Capital asset classification of acquired land upheld where Tribunal's factual finding that it was not agricultural land was left undisturbed.

Land acquired by the Government was treated as a capital asset because the assessee had earlier stated that it was not agricultural land, and the Tribunal relied on that statement, village records and surrounding facts to find that the land was not under cultivation. The High Court treated that conclusion as a pure finding of fact and held that, in reference jurisdiction under section 256(2), it could not reappreciate the evidence or substitute a different view on the character of the land. The reference was answered in favour of the Revenue, sustaining the capital gains assessment.

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Issues: Whether the land acquired by the Government was a capital asset within the meaning of section 2(4A) of the Indian Income-tax Act, 1922, and whether the resulting receipt was liable to capital gains tax.

Analysis: The assessee had earlier declared that the land was not agricultural land. The Tribunal relied on that declaration, the village records and the surrounding facts to hold that the land was not under cultivation and that it was a capital asset. The High Court noted that this was essentially a finding of fact. In a reference under section 256(2) of the Income-tax Act, such a factual finding could not be disturbed by reappreciating the evidence or substituting another view on the character of the land.

Conclusion: The question was answered in the affirmative. The land was held to be a capital asset within section 2(4A), and the answer was against the assessee and in favour of the Revenue.

Final Conclusion: The reference was answered by sustaining the Tribunal's factual finding that the acquired land was not agricultural land and that the capital gains assessment was justified.

Ratio Decidendi: In a reference jurisdiction, the High Court cannot disturb a Tribunal's pure finding of fact unless a question of law arises from that finding.

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