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TMI Blog1983 (9) TMI 180X X X X Extracts X X X X X X X X Extracts X X X X ..... . There are said to be about a dozen trees there in the said plot. The value of the said plot of land was reflected by the assessee in his return of income in the following manner : Assessment Value Value estimated year reflected by the WTO Rs. Rs. Rs. 1970-71 26,000 30,000 1971-72 26,000 30,000 1972-73 27,000 35,000 1973-74 28,000 36,000 1974-75 28,000 36,000 1975-76 29,000 40,000 1976-77 29,000 40,000 5. Since there are said to be 12 old mango trees in the said plot of land on that basis--the assessee claimed that the land was exempt under section 5(1)(iva) of the Wealth-tax Act, 1957 ('the Act')-being agricultural land. The learned WTO obtained a report from his inspector and on the basis thereof and other materials in his possession, recorded a finding that the said land being within the municipal corporation was not assessed to the land revenue. The Inspector also observed that the residential houses were fast coming up in the area and no agricultural operations were being carried out on the said land. The learned WTO on the basis of the said report estimated the value of the land as referred to above and refused to allow exemption as claimed. 6. The as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he revenue, the learned senior departmental representative, Shri Khan, supported the actions of the authorities below and further argued that the report of the Income-tax Inspector was clear on the point and that the contents thereof have not been challenged. He continued that the circular mentioned by the assessee is also of no help being irrelevant in the context. He also relied upon the ratio in the cases supra. 10. The contentions raised and submissions made on behalf of the contesting parties have been heard and record carefully perused. The area of the plot in question is 0. 19 acre, i.e., 6 kathas, i.e., less than 1,000 square yds. 12 mango trees were said to be in the plot at the time of purchase and it is not shown that the number has gone to 13, i.e., there is no change of whatsoever nature in the plot. The plot is said to be sorrounded by a compound wall and the house construction activities around the plot are said to be in progress and some houses are said to have been built also. The land is situated within the area of the municipal corporation, Patna. On behalf of the assessee, it was no doubt contended that the land is situated in Kurji village, but no evidence of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. 15. If some income of Rs. 500 or so was shown by the assessee as agricultural income during a particular year, that cannot by itself be a basis for coming to the conclusion that the land in question is an agricultural land, Moreover, it is not shown that the said income was directly attributable to this plot. The learned ITO might have acted there on the basis of the entries made in the return. Thus, the entries in the return cannot take the place of proof for recording a finding in the controversy before us. 16. The inspector's report is really clear on the point. The plot, according to the report, is said to be situated on the western and northern side of Patliputra Industrial Estate and sorrounded by compound walls. The land is situated in the Patna municipal area and houses are said to be fast approaching from northern side. According to the report, there are few trees and the land is not assessed to land revenue. The contents of the report of the Income-tax Inspector do not appear to admit of any confusion or ambiguity. The contents were not either rebutted by the assessee by means of some evidence. It will, therefore, not be at all unsafe to base a finding on the conte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned authorised representative contended that the factory building was coming up on a leasehold plot and that the value should, therefore, be adopted keeping in view that the assessee's right to transfer is restricted. It was also contended that the investment shown in the assessee's books should have been accepted. The learned authorised representative also argued that the inspector of the revenue whose report is relied upon by the I-earned WTO, was not an expert in the line and, therefore, any reliance on such a report cannot naturally be very safe. 22. On behalf of the revenue, the learned senior departmental representative supported the impugned order on the point and further invited our attention to the chart showing investments in the factory building during various years including the years under consideration. He contended that whatever relief could possibly be relevant was already allowed by the learned AAC. 23. The arguments have been heard and record carefully perused. This was not denied before us that the verifiable accounts of the investment are not maintained by the assessee. The inspector valued the investment at Rs. 52,732 on the valuation date, i.e., 