George Stanley Vs DCIT (Kerala High Court)
No Evidence of Cultivation, No 10(37) – Benefit Mere Trees Don’t Make Land Agricultural – Kerala HC Orders AO to Examine 54F Claim- Rubber Trees Not Enough – Kerala HC Says Agricultural Use Must Be Proved, Directs AO to Reconsider 54F Claim
Assessee, a non-resident, sold 94 cents of land with a residential building in Pathanamthitta for ₹6.20 crore, claiming the property was agricultural land & hence not liable to capital gains tax. AO rejected the claim, holding that the property was not agricultural in nature & assessed long-term capital gains accordingly. Both CIT(A) & ITAT (Cochin Bench) upheld the addition.
Aggrieved, Assessee approached the High Court contending that the land was planted with rubber, coconut, mango, & jackfruit trees, as certified by the Village Officer, & hence qualified as agricultural land u/s 10(37).
The Court noted that Assessee relied only on a Village Officer’s certificate & photographs showing the presence of trees but produced no evidence of actual agricultural activity or agricultural income in the preceding two years — a mandatory condition u/s 10(37).
It was further observed that the buyer himself had confirmed before AO that the land was non-agricultural & used for commercial purposes. The sale deed also contained no endorsement from the Sub-Registrar indicating agricultural use, & Assessee had failed to disclose the sale in his return of income.
