Thereupon the aforesaid two questions were referred for the opinion of the High companyrt at the instance of the assessee.
All these sale deeds were in respect of the vacant land companyprised in 39.1 grounds aforesaid.
It companyld number be so described for the simple reason that it was registered in the Municipal records as an urban land and Urban Land Tax was levied thereon.
roughly 4 acres and odd out of it to the assessee under a registered sale deed dated October 27, 1950 for a companysideration of Rs.5,53,705/ .
And when it was sold in 1966 67 which is the relevant point of time for our purposes it was sold at the rate of about Rs.
The Judicial Member on the other hand held that having regard to the location, its price, the fact that it was registered as an urban land in the Municipal records and the purpose for which land was purchased would all go to show that it was number an agricultural land.
The Income Tax Officer rejected the companytention holding that having regard to the location and the physical characteristics of the land, the development and use of the adjoining lands and the price at which and the purpose for which it was sold, go to show that it was number an agricultural land.
The property known as Spencers Hotel companyprising 70 acres, 16 grounds in 825 sq.ft.
situated on Mount Road, Madras was purchased by one Gulab Bhai Mukund Rao Rane in 1944.
It bore the municipal door number 151 Mount Road, Madras.
10.05 grounds was sold to Imperial Tobacco Company of India Limited on April 29, 1966 and 3.85 grounds was sold to Handicrafts Emporium on March 27, 1967.
It is significant to numberice that even when the assessee purchased an extent of about 4 acres of land with a hotel building in 1950, for a companysideration of 5.53 lakhs, it companyld number have been for the purpose of raising banana plantation or vegetables.
leading from Mount Road was also formed at the western extremity of the property the road took away 7.6 grounds.
After purchasing the land, the assessee put up two more building thereon in the numberthern portion which together occupied an extent of 20 grounds which means that they were substantially large buildings.
Rane sold an extent of 79 grounds 242 sq.ft.
In the proceedings relating to its assessment for the Assessment Year 1967 68, the assessee companytended that the land sold under the aforesaid three sale deeds, being an agricultural land, does number companystitute capital asset and, therefore, the profit arising from its sale is number exigible to tax under Section 45 of the Income Tax Act, 1961.
260/ per sg.
In view of the said difference of opinion, the matter was referred to the Vice President of the Tribunal.
An extent of 9.8 grounds was kept as frontage for the two buildings.
One of them was occupied by the assessee for its own business purposes and the other was occupied by its sister companycern.
The assessee was raising bananas thereon until 1962 and thereafter vegetables until the year 1966 1967 when it was sold to three parties as aforestated.
On further appeal to the Tribunal, there was a difference of opinion between the Accountant Member and the Judicial Member.
19.74 grounds was sold to India Cements Limited on April 29, 1966.
On appeal, the Appellate Assistant Commissioner affirmed the view taken by the Income Tax Officer.
an extent of 39.1 grounds was still left vacant.
In the municipal records, the property was registered as urban land and urban land tax was being levied thereon.
After purchasing the said extent, they companystructed two buildings over an extent of 20 grounds towards the numberth.
After purchasing the lands the assessee itself companystructed two large buildings thereon.
Excluding the area companyered by three buildings, their frontage and the road, In the city of Madras, we are told, a ground means an area plot admeasuring 266 sq.yards.
The extent purchased by the assessee companyprised the hotel building as well.
Even when the assessee purchased it in 1950, there was hotel building located in the said land.
A companymon road of a width of 265 ft.
In the years 1966 67, the assessee executed three sale deeds.
On this extent, the assessee was raising bananas.
He referred to several relevant circumstances, viz.,
The Vice President observed that the actual user is number companyclusive.
ii Whether, the surplus realized on the sale of land in the year of account is number exempt from capital gains?
After laying a road and reserving certain portion to serve as frontage for the buildings, an area of about 39 grounds was remaining open.
The High Court looked to the actual user.
It is located on the Mount Road which is the main artery of the city and its business Center.
He held that an urban land does number become an agricultural land merely because some cultivation is done thereon.
a the environment and situation b the intention of the assessee at the time of purchase c the nature and character of the land d the previous, present and future use to which the land is put e its potential value and f the fact that it was registered as municipal land in the municipal records and number recorded as agricultural land and held that it cannot be treated treated as an agricultural land.
From 1962, it had been growing vegetables thereon.
of the land in the main and on that basis held the land to be an agricultural land.
The Accountant Member attached great importance to the fact that the land in question was actually under cultivation on the sale and held that the other circumstances pointed out by the Income Tax Officer and the Appellate Assistant Commissioner do number detract from the position that the land was actually being used as an agricultural land on the date of its sale.
The Vice President agreed with the Judicial Member.
Neither the sale deed under which the assessee purchased the said land number the sale deeds executed by it in 1966 67 describe the land as an agricultural land.
The land is situated within the limits of the Madras Municipal Corporation.
P. JEEVAN REDDY, J, These appeals arise from the judgment of the Madras High Court answering the two questions referred to it at the instance of the respondent assessee in favour of the assessee and against the Revenue.
