TMI Blog1980 (10) TMI 56X X X X Extracts X X X X X X X X Extracts X X X X ..... August, 1954, and the other in August, 1955, the assessee purchased the area covered by survey Nos. 1586/1/213 of Anand Town admeasuring one acre twenty gunthas. This land was situated within the limits of Anand Municipality. The purchase price paid by the assessee for this land was Rs. 5,928. The assessee was a manufacturer of bricks. The entire land admeasuring one acre twenty gunthas was sold by the assessee to Vijay Corporation for Rs. 1,20,000 under a deed of sale dated January 30, 1969. The ITO sought to include the gains made by the assessee on the sale of the land as capital gains arising out of the transaction of sale. The assessee contended that since the land was agricultural land he was not liable to pay any capital gains in res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5] 56 ITR 608 and other decisions and held that the land was non-agricultural in character at the relevant time. For the purposes of this judgment, in order to find out what are the facts found by the Tribunal and by the authorities below, we will not consider what has been stated in the three affidavits and in Bai Chanchal's affidavit filed at the stage when the proceedings were before the AAC. However, so far as the Tribunal was concerned, ultimately it has been found that for two years, namely, revenue years 1956-57 and 1957-58, temporary permission for making bricks was obtained from the revenue authorities and to that extent non-agricultural operations in the shape of brick-making were being carried on in this land, but as shown by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Court of Wards), Paigah [1976] 105 ITR 133 that if the law has not been correctly appreciated by the Tribunal, its appreciation of facts is bound to be affected by the wrong approach to the evidence. Now, in the instant case, the Tribunal has held against the assessee because permission to sell the land for non-agricultural use was obtained. This court has pointed out in CIT v. Manilal Somnath [1977] 106 ITR 917 that the permission granted by the revenue authorities under s. 63 of the Bombay Tenancy and Agricultural Lands Act clearly goes to show that in case the land did not cease to be agricultural land, the permission would be treated as cancelled and, therefore, the sale in favour of the particular purchaser would be infructuous and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purposes. If it is actually used at the relevant date for agricultural purposes and there are no special features, as for example, a building site being actually used as a stop-gap arrangement for agricultural purpose, it would be agricultural land. Potential use of the land as non-agricultural land is totally immaterial. Entries in the record of rights are good prima facie evidence regarding land being agricultural and if the presumption raised either from actual user of the land or from entries in revenue records is to be rebutted, there must be material on the record to rebut the presumption. The approach of the fact-finding authorities, namely, the income-tax authorities and the Tribunal, should be to consider the question from the poin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iously to be borne in mind when permission under s. 63 is obtained, that the question has to be approached. It must be pointed out that in CIT v.Manilal Somnath[1977] 106 ITR 917, this court has observed that merely because land is surrounded by development or that development has caught up with the land in question it should not be held that the land had ceased to be agricultural land. It is nobody's case that permission for non-agricultural use under s. 63 of the Bombay Land Revenue Code had been obtained by the vendor, the assessee, before he sold the land on January 30, 1969, to the purchaser. The importance of the potential non-agricultural use of the land may be reflected in the price which the purchaser is prepared to pay for the agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been whether the presumption that this was agricultural land was being rebutted by any evidence about user of the land or about the character of the land having been changed prior to the date of the sale. No such evidence has been pointed out from the records of this case or from the facts found by the Tribunal and considerations of other development in the locality or other locality in the vicinity of the land are not proper considerations to be applied, as was pointed out in Manilal Somnath's case [1977] 106 ITR 917 (Guj). Under these circumstances, the Tribunal erred in holding that the land in question was non-agricultural in character at the date of the sale. In the light of the discussion set out hereinabove, we hold that the land ..... X X X X Extracts X X X X X X X X Extracts X X X X
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