TMI Blog1996 (3) TMI 571X X X X Extracts X X X X X X X X Extracts X X X X ..... the year of account was not 'Agricultural land in India' during the year of assessment and hence not liable to be excluded from the definition of the words 'capital Asset'? (ii) Whether, the surplus realised on the sale of land in the year of account is not exempt from capital gains? 2. The property known as Spencer's Hotel comprising 70 acres, 16 grounds 825 sq. ft. situated on Mount Road, Madras was purchased by one Gulab Bhai Mukund Rao Rane in 1944. Rane sold an extent of 79 grounds 242 sq.ft. (roughly 4 acres and odd) out of it to the assessee under a registered sale-deed dated October 27, 1950 for a consideration of Rs. 5, 53,705. The extent purchased by the assessee comprised the hotel building as well. Aft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the purpose for which it was sold, go to show that it was not an agricultural land. On appeal, the Appellate Assistant Commissioner affirmed the view taken by the Income Tax Officer. On further appeal to the Tribunal, there was a difference of opinion between the Accountant Member and the Judicial Member. The Accountant Member attached great importance to the fact that the land in question was actually under cultivation on the date of the sale and held that the other circumstances pointed out by the Income Tax Officer and the Appellate Assistant Commissioner do not detract from the position that the land was actually being used as an agricultural land on the date of its sale. The Judicial Member on the other hand held that having regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee purchased it in 1950, there was a hotel building located in the said land. In the municipal records, the property was registered as urban land and urban land tax was being levied thereon. It bore the Municipal door number 151-Mount Road, Madras. Alter purchasing the land, the assessee put up two more buildings thereon in the northern portion which together occupied an extent of 20 grounds which means that they were substantially large buildings. One of them was occupied by the assessee for its own business purposes and the other was occupied by its sister concern. After laying a road and reserving certain portion to serve as frontage for the buildings, an area of about 39 grounds was remaining open. The assessee was raising ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was not a true reflection of the nature and character of the land. It is a matter of common knowledge that in the heart of New Delhi, there are houses with large compounds wherein a portion of the open land is used for raising vegetables. That does not make those portions agricultural lands. In the case of the assessee too, the raising of vegetables was a stop-gap activity until the assessee found a better use for it, whether construction of buildings or sale. It is well to remember that the question whether a particular land is an agricultural land has to be decided on a totality of the relevant facts and circumstances. There may be circumstances for and against. They have to be weighed together and a reasonable decision arrived at. One ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the next case too, the land was registered as an agricultural land and permission to convert it into non-agricultural land was not obtained before the date of sale. In the circumstances, it was held that mere fact that it was sold at a high price only indicates its potentiality for non-agricultural use. On a consideration of entirety of the circumstances, it was held that it was an agricultural land. 6. A recent decision of this Court in Sarifabibi Mohmed Ibrahim and Ors. v. Commissioner of Income-Tax [1993]204ITR631(SC) , rendered by a Bench comprising one of us (B.P. Jeevan Reddy, J.) is relied upon by the learned Counsel for Revenue. The Bench observed: whether a land is an agricultural land or not is essentially a question of fact ..... X X X X Extracts X X X X X X X X Extracts X X X X
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