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Wealth-tax Officer Vs. A.M. Shivalingaradhya and Sons - Court Judgment

LegalCrystal Citation
CourtIncome Tax Appellate Tribunal ITAT Bangalore
Decided On
Judge
Reported in(1982)1ITD866(Bang.)
AppellantWealth-tax Officer
RespondentA.M. Shivalingaradhya and Sons
Excerpt:
.....assessee owned agricultural lands including coconut garden. the assessee claimed that the coconut trees standing in the garden are exempt under section 5. the wto found that the dictionary meaning of the term "coconut tree" is "tropical palm-tree". the coconut garden is an orchard since coconut tree is a fruit bearing tree. an "orchard" is defined as an enclosure with fruit trees. the wto found that trees in an orchard or plantation arc specifically excluded in the new provisions of section 5(1)(viiib) of the wealth-tax act, 1957 ("the act"), which has come into force with effect from 1-4-1976. he, therefore, negatived the contention of the assessee and brought to tax in each year in question the value of the coconut garden at rs. 60,125.3. the assessee appealed. the appeals came to be.....
Judgment:
1. These two appeals are by the revenue and they relate to the assessment years 1976-77 and 1977-78. They raise a common contention.

The valuation dates are 31-3-1976 and 31-3-1977.

2. The assessee owned agricultural lands including coconut garden. The assessee claimed that the coconut trees standing in the garden are exempt under Section 5. The WTO found that the dictionary meaning of the term "coconut tree" is "tropical palm-tree". The coconut garden is an orchard since coconut tree is a fruit bearing tree. An "orchard" is defined as an enclosure with fruit trees. The WTO found that trees in an orchard or plantation arc specifically excluded in the new provisions of Section 5(1)(viiib) of the Wealth-tax Act, 1957 ("the Act"), which has come into force with effect from 1-4-1976. He, therefore, negatived the contention of the assessee and brought to tax in each year in question the value of the coconut garden at Rs. 60,125.

3. The assessee appealed. The appeals came to be disposed of ex parts.

The AAC found that there was nothing wrong in the procedure adopted by the WTO. However, he found that the exemption under Section 5(1)(iva) has not been granted. This will be well within the limit of Section 5(1A). With these directions, he allowed the appeals of the assessee.

4. The revenue has come on second appeal. It was submitted that the AAC erred in holding that an amount of Rs. 60,125 in each year, being the value of the coconut trees, is exempt under Section 5(1)(iva) read with Section 5(1A). It was further contended that the AAC failed to appreciate the fact that only agricultural lands are exempt under Section 5(1)(iva) and standing trees and growing crops are excluded from land. For this purpose the definition of "agricultural lands" was referred to under Section 2(e)(7) of the Act. In any case the assessee is not entitled to relief under Section 5(1)(viiib), since it is a plantation.

5. The learned counsel, on the other hand, supported the order of the AAC. He submitted that Section 5(1)(viiia) will cover the case.

6. We have considered the rival submissions. Section 2(e), which defines the word "asset", stood as under prior to 1-4-1970 ; (e)'assets' includes property of every description, movable or immovable, but does not include- (1) in relation to the assessment year commencing on the 1st day of April, 1969, or any earlier assessment year.

(i) agricultural land and growing crops, grass or standing trees on such land; After 1-4-1970, Section 2(e)(2) is relevant and it omitted Sub-clause (1) and Sub-clause (ii) of Section 2(e)(1). At the same time, Section 5(1)(iva), as it stood then, and Section 5(1)(viiia), which was introduced from 1-4-1970, were in these terms : (1) Subject to the provisions of Sub-section (1A), wealth-tax shall not be payable by an assessee m respect of the following assets, and such assets shall not be included in the net wealth of the assessee- (viiia) growing crops (including fruits on trees) on agricultural land and grass on such land ; Thereafter from 1-4-1976 Clause (viiib) was introduced which is in these terms : (viiib) trees standing on agricultural land, not being trees in an orchard or a plantation.

7. From the above it would appear that originally agricultural land and growing crops, grass, or standing trees on such land were outside the purview of the Act. Section 2(e) was amended with effect from 1-4-1970.

The exemption to agricultural land and growing crops, grass or standing trees on such lands were omitted with the result that they become a taxable asset. Section 5(1)(iva) was introduced to give exemption to agricultural land belonging to the assessee. By Section 5(1)(viiid) growing crops, including fruits on trees, on agricultural land and grass on such land was given exemption. The result was that though they are includible they are again exempt under the provisions of Section 5 with reference to certain ceilings mentioned therein. In accordance with Section 5(1)(viiia), there was no such ceiling. It would be seen that "standing trees" mentioned in Section 2(e)(i) was not covered. It is only to cover that Section 5(1)(viiib) was added with effect from 1-4-1976. The words "not being trees in an orchard or a plantation" in Section 5(1)(viiib) have been added only because they are covered by Section 5(1)(viiia). What the WTO has applied is only Section 5(1)(viiib). Section 5(1)(viiib), in our opinion, refers to trees standing on agricultural land, not being trees in an orchard or plantation, and such trees would, if they are growing crops, be covered by Section 5(1)(viiia). Coconut trees in a coconut garden are standing crops. A coconut garden consisting of the land alone will be exempt under Section 5(1)(iva) to the extent covered under Section 5(1A). As far as the coconut trees are concerned, it would be covered by the definition of "growing crops, including fruits on trees on agricultural land" referred to in Section 5(1)(viiia), The authorities below have not considered this item with reference to Section 5(1)(viiia). We see no reason to hold that coconut trees are not covered under Section 5(1)(viiia). We agree with the departmental representative that Section 5(1)(iva), in the context of the other sub-sections, would only cover agricultural land not growing crops, grass or standing trees on such land because they are dealt with separately by means of Section 5(1)(viiia) and (viiib). The overall limit mentioned in Section 5(1)(viia) originally and now read with Section 5(1A) do not apply to growing crops covered under Section 5(1)(viiia) or trees standing on agricultural land or trees in an orchard or plantation covered by Section 5(1)(via). In this view of the matter, we hold that the assessee is entitled to exemption of coconut trees in the coconut garden under Section 5(1)(viaa). We uphold the order of the AAC on a different ground, viz., that the trees are exempt under Section 5(I)(viia) and not under Section 5(i)(iva). In this view of the matter, we uphold the order of the AAC though for a different reason.


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