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Commissioner of Wealth-tax, Gujarat Vs. Narandas Motilal - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtGujarat High Court
Decided On
Case NumberWealth-tax Reference No. 2 of 1968
Judge
Reported in[1971]80ITR39(Guj)
ActsWealth Tax Act, 1957 - Sections 2
AppellantCommissioner of Wealth-tax, Gujarat
RespondentNarandas Motilal
Appellant Advocate J.M. Thakore, Adv.
Respondent Advocate K.H. Kaji, Adv.
Cases ReferredIn Rasiklal Chimanlal Nagri v. Commissioner of Wealth
Excerpt:
- - the tribunal considered the location of the land as well as the actual use to which these lands were put by the assessee even since he inherited them in the year 1952. according to the tribunal, even though the assessee had plotted out the lands were put by the assessee even since he inherited them in the year 1952. according to the tribunal, even though the assessee had plotted out the lands and had sold them after the application of the draft scheme under the town planning act, 1954, its agricultural character had not changed......elaborately discussed the tests which can be applied for determining whether a particular piece of land is agricultural land or not. while discussing this point, this court has made the following observations, which are very pertinent to the facts of the case under our consideration : 'if the land is used for agricultural purposes, ordinarily it would be correct to say that the land is agricultural land and vice versa. but even this test may not always furnish a correct answer, for there may be cases where land admittedly non-agricultural (such as a buildings site) may be used temporarily for agricultural purposes. in such cases it would not be correct to say that merely because the land is in fact being used for agricultural purposes, it is agricultural land. but, as a general.....
Judgment:

T.U. Mehta, J.

1. The only question which is involved in this reference is whether for the purpose of assessing the net wealth of the respondent-assessee for assessment years 1957-58 to 1963-64, the market value of the lands comprised by S. Nos. 184, 179/2 and 112/1 of Memnagar, Ahmedabad, should be included or not. The Tribunal has in the second appeal preferred by the assessee taken a view that the lands are agricultural lands and, therefore, their market value should not be included for the purpose of computing the net wealth of the assessee for the assessment years in question. The Commissioner has, therefore, preferred this reference.

2. Short facts of this case are that the respondent-assessee, Narandas Motilal, is being assessed in his individual capacity. In the year 1952, on the death of his adoptive father, he inherited two plots of land. One plot bearing survey Nos. 184 and 179/2 admeasuring 6,039 sq. yds. and the other plot bearing survey No. 112/1 admeasuring 12,552 sq. yds. These plots are situated in the Navrangpura area.

3. The evidence recorded in the case reveals and the same is also an admitted fact, that right from the year 1952, when the assessee inherited these plots, up to the year 1963-64, both these plots of land were actually put by the assessee in cultivation. Previously, there were tenants on both lands but it is found that these tenants surrendered the possession of the land to the assessee and, therefore, the assessee carried on the cultivation on these lands personally.

4. In the month of August, 1959, a draft scheme of the Town Planning Act, 1954, was applied to this area. It is an admitted fact that this scheme was finalised as late as the year 1966. It is found that in the months of November and December of the year 1959, the respondent-assessee plotted out both these pieces of land and then in the month of December, 1959, one plot admeasuring 470 sq. yds. out of combined survey Nos. 197/2 and 184 was sold. Thereafter, three more plots from these survey numbers were sold on March 29, 1961, and further sales of plots were made by the assessee in the years 1962 and 1963. So far as S. No. 112/1 is concerned, he is found to have sold two plots admeasuring 401 and 616 sq. yds. in the month of March, 1961, and from the same survey number, he sold 650 sq. yds. of land in the year 1965.

5. The assessment in question is for seven assessment years, namely, 1957-58, 1958-59, 1959-60, 1960-61, 1961-62, 1962-63 and 1963-64, the relevant valuation dates of which are respectively March 31, 1967, March 31, 1958, March 31, 1959, March 31, 1960, March 31, 1961, March 31, 1962, and March 31, 1963.

6. In the course of the assessment before the Wealth-tax Officer, the assessee raised the contention that the plots of land covered by the above mentioned survey numbers were agricultural lands on all these valuation dates and, therefore, they were not liable to the payment of wealth-tax. This contention of the assessee was rejected by the Wealth-tax Officer with the result that the assessee preferred an appeal before the Appellate Assistant Commissioner, who found that the lands were situated within municipal limits and were also on the western extremities of Navrangpura which had developed into a residential locality. He also considered the fact that the lands were plotted out by the assessee in the months of November and December of 1959, and were thereafter sold on yardage basis. In view of these facts the Appellate Assistant Commissioner held that the character of the land had changed even though the assessee continued to cultivate these lands for agricultural purpose.

7. Being aggrieved with this decision of the Appellate Assistant Commissioner the assessee preferred a second appeal before the Tribunal. The Tribunal considered the location of the land as well as the actual use to which these lands were put by the assessee even since he inherited them in the year 1952. According to the Tribunal, even though the assessee had plotted out the lands were put by the assessee even since he inherited them in the year 1952. According to the Tribunal, even though the assessee had plotted out the lands and had sold them after the application of the draft scheme under the Town Planning Act, 1954, its agricultural character had not changed. The Tribunal, therefore, decided the appeal preferred by the assessee in his favour.

8. As said above, the Commissioner has preferred this reference in which the following law point has been referred to this court for its opinion by the Tribunal.

'Whether, on the facts and in the circumstances of the case the two plots of lands were agricultural lands ?'

