Vinod Chandran, J v. Income Tax Officer [(2013) 351 Itr123]?(Iii)Was The Tribunal Justified In Holdingthat The Transferred Asset Was An Agriculturalland In Spite Of The Fact That Th

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE ASHOK MENON MONDAY, THE 2ND DAY OF JULY 2018 / 11TH ASHADHA, 1940 ITA.No. 99 of 2016 AGAINST THE ORDER/JUDGMENT IN ITA 456/COCH/2015 of I.T.A.TRIBUNAL, COCHIN BENCH DATED 6.1.2016 APPELLANT(S)/APPELLANT/RESPONDENT/REVENUE THE PRINCIPAL COMMISSIONER OF INCOME TAX AAYAKAR BHAVAN, KOZHIKODE 673 001 BY ADVS.SRI.CHRISTOPHER ABRAHAM, SC, INCOME TAX DEPARTMENT SRI.K.M.V.PANDALAI, SC, INCOME TAX DEPARTMENT RESPONDENT(S)/RESPONDENT/APPELLANT/ASSESSEE: KALATHINGAL FAIZAL RAHMAN "ROSE VILLA”, FEROKE KOZHIKODE 673 631 R1 BY ADV. SRI.K.I.MAYANKUTTY MATHER R1 BY ADV. SRI.R.JAIKRISHNA THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 02-07-2018,THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: APPENDIX APPELLANT'S EXHIBITS ANNEXURE-A :COPY OF THE ASSESSMENT ORDER DATED 26.3.2013.ANNEXURE-B :COPY OF APPELLATE ORDER DATED 10.6.2015 PASSED BY THECOMMISSIONER OF INCOME TAX (APPEALS). ANNEXURE-C :COPY OF ORDER DATED 6.1.2016 PASSED BY THE INCOME TAXAPPELLATE TRIBUNAL. RESPONDENT'S EXHIBITS EXHIBIT R1(a) :COPY OF CERTIFICATE FROM THE VILLAGE OFFICER, CHELAMBRA.EXHIBIT R1(b) :COPY OF CERTIFICATE FROM THE VILLAGE OFFICER, CHELAMBRA.EXHIBIT R1(c) :COPY OF CERTIFICATE FROM THE AGRICULTURAL OFFICER, KRISHIBHAVAN, CHELAMBRA.EXHIBIT R1(d) :COPY OF CERTIFICATE FROM THE VILLAGE OFFICER, CHELAMBRA.//TRUE COPY// jg-16/7 PS TO JUDGE. 'C.R.' K.VINOD CHANDRAN & ASHOK MENON, JJ. -------------------------------------------ITA No.99 of 2016 ------------------------------------------- Dated this the 2[nd] day of July, 2018 J U D G M E N T Vinod Chandran, J. The Revenue is in appeal raising substantialquestions of law against the order of the Income TaxAppellate Tribunal, which affirmed the order of thefirst appellate authority finding the sale of theassessee's land to be not assessable as capital gainsunder Section 45 of the Income Tax Act, 1961 ('Act',for short). The questions of law framed are thefollowing, as seen from the memorandum : “(i) Is not the decision of the Tribunal totreat the transferred property as agriculturalland against law and facts as there is noconclusive evidence to prove that agriculturaloperations were being carried on in thetransferred asset during the two years priorto the date of its transfer?(ii) whether the Tribunal is justified inholding that agricultural operations werecarried on in the transferred land relying onthe certificate issued by the Village Officer,in view of the decision of the Hon'ble HighCourt of Kerala in the case of Smt. AshaGeorge vs. Income Tax Officer [(2013) 351 ITR123]?(iii)Was the Tribunal justified in holdingthat the transferred asset was an agriculturalland in spite of the fact that there were fourbuildings therein?” 2.The learned Standing Counsel for the Revenuesubmitted that the assessee is a partner in variousfirms and has also substantial land holdings. Theassessment as carried out for the year 2010-2011 waswith respect to sale of a property having an extent of2.42 acres in Survey No.485 and Re-survey No.146/2 ofChelembra Amsam. The property was sold for a totalconsideration of Rs.3,38,63,200/-. The said propertywas purchased in the year 1981 by the father of theassessee and devolved on the assessee on the death ofhis father. The property was purchased, from theassesee, by the owners of a newspaper, who have latermade constructions thereon wherein the offices andpress of their Calicut edition is now located. 2.The learned Standing Counsel for the Revenuesubmitted that the assessee is a partner in variousfirms and has also substantial land holdings. Theassessment as carried out for the year 2010-2011 waswith respect to sale of a property having an extent of2.42 acres in Survey No.485 and Re-survey No.146/2 ofChelembra Amsam. The property was sold for a totalconsideration of Rs.3,38,63,200/-. The said propertywas purchased in the year 1981 by the father of theassessee and devolved on the assessee on the death ofhis father. The property was purchased, from theassesee, by the owners of a newspaper, who have latermade constructions thereon wherein the offices andpress of their Calicut edition is now located. 