9911796707
|
Home
Issues Involved:
1. Whether the land in question was agricultural land. 2. The applicability of Section 45 of the Income-tax Act, 1961, and the definition of "capital asset". 3. The relevance of the land's use and surrounding development. 4. The impact of permissions granted under the Bombay Tenancy and Agricultural Lands Act. Issue-wise Detailed Analysis: 1. Whether the land in question was agricultural land: The main issue was whether the land sold by the assessee was agricultural land. The land had been used for agricultural purposes until the date of the sale on April 7, 1967. The Tribunal held that the land was agricultural based on its continuous use for agricultural activities, despite being within municipal limits and part of a proposed town planning scheme. The Tribunal also considered Circular No. 2(WT) of 1968 issued by the Central Board of Direct Taxes, which applied to this case. 2. The applicability of Section 45 of the Income-tax Act, 1961, and the definition of "capital asset": Section 45 of the Income-tax Act, 1961, charges to income-tax any profits or gains arising from the transfer of a capital asset. However, "capital asset" as defined under Section 2(14) excludes agricultural land in India. The court noted that under the 1922 Act, any land from which income derived was agricultural income was excluded from the definition of "capital asset". The revenue argued that the land, despite being used for agriculture, had lost its agricultural character due to surrounding development and high sale price, indicating its suitability for non-agricultural use. 3. The relevance of the land's use and surrounding development: The court considered various factors to determine the nature of the land, including its actual use, the development of the surrounding area, and whether the land was within municipal limits or included in a town planning scheme. The court referred to previous judgments, including Rasiklal Chimanlal Nagri v. Commissioner of Wealth-tax, which emphasized that the actual use of the land is a primary factor. If the land is used for agricultural purposes, it is ordinarily considered agricultural land unless other factors displace this presumption. In this case, the land was consistently used for agriculture, and there was no evidence of it being used temporarily for agricultural purposes pending sale. 4. The impact of permissions granted under the Bombay Tenancy and Agricultural Lands Act: The revenue argued that the permission granted under Section 63 of the Bombay Tenancy and Agricultural Lands Act for selling the land for residential purposes indicated that the land was not agricultural. However, the court held that the permission was for the sale of agricultural land to a non-agriculturist and did not change the land's character at the time of the sale. The court emphasized that the land's character as agricultural land was not affected by the potential for non-agricultural use or the high sale price. Conclusion: The court concluded that the land in question was agricultural land at the time of the sale. The Tribunal's decision was upheld, and the question was answered in favor of the assessee and against the revenue. The Commissioner was directed to pay the costs of the reference to the assessee.
|
