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TMI Blog1979 (1) TMI 56X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration the compensation awarded by the city civil court ?" In T.C. No. 70 of 1975, which has been referred under s. 27(1) of the W.T. Act, 1957, the following questions have been referred : " (1) Whether the land bearing R.S. No. 154/10 of the extent of 12 grounds and 46 sq. ft. situate in Nungambakkam, Madras, which belonged to the assessee as on March 31, 1968, and which was acquired by the Government of Madras by Award No. 7 of 1968 dated December 14, 1968, was not an agricultural land ? and (2) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in directing that the value of the said land as on the date of valuation should be taken as Rs. 1,26,000 ? " We shall first take up for consideration the reference under the I.T. Act. The assessee, an advocate by profession, owned land bearing R.S. No. 154/10 measuring an area of 12 grounds and 46 Sq. ft. in Nungambakkam, Madras. He had purchased the land for Rs. 2,000 in 1940. The assessee's brother had similarly purchased the land bearing R.S. No. 157/11 of an equal extent at or about the same time. At the time of purchase, both these lands had been leased out to one Parthasarathy Nai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anning Scheme, that a number of houses had been constructed in the said area several years prior to the acquisition thereof, that no cultivation had been done in the land since 1953, that the acquisition had been made only for the purpose of construction of an office building and quarters for the staff employed by the Regional Provident Fund Commissioner and that the assessee himself had claimed compensation for the land in question at the rate of Rs. 22,000 per ground at which rate no person would buy an agricultural land, held that the land in question was not agricultural land and that, therefore, the capital gain arising from the acquisition was liable to be taxed under s. 45. He did not adopt the compensation, as paid by the land acquisition authorities, as the market value, but adopted a sum of Rs. 15,000 per ground invoking s. 52(2) of the Act. After giving deduction for the value of the land as on January 1, 1954, the ITO brought to tax Rs. 1,14,000 and completed the assessment by applying the provisions of ss. 80L and 80T of the Act. The assessee appealed against the assessment so made before the AAC, who confirmed the assessment made by the ITO. Against the order of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lands of about 108 acres and also buildings enclosed in compound walls, the question arose whether it constituted agricultural land within the meaning of s. 2(e)(i) of the W.T. Act, 1957. The Tribunal held that the property could not be treated as agricultural land as the land was never intended to be used for agriculture and was not ploughed or tilled. When the matter came before the High Court under reference, it was held that the land was agricultural land because-- (i) the area was 108 acres abutting the Hussain Sagar tank, (ii) the land had two wells in it, (iii) it was capable of being used for agricultural purposes, (iv) it had not been put to any use which could change the character of the land by making it unfit for immediate cultivation, and (v) it was classified and assessed to land revenue as " agricultural land " under the Andhra Pradesh Land Revenue Act. The Supreme Court, on appeal, held that the first four features considered by the High Court and based upon the absence of any user for non-agricultural purposes were inconclusive, and the fifth feature alone provided some evidence of the character of the land from the point of view of its purpose and that the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd. The assessee's brother, who simultaneously purchased the adjacent piece of land has put the same for use as a residential plot. Having regard to the fact that we have to consider the character of the land according to the purposes for which it was meant or set apart, it appears to us that the abandonment of cultivation from 1953 itself shows that the assessee had, by conduct, shown that the land was not meant for agricultural purposes. If really the assessee wanted to put the land for agricultural use, then one would not have expected him to have kept quiet for a period of thirteen years before the acquisition proceedings took place. The ITO has not called for the papers relating to the assessee's claim for compensation before the land acquisition authorities to see the basis of the claim, made by him. From the manner in which the claim appears to have been made, it is clear that the basis is that the land was a house-site and not mere agricultural land. As pointed out by the Tribunal, the acquisition itself was for a non-agricultural purpose and the assessee also had claimed large compensation at the rate of Rs. 22,000 per ground at which price no one would purchase agricultur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal on the question whether the lands were agricultural lands. When the matter came before this court, it was remitted to the Tribunal for the purpose of considering the question afresh in the light of the facts and circumstances. There are certain observations in the said judgment, on which considerable emphasis was laid by the learned counsel for the assessee, and those observations run as follows : " When once it was admittedly an agricultural land some act on the part of the assessee had to be established which would prove that the assessee had converted the property into non-agricultural land. Unless such contrary evidence is available, it will have to be presumed that it continues to be agricultural land and did not change its character. Mere non-user of the land or keeping it fallow for even a long period will not be decisive to hold that there was a change in character." If these observations were intended as laying down any principle of law, then this court, in the above case, would have decided the reference in favour of the assessee and would not have sent the matter back to the Tribunal for deciding the question afresh, as there was no proof of the conversion of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 107 ITR 280 (Mad) has considered the position in the same light. At page 289, it was pointed out : " What the courts did was merely to quantify the compensation. The right arose in the year in which the transaction took place. The right to the correct amount of compensation had already accrued to the assessee. The date of taking possession is only relevant for the purpose of taxation under section 12B (of the Indian Income-tax Act, 1922)." The provisions in the present Act of 1961, namely, s. 45, and the succeeding provisions are identical. It has been pointed out in the same decision that s. 12B of the 1922 Act had, by importing a fiction, taken the amount awarded as consideration received in the year in which the transaction took place. The circumstance that the higher amounts came to be awarded only subsequently did not affect the assessability of the amount in the year in which it was liable to be assessed. In the light of these aspects, the amount to be determined by this court will have to be taken into account in the relevant assessment to income-tax. The ITO originally adopted a higher figure for taking the compensation for the purpose of assessment, the AAC, on appeal, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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