Agricultural land character depends on actual use at sale; cultivation and revenue entries sustained exemption, despite conversion permission.

Land retains agricultural character where it was under cultivation up to the date of sale and the revenue records support that use; on those facts, a presumption arises in favour of agricultural status unless rebutted by the revenue. Permission under section 63 of the Bombay Tenancy and Agricultural Lands Act does not, by itself, convert the land into non-agricultural land. Small agricultural income, appreciation in value, and potential non-agricultural use are irrelevant where the decisive test is actual use, and a temporary or stop-gap cultivation arrangement will not suffice. On the facts stated, the land was agricultural on the date of sale and the question was answered in favour of the assessee.

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Issues: Whether the land sold by the assessee was agricultural in character at the time of sale and, therefore, the profit arose from sale of agricultural land.

Analysis: The land was found to have been under cultivation up to the date of sale, and the revenue records supported its agricultural character. Once such cultivation and entries were shown, a presumption arose that the land remained agricultural, unless rebutted by the revenue. Permission obtained under section 63 of the Bombay Tenancy and Agricultural Lands Act did not, by itself, convert the land into non-agricultural land. The small scale of agricultural income, the rise in land value, and the land's potential for non-agricultural use were held to be irrelevant to its character, as the decisive test was the actual use of the land. On the facts, the agricultural use was not a temporary or stop-gap arrangement.

Conclusion: The land was agricultural in character on the date of sale, and the question referred was answered in favour of the assessee and against the revenue.

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