1996 (5) TMI 50 - HC - Wealth-tax

Summary

Issues:
1. Whether the land in question qualifies for exemption under section 5(1)(iva) of the Wealth-tax Act, 1957?
2. Whether the majority view of the Tribunal correctly held the land to be agricultural for the purpose of the Wealth-tax Act?

Analysis:

Issue 1:
The assessee claimed exemption under section 5(1)(iva) of the Wealth-tax Act, 1957, for a land he purchased in 1970 containing mango trees. The Wealth-tax Officer, after an enquiry, concluded that the land was not agricultural and declined the exemption. The Appellate Assistant Commissioner and the Tribunal had differing views. The Vice President of the Tribunal agreed that the land was agricultural, allowing the exemption. The Revenue contended that the mere presence of mango trees does not make the land agricultural without evidence of systematic agricultural activity. The onus to prove exemption lies with the assessee, who only provided land revenue receipts, insufficient to prove the land's character. Previous case law emphasized the need for cultivation and agricultural activities to classify land as agricultural.

Issue 2:
The land in question, situated near an industrial estate and within a municipal area, had old mango trees but lacked evidence of ongoing agricultural activities by the assessee. The report by the Income-tax Inspector highlighted the urban development around the land, indicating a shift from agricultural to residential/commercial use. The purchase of the land during urban development and lack of evidence of agricultural activities raised doubts on the land's agricultural nature. The maintenance of existing mango trees without evidence of farming activities did not suffice to classify the land as agricultural. The absence of substantial evidence besides the presence of mango trees led to the conclusion that the assessee failed to prove the land's agricultural character. The Tribunal's majority view was deemed incorrect, resulting in a ruling in favor of the Revenue.

In conclusion, the court held that the land did not qualify for exemption under section 5(1)(iva) of the Wealth-tax Act, as the assessee failed to provide substantial evidence of agricultural use besides the existence of mango trees. The court ruled in favor of the Revenue based on the lack of proof of agricultural activities on the land, despite the presence of trees. The judgment highlights the importance of demonstrating active agricultural practices to claim exemption under the Wealth-tax Act.