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Issues Involved:
1. Whether the lands sold to or acquired for Ciba of India, New Standard Engineering Co., and Nanubhai Industries were agricultural lands and therefore exempt under section 2(e)(i) of the Wealth-tax Act for the years 1960-61 and 1961-62. 2. Whether the finding that the lands measuring 40,315 sq. yds. were not agricultural lands and therefore not entitled to exemption from wealth-tax is justified in law. Issue-wise Detailed Analysis: Issue 1: Agricultural Status of Lands Sold to or Acquired for Ciba of India, New Standard Engineering Co., and Nanubhai Industries The primary question was whether the lands sold to or acquired for Ciba of India, New Standard Engineering Co., and Nanubhai Industries were agricultural lands and thus exempt from wealth-tax under section 2(e)(i) of the Wealth-tax Act for the years 1960-61 and 1961-62. Facts and Findings: - The assessee owned extensive lands in several villages within Greater Bombay, which were not included in wealth-tax assessments till 1959-60 as they were considered agricultural lands. - For the years 1960-61 and 1961-62, the Wealth-tax authorities argued that these lands had ceased to be agricultural due to: 1. Agreements for sale for non-agricultural purposes. 2. Lack of agricultural use during the years in question. 3. Prospective non-agricultural use. - The Wealth-tax Officer categorized the lands into two groups: lands under agreement for sale and remaining lands not used for agriculture. - The Appellate Assistant Commissioner and the Tribunal found that agricultural operations were carried on these lands up to the year 1959-60, and these lands were assessed to land revenue without any permission sought for non-agricultural use. - The Tribunal concluded that these lands were agricultural for the year 1960-61 and part of 1961-62, as agricultural operations were carried on, and they were classified as agricultural lands in the records. Legal Reasoning: - Under section 3 of the Wealth-tax Act, wealth-tax is levied on the net wealth of an individual, excluding agricultural land as per section 2(e)(i). - The Tribunal's findings were based on factual evidence showing continuous agricultural use up to 1959-60, classification as agricultural land, and assessment to land revenue. - The Tribunal also noted that agreements for sale did not change the character of the land until the actual conveyance or acquisition was completed. Conclusion: - The court affirmed the Tribunal's view that the lands sold to or acquired for Ciba of India, New Standard Engineering Co., and Nanubhai Industries were agricultural lands for the year 1960-61 and part of 1961-62, thus exempt under section 2(e)(i) of the Wealth-tax Act. Issue 2: Agricultural Status of Lands Measuring 40,315 sq. yds. The second question addressed whether the land measuring 40,315 sq. yds. was not agricultural land and therefore not entitled to exemption from wealth-tax. Facts and Findings: - The Tribunal found that the land measuring 40,315 sq. yds. had not been used for agricultural purposes for the past three years and was not intended to be used for agriculture in the future. - The assessee had entered into several transactions for non-agricultural purposes, indicating an intention to divest the land for non-agricultural use. - Despite being classified as agricultural land in the record of rights, the Tribunal inferred that the land had ceased to be agricultural based on the conduct of the assessee. Legal Reasoning: - The Tribunal's decision was based on the factual finding that no agricultural operations were carried out for five years, and the assessee's conduct indicated an intention to sell the land for non-agricultural purposes. - The court referred to the Supreme Court's observations in Mst. Subhadra v. Narsaji Chenaji Marwadi, noting that merely allowing land to lie fallow does not change its character unless there is a clear intention to convert its use. - The combined factors of non-use for agriculture and the intention to sell for non-agricultural purposes justified the Tribunal's conclusion. Conclusion: - The court agreed with the Tribunal's finding that the land measuring 40,315 sq. yds. had ceased to be agricultural land and was not entitled to exemption from wealth-tax. Final Judgment: - The first question was answered in the affirmative, in favor of the assessee, confirming that the lands sold to or acquired for Ciba of India, New Standard Engineering Co., and Nanubhai Industries were agricultural lands and exempt from wealth-tax for the relevant years. - The second question was also answered in the affirmative, in favor of the revenue, confirming that the land measuring 40,315 sq. yds. was not agricultural land and not entitled to exemption from wealth-tax. No order as to costs of the reference.
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