(Appeals by special leave from the orders, dated August 24, 1988 of the Punjab and Haryana High Court in I.T.C. Nos.53, 73 and 72 of 1984).

Income‑tax‑‑‑

‑‑‑‑Reference‑‑‑Question of law‑‑‑Capital gains‑‑‑Agricultural land‑‑‑Included with effect from February 28, 1970‑‑‑Sale of Agricultural land‑‑ Computation of capital gains‑‑‑Whether assessee has option to substitute value as on February 28, 1970, for cost of acquisition‑‑‑Question of law‑‑ Indian Income Tax Act, 1961, Ss.2(1.4), 45, 55(2) & 256.

The question whether the Appellate Tribunal was right in‑law in holding that where capital gains arising from the sale of agricultural land is to be taxed, the assessee has the option to substitute its cost as on February 28, 1970, which was the date from which agricultural lands became a capital asset, is a question of law.

M.L. Verma, Senior Advocate (Asha G. Nair, Shankar Divali and S.K. Dwivedi, Advocates with him) for Appellant.

Shekhar Prit Jha, Advocate for Respondents.

ORDER

The High Court of Punjab and Haryana declined to call for a reference, at the behest of the Revenue, of the following question:

"Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that in case capital gains arising from the sale of agricultural land are to be taxed, the assessee has the option to substitute its cost as on February 28, 1970, the date from which the agricultural lands, due to an amendment in law, became an asset?"

It did so because in its view no referable question of law arose

It is difficult to agree with the High Court for it seems to us clear that the question is a question of law and requires the consideration of the High Court.

Accordingly, the appeals are allowed. The orders under appeal are set aside. The Tribunal shall refer to the High Court for its consideration the question abovequoted, having drawn up a statement of case.

No order as to costs.

M.B.A./1040/FC Appeals allowed.