COMMISSIONER OF INCOME-TAX Vs. GORJA DEVI LILA

JUDGEMENT

(1.) The Income-tax Appellate Tribunal has referred the following question of law arising out of its order in respect of the assessment year 1979-80 under Section 250(1) of the Income-tax Act, 1961.

(2.) The arguments of learned counsel have been heard. In the present matter, the assessee disclosed capital gains on sale of agricultural land within the municipal limits in the return submitted by him. Subsequently, in view of the decision of the Bombay High Court in the case of Manubhai A. Sheth v. N.D. Nirgudkar, Second ITO [1981] 128 ITR 87 holding that the levy, of capital gains tax on the sale of agricultural land is ultra vires the power of Parliament, the assessee revised the returns and claimed that the capital gains is not liable to tax, The Income-tax Officer did not accept the claim. The Appellate Assistant Commissioner upheld the order on the ground that the validity of the Income-tax Act cannot be examined in appeal. The Income-tax Appellate Tribunal, however, following the decision of the Bombay High Court held that the sale of agricultural land could not be subject to tax under the Income-tax Act.

(3.) We need not go in detail into the controversy raised in the present case because the Explanation to Section 2(1A) has been added by the Finance Act with retrospective effect from April 1, 1970. In view of the retrospective amendment as aforesaid, the view taken by the Bombay High Court cannot be relied upon. Therefore, we are of the opinion that the Income-tax Appellate Tribunal was not justified in holding that no capital gains tax is leviable on the sale of garden land situated within the municipal limits of a town in view of the Bombay High Court decision in Manubhai A. Sheth v. N.D. Nirgudkar [1981] 128 ITR 87.