Totality of circumstances test governs agricultural land status for capital gains exemption; land sold for housing use was taxable.

Land must be assessed on the totality of circumstances on the date of transfer to determine whether it is agricultural land for capital gains exemption. Revenue entries, past cultivation, land revenue payment, location, user, surrounding circumstances, intended use, and permissions for non-agricultural transfer are all relevant, but none is conclusive. Here, the land had not been cultivated for several years, was agreed to be sold to a housing society for building purposes, and was transferred after permission for such use had been obtained. Those facts outweighed the revenue records, so the land was held not to be agricultural land at the time of sale and the surplus was taxable.

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Issues: Whether the land sold by the assessees was agricultural land on the date of sale and, if so, whether the capital gain arising from its transfer was exempt from tax.

Analysis: The character of land for capital gains purposes depends on a cumulative assessment of all relevant facts, with revenue classification, land revenue payment, actual user, surrounding circumstances, prior and intended user, permissions for non-agricultural use, location, and sale price all being relevant but none being conclusive by itself. On the facts, the land had not been cultivated for several years before sale, the assessees had agreed to sell it to a housing society for building purposes, had sought and obtained permission under the tenancy law for such transfer, and the land was sold soon thereafter at a price and in circumstances consistent with non-agricultural use. These factors outweighed the entries in the revenue records and past agricultural user.

Conclusion: The land was not agricultural land at the time of sale, and the resultant surplus was not exempt from capital gains tax; the finding was in favour of the Revenue.

Ratio Decidendi: The character of land for exemption purposes must be determined from the totality of circumstances on the date of transfer, and revenue entries or past agricultural use are not conclusive where the land has ceased to be intended or used for agricultural purposes.

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