3.The assessee had not declared any capitalgains in the return of income filed for the year, andon scrutiny under Section 143 of the Act, the specificsale was sought to be assessed as capital gains. Theonly evidence produced by the assessee to prove thatthe land was agricultural land, was a certificateissued by the Village Officer, which was found to benot reliable. The learned Standing Counsel relies on (2013) 351 ITR 123 (Ker) [Smt.Asha George v. IncomeTax Officer] to contend that such certificates issuedlong after the sale cannot be the basis of a conclusionas to whether the property was agricultural land ornot. The learned Standing Counsel has also relied on(1993) 204 ITR 631 (SC) [Sarifabibi Mohmed Ibrahim andOthers v. Commissioner of Income Tax] in which certaintests were laid down, which were specifically lookedinto by the Assessing Officer (AO), to negative theclaim of the assessee. 4. The learned counsel for the respondent-assesseewould also rely on Sarifabibi (supra) to point out thatwhat is urged before this Court are essentiallyquestions of facts which this Court cannot go into in arevision wherein only substantial questions of law areto be considered. The learned counsel would take us toclause (iii) of Section 2(14) of the Act and contendthat only those lands which come under (a) and (b) ofclause (iii), can be included as 'capital asset'.Profits and gains arising from sale of such propertyalone can be taken for assessment as income. Thelearned counsel would also refer to Annexure-R1(a) to ITA 99/16 Annexure-R1(d) produced subsequently before this Court,to contend that this evidences the fact that the landis an agricultural land. The assessment order is readover to point out that the test as prescribed inSarifabibi (supra) has been applied wrongly to thefacts of the case. The AO proceeded on the premisethat there was a building constructed in the saidproperty subsequent to the purchase, which is notrelevant for considering whether the land is exemptedfrom the definition of “capital Gains” as anagricultural land. A Division Bench of the Madras HighCourt in(2016) 388 ITR 514 (Mad) [PrincipalCommissioner of Income Tax v. Mansi Finance ChennaiLtd.],which according to the assesee, is in similarcircumstances and is heavily relied on. The decisionin AIR 1957 SC 768 [Commissioner of Income Tax, WestBengal v. Benoy Kumar Sahas Roy] is relied on for themanner in which the fact of agricultural operationsbeing carried on has to be ascertained. 5.At the outset, it has to be stated that theargument of the learned counsel for the assessee thatan agricultural land could be deemed to have been included for the purpose of assessment under CapitalGains, only if the land comes within the distance asspecified in clauses (a) and (b) of Section 2(14)(iii)of the Act, cannot be countenanced. Sub-section (14)of Section 2 of the Act is the definition of CapitalGains and this does not include those items enumeratedunder clauses (i) to (vi). Clause (iii) of Section2(14) reads as under: “2(14) : Capital asset” means property ofany kind held by an assessee, whether ornot connected with his business orprofession; xxx xxx xxx xxx 5.At the outset, it has to be stated that theargument of the learned counsel for the assessee thatan agricultural land could be deemed to have been included for the purpose of assessment under CapitalGains, only if the land comes within the distance asspecified in clauses (a) and (b) of Section 2(14)(iii)of the Act, cannot be countenanced. Sub-section (14)of Section 2 of the Act is the definition of CapitalGains and this does not include those items enumeratedunder clauses (i) to (vi). Clause (iii) of Section2(14) reads as under: “2(14) : Capital asset” means property ofany kind held by an assessee, whether ornot connected with his business orprofession; xxx xxx xxx xxx but does not include-(i)xxxxxxxxx(ii) xxxxxxxxx(iii)agricultural land in India, notbeing land situate- (a)in any area which is comprisedwithin the jurisdiction of a municipality(whether known as a municipality, municipalcorporation, notified area committee, townarea committee, town committee, or by anyother name) or a cantonment board and whichhas a population of not less than tenthousand; or (b)in any area within the distance,measured aerially,-(I)not being more than twokilometres, from the local limits of anymunicipality or cantonment board referredto in item (a) and which has a populationof more than ten thousand but not exceedingone lakh; or ITA 99/16 (II) not being more than sixkilometres, from the local limits of anymunicipality or cantonment board referredto in item (a) and which has a populationof more than one lakh but not exceeding tenlakh; or (III)not being more than eightkilometres, from the local limits of anymunicipality or cantonment board referredto in item (a) and which has a populationof more than ten lakh.Explanation.