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TMI Blog1985 (3) TMI 106X X X X Extracts X X X X X X X X Extracts X X X X ..... e ? 2. On the facts and in the circumstances of the case, whether the Tribunal was justified in stating that the WTO did not carry any enquiry in treating the property as one in which no agricultural operation was carried on ?" 3. Following is the common question during the assessment years 1973-74 and 1974-75 : "3. Whether the Tribunal was legally justified in accepting the contention that the lease period expired on1-4-1973and directing the deletion of property from the taxable wealth although no such contention was at any time put forth for consideration by the WTO ?" 4. The appeals were decided by a consolidated order. The facts, circumstances, parties and issues are common, and, therefore, for the sake of convenience, we consolidate the reference applications for consideration and disposal. 5. Inasmuch as, in our opinion, mixed questions of law and fact do, in fact, arise from the said consolidated order of the Tribunal, we proceed to draw up a consolidated statement of the case for making a reference. 6. The assessee is shown as a HUF by status and the valuation dates are31-3-1976and onwards. The assessee was the owner of land situated in theCantonment Road,Cuttac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 acres as the basis. He has also kept in mind the increase in the value of the land from year to year." Copies of the assessment orders are marked as Annexures A1 to A9 and form part of the statement of the case. 7. The matter was thereafter taken by the assessee before the learned AAC by way of first appeals. The learned AAC confirmed the findings of the learned WTO during all the years under consideration. A copy of the consolidated order dated20-3-1980of the learned AAC is marked Annexure B and forms part of the statement of the case. 8. Finally, the matters were taken by the assessee before the Tribunal by way of second appeals. "Mr. Pasayat for the assessee raised a number of contentions in regard to this particular land. He pointed out that the land is essentially agricultural land which is recorded as such in the record of rights issued by the Government and that the land revenue was being paid by the assessee. Thus, it is submitted that the land is not an asset the value of which can be included in the wealth of the assessee, Secondly, he submitted that the lease is a precarious one, which is terminable at the option of the Government by giving three months' noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vated land. The statement of the assessee that crops were grown remain uncontroverted. It must, therefore, be held that actual cultivation was taking place and crops were being raised for several years. There is no conversion of agricultural use to non-agricultural use at any stage. There was not even an attempt by the assessee to convert it into non-agricultural use by any mode. The fact that the land is in a developed residential area is not a decisive factor as held by the Gujarat High Court in Sercon (P.) Ltd.'s case and that by the Madras High Court in Gemini Pictures Circuit (P.) Ltd.'s case. We, accordingly, hold that the land is agricultural in character and on this finding the value of the land cannot be included in the wealth of the assessee. We may also add here that so far as 0.846 acre of land is concerned, admittedly, there is an orchard and the land was shown as cultivated land. Apart from the above aspect, the argument that the land has no value because of the precarious nature of the lease and various proceedings to have taken place as well as in regard to resumption proceedings started by the Government to resume the land may be considered. Mr. Pasayat having brou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to bear in mind, the valuation made by the authorities below by taking into account the compensation fixed for the land acquired is clearly unsupportable. The Government thought that the assessee had freehold interest and, therefore, fixed the compensation, accordingly. The compensation cannot be a guide for fixing the value of the leasehold interest of the assessee for the assessment years under appeal (barring 1973-74 and 1974-75). What should be the value of such interest for each of the assessment years from 1966-67 to 1972-73 is a matter which has to be decided on proper principles of valuation keeping in mind the above features, but we do not want to do that exercise nor is it necessary to direct the lower authorities to redetermine the value in view of our basic finding that the land is an agricultural land." Copy of the consolidated order of the Tribunal dated24-9-1983is marked Annexure C and forms part of the statement of the case. 10. In the light of the aforementioned paragraphs, we refer the questions hereinbefore mentioned, for the esteemed opinion of theHon'ble CourtatCuttack. 