Wealth tax---

---- Land whether agricultural---Question not considered from proper perspective--- Matter remanded.

Held, that the Tribunal had not considered the question whether the land in question was agricultural land or not from the proper perspective and from the proper angle and had not applied the correct law to this point. Its whole approach was erroneous in the light of the law as explained by the High Court in the case of CIT v. Manilal Somnath (1977) 106 ITR 917 (Guj.) and by the Supreme Court in the case of CWT v. Officer-in-Charge (Court of Wards) (1976)105 ITR 133. It would be open to the Tribunal to dispose of the appeal in the light of the observations made by the Division Bench in the case of Smt. Chandravati Atmaram Patel v. CIT (1978) 114 ITR 302 (Guj.).

Chandravati Atmaram Patel (Smt.) v. CIT (1978) 114 ITR 302 (Guj.); CIT v. Indian Molasses Co. (P.) Ltd. (1970) 78 ITR 474 (SC); CIT v. Manilal Somnath (1977) 106 ITR 917 (Guj.) and CWT v. Officer-in-Charge (Court of Wards) (1976) 105 ITR 133 (SC) ref.

K.H. Kaji for the Assessee.

B.J. Shelat instructed by Messrs M.R. Bhatt and Co. for the Commissioner.

JUDGMENT

S.D. SHAH, J.---On being moved under section 27 of the Wealth-tax Act, 1957 (hereinafter referred to as "the said Act"), the Income-tax Appellate Tribunal has referred the following question for our determination:

"Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is justified in holding that the land in question was non-agricultural land?"

In order to answer the said question, it would be necessary for us to . set out the relevant facts herein:

(i)The assessee is an individual and the relevant assessment years are 1967-68 and 1968-69. The Wealth-tax Officer completed the assessment and included in the wealth of the assessee the value of two parcels of land bearing S. Nos. 51/1/11 and 51/1/2/2/2. The contention of the assessee that the said parcels of land were agricultural lands and were, therefore, not liable to be included in the net wealth of the assessee was negatived by the Wealth-tax Officer on his finding that the said parcels of land were non-agricultural lands.

(ii)The assessee preferred appeals to the Appellate Assistant Commissioner who allowed the appeals holding that the aforesaid two parcels of land were agricultural lands.

(iii)Being aggrieved by the said order, the Revenue preferred appeals to the Tribunal and the Tribunal, by following its earlier decision in the income-tax case of this very assessee in Income-tax Appeal No.1477/Ahd. of 1972-73, held that the lands in question were non agricultural lands and reversed the order of the Appellate Assistant Commissioner.

(iv)From the aforesaid decision of the Tribunal, the assessee has got referred the aforesaid question for our decision. From the aforesaid facts, it becomes clear that the Income-tax Appellate Tribunal has based its decision mainly on its earlier order in Income-tax Appeal No. 1477/Ahd. of 1972-73. The said order of the Tribunal was the subject of a reference to this Court and the following question was referred to this Court for its decision in Income-tax Reference No.51 of 1975 (see Chandravati Atmaram Patel v. CIT (1978) 114 ITR 302, 303):

"Whether, on the facts and in the circumstances of the case, the land in question is agricultural land within the meaning of section 2(14)(iii) of the Income-tax Act, 1961, and, therefore, whether the capital gains arising from the sale thereof is exempt from assessment to income-tax under the said Act?"

The Division Bench of this Court, in the case of Smt. Chandravati Atmaram Patel v. CIT (1978) 114 ITR 302 (Guj), has declined to answer the aforesaid question inasmuch as the Division Bench was of the view that various relevant factors which were required to be taken into consideration for the purpose of deciding the nature of the land were, in fact, not taken into consideration by the Tribunal. Therefore, following the decision of the Supreme Court, the Division Bench found that, on the facts and in the light of the situation prevailing before it, two courses were open to it, i.e., (i) to call for a supplementary statement of the case from the Tribunal or (ii) to decline to answer the question raised by the Tribunal and to leave-the Tribunal to take appropriate steps to adjust his decision under section 260(1) of the Income-tax Act, 1961. The Division Bench, therefore, in the aforesaid case passed the following order (at page 315):

"In the circumstances, we think it appropriate to decline to answer the question on the ground that the Tribunal has failed to consider and decide the question whether the land was agricultural land from the correct angle, that is, it has not considered the question whether the land under consideration was agricultural land or not from the proper perspective and from the proper angle and has not applied the correct law to this point and its whole approach was erroneous in the light of law as explained by this Court in Manilal Somnath's case (1977) 106 ITR 917 (Guj) and by the Supreme Court in CWT v. Officer-in -Charge (Court of Wards) (1976) 105 ITR 133, and the Tribunal has not considered all the appropriate provisions of law applicable to this question. It would be open to the Tribunal to dispose of the appeal under section 260, subsection (1) of the Income Tax Act, 1961, in the light of the observations made by us in this decision after approaching the question from the correct angle as explained by us (vide CIT v. Indian Molasses Co. (P.) Ltd. (1970) 78 ITR 474 (SC). There will be no order as to costs of this reference."

It, therefore, becomes clear that the decision of the Income-tax Appellate Tribunal in Income-tax Appeal No. 1477 of 1972-73 no longer holds the field and because of the decision rendered in the case of Suit. Chandravati Atmaram Patel (1978) 114 ITR 302 (Guj), this Court has left the matter to the Income-tax Appellate Tribunal for decision under section 260(1) of the Income-tax Act. Therefore, the decision on which the judgment of the Tribunal is based in the case before us, i.e., the decision, dated January 24, 1977, cannot stand and we shall have to the issue same directions, which were issued by the Division Bench of this Court in the case of Suit. Chandravati Atmaram Patel (1978) 114 ITR 302 (Guj.).

We, accordingly, decline to answer the question on the ground that the Tribunal has failed to consider and decide the question whether the land was agricultural land from the correct angle, i.e., it has not considered the question whether the land in question was agricultural land or not from the proper perspective and from the proper angle and has not applied the correct law to this point and its whole approach was erroneous in the light of the law as explained by this Court in the case of Manilal Somnath (1977) 106 ITR 917 and by the Supreme Court in the case of CWT v. Officer-in-Charge (Court of Wards) (1976) 105 ITR 133. It will be open to the Tribunal to dispose of the appeal under section 27(1) of the Wealth-tax Act, 1957, in the light of the observations made by the Division Bench in the case of Smt. Chandravati Atmaram Patel (1978) 114 ITR 302 (Guj), after approaching the question from the correct angle as explained by the Division Bench in the said judgment. There shall be no order as to costs.

M.BA./2280/S