TMI Blog1986 (9) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... wing sub-clause shall be substituted, namely: '(iii) agricultural land in India, not being land situate-... (b) in any area within such distance, not being more than eight kilometres, from the local limits of any municipality or cantonment board referred to in item (a), as the Central Government may, having regard to the extent of, and scope for, urbanisation of that area and other relevant considerations, specify in this behalf by notification in the Official Gazette'. " The object of this amendment is to bring within the term " capital asset agricultural land situated within any municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee or by any other name) or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lled upon to decide those it questions. The contention of the petitioner could hold the field provided was established that the land on which capital gains is being charged from the petitioner was being used for agricultural purposes but since it is found that it was not being used for agricultural purpose on the date on which it was transferred, the question of validity of section 2(14)(iii) would not arise. The brief facts of this case are these. The petitioner-assessee, who is an individual for the purpose of the Income-tax Act, purchased 9 bighas 11 biswas of land by means of a court auction in December, 1967, for Rs. 1,460. He sold 2 bighas 10 biswas. 11 biswas is for Rs. 40,000 on June 15, 1970. He further sold the balance land for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar [1981] 128 ITR 87 (Bom). This argument was repelled by the Tribunal. It held that in Manubhai A. Seth's case [1981] 128 ITR 87, the Bombay High Court laid down that " agricultural land " as occurring in section 2(14)(iii) should be so read down that it should not include land used for agricultural purposes. It was, therefore, held by the Tribunal to be necessary for applying the ratio of Manubhai A. Sheth's case [1981] 128 ITR 87 (Bom) that the land must have been used for agricultural purposes and the income or profit arising on sale of such land will partake of the character of agricultural income and, as such, would be exempt from income-tax under section 19(1) of the Income-tax Act. On the evidence, the Tribunal found that: " The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch, the income earned by the sale was not a " capital asset " within the meaning of section 2(14)(iii) of the Act. The Income-tax Appellate Tribunal while disposing of the appeal rejected his claim and recorded a finding that there was no material to show that the petitioner carried on any agricultural operations or incurred any expenditure in connection therewith since December, 1967. This decision of the Incometax Appellate Tribunal decides the controversy about the character of the land finally. Since, according to this decision, the land was not being used for agricultural purposes, the profit earned by its sale in June, 1970, was not agricultural income. Consequently, there is no occasion to decide the validity of section 2(14)(iii) of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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