Prima facie, land which is not agricultural is a capital asset and hence taxable.
As such agricultural land is not defined in IT act.
But, Hon’ble Supreme Court has evolved the following 13 factors/indicators applying which the question has to be answered. The 13 factors are the following :
- (1) Whether the land was classified in the revenue records as agricultural and whether it was subject to the payment of land revenue?
- (2) Whether the land was actually or ordinarily used for agricultural purposes at or about the relevant time?
- (3) Whether such user of the land was for a long period or whether it was of a temporary character or by way of a stop-gap arrangement?
- (4) Whether the income derived from the agricultural operations carried on in the land bore any rational proportion to the investment made in purchasing the land?
- (5) Whether, the permission under section 65 of the Bombay Land Revenue Code was obtained for the non-agricultural use of the land? If so, when and by whom (the vendor or the vendee)? Whether such permission was in respect of the whole or a portion of the land? If the permission was in respect of a portion of the land and if it was obtained in the past, what was the nature of the user of the said portion of the land on the material date?
- (6) Whether the land, on the relevant date, had ceased to be put to agricultural use? If so, whether it was put to an alternative use? Whether such cesser and/or alternative user was of a permanent or temporary nature?
- (7) Whether the land, though entered in revenue records, had never been actually used for agriculture, that is, it had never been ploughed or tilled? Whether the owner meant or intended to use it for agricultural purposes?
- (8) Whether the land was situate in a developed area? Whether its physical characteristics, surrounding situation and use of the lands in the adjoining area were such as would indicate that the land was agricultural?
- (9) Whether the land itself was developed by plotting and providing roads and other facilities?
- (10) Whether there were any previous sales of portions of the land for nonagricultural use?
- (11) Whether permission under section 63 of the Bombay Tenancy and Agricultural Lands Act, 1948, was obtained because the sale or intended sale was in favour of a non-agriculturist? If so, whether the sale or intended sale to such non-agriculturist was for non-agricultural or agricultural user?
- (12) Whether the land was sold on yardage or on acreage basis?
- (13) Whether an agriculturist would purchase the land for agricultural purposes at the price at which the land was sold and whether the owner would have ever sold the land valuing it as a property yielding agricultural produce on the basis of its yield?
- It is further clarified that not all of these factors would be present or absent in any case and that in each case one or more of those factors may make appearance and that the ultimate decision will have to be reached on a balanced consideration of the totality of circumstances
Coutesy: CA Pramod Shingte, Pune
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