DAVENDRA PAL SINGH VS COMMISSIONER OF WEALTH TAX .
2001 P T D 1860
[243 I T R 127]
[Allahabad High Court (India)]
Before M. C. Agarwal, J
DAVENDRA PAL SINGH
Versus
COMMISSIONER OF WEALTH TAX and another
Civil Miscellaneous Writ Petitions Nos.330 and 329 of 1995, decided on 16/08/1999.
(a) Wealth tax---
----Exemption---Agricultural land---Agreement in May, 1989 to sell to developer land which had groves on it---Purchaser authorised to cut trees-- Application for approval for development of land submitted in June, 1989 and amount paid to development authority in September, 1989---Land to be sold by developer in plots and assessee to get amounts from such buyer up to agreed limit---Payment of land revenue and absence of order authorising change of user were not conclusive in determining nature of land---Land had ceased to be agricultural ---Assessee not entitled to exemption in respect of land in assessment years 1990-91 and 1991-92---Indian Wealth Tax Act, 1957, S.2(e).
(b) Wealth tax---
---- Valuation of assets---Land agreed to be sold in plots and vendor to get amounts up to agreed limit of Rs.1,04,28,000---Part of land set aside for common use in shape of roads, parks, etc.---Value of such common land to be taken into account---Valuation in any case could not exceed Rs.1,04,28,000---Indian Wealth Tax Act, 1957.
(c) Wealth tax---
----Penalty---Writ---Concealment of wealth ---Assessee had efficacious alternate remedy by way of appeal---Levy of penalty could not be challenged in writ proceedings---Indian Wealth Tax Act, 1957, S.18---Constitution of India, Art. 226.
(d) Writ---
---- Powers of High Court---Power is limited---Finding of fact cannot be interfered with unless it is based on no evidence or is based on irrelevant considerations---Constitution of India, Art. 226.
One of the objects of the exemption from the wealth tax given to agricultural lands is to encourage cultivation or actual utilisation of land for agricultural purposes and if there is neither anything in its condition, nor anything in the evidence to indicate the intention of its owners or possessors so as to connect it with agricultural purpose, the land would not be "agricultural land" for the purposes of earning an exemption. The question whether a piece of land is agricultural land or not is essentially a question of fact and though several tests have been evolved in decisions of the Supreme Court and the High Courts, all of them are more in the nature of guidelines and the question has to be answered in each case, having regard to the facts and circumstances of that case.
The petitioner was the owner of lands. Up to the assessment year 1988-89, this land was treated as agricultural land and was treated to be exempt from wealth tax. On May 19, 1989, the petitioner entered into an agreement to sell this land to a partnership firm named K constituted by six persons including the petitioner's wife. The agreement described the prospective purchaser as colonizers who were purchasing the land having potential for residential and commercial purposes and who were to sell the same after carving out plots. The consideration agreed was Rs.1,04,28,000 and a period of three years was agreed for the completion of the terms of the agreement. It was agreed that the party of the first part would provide all assistance to the party of the second part so that they may get approved, the layout plan for the establishment of the colony. The party of the first part was to continue to be the owner of the land till the sale-deeds were executed but the party of the second part was entitled to get executed, the sale-deeds plotwise as approved or to be approved by the development authority or pocket-wise or Khata numberwise. The party of the second part was also entitled to enter upon the land for the purposes of making, measurements, marking the roads, parks and plots according to the approved layout plan. The entire expenses for the approval of the layout plan of the development of the site and other ancillary expenses were to be borne by the party of the second part and the party of the second part was at liberty to get out the entire grove at its own expense and sell the wood to meet the expenses of the development work for this purpose. The Assessing Officer while making the assessments held that on the relevant valuation dates, i.e., March 31, 1990 and March 31, 1991, the land had lost its character as agricultural land and was, therefore, not excluded from the definition of "assets" in section 2(e) of the Wealth Tax Act, 1957. The circumstances relied upon by the Assessing Officer for holding that the land in question was no longer agricultural land were that (i) the Bulandshahr Khurja Development Authority (BKDA) was requested for approval of the colony in the month of June, 1989; (ii) on September ~9, 1989, a sum of Rs.3 lakhs was paid by the assessee to -the BKDA; (iii) the firm, K, had paid an instalment of Rs.2,84,407 on December 30, 1989, to BKDA; (iv) the assessee sold Plot No. 119 measuring 176 sq. mtrs. of this colony on March 19, 1990; and (v) in the income-tax return for the assessment year 1990-91, the builders, K, had shown a sum of Rs.3,18,451 as sale proceeds of the plots in H the name that was given to the colony to be developed on the disputed land. For the assessment year 1990-91 the Assessing Officer valued this land at Rs.2,11,52,750. This value was arrived at by applying a rate of Rs.350 per sq. mtr. to the land measuring 6,618 sq. mtrs. and adjusting therefrom the value already received in respect of Plot No. 119. For assessment year 1991-92 the value of the land was assessed at Rs.1,98,68,894 by applying a rate of Rs.350 per. sq. mtr. to the unsold land measuring 56,768.27 sq. mtrs. Against the assessment orders, the petitioner preferred appeals to the Commissioner of Wealth Tax (Appeals) but withdrew the appeals and filed a revision petition. On the dismissal of the revision petition, he filed a writ petition challenging this order as well as an order levying penalty under section 18(1)(c):
