Agricultural land character for capital gains can be proved by revenue records despite missing input bills and urban land tax.

Land is treated as agricultural for capital gains purposes when contemporaneous revenue records and competent-authority findings show continued cultivation, even if purchase bills for seeds, fertilisers or insecticides are unavailable. Adangal entries, returns describing the land as agricultural, and the revenue authority's certificate supported agricultural user, while the levy of urban land tax did not by itself change the land's character. On those facts, the land did not fall within the definition of capital asset under Section 2(14) of the Income-tax Act, 1961, and the surplus on sale was not chargeable to long-term capital gains tax.

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Issues: Whether the land sold by the assessee was agricultural land and, therefore, whether the surplus on its sale was outside the definition of capital asset and not liable to tax as long-term capital gains.

Analysis: The land was not within the notified limits of any municipality or similar local authority, and the only dispute was its character. The absence of purchase bills for seeds, fertilizers or insecticides did not by itself disprove agricultural user where the record contained contemporaneous official material showing cultivation of casuarina, including adangal entries, wealth-tax and income-tax returns reflecting the land as agricultural, and the certificate of the competent revenue authority stating that the land remained agricultural. The fact that urban land tax had been levied did not alter the character of the land when the revenue records and official inspection showed continued agricultural use.

Conclusion: The land was agricultural in nature and did not fall within the definition of capital asset under Section 2(14) of the Income-tax Act, 1961; the sale proceeds were not chargeable to capital gains tax.

Final Conclusion: The Revenue failed to establish a non-agricultural character of the land, and the deletion of the addition was sustained.

Ratio Decidendi: Official revenue records and contemporaneous competent-authority findings showing continued agricultural use prevail over the mere absence of input bills or the levy of urban land tax in determining whether land is agricultural for capital gains purposes.

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