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TMI Blog2000 (9) TMI 227X X X X Extracts X X X X X X X X Extracts X X X X ..... udible in the net wealth. However, while finalising the wealth-tax assessments of the partners for the assessment years 1982-83 to 1989-90, the WTO considered this land as urban land and on the basis of the valuation report dated 7-1-1993 obtained from the DVO, determined the value of interest of the assessees as partners in the firm of M/s. ADF, Banswara and included the same in their respective net wealth. 3. The matter was carried before the CWT(A) who considered the said land as exempt from wealth-tax within the meaning of section 2(e) being agricultural in nature. However, considering that a portion of the building standing on the said land was let out and as such ceased to be used as a dwelling house/storage house by the cultivators, the ld. CWT(A) held that interest of the assessee in the value of the rented portion calculated on the basis of rent capitalisation method was liable to be included in the net wealth of the assessee for assessment years 1986-87 to 1989-90. Aggrieved by the same the Revenue is in appeal before us in respect of all the assessments involved, whereas all the four assessees have filed Cross Objections against the Departmental appeals. 4. The ld. Dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e land as agrl. land, relying on the judgment of Hon'ble Delhi High Court in Shiv Shankerlal v. CIT [1974] 94 ITR 433. He also contended that the intention of the owner/occupier is very material in such cases as held by the Gujarat High Court in Arundhati Balakrishna v. CIT [1982] 138 ITR 245 as well as by Bombay High Court in CWT v. H.V Mungale [1984] 145 ITR 208. He, therefore, contended that the Assessing Officer's order on this issue suffers from no infirmity and accordingly deserves to be upheld. 5. The ld. counsel for the assessee relied on the submissions made before the CWT(A) in this case and submitted that the issue involved in these appeals is covered in favour of the assessee by the decision of Jaipur Bench of ITAT in the assessee's own case for the immediately preceding years 1974-75 to 1981-82 in ITA Nos. 64 to 79/JP./83 dated 6-8-1984 involving identical facts and circumstances. He also furnished a copy of the said judgment in his paper book at pages 16 to 18. He further submitted that the Hon'ble Court of Revenue, Appellate Authority, Udaipur delivered its judgment treating the land as abadi land only on 13-6-1989 i.e. after the last valuation date involved in thes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peals before us involve assessment years from 1982-83 to 1989-90 in which the latest valuation date involved is 31-3-1989. From the perusal of material available on record, it is evident that, there has been no material change in the facts and circumstances of the case as prevailing on 31-3-1989 from the one prevailed on 31-3-1981 to consider the matter on a different footing. However, the ld. D/R has raised various new contentions before us in support of revenue's case which need to be considered. 7. The ld. D/R has contended that the value of assessee's interest in the firm has been included in the net wealth of the assessee under section 4(1)(b) which is not exempt under the Wealth-tax Act. It is observed that no doubt section 4(1)(b) contains provisions relating to inclusion of the value of assessee's interest. However, in the instant case such interest is mainly related to the agricultural land and the building constructed thereon which are not the assets envisaged by section 2(e) and as held by the Hon'ble Madras High Court in the case of CWT v. Vasantha [1973] 87 ITR 17 any property which is owned by the firm and which is not an asset as envisaged by section 2(e), should no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral operations were carried on, on the said land by the assessee in that case and on the contrary the assessee constructed a studio on the said land which resulted into actual use of the said land for non-agricultural purposes. Another decision of the Hon'ble Bombay High Court in the case of H.V. Mungale also appears to be no help to the Revenue in this regard. On the contrary it seems to render some support to the assessee's case as it has been observed therein that merely because the land remained fallow for some period after being used for agriculture and entered in the revenue record as agricultural land, it did not cease to be agricultural land. It was, therefore, held that the said land was agricultural land within the meaning of section 2(e)(1)(ii) on the valuation date and its value could not be included in computing the net wealth of the assessees. 10. It is observed that the ld. CWT(A) has elaborately discussed all the relevant facts of the case before finally observing as under: "I have considered the facts of the case and the submissions of the Authorised Representative. The contentions of the appellant that the land is agricultural are acceptable. Though it is true t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osed in the return of income. Subsequently, during the assessment years 1987-88 to 1989-90, there was a temporary discontinuance of the agricultural activities, as the firm was engaged in litigation on this issue. (3) The land was actually used for agricultural purposes for a long period and it was not just a stop-gap arrangement. (4) The land was introduced by one of the partners as his capital contribution for an agreed value of Rs. 1,50,000 and the firm derived the agricultural income from the said land as given below:-- A.Y Income (Rs.) 1982-83 25,952 1983-84 22,284 1984-85 17,439 1985-86 27,937 1986-87 30,190 From the above, it is evident that the income derived from agricultural operations carried on in the land bore rational proportion to the value of land. (5) Although the permission was sought by the assessee for the use of the land for non-agricultural purposes, the same was accorded only on 13-6-1989 by the decision of the Hon'ble Court of Revenue, Appellate Authority, Udaipur. This matter was subsequently carried before the Hon'ble Court of Revenue Board, Rajasthan who upheld the decision of the Court of Revenue Appellate Authority by its judgment delive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gujarat High Court has held that the crucial test for determining the nature of a particular land is the actual use of the said land on the relevant date and not the potential non-agricultural use which does not alter the character of the land from agricultural to non-agricultural. The Hon'ble Supreme Court had an occasion to deal with a similar issue in the case of CWT v. Officer-in-charge (Court of Wards) [1976] 105 ITR 133 and it has been held by the Hon'ble Supreme Court that the classification of the land and its assessment to land revenue as agricultural land under the relevant revenue enactment is a good prima facie evidence of land being agricultural one and this presumption can only be rebutted only by leading evidence for establishing that the said land is put to some other non-agricultural purpose. 15. The ld. counsel for the assessee has placed on record a copy of Circular No. 2 (WT) dated 16-3-1968 and the relevant portion of the same is reproduced below:-- "At the 10th meeting of the Direct Taxes Advisory Committee, the question of assessment of vacant lands, which were converted into non-agricultural use, was considered. It was decided that land which is covered by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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