A.S. Guna Shenoy (HUF) vs Commissioner of Income Tax and Others

K.S. Paripoornan, J.—The petitioner states that he is the "karta" of an undivided family of five members. In this case, we are concerned with certain aspects with regard to the Income Tax assessment on the petitioner for the assessment year 1972-73. During the previous year, about 2 acres and 3 1/5 cents of land belonging to the Hindu undivided family was acquired by the Government under the Land Acquisition Act for the purpose of the Cochin Shipyard. The short question that was mooted by the petitioner before the authorities below was that the lands acquired are agricultural lands and any capital gains arising therefrom could not be brought to tax. The petitioner largely relied upon the decision of the Bombay High Court, reported in Manubhai A. Sheth and others Vs. N.D. Nirgudkar, 2nd Income Tax Officer, A-II Ward, Bombay and another, in support of his plea.

We heard counsel for the petitioner, Mr. C. M. Devan, as also counsel for the respondent-Revenue. At the time of hearing it was agreed that a Bench of this court in CIT v. T. K. Sarala Devi [1987] 167 ITR 136 dissented from the decision of the Bombay High Court and has held that capital gains tax is exigible even in the case of agricultural lands. The decision in Sarala Devi''s case [1987] 167 ITR 136 was followed subsequently in more decisions than one ; the latest decision is reported in COMMISSIONER OF Income Tax Vs. GLORY PAUL., , wherein, besides the above decision in Sarala Devi''s case [1987] 167 ITR 136, the amendment made by Section 3 of the Finance Act, 1989, to Section 2(14) of the Income Tax Act, 1961, was also referred to, to show that the plea that no capital gains tax is leviable on the acquisition of agricultural lands is without substance.

In the light of the above Bench decisions of this court, the original petition is without merit. It is dismissed. There shall be no order as to costs.