1. In each of these four reference the same two questions have been referred to us for our opinion, namely :
'Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in setting aside the order of the Appellate Assistant Commissioner confirming the order of the Wealth-tax Officer made under section 35 of the Wealth-tax Act
(2) Whether the Tribunal was justified in law in holding that it is a debatable point whether 'stock-in-trade' is or is not covered by the term 'business premises' used in the Explanation to clause (c) of Para. A of the Schedule of rates of wealth-tax and, therefore, it was not an error patent and obvious one capable of certification ?'
2. The facts leading to these four reference are as follows : Assessment years under consideration are assessment years 1966-67, 1967-68, 1968-69 and 1969-70. The assessee is Hindu undivided family and it possesses two buildings at Baroda, namely, Indira Nivas, which is used by it for its self-occupation and Kadam Building which is not occupied by the family. Apart from these two buildings, the assessee was also possessed of vast agricultural lands which were converted to non-agricultural use in the previous year relevant to assessment year 1966-67 and, thereafter, from time to time during the different years under consideration, the plots of land from these agricultural lands which were converted to non-agricultural land were being sold as and when convenient. The lands were treated by all taxing authorities as stock-in-trade of the HUF and the question arose under the W.T. Act as to whether these lands belonging to the HUF should be subjected to the additional rate of tax under clause (c) of Para. A of Pt. I of the Schedule as it them stood. Under the W.T. Act as it prevailed from April 1, 1965, to 31st March, 1970, clause (a) of Para. A of Pt. I laid down what may be called standard rates of tax in the case of individuals, and clause (b) laid down standard rates of tax for every HUF. Under clause (c), in the case of every individual and HUF, where the net wealth of the individual or HUF included the value of any asset being building or land (other than business premises), or any right in such building or land, situated in any area falling in category A or category B or category C or category D specified in r. 2 of Para. B, additional tax at the rates specified in clause (c) was to be levied. Now, it is common ground that the area where the agricultural lands in question were situated would fall within category D of r. 2 of Para. B of the Schedule. The main question was whether these lands which were originally agricultural lands but which were converted to non- agricultural use and were held by the assessee-family as stock-in-trade, could be said to be 'business premises' because if they formed 'business premises', then they would be taken out of the additional tax under clause (c) of Para. A of Part I as it then stood. For the purpose of Part I, 'business premises', according to the Explanation to Part I, meant any building or land or part of such building or land, or any right in building or land or part thereof, owned by the assessee and used throughout the previous year for the purpose of his business or profession, and included any building used for the purpose or residence of persons employed in the business or any building used for the welfare of such persons as a hospital, creche, school, canteen, library, recreational centre, shelter, rest-room or lunch-room.
3. When the WTO passed assessment orders for the wealth-tax in respect of each of these four years under consideration before us in this group of matters, he treated the agricultural lands converted to non-agricultural use as part of the movable assets of the assessee-family on the footing that the stock-in-trade was part of the movable assets of the HUF. After the assessments for the four years were over, the WTO issued notices under s. 35 of the W.T. Act in connection with rectification proceedings on the footing that there was a mistake apparent from the record inasmuch as the former agricultural lands converted to non-agricultural use were treated as the part of movable assets and were not subjected to the additional rate of tax under clause (c) of Para. A of Part I of the Schedule to the W.T. Act. The assessee objected to the rectification proceeding but the objections were overruled by the WTO and rectification orders were passed for each of these four assessment years under reference. Appeals for the different assessment years filed by the assessee concerned were dismissed and the AAC confirmed the orders of the WTO, but the assessee succeeded before the Tribunal, inter alia, on the ground that even on the assumption that the order of the WTO in the original proceedings was erroneous, yet the error could not be said to be an error apparent from the record in view of the decision of the Supreme Court T.S. Balaram, ITO v. Volkart Brothers : 82ITR50(SC) . The Tribunal came to the conclusion that there was no mistake apparent from the record for rectification by the WTO and hence the Tribunal set aside the orders of rectification and allowed the appeals of the assessee. Thereafter, at the instance of the revenue, these four reference have been made to us by the Tribunal for our opinion.
4. Now it is clear, as the Tribunal has pointed out, that it requires debate and consideration arguments for the purpose of elucidating what is meant by 'business premises' and if the former agricultural lands converted to non-agricultural use are held by the HUF, the assessee before us, as part of its stock-in-trade, whether these lands could not be said to be held and used for the purpose of its business. At the present stage it is not necessary for us to examine whether the view of the WTO that the lands which formed part of the stock-in-trade of the family were movable assets and, therefore, should be treated as such was correct or not.
5. It has been pointed out by the Supreme Court in T.S. Balaram, ITO v. Volkart Brothers : 82ITR50(SC) that the mistake apparent on the record must be an obvious and patent mistake and not something which can be established by a long-drawn process of reasoning on points on which there may be conceivably two opinions. A decision on a debatable points of law is not a mistake apparent from the record. At page 53, Hegde J., speaking for the Supreme Court, observed :
'From what has been said above, it is clear that the question whether section 17(1) of the Indian Income-tax Act, 1922, was applicable to the case of the first respondent is not free from doubt. Therefore, the Income-tax Officer was not justified in thinking that on that question there can be not two opinions. It was not open to the Income-tax Officer to go into the true scope of the relevant provisions of the Act in a proceeding under section 154 of the Income-tax Act, 1961. A mistake apparent on the record must be an obvious and patent mistake and not something which can be established by a long-drawn process of reasoning on points on which there may conceivably be two opinions.'
6. Now, it is in the light of these principles relating to the powers of the WTO in rectification cases under s. 35 of the Act that the matter will to be looked at. The provisions of s. 35 of the W.T. Act are in pari materia with the provisions of s. 154 of the I.T. Act, 1961, and the principles laid down by the Supreme Court in the context of s. 154 of the I.T. Act would apply with equal force to the problems arising under s. 35 of the W.T. Act.
7. As the Tribunal has rightly pointed out, it is a debatable question whether the stock-in-trade in the shape of land or buildings held by a particular assessee can or cannot be said to be 'business premises' in view of the Explanation to clause (c) of Para. A of the First Part of the Schedule of the W.T. Act as it stood at the relevant time. In view of the controversy and the debate which would arise regarding the interpretation of the Explanation and the meaning of the words 'business premises', the principles laid down in the case of T.S. Balaram, ITO v. Volkart Brothers : 82ITR50(SC) would definitely apply and the Tribunal was justified in holding that there could not be said to be a mistake apparent on the record so far as the question of lands being treated as 'business premises' was concerned. Once the principle laid down in T.S. Balarams's case are found to be directly applicable, it must be held that the orders passed in rectification proceedings were outside the scope of the powers of the WTO and hence the Tribunal was justified in setting aside the orders of the AAC confirming the order of the WTO.
Under these circumstances, we answer the questions referred to us as follows :
Question No. (1)-In the affirmative, that is, in favour of the assessee and against the revenue.
Question No. (2)-In the affirmative, that is, in favour of the assessee and against the revenue.
8. The Commissioner will pay the costs of the reference to the assessee in each of these four cases.