11. On 21-9-1984, submissions were made on behalf of the assessee by Mr. Pasayat, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te the facts indicating as to how these reference applications came up for repetitive hearing before the Tribunal. The departmental reference applications were initially heard on29-6-1984and a common draft statement of case had been prepared. Thereafter, when the consolidated draft statement was fixed for the purpose of finalisation on 31-8-1984, the learned counsel for the assessee submitted that the questions, raised in the reference applications filed by the revenue were merely questions of fact and that, therefore, the draft statement of the case already prepared by the Tribunal deserves to be recalled. It was pointed out by the learned counsel that the proceedings up to the stage of the draft statement are merely tentative and that if the Tribunal prepares a draft statement under a mistaken impression that the questions sought to be raised therein are questions of law, it can redecide the matter if in fact it finds that the questions sought to be raised are only questions of fact. In support of this contention, the learned counsel for the assessee placed reliance on a decision in Sayaji Mills Ltd.'s case. In order to hear the learned representatives of the assessee and the dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion that the observations of Appellate Assistant Commissioner that in the records of Tahsildar, the land measuring 2.662 acres is recorded as homestead is not correct. From the papers filed on record, it is clear that 0.846 acre has been recorded as cultivated and it has been admitted that it is orchard land. 2.662 acres also has been mentioned as cultivated land. As already mentioned, the total land is 3.508 acres out of which 1.764 acres was already acquired and compensation was paid to the assessee. We are, therefore, concerned with the nature of the remaining land. We will deal with the right of the assessee to receive compensation insofar as the lands that were acquired. In other words, we have to consider the nature of the land that remained with the assessee. 5. Apart from the fact that the record of rights shows that the land is cultivated land and that the assessee has been paying land revenue, the assessee asserted right from the beginning that actual cultivation was going on and that crops were raised. In this connection, we would like to point out what the assessee stated before the Wealth-tax Officer in his letter dated24-2-1975. He requested the Wealth-tax Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... des must be held to have decided the matter on the facts of that case. In fact, there is plethora of decisions on this point and it will be futile exercise to deal with all those decisions as ultimately we have to bear in mind the basic principles and look to the facts of the case before us in order to decide whether the land in question is an agricultural land or not. On the facts of the case before us, we have no hesitation in holding that the land is an agricultural land. As already mentioned the land is registered in the Jama Bandi register as cultivated land." According to me, the above findings of the Tribunal were merely findings of fact. It has been repeatedly mentioned by the Tribunal as would be evident from the above extracts of its order that it was deciding merely a question of fact. It had found that the land in question was an agricultural land as per record of rights. It had been found that in the 'Jama Bandi' the land had been registered as a cultivated land. The Tribunal had further found that the land revenue had been paid in respect of the land. A statement had been made by the assessee that it was growing crops on the land in question and this statement of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t appears to me that the order of the Tribunal dated24-11-1983did not give rise to any questions of law. The question of referring question Nos. 1 and 2 identically raised in the assessment years 1966-67 to 1974-75, therefore, does not arise. 7. Question No. 3 as it stands framed in the departmental reference applications relating to the assessment years 1973-74 and 1974-75 is also not a question of law. The revenue seems to have a grievance that the Tribunal was not justified in taking into account the fact that the lease in respect of the agricultural land had expired on1-4-1973. According to it, the fact of cessation of the lease on1-4-1973having not been put forth for the consideration of the WTO, that fact could not have been brought to the notice of the Tribunal by the assessee and taken cognizance of by it. It was wholly within the jurisdiction of the Tribunal as per the Income-tax Appellate Tribunal Rules, 1963 to have taken into account the factum of cessation of the lease on1-4-1973. The lease deed seems to have been produced before the Tribunal and if on consideration thereof, it accepted an uncontroverted fact that the lease in respect of the agricultural land in ques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the view that no question of law arises out of the order of the Tribunal or atleast a referable question to the High Court even if it is held eventually that a question of law does arise out of the order of the Tribunal, because it has now been settled by a cantena of decisions of the High Courts and the Supreme Court that even if an order of the Tribunal gives rise to a question of law, that question need not be referred to the High Court if it is of an academic interest or the question of law is decided by a judgment of the Supreme Court. It is the latter part of well laid out dictum that applies to the facts of this case. As in my opinion, the matter that now debated between my learned brothers stands concluded by a decision of the Supreme Court, I felt that no question need to be referred to the High Court for its opinion under section 27(1), even if in the ultimate analysis it is said or can be said that a question of law arises out of the order of the Tribunal. 