Agricultural land character and capital gains tax hinge on revenue records, conversion permission, and limited appellate interference.

Land recorded in revenue records as agricultural, with no permission for non-agricultural conversion before sale, remained agricultural land and the sale proceeds were not liable to capital gains tax. The absence of substantial agricultural surplus did not by itself change the character of the land. On appeal under section 260A of the Income-tax Act, the HC will not disturb concurrent factual findings on the nature of land unless they are perverse or rest on an legal principle; here, the findings were supported by the evidence and applicable land revenue law, so the Revenue's challenge failed.

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Issues: Whether the land sold by the assessee was agricultural land so as to exclude the sale consideration from capital gains tax.

Analysis: The land stood recorded in the revenue records as agricultural land and there was no permission obtained for its non-agricultural use before sale. The absence of substantial agricultural surplus did not, by itself, establish that the land had ceased to be agricultural. The question whether land is agricultural is primarily one of fact, and interference in an appeal under section 260A of the Income-tax Act, 1961 is confined to cases where the finding is perverse or based on a wrong principle of law. The concurrent findings of the authorities below were supported by the evidence and by the applicable land revenue law governing conversion of agricultural land to non-agricultural use.

Conclusion: The land was correctly held to be agricultural land, and the Revenue's challenge to the deletion of capital gains failed.

Ratio Decidendi: In an appeal under section 260A of the Income-tax Act, 1961, the High Court will not disturb a concurrent factual finding that land is agricultural unless the finding is perverse or based on a wrong legal principle; recorded agricultural use and absence of permitted non-agricultural conversion support the conclusion that the land remained agricultural.

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