9. On behalf of the revenue, the learned Advocate-General has drawn our attention to the fact that the lands in question were already covered by a draft scheme under the Town Planning Act and that it was only after the lands were covered by the Town Planning Act that the assessee preferred to plot them out and subsequently sold these plots to different persons at different times, on the basis of yardage. According to the learned Advocate-General, therefore, even though it is proved that the assessee has continued to use the lands for agricultural purposes throughout the relevant period, their character has definitely been changed. As against this, it was contended by Mr. Kazi, the learned advocate of the assessee, that the character of the land would not change by the mere application of the Town Planning Act and the plotting out of the lands. It was pointed out by Mr. Kazi that the Tribunal has accepted the explanation given by the assessee about the plotting and sale of the lands and looking to this explanation, it should be believed that the assessee preferred to plot out and sell these lands in the year 1959 and subsequent years because it was apprehended that the lands would be acquired at a lower price, as Ahmedabad was to become the provisional capital for the newly formed unilingual State of Gujarat. On behalf of the assessee, emphasis was put on the fact that throughout the relevant period, the lands were situated in the outskirts of Navrangpura, it was contended that the lands have not changed their character throughout the relevant period.

10. One important fact which is not at all in dispute is that these lands have been used as agricultural lands by the assessee consistently from the year 1952, when he inherited the same from his adoptive father. Another important fact which is also beyond any dispute is that throughout the relevant period, there has not been any residential activity in the vicinity of these lands. As a matter of fact, the Tribunal has found, and this finding is not challenged, that throughout the relevant period, there was no approach to these lands. It is in perspective of these two important facts that the evidence which is recorded in the case, requires to be appreciated.

11. In Rasiklal Chimanlal Nagri v. Commissioner of Wealth-tax this court has elaborately discussed the tests which can be applied for determining whether a particular piece of land is agricultural land or not. While discussing this point, this court has made the following observations, which are very pertinent to the facts of the case under our consideration :

'If the land is used for agricultural purposes, ordinarily it would be correct to say that the land is agricultural land and vice versa. But even this test may not always furnish a correct answer, for there may be cases where land admittedly non-agricultural (such as a buildings site) may be used temporarily for agricultural purposes. In such cases it would not be correct to say that merely because the land is in fact being used for agricultural purposes, it is agricultural land. But, as a general proposition it may be stated without any fear of contradiction that ordinarily the actual user to which the land is being put would furnish prima facie evidence of the true nature or character of the land and, therefore, whenever a question arises whether a particular land is agricultural land or not, primarily regard must be had to the purpose for which the land in being actually used at or about the relevant time and that would ordinarily provide a satisfactory answer to the problem.'

12. These observations show that if once the assessee becomes successful in showing the land is consistently used for agricultural purpose throughout the relevant period, then that fact can be taken as furnishing some prima facie evidence to determine the character the character of the land in question. However, this may not be considered as sufficient looking to other facts and circumstances of the case. For instance, if building site which is situated in the midst of a fully developed residential locality is subjected to agricultural use then the prima facie presumption about the agricultural character of the land would at once be displaced. It is, therefore, necessary to see whether there are any other circumstances in this case going to suggest that the prima facie presumption which would arise from the fact that this land has been put to agricultural use consistently from the year 1952 is in any manner displaced. While considering this point we find that throughout the relevant period, the lands have been so situated that they could not have been put to any other use expect that of agriculture. It is an admitted position that in the area roundabout, there was no building activity. The land was not approachable by any road to the residential locality of Navrangpura and other societies to which reference is made by the Appellate Assistant Commissioner in his order. It is in evidence that neither the assessee nor the persons to whom the assessee has sold different plots of land have, at any time, made any attempt to put this land to non-agricultural use. As a matter of fact, there is absolutely no evidence in the record going to show that even the purchasers have made any attempt to carry on any non-agricultural activities on any of these plots of land. It is under these circumstances that the fact that the lands have been subjected to agricultural use throughout the relevant period (sic). The fact that the land was never intended to be used during the relevant period as a building site or for any other non-agricultural purpose lends support to the contention that they did not cease to possess their original character, namely, the agricultural character. Under the circumstances, these facts fortify the prima facie presumption which can be made about the character of these lands.

13. The question which arises to be considered is whether there are any other facts or circumstances going to displace this presumption. The revenue has put reliance upon three facts on this question, namely, (1) that the draft town planning scheme was applied to the area in which these lands are situated. (2) that the lands were plotted out by the assessee in the year 1959, and (3) that these plots of land were sold to different persons on the basis of yardage. We find that the fact that the draft town planning scheme was applied to the area in which the lands are situated would go to suggest only one fact, namely, that the potential value of the land had increased. The land can possess it agricultural character even if it is covered by the draft town planning scheme. Similarly, the mere fact that the lands were plotted out and sold would not necessarily show that its intrinsic character was changed. Of course, plotting out of the land and the sale of these plots on yardage basis would always furnish some evidence about the real character of the land. But, in this case, the evidence is not found to be potent enough to displace the presumption about the agricultural character of this land. As already stated above, the lands were not only put to agricultural use but they were so situated that they could not have been used for building or non-agricultural purpose at any time during the relevant period. Therefore, the fact that the lands were plotted out and sold on yardage basis, would not be sufficient for changing its character.

14. Taking, therefore, all these facts and circumstances of the case into consideration, we find no reasons to differ from the view taken by the Tribunal on this question. Our answer, therefore, to the question referred to us is in the affirmative. The matter is sent back to the Tribunal to be dealt with according to law. The Commissioner shall bear the costs of the respondent-assessee in this reference.

15. Question answered in the affirmative.


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