COMMISSIONER OF INCOME TAX Vs. SINGHAI RAKESH KUMAR

JUDGEMENT

(1.) THIS is an income-tax reference under S. 256(2) of the IT Act at the instance of the Revenue. The following question of law has been referred for answer by this Court :

(2.) BRIEF facts giving rise to this reference are that in the previous years relevant to the asst. yrs. 1981-82 and 1983-84, the assessee sold certain agricultural lands owned by him and situate within the Municipal limits of Bina and made certain profits which the ITO assessed as capital gains amounting to Rs. 40,500 and Rs. 18,780 respectively. On appeal, the CIT(A) upheld the order of the ITO. Thereafter, the assessee approached the Tribunal and the Tribunal held that the profits of the sale of agricultural lands were not capital gains within the meaning of provisions of S. 2(14) of the IT Act and the Tribunal relying on the decision in Manubhai A. Sheth vs. N.D. Nirgudkar, Second ITO (1981) 22 CTR (Bom) 41 : (1981) 128 ITR 87 (Bom) : TC 20R.604 of Bombay High Court reversed the finding of both the authorities below and decided in favour of the assessee. Hence, the Revenue approached the Tribunal for referring the case before this Court. Accordingly, the Tribunal has referred the aforesaid question of law for answer by this Court.

(3.) IT may also be relevant to mention here that a challenge to the Explanation inserted in S. 2(1A) of the IT Act, 1961 and the definition of 'agricultural income' in S. 2(14)(iii)(a) of the Act was also made in Writ Petition No. 31 of 1996 [Singhai Rakesh Kumar vs. Union of India & Ors. (1996) 134 CTR (MP) 280 and we have dismissed the writ petition upholding the validity of the provisions by order dt. 8th April, 1996.