1. These appeals by the department relate to the assessment years 1978-79 and 1979-80, for which the relevant valuation dates are 31-3-1978 and 31-3-1979, respectively.
2. The assessee owned about 5 acres of agricultural lands, which included paddy fields and coconut gardens. The assessee showed the value of the agricultural properties as Rs. 67,835 and claimed exemption thereof. The WTO estimated the value of the agricultural lands at Rs. 1 lakh and allowed exemption for the same. However, he valued the arecanut and coconut trees in the agricultural lands at Rs. 1,700 and Rs. 1,07,000 respectively, and treated the same as non-agricultural assets and denied exemption thereof.
3. The AAC accepted the contention of the assessee that the trees are are also exempt. The reasoning of the AAC was to the following effect.
Section 5(1)(iva) of the Wealth-tax Act, 1957 ('the Act'), exempts agricultural lands from wealth-tax. Section 5(1) (viiib) exempts trees on agricultural lands other than plantation and orchard. As the term 'plantation' has not been defined in the Acts, the meaning attributed to the term in common usage should be taken. A coconut garden or an arecanut garden is not known as plantation unlike in the case of rubber or tea estate. Coconut trees are, therefore, not trees standing on a plantation. The coconut trees without their fruits do not have any value as they can be used only for the purpose of fire wood. The value of arecanut and coconut trees will, therefore, be exempt from wealth-tax.
4. Aggrieved by this finding, the department has come up in appeal. The common ground taken by the department in the two appeals is that the AAC erred in holding that the assessee is entitled to exemption for the value of the trees standing on the lands.
5. The arguments advanced by the learned Counsel for the assessee were to the following effect : Under Section 5(1)(viiib), trees standing on agricultural lands are exempt. Only trees standing in an orchard or a plantation are not exempt. A coconut garden is not a plantation.
'Plantation' contemplated by the Act is only tea, coffee, rubber or cardamom plantation. This is clear from the fact that when Section 5(1)(viiib) was amended by the Finance Act, 1982, plantation was clarified as tea, coffee, rubber or cardamom plantation. A coconut garden was not, therefore, understood to be a plantation by the Legislature. In a coconut or arecanut garden, the trees themselves constitute the plantation and there is no scope for referring to these trees as trees standing in a plantation. The reference to standing trees in a plantation can only be to shade trees or other trees of spontaneous growth, which can be cut and sold without affecting the plantation. The coconut and arecanut trees without their fruits have little timber value and it cannot be the intention of the Legislature to tax the value of these trees at the same excluding the value of the fruits standing on the trees. Further, in the case of the assessee, the properties cannot be termed as plantation as the properties consist of eight different blocks with a total extent of 3.34 acres. Apart from this, the assessee has only a one-sixth share in the house compound which is about 58 cents in extent. The coconut trees and arecanut trees are, therefore, trees standing on small compounds and it will not be proper to term them as plantation.
6. As against this, the arguments of the learned departmental representative were to the following effect : It is not correct to say that the coconut and arecanut trees without their fruits have no value.
The coconut trees are used as pillars to support the roof in houses and also as rafters, etc. They are even used for pile driving for resting foundations of houses where the earth is loose. The coconut trees cannot be compared to the shade trees in plantations, which are very soft and can be used only for making packing cases. There will be no shade trees in rubber plantations, where the only trees will be rubber trees. Because of this it will not be correct to say that rubber trees in a plantation will be exempt under Clause (viiib) of Section 5(1).
From the fact that reference was made in the amended Clause (viiib) of Section 5(1) to tea, coffee, rubber or cardamom plantation, it does not follow that the term plantation occurring prior to the amendment was also confined to tea, coffee, rubber or cardamom plantation. It can as well be a case where the Legislature, subsequently, decided to confine the exclusion to the trees in the plantations specified. The coconut and arecanut gardens were treated as plantation by the Kerala State when the State had levied plantation tax by a State Act. It was, therefore, contended by the learned departmental representative that the coconut trees and arecanut trees standing in the coconut and arecanut gardens will be trees in a plantation for the purpose of Clause (viiib) and the value of the trees are not, therefore, exempt from wealth-tax.
