Current income-tax law governs agricultural income definition, making municipal land transfers taxable as capital gains.

Article 366(1) refers to the income-tax enactments in force when the definition is applied, not to a frozen 1950 or 1922 version of the law. On that construction, Parliament may define agricultural income under the operative income-tax statute, and the 1961 Act validly excludes agricultural land situated in municipal or specified urban areas from that concept. Income arising from the transfer of such land therefore falls outside the constitutional and statutory definition of agricultural income and is chargeable to capital gains tax; the challenge was rejected and the amendments were upheld.

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Issues: Whether capital gains arising from the transfer of agricultural land situated within municipal limits are excluded from capital gains tax as agricultural income, and whether the constitutional definition of agricultural income is fixed by the law as it stood in 1950 or by the income-tax law for the time being in force.

Analysis: Article 366(1) defines agricultural income by reference to the enactments relating to Indian income-tax, using the plural expression "enactments", which indicates a reference to the income-tax law then current and not a frozen incorporation of the 1922 Act. On that construction, Parliament is competent to define agricultural income under the operative income-tax statute, and the amended definitions in the 1961 Act validly exclude from agricultural income land situated in municipal or specified urban areas. Income arising from the transfer of such land therefore falls outside the constitutional and statutory concept of agricultural income and is chargeable under the capital gains provisions.

Conclusion: The challenge failed. Capital gains from the sale of agricultural land within the municipal limits were held taxable, and the amendments to the 1961 Act were upheld.

Final Conclusion: The appeals were dismissed and the assessee was held liable to capital gains tax on the sale of the lands in question.

Ratio Decidendi: A constitutional definition that refers generally to the enactments relating to a subject incorporates the law as it stands when applied, including subsequent amendments to the governing statute, and not a frozen historical version of the earlier enactment.

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