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TMI Blog1988 (11) TMI 69X X X X Extracts X X X X X X X X Extracts X X X X ..... the next two assessment years, i.e., 1960-61 and 1961-62, the Wealth-tax Officer took the view that circumstances had changed and, the lands in dispute had ceased to be agricultural lands (i) as the assessee had entered into several agreements for sale of these lands with different parties, (ii) as except the area of land admeasuring about I acre 331/2 gunthas the remaining lands were not used for agricultural purposes during the previous years relevant to the assessment years 1960-61 and 1961-62, and (iii) as these remaining lands were likely to be used for the construction of industrial units by the purchasers. The said wealth-tax assessments; were divided into two groups. The first group related to the lands for which agreements for sale had been entered into by the assessee with three different concerns, i.e., Ciba of India, New Standard Engineering Co. Ltd. and Nanubhai Industries, and which lands were ultimately purchased by the said concerns. The second related to the lands which were lying fallow. The Wealth-tax Officer held that except for an area admeasuring I acre and 331/2 gunthas, which was used for agricultural purposes, all other lands had ceased to be agricultural ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal accepted the assessee's claim that the lands were agricultural lands and that, therefore, the surplus arising on their sale, if any, was not liable to tax. The Tribunal, however, did not accept the assessee's alternative contention that the fair market value of the lands was higher on January 1, 1954, than the sale price. In fact, a question sought to be raised on behalf of the assessee as regards the estimate of the fair market value of the lands as on January 1, 1954, as a question of law was rejected by the Tribunal holding that the question involved a finding of fact. The question that arises in this reference, therefore, is whether or not the lands were agricultural lands in the hands of the assessee during the relevant previous years. In this context, it is desirable to mention that so far as the lands sold during the previous year relevant to the assessment year 1963-64 are concerned, the dates of the agreements of sale are not available on record. It is, however, common ground that the possession of the lands was handed over on September 21, 1961, and the deed of conveyance was executed on May 14, 1962. It is also more or less agreed that the lands in dispute were u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner that the lands in dispute continued to be agricultural lands even at the time when the deed of sale was executed. As regards the assessment year 1965-66, facts are almost nil on record. However, the Tribunal has proceeded on the assumption that the facts are identical. Observing in paragraphs 18 and 19 of its judgment that there was no material to show that the nature and/or character of lands had altered, the Tribunal held that the Income-tax Officer was in error in treating the surplus arising out of the transaction as capital gain and agreed with the finding of the Appellate Assistant Commissioner. Regarding the assessment year 1966-67, the Tribunal, laying main stress on the fact that the assessee had not done anything to convert the lands from agricultural into non-agricultural and agreeing with the Appellate Assistant Commissioner's finding, held that the lands were agricultural and that the surplus arising from the transaction was, therefore, not liable to tax as capital gain. Shri Jetley, learned counsel for the Department, drew our attention to the Supreme Court decision in the case of CWT v. Officer-in-Charge (Court of Wards), Paigah, [1976] 105 ITR 133, for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to non-agricultural use was of not much consequence. It was clear that once the lands were sold, they were likely to be used by the purchasers for setting up industries and certainly not for an agricultural purpose. The lands sold during the previous year relevant to the assessment year 1966-67, in particular, it was further stated, were not put to agricultural use after March 31, 1959. Except for a vague observation that the lands were treated as agricultural lands, there was no specific finding that the lands continued to be assessed to land revenue up to the time of the sale. These circumstances, according to Shri Jetley, clearly indicated that the Tribunal was in error in treating them as agricultural lands. Shri Dalvi, learned counsel for the assessee, on the other hand, reiterated that the lands in dispute were assessed to land revenue and that the lands sold during the previous years relevant to the assessment years 1963-64 and 1966-67 were used for agricultural purposes till March 31, 1959, whereas the lands sold during the previous year relevant to the assessment year 1965-66 were put to agricultural use till March 31, 1961. He strongly relied on the negative fact, name ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered at this stage. Firstly, this is not the question of law referred to this court by the Tribunal and, therefore, it is not possible for us to look into that aspect of the matter in this reference. Moreover, paragraph 24 of the Tribunal's order clearly shows that the Tribunal had also not entertained such a contention. The Tribunal's observations in this regard are: "..The assessee offered the said amount for assessment in this year and the assessee now cannot seek to go back on his own conduct. If the assessee had taken up this point at the stage of assessment, there would have been scope for taking other proceedings for the earlier year or years so as to bring the relevant amount to tax in the earlier year or years. The assessee cannot seek to prejudice the Revenue by offering the amount for assessment in 1966-67 and then finding that the proceeding for the earlier year could be barred, trying to go back on the admission." We do not think that it is really necessary to examine each and every decision considered by the Tribunal in its judgment or cited before us by the parties. It is sufficient to say that after the Supreme Court decision in the case of Officer-in-Charge (Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment year 1966-67 were not agricultural lands and the surplus computed by the Income-tax Officer was accordingly liable to tax. For the assessment year 1965-66, however, as stated by us earlier, there is no material on record to suggest that the nature and/or character of the lands which were treated as agricultural lands for the assessment years 1960-61 and 1961-62 had changed in any manner whatsoever. On the material before us, therefore, we do not see, any justification for interference so far as the finding of the Tribunal in regard to the assessment year 1965-66 is concerned. In the result, the question of law which is a composite question of law is answered thus In so far as the assessment years 1963-64 and 1966-67 are concerned, the sums of Rs. 5,98,527 and Rs. 2,47,300, respectively, are not exempt from assessment to tax as capital gains on the ground that the relevant lands were not agricultural lands. In so far as the assessment year 1965-66 is concerned, the sum of Rs. 1,37,328 is exempt from assessment to tax as capital gain on the ground that the relevant land was agricultural lands. The question is so answered. No order as to costs. - - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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