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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 ..... the said piece or parcel of land and he contributed a sum of ₹ 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 948? 5. Under the charging 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. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he cesser of agricultural use was 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. Narand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use obtained after sales by vendees, all but one of whom were co-operative housing societies. Yes Gordhanbhai Kahandas Dalwadi v. CIT [1981] 127 1TR 664 (Guj.) Agricultural land within the limits of Anand Municipality; temporary use for 2 years for brick manufacture; thereafter lying fallow except for one year when bajri crop raised; situate in fast developing locality; permission under section 63 of the Tenancy Act obtained for sale. Yes Manibhai Motibhai Patel v. CIT [1981] 131 ITR 120 (Guj.) 5 pieces 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 al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subsequently. No 10. Next we may give similar particulars in a tabular form in respect of cases where the land was situate in the vicinity of or at some distance from well-developed cities: Citation Situation and description of land Whether held to be agricultural Ranchhodbhai Bhaiji Bhai Patel v. CIT [1971] 81 ITR 446 Large piece of land situate in village Saved at some distance from Baroda city, agreements of sale in respect of two separate portions of the land in favour (Guj.) of a construction company and a co-operative housing society; permission for non-agricultural use obtained thereafter; cessor of agricultural operations after agreements of sale price fixed on yardage basis. No Maganlal Morarbhai v. CIT [1979] 118 ITR 224 (Guj.) A portion of the land situate at village Phoolpada near Surat; 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; permis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ormula. Indeed, this Court has repeatedly observed that whether or not a particular land is agricultural must, in the ultimate analysis, depend upon the facts and circumstances of each case and that in each case, the conclusion will have to be reached upon a balanced consideration of the diverse factors. This is also the view of the Supreme Court as is evident from the decision in CWT v. Officer-in-Charge ( Court of Wards) [1976] 105 ITR 133, wherein it is observed: ... the determination of the character of land, according to the purpose for which it is meant or set apart and can be used, is a matter which ought to be determined on the facts of each particular case. (p. 143) It would, thus, appear that any attempt to devise any straight-jacket formula, howsoever precisely conceived and designed to cover all situations, would not prove to be a profitable exercise and that it may not always produce a correct answer. 13. It would be convenient at this stage to refer to the decision in the case of Officer-in-Charge (Court of Wards) (supra). The question before the Supreme Court in that case was whether the property called Begumpet Palace within the municipal limits of Hyde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conclusive, would raise a rebuttable presumption and it would furnish good prima facie evidence . Evidence to rebut it should be led by the department. 14. On a conspectus of these cases, several factors are discernible which were considered as relevant and which were weighed against each other while determining the true nature and character of the land. It may be useful to extract from those decisions some of the major factors which were considered as having a bearing on the determination of the question. Those factors are: 1. Whether the land was classified in the revenue record as agricultural and whether it was subject to the payment of land revenue? 2. Whether the land was actually or ordinarily used for agricultural purposes at or about the relevant time? 3. Whether such user of the land was for a long period or whether it was of a temporary character or by way of a stop-gap arrangement? 4. Whether the income derived from the agricultural operations carried on in the land bore any rational proportion to the inve1stment made in purchasing the land? 5. Whether the permission under section 65 of the Bombay Land Revenue Code was obtained for the non-agricult ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e by valuing it as property yielding agricultural produce on the basis of its yield, it must be remembered that the valuation of an agricultural land is a complex matter. Several factors enter into account in determining the value of an agricultural land such as the nature of the soil and its fertility, the type of crop for which the land is suited or is adaptable, the size of the land and the practicability of the use of mechanised implements, in order to procure better yield, the proximity to village and availability of transport facilities, the availability of irrigation facility and power and above all, the scarcity of the land in the area. Personal, social and economic considerations also influence, perceptibly or otherwise, the valuation of an agricultural land in our country. All these factors will have to be investigated into and a finding of fact will have to be recorded on each of the relevant aspects by the fact-finding authorities. In the absence of such findings, no presumption can ordinarily be raised, merely because high price is realised, that the land could never have been sold as an agricultural land for genuine agricultural user or purposes. 16. Against the af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agricultural land was not changed either as a result of its re-classification in the revenue records or by the actual alteration of its use. If, for any reason, the sale transaction had not gone through or the conditions laid down in the permission issued under section 63 had not been satisfied, the permission would have been treated as cancelled. There is no evidence on record to show that there was any development in the surrounding area or that the land itself was developed prior to its sale. The land is located on the outskirts of the Billimora town but it was not situate within the municipal limits. The land must, therefore, be taken as having been situate in a rural area and it continued to an agricultural land right up to the date of its sale. There is no evidence or material on record to indicate that the price offered for the land by the vendee, even proceeding on the basis that the intended user on his part was non-agricultural, would not have been offered by an agriculturist who wanted to purchase the land for purely agricultural user. There being no evidence on record as regards the nature of the soil, its fertility, its suitability and adaptability for raising cash cr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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