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TMI Blog1981 (9) TMI 307X X X X Extracts X X X X X X X X Extracts X X X X ..... executed on August 18, 1965. The assessee had an undivided one-third share in the said 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 s. 63 of the Bombay Tenancy and Agricultural Lands Act, 1948. For permission for the sale of the land to the Smrutikunj Co-operative H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 63 of the Bombay Tenancy and Agricultural Lands Act, 1948 ? 5. Under the charging section (s. 4) of the I.T. Act, 1961, 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, the 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) defines income as including any capital gains chargeable under s. 45. 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 ss. 53 and 54, 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). 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 these various provisions as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Himatlal Govindji v. CWT [1977]106ITR658(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 questions. 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 : Sl No. Citation Situation description of land Whether held to be agricultural 1. Rasikalal Chimanlal Nagri v. CWT 1965 56 ITR 608 Four plots in the Ellisbridge resi dential area, at some distance from Paldi, Ahmedabad; assessed to land revenue; permission for non-agricultural use not obtained. No 2 CWT v. Narandas Motilal [1971]80ITR39(Guj) Two 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 residential activ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... locality (also called Navrangpura village) in Ahmedabad; actually used for raising crop for four years up to the date of sale; permission 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 11. Sercon Pvt.Ltd. v. CIT [1982]136ITR881(Guj) Final plot comprised in T.P.Scheme and situate very near the main road leading from Town Hall to Ellis Bridge 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 operational no permission for nonagricultural use obtained from the authority Yes 12. Chandulal Lallubhai v. CIT (Income- Tax Ref. No. 243/1975, decided on 16/17 -9-1980- Since reported on [1983] 139 ITR 642 3 plots of land situate in Vast rapur-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; finding of the Tribunal that such use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al operations after agreements of sale price fixed on yardage basis. No 2. Maganlal Morarbhai v. CIT [1979]118ITR224(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; permissioner 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 Only two more decisions remains to be referred to. Although judicial notice as regards the said involved in those cases being situate in the vicinity of two major cities can be taken, we have considered it proper to give below separately the relevant particulars in regard to those lands in a tabular form since the exact particulars with regard to the distance between the land involved in those cases and the neighbouring cities are not available from the judgment : Sl No. Citation Situation description of land Whether held to be agricultural 1. CIT v Vajulal Chunilal [1979]120ITR21(Guj) A portion of land situate at village Adajan, Taluka Ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and that it may not always produce a correct answer. 12. It would be convenient at this stage to refer to the decision in the case of CWT v. Officer-in Charge (Court of Wards) [1976]10ITR133(SC) . The question before the Supreme Court in that case was 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 compounded walls continued agricultural land within the meaning of s. 2(3)(i) of the W.T. 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 as 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 h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er 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 investment made in purchasing the land ? (5) Whether, the permission under s. 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 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 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 records, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 agriculture land for genuine agricultural 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 physi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 crops, the irrigation facility and such or similar factors which. As earlier point out, have a great bearing on the valuation of an agricultural 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 in 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 balance consideration of the entire evidence and on the application of the correct legal test, is just and correct. In the result, the question referred for our opinion are answered as follows : Question No. 1 : Answer : In the affirmative, i.e., against the Reve ..... X X X X Extracts X X X X X X X X Extracts X X X X
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