31-3-1975 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 30,000 to Rs. 40,000 in the seven assessment years. The WTO had rejected the claim of exemption in the following terms as per finding contained in the assessment order for the year 1970-71 : " Immovable Property : The assessee has shown the value of mango orchard at Kurjee Digha at Rs. 26,000 and has claimed exemption under section 5(1)(iva). The land is .19 acre and there are 12 old mango trees on it. As it appears from the inspector's report, the orchard is within the municipal corporation area and is not assessed to land revenue. Residential houses are fast approaching it. From the ITI's report, it is also clear that agricultural operations are not regularly carried out on the land and it cannot be claimed to be an agricultural land. Thus, the property does not qualify for exemption under section 5(1)(iva). As regards, the value of the property, the area is 6 kathas and is surrounded with a compound wall. There are 12 old mango trees on it. The value of the land, trees and compound wall is estimated at Rs. 30,000 and added to the assessee's wealth." Similar findings had been given by the WTO in the subsequent six assessment years and the value of the land was gradually en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rther appeal before the Tribunal, the contentions that were raised before the AAC were reiterated. It was further contended by the learned counsel that in view of a circular issued under the Act, a land which may be situate within a Town Planning Scheme, could not be denied exemption, provided the following conditions were satisfied : (i) Land revenue/agricultural cess was paid ; (ii) Agricultural operations have been carried on from year to year ; and (iii) It has not been put to non-agricultural use. Over and above, the reliance placed on the above Circular issued by the department, the learned counsel produced before us photostat copies of the land revenue receipts issued by the circle officer. These photostat copies of the land revenue receipts indicate that the land was situate in Circle-Patna and Police Station, Digha, and was owned by Shri Nathmal Jalan, son of Shri Babulal Jalan. The area of the land is indicated as .19 acre. 'Katha' number mentioned is 13 and the plot number is mentioned as 5414. For the revenue year 1971-72 a sum of Rs. 14.78 had been paid as land revenue and for the year 1980-81 a sum of Rs. 12.68 only had been paid as land revenue. Ultimately, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reparation of the ground which is cultivation and seasonal crops are gathered. Fruit trees also require seasonal attention such as pruning and digging of the soil around the roots, and it cannot be said that this ceases to be cultivation merely because the whole tree is not replanted every year . . ." 9. The above decision of the Hon'ble Patna High Court was noticed by the Hon'ble Supreme Court of India while deciding the case of Raja Benoy Kumar Sahas Roy. I have also, before taking a decision on the issue, carefully gone through the decision of the Hon'ble Patna High Court in the case of Syed Rafiqur Rahman, a decision which has been relied upon by the learned AAC in declining the exemption claimed by the appellant. 10. Proceeding to decide the issue in the background of the abovementioned facts and the legal light available from the aforesaid decisions of the Hon'ble High Court and the Supreme Court of India, it appears to me that the land admeasuring .19 acre situate at Police Station, Digha, was nothing but an orchard. The Inspector of Income-tax who was deputed to make an on the spot inspection of the plot of land, has stated repeatedly that the land in question was an or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year 1976-77 the assessee had shown an estimated agricultural income of Rs. 500 from the same plot or land and the ITO had in his assessment order determined the income at a sum of Rs. 1,000 in the following words : "Agricultural Income : The assessee has shown income of Rs. 500 from this source but no particulars have been furnished. On the basis of the discussions I estimate the income from this at Rs. 1,000." The assessee had felt aggrieved of the assessment made as above and, therefore, an appeal was preferred before the AAC. In para 10 of his order the AAC held as follows : " The last grievance is against estimate of agricultural income at Rs. 1,000 as against Rs. 500 shown. The appellant owned an orchard of six kathas in Digha, Patna. In view of the extent of the land the income be accepted as reasonable." In the face of these findings given by the lower two authorities in the various years and in view of the fact that the assessee's agricultural income was assessed to tax in the years in which it was shown and also assessed to tax in the year in which it was not shown (as for example, in the assessment year 1977-78 when the assessee had shown no agricultur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is a large-scale fragmentation of holdings and where the people living in villages are found to own and possess uneconomical small agricultural holdings, it cannot be said that those small holdings are not agricultural holdings. In conclusion, therefore, I would hold that the grounds taken in the seven petitions of appeals insofar as these relate to the exemption claimed under section 5(1)(iva) in respect of 0.19 acre of orchard land situate at Digha will stand allowed. 