1982 (3) TMI 101 - AT - Wealth-tax

Summary

Issues:
- Interpretation of exemption under section 5(1)(iva) and section 5(1)(viiia)
- Classification of coconut trees in a coconut garden as exempt assets
- Application of section 5(1)(viiib) to trees in an orchard or plantation

Analysis:
The judgment by the Appellate Tribunal ITAT Bangalore involved two appeals by the revenue concerning the assessment years 1976-77 and 1977-78, both raising a common contention regarding the valuation of a coconut garden. The issue revolved around the interpretation of the exemption provisions under section 5(1)(iva) and section 5(1)(viiia) of the Wealth-tax Act, 1957. The WTO initially assessed the value of the coconut garden at Rs. 60,125, negating the assessee's claim that the coconut trees were exempt under section 5. The AAC later granted the exemption under section 5(1)(iva) but not under section 5(1A), allowing the appeals of the assessee.

Upon further appeal by the revenue, the contention was that the exemption under section 5(1)(iva) does not apply to standing trees and growing crops, as only agricultural lands are exempt under this provision. The argument was made that the assessee did not qualify for relief under section 5(1)(viiib) as it was considered a plantation. The learned counsel for the assessee, however, supported the AAC's order, citing the relevance of section 5(1)(viiia) to the case.

The Tribunal analyzed the relevant provisions of the Wealth-tax Act, particularly the amendments to section 2(e) and the introduction of section 5(1)(iva), 5(1)(viiia), and 5(1)(viiib) over different periods. It was noted that the exemption for agricultural land and growing crops was omitted post-amendment, making them taxable assets. The introduction of section 5(1)(iva) and 5(1)(viiia) provided specific exemptions for agricultural land and growing crops, respectively. Section 5(1)(viiib) was later added to cover trees standing on agricultural land not in an orchard or plantation.

The Tribunal concluded that coconut trees in a coconut garden should be considered as standing crops falling under section 5(1)(viiia) and not as part of agricultural land under section 5(1)(iva). Therefore, the assessee was entitled to exemption under section 5(1)(viiia) for the coconut trees. The order of the AAC was upheld based on this ground, dismissing the departmental appeals.