Partial partition and agricultural land character upheld where revenue entries and actual user supported the assessee's position.

A partition deed allotting the entire specified parcel to one coparcener, with the others' shares adjusted through monetary obligations, can constitute a valid partial partition even without physical division by metes and bounds; in the absence of material showing sham or lack of genuineness, it must be recognised under section 171. The land sold also remained agricultural on the date of sale because its character depended on actual and ordinary user, supported by long-standing revenue entries and agricultural use; permission to sell to a non-agriculturist under the Bombay Tenancy Act did not by itself convert it into non-agricultural land. Both issues were decided in favour of the assessee.

---

---

Issues: (i) Whether the partial partition of the land allotted to one coparcener was valid and entitled to recognition under section 171 of the Income-tax Act, 1961. (ii) Whether the land sold was agricultural land on the date of sale, so that capital gains could not be assessed on the footing that it had become non-agricultural merely because permission under section 63 of the Bombay Tenancy and Agricultural Lands Act had been obtained.

Issue (i): Whether the partial partition of the land allotted to one coparcener was valid and entitled to recognition under section 171 of the Income-tax Act, 1961.

Analysis: The partition deed allotted the entire specified parcel to one coparcener, with adjustment of the other coparceners' shares through monetary obligations recorded by promissory notes and accounts. A partial partition may be of property, persons, or both, and physical division by metes and bounds is not necessary where the property is allotted to one member. No material showed the partition to be sham or not genuine.

Conclusion: The partial partition was valid and was rightly required to be recognised under section 171; this issue was decided in favour of the assessee.

Issue (ii): Whether the land sold was agricultural land on the date of sale, so that capital gains could not be assessed on the footing that it had become non-agricultural merely because permission under section 63 of the Bombay Tenancy and Agricultural Lands Act had been obtained.

Analysis: The character of land depends on its actual user, ordinary user, intended user, and the evidentiary value of revenue entries. Potential non-agricultural value is immaterial. The entries in the record of rights and the long-standing agricultural user raised a presumption that the land was agricultural. Permission to sell to a non-agriculturist under section 63 did not by itself change the land's agricultural character; such permission only enabled the sale and did not convert the land into non-agricultural land. That presumption was not rebutted by the material on record.

Conclusion: The land remained agricultural land on the date of sale; this issue was decided in favour of the assessee and against the revenue.

Final Conclusion: The references were answered by upholding the validity of the partial partition and by holding that the land sold retained its agricultural character at the relevant time, with costs awarded to the assessee.

Ratio Decidendi: A partition allotting specific property to one coparcener can be a valid partial partition under section 171 without physical division, and land does not cease to be agricultural merely because permission is obtained to sell it to a non-agriculturist; actual agricultural user and revenue records create a presumption that must be rebutted to displace the land's agricultural character.

---