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Issues Involved:
1. Whether the lands in question were agricultural lands. 2. Whether the Tribunal was justified in law in holding that the lands were agricultural lands. Issue-wise Detailed Analysis: 1. Whether the lands in question were agricultural lands: The lands in question were purchased in November 1937 and February 1947 by the assessee, her sister-in-law, and her two brothers-in-law. These lands were situated in village Shekhpur Khanpur, now known as Navrangpura, and measured 8,191 sq. yds. In May 1945, the lands were included in Town Planning Scheme No. 3 of Ellisbridge area in Ahmedabad City, resulting in their classification into final plots Nos. 280 and 281 by the Town Planning Authorities. The lands were sold to Shriji Co-operative Housing Society on November 10, 1966, for Rs. 5,26,412, and the capital gains were calculated at Rs. 4,10,387. The Income Tax Officer (ITO) treated the lands as non-agricultural, resulting in taxable capital gains for each joint owner. However, the Appellate Assistant Commissioner (AAC) accepted the appeal, holding the lands as agricultural and thus non-taxable for capital gains. The Department's appeal to the Tribunal was dismissed, with the Tribunal relying on previous court decisions to conclude that the lands were agricultural. 2. Whether the Tribunal was justified in law in holding that the lands were agricultural lands: The Tribunal's decision was based on several principles laid down by the Supreme Court and the Gujarat High Court regarding the classification of agricultural lands. The Supreme Court in CWT v. Officer-in-Charge (Court of Wards) [1976] 105 ITR 133 (SC) emphasized that the determination of land's character should be based on its actual condition and intended use, not merely its potential for agricultural use. The Supreme Court also noted that classification in revenue records as agricultural land creates a rebuttable presumption of its character. The Gujarat High Court in CIT v. Siddarth J. Desai [1983] 139 ITR 628 (Guj) identified four categories of land use relevant to determining agricultural status: land lying idle, land used for agriculture, land permanently ceased from agricultural use, and land used for agriculture as a stop-gap arrangement. The court emphasized that the classification of land in revenue records, actual use, duration of use, and other factors must be considered in totality. In this case, the Tribunal found that the lands were classified as agricultural in revenue records, agricultural operations were carried out up to the relevant assessment year, and there was no indication of a change in character except for the sale. The lands were not sub-plotted and were sold as a single unit, further supporting their agricultural status. The Tribunal also noted the payment to a tenant for possession, indicating agricultural use. The Revenue's arguments about the land's inclusion in the Town Planning Scheme, surrounding construction, and valuation based on yardage were insufficient to rebut the presumption of agricultural use established by the Tribunal's findings. Previous decisions, such as Yaswanti R. Bhatt v. CWT [1978] 114 ITR 318 (Guj) and CIT v. Sarifabibi Mohmed Ibrahim [1982] 136 ITR 621 (Guj), were distinguished based on different factual circumstances, such as lack of agricultural use at relevant times. Conclusion: The High Court concluded that the Tribunal was justified in holding the lands as agricultural based on the balanced consideration of diverse factors and affirmed the Tribunal's decision. The reference was answered in favor of the assessee, and the Commissioner was directed to pay costs to the assessee.
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