Held, (i) that an agreement to sell this property for development as house sites, roads, parks, etc., had been executed on May 19, 1989, i.e., much before the valuation date, i.e., March 31, 1990. An application for approval of a layout plan had been moved on August 9, 1989 before the development authority. Sums of Rs.3 lakhs and Rs.3,18,451 had also been paid to the development authority and even one plot had been sold. Apparently, therefore, the petitioner as well as the builder ceased to have an intention to hold the land for agricultural purposes after May 19, 1989. Payment of land revenue and absence of an order under section 143 of the U.P. Zamindari Abolition and Land Reforms Act authorising the change of user were, therefore, not of much importance. It was a grove land and the buyer had been authorised to cut the trees. The cutting of the trees was a material circumstance and the petitioner- had not alleged that trees had not been cut in pursuance of the agreement. In view of these circumstances and the relevant facts being in the personal knowledge of the petitioner, the burden lay heavily on him to show that on the two valuation dates in spite of the aforesaid circumstances which were not disputed the land did not lose its character as agricultural land. This burden was not shown to have been discharged and mere reliance on the facts that the plots in question were recorded in the revenue papers as agricultural land and the land revenue was paid could not be sufficient to displace the conclusion of the authorities below. The petitioner had failed to show that the conclusions arrived at by the Assessing Officer or by the Commissioner were legally erroneous being based on no evidence or being based on irrelevant circumstances so that the Court in exercise of jurisdiction under Article 226 of the Constitution of India could set aside those findings and direct the authorities to reconsider the matter. The petitioner was not entitled to exemption in respect of the land for the assessment years 1990-91 and 1991-92.
(ii) That the petitioner had agreed to sell the land to K for Rs.1,04,28,000. This was the total consideration that he was to receive in respect of this land in respect of which he was obliged to execute the sale deeds as and when required by K in favour of any person whatsoever. It was the right of the builders to prepare a plan and to sell the plots to persons of their choice and at a consideration agreed between them and the buyer. The petitioner had no say in the matter and was obliged to execute the sale deed by getting some amount as agreed between him and K subject to the overall limit of Rs.1,04,28,000. No doubt the petitioner continued to be the owner of the land but any purchaser of land from the petitioner would be bound by the terms of the agreement which could be enforced against any buyer from the petitioner. Therefore, the fair market value of the land in the hands of the petitioner on the two valuation dates could not be more than the aforesaid sum of Rs.1,04,28,000 as reduced by the amount already received up to the valuation date. In valuing the property, the authorities below had acted arbitrarily and had riot even made adjustment for the land that would have been left for common use in the shape of parks, roads, etc. Therefore, to this extent the assessment order suffered from a legal error and should be set aside for arriving at the proper fair market value of the asset in question.
(iii) That as regards the orders under section 18(1)(c), the petitioner had efficacious and adequate statutory remedy by way of appeal. Therefore, they, could not be challenged in a writ petition.
CIT v. Gemini Pictures Circuit Private Limited (1996) 220 ITR 43 (SC); CIT v. Siddharth J. Desai (1983) 139 ITR 628 (Guj.); CWT v. Officer-in-Charge (Court of Wards) (1976) 105 ITR 133 (SC); Nawab Sir Mir Osman Ali Khan (Late) v. C.W.T. (1986) 162 ITR 888 (SC); Pioneer Traders v. Chief Controller of Imports and Exports AIR 1963 SC 734; Sarifabibi Mohmed Ibrahim v. CIT (1993) 204 ITR 631 (SC) and State of Orissa v. Murlidhar Jena AIR 1963 SC 404; State of U.P. v. Maharaja Dharmander Prasad Singh AIR 1989 SC 997 ref.
Ajit Kumar for Petitioner.
A.N. Mahajan for Respondents.
JUDGMENT
These two petitions under Article 226 of the Constitution of India have been preferred by Davendra Pal Singh, an assessee, under the Wealth Tax Act, 1957 (hereinafter referred to as "the Act"), and pertain to the assessment years 1990-91 and 1991-92, respectively. The petitioner challenges order, dated January 31, 1995, whereby penalty under section 18(1)(c) of the Act has been levied for the two years, a common order, dated October 10, 1994, passed by the Commissioner of Wealth Tax, Meerut, whereby the petitioner's revision petitions against the assessment order moved under section 25 of the Act have been party allowed, and, the assessment order, dated March 29, 1994, for the two years, respectively. The petitioner further prays that a writ of mandamus be issued to the Commissioner of Wealth Tax, Meerut, to declare the land as agricultural land and directing the Assessing Officer, i.e., the Assistant Commissioner of Wealth Tax, Bulandshahr, not to proceed with the recovery of the demands created.
