COMMISSIONER OF INCOME TAX Vs. MINGUEL CHANDRA PAIS

JUDGEMENT

(1.) These appeals filed by the revenue under section 260-A of the Income Tax Act, 1961 were admitted on a substantial question of law which reads as follows :- "whether on the facts and in the circumstances of the case the assessee's land could be termed as agricultural land -

(2.) Some facts are required to be stated to dispose of both the appeals. The respondents in both the appeals are the assessees-husband and wife and though they are non-resident Indians from the year 1983 or thereabout they are governed by the regime of communion of assets as in force in this State. In may, 1995 they sold their ancestral property bearing Survey Nos. 103/1 and 102/4 admeasuring about 65,282 sq. metres to M/s. Sunset Resort Pvt. Ltd. for a sum of Rs. 2,88,10. 600/- which works out to a price of Rs. 441.33 per sq. m. The assessees did not declare capital gains on the sale of the said property and therefore a notice under section 143 (2) of the Act was issued to them and in reply to the said notice they contended that the land held by them was agricultural land having coconut and cashew plantation.

(3.) The Assessing Officer by his order dated 14-10-98 held that they were required to pay Rs. 26,06,040/- each as tax on long term capital gains for assessment year 1996-97 stating that the land sold by them was barad in nature and was not capable of agricultural operations. The Assessing officer noted that the assessees were non-resident Indians and there was no one to look after the said land. The Assessing Officer declined to accept that the father of the male assessee who was an old man, could look after the said property or involve himself in agricultural activities and also noted that the trees were not planted in a row and in order. He was also of the view that the price at which the land was sold showed that it was not agricultural land and besides, the land was adjacent to 4 five Star Hotels namely Holiday Inn, Donna Sylvia, Dalmia Old Anchor and Hotel Leela palace. It may be stated here that M/s. Sunset Resort Pvt. Ltd. is said to be sister concern of Hotel Leela Palace.