COMMISSIONER OF WEALTH TAX VS JAWAHARBHAI D. PATEL
1998 P T D 2284
[225 I T R 582]
[Gujarat High Court (India)]
Before R.K. Abichandani and R. Balia, JJ
COMMISSIONER OF WEALTH TAX
versus
JAWAHARBHAI D. PATEL
Wealth Tax Reference No.26 of 1983, decided on 06/12/1996.
Wealth tax---
----Exemptions---Agricultural land---Whether land agricultural---Factors to be considered---Very small portion of land used for agricultural operations-- Land level with road and surrounded by housing societies---Area covered in town planning scheme of municipal corporation---Appellate Assistant Commissioner holding land not agricultural---Tribunal on basis of assessment order for subsequent years holding land agricultural---Not justified---Matter remanded---Indian Wealth Tax Act, 1957, S.5(1)(iv-a).
The assessee in his wealth tax returns for the assessment years 1970-71 to 1974-75 showed that he had a 1/7th share in certain lands. The Wealth Tax Officer referred the valuation of the land to the Departmental Valuation Officer (Land and Buildings) and accepting his valuation made the assessment. The assessee appealed contending that the lands were agricultural lands and the valuation should have been done by an expert in valuing agricultural lands. The Appellate Assistant Commissioner on personal inspection found that only a part of the land was under cultivation, that from the total area of 16.22 acres, the area under cultivation was not more than one acre, that the area, excepting the portion where agricultural operations were carried out, was at the level of the main road with no water supply for cultivation purposes, that the area was surrounded by housing societies and the land abutted on the road connecting the city with the airport, and further that the area was covered under the Town Planning Scheme of the Baroda Municipal Corporation. On the basis of these factors, he held that the land should be treated primarily as non-agricultural land. On further appeal, the Tribunal, on the basis of the orders of the Wealth Tax Officer for the subsequent assessment years 1975-76 to 1977-78, held that the lands in question were to be treated as agricultural lands. On a reference:
Held, that in view of the material which was on record before the Tribunal, as reflected in the order of the Appellate Assistant Commissioner, the Tribunal was not justified, without going into the relevant aspects, merely on the basis of the orders of the Wealth Tax Officer for the subsequent years, which had not been set aside, in drawing an inference that the land in question was agricultural land for the purpose of the relevant assessment years.
Rasiklal Chimanlal Nagri v. CWT (1965) 56 ITR 608 (Guj.) ref.
P.K. Jani instructed by Manish R. Bhatt for the Commissioner.
JUDGMENT
R.K. ABICHANDANI, J.---The Income-tax Appellate Tribunal, Ahmedabad Bench "B", has referred to the High Court the following three questions for opinion under section 27 of the Wealth Tax Act, 1957.
"(1) Whether, on the facts and in the circumstances of the case, the Tribunal by placing reliance on the assessment order for 1975-76 to 1977-78 was right in law in coming to the conclusions that the land situated at villages Hami, Sawad, and Baroda Kasba were agricultural lands through mistake the nomenclature of land was mentioned as agricultural by the Wealth Tax Officer without giving any findings to that effect?
(2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in coming to the conclusion that the assessee was entitled to exemption under section 5(1)(iv-a) of the Wealth Tax Act, 1957?
(3) Whether; on the facts and in the circumstances of the case, the Tribunal was right in law in coming to the conclusion that the valuation of the lands at Rs.10,50,000 taken by the Wealth Tax Officer and confirmed by the Appellate Assistant Commissioner for determining the 1/7th share of the assessee in the said land was not proper?" .
The matter pertains to the assessment years 1970-71 to 1974-75. The assessee in his wealth tax returns for the relevant years filed as an individual had shown that he had a 1/7th share alongwith his wife and five sons who were the co-sharers in the immovable property being lands situated in Harni, Sawad and Baroda Kasba. The assessee had got the land valued by his valuer. The Wealth Tax Officer while making the assessment for the said assessment years had referred the matter to the Departmental Valuation Officer (Lands and Buildings). The Wealth Tax Officer accepted the valuation made by the Departmental Valuation Officer and assessed the share of the assessee in the said property accordingly.
The Appellate Assistant Commissioner of Wealth Tax before whom the orders of the Wealth Tax Officer were challenged, while dealing with the contention of the assessee that the property was mainly agricultural land and its valuation should be done by one who is an expert in valuing agricultural land, held that the land in question was surrounded by housing societies and abutted on the Harni Road connecting the city with the airport and that the area was included in the Town Planning Scheme of the Baroda Municipal Corporation. Considering all the relevant aspects, the Commissioner was of the view that the land should be treated primarily as non-agricultural land and, therefore, the Wealth Tax Officer had correctly considered it as a non -agricultural land for the purpose of valuation. The valuation of the property was taken as Rs.10,50,000 for the year 1970-71 and a uniform increase of price at the rate of Rs.70,000 for each subsequent assessment year was adopted and the Wealth Tax Officer was directed to recast his order on the basis of the said valuation, for the assessment years 1970-71 to 1974-75.