7. We have considered the matter. The valuation dates involved in the present appeals are 31-3-1978 and 31-3-1979. The position obtaining under the Act, as applicable to these dates, is as follows : In the definition of the term 'assets' in Section 2(e) of the Act, there is no exemption for agricultural lands, growing crops, grass or standing trees, etc. Exemption, if any, was available only under the provisions of Section 5(1) subject to the limits prescribed by Sub-section (1A) of Section 5. Section 5(1), so far as it is relevant for the present purpose, is as follows : (1) Subject to the provisions of Sub-section (1A), wealth-tax shall not be payable by an assessee in 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 ; (viiib) trees standing on agricultural land, not being trees in an orchard or a plantation ; By the Finance (No. 2) Act of 1980, Clause (viiib) was amended with effect from 1-4-1981 as follows : (viiib) trees standing on agricultural land, not being trees in any tea, coffee, rubber or cardamom plantation ; It will be found that under Clause (viiib), as applicable to the relevant valuation dates, trees standing in a plantation are not exempt. The term 'plantation' has not been defined in the Act. By the amendment with effect from 1-4-1981, it is provided that trees in any tea, coffee, rubber or cardamom plantation will not be exempt. One argument advanced by the learned Counsel for the assessee was that the fact in 1981 the Legislature specified the plantation as tea, coffee, or rubber or cardamom plantation, shows that even earlier only trees in these plantations were denied exemption. It does not seem to be safe to accept this contention because the Legislature, while making the amendment, did not make it retrospective and made it effective only from 1-4-1981. It cannot, therefore, be said that the Legislature was only declaring the position right from the beginning. On the other hand, as contended by the learned departmental representative, it is possible that while originally the Legislature intended to deny exemption to trees in all plantations, subsequently, the Legislature thought it fit that denial of exemption should be confined to trees standing in any tea, coffee, rubber or cardamom plantation. The amendment is not, therefore, decisive. Similarly, we do not think it proper to place reliance on the circumstance that when the Kerala State imposed a tax on plantations, arecanut and coconut gardens were included within the scope of the Act. This circumstance cannot be relied upon to construe the provisions of a Central Act like the Wealth-tax Act.
8. As the term 'plantation' has not been defined in the Act, we agree with the AAG that the meaning given to the term in common parlance should prevail. A plantation has been defined in Chamber's Twentieth Century Dictionary as "a place planted, esp. with trees : a colony : an estate used for growing cotton, rubber, tea, sugar, or other product of warm countries : (Southern US) a large estate :" Generally, at least as far as the Kerala State is concerned, agricultural lands, where fruit trees are grown, are not referred to as plantation. On the other hand, rubber, tea, coffee and cardamom plantations are commonly referred to in the Kerala State as rubber estate, tea estate, coffee estate and cardamom estate. The terms 'estate' and 'plantation' are usually associated with cultivation carried on in a comparatively large area in an organised manner. The coconut or arecanut trees are not generally cultivated in such an organised manner. May be there are exceptions.
But as a rule, the coconut and arecanut trees are planted and taken care of only with a degree of effort, which is associated with the cultivation of paddy, etc. It is not associated with that degree of effort and organisation, which is usually found in the running and management of tea, coffee, rubber or cardamom plantation. In the present case, as already stated, the total extent of 3.34 acres is lying as eight blocks. By maintaining and replanting the coconut trees in these plots, it cannot be said that the owner is running a plantation.
9. The provisions of Clauses (iva), (viiia) and (viiib) of Section 5(1) also give an indication in the matter. Under Clause (iva), agricultural land is exempt. Under Clause (viiia), fruits on trees are exempt. Then comes Clause (viiib), which says that trees standing on agricultural lands are also exempt excepting trees in an orchard or a plantation.
Thus, in the case of a coconut or arecanut garden the land is exempt.
So also are the coconuts and arecanuts. It cannot be that the value of the stems of the trees are not intended to be exempt and that they are to be taxed. It is difficult to work out with a reasonable degree of accuracy the value of the stem of a coconut or arecanut tree minus the land on which it stands and the fruits which it bears. It, therefore, appears improbable that the Legislature intended to tax the stems of trees, the fruits of which are exempt under Clause (viiia). In the light of this, the suggestion of the learned Counsel for the assessee that the trees which are sought to be excluded from the exemption in Clause (viiib) are shade trees and similar trees in an orchard or plantation, seems to be reasonable. In this context, the fact that the Legislature by a subsequent amendment specifically mentioned tea, coffee, rubber or cardamom plantation seems to be significant and relevant.
10. Thus, on a consideration of the above aspects, we are of the view that coconut trees and arecanut trees, even if they are standing in coconut gardens and arecanut gardens, cannot be said to be trees standing in a plantation. As such there is no scope for claiming that coconut and arecanut trees standing in house compounds or other compounds or on the bounds in paddy fields will constitute plantation.
The appeals by the department have, therefore, to fail.