Agricultural land classification for capital gains turns on total factual context, not proximity alone, with cultivation evidence remaining decisive.

For capital gains purposes, agricultural character of land depends on a balanced appraisal of the full factual matrix, not any single factor such as municipal proximity or sale consideration. Revenue records showing agricultural classification, payment of land revenue, evidence of cultivation and grass sales, later plantation activity, and absence of any conversion to non-agricultural use supported retention of agricultural character up to the transfer date. On those facts, the surplus on sale was treated as not chargeable to capital gains. A dissenting view held that the revenue presumption was rebutted because no real agricultural operations were carried on for several years before sale and the land had become non-agricultural by transfer.

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Issues: Whether the land sold by the co-owner assessees was agricultural land so that the surplus on sale was not chargeable to capital gains.

Analysis: The land was recorded in the revenue records as agricultural land and land revenue had been paid on that basis. There was material showing user of the land for cultivation and sale of grass, later followed by plantation of fruit trees and a well. No application had been made for conversion to non-agricultural use before the sale. The character of land depends on the totality of circumstances and not on any single factor such as municipal proximity or high sale price. On the facts, the majority held that the material on record did not rebut the agricultural character of the land and that the evidence of agricultural user was sufficient to sustain that character upto the date of transfer.

Conclusion: The land was agricultural land and the surplus on sale was not chargeable as capital gains.

Dissenting Opinion: The Judicial Member held that the presumption from revenue records stood rebutted, that no real agricultural operations were carried on for several years before the sale, and that the land had become non-agricultural in character by the date of transfer.

Ratio Decidendi: The nature of land for capital gains purposes must be determined on a balanced appraisal of the entire factual matrix, and revenue entries, continued cultivation or agricultural user, and absence of conversion to non-agricultural use may preserve agricultural character despite development potential or municipal proximity.

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