Retrospective amendment overrides earlier land-tax precedent, confirming capital gains tax exposure on garden land sales.

Retrospective insertion of the Explanation to section 2(1A) by the Finance Act, with effect from 1 April 1970, displaced the Bombay High Court view relied on by the assessee and followed by the Tribunal. In consequence, that earlier authority could not govern the taxability of garden land situated within municipal limits. The stated conclusion was that the Tribunal was not justified in holding that no capital gains tax was leviable on the sale of the garden land.

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Issues: Whether capital gains tax was leviable on the sale of garden land situated within municipal limits in view of the Bombay High Court decision relied upon by the assessee.

Analysis: The retrospective insertion of the Explanation to section 2(1A) by the Finance Act with effect from 1 April 1970 displaced the basis of the Bombay High Court view that had been followed by the Tribunal. In light of the retrospective amendment, the earlier decision could not govern the taxability of the land in question.

Conclusion: The Tribunal was not justified in holding that no capital gains tax was leviable on the sale of the garden land.

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