TMI Blog1985 (6) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... ai. During Samvat year 2026 there was a partial partition of the Hindu undivided family of Dhanvantrai, whereafter the sub-plots, including sub-plots Nos. 353/B/5, 353/B/22 and 353/B/33, were held by Dhanvantrai in his individual capacity. As before, these continued to be agricultural lands, and, according to the petitioners, used for agricultural purposes. During the previous year relevant to the assessment year 1967-68, some of these sub-plots were sold. There was no difference between the sub-plots thus sold and the remaining sub-plots. Dhanvantrai contended that no capital gains arose on the transfer of the sub-plots sold, as the same were agricultural lands. By its order dated May 10, 1974, the Income-tax Appellate Tribunal upheld this contention. Department's application under section 256(1) of the Act for reference on the question whether the lands were agricultural lands was rejected by the Income-tax Appellate Tribunal. Application to this court under section 256(2) of the Act suffered the same fate. A petition was filed for leave to appeal to the Supreme Court, but the same was subsequently withdrawn. During the previous year relevant to the assessment year 1971-72, D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it had no jurisdiction to go into the constitutional validity of the impugned provisions. As regards the Department's appeal, the Tribunal confirmed the finding of the Appellate Assistant Commissioner that the land was agricultural land. In doing so, the Tribunal followed its own previous orders in similar matters relating to the lands similarly situated and forming part of the same original land in the same area. In the result, the appeal of the assessee as also that of the Department were both dismissed. Subsequently, by its judgment in Manubhai A. Sheth v. N. D. Nirgudkar, II ITO [1981] 128 ITR 87, a Division Bench of this court held, inter alia, that tax on profits and gains arising from agricultural land was not a tax on land but a tax on income and by amending the definition of " capital asset " in section 2(14)(iii) of the Act, Parliament cannot be said to have encroached on the legislative field of the States. It was further held that in amending the definition retrospectively, Parliament cannot be said to have also amended directly or indirectly the definition of " agricultural income " and consequently the retrospective amendment of section 2(14)(iii) of the Act cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eptember, 1981, by way of the present petition under article 226 of the Constitution. Mr. Dastur, learned counsel for the petitioners, initially contended that the aforesaid impugned amended provisions of the Act were unconstitutional and void as being beyond the legislative competence of Parliament. This contention, however, no longer survives in view of the Division Bench ruling to the contrary in Manubhai Sheth's case [1981] 128 ITR 87 (Bom). Though against the said ruling, leave has been granted to both parties to file appeal to the Supreme Court both under articles 132(1) and 133(1) of the Constitution, the said ruling binds this court at least as at this stage albeit subject to the final decision of the Supreme Court. Realising this, learned counsel, Mr. Dastur, found it difficult to pursue this aspect of constitutional validity any further. It was then submitted by the learned counsel that even if the impugned provisions are constitutional and valid, the petitioners are entitled to the benefit of the legal position laid down in Manubhai Sheth's case [1981] 128 ITR 87 (Bom). Reading down the said provisions, it is, in the light of Sheth's ruling, obvious that tax was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase decided by the Tribunal and the effect of Sheth's ([1981] 128 ITR 87 (Bom)), ruling thereon. In the process, they would then have gone to their lawyers, taken advice, held consultations and ultimately come to a decision to file this petition under article 226 of the Constitution which was done in September, 1981. And the court then hearing admissions has, in the exercise of its own judicial discretion, not rejected it (which it could have if it had found the petition suffering from unwarranted delay) but entertained and admitted the same in 1981 itself. In all the circumstances, there is no justification for this court to even so now shut its doors against the petitioners and deprive them at the very threshold of a remedy well adopted and well deserved. This would be the position apart from authorities. And, as will presently be seen, even on the cited authorities, the ground of delay fails. Learned counsel Mr. Dhanuka for the respondents invited this court's attention to a ruling of the Supreme Court in Tilokchand Motichand v. H.B. Munshi, AIR 1970 SC 898 ; 25 STC 289 (SC), wherein it was, inter alia, observed that the court will not inquire into belated and stale claims or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... D. Cawasji Co. v. State of Mysore, AIR 1975 SC 81.3; [1975] 1 SCC 636. It was therein held that the finding in Tilokchand's case, AIR 1970 SC 898; 25 STC 289 being that the payments there were not under a mistake of law, the said ruling had no relevance to a case of payment under a mistake of law. In the light of Sheth's ruling [1981] 128 ITR 87 (Bom), there would, in the present case, be no difficulty in holding that the payment here made, if found to be in respect of capital gains arising out of transfer of agricultural land used for agricultural purpose, was under a mistake of law. The elaborate and detailed consideration running into several pages in Sheth's ruling [1981] 128 ITR 87 (Bom), is not on facts but on the legal position ultimately leading to what, according to the Division Bench, could be the correct law on the point. If the payment here made is found and held to be under mistake of law, then the observations of the Supreme Court in Cawasji's case [1975] 1 SCC 636 ; AIR 1975 SC 813, 815, certainly help the petitioners : ".. ...... where a suit will lie to recover moneys paid under a mistake of law, a writ petition for refund of tax within the period of limitatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estion whether the agricultural land therein involved was used for agricultural purposes. In the present case, though there is a categorical finding that the land was agricultural land, there is no finding on the second aspect, viz., whether the said land was used for agricultural purposes. Therefore, continued the learned counsel, without a finding on the said equally relevant second aspect, the petitioners would not be here and now entitled to the relief claimed. In this context, learned counsel, Mr. Dastur, contended that if such is the Department's stand, then the matter may be sent back to the Tribunal for considering the question or issue whether the land was used for agricultural purposes. Now, on the first aspect, we do have a finding of fact recorded by the authorities, including the Tribunal, that the land here was an agricultural land. Indeed, such a finding has been recorded by the income-tax authorities not only in this case but also in a number of other companion cases qua lands or plots or sub-plots forming part of the same original land as here. And the same has not been challenged by the Department. Indeed, even in the present case, the finding of the Tribunal th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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