Against the Commissioner's order, the assessee approached the Tribunal contending that the lands in question were agricultural lands and that this was borne out from the fact that they were treated as agricultural lands for the subsequent assessment years 1975-76 to 1977-78. The Tribunal held that the lands in question should be treated as agricultural lands in the years under appeal unless the claim of the assessee was rebutted by showing that the order of the Wealth Tax Officer for the subsequent years 1975-76 to 1977-78 was challenged and set aside by the higher authorities. The Tribunal held that since the order of the Wealth 'Tax Officer in respect of the subsequent years was not set aside, it was required to be held that the lands in question were agricultural lands. On the basis of this finding, the Tribunal held that the lands were entitled to exemption under section 5(1)(iv-a) of the Act as claimed by the assessee. Since, according to the Tribunal, the lands in question were agricultural lands and were, thus, entitled to exemption, a direction was given to the Commissioner to ascertain the value of the land taking it to be agricultural land and decide the question afresh after hearing both the sides.
Section 5 of the said Act provides for exemption in respect of certain assets. As per clause (iv-a) of section 5(1) as it operated at the relevant time, agricultural land belonging to the assessee subject to a maximum of Rs.1,50,000 in value were to be exempted. The Tribunal has found that the said lands were agricultural lands and, therefore, the authorities had erred in denying exemption in respect thereof under section 5(1)(iv-a) as it operated at the relevant time.
The expression "agricultural land" has not been defined under the Act. If the land is used for agricultural purposes, ordinarily it would be correct to say that the land is agricultural land and if it is not to be put to such use, it would be non-agricultural land. However, this test may not always be a correct guide for, there may be cases where land which is admittedly non-agricultural, may be temporarily used for agricultural purposes. Whether a particular land is agricultural land or not would depend on the general nature or character of the land and various other factors. These factors would include the development and use of land in the adjoining areas, meaning thereby its situation, the physical characteristics of the land to show whether it is capable of being put to agricultural use, the actual user over a period of time, and the intention of the owner in regard to the user of the land. If the lands are included in the town planning scheme one could reasonably assume that they were not agricultural lands. The fact that the plots were assessed for agricultural purposes and the assessee has not made any application for permission to make non-agricultural use of the plot would not be a factor which would outweigh the other factors. This position is borne out from the decision of a Division Bench of this Court, in the context of the provisions of section 2(e)(i) of the said Act, in Rasiklal Chimanlaf Nagri v. CWT (1965) 56 ITR 608.
The Appellate Assistant Commissioner while considering the question has referred to the relevant factors. He has recorded that on personal inspection he had found that only a part of the land was under cultivation and that from the total area of 16.22 acres, the area under cultivation was not more than 1 acre. He has also noted that the area excepting the portion where agricultural operations were carried out was at the level of the main road with no water supply for cultivation purposes. He noted that the area was surrounded by housing societies and the land abutted on the Harni Road connecting the city with the airport, and further that the area was covered under the Town Planning Scheme of the Baroda Municipal Corporation. On the basis of these factors, he opined that the land should be treated primarily as non-agricultural land. The Tribunal without going into these relevant aspects, merely on the basis of the orders of the Wealth Tax Officer for the subsequent years which were not challenged, drew an inference that these lands were agricultural lands for the purpose of the relevant assessment ears and, therefore, they were required to be exempted. In view of the material which was on record before the Tribunal, as reflected in the order of the Commissioner, the Tribunal committed an error in assuming that there was only a mistake in describing the land as agricultural land, committed by the Wealth Tax Officer. The Tribunal ought to have gone into the relevant factors with a view to ascertain whether the land in question was agricultural and for the purpose of deciding whether it should have been exempted and having come to an appropriate finding on the aspect, it ought to have then considered the proper method of valuing the land depending upon its nature.
In this view of the matter, we hold that the Tribunal was not right in placing reliance on the assessment orders for the years 1975-76 to 1977-78 in coming to the conclusion that the lands in question were agricultural lands solely on the basis that there was only a mistake in the nomenclature of land committed by the Wealth Tax Officer. Question No. l is, therefore,. answered in the negative accordingly in favour of the Revenue. The Tribunal will have to consider the extent of exemption if any to which assessee may be eligible under section 5(1)(iv-a) of the Act and valuation of the lands and assessment in respect of the share of the assessee will have to be determined on that basis. We, therefore, do not answer questions Nos.2 and 3 leaving it open to the Tribunal to take a fresh decision on these questions in light of this judgment. The reference stands disposed of accordingly with no order as to costs.
M.B.A./1482/FC Reference disposed.