Section 115JB dispute required hearing on legal grounds before rejection of the Revenue's challenge to book-profit treatment.

The Tribunal was required to hear and determine the Revenue's purely legal grounds on the applicability of section 115JB to profit from sale of rural agricultural land, rather than reject them at the threshold. The High Court noted that the Tribunal had gone beyond mere non-admission and had also commented on the merits, even though the dispute turned on a legal question that should have been adjudicated after hearing both sides. The Tribunal's refusal to admit and decide the grounds was therefore held unjustified, and the issue was answered in favour of the appellant.

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Issues: Whether the Tribunal was justified in refusing to admit and adjudicate the Revenue's legal grounds concerning the applicability of section 115JB of the Income-tax Act, 1961.

Analysis: The dispute concerned a legal challenge to the Tribunal's refusal to entertain grounds on the treatment of profit from the sale of rural agricultural land for computation of book profit under section 115JB. The Court noted that the Tribunal had not merely declined to admit the additional grounds but had also expressed a view on the merits. Since the question was purely legal, the parties ought to have been heard on the issue before it was rejected. The Court therefore found that the Tribunal should have examined the legality of the grounds instead of declining to entertain them at the threshold.

Conclusion: The Tribunal was not justified in refusing to admit and decide the Revenue's legal grounds on section 115JB, and the answer was rendered in favour of the appellant.

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