1985 (3) TMI 106 - AT - Wealth-tax

Bench Of Tribunal, Net Wealth, Question Of Fact, Question Of Law, The High Court, Tribunal s Order

Summary

Issues Involved:
1. Whether the land adjoining Wilson House was agricultural in nature and thus not included in the taxable wealth.
2. Whether the Wealth-tax Officer (WTO) conducted an adequate inquiry regarding the agricultural nature of the property.
3. Whether the Tribunal was justified in excluding the property from taxable wealth for the assessment years 1973-74 and 1974-75 based on the expiration of the lease period on 1-4-1973.

Issue-Wise Detailed Analysis:

1. Agricultural Nature of the Land:
The Tribunal was tasked with determining whether the land adjoining Wilson House was agricultural and thus exempt from being included in the taxable wealth of the assessee. The Tribunal noted that the land was recorded as agricultural in the Jama Bandi register and that the assessee had been paying land revenue. Additionally, the assessee's assertion that crops were grown on the land remained uncontroverted. The Tribunal concluded that the land was indeed agricultural, referencing the Supreme Court's guidelines in the case of Officer-in-Charge (Court of Wards), which emphasized the need to determine the character of land based on its actual condition and intended use. The Tribunal found that there was no conversion of the land to non-agricultural use and held that the land's location in a developed residential area was not a decisive factor.

2. Inquiry by the Wealth-tax Officer:
The Tribunal found that the Wealth-tax Officer did not conduct adequate inquiries to determine whether agricultural operations were carried out on the land. The assessee had requested the WTO to inspect the site to verify the agricultural activities, but no such inspection was conducted. The Tribunal emphasized that the lack of inquiry by the WTO meant there was no evidence to contradict the assessee's claim of agricultural use. Consequently, the Tribunal held that the land should not be included in the taxable wealth.

3. Expiration of Lease Period:
For the assessment years 1973-74 and 1974-75, the Tribunal considered whether the lease's expiration on 1-4-1973 justified excluding the property from taxable wealth. The Tribunal noted that the lease was precarious, terminable by the government with three months' notice. The Tribunal accepted the uncontroverted fact that the lease expired on 1-4-1973 and held that the property should be excluded from the taxable wealth for the relevant assessment years. The Tribunal's decision was based on the fact that the lease deed had been produced and considered, and the expiration date was acknowledged.

Dissenting Opinion:
The Accountant Member dissented, arguing that the questions raised were purely factual and did not give rise to questions of law. He emphasized that the Tribunal's findings were based on the specific facts of the case, such as the land being recorded as agricultural and the payment of land revenue. He referenced the Supreme Court's decision in Officer-in-Charge (Court of Wards) to support the view that determining the character of land is a factual matter. The Accountant Member also noted that the Tribunal had the jurisdiction to consider the lease's expiration and that this did not constitute a question of law.

Third Member Opinion:
The Senior Vice President, acting as the Third Member, agreed with the Accountant Member that the Tribunal's findings were purely factual and did not give rise to questions of law. He emphasized that the determination of the land's character was a factual issue and that the Tribunal's findings were based on ample material. He also noted that the Tribunal's consideration of the lease's expiration was within its jurisdiction and did not constitute a new fact introduced at the appellate stage.

Conclusion:
The majority opinion held that the questions raised were factual and did not warrant a reference to the High Court. The reference applications were rejected, and the Tribunal's findings that the land was agricultural and should not be included in the taxable wealth were upheld. The Tribunal's decision to exclude the property from taxable wealth for the assessment years 1973-74 and 1974-75 based on the lease's expiration was also upheld.