9911796707
TMI Blog1984 (2) TMI 146X X X X Extracts X X X X X X X X Extracts X X X X ..... (Coch.) of 1971-72 and 53 and 180 (Coch.) of 1973-74. The Tribunal held that this land sold by the assessee during these previous years was agricultural land and on that basis deleted the capital gains arising from such sales. However, the Tribunal reversed this finding by an order under section 254(2) of the Income-tax Act, 1961 ('the Act'), dated 31-7-1977. By this order, the Tribunal set aside the AAC's orders and referred the assessments back to the ITO to decide afresh the nature of land in the light of the Supreme Court's decision in CED v. V. Venugopala Varma Rajah [1976] 105 ITR 593. 2. The facts for these three years are identical in that, briefly, the assessee had taken on lease a large tract of land and converted such land as p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... compact block of this reserve land. Of these sale transactions, 39 falls within the assessment year 1970-71. The Collector's permission under the Madras Preservation of Private Forests Act for these sales to 70 persons was obtained in one proceeding. There was still another 130 acres left behind. Another permission was obtained from the Collector for the sale of this block which also is only a portion of the compact block of original reserve land. Out of that 130 acres, 70 acres were sold in 1970. The other left behind transactions of 1969 and this sale falls under assessment year 1971-72. The rest 60 acres were sold in 1971." There is no dispute by either party that the statement of facts contained in the above paragraph represents the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... change its nature, by, for example, clearing and preparing the land. He considered that taking steps to raise a loan with the intention to raise a plantation or the fact that the assessee was extending the area under plantation year after year does not change the character of the land which, according to him, would remain unaffected. He also dismissed the contention of the assessee that the lands sold have been converted into agricultural lands by the purchasers on the ground that it is an irrelevant consideration. According to him, it was necessary that the assessee should have done something to develop the forest in the sense that any particular tree should have been planted till the point of sale. He also pointed out that the land which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the forest land into agricultural land over a period of years came to the conclusion that the forest land sold by the assessee during the three previous years represented land which had been set apart and intended to be used as agricultural land. He considered that even according to the ratio of the decision of the Supreme Court in V. Venugopala Varma Rajah's case, the land in question would be agricultural land and, therefore, not a capital asset within the meaning of the Act. The revenue is in 'appeal before us. 5. The departmental representative repeated the arguments contained in the assessment orders. Stress was laid upon the fact that the assessee had not carried out any operations for agriculture on this part of the land and, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. On a careful consideration of these submissions, we are of the opinion that the land in question should be treated as an agricultural land. The Commissioner (Appeals) has quoted the relevant part of the judgment of the Supreme Court in V. Venugopala Varma Rajah's case. It is clear from this that it is enough for a land in order to become agricultural land if such land is set apart or earmarked for the purpose of agriculture. We feel that the purpose of the lease of this land taken by the assessee clearly indicates that the assessee had taken the land only for the purpose of agriculture. If this was the purpose of the lease then the entire land should be taken to have been specified, set apart or earmarked for the purpose of agriculture a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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