1. The following reference has been made to this Court for opinion:
Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the land was non-agricultural land, as the assessee had obtained permission to divert the land for agricultural operations were carried on by way of only a stop gap activity pending sale of the said land?
2. Counsel for the party aggrieved submitted that the said question is covered by the order of the Gujarat High Court in the case of Himatlal Govindji v. CWT : [1977]106ITR658(Guj) , wherein it is held that when after the agricultural land is diverted for non-agricultural purpose, after the permission to divert the land then even if agricultural operations are carried on the non-agricultural land as a stop gap activity the said character of land will be non-agricultural land.
3. It is a settled position that once an application is filed for diverting the land and the nature of land is changed the land cannot be termed as agricultural land. In the instant case, which is not in dispute that the petitioner has purchased the agricultural land admeasuring 6.17 acres on September 9, 1977, and it was assessed to land revenue at Rs. 20.12 per annum.
4. It is not in dispute that after the purchase of land by the assessee the intention of the assessee was not to carry on cultivation but to divert the said land for non-agricultural purposes with an intention to develop a residential colony. Layout plan for development of residential colony was approved by the Regional Office, Town and Country Planning, Indore, on February 13, 1979. The assessee moved an application to the Revenue authorities for permission to divert the said land for non-agricultural purposes, i.e., for to develop residential colony. Permission has been granted to the assessee vide order dated June 22,1979, and the divert land revenue of Rs. 2,687.65 per annum is paid by the assessee.
5. It is contended by counsel for the petitioner that under the Wealth-tax Act agricultural lands be exempted assets, however, lands are no longer agricultural lands. They will not be agricultural lands and assets. The question is answered in the case of Gordhanbhai Kahandas Dalwadi v. CIT : [1981]127ITR664(Guj) , it is held while interpreting the provisions of the Bombay Tenancy and Agricultural Lands Act, 1948, the definition of the word 'land' which is used for agricultural purposes or which is sometimes used as agricultural land, but is allowed to lie fallow, is agricultural land for the purposes of the Tenancy Act, and the law requires that the sale of agricultural land or non-agriculturist permission under Section 63 of that Act is necessary and considering the provisions of the Bombay Land Revenue Code that the permission was necessary and in the absence of the permission the nature of land does not change.
6. Under Section 172 of the M.P. Revenue Code, if a Bhumiswami of a land wishes to divert his holding or any part for any other purpose except agriculture is required to apply for permission to the sub-divisional officer. After considering the application, the sub-divisional officer shall either reject or grant the permission. In the present case, the permission has been granted by the sub-divisional officer. The nature of land has changed and it ceases to be agricultural land and once the land ceases to be an agricultural land, party cannot claim exemption treating the land to be an agricultural asset. In the light of the aforesaid discussion, the reference is answered accordingly in favour of the Revenue.