9911796707
TMI Blog1975 (7) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... The facts giving rise to these two questions may be stated : The assessment years concerned in the case are the assessment years 1960-61 and 1961-62, the corresponding valuation dates being March 31, 1960, and March 31, 1961. The assessee, Shri Sitaram N. Desai, owned extensive lands in several villages of Pahadi, Oshivara, Dindoshi, Goregaon, etc., within Greater Bombay. Till and inclusive of the assessment year 1959-60, the value of these lands were not included in the assessment of the assessee under the Wealth-tax Act for the reason that these properties were admittedly agricultural lands. It appears that in the years under consideration the department took the view that the circumstances had altered and these agricultural lands had ceased to be agricultural properties and had become liable to be taxed under the Wealth-tax Act. Principally, three reasons influenced the mind of the wealth-tax authorities in taking this view : One was that the assessee had entered into several agreements with different parties for the sale of different portions of lands for non-agricultural purposes like starting of industries, etc. The second factor which weighed with the authorities was that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ward was made and possession obtained under the provisions of the Land Acquisition Act. Reliance was also placed upon the fact that the record of rights showed all those lands as agricultural lands, that all these lands had been assessed to land revenue and that no permission for converting the user thereof to non-agricultural purpose had been sought or obtained and that in some portions agricultural operations were actually carried on. The Appellate Assistant Commissioner took notice of the fact that the lands were classified as agricultural lands, that they had been assessed to land revenue, that cultivation was being carried on in those lands till the year ending 31st March, 1959, and that no application was made to the Collector seeking permission from him for using these lands for non-agricultural purposes. He, therefore, took the view that the mere stoppage of agricultural operations on those lands after 31st March, 1959, did not change its character. He further took the view that the mere execution of agreements for sale did not affect the appellant's title to these lands till a conveyance was executed or lands were finally acquired under the Land Acquisition Act and that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rly exempt from the provisions of the Act. For the second year also, as far as Ciba lands were concerned, the Tribunal took the view that these could not be included in the assessment of the assessee as they continued to be agricultural lands in his possession as his property throughout the entire second year also, the conveyance in that behalf having been executed on May 14, 1962. But as regards the lands acquired by New Standard Engineering Co. and Nanubhai Industries, though no doubt these lands were actually cultivated and continued to be agricultural lands, the assessee was divested of these lands and as on the valuation date of the second year the assessee had received compensation and the compensation amount less what was payable to the tenants would have to be included in the assessment of the assessee as far as the second year was concerned. As regards the lands measuring 40,315 sq. yards were concerned, the Tribunal took the view that the assessee had not cultivated the lands for the past three years and had no intention of cultivating the same in future and that the assessee had been gradually divesting himself of the properties by selling for non-agricultural purposes a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts which are found by the Tribunal will have to be stated. As far as the lands sold to Ciba of India are concerned, the facts are that lands admeasuring 1,43,000 sq. yards situate in Dindoshi and Pahadi villages bearing S. Nos. SO/1, 20/10-11, 14, 15, 16 and 17, were agreed to be sold by the assessee to Ciba of India Ltd. for a fixed price of Rs. 9,84,000 and under the agreement earnest money of Rs. 50,000 was received. Ultimately, the conveyance came to be executed on May 14, 1962, though possession had been given in the meanwhile on 21st September, 1961. As regards the lands acquired by New Standard Engineering Co. the assessee had entered into an agreement with the said company for sale of lands admeasuring 1,30,680 sq. yards bearing Hissa Nos. 14/9-10-15, 25/1-2, 26, 29, 79/2-4, 81/2-5, 61/1, 23/3, 82/4 and 22 situate in Goregaon village. The agreement was entered into on December 22, 1958, for the fixed price of Rs. 3,26,680 and a deposit of Rs. 2,50,000 was paid thereof. But for some reason or the other, beyond the agreement, nothing happened. It appears that there was some difficulty on account of the tenants actually in occupation of such lands and such tenants having acq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied on on this land up to the year 1959-60. Therefore, for the first year and part of the second year, agricultural operations were in fact carried on on these lands. We have already indicated the existence of tenants on these lands. It is clear, therefore, that for both these years, agricultural operations were in fact carried on on these lands (except the 40,315 sq. yds.)