Actual use, not revenue records, determines whether land is agricultural for capital gains tax purposes.

Revenue records are not conclusive in deciding whether land is agricultural for capital gains purposes under the Income-tax Act, 1961. Where the land was never shown to have been used for agricultural operations and was in fact used for film shooting and other non-agricultural purposes, the surrounding circumstances and the intention behind its use indicated a non-agricultural character. On those facts, the balance 13,200 square yards was treated as non-agricultural land, and the surplus on sale was assessable as capital gains in favour of the Revenue.

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Issues: Whether the balance 13,200 square yards of land was agricultural land or non-agricultural land so as to attract capital gains tax under the Income-tax Act, 1961.

Analysis: The land had never been shown to have been actually used for agricultural operations. The only demonstrated use was for film shooting and related non-agricultural purposes, while the original purchasers had sought permission to convert it to non-agricultural use. Mere assessment of the land as agricultural in revenue records was held to be only a relevant circumstance and not conclusive. On the facts, the surrounding circumstances, the intended use, and the actual user all pointed away from an agricultural character.

Conclusion: The land was held to be non-agricultural land, and the excess price realised on its sale was liable to assessment under the head of capital gains, in favour of the Revenue.

Ratio Decidendi: Classification in revenue records is not conclusive; the character of land for capital gains purposes depends on its actual user, the surrounding circumstances, and the intention with which it was held or used.

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