9911796707
TMI Blog1996 (3) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... the year of assessment and, hence, not liable to be excluded from the definition of the words 'capital asset' ? (ii) Whether the surplus realised on the sale of land in the year of account is not exempt from capital gains ?" The property known as Spencer's Hotel comprising 17 acres, 16 grounds and 825 sq. ft. situated on Mount Road, Madras, was purchased by one Gulab Bhai Mukund Rao Rane in 1944. Rane sold an extent of 79 grounds 242 sq. ft. (roughly four acres and odd) out of it to the assessee under a registered sale deed dated October 27, 1950, for a consideration of Rs. 5,53,705. The extent purchased by the assessee comprised the hotel building as well. After purchasing the said extent, the assessee constructed two buildings over an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n appeal, the Appellate Assistant Commissioner affirmed the view taken by the Income-tax Officer. On further appeal to the Tribunal, there was a difference of opinion between the Accountant Member and the Judicial Member. The Accountant Member attached great importance to the fact that the land in question was actually under cultivation on the date of the sale and held that the other circumstances pointed out by the Income-tax Officer and the Appellate Assistant Commissioner do not detract from the position that the land was actually being used as an agricultural land on the date of its sale. The Judicial Member, on the other hand, held that having regard to the location, it's price, the fact that it was registered as urban land in the Muni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l records, the property was registered as urban land and urban land tax was being levied thereon. It bore the municipal door number " 151, Mount Road, Madras". After purchasing the land, the assessee put up two more buildings thereon in the northern portion which together occupied an extent of 20 grounds which means that they were substantially large buildings. One of them was occupied by the assessee for its own business purposes and the other was occupied by its sister concern. After laying a road and reserving a certain portion to serve as frontage for the buildings, an area of about 39 grounds was remaining open. The assessee was raising bananas thereon until 1962 and thereafter vegetables until the year 1966-67 when it was sold to thre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that in the heart of New Delhi, there are houses with large compounds wherein a portion of the open land is used for raising vegetables. That does not make those portions agricultural lands. In the case of the assessee too, the raising of vegetables was a stop-gap activity until the assessee found a better use for it, whether construction of buildings or sale. It is well to remember that the question whether a particular land is agricultural land has to be decided on a totality of the relevant facts and circumstances. There may be circumstances for and against. They have to be weighed together and a reasonable decision arrived at. One has to take a realistic view and see how the persons selling and purchasing it understood it. Is it believa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was held that the mere fact that it was sold at a high price only indicates its potentiality for non-agricultural use. On a consideration of the entirety of the circumstances, it was held that it was agricultural land. A recent decision of this court in Sarifabibi Mohmed Ibrahim v. CIT [1993] 204 ITR 631, rendered by a Bench comprising one of us (B. P. Jeevan Reddy J.) is relied upon by learned counsel for the Revenue. The Bench observed (page 637) : "Whether a land is an agricultural land or not is essentially a question of fact. Several tests have been evolved in the decisions of this court and the High Courts, but all of them are more in the nature of guidelines. The question has to be answered in each case having regard to the facts an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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