1. Leave granted.
2. This appeal is against the High Court's order rejecting the application made under Section 256(2) of the Income Tax Act to call for a reference on the following question of law, namely, Whether on the facts and in the circumstances of the case, the ITAT was right in law in upholding the order of the CIT(A) directing the ITO to exclude the capital gains arising from the transfer of agricultural lands from the assessment?
3. The High Court rejected the application in view of the decisions in Manubhai A. Sheth v. N.D. Nirgudkar and J. Raghottama Reddy v. ITO . However, an explanation has been inserted in Sub-section (1-A) of Section 2 of the Income Tax Act by the Finance Act, 1989 with retrospective effect from 1-4-1970 to overcome the effect of those decisions. This being so, the aforesaid question of law does arise out of the Tribunal's order.
4. Consequently, the appeal is allowed with the result that the application made under Section 256(2) of the Act for reference of the above question of law is allowed.