Bombay High Court
Commissioner Of Income-Tax vs B.C. Joshi And B.C. Joshi on 17 February, 1993
Author: Sujata Manohar
Bench: Sujata V. Manohar
JUDGMENT Mrs. Sujata Manohar, J.
1. Under section 256(1) of the Income-tax Act, 1961, the following question is referred to us for opinion :
"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in applying the tests laid down by the Bombay High Court's unreported decision for the purpose of determining whether or not the plots of land sold by the assessee constituted agricultural lands ?"
2. This reference pertains to the assessment year 1966-67. The two assessees, P. C. Joshi and B. C. Joshi, are brothers. The father of the assessees owned agricultural property consisting of open undeveloped land admeasuring 9,192 square yards in the Registration District of Bombay suburban Sub-District Bandra being Sr. No. 135/6 and 135/1B of Muland Divn. The father of the assessee by a gift deed dated June 7, 1962, gifted a piece of land admeasuring 2,727 square yards out of this land to the assessees. This land has been sold by the assessees to the Maharashtra State Co-operative Bank Limited on June 24, 1965, for a sum of Rs. 99,656,99. Out of the land so sold, the plot under Survey No. 135/6 has been described as agricultural property and the portion of the plot under Survey No. 135/1B has been described as non-agricultural property. There is no dispute that the lands under Survey No. 135/6 were assessed as agricultural lands. The adjoining lands were under acquisition of the Maharashtra Housing Board under the land acquisition proceedings pending pending on the date of the sale.
3. The Tribunal, while considering whether capital gains tax can be levied on the sale of this land by the assessee, has applied the tests laid down by the Bombay High Court in an unreported judgment in the case of CWT v. Poddar Mills Ltd. (W. T. R. No. 5 of 1964 decided on 4-2-1972). The Tribunal has held : (1) except for the portion of land covered by Survey No. 135/1B, other lands were agricultural lands; (2) they have been described as agricultural lands in the sale deed; (3) there is no material on record to suggest that these were put to non-agricultural use. The Town Planning Scheme became operative in this area much after the date of the sale deed and only in the year 1971; and (4) the land continued to be assessed under the Land Revenue Code as agricultural land. The Tribunal, therefore, held that the land covered under Survey No. 135/6 was agricultural land. It, therefore, directed that only surplus arising on the sale of land covered under Survey No. 135/1B should be subject to tax. This was in view of section 2(14)(iii) of the Income-tax Act which exempted, at the material time, agricultural lands in India, from the definition of capital assets.
4. The factors which have been considered by the Tribunal in deciding whether the land should be considered as agricultural land are not in any manner inconsistent with the tests laid down by the Supreme Court of India in the case of CWT v. Officer-in-Charge (Court of Wards), Paigah [1976] 105 ITR 133. The Supreme Court has also said that entries in the revenue record are good prima facie evidence, though they may not be conclusive. In the present case also, the Tribunal has looked at other surrounding circumstances also in addition to the entries in the revenue record are good prima facie evidence, though they may not be conclusive. In the present case also, the Tribunal has looked at other surrounding circumstances also in addition to the entries in the revenue record for coming to the conclusion it has come to. We may add that the Tribunal was bound to apply the tests laid down by the Bombay High Court in the case of CWT v. Poddar Mills (W. T. R. No. 5 of 1964 - 4-2-1972) as this decision was binding on the Tribunal. In the premises, the question referred to us is answered in the affirmative and in favour of the assessee.
5. No order as to costs.