TMI Blog2005 (3) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... e appeals filed by the Revenue under section 260A of the Income-tax Act, 1961 were admitted on a substantial question of law which reads as follows: "Whether, on the facts and in the circumstances of the case the assessees' land could be termed as agricultural land?" Some facts are required to be stated to dispose of both the appeals. The respondents in both the appeals are the assessees-husband and wife, and though they are non-resident Indians from the year 1983 or thereabout they are governed by the regime of communion of assets as in force in this State. In May, 1995 they sold their ancestral property bearing Survey Nos. 103/1 and 102/4 admeasuring about 65,282 sq. metres to M/s. Sunset Resort P. Ltd. for a sum of Rs. 2,88,10,600 which works out to a price of Rs. 441.33 per sq. m. The assessees did not declare capital gains on the sale of the said property and, therefore, a notice under section 143(2) of the Act was issued to them and in reply to the said notice they contended that the land held by them was agricultural land having coconut and cashew plantations. The Assessing Officer by his order dated October 14, 1998, held that they were required to pay Rs. 26,06,040 e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Margao and the land between the road and the river was found to be covered by coconut, cashew, mango and acacia trees, with a mundcarial house in it and the mundcar had been looking after horticultural operation since long. He also found that coconut trees were found planted more or less under a regular plan. He also found that the other portion stretching from the road to the seashore was having coconut plantation only on the sea side, but on the road side it was a barren land having sand dunes, some cashew shrubs strewn here and there and according to him the cashew shrubs were not planted but were part of natural growth. The Commissioner of Income-tax (Appeals) ultimately treated 2/3rds portion of Survey No. 103/1 as garden land where plantation of mainly coconut trees was done. He held that 1/3rd portion of this land could not be said to be agricultural land. The Commissioner of Income-tax (Appeals), therefore, directed that the sale proceeds of 1/3rd of Survey No. 103/1 and the sale proceeds of Survey No. 102/4 could be charged to capital gains and thus partly allowed the appeals. Both the parties then filed appeals before the Income-tax Appellate Tribunal (the ITAT), Pan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ikale has also referred to the case of Santosh Hazari v. Purushottam Tiwari [2001] 251 ITR 84 (SC); [2001] 3 SCC 179 wherein the hon'ble Supreme Court has defined what is a substantial question of law and it is only when a substantial question of law is involved that the interference of this court is called for under section 260A of the Act. It may be noted that both the cases of Gopal C. Sharma v. CIT [1994] 209 ITR 946 (Bom) as well as Sarifabibi Mohmed Ibrahim v. CIT [1993] 204 ITR 631 (SC) were referred to and relied upon by the authorities below including the learned Income-tax Appellate Tribunal and after considering the same, they came to the conclusions to which a brief reference has already been made. Section 260A of the Act is analogous to section 100 of the Civil Procedure Code. Both the said provisions provide that an appeal shall lie to this court only in case this court is satisfied that the case involves a substantial question of law. Sub-section (4) of section 260A of the Act and sub-section (5) of section 100 of the Civil Procedure Code provide that the appeal shall be heard on the questions so formulated, and the respondent shall, at the hearing of the appeal, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is an open question in the sense that the issue has not been settled by pronouncement of the Supreme Court or Privy Council or by the Federal Court, or (4) the issue is not free from difficulty, and (5) it calls for a discussion for alternative view. The Division Bench also stated that there is no scope for interference by the High Court on a finding recorded when such finding could be treated to be a finding of fact. The view held in Mahavir Woollen Mills [2000] 245 ITR 297 (Delhi) has now become the law laid down by the hon'ble Supreme Court in the case of M. Janardhana Rao [2005] 273 ITR 50. The Supreme Court in the case of Sarifabibi [1993] 204 ITR 631 has approved the decision of a Division Bench of the Gujarat High Court in the case of CIT v. Siddharth J. Desai [1983] 139 ITR 628, and has laid down 13 tests or factors which are required to be considered and upon consideration of which the question whether the land is an agricultural land or not has got to be decided or answered. We could reproduce the said 13 tests with advantage. They read as follows: "(1) Whether the land was classified in the revenue records as agricultural and whether it was subject to the payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stated that whether a land is an agricultural land or not is essentially a question of fact. The question has to be answered in each case having regard to the facts and circumstances of that case. There may be factors both for and against a particular point of view. The court has to answer the question on a consideration of all of them-a process of evaluation and the inference has to be drawn on a cumulative consideration of all the relevant facts. The Supreme Court has further stated that not all these factors or tests would be present or absent in any case and that in each case one or more of those factors may make appearance and that the ultimate decision will have to be reached on a balanced consideration of the totality of the circumstances. Section 2(14) of the Act defines "capital asset" to mean property of any kind held by an assessee, whether or not connected with his business or profession, but does not include, inter alia, agricultural land in India, not being land situate- (a) in any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lusion of fact upon which that conclusion is based. This is not the case at hand. It is not possible to turn a mere question of fact into a question of law by asking whether as a matter of law the authority came to a correct conclusion upon a matter of fact. In our view, therefore, the finding arrived at by the learned Income-tax Appellate Tribunal that the property sold by the assessees was an agricultural land is a finding which has been rendered after considering the totality of the circumstances and the tests laid down by the hon'ble Supreme Court in the case of Sarifabibi Mohmed [1993] 204 ITR 631 and, therefore, calls for no interference from this court. The learned Income-tax Appellate Tribunal had relied upon Form Nos. I and XIV of both the sub-divisions of the property of the assessees wherein their property was predominantly shown as garden land and, therefore, agricultural in nature. The learned Commissioner of Income-tax (Appeals) ought to have seen whether the land sold was predominantly agricultural or not. The learned Income-tax Appellate Tribunal had also observed that the assessees had produced receipts for payment of land revenue which could not be ignored. Admi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erpretation both in regard to its operation as well as the result of the same. Nevertheless there is present all throughout the basic idea that there must be at the bottom of its cultivation of the land in the sense of tilling of the land, sowing of the seeds, planting and similar work done on the land itself and this basic conception is the essential sine qua non of any operation performed on the land constituting agricultural operation and if the basic operations are there, the rest of the operations found themselves upon the same, but if these basic operations are wanting, the subsequent operations do not acquire the characteristics of agricultural operations. The witnesses whose affidavits were produced had clearly stated that labourers were seen working in the subject land until it was sold to M/s. Sunset Resorts P. Ltd. The Assessing Officer had noted that the father of the male assessee was an old man and was not capable of involving himself in agricultural pursuits. It was common knowledge in this State that gentlemen of the landed gentry at times only supervised agricultural operations which were generally done once a year or once in two years from under the shade of their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as classified in the revenue records, but also it was subjected to the payment of land revenue and that it was actually and ordinarily used for agricultural purpose at the relevant time. It was nobody's case that the assessees had obtained any permission for non-agricultural use as required under the G.D.D. Land Revenue Code, 1968 in respect of the subject land or any portion thereof. The assessees had also proved that on the relevant date of sale, the subject land had continued to be put to agricultural use and that it was always used for agricultural purpose. The assessees had satisfied most of the tests which were laid down by the hon'ble Supreme Court in the case of Sarifabibi [1993] 204 ITR 631. As far as test No. 4 is concerned, one may tend to argue that the price paid by the buyer was rather on the higher side, but two things are required to be taken note of. The first is that the subject land was abutting the land owned by the sister concern of the buyer and secondly, it is also probable that the said buyer wanted to continue to use the subject land for agricultural purpose so as to be an added attraction to the said sister concern or to do landscaping, etc. In this conte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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