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TMI Blog1980 (8) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... , for a consideration of Rs. 4,18,200. The Income-tax Officer regarded this item of land as "capital asset " of the assessee and brought to tax the gains resulting from its sale. This assessment was confirmed in appeal first by the Appellant Assistant Commissioner and later by the Madras Tribunal. The objection of the assessee to the assessment was that the land sold by him was agricultural land and, hence, it stood excluded from " capital assets chargeable to tax under the Act. He relied on the definition of the expression " capital asset " in section 2(14)(iii) of the Income-tax Act, 1961 (" the Act "), under which agricultural land stood specifically excluded from the purview of " capital assets In proof of his claim that the land was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al for the assessment in question and the assessee's claim for exemption from capital gains tax was, therefore, untenable. In this reference which comes to us at the instance of the assessee, his learned counsel, Mr. K. C. Rajappa, urged that the crucial inquiry in cases of this kind is to find out what was the owner's intention as to the user to which the land was to be put. Approaching the assessee's case from this view-point, the learned counsel submitted that there can be no mistaking of the assessee's intended user of the land when he set up a 7.5 H.P. motor and pump set. The suggestion of the learned counsel was that a pump set of this horse power could hardly have been installed in the land for any purpose other than for irrigation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... area of 42.5 acres, no agricultural activities of any kind could possibly have been carried out on a consumption of 20 to 40 units of electricity per month. The electricity consumption was so minimal as to discredit the very intention alleged by the assessee for the installation of the pump set. Whether any given land is or is not agricultural land is a mixed question of law and fact. More so, because the expression " agricultural land " has not been defined anywhere in the Act. This means that one has to have a clear conception of what distinguishes agricultural land from other species of land and then determine to which category one should assign the particular land under consideration. This determination, however, cannot be arrived at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the sale of which there accrued a surplus over cost, was not agricultural land exempt from capital gains tax. The learned counsel, however, took the Tribunal to task for basing their determination on two other grounds which, according to him, were altogether far-fetched for purposes of the present inquiry. The Tribunal in their order had observed that the land sold by the assessee was situate in the centre of Madras City, in the thick of a residential locality, surrounded everywhere by buildings. The Tribunal apparently entertained the notion that there can be no agricultural land within the confines of an urban area. This line of reasoning, according to the learned counsel, was signally at fault. We realise there is force in the learne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. It seems to us that the price element does not always offer a dependable test for ascertaining the nature and character of the subject-matter of the bargain. The consideration paid to any given land, or for that matter any commodity, is a determinant of market forces, as well as felt urgency of the vendor or the purchaser at the given moment. We do not, therefore, set much store on the circumstance that the land which figures in this case realised a price which an equal extent of agricultural land might not have fetched. Although we have not agreed fully with two of the grounds on which the Tribunal had founded its determination, we are satisfied that the Tribunals conclusion can very well stand on the basis of their principal finding ..... X X X X Extracts X X X X X X X X Extracts X X X X
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