Capital gains tax on sale of agricultural land is taxable where binding precedent takes that view.

Capital gains tax was held to be exigible on the sale of agricultural land where the binding Bench view of the Kerala High Court had already taken that contrary position. Although the assessee relied on the character of the land as agricultural and on an earlier Bombay High Court view, the Court followed its own binding precedent and treated the transfer as taxable under capital gains law. The issue was answered in the negative for the assessee and in favour of the Revenue.

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Issues: Whether capital gains tax was leviable on the sale of agricultural land.

Analysis: The assessee claimed that the land sold was agricultural land and, therefore, not liable to capital gains tax. The decision of the Appellate Tribunal had followed an earlier Bombay High Court view, but the binding Bench decision of the Court had taken the contrary view and held that capital gains tax on the sale of agricultural land is exigible.

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

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