Law:

Section:

Section 2(14) of the income-tax act, 1961-Capital asset-Agricultural land-Assessee purchased certain land which had on it certain coconut arecanut, mango trees, etc.-Assessee constructed thereon building to carry on its business and no agricultural operations were carried on the land-Only expenditure incurred for certain years on impugned land was for plucking of coconuts-Whether impugned land was agricultural land-Held, on facts, no Facts In 1947, the assessee-company had purchased a land on which there were coconut trees and arecanut trees in addition to trees like mango trees, tamarind trees, etc. For the purpose of carrying on its business, the assessee constructed on the land two buildings, a car shed, a bathroom and a compound wall. In 1957, the assessee stopped the business and the building was let out to the PWD. Since 1960 the assessee had not spent a pie on this land in the form of agricultural operations. In the years 1960 to 1963, the only expenditure incurred was for plucking of coconuts. Subsequently, this land was acquired by the State Government. When the ITO sought to assess the compensation received on the acquisition as capital gains, the assessee claimed that the land in question was agricultural land. The ITO held that the acquired lands were purely non-agricultural and, hence, in computing the capital gains, the entire value awarded as compensation was taken into account. On appeal, the AAC confirmed the assessment. On further appeal, the Tribunal also dismissed the assessee's claim. On reference under section 256(2) : Held It was difficult to accept the assessee's contention that the existence of good number of coconut and arecanut trees on the property must itself be taken as evidence in no uncertain measure of the basic character of the land as agricultural. In Rasiklal Chimanlal Nagri v. CWT [1965] 56 ITR 608 (Guj.), it has been pointed out that in a case where the land is not being actually put to any use, the true test to be applied for the purpose of determining whether a particular land is agricultural land or not, is not whether the land is capable of being used for agricultural purpose, but whether, having regard to the various…

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