TMI Blog1979 (10) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of section 45 of the Income-tax Act, 1961 ? " In terms of s. 45 of the Act any profits and gains arising from the transfer of " Capital asset " is chargeable to income-tax under the head "Capital gains" and is treated to be the income of the previous year in which the transfer took place. " Capital asset " has been defined in sub-s. (14) of s. 2 of the Act as not including, inter alia, agricultural land in India. Subsequently, however, by an amendment made in the year 1970, " agricultural land " which is not to be included in the " capital asset " has been restricted. Since, however, the restriction does not affect the assessment in question, it is not necessary to mention it. All that is necessary to be stated is that " capital asset ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income-tax Appellate Tribunal which found, on the basis of an enquiry, which was made at its instance, by an inspector of income-tax, the following facts : (i) the Malguzari receipts granted by the State Government indicated the character of the land as Hakast Kheti ; (ii) The entry in the record of rights showed the land as Raiyati Krishi ; (iii) It was a low land and from local enquiry it was found that it was being used for agricultural purposes previously, but for last 2-3 years it was not being so used ; (iv) The land adjoining on the southern side was being used for growing vegetables, fruits and other crops. Only on its western side some land had been purchased by the income-tax department and on which side also lay th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so be some of the criteria for determining the character of the piece of land, but by themselves they would not be sufficient for the purpose. It would all depend upon the facts and circumstances of each case and it is only on an overall view of all the situation pertaining to the land, that the character of the land can be properly determined. Agricultural land has not been defined in the Act and there have been a series of cases on the question relating to the criteria to determine the character of a land, claimed to be an agricultural land. The Supreme Court in the case of CWT v. Officer-in-Charge (Court of Wards), Paigah [1976] 105 ITR 133, has said that the classification and assessment of the land to land revenue as " agricultural l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s us an idea of another criterion which has to be kept in mind for determining the character of land, namely, that a mere temporary user of a land in a particular fashion, either for agricultural purposes or for non-agricultural purposes, will not be a safe criterion. What has to be determined is the intention of the owner about the purpose for which he is retaining the land. In fact, the Gujarat High Court in the case of CIT v. Manilal Somnath [1977] 106 ITR 917 has expressed the same view. It has that in order to determine whether a particular land is agricultural land or not, one has first to find out the use to which it is being put. If it is used for agricultural purposes, the presumption is that it is agricultural land ; if it is us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eria which the Tribunal has adopted for determining the nature of the land were valid and correct. We have already quoted the various factors which the Tribunal has taken into consideration for determining the nature of the land and we must say that each one of them is a very valid and cogent factor for the purpose of determining the character of the land. The two criteria, about which Mr. Rajgarhia spoke, may be relevant even as supporting the view which the Tribunal has taken, the land may lie near an urban area and the land may have fetched a good price, may hold good in cases of agricultural land also. Since the land has been recorded in the official records as agricultural land, if the department wanted to show that the entry was wrong ..... X X X X Extracts X X X X X X X X Extracts X X X X
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