TMI Blog1977 (9) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... res on the two Karthas referred to above under a deed 7th Sept., 1954 and since then the two assessees have been enjoying the properties as owners. The property consists of a building known as "Sankara Vijayam" in one portion and cattle shed, irrigation well, pump house, granery, stores and cottages on other portions and is of the total extent of 19 grounds 808 sq.ft. This property was sold by the two Karthas to Sri Krishna Tiles and Potteries (Madras) (P) Ltd. for Rs. 3,27,000 under a sale deed dt. 15th June, 1972, registered as document No. 3064 of 1972. 3. The ITO completed the assessments on two assessees by his orders dt. 15th Nov., 1974. While making the assessments he did not bring to tax the capital gains arising from the sale of the aforesaid property on the ground that the property sold was not a capital asset, being agricultural lands, except for the building "Sankara Vijayam" and that the gains arising to each of the two assessees from the sale of "Sankara Vijayam" was less than Rs. 5,000. Subsequently the CIT noticed that in view of the amendment of s. 2(14) of the IT Act, 1961 w.e.f. 1st April, 1970 and in view of the notification issued on 6th Feb., 1973, whereunde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14) was amended w.e.f. 1st April, 1970 by the introduction of sub-cl. (iii) therein, since the notification contemplated thereunder was issued by the Government of India only on 6th Feb., 1973, the gains arising from the sale of agricultural lands situate within a distance of 8 kms. from the Corporation limits etc. could be brought to tax only if such sales are made subsequent to 6th Feb., 1973 and that since in the insant case the sale was made on 16th Feb., 1972, gains arising to the assessee from such sales could not be brought to tax under s. 45 of the IT Act, 1961. In support of this contention he strongly relied upon the decision of the Supreme Court in the case of ITO, Alleppey vs. M.C. Ponnoose Ors. (1970) 75 ITR 174 (SC). He further contended that agricultural lands situate within a distance of 8 kms from the local limits of any municipality, corporation, etc. would become capital assets only on the issue of a notification by the Central Government and since such notification was issued only on 6th Feb., 1973, the land in question in the instant appeals was not a capital asset on the date of sale and since it was not a capital asset on the date of sale gains arising ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asset" has been defined in s. 2(14) of the IT Act, 1961 as follows: "(14) capital asset means property of any kind held by an assessee, whether or not connected with his business or profession, but does not include (i) any stock-in-trade, consumable stores or raw materials held for the purposes of his business or profession, (ii) Personal effects, that is to say, movable property (including wearing appeal and furniture, but excluding jewellery) held for personal use by the assessee or any member of his family dependent on him. (iii) agricultural land in India, not being land situate (iv) etc. etc. By the Finance Act of 1970 sub-cl. (iii) above was amended to read as follows : "(iii) agricultural land in India, not being land situate (a) in any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee, or by any other name) or a cantonment board and which has a population of not less than ten thousand according to the last preceding census of which the relevant figures have been published before the first day of the previous year; or (b) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Madras but within a distance of 8 kms. did not become capital assets on 1st April, 1970 but became capital asset only w.e.f. 6th Feb., 1973 on the issue of a notification on that date by the Central Government. 7. In order to appreciate these contentions it is necessary to understand the real nature of the notification issued by the Government, i.e. whether it is a piece of sub-ordinate legislation or a piece of conditional legislation. The necessity for the Parliament to delegate its legislative functions is now well recognised. This is because while the aim of all legislatures is to project their minds as far as possible into the future and to provide in terms as general as possible for all contingencies likely to arise in the application of law it is not always possible to provide specifically for all cases. Hence legislation has taken the form of conditional legislation leaving it to some specified authority to determine the circumstances in which the law shall be applied or to what its operation shall be extended or the particular class of persons or goods to which it shall be applied. It is now well established that the legislature must retain in its own hands the essential ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... connection reference may be made to the decision of the Supreme Court in the case of ITO, Allepey vs. M.C. Ponnoose Ors. The question which arose in that case concerned the effect of a notification issued by the Government of Kerala authorising Tahsildars in State Government Service to exercise the powers of a TRO under the IT Act, 1961. The notification in question was on 20th Aug., 1963. But it expressly provided that "This notification issued shall be deemed to have come into force on the 1st April, 1962". The notification was issued by the State Government in purported exercise of its powers under s. 2(44)(ii) of the IT Act, 1961. The relevant provision reads as under : "TRO" means (ii) any such officer empowered to effect recovery of areas of land revenue or other public demand under an law relating to land revenue or other public demand for the time being in force in the State as may be authorized by the State Government, by general or special notification in the Official Gazette, to exercise the powers of a TRO." The question before the Supreme Court was whether the State Government could invest the Tahsildar with the powers of a TRO under s. 2(44)(ii) of the IT Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f S.A.L. Narayan Row Another vs. Ishwarlal Bhagwandas and Anr. There the assessee had filed an estimate of income under s. 18A(2) of the IT Act, 1922. Subsequently he filed a revised estimate and paid tax accordingly. In the regular assessment made on 31st March, 1953 no interest was charged though it was found that the tax paid on the basis of the estimates of the assessee was less than 80 per cent of the tax determined. In 1956 upon objection being raised by the Departmental auditor, the ITO took action under s. 35 of the IT act, 1922 and passed an order rectifying the mistake on the ground that failure to charge interest under s. 18A(6) was a mistake apparent from the record. The CIT confirmed the order under s. 33A but modified the quantum of interest. He rejected the contention of the assessee that the ITO should be deemed to have waived interest under r. 48 of the IT Rules read with the fifth proviso to s. 18A(6) on the ground that the fifth proviso came into operation only when r. 48 was framed. It was held by the Supreme Court that the above view was wrong. The Court held that the amendment and the rules which came into operation later had in view of the retrospective ope ..... 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