TMI Blog1992 (9) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... at all ? 2. Whether, on the facts and in the circumstances of the case, the decision of the Bombay High Court in the case of Manubhai A. Sheth relied upon by the Tribunal applies to this case ? " The relevant assessment year is 1967-68. The assessee, which is an association of persons, purchased a plot of agricultural land on October 1, 1966, for Rs. 42,085 which was sold by it to one Shri Shivaji Griha Nirman Sahakari Sanstha, Nagpur, on January 6, 1967, for Rs. 84,759. The assessee claimed exemption in respect of the profits arising out of this deal on the ground that the subject-matter of the transaction being agricultural land, the profits therefrom are not taxable under the Income-tax Act, 1961. 4 The Income-tax Officer rejected t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was the only transaction of purchase and sale of land by the assessee during the whole year. The assessee had not been selling and purchasing lands in the course of its business. Admittedly, it is an isolated transaction of purchase and sale of agricultural land by the assessee. There is also no past record of the assessee having carried on any such business. The question that arises for consideration is, whether, in such a situation, the profits from the sale of agricultural land in question can be subjected to tax under the Income-tax Act. The matter can be examined from three angles. Firstly, whether the income from sale of " agricultural land " can be termed as agricultural income within the meaning of the term as defined in clause 2( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thus, the expression any revenue' would mean income of every kind. The word 'revenue' is not used as a synonym for the word 'rent' but in contra-distinction to it and to cover all income from land, which is used for agricultural purposes, other than rent and income of the types specified in sub-clauses (b) and (c) of section 2(1). The source of capital gains on the transfer of agriculture land is the same as the source of the other types of agricultural income referred to in section 2(1), namely, the land, and it is a gain which has sprung up or arisen from land like any other gain or income referred to in section 2(1)(a). " It was, therefore, held that (headnote):" capital gains arising from sale of land situate in India, which land is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... include " agricultural land in India ". As a result, such land did not form part of capital assets and no capital gain was leviable on the transfer of such land. Besides income derived from transfer of such lands cannot be held to be agricultural income within the meaning of section 2(1) of the Act consequent to the insertion of the Explanation referred to above as it has been done with effect from the assessment year 1970-71. So far as the present assessment is concerned which relates to the assessment year 1967-68, these amendments are not material and the law as laid down by the Bombay High Court in Manubhai A. Sheth v. N. D. Nirgudhar [1981] 128 ITR 87 still holds the field. The Tribunal was, therefore, right in holding that the income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sons was also contradicted by the assessee. The case of the assessee was that all its members were agriculturists and they never indulged in any such purchase or sale of agricultural land. The Tribunal did not accept the contention of the Revenue in this regard. In that view of the matter, there being no finding in regard to the carrying on of the business by the assessee of sale and purchase of the land and the land being stock-in-trade, the contention of the Revenue that the income from sale of land amounted to profits and gains of business cannot be sustained. In view of the aforesaid factual position, it is not necessary to go into an elaborate discussion on the point as to when a transaction will fall within the definition of business ..... X X X X Extracts X X X X X X X X Extracts X X X X
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