:1: IN THE HIGH COURT OF BOMBAY AT GOA TAX APPEAL NO. 1 OF 2006 WITH TAX APPEAL NO. 2 OF 2006 TAX APPEAL NO. 1 OF 2006 The Commissioner of Income Tax, Having office at Aayakar Bhavan, Patto-Plaza, Panaji Goa. ... Appellant V e r s u s Smt. Debbie Alemao, Varca, Salcete, Goa. ... Respondent AND TAX APPEAL NO. 2 OF 2006 The Commissioner of Income Tax, Having office at Aayakar Bhavan, Patto-Plaza, Panaji Goa. ... Appellant V e r s u s Shri Joaquim Alemao, Varca, Salcete Goa. ... Respondent Mrs. Asha Dessai, Advocate for the Appellant. None present for the Respondents. CORAM : D. G. KARNIK, & F.M. REIS, JJ. DATED : 9 th SEPTEMBER, 2010. :2: ORAL JUDGMENT ( Per D. G. KARNIK, J ) The respondents in these two tax appeals are the wife and husband and were co-owners of the land bearing survey no. 126 admeasuring about 46,250 square metres situated at revenue village Varca, Salcete Taluka, in the District of South Goa ( for short “ the said land”). They purchased the said land for a sum of Rs.8,00,000/- under a sale deed dated 28th February, 1988 as an agricultural land. On 3rd September, 1990 they sold the said land to Varca Holiday Beach Resort Private Limited for a sum of Rs.73,00,000/- and the consideration was paid equally to the wife and husband. The respondents filed separate returns of income under the Income Tax Act. The capital gain arising out of the sale of the land was claimed by each of them to be exempt, being arising out of the sale of agricultural land. The Assessing Officer held that the said land had non-agricultural potential and the fact that it was sold at a price which was nearly 10 times the purchase price within two years from its purchase and it was purchased by the purchaser for the purpose of a beach resort and showed that the said land was not an agricultural land. Consequently, he held the profit arising out of the sale of the said land was assessable to the tax as capital gains. 2. Aggrieved by the decision of the Assessing Officer, each of the respondents filed a separate appeal before the Commissioner of Income Tax ( Appeals ). The Commissioner of Income Tax accepted the :3: contention of the respondents that the said land was an agricultural land and the capital gain arising out of the sale of agricultural land was not chargeable to tax under Section 45 of the Income Tax Act. He, accordingly, allowed the appeals and by deleting the amount of capital gains. In the appeals at the instance of the Revenue, the Income Tax Appellate Tribunal ( for short “ the ITAT” ) confirmed the decision of the Commissioner of the Income Tax (Appeals ). Aggrieved by the decision of the ITAT the revenue is in appeal. 3. By an order dated 20th March, 2006, the appeals were admitted as to the following substantial question of law : “Whether on the facts and in the circumstances of the case the assessee's land could be termed as “Agricultural Land” ?” 4. The learned Counsel for the appellant submitted that the said land had non-agricultural potential when it was purchased by the respondents. She submitted the very fact that the respondents sold the said land within two years of its purchase to a purchaser for construction of a beach resort showed that the respondents had purchased the property with an intention of selling it for a non -agricultural use. The huge difference in the price nearly 10 times the purchase price would indicate that the land was purchased with an eye on the non -agricultural potential. :4: The learned Counsel for the appellant, therefore, submitted that the said land was not an agricultural land. The learned Counsel for the appellant also invited our attention to the fact that the Respondents had not shown any agricultural income during the period of two years from the date of the purchase till the date of the sale, arising out of the said land. This also showed that the land was not an agricultural land. The Counsel for the appellant submitted that the Commissioner of Income Tax ( Appeals ) as well as the ITAT committed a gross error, bordering on perversity, in holding that the said land was an agricultural land. Ordinarily, the question whether a land is an agricultural land and a non- agricultural land is a question of fact and the finding on the question of fact recorded by the ITAT is final. 5. Under Section 260A of the Income Tax Act, it is not open to the High Court to interfere in the finding of the fact. The finding of fact that could be interfered only if it was arrived at by application of wrong principles of law or was perverse i.e to say that no prudent man versed in law would come to the said finding. In our view, the finding is neither perverse nor is it arrived at by wrong application of any principle of law and it is not open for us to interfere in the possible finding of fact in an appeal under Section 260A of the Income Tax Act. The Assessing Officer has noted that the said land was entered in the revenue record as an agricultural land i.e. garden or orchard. The ITAT also held that the land was recorded in the revenue records as an agricultural land. This is :5: not disputed by the revenue. It is however contended that the land was not actually used for agricultural in as much as no agricultural income was derived from this land and was not shown by the respondents in their income tax return. This was explained by the respondents by saying that there were coconut trees in the land but the agricultural income derived by sale of the coconuts was just enough to maintain the land and there was no actual surplus. Hence, no agricultural income was shown from this land. In our opinion, if an agricultural operation does not result in generation of surplus that cannot be a ground to say that the land was not used for the agricultural purpose. It is not disputed that the land was shown in the revenue record to be used for agricultural purpose and no permission was ever obtained for non-agricultural use by the respondents. Section 30 of the Goa, Daman and Diu Land Revenue Code, 1968 provides that no land used for agriculture shall be used for any non- agricultural purpose and no land assessed for one non- agricultural purpose shall be used for any other non- agricultural purpose except with the permission of the Collector. Section 32 of the Goa, Daman and Diu Land Revenue Code prescribes the procedure for conversion of use of land from one purpose to another including conversion from agricultural purpose to non- agricultural purpose. The permission for non- agricultural use was obtained for the first time by the Varca Holiday Beach Resort Private Limited the purchaser after it purchased the land. Thus, the finding recorded by the two authorities below that the land was :6: used for the purpose of agricultural is based on appreciation of evidence and by application of correct principles of law. The Tribunal has relied upon two unreported decisions of this Court in CIT V/s Minguel Chandra Pais ( Tax Appeal No. 1/2002) and CIT V/s Smt. Maria Leila Tovar Furtadoe Pais ( Tax Appeal No. 2/2002) which involved identical issue. In those appeals, this Court has upheld the order of the Tribunal holding that the land was agricultural land and its sale did not invite the payment of capital gain. It is not disputed before us that the facts of the said cases were similar to the facts of the present cases. We are bound by the decision in those cases. 5. For these reasons, there is no merit in the appeals which are hereby dismissed with costs. D. G. KARNIK, J F. M. REIS, J at*