The assessee sold agricultural land and claimed exemption in respect of capital gains. The Assessing Officer denied the exemption. The assessee filed revision application before the Commissioner under section 264 of the Act. Commissioner rejected the application on merit. The assessee filed writ before the High Court. Single judge held that the assessee should have filed an appeal before the Commissioner of Income tax (Appeals) under section 246A of the Act and dismissed the petition. On appeal the division bench held that the observations of Single Judge made with regard to the assessees herein exercising their option to file a revision under s. 264 and not file an appeal under s. 246A, cannot be sustained. Court also held that before applying s. 48, it is necessary to ascertain whether the subject matter of transfer, namely immovable property or land is agricultural land or not-On perusal of the order of the AO, it is found that the provisions of ss. 2(14)(ii) and 2(47) have not been applied to the facts of the case Although, there is a detailed discussion with regard to the nature of the transaction, as to whether it is a transfer or not, there is no application of mind as to whether the subject lands are capital asset or not. Revision petition was maintainable. Court set aside the order of the Commissioner and remanded to the concerned AO to consider the case of the assessee in accordance with law.  (AY. 2006-07)