1998 (4) TMI 66

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....e assessee sold some lands, which resulted in capital gains. The Income-tax Officer computed the capital gains arising in the case of the Hindu undivided family at Rs. 70,364 and in the case of the individual at Rs. 58,700 and levied tax thereon. Aggrieved by the above orders of the Income-tax Officer, the assessee filed appeals before the Appellate Assistant Commissioner, claiming that the lands sold were agricultural in nature and in view of the decision of the Bombay High Court in the case of Manubhai A. Sheth v. N. D. Nirgudkar, Second ITO [1981] 128 ITR 87, the Central Government has no authority to levy tax on income arising on sale of agricultural lands and so, levy of tax on capital gains arising on the sale of agricultural la....

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.... in total income. According to sub-section (1) of section 10, the agricultural income shall not be included in computing the total income of the previous year of any person. Section 2(14) defines "capital assets" by way of a definition with certain exclusions. Such exclusions are contained in sub-clauses (i) to (v) of the said section. Sub-clause (iii) of the said section which is relevant for our purpose reads as under : "(14) 'Capital asset' means property of any kind held by an assessee, whether or not connected with his business or profession, but does not include---... (iii) agricultural land in India, not being land situate--- (a) in any area which is comprised within the jurisdiction of a municipality (whether known as a ....