Counter and rejoinder affidavits, etc., have been exchanged.
I have heard Sri Ajit Kumar, learned counsel for the petitioner, and Sri A.N. Mahajan, learned counsel for the respondents.
'I7te.petitioner is a wealth tax assessee and was the owner of the agricultural lands bearing Khasra numbers 509, 510, 513; 514, 515, 538, 539 and 540 situate in village Bhoor, District Bulandshahr and measuring 23 Bighas, 16 Biswas Pacca, i.e., 71,968 square yards or 60,650 square meters. Up to the assessment year 1988-89, this land was treated as agricultural land and was treated to be exempt from wealth tax having been excluded from the definition of "asset" by section 2(e)(2)(i)(a) of the Act and the dispute in these writ petitions is whether on the relevant valuation dates, i.e., March 31, 1990, and March 31, 1991, this land ceased to be agricultural land and became an asset as held by the Assessing Officer and the Commissioner.
On May 19, 1989, the petitioner entered into an agreement to sell this land to a partnership firm named Konarka Builders constituted by six persons including the petitioner's wife, Sint. Sarla Rani. A copy of this agreement is Annexure 9 to Writ Petition No.330 of 1995 which describes the petitioner as a party of the first part. The agreement describes the prospective purchaser as colonizers who welt purchasing the land having potential for residential and commercial purposes and who were to sell the same after carving out plots, a corollary colony in accordance with law of the day and selling them for profits. The consideration agreed was Rs.1,04,28,000 and a period of 3 years was agreed for the completion of the terms of the agreement. It was agreed that the party of the first part would provide all assistance to the party of the second part so that they may get approved the layout plan for the establishment of the colony. The party of the first part was to continue to be the owner of the land till the sale-deeds were executed but the party of the second part was entitled to get executed the sale-deeds plotwise as approved or to be approved by the development authority or pocketwise or Khata numberwise. The party of the second part was also entitled to enter upon the land for the purposes of making measurements, marking the roads, parks and plots according to the approved layout plan, showing to their potential purchasers and developing roads, parks or plots, etc. The entire expenses for the approval of the layout plan, of the development of the site and other ancillary expenses were to be borne by the party of the second part and the party of the second part was at liberty to get cut the entire grove at their own expenses and sell the wood to meet the expenses of the development work for this purpose. The property was described in a schedule as under:
"Grove land is situated in village Bhoor Pargana Baran District Bulandshahr.
| Khasra No.Area in Bigha Khata No. (Pukhta) 5092-12-0 5102-12-0 5130-18-0 5142-8-0 5153-14-0 5386-3-0 5393-5-0 5402-4-0 |
Twenty-three Bigha and Sixteen Biswas Pukhta."
It was because of this agreement and the subsequent events that the Assessing Officer while making the assessments held that on the relevant valuation dates, i.e., March 31, 1990 and March 31, 1991, the land had lost its character as agricultural land and was, therefore, not excluded from the definition of "asset" in section 2(e) of the Act. The circumstances relied upon by the Assessing Officer for holding that the land in question was no longer agricultural land were (i) the Bulandshahr Khurja Development Authority (for short BKDA) was requested for approval of the colony in the month of June, 1989; (ii) on September 29, 1989, a sum of Rs.3 lakhs was paid by the assessee to the BKDA; - (iii) the firm, Konarka Builders, had paid an instalment of Rs.2,94,407 on December 30, 1989 to the BKDA; (iv) the assessee sold Plot No. 119 measuring 176 square meters of this colony on March 19, 1990; and (v) in the income-tax return for the assessment year 1990-91, the builders Konarka Builders had, shown a sum of Rs.3,18,451 as sale proceeds of the plots in Hari Enclave the name that was given to the colony to be developed on the disputed land. In the assessment order for the assessment year 1991-92 (valuation date March 31, 1991), the Assessing Officer mentioned that up to the valuation date plots measuring 3,846.73 square yards had been sold. For the assessment year 1990-91, the Assessing Officer valued this land at Rs.2,11,52,750. This value was arrived at by applying a rate of Rs.350 per square meter to the land measuring 60,650 square meters and adjusting therefrom the value already received in respect of Plot No. 119. For the assessment year 1991-92, the value of the land was assessed at Rs.1,98,68,894 by applying a rate of Rs.350 per square meter to the unsold land measuring 56,768.27 square meters.
