Compensation for acquired agricultural land not taxable as business profit; new capital gains plea cannot be raised in reference.

Compensation received on compulsory acquisition of agricultural land could not be sustained as business profit where the Tribunal followed earlier authority holding that such excess receipt was not taxable on that footing. The Revenue also could not introduce, for the first time in reference proceedings under section 256(1), an alternative contention that the amount was taxable as capital gains, because that issue had not been raised before the Income-tax Officer, the appellate authority, or the Tribunal. The addition was therefore not restored, and the new capital gains argument was rejected as outside reference jurisdiction.

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Issues: Whether the addition made on account of compensation received for compulsory acquisition of agricultural land could be sustained as business profit, and whether the Revenue could raise for the first time in reference proceedings the alternative contention that the amount was taxable as capital gains.

Analysis: The Tribunal had deleted the addition by following the earlier decision holding that the excess amount received on acquisition of agricultural land was not taxable as business profit. The alternative contention that the receipt was liable to capital gains tax was not raised before the Income-tax Officer, the appellate authority, or the Tribunal, and the reference jurisdiction under section 256(1) could not be used to introduce a new question not raised, argued, or decided below.

Conclusion: The addition could not be restored as business profit, and the new capital gains contention was not entertainable in the reference; the Revenue failed.

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