MOTIBHAI D PATEL DR Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) IN this case, at the instance of the assessee, the following question has been referred to us for our opinion :

(2.) WE are concerned with the assessment year 1966 -67, relevant previous year being the financial year ended March 31, 1967. The assessee along with two other persons, Dr. Dhirajlal Harilal and Dr. Harilal Chandandas, purchased lands bearing survey Nos. 115 and 153 of Acher of Sabarmati, admeasuring 34,729 square yards of land. This purchase was made on October 19, 1946. The total price paid for the land was Rs. 1,39,450 and it was purchased at the rate of Rs. 4 per square yard. The assessee had six annas share in the rupee in the said land. Out of this aggregate area of 34,727 square yards, land admeasuring 16,172 square yards was sold to three co -operative societies on March 17, 1967. The assessee received Rs. 1,32,864 by way of his share in the profits from the sale price paid by the three co -operative societies. Out of this amount, a sum of Rs. 8,420 was claimed by way of expenses and thus the net profit disclosed by the assessee came to Rs. 1,24,444. The assessee claimed before the ITO that the profit or gain arising from this transaction was not capital gains taxable under the I.T. Act, inasmuch as the land which was sold by him was agricultural land and was agricultural in character. He contended that the land was under cultivation and crops were grown on the same up to the date of sale. The ITO rejected the contention of the assessee and held that the land was non -agricultural in character. He came to this conclusion mainly on two grounds; firstly, that there was no proof that the land was actually under cultivation on the date of sale, and secondly, that the assessee and his co -owners had obtained permission to sell the land to to the co -operative societies under s. 63 of the Bombay Tenancy and agricultural lands Act.

(3.) THE revenue went in appeal against the decision of the AAC and the tribunal held that the land when it was sold was non -agricultural in character. Thereafter, at the instance of the assessee, the question herein above set out has been referred to us for our opinion.