Court rules land as agricultural based on actual use & revenue records, rejects non-agricultural claim.

The High Court determined that the land in question was agricultural in character at the time of sale, rejecting the revenue's claim that it was non-agricultural. Emphasizing the significance of actual land use and revenue records, the Court ruled in favor of the assessee, highlighting that the presence of agricultural activities and corresponding revenue records create a presumption of agricultural character. As there was no evidence to rebut this presumption, the Court concluded that the land was indeed agricultural, directing the Commissioner to bear the costs of the reference.

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Issues involved: Determination of whether the land in question was agricultural or non-agricultural in character for the purpose of taxation.

Summary:
The case involved a dispute regarding the character of land sold by the assessee and two co-owners to cooperative societies. The assessee claimed that the land was agricultural and thus not subject to capital gains tax. The Income Tax Officer (ITO) initially held the land to be non-agricultural based on lack of proof of cultivation and permission obtained under the Bombay Tenancy and Agricultural Lands Act. However, the Appellate Authority Commission (AAC) ruled in favor of the assessee, stating that the land remained agricultural up to the date of sale. The Tribunal later reversed this decision, deeming the land non-agricultural at the time of sale. The High Court, considering various precedents, emphasized that if agricultural activities were being carried out on the land at the time of sale, and revenue records indicated agricultural use, a presumption of agricultural character arises. The Court highlighted that obtaining permission under the Act does not automatically change the land's character. As there was no evidence to rebut the presumption of agricultural character, the Court concluded that the land was indeed agricultural at the time of sale, ruling in favor of the assessee.

In conclusion, the High Court held that the land in question was agricultural in character at the time of sale, rejecting the revenue's contention that it was non-agricultural. The Court emphasized the importance of actual land use and revenue records in determining the character of the land for tax purposes. The judgment favored the assessee, directing the Commissioner to bear the costs of the reference.

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