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TMI Blog1981 (9) TMI 48X X X X Extracts X X X X X X X X Extracts X X X X ..... piece or parcel of land and he contributed a sum of Rs. 15,400 towards the consideration. The land is situate in an area which was not included in the municipal limits and there is no evidence or material on the record to show that there was any development in the surrounding area indicating any potentiality for the development of the land. After the purchase, the land was put to agricultural use for a period of three years. According to the revenue record, the crop of pulse (tuver) was realised for two years and, for one year, the land yielded green grass. The yield, however, was of a very low order quantitatively and, therefore, there was no sale of the produce. It is not in dispute that at or about the time of its subsequent sale, the land was not actually put to agricultural use. All the while, however, the land continued to be listed in the revenue record and it was assessed to land revenue. 3. The assessee made an application to the competent authority under section 63 of the Bombay Tenancy and Agricultural Lands Act, 1948, for permission for the sale of the land to the Smrutikunj Co-operative Housing Society Ltd. The permission was granted by an order made on 16-11-1968 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rging section (section 4) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), where any Central Act enacts that income-tax shall be charged for any assessment year at any rate or rates, income-tax at that rate or those rates shall be charged for that year in accordance with, and subject to the provisions of this Act in respect of the total income of the previous year or previous years, as the case may be, of every person. Section 2( 24) of the Act defines "income" as including any capital gains chargeable under section 45 of the Act. Section 45, as it stood at the material time, provided that any profits or gains arising from the transfer of a capital asset effected in the previous year shall, save as otherwise provided in sections 53 and 54 of the Act, be chargeable to income-tax under the head "Capital gains", and shall be deemed to be the income of the previous year in which the transfer took place. Section 2 (14) of the Act, as it stood at the relevant time, defined "capital asset" to mean property of any kind held by an assessee, whether or not connected with his business or profession, but as not including agricultural land in India. The combined effect of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as of a permanent nature. In Himatlal Govindji v. CWT [1977] 106 ITR 658 (Guj.) though on the relevant date, the land was being used for agricultural purposes, the finding of fact was that such user was only by way of a stop gap arrangement pending the availability of buyers for the demarcated plots in question. 9. One fact which requires to be emphasised is that most of the cases which have arisen so far in this Court were concerned with land situate within the municipal limits of well developed cities and towns. We tabulate below those cases with the relevant particulars such as the description and location of land and the finding in each case as to its true nature and character. Citation Situation and description of land whether held to be agriculture (1) (2) (3) Rasiklal Chimanlal Nagri (supra) 4 plots in the Ellisbridge residential area, at same distance from Paldi, Ahmedabad; assessed to land revenue; permission for non-agricultural use not obtained. No CWT v. Narandas Motilal (supra) 2 plots of land situate in the Navrangpura area of Ahmedabad; sub-plotting made; some sub-plots sold; Draft T.P. Scheme applied; no non-agricultural use of the plots nor any resident ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or parcels of agricultural land situate in Shekhpur-Khanpur locality (also called Navrangpura village) in Ahmedabad: actually used for raising crop for four years up to the date of sale; per mission under section 63 of the Tenancy Act obtained for sale; sale for non-agricultural use; land covered by T.P. Scheme; residential locality nearby. Yes Sercon (P.) Ltd. v. CIT [1981] 23 CTR (Guj.) 303 Final plot comprised in T.P. Scheme and situate near the main road leading from Town Hall to Ellisbridge in Ahmedabad; surrounded on all sides by buildings; land shown in revenue records as agricultural land; for 17 years kept fallow; for a period of 4 years roughly immediately preceding the date of sale, put to agricultural use and some income derived from agricultural operations; no permission for non-agricultural use obtained from the authority. Yes Chandulal Lallubhai v. CIT (IT Reference No. 243 of 1975 decided on 16-9-1980 and 17-9-1980) 3 plots of land situate in Vastrapur-Paldi area of Ahmedabad; plots formed part of agricultural land subject to land revenue; two survey numbers in which two plots were comprised actually cultivated as agricultural land at the relevant time, findin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urat; not within municipal limits; not covered by T.P. Scheme; used for agricultural purposes till the date of sale; the remaining portion of the land continued to be used for agricultural purposes even after sale; permission under section 63 of the Tenancy Act obtained for sale; sale in favour of a co-operative housing society on yardage basis yielding high price. Yes CIT v. Vajulal Chunilal (HUF) [1979] 120 ITR 21 (Guj.) A portion of land situate at village Adajan, Taluka Chorasi, District Surat; land surrounded by residential locality; sale in favour of a co-operative housing