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TMI Blog2005 (3) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 each as tax on long-term capital gains for the assessment year 1996-97 stating that the land sold by them was barad in nature and was not capable of agricultural operations. The Assessing Officer noted that the assessees were non-resident Indians and there was no one to look after the said land. The Assessing Officer declined to accept that the father of the male assessee who was an old man, could look after the said property or involve himself in agricultural activities and also noted that the trees were not planted in a row and in order. He was also of the view that the price at which the land was sold showed that it was not agricultural land and besides, the land was adjacent to 4 five star hotels namely Holiday Inn, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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), Panaji Bench, and the Income-tax Appellate Tribunal by judgment dated September 28, 2001 was pleased to allow the appeals filed by the assessees and dismissed the appeals filed by the Revenue. The Income-tax Appellate Tribunal came to the conclusion that the documentary evidence produced by the assessees and its prevailing nature and considering all surrounding facts brought on record, it was of the opinion that the land sold was agricultural land. The Commissioner of Income-tax (Appeals) also found that the land was in a settlement zone and the said property was situated in village Cavelosim, outside the municipal limits as well as notified outer limits. Before this court, on behalf of the Revenue, two judgments have been r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, be allowed to argue that the case does not involve such question. As stated, it is the case of the assessees that the question framed is not at all involved in these appeals. The Supreme Court in the case of Santosh Hazari [2001] 251 ITR 84, has stated that pure findings of fact remain immune from challenge before the High Court in second appeal. The first appellate court is also a final court of law in the sense that its decision on a question of law even if erroneous may not be vulnerable before the High Court in second appeal because the jurisdiction of the High Court has now ceased to be available to correct the errors of law or the erroneous findings of the first appellate court even on questions of law unless such quest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 of land revenue? (2) Whether the land was actually or ordinarily used for agricultural purposes at or about the relevant time? (3) Whether such user of the land was for a long period or whether it was of a temporary character or by way of a stopgap 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 section 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 such permission was in respect of the whole or a portion of the land? If the permission was in respect of a portion of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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, or by any other name) or a cantonment board or which has a population of not less than ten thousand according to the last preceding census of which the relevant figures have been published before the first day of the previous year; or (b) in any area within such distance, not being more than eight kilometres, from the local limits of any municipality or cantonment board referred to in Item (a), as the Central Government may, having regard to the extent of, and scope for, urbanisation of that area and other relevant considerations, specify in this behalf by notification in the Official Gazette. The expression "agricultural land" is not defined in the Act, and now, whether it is agricultural land or not has got to be determined by using the tests ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Admittedly, the subject land was situated in a village and at a distance of about 15 kms. from the municipal limits as noted by the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals) visited the subject land, but however the learned Income-tax Appellate Tribunal found fault with his visit, stating that he ought to have given a finding on the basis of the evidence produced before him. In our view, there was nothing wrong in the Commissioner of Income-tax (Appeals) to have visited the subject land in order to appreciate in a better way the evidence produced by the assessees before him. The assessees had also produced an award of the Land Acquisition Officer dated November 14, 1990. This award showed that by notification issued u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 own umbrellas and, therefore, it could not be said that only because the father of the male assessee was an old man, he could not involve in agricultural pursuits. It may be noted that the term to cultivate in the G.D.D. Agricultural Tenancy Act, 1964 with its grammatical and cognate expressions means to till land for the purpose of raising or improving agricultural produce whether by manual labour or machinery or to carry on any agricultural operations thereon and the expression uncultivated is to be construed correspondingly. The Constitution Bench of the Supreme Court in the aforesaid case observed that the entries in revenue records were considered good prima facie evidence and the Gujarat High Court in the case of Dr. Motibhai D. Patel v. CIT [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 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 context it may also be stated that the subject land had also not lost its physical characteristics at the time of sale or soon thereafter by the setting up of the said hotels near about it. We may refer to the case of CIT v. Manilal Somnath [1977] 106 ITR 917 (Guj) wherein the Division Bench observed that the potential non-agricultural value of the land for which a purchaser may be prepared to pay a large price would not detract from its character as agricultural land on the relevant date of sale. We may also refer to the case of Gopal C. Sharma v. CIT [1994] 209 ITR 946 wherein a Division Bench of this court has stated that the profit motive of the assessee selling the land without anything more by itself can never be decisive for determination of the is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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