Andhra HC (Pre-Telangana)
Commissioner Of Income-Tax vs Mohd. Khaleel on 27 November, 1990
Equivalent citations: [1991]188ITR449(AP)
Author: P. Venkatarama Reddi
Bench: P. Venkatarama Reddi
JUDGMENT A. Lakshmana Rao, J.
1. The Revenue has filed this application for referring the following question for the decision of this court :
"Whether, on the facts and in the circumstances of the case, the income-tax Appellate Tribunal is justified in law in holding that the land situated within a redus of 8 kms. form the end of the municipal limits of the notified municipality is not a capital asset within the meaning of the terms as contained in section 2(14) of the Income-tax Act?"
2. It is seen from the order of the Income-tax Appellate Tribunal that the Tribunal followed the decision of this court in J Raghottama Reddy v. ITO and dismissed the departmental appeals. In the said decision, this court held that " the mere amendment of the definition of 'capital asset' in section 2(14) is not sufficient to clothe Parliament with the power to tax agricultural income. "This court held that the profit or gain arising form the transfer of land used for agricultural purposes amounts to "agricultural income" and hence no income-tax can be levied. Learned standing counsel for the Income-tax Department has contended that, in order to get over the decision of this court, and Explanation has been added to section 2(1A) of the Income-tax Act by the Finance Act of 1989 with retrospective effect and, therefore, the judgment of this court which has been followed by the Tribunal no longer applies.
3. On a consideration of the aforementioner argument, we are satisfied that the question of law as stated below arises for the decision of this court though the question framed in the reference application is somewhat different :
"Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is justified in holding that the profit or gain arising out of sale of agricultural land of the assessee situate within a distance of 8 kms. from the limits of notified municipality or municipal corporation is agricultural income not chargeable to income-tax having regard to the Explanation to section 2(1A) of the Income-tax Act introduced by the Finance Act of 1989 with retrospective effect from April 1,1970?"
4. The income-tax cases are, accordingly, allowed No. costs.