Agricultural land classification for capital gains turns on actual use, revenue records, and conversion status; presumption favoured agricultural character.

Land classification for capital gains depends on the totality of objective circumstances, with particular weight given to actual agricultural user, revenue-record classification, intended use, physical situation, surrounding development, and conversion status. Actual agricultural use creates a presumption that the land retains agricultural character unless stronger contrary factors displace it. On the stated facts, the land remained classified as agricultural in the revenue records, agricultural operations continued up to the relevant accounting year, no non-agricultural conversion had taken place, and sale as one unit did not displace that presumption. The land was therefore treated as agricultural land and not as non-agricultural land for capital gains purposes.

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Issues: Whether the lands in question were agricultural lands for the purpose of capital gains tax.

Analysis: The classification of land depends on the totality of circumstances, with special weight given to actual or ordinary agricultural user, the intended purpose of the land, revenue-record classification, physical situation, surrounding development, conversion permission, and other objective indicators. Where the land is actually used for agricultural purposes, a presumption arises in favour of agricultural character unless displaced by stronger contrary factors. On the facts found, the lands were classified as agricultural in the revenue records, agricultural operations continued up to the relevant accounting year, there was no conversion to non-agricultural use, the land was sold as one unit, and the surrounding development and town-planning inclusion did not displace the presumption arising from actual user and classification.

Conclusion: The lands were agricultural lands and were not liable to be treated as non-agricultural land for capital gains purposes.

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