Against the assessment orders, the petitioner preferred appeals to the Commissioner of Wealth Tax (Appeals) but for reasons best known to him the petitioner withdrew the appeals which were dismissed as such by the Commissioner of Wealth Tax (Appeals) vide order, dated September 28, 1994, a copy of which is Annexure 13 in Writ Petition No.330 of 1995. Though this order does not state the reasons for the withdrawal of the appeals, in the petition it is stated that the petitioner withdrew these appeals as the petitioner preferred to file revision petitions before the Commissioner (see paragraph 18). By the impugned order, dated October 10, 1994, the Commissioner dismissed-the revision petitions in so far as the character of the land and its valuation was concerned.
In the writ petition, it is contended that no development work had been undertaken on the land in question up to the relevant valuation dates, i.e., March 31, 1990 and March 31, 1991, and it was only thereafter that actual development work started. The following grounds have been set up in Writ Petition No.330 of 1995 and similar grounds have been set up in the other writ petition:
"(I)Because respondent No.1 has given a totally perverse finding and has gone on irrelevant and extraneous consideration. The Commissioner was of the opinion that since the documents on which the agreement to sell was executed was purchased on May 19, 1989, the land had lost its character of agricultural land. It was also mentioned that the petitioner was not the owner of the land. Both these findings are perverse in nature. The petitioner had already filed relevant documents to show that the land retained its character as agricultural land till the year 1991, when the permission to develop the land was accorded by the development authority and a separate agreement, dated February 26, 1991, was entered into between the petitioner and the said development authority. It has also been shown by necessary documents annexed earlier to the writ petition that the petition continued to remain as the owner of the land and in any view of the matter this was hardly the relevant consideration for the domain whether the land was agricultural or non-agricultural. The law is also clear on this ground that mere agreement to sell does not get absolute right and title in the property in question.
(II)Because the Commissioner has also not taken into consideration the Circular No.2(WT) of 1968, issued by the Central Board of Direct Taxes in which certain guidelines have been laid down for treating the land as agricultural or non-agricultural. The Commissioner has merely said that the third condition of the said circular that it has not been put to use as non-agricultural land has not been satisfied.The petitioner has already shown that the land retained its character as agricultural land for the relevant assessment years in question. Thus, it is clear that the Commissioner has not taken into consideration the relevant factors which go to determine the nature of the land as to whether it is agricultural or non-agricultural. He had merely been influenced by the fact that the agreement to sell was entered into between the petitioner and private builders.
(III) Because as already stated above, the Commissioner of Wealth Tax, Meerut, had not applied the necessary tests as laid down by various Courts to determine whether the land in question is agricultural or non-agricultural in nature. The Commissioner has not taken into consideration the relevant factors on facts and on law which were presented before both the authorities, i.e., respondents Nos. l and 2. It was pointed out before the both authorities below that for the relevant assessment year and on the relevant valuation date, the land in question was agricultural in nature and no operations were carried out on the said land, so as .to change the character of the land. Although it is true that an agreement to sell was entered into, but the land remained untouched and even for the assessment year
1991-92 as pointed out again the agricultural income to the tune of Rs.55,000 was shown and it was accepted, as such, under the heading 'income from agricultural sources and the addition made on the income from undisclosed sources' was deleted by the Commissioner of Income-tax (Appeals).
(IV) Because the Commissioner also did not take into consideration the fact that the development work was started only when the second agreement was entered into between the petitioner and the relevant development authority on February 26, 1991. Even then, the actual development work did not start and the correspondence was being carried on between the two parties right up to September, 1991, regarding the deposit of supervision charges, etc.
(V)Because the Commissioner also did not take into consideration the land revenue receipt as well as the copy of Khasra and Khatauni which were filed before the various authorities below as well as before the Commissioner to show that the land was agricultural.
(VI) Because the Commissioner, also did not take into consideration the
Board's Circular, dated March 16, 1968, which was categorical to the effect that any land even if it comes within the town planning scheme may be treated as agricultural land provided land revenue is being paid, agricultural operations being carried out and it is being put to non-agricultural purpose on the relevant valuation date. All the three said conditions were satisfied in the petitioner's case, therefore, the land should have been accepted as agricultural. It is settled law, that the Circular of the Board is binding on all income -tax authorities including the Commissioner under section 119 of the Income-tax Act. The order passed by the Commissioner is perverse and based on irrelevant and extraneous considerations and as such is liable to be quashed by this Court.
(VII) Because it may be relevant to mention here that after the passing of these orders a heavy demand has been created against the petitioner by respondent No.2 to the present writ petition.
