TMI Blog1984 (12) TMI 56X X X X Extracts X X X X X X X X Extracts X X X X ..... ther, on the facts and in the circumstances of the case, the Tribunal was right in holding that the excess realised on the trees and other assets on account of acquisition of the land constitute agricultural income and, therefore, exempt from taxation ? (3) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the cost of acquisition of the land has to be taken as on April 1, 1970, when agricultural land came to be considered as assets within the meaning of section 2(14) of the Income-tax Act, 1961 ? " For the assessment year 1974-75, the assessee filed a return declaring an income of Rs. 5,040 with a net agricultural income of Rs. 2,000. The Income-tax Officer noticed that the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conclusion that what was acquired was only the land and separate purchase was made of the trees and other plants with the result that it should be treated as two transactions instead of one. After holding that it was two transactions, the Tribunal considered the results as follows : " As far as the asset other than the land was concerned, the assessee had received a sum of Rs. 2,25,017 which includes cost of well, pump sets, etc., and trees and plants. " The Tribunal held that that part of the compensation should be regarded as agricultural income, which should not be considered as capital gains. Then the Tribunal alternatively examined the fair market value of the land in the following terms. The land in question was agricultural ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question. This legal formulation proceeded on the basis that there were two transactions in the acquisition, one pertaining to the land and the other to malkies thereon. This is wholly incorrect. The land was compulsorily acquired by the C.I.T.B., Bangalore. There were no two transactions. While making the award, the land and the tree growth were separately valued, but that does not mean that there were two transactions. The Tribunal, therefore, was not correct in drawing an inference that there were two transactions, one for acquiring the land and the other for the trees and malkies. We, therefore, answer the first question in the negative. This takes us to the second question. The Tribunal has held that the excess realised from the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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