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TMI Blog1975 (12) TMI 74X X X X Extracts X X X X X X X X Extracts X X X X ..... it or forest trees, or plantation for fuel. 20% of the land was to be planted with trees, within the first year of the cowle and another 20 in each succeeding year, so that the while area would be planted with trees within five years. The cowle was liable to be cancelled unless good and sufficient reasons could be shown for not planting the area. If the cowle-holder thought proper, he could plant trees on a portion only and pay for the remainder the full assessment, but each acre of land planted should contain 40 standards at the least. The cowle-holder was not to be charged any rent for cultivation so long as be used his own water. If he elected to make use of water from Government tanks or channels, he would have to pay the water charges levied usually therefor. When coconut or other trees were planted on registered two crop land by the aid of Government water, the second crop charge was not to be levied unless the planter had used Government water throughout the year. At the end of the 20 year period, if the land was still irrigated with Government water, then the rent then demanded would be that of the neighbouring wet land. The cowle-holder was to replant a tree for every one ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to 1947, it could have been only in S. No. 26/2 covering an area of 2.23 acres out of a total of about 18 acres. The Appellate Assistant Commissioner relying on : (1) the area having been included in the Corporation limits from 1947 ; (2) the negligible nature of income and expenditure from these lands as shown by the absence of the accounts ; (3) the presence of big factories and quarters for company executives in the adjoining tracts of land ; and (4) the absence of any tilling or any agricultural operations performed in the relevant year, confirmed the assessment. He referred to the presence of palmyrah trees, but stated that such trees dotted the entire landscape near Madras and that they were standing on the land partly because of the absence of agricultural operations. He held that the land was not agricultural land within the meaning of the Wealth-tax Act. The assessee appealed to the Tribunal. The Tribunal pointed out that there was evidence that in pursuance of the terms of the cowle the palmyrah trees and date-palm trees, which did not require much water for their maintenance, were planted on the lands, that there were about 700 palmyrah trees and 150 palm trees on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act of all the assets, wherever located, belonging to the assessee on the valuation date, was in excess of the aggregate value of all the debts owed by the assessee. The word " assets " occurring in section 2(m) has been defined in section 2(e) of the Act and to the extent material it runs as follows : " 'Assets' includes property of every description, movable or immovable, but does not include-- (i) agricultural land and growing crops, grass or standing trees on such land ; ... " We have, therefore, to see whether the lands in the present case can be called " agricultural lands ". There is no definition of the expression " agricultural land " in the Act. The expression has, therefore, to be interpreted in its ordinary sense controlled, no doubt, by the context of the Act. The meaning of the words " agricultural lands " has been the subject of consideration in several cases in this court. In Sarojini Devi v. Sri Kristna a Hindu widow claimed right of succession to a mango grove under the provisions of the Hindu Women's Rights to Property Act, 1937. The Federal Court had held in In re Hindu Women's Rights to Property Act that the Act of 1937 did not operate to regulate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at " agriculture " in its primary sense denoted cultivation of the field and was restricted to cultivation of the land in the strict sense of the term. It was pointed out that there must be expenditure of human skill and labour upon the land itself. As the trees in the forest grow spontaneously and without any aid of human tendency, the income was held to be outside the scope of exemption under the Indian Income-tax Act. At page 476 their Lordships referred to the case in Sarojini Devi v. Sri Kristna and observed as follows : " There was authority for the proposition that the expression 'agricultural land' mentioned in Entry 21, of List II of the Seventh Schedule to the Government of India Act, 1935, should be interpreted in its wider significance as including lands which are used or are capable of being used for raising any valuable plants or trees or for any other purpose of husbandry. (See Sarojini Devi v. Sri Kristna and Megh Raj v. Allah Rakhia). " In Megh Raj v. Allah Rakhia the Federal Court had noticed the difficulty in determining the precise scope and meaning of the expression it " agricultural land " in relation to a grove and left the question with the following obser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kristna Rao L. Balekai v. Third Wealth-tax Officer, City Circle I, Bangalore, the Mysore High Court was concerned with certain " agricultural lands " which had been requisitioned by the Government in the year 1944 or 1945 for the purpose of locating a military aerodrome. The question was whether the land on which the military aerodrome stood for about 15 years could be called " agricultural land " so as to be exempted under the Wealth-tax Act. At page 474, the learned judges observed as follows : " Normally, when we say that a land is an 'agricultural land', we mean that that land