(VIII) Because a bare perusal of the-order passed under section 18(1)(c) of the Wealth Tax Act would show that the Assessing Officer had not at all applied his mind as to whether penalty would have been levied in this case or not. He has also not discussed anything as to whether any concealment was there on the part of the assessee. The entire order is arbitrary and based on conjectures and surmises. It would not be wrong to say that the Assessing Officer is simply following the order passed by the higher authorities. No application of mind independently in this issue has been done and no efforts have been made to say whether the ingredients of section 18(1)(c) of the Wealth Tax Act, are present or not. "
So far as the orders levying penalty under section 18(1)(c) are concerned though first and second appeals are provided under sections 23 and 24 of the Act and provision for reference of a question of law is contained in section 27 of the Act, the petitioner did not avail of these statutory remedies and has sought to challenge the same in these writ petitions. In the counter-affidavit the circumstances referred to above have been relied upon in support of the decision of the authorities below that the land in question had lost its character as agricultural land.
In Sarifabibi Mohamed Ibrahim v. CIT (1993) 204 ITR 631, the Supreme Court held that whether a piece of land is agricultural land or not is essentially a question of fact and though several tests have been evolved in decisions of the Supreme Court and the High Court, all of them are more in the nature of guidelines and the question has to be answered in each case, having regard to the fact and circumstances of that case. It was further observed that there may be factors both for or against a particular point of view, the Court has to answer the question on a consideration of all of them---a process of evaluation. The inference has' to be drawn on a cumulative consideration of all the relevant facts. Thus, the question involved being one of fact, a further question arises as to whether in exercise of jurisdiction under Article 226 of the Constitution of India this Court can upset a finding of fact arrived at by a statutory authority. In Poineer Traders v. Chief Controller of Imports and Exports, AIR 1963 SC 734, the Supreme Court held that a writ cannot issue even if a finding of fact is erroneous. In State of Orissa v. Murlidhar Jena, AIR 1963 SC 404, it was held that in proceedings under Articles 226 and 227, the High Court cannot sit in appeal over the findings recorded by a competent Tribunal in a departmental enquiry so that if the High Court has purported to reappreciate the evidence itself that would be outside its jurisdiction. However, if it is shown that the impugned findings recorded by the Tribunal are not supported by any evidence the High Court would be justified in setting aside the findings. Similarly, in State of U.P. v. Maharaja Dharmander Prasad Singh, AIR 1989 SC 997, it was held that judicial review under Article 226 cannot be converted into an appeal and judicial review is directed not against the decision but is confined to examination of the decision-making process. Therefore, the jurisdiction under Article 226 of the Constitution of India is very limited and this Court can only interfere with the order if it is found that the finding of fact recorded by the authorities below is based on no evidence or is based on an irrelevant consideration.
In CIT v. Siddharth J. Desai (1983) 139 ITR 628, a Division Bench of the Gujarat High Court considered the matter and held that the following factors are useful for deciding whether a particular land was agricultural land or not (page 638):
"(1)Whether the land was classified in the Revenue Records as agricultural and whether it was subject to the payment of land revenue?
(2)Whether the land was actually or ordinarily used for agricultural purposes at or about the relevant time?
(3)Whether such user of the land was for a long period or whether it was of a temporary character or by way of a stop-gap arrangement?
(4)Whether the income derived from the agricultural operations carried on in the land bore any rational proportion to the investment made in purchasing the land?
(5)Whether, permission under section 65 of a Bombay Land Revenue Code was obtained for the non-agricultural use of the land? If so, when and, by whom (the vendor or the vendee)? Whether such permission was in respect of the whole or a portion of the land? If the permission was in respect of a portion of the land and if it was obtained in the past, what was the nature of the user of the said portion of the land on the material date".
(6)Whether the land, on the relevant date, had ceased to be put to agricultural use? If so, whether it was put to an alternative use? Whether such cesser and/or alternative user was of a permanent, or temporary nature?
(7)Whether the land, though entered in the Revenue Records, had never been actually used for agriculture, that is, it had never been ploughed or tilled? Whether the owner meant or intended to use it for agricultural purposes?
(8)Whether the land was situated in a developed area? Whether its, physical characteristics, surrounding situation and use of the lands in the adjoining area were such as would indicate that the land was agricultural?
(9)Whether the land itself was developed by plotting and providingroads and other facilities?
(10) Whether there were any previous sales of portions of the land for non-agricultural use?
(11)Whether permission under section 63 of the Bombay Tenancy and Agricultural Lands Act, 1948, was obtained because the sale or intended sale was in favour of a non-agriculturist? If so, whether the sale or intended sale to such non-agriculturist was for non agricultural or agricultural user?
(12) Whether the land was sold on yardage or on acreage basis?
(13) Whether an agriculturist would purchase the land for agricultural purposes at the price at which the land was sold and whether the owner would have ever sold the land valuing it as a property yielding agricultural produce on the basis of its yield?"
