W.TAS. NOS. 1770/KB TO 1773/KB OF 1986-87, DECIDED ON 21ST FEBRUARY, 1995. VS W.TAS. NOS. 1770/KB TO 1773/KB OF 1986-87, DECIDED ON 21ST FEBRUARY, 1995., 1995 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 1426 (1995)

(a) Wealth Tax Rules, 1963---

----R. 8(3-A)---Valuation of assets---Agricultural land---Question whether a particular piece of land, is agricultural land within the meaning of Wealth Tax Act, 1963 is a question of fact to be decided in the circumstances of the given case and no hard and fast rule or inviolable test can be laid down for determining the question generally.

The term "agricultural land" is not define in the Wealth Tax Act or Rules. Question whether a particular piece of land is agricultural land within the meaning of Wealth Tax Act is a question of fact to be decided in the circumstances of the given case and no hard and fast rule or inviolable test can be laid down for determining the question generally. The circumstances of a case are crucial in deciding the issue.

Officer-in-Charge (Court of Wards) v. C.W.T. (1969) 72 ITR 552 and C.W.T. v. H.V. Mungala (1984) 145 ITR 208 (Bom.) ref.

(b) Wealth Tax Rules, 1963---

R. 8(3-A)---Valuation of assets---Agricultural land---Test for classifying a piece of land.

Another test for classifying a piece of land would be its actual use during the relevant period. If it has not been in use, then the totality of circumstances as to its present use, the intention of the owner, the use made of the contiguous or neighbouring areas or locality etc. will go to determine its true nature or character for the relevant period or point of time. Thus a land lying barren or fallow in a rural area, surrounded by agricultural fields, can fairly be classed as agricultural.

Officer-in-Charge (Court of Wards) V.C.W.T. (1969) 72 ITR 552 and C.W.T. v. R.V. Mungala (1984) 145 TTR 208 (Bom.)' ref.

(c) Wealth Tax Rules, 1963---

----R. 8(3-A)---Valuation of assets---Agricultural land---Where the department had not been able to place on record any evidence to prove that the assessee actually used or- intended to use the land in question for any purpose other than agricultural, it should have been valued under R.8(3-A) of the Wealth Tax Rules, 1963---Non-cultivation of land for a year or so, for some unavoidable reasons, would not change the character of agricultural land.

In the present case the 'department has not been able to place on record a scintilla of, evidence to prove that the assessee actually used or intended to use the land for any purpose other than agricultural. Non cultivation of land for a year or so, for some unavoidable reasons, does not change the character of agricultural land.

The land in question was an agricultural land in all the years under appeal and hence it should have been valued under Rule 8(3-A) of the Wealth Tax Rules.

Officer-in-Charge (Court of Wards) V.C.W.T. (1969) 72 ITR 552 and C.W.T. v. H.V. Mungala (1984) 145 ITR 208 (Bom.) ref.

Abdul Ghani Channa, D.R. for Appellant

Jan-e-Alam, I.T.P. for Respondent.

Date of hearing: 12th February, 1995.

ORDER

These four appeals at the instance of Wealth Tax Officer are directed against the common order, dated 19-2-1987 passed by the learned CIT(A), Zone-5, Karachi, contesting his direction to consider the land as an agricultural land.

2.Relevant facts of the case are that the assessee purchased on 9-6-1981 land measuring 47 acres and 20 Ghuttas in Deh Theming Tapu Gadap, Karachi in consideration of Rs.8,89,906. Since the value of the land, on the basis of Produce Index Units, was below Rs.1,00,000, the same was claimed to be exempt from wealth tax under clause (xii) of section 5(1) of the Wealth Tax Act. The Wealth Tax Officer, without giving any opportunity to the assessee to substantiate his case, treated the land as `sikni' for the reasons that the land had no agricultural use and that it was located within the municipal limits of Karachi. Hence the declared purchase price of Rs.889,906 was included in the taxable assets of the assessee.

3. On consideration of the arguments and pieces of evidence produced on behalf of the assessee, the learned CTT(A) did not agree with the finding of the Assessing Officer and directed him to treat the land. in question as agricultural land' for the following reasons:,

(a)The WTO had not confronted the assessee with his intention of treating the land as urban land and reached his own conclusions without bringing any material on record to justify his action.