- For the purposes of this sub-clause, “population” means the populationaccording to the last preceding census ofwhich the relevant figures have beenpublished before the first day of theprevious year.” 6.Agricultural land in India, except thosecoming within (a) & (b) of the above provision isexcluded from the definition of Capital Asset. As hasbeen rightly noticed by the Tribunal, there is nodefinition for agricultural land in the subject statuteand it has to be understood as in common parlance, forwhich evidence has to be produced to establish thefact. Since there is no definition of agricultural landin the Act Sarifabibi (supra) observed: “ Whether aland is agricultural land or not is essentially aquestion of fact” (sic para 12). On facts if aproperty of the assessee is found to be agriculturalland, then it cannot be included in the definition of ITA 99/16 'capital asset'. Even then, if such property is foundto be within the description and distance specified, insub-clauses (a) and (b) as extracted herein above; itcannot qualify for exclusion from being included ascapital assets. Hence the ascertainment of the factwhether a property would qualify for exclusion has tobe done independently. 7.We agree that the use to which the propertywas put to by the purchaser would not be relevant forascertaining whether at the time of sale and in thehands of the purchaser it was an agricultural land. Inthe present case, before the AO, the assessee is saidto have produced a certificate issued by the VillageOfficer. We also see other certificates issued by theVillage Officer at Annexure-R1(a) and that issued bythe Agricultural Officer at Annexure-R1(b). But, we donot think that either of these documents were producedbefore the AO, since the date of order itself is26.3.2013, and Annexure-R1(a) is issued on 14.5.2013.Annexure-R1(b) though issued on 20.3.2013, the AO doesnot speak of such a certificate from the agriculturalofficer. We also do not see any signature or seal of 7.We agree that the use to which the propertywas put to by the purchaser would not be relevant forascertaining whether at the time of sale and in thehands of the purchaser it was an agricultural land. Inthe present case, before the AO, the assessee is saidto have produced a certificate issued by the VillageOfficer. We also see other certificates issued by theVillage Officer at Annexure-R1(a) and that issued bythe Agricultural Officer at Annexure-R1(b). But, we donot think that either of these documents were producedbefore the AO, since the date of order itself is26.3.2013, and Annexure-R1(a) is issued on 14.5.2013.Annexure-R1(b) though issued on 20.3.2013, the AO doesnot speak of such a certificate from the agriculturalofficer. We also do not see any signature or seal of the Officers in those certificates. Further documentsproduced are Annexures-R1(c) and R1(d) dated 23.1.2015issued before the hearing by the Tribunal; which asseen from Annexure-C order, was on 15.12.2015. However,they are not seen produced before the Tribunal. Noneof the documents produced before us can berelied on to establish the fact and as is trite, therecould be no determination of facts by this Court in arevision; based on documents not produced before thefact finding authorities. 