1982 (7) TMI 29 - HC - Wealth-tax

Court Upholds Agricultural Land Classification for Wealth Tax Exclusion

The court affirmed the Tribunal's decision that the land in question was agricultural land within the meaning of s. 2(e)(1)(i) of the Wealth-tax Act, ... Agricultural Land, Wealth Tax Issues Involved:1. Whether the land in question was agricultural land within the meaning of s. 2(e)(1)(i) of the Wealth-tax Act, 1957.2. Whether the value of the land should be included in computing the net wealth of the assessee for the assessment years 1965-66 to 1969-70.Summary:Issue 1: Agricultural Land Definition u/s 2(e)(1)(i) of the Wealth-tax Act, 1957The primary issue was whether the land, Survey No. 699, Hissa No. 1, situated on the outskirts of Poona City, was agricultural land within the meaning of s. 2(e)(1)(i) of the Wealth-tax Act, 1957. The Tribunal had held that the land was agricultural and thus not includible in the net wealth of the assessee. The Revenue contended, based on the Supreme Court decision in CWT v. Officer-in-Charge (Court of Wards), Paigah [1976] 105 ITR 133, that mere capability of being used for agricultural purposes was insufficient to classify the land as agricultural. The Supreme Court emphasized the need for actual condition and intended user, not mere potentiality, to determine the agricultural nature of the land. The Tribunal's decision was based on the land's historical agricultural use, its recording in revenue records as agricultural land, and the absence of evidence from the Revenue to rebut this presumption.Issue 2: Inclusion of Land Value in Net WealthThe Tribunal's decision to exclude the value of the land from the net wealth of the assessee was challenged by the Revenue. The land had been used for agriculture until 1963 and was recorded as agricultural land in revenue records. The Supreme Court's decision in the Court of Wards' case indicated that entries in revenue records are prima facie evidence of the land's character, and the burden to rebut this presumption lies with the Revenue. The Tribunal found no evidence from the Revenue to rebut the presumption that the land was agricultural. Consequently, the court declined to send the matter back to the Tribunal for a fresh finding, noting the long duration of the assessment proceedings.Conclusion:The court affirmed the Tribunal's decision, holding that the land in question was agricultural land within the meaning of s. 2(e)(1)(i) of the Wealth-tax Act, 1957, and thus its value was not includible in computing the net wealth of the assessee for the relevant assessment years. The assessee was awarded the costs of the reference.