Capital gains tax on sale of urban agricultural land confirmed after retrospective amendment brought such land within the charging provision.

The Kerala High Court treated consideration from the sale of urban agricultural land as liable to capital gains tax. It followed its earlier Division Bench view and relied on the retrospective amendment to section 2(14) of the Income-tax Act, 1961 by section 3 of the Finance Act, 1989, which brought such land within the charging provision. On that basis, the taxability of these transactions was held to be clear, and the issue was answered in favour of the Revenue.

---

---

Issues: Whether the consideration received on the sale of urban agricultural lands is exigible to capital gains tax.

Analysis: The Court followed its earlier Division Bench view that capital gains tax is exigible on the sale of agricultural lands, and noted that the later statutory amendment to section 2(14) of the Income-tax Act, 1961, by section 3 of the Finance Act, 1989, was given retrospective effect, making the taxability of such transactions clear.

Conclusion: The consideration received on the sale of urban agricultural lands is exigible to capital gains tax; the question was answered in the affirmative against the assessee and in favour of the Revenue.

Ratio Decidendi: Where the statute, as retrospectively amended, brings agricultural land within the charging provision for capital gains, consideration from the sale of such land is taxable as capital gains.

---