In Sarifabibi Mohamed Ibrahim's case (1993) 204 ITR 631, the Supreme Court held that the land had ceased to be agricultural land. The circumstances for and against the conclusions were discussed as under (page 642):
"Now, we may consider the various circumstances appearing for and against the appellant's case. The facts in their favour are; the land being registered as agricultural land in the Revenue Records; payment of land revenue in respect thereof till the year 1968-69; absence of any evidence that it was put to any non-agricultural use by the appellants; that the land was actually cultivated till and including the agricultural year 1964-65; that there were agricultural lands abutting the said land and that the appellants had no other source of income except the income from the said land. As against the above facts, the facts appearing against their case are; the land was situated within the municipal limits---it was situated at a distance of one kilometre from the Surat Railway Station; the land was not being cultivated from the year 1965-66, until it was sold in 1969; the appellants had entered into an agreement with a housing cooperative society to -sell the said land for avowed non-agricultural purposes, namely construction of houses; they had applied in June, 1968, and March, 1969, for permission to sell the said land for non agricultural purposes under section 63 of the Bombay Tenancy-and Agricultural Lands Act and obtained the same on April 22, 1969; soon after obtaining the said permission they executed sale-deeds in the following month, i.e., in May, 1969; the land was sold at the rate of Rs.23 per sq. yard and the purchaser-society commenced construction operations within three days of the purchase. What is the inference that flows from a cumulative consideration of all the aforesaid contending facts? This question has to be answered keeping in mind the criteria evolved in Begumpet Palace's case (1976) 105 ITR 133 (SC), set out hereinbefore. In our opinion, the entering into the agreement to sell the land for housing purposes, the applying and obtaining the permission to sell the land for non agricultural purposes under section 63 of the Bombay Tenancy and Agricultural Lands Act and its sale soon thereafter and the fact that the land was not cultivated for a period of four years prior to its sale coupled with its location, and the price at which it was sold, do outweigh the circumstances appearing in favour of the appellants' case. The aforesaid facts do establish that the land was not an agricultural land when it was sold. The appellants had no intention to bring it under cultivation at any time after 1965-66--certainly not after they entered into the agreement to sell the same to a housing cooperative society. Though formal permission under section 65 of the Land Revenue Code was not obtained by the appellants, yet their intention is clear from the fact of their application for permission to sell it for a non-agricultural purpose under section 63 of the Bombay Tenancy and Agricultural Lands Act.
We are, therefore, of the opinion that the High Court was right in holding that the said land was not an agricultural land at the time of its sale and that the income arising from its sale was not exempt from capital gains tax. The appeals accordingly fail and are dismissed. No costs."
In CWT v. Officer-in-Charge (Court of Wards) (1976) 105 ITR 133, the Supreme Court observed that it is not the mere potentiality, which will affect its valuation as part of "assets", but its actual condition and intended user which have to be seen for purposes of exemption from wealth tax. One of the objects of the exemption i6 to encourage cultivation or actual utilisation of land for agricultural purposes and if there is neither anything in its condition nor anything in the evidence to indicate the intention of its owners or possessors so as to connect it with an agricultural purpose, the land could not be "agricultural land" for the purposes of earning an Luc, use Act and entries in Revenue Records are, however, good prima facie evidence. Learned counsel for the petitioner also made reference to CIT v. Gemini Pictures Circuit (Private) Limited (1996) 220 ITR 43 (SC), in which a piece of land situated on the busiest road within the limits of municipal corporation and was registered as urban land in the municipal records and surrounded by commercial buildings and neither seller nor purchaser thereof considering it as agricultural land could not be treated as agricultural land merely because vegetables were being raised therein at the time of sale.
As is, evident, from a perusal of various authorities cited above, there are various considerations which affect the nature of land and every case depends on its own facts. Further, the jurisdiction of the High Court under Article 226 of the Constitution of India, with regard to a finding of fact is extremely limited and the subordinate authorities' fording cannot be disturbed unless it is based on- no evidence or is based on an irrelevant consideration. In this case, the various circumstances that have been taken into account by the authorities below have been narrated above and they were certainly relevant to the issue.
Learned counsel for the petitioner contended that the land in question was admittedly agricultural land and was so assessed up to the immediately preceding year, that the land user was not changed in terms of section 143A of the U. P. Zamindari Abolition and Land Reforms Act and the land revenue was also paid even in the year in question and that the land was recorded in the revenue papers as grove land and that these matters have not been given due consideration by the Assessing Officer as well as by the Commissioner. Since the land in question was admittedly agricultural land in the preceding year and till sometime during the period 1990-91, these circumstances alone could not have clinched the issue in favour of the petitioner and it is not shown that much stress was laid on them. A copy of the revision petition has been placed as Annexure 14 in Writ Petition No. 330 of 1995 which reads as under:
"Sir,
I had filed my return of wealth for the assessment year 1991-92 on March 31, 1993; declaring net wealth at Rs.2,50,700. Computation of net wealth is being enclosed herewith for your kind perusal. The same has been assessed by the learned Assistant Commissioner of Wealth Tax, Circle Bulandshahr, at Rs.2,07,06,219 by treating the agricultural land as commercial land and its value has been taken arbitrarily. The value of the residential house has also been valued contrary to the Wealth Tax Rules.
