BALASUBRAHMANYAN J. - This group of wealth-tax reference arising under the W.T. Act, 1957, concerns a group of wealth-tax assessee who formed themselves into a syndicate and purchased an estate called 'Glenorock Estate' in Gudallur in the Nilgiris District. The total extent of the estate is 4,465 acres. At the material time relevant for the group of reference, 345 acres of the estate were under rubber cultivation; 90 acres were planted with office; cardamom in 70 acres; eucalyptus grains and miscellaneous plants in 20 acres. Absolute rock and barren rocky ground accounted for 405 acres. Nearly 500 acres were covered by thickly grown bamboo clusters. The rest of the area was covered by evergreen and mixed type of forests. Wherever the forests were not in command, the ground was covered with a wild growth of grass. The average rainfall in the region is about 115 to 120 inches during south-west monsoon and 15 to 25 inches during north-east monsoon. Even during March and April, there are thunder showers accounting for 5 to 10 inches.
This estate, if it can be so called in its utter present condition appears once upon a time to have been a flourishing coffee plantation growing arabica coffee. There was also evidence of tea plantations. These gardens have now fallen into total desuetude. After their purchase of this investment, the assessee requisitioned the services of an agricultural expert for the purpose of examining whether the estate can be reclaimed for agricultural purposes, or plantation purposes and, if so, to what extent. He made a report, but not much came out of it by way of actual deforestation.
Agricultural land, to and inclusive of the assessment year 1969-70 was exempt from wealth-tax. It was expressly excluded from the definition in the W.T. Act of 'taxable assets'. For assessment years 1966-67 to 1969-70, the assessee claimed that Glenrock Estate was agricultural land, and the value of their respective shares or interest in that estate could not be included in their individual wealth-tax assessments as a part their taxable net wealth. On appeal, the AAC went into some detail as to the actual extent of the land either under cultivation or used otherwise for agricultural purposes. He found that 3,997 acres of the estate were covered with natural forest growth and waste land. But since the assessee had raised a plantation in 50 acres of land in the year ended on April 30, 1967, which was increased to 125 acres in the year ended March 31, 1968 he directed that, to this extent, the land in the estate must be regarded as agricultural land and the proportionate interest therein of each assessee would be eligible for exclusion from his individual assessment to wealth-tax. On further appeal by the assessee, however, the Tribunal held that barring 405 acres of barren rock, the rest of the estate must be regarded as agricultural lands even if, ar the present moment, they were overgrown with dense forest or other foliage.
Department thereupon demanded a reference to this court. The Tribunal complied with the requisition, and have made this group of references in which the following common question of law have been propounded :
'(1) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the assessee was entitled to exemption under section 2(e)(i) of the Wealth-tax Act in respect of the Glenrock Estate barring the rocky portion to an extent of 405 acres ?
(2) Whether the Tribunals view that forest land would also constitute agricultural land for the purpose of the exemption provided under section 2(e)(i) of the Wealth-tax Act and that, therefore, the assessee was entitled to the said exemption, is sustainable in law and on the materials on record ?'
The Tribunal expressed themselves as having taken note of the following factors before coming to their conclusion that all but 405 acres of this estate qualifies for exemption from wealth-tax as agricultural land :
(1) Geographical location, surroundings and situation of the land ;
(2) Physical characteristics of the land and inherent quality and potentialities of the land for being used for agricultural purposes;
(3) The assessment of the estate to land revenue;
(4) The history of the estate showing that plantations had once been in existence but had been abandoned owing to plant disease;
(5) The intention of the present owners to bring the land under recultivation as might be gathered from the steps taken by them in obtaining an experts project report, and the like.
(6) The nature of the actual present user of a portion of the estate showing that agriculture has not once and for all been abandoned;
(7) The development and user of the land surrounding the estate as plantations.
Although the Tribunal, in their order,: dealt with each and even one of the considerations, they were swayed by one factor more than any other. It had to do with the fact that once upon a time, this estate was a plantation, and, for some reason or other, it had fallen into ruin and become forest land, but it certainly holders the promise or potentiality of again being converted into agricultural land including the areas where the forest had grown thick during 50 years or more of neglect and abandonment. .
