TMI Blog1985 (9) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... open plot of land admeasuring 24,613 square yards (referred to hereinafter as " the larger plot ") for Rs. 1,47,816. Thereafter, they applied to the Collector for permission to use the larger plot for non-agricultural purposes. On November 11, 1952, the Collector refused to grant such permission. Govindram Brothers thereafter considered it proper to separate their cinema business from the remaining businesses carried on by them and with that object, the assessee-company, namely, Universal Cine Traders Pvt. Ltd., was incorporated on October 8, 1953, under the Indian Companies Act, 1913. One of the objects of the assessee-company was to take over the business and the undertaking of the Famous Cine Laboratory and Modern Studio and all other concerns pertaining to the film line from Govindram Brothers. This object could not be carried out. However, the larger plot which Govindram Brothers had agreed to purchase as aforesaid was in fact purchased by the assessee company on April 23, 1959. Thereafter, about 1,800 square yards of the larger plot was leased out to Govindram Brothers and Govindram Brothers constructed studio No. 4, and chawls thereon in 1962. There is no positive evidence a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acquired was agricultural land till the time of its acquisition by the Government, and hence the excess price realised by the assessee was not liable to assessment under the head " Capital gain ". The contention of the assessee was that at the time when the land was agreed to be purchased by Govindram Brothers, it was agricultural land. This was in 1951 and even subsequently the land continued to be subject to assessment of land revenue as agricultural land. It was contended on behalf of the assessee before the Tribunal that out of a vast area of 24,000 square yards, only small area admeasuring 1,800 square yards had been leased out to Govindram Brothers, and it was on that portion that Govindram Brothers had put up a studio. As far as the remaining land was concerned, it was contended that nothing was done by the assessee to render the land unfit for cultivation. It is significant that before the Tribunal, learned counsel for the assessee admitted that the entire land acquired other than the land given on lease to Govindram Brothers was permitted to be used by Govindram Brothers for shooting films, but the learned counsel submitted that this did not permanently change the charact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which was leased out to Govindram Brothers was agricultural land. The term has not been defined anywhere in the Income-tax or the Wealth-tax Act and in accordance with well settled principles, the meaning of the term " agricultural land " will have to be gathered from what is generally understood to be such land or in accordance with popular parlance. Before going into the contentions raised by the respective counsel, there are certain decisions which, to a considerable extent cover the question which we are called upon to consider. In CWT v. Officer-in-Charge (Court of Wards), Paigah [1976] 105 ITR 133, the Supreme Court was called upon to consider whether the property called " Begumpet Palace " within the municipal limits of Hyderabad consisting of vacant lands of about 108 acres and also buildings enclosed in compound walls constituted " agricultural land " within the meaning of clause (i) of section 2(e) of the Wealth-tax Act, 1957. The High Court in its decision, on which the Tribunal has placed strong reliance in this case, had taken the view that the said land was agricultural land. Amongst the factors on which the High Court placed reliance was the factor that the said lan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he question before us. Coming to the facts of the present case, it is significant that the larger plot, which was of considerable size, was situated in a suburb of a very large city, namely, Bombay. Quite apart from that, it must be noted that no sooner did Govindram Brothers entered into an agreement to purchase the larger plot, than they applied for permission to put it to non-agricultural use. It is true that the permission was refused, but the application for permission clearly shows that the intention of Govindram Brothers in purchasing the larger plot was to use it for non-agricultural purposes. It is correct that the assessee is technically a different entity from Govindram Brothers, but one cannot lose sight of the fact that the assessee-company was really formed with a view to take over the film business and the businesses associated with films carried on by Govindram Brothers. That the said purpose could not be achieved is a different matter. But the facts found clearly show that there was very close association between the assessee-company and Govindram Brothers. As far as the area of 1,800 square yards leased out to Govindram Brothers is concerned, it has already been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... H. V. Mungale (to which one of us was a party) [1984] 145 ITR 208. The facts in that case, however, are completely different from the facts in the case before us, so that the conclusions to which the Division Bench arrived at are not applicable to the case before us at all. In that case, the assessment years with which the court was concerned were the assessment years 1965-66 to 1969-70. The land had been purchased by the assessee in 1955 and in the land revenue records, it was described as agricultural land. The land was actually cultivated till 1963, although it remained uncultivated thereafter. There was no evidence that the land had been put to any non-agricultural use at any time. It was on these facts and circumstances that the court came to the conclusion that the said land was agricultural land and took the view that the mere fact that no agricultural operations were carried on the said land for some years did not lead to the conclusion that it had ceased to be an agricultural land. In the case before us, the facts are completely different just to mention two, the intention with which Govindram Brothers purchased the land was to put it to non-agricultural use. On the porti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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