is used or is capable of being used for 'agricultural purpose'. It is not what use it can be put to by changing its character." At page 475, it was observed as follows : " But it must be remembered that in the instant case the land in question has been converted into an airfield, an act which is totally different from planting a grove. It has long ceased to be an 'agricultural land' and it can be only reconverted into an 'agricultural land' by expending considerable labour and money." It may be seen that the test adopted by t he Mysore High Court is similar to the one adopted by Patanjali Sastri J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e category of " assets " under section 2(e) of the Act. The Calcutta High Court was of the opinion that " agricultural land " should comprise the following characteristics : (1) it must be a land ; (2) it must pertain to or be connected with cultivation ; and (3) it must involve expenditure of human labour and skill for the purpose of cultivation or for keeping it in a cultivable state. The court held that a part of the estate in which the forest grew spontaneously was not " agricultural land " and that " agricultural land " included water tanks and roads, which were necessary ingredients of and vitally connected with plantation portion. The bridges and pipes were considered to be outside the category of " agricultural land " unless there was a clear finding to the effect that the agricultural activity in the particular garden was not feasible without them. This case links the test for determining the character of the land as "agricultural land" with the expenditure of human skill and labour for the purpose of cultivation. In a way the test appears to be that unless agricultural income was earned therefrom, the land was not " agricultural land ". This test is inconsistent with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed of vacant land of about 108 acres and also buildings enclosed by compound walls. The land was never ploughed or tilled, though it was capable of being used for agriculture. Land revenue was assessed on it. The wealth-tax authorities and the Tribunal had held that the lands were not agricultural lands so as to be exempt from wealth-tax. On a reference, the Full Bench held that the property in question came within the scope of the exemption. At page it was pointed out that "agricultural land" was an open land which was either cultivated or which was fit for cultivation and that it was the inherent quality of the land that had to be taken into consideration in determining whether it had the characteristic of agricultural land or not. At page 559 it was observed as follows : " If it is shown that the land is actually cultivated either presently or in the immediate past or if it is shown that it is lying fallow, but is capable of being cultivated, so long as the land has not been actually diverted to purposes other than agricultural purposes by construction of buildings thereon and other operations which render the land itself incapable of being cultivated without undertaking some ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the central plot which originally belonged to her but had been sold by her earlier to the Government for establishment of Government postal colony. The court held that the lands were " agricultural lands ". It was pointed out at page 703 after referring to the decision of the Madras High Court in Sarojini Devi V. Sri Kristna and Officer in-charge (Court of Wards) as follows : " The question whether a particular piece of land is or is not "agricultural land" within the meaning of section 2(e)(1) of the Wealth-tax Act is necessarily a question of fact to be decided in the circumstances of a given case depending on the nature and character of the land, its environment, the use to which it has been previously put or is capable of being put, sometimes possibly the intention of the owner, its assessment or non-assessment to the land revenue, its situation within a municipal or a town planning area, its potential value, and various other relevant factors. " The Gujarat High Court again considered this question Commissioner of Wealth-tax v. Narandas Motilal in the context of its earlier decision which we have already considered, viz., Rasiklal Chimanlal Nagri v. Commissioner of Wealth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wn planning scheme to the area would not be conclusive. The proposition urged for the revenue that there can be no agricultural land within the city limits is too wide to be accepted. The application of the town planning scheme is only to regulate building activity and does not by itself convert what is already an agricultural land into non-agricultural property unless the owner has taken steps to convert the land into building plots or factory sites. A clear case of agricultural land would be where income derived therefrom is agricultural income in the relevant year. However, the absence of income in one or more years would not convert the property into non-agricultural property, if there is no evidence of the owner having abandoned any idea of agriculture with reference to that property or had decided to convert it into non-agricultural property. The intention of the owner to keep it as agricultural property, though not conclusive, would be a relevant circumstance. If, however, the property is surrounded by residences, then the intention of the owner would lose its significance. Keeping these principles in view we have to approach the question in the present case. At any rate, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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