The learned Assessing Officer has wrongly taken the character of he land and its valuation has wrongly been adopted. Similarly, the residential house, which has been acquired by me through succession, constructed on or before financial year 1981-82 has also been valued excessively and contrary to the method of valuation provided in the rules.
Under the circumstances enumerated above, I would request your honour, that the character of the land be taken as of 'agricultural land' and the value of the residential house be adopted as per Wealth Tax Rules.
Counterfoil of the challan for the payment of the filing fee of the revision of Rs.25 is being enclosed herewith.
Thanking you."
Thus, the points that the petitioner agitates now do not seem to have been pressed and placed before the Commissioner and it seems that the petitioner acted in a very perfunctory manner in preferring and placing the revision petition before the Commissioner. An agreement to sell this property for development as house sites, roads, parks, etc., had been executed on May 19, 1989, i.e., much before the valuation date, i.e., March 31, 1990. Application for approval of a layout plan had been moved on August 9, 1989, before the development authority. Sums of Rs.3 lakhs and Rs.3,18,451 had also been paid to the development authority and even one Plot No. 119 measuring 176 sq. meters had been sold. During the next year, the land to the extent of Rs.3,846.73 meters had also been sold. As held in CWT v. Officer-in-Charge (Court of Wards) (1976) 105 ITR 133
(SC), if there is neither anything in its condition nor anything in the evidence to indicate the intention of its owners or possessors so as to connect it with an agricultural purpose the land could not be agricultural land for the purposes of earning an exemption under the Act. Similarly, in Sarifabibi Mohamed Ibrahim's case (1993) 204 ITR 631 (SC), where an appellant had no intention to bring it under cultivation at any time after 1965-66 and certainly not after he entered into the agreement to sell the land .to the housing cooperative society, it was held that the land did not remain agricultural land.
In this case, there was an agreement on May 19, 1989, to sell this land for non-agricultural purposes and efforts in that direction had started in right earnest and several acts as narrated above, were done towards that end and even a plot of land bearing Plot No. 119 was sold to a prospective house builder. Apparently, therefore, the petitioner as well as the builder ceases to have an intention to hold the land for agricultural purposes after May 19, 1989. Payment of land revenue and absence of an order under section 143 of the U.P. Zamindari Abolition and Land Reforms Act authorising the change of user were, therefore, not of much importance.
Learned counsel for the petitioner also contended that the Commissioner had not taken into account a Circular No.385, dated July 3, 1984 (see (1984) 148 ITR (St.) 33), issued by the Central Board of Direct Taxes. A copy of the circular has been placed as Annexure 15 to Writ Petition No. 330 of 19.95 and it says that for the purposes of the Act a land used for agricultural purposes is to be treated as agricultural land even though it may not be assessed to land revenue. This circular is not of any consequence because the essential question is whether the land was being used and held for agricultural purposes. In the present case, this was to be seen on the valuation dates, i.e., March 31, 1990, March 31, 1991 and this question had to be examined in the light of the circumstances mentioned above and in view of those circumstances the findings by the Assessing Officer as well as by the Commissioner that the land ceased to be used for agricultural purposes on the valuation dates cannot be said to be without any evidence or to be based on irrelevant considerations.
It has been alleged in the writ petition that for tire assessment year 1991-92, the Income-tax Appellate Tribunal has accepted the petitioner's contention that he had earned Rs.55,000 as agricultural income. The Tribunal's judgment is, dated November 28, 199,7., which has been filed alongwith a supplementary affidavit and is, therefore, a subsequent event in different proceeding and, therefore, does not affect the validity of the orders. By diverting the legal route by withdrawing the first appeal and by choosing a restricted remedy, in the form of a revision petition, the petitioner denied himself the benefit of the wider appellate jurisdiction and a finding off the Tribunal on the question under consideration. Further, the petitioner admittedly, had some other lands as well and, lastly, as stated alcove, a writ petition cannot be heard like an appeal and evidence that was not before the authorities below cannot be allowed to be put in.
Learned counsel for the petitioner also referred to the definition of urban land as contained in section 2(o) of the Urban Land (Ceiling and Regulation) Act, 1976. This has no relevance because it is admitted by the Revenue that till May 19, 1989, the Land was agricultural land and it changed its character only thereafter. As is mentioned in the agreement it was a grove land and the buyer had been authorised to cut the trees. The cutting of the trees was a material circumstance and the petitioner does not even seem to allege that not a single tree was felled in pursuance of the agreement before March 31, 1990 and March 31, 1991, and explain how Plot No. 119 could be sold without any development whatsoever.
