TaxTMI 
TaxTMI 
1988 (5) TMI 3
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....y belonged to an ancestor of the present karta as agricultural land. The land was in the possession of tenants and crops like wheat, gram and so on were grown on the said land by the tenants. The present karta wished to develop the land into a housing colony and took steps to evict the tenants. For this purpose, he filed a suit in the High Court and on September 24, 1957, that suit was decreed. The assessee got plans drawn up for the laying out of the said land as a housing colony in the year 1952 after the assessee was permitted to develop the land into a housing colony. In 1958, the Executive Engineer of Indore approved the revised lay out plan. The assessee then divided the land into plots and developed the land for making it suitable as building sites. The assessee also constructed some roads, sewages and water pipelines and spent a large amount for developing the land. This expenditure was incurred in the accounting period 1958-59 and the subsequent years. The assessee started leasing building sites to various parties from May, 1958. The first lease was granted by the assessee, demising plot No. 12 on May 24, 1958. That lease was for a period of 99 years. It was agreed under t....
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....e, the land sold by the assessee constituted a capital asset within the meaning of section 12B of the Indian Income-tax Act or was agricultural land as defined in section 2(4A) of the Act ? (2) Whether the transaction of lease effected by the assessee amounted to a transfer within the meaning of section 12B so as to attract liability for capital gains tax ?" The first contention urged by the assessee before the High Court was that no capital gains tax could be levied on the said transactions for the lease of the land as the land was agricultural land, and the second contention was that section 12B of the said Act did not come into play as only the leasehold rights in the said lands had been conveyed. As far as the first contention is concerned, it was conceded before the High Court that as the land was diverted to non-agricultural purposes several years ago, that contention could not be pressed and it was not disputed that the lands in question constituted a capital asset within the meaning of section 2(4A) of the said Act. In support of the second contention of the assessee, it was urged on behalf of the assessee that the word "transfer" under section 12B of the said Act mus....
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....ncestor of the assessee. It was submitted by him that the facts on record show that the land was granted by the Maharaja of Indore as inam to the concerned ancestor of the present karta and it was urged by him that in accordance with the usual practice, the Maharaja must have given it free. It was submitted that section 12B of the said Act is applicable only in the case of assets where there was a cost of acquisition. In support of this contention, Mr. Desai cited some, judgments including the decision of this court in CIT v. Srinivasa Setty [1981] 128 ITR 294, which was a case pertaining to goodwill. It was, on the other hand, submitted by Mr. Manchanda, that it was not open to Mr. Desai to raise this contention at all as it did not arise out of the decision of the Tribunal and was not reflected in the questions referred by the Tribunal, and particularly in the question in respect of which certificate of appeal has been granted. In our view, the submission of Mr. Manchanda must be upheld. The question in respect of which certificate of fitness has been granted clearly relates to one controversy, namely, whether the provisions of section 12B of the said Act can be brought into play....
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....y it nor does it arise on the judgment of the Tribunal. Merely because question of law might arise on the facts found by the Tribunal, this would not render it a question arising out of the decision of the Tribunal. Moreover, it is interesting to note that in the present case, there is no finding of fact that the inam was originally given without consideration, although we agree that it must almost certainly have been so. However, what the assessee sold was not agricultural land which was given to the assessee's ancestor under the inam, but land which was developed as housing sites on which development the assessee had spent considerable amounts of money. In our view, therefore, it is not open to Mr. Desai to raise this question at all. The next question which we have to consider is whether the provisions of section 12B of the said Act can be brought into play, although what was transferred was only leasehold interest in the lands in question. In this connection, it is significant that the leases are for a long period of 99 years and in all the transactions of lease, premium has been charged by the assessee for the grant of the lease concerned. In Traders and Miners Ltd. v. CIT ....