TMI Blog1984 (2) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... hly equivalent to 1.28 gunthas. With effect from May, 1945, the said lands came within Town Planning Scheme No. 3 of Ellisbridge area in Ahmedabad City, with the result that they were given two, final plots Nos. 280 and 281 by the Town Planning Authorities. Each of the four owners had 1/4th interest in the said lands. These lands were sold to one co-operative housing society under the name and style of Shriji Co-operative Housing Society on November 10, 1966, for Rs. 5,26,412; and the capital gains were worked out at Rs. 4,10,387 with the result that each joint owner including the present assessee was held to be taxable on capital gains of Rs. 1,02,597. It was claimed by the assessee that the lands were agricultural lands and they were sold as such. That claim did not find favour with the ITO; and he, therefore, treated the land as non-agricultural land and calculated capital gains accordingly. The assessee, therefore, carried the matter in appeal before the AAC, who accepted the appeal holding that the land was agricultural land and, therefore, there was no question of any taxable capital gains. The Department, therefore, carried the matter in appeal before the Tribunal in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd revenue as " agricultural land " under the Andhra Pradesh Land Revenue Act. On appeal to the Supreme Court, it was held that the first four features set out above were inconclusive and the fifth feature alone provided some evidence of the character of the land from the point of view of its purpose ; and that the property was classified in the revenue records as agricultural land, though not conclusive, would raise a rebuttable presumption; and, therefore, the Appellate Tribunal should determine afresh whether the lands were agricultural after giving an opportunity to both sides to lead further evidence. The Supreme Court further ruled that the determination of the character of the land, according to the Purpose for which it is meant or set apart and can be used, is a matter which ought to be determined on the facts of each particular case. What is really required to be investigated and established is the connection with an agricultural purpose and user and not the mere possibility of user of land, by some possible future owner or possessor, for an agricultural purpose. The Supreme Court emphasized that potentiality has bearing only as far as its valuation is concerned, but its a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt tests have been evolved and applied for determining the nature of the land. The Division Bench, speaking through Desai J., stated broadly that the question has arisen in the context of four facts-situation in connection with the user of the land on the date of sale. The first category of cases is where the land in question was not being put to any use whatsoever and was lying idle on the relevant date. The basic decision in respect of this category is Rasiklal Chimanlal Nagri v. CWT [1965] 56 ITR 608 (Guj). The second category of these cases pertains to the land being actually put to agricultural use on the material date ; and no other factors dislodging the presumption flowing from the agricultural use of the land was brought on record. The leading decision in this category is CWT v. Narandas Motilal [1971] 80 ITR 39 (Guj). The third category pertains to the land which ceased to be used for agricultural purpose on the relevant date and the cesser of agricultural use was of a permanent nature. This category is represented by the decision in Ranchhodbhai Bhaijibhai Patel v. CIT[1971] 81 ITR 446 (Guj). The fourth category pertains to land which, though being used for agricultural ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d or meant to be used for agricultural purposes. " The Division Bench, thereafter, extracted major factors which in its opinion have a bearing on the determination of the question. We need not state all the factors in extenso since the Division Bench has carefully noted that not all of these factors 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 circumstances. The important factors which we should recapitulate are : (1) classification of the land in the revenue records as agricultural land; (2) actual or ordinary use of the land for agricultural purposes at or about the relevant time; (3) whether such user was for a substantial period or it was for a temporary duration only by way of a stop-gap arrangement; (4) rational proportion of income from the land to investment made therein; (5) permission under s. 65 of the Bombay Land Revenue Code for change of user, and when and by whom it has been obtained; (6) cessation of the agricultural use and converting the land to non-agricultural purpose; (7) non-use for agricultura ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er in the reference before us, the land in question was rightly held by the Tribunal to be an agricultural land. It has been found as matter of fact by the Tribunal that the land in question was classified as agricultural land in the revenue records maintained under the Bombay Land Revenue Code. It has also been found by the Tribunal that the sale deed supported by the Pani Patrak established that agricultural operations were being carried on up to the accounting year relevant to the assessment year 1966-67. The Tribunal has found, firstly, that the lands have been acquired by the family in the thirties. There is some evidence to hold that it was being put to agricultural use; and there is nothing to indicate that it was not so used in any of the intermediate years. Thirdly, the land has also been accepted to be an agricultural land right up to the assessment year 1966-67 (Re. wealth-tax assessment) and nothing has happened in this year except sale of land which would indicate that the character of the land was changed. The only adverse circumstance which the Tribunal has noted was that there was some construction activity around the land in question; and that the town planning sch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... our attention to the three decisions of the Division Bench of this court, where the court has taken a view that the land which was the subject-matter of a reference before the Division Bench was held not to be an agricultural land. First decision is in Yaswanti R. Bhatt v. CWT [1978] 114 ITR 318 (Guj). In that case, the land was situated in Paldi area of Ahmedabad and included in the Town Planning Scheme and the surrounding area was fully developed for housing. The decision of the Division Bench in that case would not be applicable to the facts of the present case, since there was no cultivation being carried on the said land for six out of eight years involved. The Division Bench was concerned with the assessment years 1963-64 to 1970-71. The Division Bench noted that the assessee had not placed any evidence to show that she had cultivated the land either personally or through tenants during the assessment years 1963-64 to 1968-69 and that the land was kept fallow during these years is not in dispute. For the remaining two assessment years, i.e., 1969-70 and 1970-71, there was some cultivation of juwar and vegetables; and the income realised was too meagre. It is under these circu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liable for capital gains arising out of the sale of the land. The assessee relied upon two factors, viz., the classification of land as agricultural land in the revenue records and its use at the relevant time for growing bajri and grass. The Tribunal found that a large block of land admeasuring acres 10-21 gunthas was purchased by father-in-law of the assessee as the karta of the HUF, comprising of himself and his three sons including the assessee's husband in the year 1944, for a total consideration of Rs. 2,67,321. Out of the said land, a substantial parcel thereof admeasuring acres 6-36 gunthas was acquired for public purpose for construction of houses by the Gujarat Housing Board as early as in 1962. There was a partial partition amongst the members of the bigger HUF and a portion of the remaining land came to the share of the smaller HUF. There was a further partial partition in 1963 in the smaller HUF headed by the husband of the assessee as a result of which the assessee and her husband acquired undivided 1/2 share in the parcel of land admeasuring 8,578 sq. yds. which was the subject-matter of the transaction effected in 1970 and in respect of which liability to capital g ..... 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