Capital gains tax on agricultural land sale upheld where the statutory definition of capital asset applied retrospectively.

Sale consideration from agricultural land was held exigible to capital gains tax under the Income-tax Act because the Court applied its earlier binding rulings that agricultural land could fall within the statutory definition of "capital asset" then in force. The retrospective amendment made by section 3 of the Finance Act, 1989 to section 2(14) was treated as confirming that position. The reference was answered in favour of the Revenue and against the assessee.

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Issues: Whether consideration received on the sale of agricultural land is exigible to capital gains tax under the Income-tax Act.

Analysis: The land sold was agricultural land, but the Court followed its earlier binding decisions holding that agricultural land could still attract capital gains tax under the statutory definition then applicable. The retrospective amendment made by section 3 of the Finance Act, 1989 to section 2(14) of the Income-tax Act was also relied upon as confirming the taxability of capital gains arising from the sale of agricultural land.

Conclusion: The consideration received on sale of agricultural land is exigible to capital gains tax and the reference was answered against the assessee and in favour of the Revenue.

Ratio Decidendi: Agricultural land was held to be taxable for capital gains under the applicable definition of capital asset, and the retrospective amendment to that definition confirmed such taxability.

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