2. Now adverting to the facts, the assessee is a HUF and these reference applications arise out of the wealth-tax assessments made on this HUF for the assessment years 1966-67 to 1974-75, in respect of each of which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue of the land. Eventually, when the matter come for decision before the Tribunal, the Tribunal agreed with the assessee's contention and vacated the findings of the lower authorities. It held that keeping in view the various principles of law decided by the various High Courts and the Supreme Court and applying those principles to the facts on record, there would be no doubt that the land in question was an agricultural land. The Tribunal held : "On the facts of the case before us, we have no hesitation in holding that the land is an agricultural land. As already mentioned the land is registered in the Jama Bandi register as cultivated land. The statement of the assessee that crops were grown remained uncontroverted. It must, therefore, be held that actual cultivation was taking place and crops were being raised for several years. There is no conversion of agricultural use to non-agricultural use at any stage. There was not even an attempt by the assessee to convert it into non-agriculture use by any mode. The fact that the land is in a developed residential area is not a decisive factor as held by the Gujarat High Court in Sercon (P.) Ltd. v. CIT [1982] 136 ITR 881 and also by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This was the view held by the learned Accountant Member with regard to the first two questions. With regard to the third question relating to the assessment years 1973-74 and 1974-75, he was of the opinion that it was wholly within the jurisdiction of the Tribunal as per the Income-tax (Appellate Tribunal) Rules, to take into account the factum of cessation of the lease and that the lease deed seemed to have been produced before the Tribunal and, therefore, that was not a question of law but a pure question of fact. Thus, the difference of opinion that arose between my learned brothers has been referred to me by the President as a Third Member. 4. I have already indicated in the beginning of this order about my inclination. Whatever may be the position of our convention, the fact remains now that the difference of opinion arose whether a question of law can be said to arise out of the order of the Tribunal it has to be resolved. From the portion of the order extracted above, it is abundantly clear that the Tribunal gave a categorical finding on consideration of the relevant facts that the land was agricultural in character. It found that the land was under cultivation. It found ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at no referable question of law arises from the order of the Tribunal. 5. Insofar as the third question is concerned, it is again a pure finding of fact and the finding of the Tribunal that the lease expired on1-4-1973does not give rise to a question of law. The fact of the matter is that the order of the AAC contains references to the lease and its expiry on1-4-1973and it was not a new fact that was discovered by the Tribunal at the appellate stage. It is already a fact found by the revenue which the Tribunal adopted as correct. Therefore, the question now raised suggesting as though the Tribunal accepted the contention on the basis of fresh evidence produced for the first time at the appellate stage before, it does not seem factually correct. 6. It would now be useful to refer to the points of difference as framed by my learned brothers : "1. Whether the stage anterior to the stage of finalisation of a draft statement of the case is tentative and whether it is open to the parties to reagitate the matter before the draft is actually finalised ? 2. Whether at the stage of the finalisation of the consolidated statement of the case, it was legally tenable to differ ? 3. If ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterior to the finalisation of the draft statement are tentative. When it is open to the Members finalising the draft statement to agree or not to agree with the request put forward on behalf of the parties before them, it follows that it is open for them also to disagree on their opinion. Whether it is the stage of finalisation of the draft statement or whether it is the stage of preparation of the draft statement, the question that the Members were considering is whether a question of law arises out of the order of the Tribunal. When it is open to the members to differ on this question at the time of preparation of the draft statement, there is nothing preventing them from differing at the time of finalisation also, because the finalisation is only a continuation of the preparation of the draft statement. The Members would become non est only after the draft is finalised and the reference application leaves the office of the Tribunal. But I, in the interest of building up a good and healthy convention and for ensuring proper judicial discipline and to increase the faith of the litigants before the Tribunal in its capacity to administer justice without fear and favour, would say t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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