1983 (9) TMI 180 - AT - Wealth-tax

Issues Involved:
1. Exemption of mango orchard under section 5(1)(iva) of the Wealth-tax Act.
2. Valuation of factory building for assessment years 1975-76 and 1976-77.

Detailed Analysis:

1. Exemption of Mango Orchard under Section 5(1)(iva) of the Wealth-tax Act:

Facts and Contentions:
- The appellant-assessee purchased 0.19 acres of land with 12 mango trees in 1970 and claimed it as agricultural land exempt under section 5(1)(iva) of the Wealth-tax Act.
- The Wealth-tax Officer (WTO) denied the exemption, arguing that the land was within the municipal corporation, not assessed to land revenue, and not used for regular agricultural operations.
- The assessee contended that agricultural operations were carried out, the land was within village Kurji, and submitted land revenue receipts as evidence.

Findings:
- The WTO, supported by an inspector's report, found that the land was within Patna municipality, surrounded by residential development, and not used for agricultural purposes.
- The Appellate Assistant Commissioner (AAC) upheld the WTO's decision, relying on the Patna High Court and Supreme Court judgments, concluding that the land was not agricultural.
- The Tribunal's Judicial Member agreed with the WTO and AAC, emphasizing that the land's small size and lack of agricultural operations disqualified it from exemption.
- The Accountant Member dissented, arguing that the land was indeed an orchard, agricultural operations were carried out, and the land revenue receipts supported the assessee's claim.

Third Member Decision:
- The Vice President, acting as the Third Member, concluded that the land was agricultural based on continuous agricultural operations, payment of land revenue, and the income from mango sales accepted by the Income-tax Officer (ITO).
- The Third Member emphasized that the land's potential future use for non-agricultural purposes and its location within the municipal corporation were irrelevant to its current agricultural status.

Conclusion:
- The majority opinion held that the land was agricultural, and the exemption under section 5(1)(iva) was allowable.

2. Valuation of Factory Building for Assessment Years 1975-76 and 1976-77:

Facts and Contentions:
- The assessee declared the factory building's value based on his account books: Rs. 43,700 for 1975-76 and Rs. 46,620 for 1976-77.
- The WTO rejected these figures, citing unverifiable accounts and higher construction costs, valuing the building at Rs. 53,300 and Rs. 64,767, respectively.
- The AAC confirmed these valuations but reduced the 1976-77 value to Rs. 56,000.

Findings:
- The Tribunal found that the inspector's report, despite not being from an expert, was credible given the lack of verifiable accounts.
- The Tribunal adjusted the valuations to Rs. 50,000 for 1975-76 and Rs. 55,000 for 1976-77, considering the entire process an estimate.

Conclusion:
- The appeals were partly allowed, modifying the factory building's valuation to Rs. 50,000 for 1975-76 and Rs. 55,000 for 1976-77.

Final Disposition:
- The appeals regarding the mango orchard exemption were allowed based on the majority opinion.
- The appeals concerning the factory building valuation were partly allowed with adjusted valuations.

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