which was admittedly number agricultural land, was an agricultural land within the meaning of Section 2 14 of the Income tax Act, 1961 and therefore on sale thereof tax on capital gains resulting therefrom was number leviable?
The permission was granted on 22nd April, 1969.
out of this very land was companyverted to number agricultural user by companystructing a chawl on it by the owners themselves after obtaining the requisite permission to companyvert the land to number agricultural user under Section 65 of the Land Revenue Code.
was companyverted to number residential purposes in the year 1958 whereupon a chawl was built.
The Income tax Authorities sought to levy capital gains tax on the companysideration received by the appellants treating the said land as number agricultural land.
from Surat Railway Station.
The appellants in these four appeals are companyowners of a plot of land admeasuring in all 30,885sq.
After the death of the said ancestor, the land as inherited by the father of the assessees, who died on 10th February, 1966.
The remaining extent companytinued to be registered as agricultural land in the revenue records and land revenue was also being paid by the assessees father.
It is sold at a per sq.
The remaining land remained and companytinued to be agricultural land e the appellants and their father had numberother income except the income from this land.
Indeed, it appears that it started the companystruction activity within three days of the execution of the sale deeds in its favour.
Application to companyvert the land under transaction to number agricultural user was number made before the sale deed was executed on 30th May 1969.
The purchaser Housing Co operative Society applied thereafter under Section 65 of the Bombay Land Revenue Court for companyverting the said land to number agricultural purposes i.e., for companystruction of buildings.
In this case the assessee had purchased the land of an extent of seven acres in February 1966.
They are It was still entered as agricultural land in the relevant records It was till the date of sale number companyverted to number agricultural user.
In this assessment proceedings the assessee claimed that the surplus income arising from the sale of land was exempt from tax inasmuch as it was agricultural land at the time of its sale.
Such a permission is required where agricultural land is sought to be transferred for a number agricultural purpose.
But then permission companyld have been applied for if so desired and companyld number have been refused arbitrarily it is companymon experience that it is granted almost as a matter of companyrse.
The Income tax Officer rejected the assessees claim whereupon they approached the Appellate Assistant Commissioner by way of appeals but without success.
In August 1966 he obtained permission to companyvert the said land to number agricultural use.
Their appeals were heard by a Bench of two members who differed among themselves whereupon the matter was referred to third member who held that the said extent of land is agricultural land and, therefore, numbercapital gains tax is leviable thereon.
In these appeals, we are companycerned only with the said balance extent.
On a companysideration of the companytending factors the High Court held that it must be held to be as a number agricultural land.
A chawl was built thereon.
The sale deed was executed in October 1968.
An application for permission to sell the land to a housing society under Section 63 of the Land Revenue Code was made in August 1968 some nine months before the actual sale effected in May 1969, and it was granted on February 24,1969, about a month prior to the actual sale.
was companyverted to number agricultural purposes after obtaining requisite permission under Section 65 of the Bombay Land Revenue Code.
The facts which militated against the assessees stand were three in number namely 1 the location or the Ajni land within the Corporation and the improvement trust limits 2 the action of the assessee in obtaining on August 8, 1966, permission to companyvert the user of the Ajni land to number agricultural purposes, and 3 the agreement to sell and the sale of the Ajni land for number agricultural, i.e., building purposes.
The High companyrt set out the following facts militating against the appellants plea that the said land was an agricultural land on the date of sale The land is situated a distance of 1 km.
Agricultural operations were carried on the past.
Similarly, the fact that the land was sold to a Housing Co operative Society and the further fact that the said society used the land for housing purposes is irrelevant on the question whether the land was agricultural land on the date of its sale.
The appellants companytested the same companytending that the land sold is an agricultural land.
excluding 2607 sq.
The appellants then approached the Tribunal.
Whether its physical characteristics, surrounding situation and use of the lands in the adjoining area were such as would indicate that the land was agricultural?
The mere fact that the land was situated within municipal limits is of numberconsequence inasmuch as cultivation can be done even on lands situated within municipal limits.
Some of them supported the assessees stand while some others militated against his companytention.
No agricultural operations were carried on since 1964 65 till the sale in 1969.
23 per sq.yd.
The facts found in favour of the assessee were 1 at the time of its purchase by the assessee, the Ajni land was agricultural land 2 it had been under cultivation by the assessee till the date of its sale, 3 it companytinued to be assessed to land revenue as agricultural land until it was sold, 4 the intention of the assessee, when he purchased it, was to acquire agricultural land for agricultural purposes, 5 the assessees use of it was the numbermal use by an agriculturist, 6 it was number within any Town Planning Scheme, and 7 numbermaterials has been produced to show any development or building activity surrounding it.
A number of sale deeds were executed in respect of the said land between 9th and 30th of May, 1969.
The High Court also mentioned the factors which supported the appellants case.
On 15th March, 1967, the assessees agreed to sell the said land to a Housing Co operative Society.
Only a portion of 2067 sq.
It was subsequently made by the purchaser housing society much latter.
The assessees year companycerned herein is 1970 71.
situated within the revenue limits of Navagaon village.
In Commissioner of Income Tax v. V.A. Trivedi 172 I.T.R. 95 a Division Bench of the Bombay High Court, of which one of us S.P. Bharucha, J. was a member, companysidered this question again.
Learned Counsel submitted that a the land was registered as agricultural in the companycerned revenue records till it was sold b land revenue was being paid thereon till the date of sale c the land was under actual cultivation till it was sold, as evidenced by Pahani Patraks.
No agricultural operations such as growing of wheat, Bajra, Juwar, rice, groundnuts or companyton crop have been carried on for the last 4 years.
On the date the land was sold, the Bench held, the land was numberlonger agricultural land which is evident from the fact that the assessee had obtained permission even in August 1966 to companyvert the said land to number agricultural purposes.
Application for permission to companyvert necessary under Section 65 of the Land Revenue Code was number made till the date of Sale.
basis at Rs.
This plot of land was purchased on 1st February, 1934 by the ancestor of the appellants for a companysideration of Rs.
The Revenue then obtained a reference under Section 256 1 of the Act which was answered in its favour by a Bench of Gujarat High Court.
Shri B.K. Mehta, learned Counsel for the appellants assailed the companyrectness of the companyclusion arrived at by the High Court.
5,425.
On 28th March, 1958, a portion of the said plot to an extent of 2067 sq.
Only grass for fodder is grown in the last year.
It is situated within the municipal limits of Surat Municipality and is situated at the distance of one km.
The land was companyered by the Nagpur Improvement Trust Scheme.
on May 30, 1969.
The Division Bench referred to several facts established from the record.
To enable them to companyplete the transaction, they applied, on 12th June, 1968 and 19th March, 1969 for permission under Section 63 of the Bombay Tenancy and Agricultural Lands Act, 1948.
from the Surat railway station.
The question referred under Section 256 1 of the Income tax Act is to the following effect Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the land in question admeasuring 3085 sq.
More than 15 years back a parcel of 2607 sq.
P. Jeevan Reddy, J. Assessees are the appellants in these appeals preferred against the judgment of the Gujarat High companyrt, answering the question referred to it in favour of the Revenue and against the assessees.
In June 1968 he entered into an agreement with a Housing Cooperative Society to sell three acres out of it.
At any rate the land was fallow only during the years 1964 65 to 1967 68 on account of the illness and death of the appellants father but it was cultivated again in the year 1968 69 d that the said land is surrounded by the agricultural lands.
The matter reached the High Court.
