Bombay High Court
Fazalbhoy Investment Co. P. Ltd. vs Commissioner Of Income-Tax on 15 November, 1988
Equivalent citations: [1989]176ITR523(BOM)
Author: S.P. Bharucha
Bench: S.P. Bharucha
JUDGMENT S.P. Bharucha, J.
1. This reference under section 256(1) of the Income-tax Act, 1961, is made at the instance of the assessee and raises the following question :
"Whether, on the facts and in the circumstances of the case, the assessee's lands at Chembur acquired by the government were 'not agricultural lands' within the meaning of section 2(14)(iii) of the Income-tax Act, 1961 ?"
2. The reference relates to the assessment years 1967-68 to 1969-70, the relevant previous years having ended on September 30, 1966, 1967 and 1968, respectively. The assessee purchased the land in question, at chembur, in July 1951. It was acquired by the government during the course of the three previous years. The Income-tax Officer, assessed long-terms capital gains in the sums of Rs. 2,18,933, Rs. 4,218 and Rs. 34,428, respectively, for the three years. He rejected the contention of the assessee that the said land was agricultural land and that any gain made thereon would not, therefore, attract the provisions relating to capital gains tax in the Income-tax Act.
3. The assessee's appeal before the Appellate Assistant Commissioner was rejected. The assessee went up to the Income-tax Appellate Tribunal. He urged that the said land was agricultural land for the reasons that it was assessed to land revenue; that it was utilised for the growth of mangoes and grass; that no certificate under section 230A of the Income-tax Act had been called for by the Sub Registrar of Assurances; that extracts of its record of rights showed that paddy had been grown upon it in 1941-42 and 1942-43 and grass thereafter : and that the Tahsildar concerned had issued a certificate stating that the lands bearing various survey numbers (which included the said land) were agricultural lands till the year 1966. The Tribunal, after considering the submissions of the assessee and the Revenue and the relevant law, found that the details of agricultural expenses that had been filed by the assessee showed no expenses in relation to the agricultural operations on the said land. The details showed that there were only petty sale proceeds from the sale of mangoes and grass. His indicated that the assessee had been selling mangoes from such trees as had existed on the said land and the grass that grew spontaneously thereon. The Tribunal noted the uniform view that had been taken by judicial decisions which was that the use to which land had been put indicated, prima facie, its character. The Tribunal observe :
"In the present case, in the absence of any evidence to show that the land was put to any agricultural use at any particular point of time even in the past, apart from the sale of some mangoes and grass, it could not be held that he lands could be treated as agricultural lands."
4. The Tribunal, therefore, sustained the finding of he Appellate Assistant Commissioner that the said land was not agricultural land.
5. Mr. Sonde, learned counsel for the assessee, attacked the Tribunal's observation which has been quoted above. In his submission, it was vitiated because it ignored the extracts from the record of rights which showed that paddy had been grown on the said land in 1941-42 and 1942-43 and grass thereafter and because it ignored the Tahsildar's certificate which indicated that the said land was agricultural land till the year 1966. Mr. Sonde drew our attention to the judgment of the Supreme Court in CIT v. S. P. Jain [1973] 87 ITR 370, and submitted that this court, in exercise of its jurisdiction under section 256 was entitled to interfere with the Tribunal's factual finding.
6. The judgment in S. P. Jain's case [1973] 87 ITR 37 (SC) says that unless the Tribunal had been asked to refer a question impugning the validity of the findings sustainable on any principle of law, the facts stated in the statement of case would form the basis on which the legality or otherwise of the assessment would alone require to be considered by the high Court. The judgment then says that the court has a right to intervene if the conclusion of the Tribunal is, to put it succinctly perverse.
7. In the present case, no question has been referred which impugns the validity of the findings. Mr. Sonde submitted that the Tribunal had been asked to refer such question. The Tribunal did not refer such question and the assessee did not take any steps in that behalf. The only question, therefore, that we may consider is the question which has, in fact, been referred. Further, this is not a case where the finding of the Tribunal can be said to be perverse or such that no person, acting judicially and properly instructed, could have arrived at. The Tribunal took into account all the evidence before it and, upon weighing it, found against the assessee. This court will not, in deciding a reference, interfere with such finding of fact.
8. The stress upon the sentence in the Tribunal's judgment which has been quoted above does not indicate that the Tribunal ignored the extracts from the record of rights or the Tahsildar's certificate. The Tribunal's order shows that these were taken into consideration. The sentence quoted indicates only that the Tribunal found the evidence insufficient to establish that the land was agricultural land. This is a reasonable conclusion for paddy had been grown on he land as far back as 1941-42 and 1942-43 and the Tahsildar's certificate related to a mass of land which was assessed to land revenue as agricultural land.
9. In the result, the question is answered in the affirmative and in favour of the Revenue.
10. The assessee shall pay the Revenue the costs of the reference.