Section 2(14)(iii) of the Income Tax Act
The decision most relied on for Section 2(14)(iii) is CIT v. Siddharth J Desai (139 ITR 628), cited in 45 of the 238 judgments on BharatTax that turn on this section.
Leading authorities on Section 2(14)(iii)
This case lays down 13 specific tests and factors for determining whether land qualifies as agricultural land under the Income-tax Act. It holds that obtaining permission to sell agricultural land for non-agricultural purposes shortly before the sale does not automatically alter its agricultural character.
Actual earning of agricultural income is not essential for determining the character of land as agricultural. The absence of agricultural income is legally irrelevant to this determination.
A transaction involving the purchase of land, especially if part of a series of similar transactions and likely to be acquired by the government, can be considered an adventure in the nature of trade, leading to the profit being assessed as business income.
The potential for non-agricultural use or the purchaser's intention does not alter the agricultural character of land for capital gains purposes if it was agricultural at the time of sale and prior use. Market conditions leading to a high price do not change the essential nature of the land.
If agricultural operations are being carried out on land at the time of sale and revenue records indicate it is agricultural land, a presumption arises that it is agricultural in character, which the revenue must rebut. Permission to convert land to non-agricultural use does not render it non-agricultural if not obtained before the sale.
The potential non-agricultural value of land, or the large price a purchaser is willing to pay due to market conditions, does not change its essential character as agricultural land at the time of sale, provided it was used for agricultural purposes.
The character of land is determined by entries in revenue records, and if these records classify land as agricultural, it should be considered as such for tax purposes.
This case is cited for the proposition that the High Court can consider decisions from other High Courts and the Supreme Court when deciding an appeal.
The character of land as agricultural is determined by its use and legal status prior to sale, not by subsequent non-agricultural use by the purchaser or its location in a developed area.
Stamp duty paid on a license can be capitalized as an intangible asset and is eligible for depreciation. This allows for the deduction of the cost of the license over its useful life.
