HON’BLE SUPREME COURT · SOURCE-REVIEWED NOTE
Singh Hai Rakesh Kumar v. Union of India and Others
Civil Appeal Nos. 15619-15620 of 1996
[2000] Supp. 5 SCR 111 ·
Income-tax Act, 1961: sections 2(1A), 2(14)(iii) and 45 · Constitution of India: article 366(1), Seventh Schedule entries 46 of List II and 82 of List I
Sources & disclosures includedDownload original judgment / order
Three-judge bench; judgment delivered by S. P. Bharucha, J. · S. P. Bharucha, J. · Doraiswamy Raju, J. · Ruma Pal, J.
Assessment years: 1981-82, 1983-84
01 · Facts of the case
For assessment years 1981-82 and 1983-84, the assessee sold agricultural lands situated within the municipal limits of Bina. The Income-tax Officer charged capital gains and the first appellate authority agreed. The Tribunal held the profit was not capital gains, but the Madhya Pradesh High Court rejected that view and also dismissed the assessee's constitutional challenge to the relevant definitions (SCR pp.111-113; PDF pp.1-3).
02 · Discussion by the Hon’ble Court
Article 366(1) defines agricultural income by general reference to enactments relating to Indian income-tax, not by freezing the 1922 Act's definition as at commencement of the Constitution. Parliament could therefore define agricultural income in the income-tax enactment then in force. Income from transferring land within the specified municipal or notified areas fell outside the relevant definition of agricultural income and within the capital-asset regime. The challenged amendments to sections 2(1A) and 2(14) were within Parliament's competence (SCR pp.113-116; PDF pp.3-6).
Source: Primary judgment: constitutional and statutory analysis
03 · Judicial decision
The Court upheld the High Court. The gains from the land sales within Bina municipal limits were chargeable to capital gains tax under section 45, and the appeals were dismissed with costs (SCR p.116; PDF p.6).
Source: Primary judgment: decision
04 · Outcome / in whose favour
In favour of Revenue. The assessee remained liable to capital gains tax on the two urban agricultural-land sales, and the constitutional challenge failed.
Source: Primary judgment: outcome
05 · AKHB REVIEW POINT
AKHB analysis: do not treat agricultural use alone as conclusive for capital-gains exclusion. Identify the assessment year, the land's precise municipal or notified location, the population and distance rule then applicable, and the statutory definition in force. The constitutional holding supports Parliament's definitional competence, but present taxability still depends on current facts and text.
Source & verification
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