K. Jagannatha Shetty, J.—This is a reference under section 256(1) of the Income Tax Act, 1961. The Tribunal has referred the following three questions :

"1. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the acquisition in this case consisted of two different transactions, viz., the acquisition of the land on the one hand and other assets on the other hand ?

(2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the excess realised on the trees and other assets on account of acquisition of the land constitute agricultural income and, therefore, exempt from taxation ?

(3) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the cost of acquisition of the land has to be taken as on April 1, 1970, when agricultural land came to be considered as assets within the meaning of section 2(14) of the Income Tax Act, 1961 ?"

2. For the assessment year 1974-75, the assessee filed a return declaring an income of Rs. 5,040 with a net agricultural income of Rs. 2,000. The Income Tax Officer noticed that the assessee had received a s