8.We see that the AO has dealt with thecertificate of the Village Officer produced before himand has negatived the same as having been issued longafter the sale. Without any substantiating material,the said document could not be relied on, was thefinding of the AO, which we are inclined to accede to.The A.O also relied on the decision of the SupremeCourt in CWT Vs Officer-in-Charge (Court of Wards)Paigah 1976 3 SCC 864 the finding in which was noticedin Sarifabibi which portion we also deem appropriate toextract: “On appeal, a Constitution Bench ofthis Court held that: (a) inasmuch as agricultural land is exempted from thepurview of the definition of theexpression “assets”, it is “impossible toadopt so wide a test as would obviouslydefeat the purpose of the exemptiongiven”. The idea behind exempting theagricultural land is to encouragecultivation of land and the agriculturaloperations. “In other words thisexemption had to be necessarily given amore restricted meaning than the verywide ambit given to it by the Full Benchof the Andhra Pradesh High Court.” (b)What is really required to be shown isthe connection with an agriculturalpurpose and user and not the merepossibility of user of land by somepossible future owner or possessor, foran agricultural purpose. It is not themere potentiality but its actualcondition and intended user which has tobe seen for purposes of exemption.(emphasis added) (c) “The person claimingan exemption of any property of his fromthe scope of his assets must satisfy theconditions of the exemption.” (d) “Thedetermination of the character of land,according to the purpose for which it ismeant or set apart and can be used, is amatter which ought to be determined onthe facts of each particular case.” (e)The fact that the land is assessed to theLand Revenue as agricultural land underthe State Revenue Law is certainly arelevant fact but it is not conclusive.” 9.Sarifabibi (supra) also referred to a Benchdecision of the Bombay High Court, (1988) 172 ITR 95[C.I.T Vs V.A. Trivedi],with approval, in thefollowing manner: 9.Sarifabibi (supra) also referred to a Benchdecision of the Bombay High Court, (1988) 172 ITR 95[C.I.T Vs V.A. Trivedi],with approval, in thefollowing manner: “18. The Bench observed that to ascertainthe true character and the nature of theland, it must be seen whether it has beenput to use for agricultural purposes for areasonable span of time prior to therelevant date and further whether on therelevant date the land was intended to beput to use for agricultural purposes for areasonable span of time in the future.Examining the facts of the case from thesaid point of view, the Bench held that theagreement entered into by the assessee withthe Housing Society is the crucialcircumstance since it showed that theassessee agreed to sell the land to HousingSociety admittedly for utilisation for non-agricultural purposes. The sale-deeds wereexecuted four months after the agreement ofsale and even if any agriculturaloperations were carried on within the saidspan of four months, — the Bench held — itwas evidently in the nature of a stopgaparrangement. On the date the land was sold,the Bench held, the land was no longeragricultural land which is evident from thefact that the assessee had obtainedpermission even in August 1966 to convertthe said land to non-agriculturalpurposes.” The Court then examined the factors in favour of andagainst the assessee to hold that, those against faroutweighed those in favour. Pertinently the fact of thesale having been made for an obvious non agriculturalpurpose along with the user of the land having not beenproved are two grounds found against the assessee. ITA 99/16 -11- 10.Now the question arises as to whether therewas any evidence produced to show the land having beenput to use for agricultural purpose. The VillageOfficer's certificate was the only document produced bythe assessee before the AO, which as has been held inSmt.Asha George (supra) cannot be relevant. MansiFinance Chennai Ltd (supra) and the decisions referredto therein according to the learned counsel are insimilar circumstances. But on a reading of the decisionwe do not think so. In the said case there was acertificate by the Village Administrative officerproduced by the assessee company. Its memorandum andarticles of Association showed as the objects to befinancing business and other businesses. The assesseecompany had admitted income from financing and fromother sources, one of which was agricultural income bylease of the property to a third party. Theagricultural income received were brought into theaccount books and was offered for income-tax. Theoverall circumstances were found to indicate that theassessee has purchased the property for the purpose ofearning agricultural income, held the property for a considerable time with routine agricultural activitybeing carried on and the subject sale was only to takeadvantage of the boom in real estate market. Theassessing officer called for information from theTahsildar and based on that report rejected the claim.Reliance placed on such report was faulted since thesame was obtained behind the back of the assessee andwithout offering an opportunity to the assessee tocontrovert it by cross-examining the author of thereport. We do not see any identity on facts. 