TMI Blog1998 (4) TMI 66X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Income-tax Officer computed the capital gains arising in the case of the Hindu undivided family at Rs. 70,364 and in the case of the individual at Rs. 58,700 and levied tax thereon. Aggrieved by the above orders of the Income-tax Officer, the assessee filed appeals before the Appellate Assistant Commissioner, claiming that the lands sold were agricultural in nature and 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, the Central Government has no authority to levy tax on income arising on sale of agricultural lands and so, levy of tax on capital gains arising on the sale of agricultural land is not correct. The Appellate Assistant Commissioner uph ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ricultural income shall not be included in computing the total income of the previous year of any person. Section 2(14) defines "capital assets" by way of a definition with certain exclusions. Such exclusions are contained in sub-clauses (i) to (v) of the said section. Sub-clause (iii) of the said section which is relevant for our purpose reads as under : "(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---... (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the so-called agricultural land, either within the municipal area or a cantonment having a population of not less than ten thousand or in any area not more than eight kilometres of any municipality or cantonment board in relation to which the Central Government has, having regard to the extent of, and scope for, urbanisation of that area or other relevant considerations specified in that behalf by any notification in the Official Gazette. Without such factual matrix, it is not plausible or possible to decide as to whether the sale value of the so-called agricultural land is liable to be taxed, on capital gains. In this view of the matter, we are of the view that the Appellate Tribunal is right in directing the Income-tax Officer to re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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