Commissioner of Income Tax vs Col. Guman Singh

On the application filed u/s 256(1) of the income tax Act, 1961 (''the Act''), the Tribunal has referred the following question : Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the amount received on account of sale of agricultural land situated within the Municipal limit of Bhilwara city was the assessee''s agriculture income and as such the same was exempt from tax under the income tax Act, 1961 ?

At the outset, the learned counsel for the assessee clearly admits that now the issue has been concluded by their Lordships in the case of Singhai Rakesh Kumar Vs. Union of India and Others, while considering the Explanation inserted to clause (1A) of section 2 by Finance Act, 1989, which made effective from 1-4-1970, after quoting the Explanation their Lordships observed as under:

The position, as a result, is that income arising from the transfer of agricultural land that falls within the terms of items (a) and (b) of sub-clause (iii) of clause (14) of section 2 falls outside the ambit of revenue derived from land and, therefore, outside the ambit of ''agricultural income''. Such income, therefore, is liable to capital gains tax chargeable u/s 45 of the 1961 Act. (p. 155)

Following the view taken by their Lordships in the aforementioned case, we answer the question in negative, i.e., in favour of the revenue and against the assessee. Reference so made stands disposed of accordingly.