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Issues:
Whether the land in question was agricultural land and not liable to capital gains. Analysis: The case involves a reference from the revenue questioning the Tribunal's decision regarding the classification of the land in question as agricultural land exempt from capital gains tax. The assessee, an individual conducting business under a specific name, was previously a member of a joint Hindu family that owned the disputed land. Following a partial partition in 1959, the land came into the possession of the assessee, who later sold it to a housing society. The Income-tax Officer treated the land as a capital asset, resulting in capital gains tax liability. However, the Appellate Assistant Commissioner found that the land had been under continuous agricultural use and was not a capital asset as per the Income-tax Act, 1961, based on previous court decisions. The Tribunal also upheld this view, emphasizing the lack of evidence proving non-agricultural use of the land. Consequently, the High Court, referring to relevant precedents, concluded that the land's agricultural use over several years prior to the sale outweighed any surrounding development, leading to the classification of the land as agricultural. Therefore, the Court ruled in favor of the assessee, holding that the land was indeed agricultural and not subject to capital gains tax. In their judgment, the Court highlighted the significance of actual agricultural use at the time of sale, emphasizing that if the land is genuinely utilized for agricultural purposes without conflicting circumstances, it should be considered agricultural land, even if located near developed areas. The Court reiterated that the presumption of agricultural land status remains valid unless there is concrete evidence to the contrary. By referencing a previous decision, the Court reaffirmed that continuous agricultural use prior to the sale establishes the land's agricultural nature, irrespective of the method of sale or its proximity to urban development. Ultimately, based on the evidence and legal principles, the Court upheld the classification of the land as agricultural, thereby ruling in favor of the assessee and against the revenue. The Commissioner was directed to bear the costs of the reference.
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