11.Now we come to the other decisions cited inMansi Finance Chennai Ltd (supra). (2014) 369 ITR 558(Mad) [Mrs. Sakunthala Vedachalam Vs. Asst. Commissionerof Income Tax] was a case in which the classification ofthe land in the revenue records showed it to beagricultural land. Here admittedly the classificationwas “garden land” which could be used for cultivationlike coconut plantation, as claimed by the assessee, orfor construction of any type of buildings; residentialor commercial. Hence the classification in the revenuerecords in the instant case is not of any consequence.(1981) ITR 671 (Guj) [Dr.Motibhai Patel Vs. CIT]and 11.Now we come to the other decisions cited inMansi Finance Chennai Ltd (supra). (2014) 369 ITR 558(Mad) [Mrs. Sakunthala Vedachalam Vs. Asst. Commissionerof Income Tax] was a case in which the classification ofthe land in the revenue records showed it to beagricultural land. Here admittedly the classificationwas “garden land” which could be used for cultivationlike coconut plantation, as claimed by the assessee, orfor construction of any type of buildings; residentialor commercial. Hence the classification in the revenuerecords in the instant case is not of any consequence.(1981) ITR 671 (Guj) [Dr.Motibhai Patel Vs. CIT]and (1984) 145 ITR 208 (Bom) [CWT Vs. H.V. Mungale] noticedthe decision in Officer in Charge (Court of wards) tofind that if there is evidence of agriculturaloperations being carried on and the land is classifiedso in the revenue records then that raises a presumptionin favour of the assessee which has to be rebutted by theDepartment to disallow the exemption from being taxed assale of capital asset. Such a presumption does not arisehere for reason of no such evidence being placed by theassessee before any of the fact finding authorities.(1976) 106 ITR 917 (Guj) [CIT Vs Manilal Somnath]and(1994) 209 ITR 946 (Bom) [Gopal C. Sharma Vs. CIT]both observed that the potential value of the property,on non-agricultural considerations and large price,obtained by reason of the market conditions would notdetract from the essential nature of the land at thetime of the sale and the use to which it was put, priorto the sale. (2006) 284 ITR 511 (Mad) [CIT Vs.Udayakumar]and (2004) 270 ITR 40 (P&H) [CIT Vs.Smt. Savita Rani] were both on Section 54B, which isnot applicable here. (2012) 208 Taxman 394 (Karn) [CIT ITA 99/16 Vs. Madhukumar.N (HUF)]interpreted Section 2(14) (iii); just as we did herein above. 12.We cannot but observe that Mansi FinanceChennai Ltd(supra) quoted with approval certainparagraphs of the Tribunal order, which principle weagree with. Of vital significance is the intention ofthe assessee at the time of purchase and the use towhich the land is put to in the interregnum; before thesale. This would reveal the nature of the land andwhether it was an adventure in the nature of trade. Theintention would be revealed from the use to which theland is put to and the enhanced profit receivedon sale cannot be the sole consideration. Inproving such intention the assessee should leadevidence and at the first instance the burden issquarely on the assessee as has been held in (1990) 185ITR 318 (Ker) [Kalpetta Estates Ltd. Vs. CIT]. Oncethe burden is discharged as has been held in the citeddecisions, the onus to prove otherwise shifts to theRevenue. We do not see the assessee in the subject casehaving discharged the burden. ITA 99/16 -15- 13.The contention of the assessee itself wasthat the income derived from the property was not suchthat a return under the Agricultural Income Tax Actcould be filed. We have, in this context, to noticethat the property itself was having an extent more than2.42 acres and the limit of exemption as availableunder the Agricultural Income Tax Act is for an amountof Rs.5,000/-. The claim of the assessee was that therewas a coconut plantation in the land. The assessee alsohad a claim that there was an adjacent property havinga still larger extent of 4.71 acres, which too wasagricultural land having coconut plantation. Thedevolution of the said lands was; as of