." This finding of the Tribunal has not been challenged by the revenue before us. In addition to this finding which clearly shows that the agricultural operations were carried on in these lands for the first year and for part of the second year under consideration, additional factors in the present case which appear on record are that these lands have been shown on the record of rights as agricultural lands, that these lands have been assessed to land revenue under the Land Revenue Code and in respect of these lands no permission to convert their user to non-agricultural was ever sought or obtained. In other words, notwithstanding the fact that the assessee had entered into agreements for sale with regard to these lands with the aforesaid three parties, till the conveyance was actually executed in favour of on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se were assessed to land revenue, that no permission was sought to convert the user of these lands for non-agricultural purposes and above all, as has been found by the Tribunal, agricultural operations were actually carried on on these lands for the first year under consideration and for part of the second year under consideration. In view of these facts it will be difficult to hold that the aspects on which reliance was placed by Mr. Joshi are sufficient to show that these had ceased to be agricultural lands during the relevant years. In our view, therefore, the Tribunal's finding that all these lands which were ultimately sold or acquired for Ciba of India, New Standard Engineering Co. and Nanubhai Industries were agricultural lands and, therefore, exempt under section 2(e)(i) of the Wealth-tax Act for the year 1960-61 and that the lands sold to Ciba of India were also agricultural lands and, therefore, exempt under section 2(e)(i) of the Wealth-tax Act for the year 1961-62 is correct. The first question is, therefore, answered in the affirmative, in favour of the assessee. Turning to the second question, the finding which has been recorded by the Tribunal with regard to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earing for the assessee has contended that the mere fact that the lands which were initially used for agricultural purposes were allowed to remain fallow for a year or two or for a certain duration would not lead to an inference that these had ceased to be agricultural lands and in that behalf be invited our attention to certain observations made by the Supreme Court in the case of Mst. Subhadra v. Narsaji Chenaji Marwadi reported in [1962] 3 SCR 98; AIR 1966 SC 806. It appears that that was a case under the Bombay Rents, Hotel and Lodging Houses Rates Control Act, 1947, under which the expression "premises" is defined by section 5(8) as meaning "any land not being used for agricultural purposes". In that case the court was concerned with certain premises bearing plot No. 68, Town Planning Scheme, No. 1, Jamalpur, Ahmedabad, being part of Survey No. 405, admeasuring approximately 38 gunthas and the Supreme Court was concerned with the question as to whether the aforesaid premises in the case before it were "premises" within the meaning of section 5(8) of the Bombay Rents, Hotel and Lodging Houses Rates Control Act or not. In 1947 the respondent before the Supreme Court had by deed, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or more than one reason. In the first place, the observation on which reliance was placed by him must be read in the context of facts which obtained in the Supreme Court case and also in the context of the question which the court was called upon to decide in that case. The Supreme Court was not concerned with deciding the question as to whether the premises in dispute before it being plot No. 68, Town Planning Scheme No. 1, Jamalpur, Ahmedabad, was agricultural plot or not. The Supreme Court was concerned with the question as to whether the premises in dispute before it were the premises within the meaning of section 5(8) of the Bombay Rents, Hotel and Lodging Houses Rates Control Act, 1947, where the expression "premises" had been defined to mean "any land not being used for agricultural purposes". Therefore, the observation on which reliance has been placed by Mr. Kolah cannot straightaway be applied to the facts obtaining in the present case and the question before us cannot be decided in the light of those observations. Secondly, it is not as if that there is merely one aspect, namely, that the lands in the instant case have been allowed to remain fallow for five years as sugg ..... X X X X Extracts X X X X X X X X Extracts X X X X
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