Section 10(37) exemption upheld where agricultural land was used for agriculture, without requiring personal manual cultivation by the assessee.

Exemption under section 10(37) was available where agricultural land was used for agricultural purposes during the relevant period and the other statutory conditions were satisfied. The court rejected the contention that the assessee had to personally carry out manual cultivation or live near the land, holding that such personal physical involvement was not a mandatory requirement. Regular declaration and acceptance of agricultural income, together with crop entries in revenue records, supported compliance with the statutory condition. The capital gains exemption on enhanced compensation for compulsory acquisition of agricultural land was therefore upheld, and the revenue's challenge failed.

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Issues: Whether exemption under section 10(37) of the Income-tax Act, 1961 was unavailable because the assessee did not personally carry out agricultural operations on the land.

Analysis: The exemption applies to income chargeable under the head capital gains arising from transfer of agricultural land used for agricultural purposes by the assessee, individual, or parent during the relevant period, where the other statutory conditions are met. The mere fact that the assessee lived away from the land or was engaged in other business activity did not establish that the land was not used for agricultural purposes by the assessee. The record showed regular declaration and acceptance of agricultural income, along with crop details in revenue extracts, supporting fulfillment of the statutory condition.

Conclusion: The assessee satisfied the conditions for exemption under section 10(37); the contention that personal physical cultivation was required was rejected, and the finding was in favour of the assessee.

Final Conclusion: The capital gains exemption on enhanced compensation for compulsory acquisition of agricultural land was upheld, and the revenue appeal failed.

Ratio Decidendi: For the purpose of section 10(37), it is sufficient if the agricultural land was used for agricultural purposes by the assessee or the parent during the relevant period; personal residence near the land or direct manual cultivation by the assessee is not a mandatory requirement.

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