SERCON PRIVATE LIMITED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) IN this reference made at the instance of the assessee, the following question has been referred to us for our opinio :

(2.) IN the instant case, we are concerned with assessment year 1970 -71, the relevant period of account being the financial year 1969 -70. The assessee before us is a limited company and it was formed on April 1, 1968, by amalgamation of two private limited companies, namely, Western India Prospecting Syndicate Private Ltd., and Cotton and Cloth Private Ltd. The Western Indian Prospecting Syndicate Private Ltd., was formed on May 1, 1920, under the Indian Companies Act, 1913, and on July 10, 1947, Western India Prospecting Syndicate Private Ltd., had purchased 4,847 square yards of land at the rate of Rs. 46 per square yard and the total purchase price which was paid was Rs. 2,18,220. On August 14, 1969, the assessee -company which had got the land at the time of the amalgamation sold that plot of land for Rs. 13,08,690 and this means that the price was about Rs. 276 per square yard. The assessee contended that the land was agricultural land at the time when it was sold and, therefore, it was not liable to capital gains tax under the provisions of the I.T. Act, 1961.

(3.) THUS it is clear that in view of the positions under the Bombay Land Revenue Code, even for the purpose of the Bombay Rent Act, 1947, the land was treated as agricultural land being put to agricultural user because user could only be changed from agricultural to non -agricultural by a specific order made by the Collector under s. 65 of the Bombay Land Revenue Code. The following statement of the laws was set to by us after considering the decisions, in Chandravati Atmaram case : [1978]114ITR302(Guj)