TMI Blog1977 (9) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... ur village. These two plots were subsequently given final plot No. 65 of the Town Planning Scheme No. 20 admeasuring about 2,360 square yards. The assessee had one-half share in the land bearing plot No. 65. The assessee agreed to sell the land of plot No. 65 to Messrs. Amit Corporation, a partnership firm. Amit Corporation agreed to sell the land to Manav Flats Co-operative Housing Society Ltd. under an agreement of sale dated January 9, 1968. Thereafter, by a sale deed dated September 4, 1968, the assessee sold her half undivided share in the said plot of land, namely, 1, 180 square yards of land, to Manav Flats Co-operative Housing Society Ltd. The sale deed was also executed by the partners of Messrs. Amit Corporation as confirming parties. The land was sold for Rs. 1,18,000. In the course of the assessment for the assessment year under reference, the assessee claimed that she was not liable to pay any tax on capital gains since the land sold by her was agricultural land. The Income- tax Officer rejected this contention of the assessee. According to the Income-tax Officer the market value of the land on January 1, 1954, was 11,810 at the rate of Rs. 10 per square yard. He, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ights was maintained in respect of this area. Another plot of 810 square yards out of survey No. 51/1 was given on lease by Gulchand Somnath Patel to Indraprasad Devshanker Bhatt and Jamiatram Dahyashanker Pandya, with an option of purchase to the lessees and that lease was executed on January 5, 1942, and was duly registered. It appears that Indraprasad Devshanker Bhatt and Jamiatram Dahyashanker Pandya exercised their option to purchase and by the document of April 23, 1942, the 810 square yards were sold to these purchasers by a registered document. On May 6, 1942, Hormasji Ratanji Dalal purchased from Indraprasad Devshanker Bhatt and Jamiatram Dahyashanker Pandya, the right, title and interest of these two persons in 810 square yards and this plot of 810 square yards was given survey No. 51/1/2/2/2 and it was also centred seperately in the record of rights. Thus, these two adjoining plots of land, namely, 1,767 1/2 square yards and 810 square yards aggregating to 2,577 1/2 square yards were of the ownership of Hormasji Ratanji Dalal and, thereafter, the assessee and Shantaben Dahyabhai Patel purchased the entire area of 2,577 1/2 square yards by a registered sale deed, executed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enue authorities for permission for non-agricultural use after September 4, 1968. Mr. Kaji also emphasized the fact that in the sale deed it has been specifically mentioned that the land sold by the assessee to Manav Flats Co-operative Housing Society Ltd. was agricultural land and agriculture was being carried on this plot of land. It was also mentioned that there was a standing crop of juwar on this plot of land at the time of the execution of the sale deed on September 4, 1968. Before considering the rival contentions urged by Mr. Kaji for the assessee and Mr. G. N. Desai for the revenue, it is necessary to refer to the relevant sections of the Income-tax Act, 1961. Under the charging section, namely, section 4 of the Act, where any Central Act enacts that income-tax shall be charged for any assessment year at any rate or rates, income-tax at that rate or those rates shall be charged for that year in accordance with, and subject to the provisions of the Act in respect of the total income of the previous year or previous years, as the case may be, of every person. Section 2(24) mentions that " income " includes, inter alia, any capital gains chargeable under section 45. Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... land " is common for assessment for wealth-tax purposes and assessment for capital gains under the Income-tax Act and the same principles under the Wealth-tax Act and the Income-tax Act have been applied to the concept of " agricultural land ". In Commissioner of Income-tax v. Manilal Somnath [1977] 106 ITR 917 (Guj), the Division Bench consisting of both of us considered the earlier decisions in Rasiklal Chimanlal Nagri v. Commissioner of Wealth-tax [1965] 56 ITR 608 (Guj), Commissioner of Wealth-tax v. Narandas Motilal[1971] 80 ITR 39 (Guj), Ranchhodbhai Bhaijibhai Patel v. Commissioner of Income-tax [1971] 81 ITR 446 (Guj) and Himatlal Govindji v. Commissioner of Wealth-tax [1977] 106 ITR 658 (Guj), and the principles which we culled out from these decided cases were--See [1977] 106 ITR 917, 930 : " First, find out whether the land in question is being put to any use or not. If it is being put to agricultural use, ordinarily it would be agricultural land unless there are factors which dislodge that presumption. Similarly, if the land is being put to non-agricultural use, it would be non-agricultural land. The different tests which are mentioned in Rasiklal Chimanlal Nagri's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1960-61. The Tribunal has found that the area was well developed for housing purposes and co-operative housing colonies had come up before the period involved in these appeals. It would, therefore, appear from the facts of the case that on account of the development of the area all round the land, the assessee had stopped agricultural operations presumably with a view to find a good buyer who would develop it into a housing colony. It is not as if the assessee, for the reason that she could not get a tenant or she could not personally raise some vegetables or some crop on the land, stopped cultivating the land for the six assessment years. The fact that she resumed cultivation in the last two assessment years 1969-70 and 1970-71, and realised a meagre income of Rs. 83.25 and Rs. 301.35 respectively from a very valuable land would clearly bring out her intention that she was not intending to use it as an agricultural land and that she was only waiting for a proper buyer who would buy for a good price. " It appears