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TMI Blog1968 (10) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... situate in the erstwhile Malabar District which was part of the State of Madras till the formation of Kerala on November 1, 1956. The assessee claimed that forest lands are agricultural lands, and they were not, therefore, liable to estate duty under the Estate Duty Act, 1953. In support of this claim, reliance was made on the decision of the Madras High Court in Sarojini Devi v. Sri Kristna which held that the expression " agricultural lands " must be taken to include lands which are used or are capable of being used for raising any valuable plants or trees or for any other purpose of husbandry. The Appellate Tribunal, by its order dated 28th July, 1964, rejected the assessee's claim holding that the above decision did not lay down a definition of the expression of agricultural lands for all purposes, and that it did not apply to cases under the Estate Duty Act. The question in this reference arose out of the above order ; and it came for decision before a Bench of this court in I T.R. Case No. of 75 of 1965, which was disposed of by the order pronounced on 26th August, 1966, The court disagreed with the view of the Tribunal, and held that the term " agricultural land " should be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is assumed that there is a bare possibility of this area being brought under cultivation, the assessee has not placed any material before us from which it can be said that a prudent owner would undertake any process of farming in respect of this land." Regarding the 16,000 and odd acres held by the State of Kerala under lease, the Appellate Tribunal stated : " With regard to the second category of the land of the extent of 16,000 and odd acres, the report of the valuers does not throw any light upon the nature of this land, and the only information available is that these lands have been held by the Kerala Government under a perpetual lease on an annual rent of Rs. 5,000. The assessee has not shown whether this land was being cultivated by the Kerala Government or whether it was only being exploited by the Kerala Government for its timber value. On the material on record, it is not possible for these lands to come under the category of agricultural lands. " The Tribunal then concluded by saying : " We, therefore, record a finding that none of the lands in question of the total extent of 36,857.16 acres is agricultural land." It is obvious from the above statement of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of agricultural lands, except in pursuance of resolutions passed by the State legislatures as provided by article 252 of the Constitution. The legislatures of some of the States had passed such resolutions for enabling Parliament to levy estate duty in respect of agricultural lands. Accordingly, Parliament became entitled to levy estate duty on agricultural lands within the said States ; and these States were included in the First Schedule to the Estate Duty Act, 1953. By sub-section (2) of section 5 of the Estate Duty Act, provision was also made for including in the First Schedule in the Act, States in respect whereof resolutions adopting this Act may be passed by their legislatures. The Madras Legislature passed such a resolution on April 2, 1955 ; and pursuant to that, the Government of India issued a notification, S.R.O. No. 1227, dated June 6, 1955. It reads as follows : " Whereas in pursuance of the provisions contained in clause (1) of article 252 of the Constitution, a resolution has been passed by the Legislature of the State of Madras on the 2nd April, 1955, adopting the Estate Duty Act, 1953 (34 of 1953), in so far as it relates to estate duty in respect of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in that entry ; and, after referring to various decisions of the Indian High Courts the court said : " It may on a proper occasion be necessary to consider whether for the purposes of the relevant entries in Lists II and III of the Constitution Act it will not be right to take into account the general character of the land (as agricultural land) and not the use to which it may be put at a particular point of time. It is difficult to impute to Parliament the intention that a piece of land should, so long as it is used to produce certain things, be governed by and descend according to laws framed under List II, but that when the same parcel of land is used to produce something else (as often happens in this country), it should be governed by and descend according to laws framed under List III." The same question arose before, the Madras High Court in Sarojini Devi v. Sri Kristna with respect to the constitutional validity of the Hindu Women's Right to Property Act, 1937 ; and Patanjali Sastri J., in delivering the judgment of the court, said : " As we have already pointed out, the term ' agriculture ' is used in different senses and in order to ascertain in what sense it is us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate are being cleared and converted into valuable plantations. In the absence of exceptional circumstances such as the land being entirely rocky or barren for other reasons, all forest lands in this state are agricultural lands in the sense that they can be prudently and profitably exploited for agricultural purposes. There is no case that the forest lands concerned in this case or any part thereof are unfit for agricultural exploitation. The learned counsel for the revenue raised a new contention before us on the basis of section 30 of the Estate Duty (Amendment) Act, 1958. This section reads as follows : " Act not to apply to agricultural land.---For the removal of doubts, it is hereby declared that nothing contained in this Act shall have effect in respect of any matter enumerated in entry 48 of List II in the Seventh Schedule to the Constitution, and estate duty in respect of any estate which consists wholly or in part of agricultural land situate in the territories which immediately before the 1st day of November, 1956, were comprised in the States specified in the First Schedule to the principal Act shall continue to be governed by the principal Act as if this Act had no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te duty until that State was included in the First Schedule to the Act by the notification of the Central Government dated June 6, 1955. It may also be stated that in the valuation made by the Assistant Controller of Estate Duty, which has been upheld by the Appellate Tribunal, agricultural lands which belonged to the deceased persons and situate in Madras have been excluded from the valuation, obviously on the ground that such lands did not come within the ambit of the statute on the relevant dates. The question in this reference has been drawn up on that basis ; and it was also dealt with by this court in I.T.R. No. 75 of 1965 accordingly. The contention raised by the leared counsel for the revenue is devoid of any substance. In the result, we answer the question referred to this court in the negative and against the Controller of Estate Duty, except regarding 5,000 acres of rocky land which have been found by the revenue as non-agricultural land. In the circumstances of the case, the parties will bear their costs. A copy of this judgment will be forwarded to the Appellate Tribunal as required by section 64(4) of the Estate Duty Act, 1953. - - TaxTMI - TMITax - Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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