11. Before coming to the above conclusion I have carefully gone through the decision of the Hon'ble Patna High Court which has been reported in Syed Rafiqur Rahman's case. It appears to me that the facts in that case are wholly different. Even though the Survey 'Khaitan' as recorded in the municipal records had shown that the land in question in that case was a mango orchard, it had been found on inspection of that land that there was no mango tree on that plot of land and that land had never been used for agricultural purposes. There were few palm trees on the fringes of that land and it was in these circumstances that the Hon'ble Patna High Court had held that the land which was situate at Bhattacharjee Ro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... area and residential houses are fast approaching it. The observation of the WTO in the assessment year 1970-71 is reproduced below : " Immovable property : The assessee has shown the value of mango orchard at Kurji, Digha, at Rs. 26,000 and has claimed exemption under section 5(1)(iva). The land is 19 decimals and there are 12 old mango trees on it. As it appears from the Inspector's report, the orchard is within the municipal corporation area and is not assessed to land revenue. Residential houses are fast approaching it. From the ITI's report, it is also clear that the agricultural operations are not regularly carried out on the land and it cannot be claimed to be agricultural land. Thus, the property does not qualify for exemption under section 5(1)(iva). As regards the value of the property, the area is 6 kathas and is surrounded with a compound wall. There are 12 old mango trees on it. The value of the land, trees and compound wall is estimated at Rs. 30,000 and added to the assessee's wealth." The WTO, accordingly, during the assessment year 1970-71 estimated the value of the land at Rs. 30,000. Following his order for the assessment year 1970-71, the value was estimated a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s eligible for exemption under section 5(1)(iva). Shri Vaskar Sen, senior departmental representative, on the other hand, placed strong reliance on the order of the Judicial Member and urged that simply because the assessee had 12 mango trees, it could not be said that the assessee fulfils the characteristic of the agricultural land. Under the above circumstances, the claim of the assessee was rightly negatived. 6. The assessee purchased agricultural land of 0. 19 acre in 1970. The land was surrounded by a compound wall and it had 12 mango trees. The exemption under section 5(1)(iva) was claimed in the assessment year 1970-71 and for the subsequent years. The Inspector was deputed by the WTO who reported the matter as hereunder : " As directed, I visited the orchard of the above-named person. The plot is just on the western and northern side of Patliputra Industrial Estate and is surrounded with the compound wall. The orchard is within the municipal corporation and the residential houses are fast approaching from the northern side. There are few old trees on it. Further, the land is not assessed to the land revenue. In the circumstances, this orchard could not be termed as an a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccount the above two decisions, it is clear that it can only be determined on facts whether the land owned by the assessee is an agricultural land or not. It would be relevant to refer the circular of the department No. 2 (WT) of 1968, dated 16-3-1968, which has been discussed at page 91 of Law Practice of Wealth-tax and Gift-tax by V. Balasubramanian (4th Edition). The following characteristics had been indicated in the above circular which are necessary for accepting any land as an agricultural land : " Circular No. 2(WT) of 16-3-1968 held exemption from available to vacant lands under town planning scheme if : (i) land revenue or agricultural cess is paid ; (ii) agricultural operations are carried on from year to year ; and (iii) land is put to agricultural use." 7. Now the matter is considered on facts having in mind the above circular. The assessee has produced two receipts for the years 1971-72 and 1980-81 showing the payment of land revenue. The certificates with the assessee were lying since 1971-72 for all the years. The assessee also filed the certificate for the year 1982. It is clear from the certificates that the assessee was paying the land revenue for the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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