Agricultural land classification depends on overall facts, and surplus on sale was not taxable as capital gains.

Land sold by the assessee was treated as agricultural land for capital gains purposes because its character had to be assessed on the totality of relevant facts, not any single factor. Revenue records, actual agricultural use for about three years, absence of conversion to other use, location outside municipal limits, and lack of reliable evidence of surrounding development supported agricultural character. Permission to sell to a housing society and later permission for non-agricultural use did not, by themselves, change the nature of the land before sale. The surplus on transfer was therefore not chargeable to capital gains tax.

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Issues: Whether the land sold by the assessee was agricultural land on the date of sale so that the surplus on its transfer was not chargeable to capital gains tax.

Analysis: The character of land for capital gains purposes depends on the totality of relevant circumstances and not on any single test. Material factors include revenue classification, actual or ordinary agricultural use, duration and nature of such use, any change in user, surrounding development, non-agricultural permissions, mode of sale, and whether the land was held and treated as agricultural in substance. On the facts, the land was purchased as agricultural land, remained entered in the revenue records as agricultural land, was subjected to agricultural use for about three years after purchase, was not shown to have been converted to any other use, was outside municipal limits, and there was no reliable evidence of surrounding development or of a price that could not have been paid by an agriculturist for agricultural purposes. Permission under the tenancy law for sale to a housing society and later permission for non-agricultural use did not by themselves alter the land's character before sale.

Conclusion: The land was agricultural land on the date of sale and the surplus was not chargeable as capital gains.

Ratio Decidendi: Whether land is agricultural land must be decided on a balanced appraisal of all relevant facts, and revenue entry or intended non-agricultural use is not unless the land has in substance ceased to be connected with agricultural purpose and user.

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