Agricultural land classification controls capital gains treatment when revenue records and evidence establish agricultural character.

Revenue records and supporting evidence showing agricultural use can determine land classification for income-tax purposes, so land treated as agricultural falls outside capital gains taxation. The Court also noted that valuation materials such as guideline values are not determinative of the land's character, and a contrary factual finding may be interfered with if perverse. On jurisdiction, the Tribunal was entitled to entertain and decide appeals arising from the assessment and first appellate orders. The principal tax dispute was resolved in favour of the assessee, with the finding that the land was non-agricultural set aside.

---

---

Issues: (i) whether the subject land was agricultural land and therefore outside the ambit of capital gains taxation under the Act; (ii) whether the Tribunal was justified in entertaining and deciding the appeal on the assessment and first appellate orders; (iii) whether the Tribunal erred in disregarding the revenue records, official reports, photographs and sale deeds evidencing agricultural character and activity.

Issue (i): whether the subject land was agricultural land and therefore outside the ambit of capital gains taxation under the Act.

Analysis: The classification of land is a matter within the State's domain, and for income-tax purposes the statutory definition of agricultural land must be applied consistently with the constitutional position. The land stood supported by revenue records and the factual material accepted by the Court showed agricultural character and use. The contrary view taken below rested on assumptions and on records such as guideline values that were not determinative of land classification.

Conclusion: The issue was answered in favour of the assessee.

Issue (ii): whether the Tribunal was justified in entertaining and deciding the appeal on the assessment and first appellate orders.

Analysis: The Tribunal has jurisdiction to examine the orders of the Assessing Officer and the first appellate authority and to decide questions of fact and law arising from them. No jurisdictional error was found in its entertaining the cross-appeals.

Conclusion: The issue was answered against the assessee.

Issue (iii): whether the Tribunal erred in disregarding the revenue records, official reports, photographs and sale deeds evidencing agricultural character and activity.

Analysis: The evidentiary material, including revenue records and supporting documents, established the agricultural nature of the land. The Tribunal's rejection of that material was held to be factually erroneous and perverse, as it substituted conjecture for the official land classification records.

Conclusion: The issue was answered in favour of the assessee.

Final Conclusion: The appeal succeeded, the finding treating the land as non-agricultural could not be sustained, and the assessee obtained relief on the principal tax dispute.

Ratio Decidendi: Where the revenue records and supporting evidence establish that land is agricultural in character, such land cannot be treated as a capital asset for capital gains purposes on the basis of non-determinative valuation or guideline records, and a contrary factual finding may be interfered with when it is perverse.

---