(b)The land was purchased from an agriculturist family who had been deriving agricultural income from the said land. The registered sale -deed clearly established that the land in question was agricultural land as per Revenue Record.

(c)The other lands in the vicinity were being used for agricultural purposes and that the WTO had not brought any material evidence on record to hold that the land was converted into `sikni'.

(d)The proximity of the land to Karachi City was no justification for treating it as an urban land.

4. Being aggrieved by the decision of learned CIT(A), WTO has filed the instant appeals. The learned D.R. submitted that the action of the learned CIT(A) was not justified in view of the fact that the land in question was not cultivated and that it was located in the urban area of Karachi City. He, however, could not substantiate his assertion with any documentary evidence.

5. The learned D.R. reitereated his earlier stand before the learned CIT(A) and further produced the copies of wealth tax return and assessment order for assessment year 1984-85 in the parallel case of Mr. Mangi Ladho GIR 3590/V in which the department had treated the land in the same village as `agricultural land' and valued it under Rule 8(3) of the Wealth Tax Rules. He further submitted that the land in question was situated more than 10 kilometres outside K.M. Octori Post on Super Highway. Hence the land was located in the jurisdiction of District Council, Karachi and not that of Karachi Municipal Corporation. Moreover, the Revenue Collector, Karachi had not included the area in which the land in question was situated in his Notification regarding the valuation of urban property within the territorial limits of Karachi Municipal Corporation. It clearly indicated that the area under consideration was outside the urban area limits of K.M.C. He finally submitted that non-cultivation of agricultural land for sometime does not alter the nature of agricultural land for the purposes of wealth tax.

6. We have considered the arguments advanced by both the sides. The term `agricultural land' is not defined in the Wealth Tax Act or Rules. So it is advisable to consult the case-law on the subject. It has been held by the Courts that question whether a particular piece of land is agricultural land within the meaning of Wealth Tax Act is question of fact to be decided in the circumstances of the given case and no hard and fast rule or inviolable test can be laid down for determining the question generally. It implies that the circumstances of a case are crucial in deciding the issue. In a case reported as Officer-in-Charge (Court of Wards) v. C.W.T. (1969) 72 ITR 552 (FB) (A.P.) the Court held that--

"a land which is left barren, but which is capable of being cultivated can also be `agricultural land' unless the said land is actually put to some other non-agricultural purpose, like construction of building or an aerodrome runway to. thereon, which alters the physical character of the land rendering it unfit for immediate cultivation." .

In yet another case reported as C.W.T. v. H.V. Mungala (1984) 145 ITR 208 (Bom:) the Court made the following observation:

The facts showed that the land was used for agriculture till 1963. It had been so recorded in the Revenue Records and the land was assessed as agricultural land. No evidence had been led on behalf of the Revenue to rebut this presumption. It was pointed out that merely because it remained fallow after 1963, the land did not cease to be agricultural' land. It was also pointed out that the land which was recorded as agricultural land in the revenue papers could not be used for a non-agricultural purpose by the owner, unless the land is allowed to be converted to a non-agricultural purposes by the Collector under the provisions of the relevant Land Revenue Act or the Land Revenue Code. This is a circumstance which must necessarily be taken into account while determining the character or the nature of the land...'

Another test for classifying a piece of land as prescribed by the Courts, would be its actual use during the relevant period. If it has not been in use, then the totality of circumstances as to its present use, the intention of the owner, the use made of the contiguous or neighbouring areas or locality etc. will go to determine its true nature or character for the relevant period or point of time. Thus a land lying barren or fallow in a rural area, surrounded by agricultural fields, can fairly be classed as agricultural.

7. On consideration of the facts of present case in the light of above case-law, it is quite evident that the land owned by the appellant falls in the category of agricultural land. The department has not been able to place on record a scintilla of evidence to prove that the appellant actually used or intended-to use the said land for any purpose other than agricultural. Non cultivation of land for a year or so, for some unavoidable reasons change the character of agricultural land. In view of overwhelming evidence in favour of the assessee-respondent and in the light of principles deduced from the abovementioned case-law on the subject, we have no hesitation in holding that the land in question was an agricultural land in all the years under appeal and hence it should have been valued under Rule 8(3-A) of the Wealth Tax Rules. We, therefore, confirm the finding of the learned CIT(A) and consequently dismiss all the four departmental appeals:

M.B:A./128/TAppeal dismissed.