society after obtaining permission under section 63 of the Tenancy Act; land not converted to non-agricultural use prior to sale and over several years used for agricultural purposes; even on the date of sale crops grown. Yes Dr. Motibhai D. Patel v. CIT [1981] 127 ITR 671 (Guj.) A portion of land situate in Acher of Sabarmati, Ahmedabad; agricultural land which was under cultivation up to the date of sale; very small income, as compared to the investment made, derived from agricultural operations; permission for sale obtained under section 63 of the Tenancy Act; sale in favour of co-operative housing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether the property called "Begumpet Palace" within the municipal limits of Hyderabad consisting of vacant lands, admeasuring about 108 acres, and also buildings enclosed in the compound wall constituted "agricultural land" within the meaning of section 2(e)(() of the Wealth-tax Act. The income-tax authorities had found that the land was never intended to be used for agricultural purpose and that since it was not ploughed or tilled, it had not been actually used for such purpose. The authorities up to the stage of the Appellate Tribunal held, therefore, that the property could not be treated as "agricultural land". On reference, the High Court held that the land was classified and assessed to land revenue as "agricultural land" under the Andhra Pradesh Land Revenue Act and that that circumstance coupled with certain other circumstances, present in the case led to the conclusion that the land was agricultural. On appeal to the Supreme Court, it was held that in the context it is imperative to give reasonable limits to the scope of the term "agricultural land". It was further held that to be "agricultural land", the land must be one "which could be said to be either actually used o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 65 of the Bombay Land Revenue Code was obtained for the non-agricultural use of the land? If so, when and by whom (the vendor or the vendee)? Whether such permission was in respect of the whole or a portion of the land? If the permission was in respect of a portion of the land and if it was obtained in the past, what was the nature of the user of the said portion of the land on the material date? 6. Whether the land, on the relevant date, had ceased to be put to the agricultural use? If so, whether it was put to an alternative use? Whether, such cesser and/or alternative user was of a permanent or temporary nature? 7. Whether the land, though entered in revenue record, had never been actually used for agriculture, that is, it had never been ploughed or tilled? Whether the owner meant or intended to use it for agricultural purposes? 8. Whether the land was situate in a developed area? Whether its physical characteristics, surrounding situation and use of the lands in the adjoining area were such as would indicate that the land was agricultural? 9. Whether the land itself was developed by plotting and providing roads and other facilities? 10. Whether there were any previous sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ricultural user or purposes. 16. Against the aforesaid background, let us turn to the question whether on the facts and in the circumstances of the present case, the land in question was an agricultural land. The land, when jointly purchased by the assessee from an agriculturist about four years prior to its present sale, was admittedly agricultural. It was and it continued to be listed in the revenue records as agricultural land subject to the assessment of land revenue. For a period of three years immediately after its purchase, agricultural activity was carried on in the land which yielded agricultural produce. For the first two years, the crop of pulse (tuver) was raised and for the third year green grass was grown. Of course, quantitatively the yield was not much and there was no sale of the produce resulting in any profit to the assessee. However, the nature of exploitation of the land for the major part of the period during which the assessee held it would indicate that not only its physical characteristics but the user also was agricultural. It is not shown that such user was of a temporary character or as and by way of a stop-gap arrangement. Even though the land was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suitability and adaptability for raising cash crops, the irrigation facility and such or similar factors which, as earlier pointed out, have a great bearing on the valuation of an agricultural land, it would be hazardous to come to the conclusion that the price offered was such that no agriculturist would have paid the same if he wanted to purchase the land for purely agricultural purposes. The evidence on record does not show whether the sale was on acreage or yardage basis. The extract from the sale deed reproduced m the Tribunal's order shows that the land was sold as an "agricultural land". Having regard to the totality of circumstances, we are of the view that the conclusion reached by the Tribunal, after taking into account all the relevant circumstances and upon a balanced consideration of the entire evidence and on the application of the correct legal test, is just and correct. 17. In the result, the questions referred for our opinion are answered as follows: Question No. 1 Answer: In the affirmative, i.e., against the revenue and in favour of the assessee. Question No. 2 Answer: In the negative, i.e., against the revenue and in favour of the assessee. The Commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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