TaxTMI 
TaxTMI 
1993 (9) TMI 10
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....ins resulting therefrom was not leviable ?" The assessment year concerned herein is 1970-71. The appellants in these four appeals are co-owners of a plot of land admeasuring in all 30,885 sq. yds., situated within the revenue limits of Navagaon village. It is situated within the municipal limits of Surat Municipality and is situated at a distance of one kilometre from the Surat railway station. This plot of land was purchased on February 1, 1936, by the ancestor of the appellants for a consideration of Rs. 5,425. After the death of the said ancestor, the land was inherited by the father of the assessees, who died on February 12, 1966. On March 28, 1958, a portion of the said plot to an extent of 2,067 sq. yds. was converted to non-agricultural purposes after obtaining requisite permission under section 65 of the Bombay Land Revenue Code. A chawl was built thereon. The remaining extent continued to be registered as agricultural land in the revenue records and land revenue was also being paid by the assessees' father. In these appeals, we fire concerned only with the said balance extent. On March 15, 1967, the assessees agreed to sell the said land to housing co-operative....
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....ar. (6) An application for permission to sell the land to a housing society under section 63 of the Land Revenue Code was made in August, 1968, some nine months before the actual sale effected in May, 1969, and it was granted on February 24, 1969, about a month prior to the actual sale. (7) More than 15 years back a parcel of 2,607 sq. yards out of this very land was converted to non-agricultural user by constructing a chawl on it by the owners themselves after obtaining the requisite permission to convert the land to non-agricultural user under section 63 of the Land Revenue Code. (8) Application to convert the land under transaction to non-agricultural user was not made before the sale deed was executed on May 30, 1969. It was subsequently made by the purchaser-housing society much later. (But then permission could have been applied for if so desired and could not have been refused arbitrarily ; it is common experience that it is granted almost as a matter of course). In fact, it is on record that the purchaser-society commenced actual construction on June 2, 1969, that is to say, within three days of the execution of the sale deed in its favour by the assessee in antici....
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....anchanda, learned counsel appearing for the Revenue, supported the reasoning and conclusion of the High Court. Counsel submitted that, apart from the factors mentioned by the High Court in favour of its conclusion, there is the further fact that a town planning scheme (draft scheme) was published in March, 1967, covering the said land and that by the date of execution of the sale deeds, the draft scheme was also declared. The sale deeds concerned herein were executed in the month of May, 1969. By virtue of clause (viii) in section 47-which clause was inserted by the Finance Act, 1970, with effect from April 1, 1970-"any transfer of agricultural land in India effected before the 1st day of March, 1970" is exempt from the levy of capital gains tax. By the very same Finance Act, it may be mentioned, agricultural lands situated within the jurisdiction of municipalities and within a radius of 8 kilometres of such municipalities as may be specified in that behalf by the Central Government [sub-clauses (a) and (b) in clause (iii) of the definition of "capital asset" in section 2(14) of the Act] were excluded from the purview of agricultural land but again with effect from April 1, 1970....
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....this exemption had to be necessarily given a more restricted meaning than the very wide ambit given to it by the Full Bench of the Andhra Pradesh High Court". (b) What is really required to be shown is the connection with an agricultural purpose and user and not the mere possibility of user of land, by some possible future owner or possessor, for an agricultural purpose. It is not the mere potentiality, but its actual condition and intended user, which have to be seen for purposes of exemption. (emphasis added). (c)"The person claiming an exemption of any property of his from the scope of his assets must satisfy the conditions of the exemption." (d) "The determination of the character of land, according to the purpose for which it is meant or set apart and can be used, is a matter which ought to be determined on the facts of each particular case." (e) The fact that the land is assessed to land revenue as agricultural land under the State revenue law is certainly a relevant fact but it is not conclusive. That was a case where the question arose with respect to a large extent of 108 acres situated in the City of Hyderabad. The land was enclosed by a boundary wall, wherein there we....
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....s evolved the following 13 factors/indicators applying which the question has to be answered. The 13 factors are the following (at page 638) ; "(1) Whether the land was classified in the revenue records as agricultural and whether it was subject to the payment of land revenue? (2) Whether the land was actually or ordinarily used for agricultural purposes at or about the relevant time ? (3) Whether such user of the land was for a long period or whether it was, of a temporary character or by way of a stop-gap arrangement ? (4) Whether the income derived from the agricultural operations carried on in the land bore any rational proportion to the investment made in purchasing the land ? (5) Whether the permission under section 65 of the Bombay Land Revenue Code was obtained for the non-agricultural use of the land ? If so, when and by whom (the vendor or the vendee) ? Whether such per mission was in respect of the whole or a portion of the land ? If the permission was in respect of a portion of the land and if it was obtained in the past, what was the nature of the user of the said portion of the land on the material date ? (6) Whether the land, on the relevant date, h....
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....lus income arising from the sale of land was exempt from tax inasmuch as it was agricultural land at the time of its sale. The matter reached the High Court. The Division Bench referred to several facts established from the record. Some of them supported the assessee's stand while some others militated against his contention. The facts found in favour of the assessee were : (1) at the time of its purchase by the assessee, the Ajni land was agricultural land ; (2) it had been under cultivation by the assessee till the date of its sale ; (3) it continued to be assessed to land revenue as agricultural land until it was sold ; (4) the intention of the assessee, when he purchased it, was to acquire agricultural land for agricultural purposes; (5) the assessee's use of it was the normal use by an agriculturist ; (6) it was not within any Town Planning Schemes ; and (7) no material has been produced to show any development or building activity surrounding it. The facts which militated against the assessee's stand were three in number, namely : (1) the location of the Ajni land within the Corporation and the improvement trust limits; (2) the action of the assessee in obtaining on August 8,....
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....rendered the said land useless for cultivation for a couple of months because of heavy accumulated layers of mud and slush; (b) the next monsoon sowing season would have started in June, 1969, but even before that the land was sold in May, 1969 ; (c) there is evidence of agricultural cultivation and raising of "loni" grass during the year 1968-69 ; (d) for a period of seven months from October, 1968, to April, 1969, the land remained uncultivated. In our opinion, the above findings considered together do negative the theory of actual cultivation of the said land during any part of the year 1968-69. It there were floods in the Tapti river in the year 1968-this must be during the months June to September-and there was no cultivation during the period October, 1968, to April, 1969, it is difficult to see when the grass was raised in the said land. We conclude, on the basis of the facts found by the learned third Member, that there was no cultivation even during the year 1968-69. Now, we may consider the various circumstances appearing for and against the appellant's case. The facts in their favour are : the land being registered as agricultural land in the revenue records ; payment....