the subjectland; on the death of the assessee's father, who wasthe prior owner who purchased it. If the claim isaccepted, then necessarily, there would have been areturn filed, since the large extent would definitelyraise a presumption that the income obtained would beabove Rs.5,000/-. The Inspector who visited the sitereported that this adjacent property also did not showa routine agricultural operation and was merely dottedwith certain coconut trees. Though the use to which the subject property is put to after sale may not berelevant; the nature of the adjacent property whichremained still with the assessee; on which a similarclaim was raised is definitely relevant. If at allthe assessee's claim was that there was moreexpenditure than income, then at least for aggregationpurposes, the assessee would have claimed the lossesunder the individual return filed under the Act, whichhas also not been done. 14.We have already held that the mere fact thatthe land does not come under clauses (a) or (b) ofSection 2(14)(iii) would not lead to exclusion of theproperty from the definition of capital asset when itis sold. Inclusion made under sub-clauses (a) and (b)is to include even agricultural lands situated within aparticular distance from a municipality or a cantonmentboard, in the definition of Capital Asset. Whether theland is eligible to be excluded as agricultural landsessentially is a question of fact which has to beestablished by the assessee. The sole evidence placedon record by the assessee is the certificate of theVillage Officer long after the sale; which as held by the AO; going by the binding precedent in Asha George(supra) cannot be relied on. The Tribunal too relied onthis sole piece of evidence; which according to us isnot sufficient to raise a presumption in favour of theassessee. The First Appellate Authority relied on thecertificate holding that the Inspector of Income Taxalso reported the facts existing after three years ofsale. We agree that the Inspector's report of thedevelopments in the subject land after sale cannot beof any consequence. But the lie and nature of theadjacent property which also is asserted to beagricultural land; goes a long way in understanding theintention of the assessee. The assessee has failed toestablish the land to be an agricultural land. We cannotalso accede to the argument of the learned counsel thatin setting aside the Tribunal's order, we would bedeciding on a question of fact. The question of factwas decided by the AO which was interfered with by theappellate authority and the Tribunal solely for reasonof the certificate issued by the Village Officer; whichis against the binding declaration in Asha George(supra). ITA 99/16 15.As held in Benoy Kumar Sahas Roy'scase,the basic conception which is the sine qua non of aland being classified as agricultural; is thecultivation carried on; which implies the expenditureof human skill and labour. A coconut plantation wouldnot require regular tilling of land or sowing of seeds;as is required for paddy or wheat. But the trees areto be tended and the land prepared for better yield. Aproper coconut plantation requires the opening of abasin, around the root of the tree, by mere arrangementof earth; for retention of water and application offertilizer or manure. The trees also have to beregularly pruned at its crown since pest infestationoccurs at the top which is the yielding end. Crowncleaning involves removal of dried inflorescent spikesand spathe and application of pesticides; all of whichinvolves human labour and skill. In addition to theseplant protection measures like weed management has to becarried out and for this there is always an inter-cropof vegetables or spices like clove, nutmeg etc. Theseare all routine agricultural operations required for aconcerted effort of coconut plantation. Coconut trees yield even otherwise but that is not an agriculturaloperation intended at consumption or for trade andcommerce as has been held in Benoy Kumar Sahas Roy(supra). The specific case of the assessee as seen fromhis objection as extracted in the AO's order is: yield even otherwise but that is not an agriculturaloperation intended at consumption or for trade andcommerce as has been held in Benoy Kumar Sahas Roy(supra). The specific case of the assessee as seen fromhis objection as extracted in the AO's order is: “it is stated that it is a coconut gardenand in these days it is difficult to geta person to pluck coconuts..most of thetime the nuts fall and collected by theneighbourhood. Eventually the pluckingand other charges like manure, etc willonly be sufficient from the incomearising out of sale of coconuts. Sothere is nothing to offer as agriculturalincome.” Such casual consumption of nuts is not the result ofagricultural operations. The said submission of theassesee stands against his claim. 