COMMISSIONER OF INCOME-TAX VS L. BUSAPPA KUMAR
2001 P T D 1066
[243 I T R 853]
[Supreme Court of India]
Present: J.S. Verma and S.P. Kurdukar, JJ
COMMISSIONER OF INCOME‑TAX
Versus
L. BUSAPPA KUMAR
Civil Appeal No. 596 of 1997, decided on 31/01/1997.
(Appeal by Special Leave from the judgment and order, dated January 17, 1989, of the Andhra Pradesh High Court in Income‑tax Case No. 74 of 1989).
Income-tax---
‑‑‑‑Reference‑‑‑Capital gains ‑‑‑Transer of agricultural lands‑‑‑Law applicable‑‑‑Effect of amendment of S.2(1A) with retrospective effect from 1‑4‑1970‑‑Question whether capital gains could be levied on gains arising on transfer of agricultural land‑-‑Question of law‑‑‑Indian Income Tax Act, 1961, Ss. 2(IA), 45 & 256.
Held, that the High Court rejected the application to direct reference in view of the decisions of Manubhai A. Sheth v. N.D. Nirgudkar, Second ITO (1981) 128 ITR 87 (Born.) and J. Raghottama Reddy v. ITO (1988) 169 ITR 174 (AP). However, an Explanation had been inserted in clause (IA) of section 2 of the Income Tax Act, 1961, by the Finance Act, 1989, with retrospective effect from April 1, 1970, to overcome the effect of those decisions. This being so, the question whether the Income‑tax Appellate Tribunal was right in law in upholding the order of the Commissioner of Income‑tax (Appeals) directing the Income‑tax Officer to exclude the capital gains arising from the transfer of agricultural lands from the assessment had to be referred to the High Court.
Manubhai A. Sheth v. N.D. Nirgudkar, Second ITO (1981) 128 ITR 87 (Bom.) and J. Raghottama Reddy v. ITO (1988) 169 ITR 174 (AP) ref.
B.S. Ahuja and B. Krishna Prasad, Advocates for Appellant.
A.V. Rangam and A. Ranganadhan, Advocates for Respondent.
ORDER
Leave granted.
This appeal is against the High Court's order rejecting the application made under section 256(2) of the Income Tax Act, 1961 to call for a reference on the following question of law, namely:‑‑‑
"Whether, on the facts and circumstances of the case, the Income tax Appellate Tribunal was right in law in upholding the order of the Commissioner of Income‑tax (Appeals) directing the Income‑tax Officer to exclude the capital gains arising from the transfer of agricultural lands from the assessment?"
The High Court rejected the application in view of the decisions in Manubhai A. Sheth v. N.D. Nirgudkar, Second ITO (1981) 128 ITR 87 (Born.) and Raghottama Reddy v. ITO (1988) 169 ITR 174 (AP). However, an Explanation has been inserted in clause (1A) of section 2 of the Income‑tax Act by the Finance Act, 1989, with retrospective effect from April 1, 1970, to overcome the effect of those decisions.
This being so, the aforesaid question of law does arise out of the Tribunal's order.
Consequently, the appeal is allowed with the result that the application made under section 256(2) of the Act reference of the above question of law is allowed.
M.B.A./437/FC Reference answered.