Agricultural land character depends on total evidence; incidental vermi-compost use and attached assets may be taxed separately.

Agricultural character of land is determined from the totality of surrounding facts, revenue records, actual and intended use, and the parties' conduct. Revenue entries and cultivation history may support agricultural status, while industrial-type registration or related documents do not by themselves convert the entire land into non-agricultural land if there is no formal conversion under land revenue law. A small area used for vermi-compost activity may be treated differently from the remaining land. For capital gains purposes, buildings, trees and other attached assets require separate consideration from the land, and their tax computation must be determined independently on the available record.

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Issues: Whether the land sold was agricultural land so as to fall outside the definition of capital asset, whether only a small portion used for vermi-compost activity could be treated as non-agricultural, and whether capital gains on buildings, trees and other attached assets required separate consideration.

Issue (i): Whether the land sold was agricultural land so as to fall outside the definition of capital asset.

Analysis: The character of land has to be determined on a cumulative consideration of the surrounding facts, revenue records, actual user, intended user and the conduct of the parties. Revenue entries and girdawari showed agricultural character for substantial portions of the land, and there was evidence of cultivation in earlier years. At the same time, the material on record also showed that a small area had been used for vermi-compost activities pursuant to the PMT registration application. The existence of an industrial-type registration and related documents did not, by themselves, convert the entire land into non-agricultural land, especially when the land was not formally converted under the land revenue law. The documentary record was given precedence over oral assertions.

Conclusion: The land retained its agricultural character except to the extent of the small area actually used for vermi-compost activity, which could not be treated as agricultural land.

Issue (ii): Whether capital gains on buildings, trees and other attached assets required separate consideration.

Analysis: The land and the superstructures, trees and similar assets were not to be treated as a single inseparable item for capital gains purposes. The appellate authority had not recorded findings on the quantum of short-term capital gain attributable to such assets, and the computation required fresh determination on the basis of the record.

Conclusion: Capital gains on buildings, trees and other non-land assets had to be considered separately, and the computation was remitted for fresh examination.

Final Conclusion: The appeals were allowed only in part by upholding agricultural character for the major portion of the land while sustaining separate tax treatment for the non-agricultural portion and remitting the computation of gains on attached assets for fresh determination.

Ratio Decidendi: For capital gains purposes, the nature of land must be determined from the totality of the evidence, and agricultural character is not lost merely because a small portion is used for a non-agricultural ancillary activity or because some registration documents suggest intended industrial use.

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