As is evident, from the circumstances of the case, in view of the circumstances mentioned above and the relevant facts being in the personal knowledge of the petitioner, the burden lay heavily on him to show that on the two valuation dates in spite of the aforesaid circumstances which are not disputed, the land did not lose its character as agricultural land. This burden is not shown to have been discharged and mere reliance on the facts that the plots in question were recorded in the revenue papers as agricultural land and the land revenue was paid could not be sufficient to displace the conclusion of the authorities below in the face of the circumstances mentioned above.
Learned counsel for the petitioner also contended that the Commissioner did not apply his mind to the facts of the case. For this reference was made to an observation in the impugned order that after the agreement the assessee did not remain the owner of the land. This is an erroneous observation but it does not mean that the Commissioner did not apply his mind to the facts of the case. The order mentions the various facts and the authorities cited before him and this contention, therefore, cannot prevail.
The result of the above discussion is that the petitioner has failed to show that the conclusions, arrived at by the Assessing Officer or by the Commissioner are legally erroneous being based on no evidence or being based on irrelevant circumstances so that this Court in exercise of jurisdiction under Article 226 of the Constitution of India could set aside those findings and direct the authorities to reconsider the matter.
The other point that was raised before the Commissioner was about the valuation of the land in question. As stated above, the authorities below have valued the land by applying the rate at which Plot No. 119 was gold. The Commissioner has dealt with this issue in the following manner:
"The total area of the land as on March 31, 1990, is 60,615 sq. meters (23-10-0) Pukhat Bigha. The assessee sold Plot No.119 for Rs.62;500 at Rs.350 per sq. meter. Thus, the value of land converted into plots is Rs.2,11,50,750. However, the assessee was required to pay Rs.3,68,302 to B.K.D.A towards development charges for external development and Rs.1,77,805 towards supervision charges. Therefore, it would be reasonable to reduce the said amount of development and supervision charges from the value as calculated above. The net wealth would be Rs.2,06,06,563 and the assessee would get a relief of Rs.5,46,187 (Rs.3,68,302 + Rs.1,77,805) in the assessment year 1990-91.
Similarly, the assessee has 56,768 sq. meters of land as on March 31, 1991. Taking the said circle rate, the value would be Rs.1,98,68.044. Deducting therefrom the development charges and supervision charges, payable by the assessee amounting to Rs.5,46,187 the net value would come to Rs.1,93,22,707 and the assessee would get a relief of Rs.5,Q6,187.
The contention of the assessee that its value be taken at which it sold land to Konarka Builders is not acceptable as the assessee's wife, Sint. Sarla Rani, is a partner in Konarka Builders and price fixed is a mutual adjustment."
As is evident, the petitioner has agreed to sell the land to Konarka Builders for Rs.1,04,28,000. This was the total consideration that he was to receive in respect of this land in respect of which he was obliged to execute the sale-deed as and when required by Konarka Builders in favour of any person whatsoever. It was the right of the builders to prepare a plan and to sell the plots to persons of their choice and at a consideration. agreed between them and the buyer. The petitioner had no say in the matter and was obliged to execute the sale-deed by getting some amount as agreed between him and Konarka Builders subject to the overall limit of Rs.1,04,28,000. No doubt the petitioner continued to be the owner of the land (see Nawab Sir Mir Osman Ali Khan (Late.; v. CWT (1986) 162 ITR 888 (SC)), but any purchaser of land from the petitioner would be bound by the terms of the agreement which could be enforced against any buyer from the petitioner. Therefore, the fair market value of the land in the hands of the petitioner on the two valuation dates could not be more than the aforesaid sum of Rs.1,04,28,000 as reduced by the amount already received up to the valuation date. In valuing the property, the authorities below have acted arbitrarily and have not even made adjustment for the land that would have been left for common use in the shape of parks, roads; etc. Therefore, only to this extent the assessment order suffered from a legal error and should have been set aside for arriving at the proper fair market value of the asset in question.
As regards the orders under section 18(1)(c), as stated above, the petitioner had efficacious and adequate statutory remedy by way of appeal. Therefore, they could not be challenged in a writ petition and the writ petitions in relation to them will have to be dismissed.-
In the result, the writ petitions are partly allowed and the assessment orders for the assessment years 1990-91 and 1991-92 are partly set aside in so far as the determination of the fair market value of the asset, i.e., land is concerned and it is directed that the said asset shall be valued at Rs.1,04,28,000 as reduced by the amounts already received by the petitioner from Konarka Builders towards the sale consideration. The Assessing Officer will redetermine the value after making such enquiries as may be necessary and after giving the petitioner a proper opportunity of hearing. In other respects, the writ petitions are dismissed. The interim orders are vacated.
The parties will bear their own costs.
M.B.A./441/FCPetitions partly allowed.