from the judgment in Smt. Yaswanti R. Bhatt's case that what weighed with this High Court in that case was that the mere fact that the land was put to agricultural use i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r by the High Court from the point of view of this presumption and it directed that the Appellate Tribunal should determine afresh whether the lands were agricultural after giving opportunity to both sides to lead further evidence. Beg J., as he then was, speaking for the Supreme Court, observed at page : " It is true that this case (Commissioner of Income-tax v. Raja Benoy Kumar Sahas Roy [1957] 32 ITR 466, decided by the Supreme Court) is not a direct authority upon what is ' agricultural land '. Nevertheless, it goes a long way in helping us to decide what could be agricultural land. We think that this must be land which could be said to be either actually used or ordinarily used or meant to be used for agricultural purposes. In other words, ' agricultural land ' must have a connection with an agricultural user or purpose. It is on the nature of the user that the very large number of definitions and authorities discussed by this court in Raja Benoy Kumar Sahas Roy's case [1957] 32 ITR 466 (SC) have a direct bearing. In that case, this court held that the wider meaning given to agricultural operations, such as breeding and rearing of livestock, poultry farming or dairy farming ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , AIR 1944 Mad 401, which was followed by the Full Bench of the Andhra Pradesh High Court in the case of Officer-in-Charge (Court of Wards) v. Commissioner of Wealth- tax [1969] 72 ITR 552, and which held that for the purpose of coming to the conclusion that the land in question was " agricultural land " it was enough to show that the land under consideration was capable of being used for agricultural purposes. According tc the Supreme Court, this view was erroneous and this view had led the Full Bench of the Andhra Pradesh High Court into giving excessive weight to considerations which had a bearing only on potentialities of the land for use for agricultural purposes. At page 143 ([1976] 105 ITR 133), the conclusions of the Supreme Court were mentioned in the following words : " For the reasons already given, we do not think that the term ' agricultural land ' had such a wide scope as the Full Bench appears to have given it for purposes of the Act we have before us. We agree that the determination of the character of land, according to the purpose for which it is meant or set apart and can be used, is a matter which ought to be determined on the facts of each particular case. Wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng agricultural land and if the presumption raised either from actual user of the land or from agricultural use of 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 by the presence of other factors in the case. On the facts of this case it appears that this very land was treated as agricultural land for wealth-tax assessment purposes by the taxing authorities for assessment years 1964-65 to 1966-67. In the case of the other co-owner of the land, namely, Shantaben, who was the owner of the remaining one-half of final plot No. 65, also the land was treated as " agricultural land " for wealth-tax purposes for the assessment year 1969-70. The adjoining land owned by the husbands of Shantaben and the assessee was treated as agricultural land for income-tax purposes, that is, for considering capital gains when the adjoining land plot of 3,025 square y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s particular case the facts were very similar to the case in Manilal Somnath's case [1977] 106 ITR 917 (Guj) and the present case was entirely covered by Somnath's case [1977] 106 ITR 917 (Guj). On the other hand, Mr. Desai for the revenue has contended that no entries for the years 1959-60 to 1963-64 have been produced and the record of rights entries which are annexed to the statement of the case are merely from the years 1963-64 onwards. It was also contended that in reference to survey No. 51/1/1/1 an entry has been made in the record of rights " You are entitled to hold this land for n. a. purpose ". The relevant mutation entry which was responsible for this entry in the record of rights is shown at annexure " J " as Mutation Entry No. 2651 and very strong reliance was placed by Mr. Desai for the revenue on this aspect of the case. Mr. Desai also contended that as shown by the amendment made by the Finance Act, 1970, to section 2(14)(iii) which amendment came into effect from April 1, 1970, the trend was to treat all lands within municipal limits as non-agricultural land irrespective of the user to which the land was to be put. In the instant case, we are not concerned wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... explained by us in Manilal Somnath's case [1977] 106 ITR 917 (Guj) and it appears to us that the Tribunal has not correctly applied the law for determining as to what is agricultural land for the purpose of section 2(14)(iii) of the Income-tax Act, 1961, as it stood prior to March 31, 1970. It is true that, ordinarily, the High Court has to accept the facts as found by the Tribunal but as pointed out by the Supreme Court in Commissioner of Wealth-tax v. Officer-in-Charge (Court of Wards) [1976] 105 ITR 133, 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. On these facts, in the light of the situation as prevailing, two courses, are open to us : (1) to call for a supplementary statement of the case from the Tribunal ; or (2) decline to answer the question raised by the Tribunal and to leave the Tribunal to take appropriate steps to adjust its decision under section 260, sub-section (1), of the Income-tax Act, 1961, in the light of the answer of this court. If we direct the Tribunal to submit a supplementary statement of the case, the Tribunal will, according to the decisions o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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