TMI Blog1979 (1) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... me, he was about 90 years of age. His son Maganlal Morarji, the assessee before us, inherited the lands and he used these lands for agricultural purposes. On July 10, 1965, the assessee entered into an agreement to sell four acres and thirty-two gunthas and forty-nine square yards, that is, 23,281 square yards, from the lands he owned. With reference to the survey numbers, the entire land of survey No. 122/3 admeasuring one acre and thirty-two gunthas and three acres and forty-nine square yards out of survey No. 95, were agreed to be sold. The agreement to sell was in favour of Maheshwari Co-operative Housing Society. Price of the land was fixed at Rs. 6.95 per square yard and the total sale price came to Rs. 1,61,802. The land was agreed to be sold according to the areas mentioned in terms of acres and gunthas. On August 23, 1966, the assessee applied to the Collector of Surat for permission under s. 63 of the Bombay Tenancy and Agricultural Lands Act, 1948, since the sale of agricultural land was going to be in favour of a non-agriculturist. This permission under s. 63 was granted by the Assistant Collector, Surat, on January 2, 1967. Thereafter, on January 12, 1967, the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... date in question. The law on the point has been considered in several decisions of this High Court and in one decision of the Supreme Court. The decisions of this High Court are Rasiklal Chimanlal Nagri's case [1965] 56 ITR 608 (Guj), CWT v. Narandas Motilal [1971] 80 ITR 39 (Guj), Ranchhodbhai Bhaijibhai Patel's case [1971] 81 ITR 446 (Guj), Himatlal Govindji's case [1977] 106 ITR 658 (Guj), CIT v. Manilal Somnath [1977] 106 ITR 917 (Guj), Chandravati Atmaram's case [1978] 114 ITR 302 (Guj), CIT v. Prakash Industries [1978] 114 ITR 316 (Guj), Yashwanti R. Bhatt's case [1978] 114 ITR 318 (Guj) and the decision of this Bench in Chhotalal Prabhudas (HUF)'s case, Income-tax Reference No. 105 of 1975 decided by this Bench on October 10, 1978 (since reported in (1979] 116 ITR 631). The decision of the Supreme Court is in CWT v. Officer-in-Charge (Court of Wards) [1976] 105 ITR 133. In CIT v. Manilal Somnath [1977] 106 ITR 917 (Guj), the position of law was thus summarised after considering all the decisions available till the date of the decision : " In our opinion, the correct approach has rightly been indicated in Rasiklal Chimanlal Nagri's case [1965] 56 ITR 608 (Guj). First, fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h as breeding and rearing of live-stock, poultry farming or dairy farming will not be applicable. It held that the correct test to apply would be to find out whether human labour had been applied to the land itself, in order to extract from its natural powers, added to or aided by other natural or artificial sources of strength to the soil, a product which can yield an income." (Emphasis supplied by us) The following passage from page 141 of the Supreme Court case was also extracted : " It is only 'agricultural land' which could be exempted. Therefore, it is imperative to give reasonable limits to the scope of the ' agricultural land ', or, in the other words, this exemption bad to be necessarily given a more restricted meaning than the very wide ambit given to it by the Full Bench of the Andhra Pradesh High Court (in this very case). " It was further observed, at page 143 of the report, by Beg J. : " Learned counsel for the assessee-respondents submitted that no evidence had been led on the question of intended user before the taxing authorities as the ' prima facie evidence ', provided by the entries in the revenue records, was considered enough. It has, however, to be re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it with an agricultural purpose, the land could not be ' agricultural land ' for the purposes of earning an exemption under the Act. Entries in revenue records are, however, good Prima facie evidence. We do not think that all these considerations were kept in view by the taxing authorities in deciding the question of fact which was really for the assessing authorities to determine having regard to all the relevant evidence and the law laid down by this court. The High Court should have sent back the case to the assessing authorities for deciding the question of fact after stating the law correctly. " (Emphasis supplied by us) The position of law in the light of the Supreme Court decision and in the light of the decision in Manilal Somnath's case [1977] 106 ITR 917 (Guj) was thus summed up at page 312 of the report in Chandravati Atmaram's case [1978] 114 ITR 302, 312 (Guj) : " In this case, the law, therefore, is very clear. If the land is actually used for agricultural purpose as shown by Manilal Somnath's case [1977] 106 ITR 917 (Guj) and also by the Supreme Court in Commissioner of Wealth-tax v. Officer-in-Charge (Court of Wards) [1976] 105 ITR 133, it can be said to be agri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as granted to sell the land to a non-agriculturist for non-agricultural purposes. It was contended by the departmental representative before the Tribunal that on January 2, 1967, the land in question ceased to be agricultural land. The land was sold on January 12, 1967, and, therefore, according to the departmental representative before the Tribunal, the land was sold only as non-agricultural land and not as agricultural land. It may be pointed out that before the AAC, both the ITO and the income-tax practitioner on behalf of the assessee were present and in para. 2 of his order, which is annex. " B " on the record of the case before us, the AAC stated that the admitted facts by the ITO and Shri B. G. Shah, learned counsel for the assessee, were as set out in paras. 2 and 3 of the order. In para. 3, it was pointed out that Shri Maganlal Morarbhai Chauhan (the assessee before us) used these lands for agricultural purposes till calendar year 1967. It is further pointed out by the AAC in para. 8 : " The remaining part of the land which was not sold was being used for agricultural purposes till the year 1967-68. In other words in the year in which the land was sold the remaining land w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lpad Division of Surat District, at the time of granting permission under s. 63 of the Bombay Tenancy and Agricultural Lands Act, that land admeasuring 7,527 sq. yds. i.e., other than the land in respect of which permission has been given for sale, should be used by the seller for non-agricultural purpose. It is clear from the materials on the record and what was admitted before the AAC by the ITO concerned that the remaining portion of the land admeasuring 7,526 square yards was used for agricultural purposes by the assessee even after the date of sale to the co-operative society right till 1972-73 as shown by the Pani Patraks. Hence, it is clear that the assessee was actually cultivating the land and was carrying on agricultural operations on the land. Yet, surprisingly enough, we find, in para. 8 of the order of the Tribunal, the following passage : " The land was a very small piece of land and it could not have possibly been made use of for agricultural purposes. For a number of years, the land was not used for agricultural purposes. Wherever the land was allegedly used for agricultural purposes, the assessee had not earned any income from the said land. Some expenses have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riculturist would be treated as cancelled. " That eventuality has not taken place in the instant case and it was only in May, 1967, that permission was obtained by the purchaser from the authorities concerned to put the land to a non-agricultural use and the fact that the purchaser had agreed to pay a high price does not mean that it is not an agricultural land at the relevant date, namely, the date of sale. In view of the legal position which we have set out hereinabove, it must be pointed out that, prima facie, the presumption from the actual user of the land, namely, agricultural user, would arise in the instant case. A further presumption would arise from the entries in the revenue records and neither of these presumptions is rebutted by the presence of any other factor in this case. No factor has been pointed out in this case which would go to show that either of these two presumptions is rebutted in the instant case. The Pani Patraks which were produced before the ITO and which were mentioned by the Tribunal in its order go to show that continuously, right down till the date of the sale, so far as the land sold to the co-operative society is concerned and the balance so f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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