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Issues:
1. Whether the lands sold by the assessee are entitled to exemption under section 2(14)(iii) of the Income-tax Act, 1961, as agricultural lands? Analysis: The case involved the assessment of a parcel of land sold by the assessee in Madras city and whether it qualified as agricultural land exempt from capital gains tax. The assessee argued that the land was agricultural based on the installation of a motor and pump set for irrigation purposes. However, the Income-tax Officer and appellate authorities found the evidence insufficient to prove agricultural use. The Tribunal concluded that the land was non-agricultural, as there was minimal electricity consumption inconsistent with agricultural activities on a large land parcel. The court emphasized that determining agricultural land status requires evaluating both facts and legal principles. The Tribunal's decision was upheld as they correctly focused on actual land use rather than the owner's intention alone. The location of the land within an urban area was also a point of contention. The Tribunal's argument that agricultural land cannot exist in urban areas was challenged by the court. The court acknowledged that urban land can be agricultural and stressed that each land's character should be assessed independently. While location is a relevant factor, it should not solely determine land classification. The court highlighted that convincing evidence is crucial to establish urban land as agricultural. Additionally, the Tribunal's consideration of the high sale price as indicative of non-agricultural land was critiqued. The court noted that price alone is not a reliable determinant of land character, as it can be influenced by various market factors. Despite disagreeing with some grounds of the Tribunal's decision, the court upheld the conclusion based on the absence of actual agricultural operations on the land. A comparison to a previous case involving urban agricultural land highlighted the importance of substantial evidence of agricultural use in determining land classification. Ultimately, the court ruled in favor of the Tribunal's decision, affirming that the land in question did not qualify as agricultural land exempt from capital gains tax. The court emphasized the significance of concrete evidence of agricultural activities to support claims of land classification, regardless of the land's location or sale price.
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