COMMISSIONER OF INCOME TAX Vs. KAZIAMUNNISA BEGUM
LAWS(APH)-1992-8-24
HIGH COURT OF ANDHRA PRADESH
Decided on August 26,1992

COMMISSIONER OF INCOME-TAX Appellant
VERSUS
KAZIAMUNNISA BEGUM Respondents


Cited Judgements :-

COMMISSIONER OF INCOME TAX VS. UMRAO SINGH [LAWS(DLH)-1997-7-47] [REFERRED]


JUDGEMENT

- (1.)The respondent-assessees are entitled to one-sixth share each in the Matruka lands of their father. Part of the agricultural land was sold by them during the accounting year relevant to the assessment year 1981-82. In response to notice under section 143(2), they returned certain income, but claimed that no capital gains tax is leviable as the income is agricultural income. The Income-tax Officer did not accept the plea that the income is agricultural income within the meaning of the term as held by the Bombay High Court in Manubhai A. Sheth v. N. D. Nirgudkar, Second ITO [1981] 128 ITR 87 on the ground that the Department has not accepted the said judgment of the Bombay High Court and filed a special leave petition in the Supreme Court. On appeal, the Appellate Assistant Commissioner upheld the order of assessment passed by the Income-tax Officer. On further appeal to the Tribunal, it was held that the above question had to be considered in the light of the decision of the Bombay High Court cited supra (see [1981] 128 ITR 87) and for consideration of the issue whether the agricultural land sold came within the purview of the rationale of that decision, the matter was remitted to the Income-tax Officer. The Tribunal thus allowed the appeal and remitted the matter to the Income-tax Officer for fresh consideration.
(2.)At the instance of the Revenue, the following question of law is referred to this court for its opinion :
"Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is correct in holding that capital gains tax was not leviable on the sale of agricultural lands used for agricultural purposes ?"

(3.)The above said question is squarely covered by the decision of the Bombay High Court cited supra (see [1981] 128 ITR 87) as well as the judgment of our High Court in J. Raghottama Reddy v. ITO [1988] 169 ITR 174. But before answering this reference, it is necessary to notice the subsequent events. The Income-tax Act has been amended by Parliament and an Explanation is added to sub-section (1A) of section 2 by the Finance Act, 1989, with retrospective effect from 1/04/1970, Admittedly, the amended definition of "agricultural income" was not before the Tribunal when it decided the appeals of the respondents-assessees on 31/03/1984. In these circumstances, should we answer the question of law in the light of the law as it existed when the Tribunal passed the order or in the light of the law as it is deemed to have existed in view of the amendment of the definition of "agricultural income" retrospectively ?
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