Rural agricultural land in Delhi treated as a capital asset, making transfer gains taxable under income tax law.

Rural agricultural land situated in the Union Territory of Delhi was held to fall within the definition of capital asset under section 2(14)(iii)(a) of the Income-tax Act, 1961. The Court applied its earlier ruling on the same provision and confirmed that capital gains arising from transfer of such rural agricultural land are chargeable to tax. The issue was answered in favour of the Revenue and against the assessees.

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Issues: Whether agricultural land situated in the rural area of the Union Territory of Delhi falls within the definition of capital asset under section 2(14)(iii)(a) of the Income-tax Act, 1961, and whether capital gains arising on its transfer are exigible to tax.

Analysis: The question turned on the applicability of section 2(14)(iii)(a) to rural agricultural land in the Union Territory of Delhi. The Court noted that the issue had already been considered in an earlier decision holding that the provision applies to such rural areas and that capital gain arising from transfer of such land is chargeable to tax.

Conclusion: The question was answered in the negative, in favour of the Revenue and against the assessees.

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