16.On the question of law framed as (i), we findthat the decision to treat the transferred property asagricultural land is against law and facts, especiallysince the assessee has not established that the land inhis possession and sold by him was an agricultural landput to use for agricultural purposes. There could nothave been any reliance placed on the certificate issuedby the Village Officer and it did not raise a validpresumption in favour of the assessee. The reliance so placed was also against the binding precedent in AshaGeorge.The second question of law framed is alsoanswered against the assessee and in favour of theRevenue. The third question of law is on facts and thereport of the Inspector as relied on by the AO spoke oftwo factory buildings in the adjacent property. We donot find any relevance to that fact. The orders of thefirst appellate authority and the Tribunal are setaside. When judgment was delivered, the learned counselfor the assessee as a last ditch effort relied again onOfficer-in-Charge (court of Wards) to pray for aremand; as was granted there. That was a case in whicha remand was made in the appeal by the Revenue forreason of the High court having held in favour of theassessee finding the land sold to be a agriculturalland by reason only of the categorisation of land inthe revenue records, which was held to be inconclusive.There is no such cause agitated here and there is nofurther evidence adduced by the assessee before any ofthe fact finding authorities. Even before us; selfserving documents have been produced, issued by ITA 99/16 Government Officials long after the sale. It is notclear how the State officials were persuaded to issuesuch certificates; when at that point of time the landstood converted to use for an industry. Yet again wedraw further sustenance to our reasoning from thejudgment of the Constitution Bench of the Hon'bleSupreme Court. We extract a paragraph from thedecision in Officer-in-Charge (court of Wards): “24. For the reasons already given, we donot think that the term “agricultural land”had such a wide scope as the Full Benchappears to have given it for the purposesof the Act we have before us. We agree thatthe determination of the character of land,according to the purpose for which it ismeant or set apart and can be used, is amatter which ought to be determined on thefacts of each particular case. What isreally required to be shewn is theconnection with an agricultural purpose anduser and not the mere possibility of userof land, by some possible future owner orpossessor, for an agricultural purpose. Itis not the mere potentiality, which willonly affect its valuation as part of“assets”, but its actual condition andintended user which has to be seen forpurposes of exemption from wealth tax. Oneof the objects of the exemption seemed tobe to encourage cultivation or actualutilisation of land for agriculturalpurposes. If there is neither anything inits condition, nor anything in evidence toindicate the intention of its owners orpossessors, so as to connect it with anagricultural purpose, the land could not be “agricultural land” for the purposes ofearning an exemption under the Act. Entriesin revenue records are, however, good primafacie evidence. We do not think that allthese considerations were kept in view bythe taxing authorities in deciding thequestion of fact which was really for theassessing authorities to determine havingregard to all the relevant evidence and thelaw laid down by this Court. The High Courtshould have sent back the case to theassessing authorities for deciding thequestion of fact after stating the lawcorrectly.” We do not find any way to remand the issue and theprinciple behind the exemption; succinctly stated bytheir Lordships, equally apply in the case of theIncome Tax Act. The Appeal is allowed. No order oncosts. Sd/- K.VINOD CHANDRAN JUDGE jg Sd/- ASHOK MENON JUDGE