TMI Blog1981 (3) TMI 44X X X X Extracts X X X X X X X X Extracts X X X X ..... pecting Syndicate Private Ltd. was formed on May 1, 1920, under the Indian Companies Act, 1913, and on July 10, 1947, Western India Prospecting Syndicate Private Ltd. had purchased 4,847 square yards of land at the rate of Rs. 46 per square yard and the total purchase price which was paid was Rs. 2,18,220. On August 14, 1969, the assessee-company which had got the land at the time of the amalgamation sold that plot of land for Rs. 13, 08,690 and this means that the price was about Rs. 276 per square yard., The assessee contended that the land was agricultural land at the time when it was sold and, therefore, it was not liable to capital gains tax under the provisions of the I.T. Act, 1961. The question as to what is agricultural land in the context of I.T. Act and W.T. Act has been considered by the Supreme Court in CWT v. Officer-in-Charge (Court of Wards), Paigah [1976] 105 ITR 133 and it was also considered by this High Court in a series of decisions.. It may also be pointed out that in Mst. Subhadra v. Narsaji Chenaji Marwadi, AIR 1966 SC 806, in the context of the Bombay Rents, Hotel and Lodging. House Rates Control Act, 1947 the Supreme Court considered the meaning of " agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... land which is either actually used or ordinarily used or meant to be used for agricultural purposes. If it is actually used at the relevant date for agricultural purposes and there are no special features, for example, building plot being actually used as a stop-gap arrangement for agricultural purposes or a building site being used for agricultural purposes, actual user or ordinary use or intention to use the land for agricultural purposes, or land is meant to be used for agricultural purposes, it would be 'agricultural land'. Secondly, potential use of the land as agricultural land is totally immaterial. Thirdly, entries in the record of rights are good prima facie evidence regarding agricultural land and if the presumption raised either from actual user of the land or from agricultural use or the land is to be rebutted, there must be material on the record to rebut that presumption. The approach of the fact-finding authorities, namely, the income-tax authorities and the Tribunal should be to consider the question from the point of view of presumption arising from entries in the record of rights or actual user of the land and then consider whether that presumption is dislodged b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arried on in the land. As pointed out by the Supreme Court in Mst. Subhadra's case, AIR 1966 SC 806, the fact that the land was lying fallow is totally immaterial. Permission to convert the land to non-agricultural user had not been obtained under s. 65 of the Bombay Land Revenue Code. Moreover, in Begumpet Palace case [1976] 105 ITR 133 (SC), it was pointed out by Beg J., as he then was, speaking for the Supreme Court, at p. 138 of the report : " The property at Begumpet was known as 'Begumpet Palace, Hyderabad'. The buildings in this property were valued at Rs. 8,81,336 while the vacant land comprising an area of about 108 acres was valued at Rs. 15,69,052. The entire plot of land was enclosed in a compound Wall and the various buildings inside it had their own compound walls. The property is situated within the limits of the Hyderabad Municipal Corporation. The land had never boon actually used for agriculture, in the sense that it had never been ploughed or tilled. The property is situated, adjacent to the tank known as 'Hussain Sagar on the southern side, and there are two walls in the said land. The land was capable of being used for agricultural and land revenue was being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot meant to be used for agricultural purposes when it was sold by the assessee-company on August 14, 1969. Now it is well-settled law that the character of a land, namely, whether it is agricultural land or whether it has ceased to be an agricultural land has to be judged as of the date of sale with reference to which the question of capital gains arises. In the instant case, the question that we have to ask ourselves is whether, at the date of sale by the assessee-company it could be said that the land was not meant to be used for agricultural purposes, and that, therefore, it bad lost its agricultural character. In Manilal Somnath's case [1977] 106 ITR 917 (Guj), we have pointed out that the high price paid for the agricultural land may be due to the reflection of the potential non-agricultural user of the land but merely because high price is paid for a piece of agricultural land it cannot be said that the land had ceased to be agricultural land in character. In Begumpet Palace case [1976] 105 ITR 133 (SC), the Supreme Court has pointed out that when land is actually used for agricultural purposes or ordinarily used for agricultural purposes or meant to he used for agricultu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f land in question in anticipation of the permission under s. 65 of the Land Revenue Code for non-agricultural use, or applying to the municipal authorities or other authorities for sanctioning of such plans and designs for the construction of buildings, that it can be said that, according to the vendor, the land was not meant to be used as land for agricultural purposes and, therefore, it had lost its agricultural character at the date of the sale. Barring such clear cut and specific evidence on the point, it cannot be said, so long as the permission under s. 65 of the Bombay Land Revenue Code had not been obtained from the Collector, that the user of the land had ceased to be agricultural and that land had lost its agricultural character. In the instant case, there is no clear cut evidence to that effect and all that we have got is the fact that on the revenue records the land continued to be shown as agricultural land and no permission had been applied for from the Collector under the provisions of s. 65 of the Bombay Land Revenue Code to change the user of the land. The fact that the land is situated in a well developed locality or within the limits of the Municipal Corporati ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
