TaxTMI 
TaxTMI 
1971 (12) TMI 34
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.... The same year the Government of Kerala initiated proceedings for acquiring the property for providing house sites for Harijans. In the acquisition the assessee and his brother got Rs. 2,90,653 as compensation, the matter, ultimately, having been disposed of by the High Court in February, 1961. The assessee claimed that he expended Rs. 5,000 on the property subsequent to the settlement. However, the department allowed the claim only to the extent of Rs. 3,400 so that the total cost of the asset (the property) came to Rs. 37,900. Deducting this amount from the amount received as compensation, the balance came to Rs. 2,52,753, out of which the share of the assessee came to Rs. 1,68,500. This was sought to be assessed under the head "capital gains" ; and the assessee raised objection that the property was agricultural land and as such was not a capital asset. The Income-tax Officer and the Appellate Assistant Commissioner overruled this objection and treated the amount as capital gains. On appeal, the Income-tax Appellate Tribunal held that the property was agricultural land (in other words, the income derived from the property was agricultural income) and, therefore it was not a cap....
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....low price, which worked out only to less than Rs. 40 per cent was also an agricultural and that, the after, unless there was some act on the part of the assessee to convert the land into non-agricultural land, the property should remain agricultural land as it originally was. The Tribunal also pointed out that there was no evidence to show that the assessee after this purchase from the Maharajah, converted the land into non-agricultural land. Though the term " agricultural income " is defined in the Income-tax Act (article 366(1) of the Constitution lays down that for purposes of the Constitution the definition in the Indian Income-tax Act will prevail), the terms "agriculture" and "agricultural purpose" have not been defined. Therefore, the court has necessarily to fall back upon the general sense in which they have been understood in common parlance. The Supreme Court has considered the meaning of the term "agriculture" elaborately in Commissioner of Income-tax v. Raja Benoy Kumar Sahas Roy Bhagwati who spoke for the Bench, has said that "agriculture" in its root sense means cultivation of the field ; "agar" means field and "cultra" means cultivation, so that agriculture means c....
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....o decide whether the income derived by an assessee by the sale of trees in his forests was agricultural income or not, the crucial question is whether the trees were planted by the assessee or whether they grew spontaneously ; and that, if it is the latter, it would be immaterial that the assessee has maintained a large establishment for the purpose of preserving the forests and assisting in the growth of the trees, because, ex hypothesi, he performed no basic operations for bringing the forests into being. We may also refer, in this connection, to the decision of the Privy Council in Raja Mustafa Ali Khan v. Commissioner of Income-tax. The Judicial Committee has observed that, in order to decide the question whether land is "used for agricultural purposes", no assistance is to be got from the meaning ascribed to the word "agriculture" in other statutes. And their Lordships have also observed that income from the sale of forest trees growing on land naturally and without the intervention of human agency, even if the land is assessed to land revenue, is not agricultural income within the meaning of section 2(1)(a) of the Income-tax Act. The counsel on both sides have brought to our....
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....o the contrary are available in a given case, it is only safe to presume that a property would normally continue to be put to the use to which it has been put all along for a long time. Yet another decision on this aspect is the decision of the Gujarat High Court in Rasikhlal Chimanlal Nagri v. Commissioner of Wealth-tax. The learned judges have observed that the true test to be applied for the purpose of determining whether a particular land is agricultural land or not, in a case where the land is not being actually put to any use, is not whether the land is capable of being used for agricultural purposes, but whether the general nature or character of the land is such that it can be regarded as agricultural land ; and that, in order to ascertain the general nature or character of the land, various factors would have to be taken into account like the development and use of the lands in the adjoining area, the surroundings, the situation of the land, the physical characteristics of the land, the intention of the owner as gathered from the circumstances, whether the land is assessed for agricultural purposes, etc. From the facts of the case before us, it is clear that the Maharajah....