Law:

Section:

Section 2(14) of the Income-tax Act, 1961 - Capital gains - Capital asset - Assessment year 1968-69 - Assessee HUF owned certain ancestral land received by it on partition in 1939 on which agricultural operations were carried on upto time of its sale - Said land was brought draft town within municipal limits in 1956 and also within proposed draft town planning schema - Further, area surrounding particular plot of land was fully developed and cooperative housing societies had come up in surrounding area - After obtaining permission to sell said land to non-agriculturist, assessee sold it to a housing society - Assessee claimed that said land being agricultural was not a capital asset and, hence, no capital gains arose out of said transaction - Whether fact that a particular plot of agricultural land has potential non-agricultural value for which a purchaser is prepared to pay a high price does not mean that it is not an agricultural land - Held, yes - Whether fact that permission was granted to sell said land to non-agriculturist would not displace prima facie presumption which arose from fact that this ancestral land received on partition was consistently being put to agricultural use and continued to be put to agricultural use till date of sale - Held, yes - Whether fact that land was within municipal limits or that it was included within proposed town planning scheme was not by itself sufficient to rebut presumption arising out of actual user of land - Held, yes - Whether further, fact that there was no approach road at relevant time and that agricultural operations were being carried on with aid of tractor would also show that presumption raised from actual user could not be dislodged - Held, yes - Whether, therefore, land in question was agricultural land - Held, yes FACTS The assessee was a Hindu undivided family. The concerned assessment year was 1968-69, the relevant previous year being Samvat year 2023. The assessee owned 2 acres and odd gunthas of land at Wadaj, the exact measurement being 10,164 suqare yards. This land was situated within the Ahmedabad Municipal limits. It was included within the proposed Town Planning Scheme. By an agreement to sell…

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