TMI Blog1981 (2) TMI 63X X X X Extracts X X X X X X X X Extracts X X X X ..... rvey numbers, namely, Survey Nos. 98/1, 98/2, 99, 107/1/2 and 107/2. All these survey numbers were of Shekhpur-Khanpur village, also called Navrangpura village. These lands were sold during the months of May and July, 1969, and the assessee received his share of the consideration after the sale of these lands. The lands were sold to different co-operative societies. At the time when the assessee filed his return for assessment year 1970-71, he made a note along with the return of income ; " Sale of agricultural land during the year exempt u/s. 2(14)(iii) ". The ITO examined the claim of the assessee in the light of the actual fact and came to the conclusion that the lands in question were not agricultural lands. He, accordingly, called upon the assessee to produce any evidence which could go to show that the lands were really agricultural lands. The assessee wrote the letter dated March 16, 1973, explaining the position and he claimed that the lands were agricultural lands and the sale of such lands could not result in capital gains under the I.T. Act. The ITO came to the conclusion that the surplus on the sale of lands was not agricultural income and the lands were not agricultura ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee also relied upon the fact that in respect of these very lands a question had arisen in the City Civil Court, Ahmedabad, in a litigation concerning these lands as to whether the lands were agricultural lands, for the purposes of the Court Fees Act and the court fees inspector had made a report on March 30, 1970, that the land was put to agricultural use on the date of the suit which was filed in 1967, and juvar crop was growing on the land in 1967 and the court fees should be paid on the footing that the land was agricultural land. The Tribunal considered several decisions on the point and came to the conclusion that the lands were not agricultural lands. The Tribunal also relied on various decisions of the Tribunal cited in its order and ultimately it reversed the order of the AAC and restored the order of the ITO but remanded the matter to the AAC for determining the actual quantum of capital gains which had not been decided by the AAC. Thereafter, at the instance of the assessee, the following question has been referred to us for our opinion: " Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the lands in question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business, trade or storage. In para. 2 of the judgment, Shah J., as he then was, speaking for the Supreme Court, observed: " It is common ground that till November 11, 1949 (that being the date on which the Collector of Ahmedabad sanctioned conversion of the user from agricultural to non-agricultural purpose), the plot was assessed for agricultural purposes under the Bombay Land Revenue Code. In the year 1947, the plot was undoubtedly lying fallow, but on that account, the user of the land cannot be deemed to be altered. User of the land could only be altered by the order of the Collector granted under s. 65 of the Bombay Land Revenue Code." Thus, it is clear that in view of the position under the Bombay Land Revenue Code, even for the purposes of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947, the land was treated as agricultural land because the user could be changed from agricultural to non-agricultural only by a specific order made by the Collector under s. 65 of the Bombay Land Revenue Code. After this decision of the Supreme Court in Mst. Subhadra's case, AIR 1966 SC 806, there has been a series of decisions of our High Court, starting from the decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tual user of the land and then consider whether that presumption is dislodged by the presence of other factors in the case." This legal position was once again reiterated in Dr. Motibhai D. Patel's case [1981] 127 ITR 671 (Guj). Smt. Chandravati Atmaram Patel's case [1978] 114 ITR 302 (Guj) was considered and followed and the following propositions were laid down: " (1) That the fact that permission was obtained under section 63 of the Bombay Tenancy and Agricultural Lands Act did not mean that the land ceased to be agricultural in character, because if for any reason the conditions laid down in the permission were not satisfied, the sanction would automatically be null and void and the land would again resume its agricultural character. (2) That permission to convert the land into non-agricultural use was not obtained by the assessee and his co-owners prior to the date of sale on March 17, 1967, to the three co-operative societies. (3) That the presumption raised from the long user of the land for agricultural purposes and the presumption arising from the entries in the revenue records were not rebutted by the revenue. (4) That the fact that development had caught up wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be immaterial for the purpose of determining the question whether the land had ceased to be agricultural land. In Manilal Somnath's case [1977] 106 ITR 917 (Guj), this court had pointed out at p. 929 of the report: " Under section 63 of the Tenancy Act, no sale of any land or interest therein shall be valid in favour of a person who is not an agriculturist unless the Collector or an officer authorized by the State Government in this behalf grants permission for such sale on such conditions as may be prescribed. Under section 2, sub-section (8), of the Tenancy Act, 'land' means land which is used for agricultural purposes and it is, therefore, obvious that it was for the sale of land used for agricultural purpose for which the City Deputy Collector acting under section 63 of the Bombay Tenancy and Agricultural Lands Act granted permission. There is nothing to show that between the date of the permission, namely, March 24, 1967, and April 7, 1967, that is, the execution of the sale deed by the assessee in favour of Tarakkunj Co-operative Housing Society Ltd., agricultural operations which were being carried on were by way of stop-gap arrangement. We are not, in the present case, co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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