Agricultural land classification turns on actual user at sale date, not prior use or potential non-agricultural value.

Actual user of land at the relevant date is the decisive test for its agricultural character under the Wealth-tax Act, and revenue records provide prima facie support for that classification. Land cultivated at the date of sale was treated as agricultural despite prior brick-making use, its location within municipal and town-planning limits, or its potential for non-agricultural development. A cultivation arrangement was not disqualified as a mere stop-gap on the facts stated, and permissions under the Bombay Tenancy and Agricultural Lands Act and the Bombay Land Revenue Code did not by themselves alter the land's character at the date of sale.

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Issues: Whether land used for cultivation at the date of sale, but previously used for brick-making and situated within municipal limits and a town-planning area, was agricultural land within the meaning of section 2(e)(i) of the Wealth-tax Act, 1957.

Analysis: The decisive test was the actual user of the land at the relevant date, with entries in the revenue records providing prima facie support for agricultural character. Potential non-agricultural value, municipal location, or the fact that the land had earlier been put to brick-making did not by themselves destroy the agricultural character once the land had been reconverted and was in fact being cultivated. The surrounding circumstances did not establish that cultivation was a mere stop-gap arrangement to facilitate sale, and permission under section 63 of the Bombay Tenancy and Agricultural Lands Act did not convert the land into non-agricultural land by itself. The subsequent permission under section 65 of the Bombay Land Revenue Code obtained by purchasers also did not alter the character of the land at the date of sale.

Conclusion: The land was agricultural land on the date of sale and the capital gains could not be assessed on that footing; the question was answered in favour of the assessee.

Ratio Decidendi: For determining whether land is agricultural land, the controlling factor is its actual user at the relevant time, supported by the presumption arising from revenue records, and not its potential non-agricultural value or intended future use after sale.

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