 42,250 was shown in the return, with an explanatory note below thereunder that no capital gains arose in view of the judgment of the Bombay High Court in Manubhai A. Sheth v. N. D. Nirgudkar, Second JTO [1981] 128 ITR 87. The assessment under Section 143(1) of the Act came to be completed, as stated above.