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2022 (2) TMI 1146 - HC - Income TaxCapital gains - nature of land sold - land converted into a barren land to establish an industrial estate - land sold by the assessee through sale deed in favour of Kerala State Industrial Development Corporation Limited (for short ‘KSIDC’) - assessee is a public limited company engaged in a range of activities such as cultivation, processing, and trading in tea, rubber, aquaculture; providing engineering services, etc - Whether Tribunal was right in holding that the land converted into a barren land to establish an industrial estate was an agricultural land u/s.2(14) and therefore, profit on sale not assessable to income tax for capital gains? - whether the sale of an asset constitutes sale of a capital asset or agricultural land, and is case-specific and to be determined on a case-to-case basis? - HELD THAT:- The schedule property, as admitted by the parties, is located in Kinalur and Kanthalad village in Quilandi taluk, nearly 20 kms away from Kozhikode Municipal Corporation limits. The schedule property, a plantation land, was an agricultural land both by classification and user till date of cutting of rubber trees. With the cutting of rubber trees, at best, the schedule property becomes arable land, which may not be an agricultural land with plantations. The user for agriculture is not denied by such cutting of rubber trees. This contention that barren land is not agricultural land is neither supported by authority nor material. This Court is of the view that the vacant agricultural land available upon cutting and carrying away of trees, at best, can be called ‘arable land’: meaning, land used for any agricultural purpose. Either to attract the meaning of capital asset or not to attract agricultural land, something more is required. The ipsi dixit objection, examined with admitted factors, would not decisively act in determining whether the schedule property satisfies capital asset or not. In the case on hand, the assessee both factually and legally did not change the character of land from agriculture to non-agriculture. The assessee has demonstrated that the classification of land continued to be agricultural land in the revenue records even as on the date of sale. Though it is a peripheral, it is an important matter in appreciating the character of land sold by the assessee; namely, had the land been converted for the non-agricultural purpose/laid out in plots, then the stamp duty payable on registration would be on the nature of land sold at the relevant point of time. The schedule property was described as land in conveyance deed. The schedule property consists of vast extents of agricultural land, admittedly outside a notified area. There is no change of user at the instance of assessee. The burden fastened on the assessee in the circumstances of the case has been discharged and the findings recorded by the Tribunal are available in the facts and circumstances of the case. We apply the principles enunciated in the cases referred to supra to the case on hand and the tests taken out as relevant by the Revenue and examined as tenable or not. The findings of fact recorded by the Tribunal, in the circumstances of the case, do not warrant interference of this Court. The three objections raised against the findings recorded by the Tribunal since are without merit, the substantial questions are answered in favour of the assessee and against the Revenue.
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