The expression 'agricultural land', as tax exempted property, figures in several contexts in our direct tax lows. For a time, agricultural land was excluded from the definition of a capital asset and, therefore, incapable of yielding taxable capital gains under the I.T. Act. Agricultural land, again does not even now from part of the dutiable estate under the E.D. Act, 1953, in some of the States whose legislatures have not passed resolutions adopting the E.D. Act, 1953, as covering agricultural land in their States. As we earlier mentioned, agricultural land is also excluded from assessment to wealth-tax up to the year 1970, the period covered by the present references under the W.T. Act. The Expression 'agricultural land ' is not defined in any of these Act. It was, therefore, only to be expected that quite a number of cases should make their way to the higher courts for resolving the controversy whether a given land is or is not agricultural land. The board approaches to the meaning of this expression were discernible, particularly in the earlier case-law on the subject. One was to regard any land as agricultural land if it had the requisite potentiality to be used for agricultural purpose. The other view was to insist that only land which is either actually under cultivation or which is kept apart or set apart for agricultural purpose or which could reasonably be used for agricultural purposes without any alteration of its existing character can be treated as agricultural land. The remote possibility of the land being used for agricultural purposes after converting its present nature and character could not be a material consideration. Either actual cultivation or the immediate prospect of cultivation without changing the nature of the land were alone regarded as the criteria.
Amidst this division of judicial opinion came the decision of the Supreme Court in CWT v. Officer-in-charge (Court of Wards), Paigah : 10ITR133(SC) . In that case the question was whether a tract of vacant land of the extent of 108 acres, going by the name of 'Begumpet Palace' in the heart of Hyderabad City, can be treated as agricultural land and thereby excluded from the charge to wealth-tax under s. 2(e)(i) of the W.T. Act, 1957. A full Bench of the Andhra Pradesh High Court held that the 'Begumpet Palace' answered the description of agricultural land although it was not actually under cultivation. The Full Bench observed that the land was capable of being brought under agricultural, since it has not actually been put to any purpose other than agriculture, although that was quite long long ago. The Supreme Court, however, did not accept the reasoning and conclusion of the Andhra Pradesh High Court. They observed that while giving the expression agricultural land a wide connotation, still the expression must be confined to denote land a wide connotation, still the expression must be confined to denote only land which is either actually under cultivation or which is appropriate or set apart for a purpose which could be regarded as agriculture and for which it could be reasonably used without any alteration of its existing character. The Supreme Court themselves characterised what they laid down in these propositions as a minimal test' of agricultural land which should applied especially to cases which are not actually under cultivation.
The Supreme Court were to follow this decision in a subsequent case which arose under the E.D. Act raising a similar query as to what agricultural land is in CED v. V. V. Venugopala Varma Rajah : 105ITR593(SC) . That was a case of a large tract of forest land covered with wild and natural forest growth of the extent of 36,857.16 acres. The Kerala High Court upheld the claim of the accountable persons in that case that the forest land was agricultural land. The High Court expressed the view somewhat expansively that all forest lands in Kerala State are agricultural lands in the sense that they can be prudently and profitably exploited for agricultural purposes. The Supreme Court, however, disagreed with this view. They referred to their decision in CWT v. Officer-in-Charge (Court of Wards), Paigah  105 and observed that without evidence to show that the forest land had already been cleared and then prepared or earmarked for agricultural purpose, it would be too soon and too unreal to hold that it had become agricultural land. The Supreme Court further observed that the question in every case had to be decided on evidence of actual or intended user for which land may have been prepared or set apart. They proceeded to observer that the burden was heavily on the assessee or accountable persons, as the case may be, to show that forest land covered with wild and natural growth had been converted into land which is either actually used for agricultural purpose or had been prepared or set apart for such purposes.
The present references, in our opinion have got to be decided on the basis of the 'minimal test' laid down by the Supreme Court. The Tribunal found, as a fact, that 250 acres in the estate were brought under cultivation by the assessment year 1968-69. The Tribunal relied on the project report of the assessees agricultural expert to hold that barring the bamboo clusters occupying 400 acres and of rocky land of 405 acres, the balance of 3,600 acres could be brought under cultivation on a long range programme. The Tribunal referred to the possibility that even the bamboo clusters occupying 400 acres might one day yield place to agricultural, since the assessee had applied to the Collector for clearing them for conversion of the area into rubber plantations. The Tribunal recalled that about 50 or 60 years back much of the land was quite efficiently being used tea or coffee or cinchona plantations, and although after abandonment of these plantations there had been a growth of grass or forest trees on the entire area, the project report of the expert showed that much of the land could be brought under cultivation even under phased shorterms programme spanning 5 or 6 years. The Tribunal also referred to a proposal by the assessee to the Tea Board to grant them permission to plant tea in an extent of 1,176.84 acres. Accepting the feasibility of the project report of the expert in several directions, the Tribunal held that the entire area, barring the rocky land, could be brought sooner or later under cultivation, and, therefore, must be treated as agricultural land.
For all the detailed discussion one finds in their order, however, the Tribunal was hard put to it to hold the estate as agricultural land only on the basis that although, on date, it was actually forest land, it had the potential of becoming of being reconverted into cultivable land. We must point out that excepting for 250 acres, there is no evidence that any steps were at all taken by the assessee for preparing or setting apart the land for recultivation. Forests do not disappear merely under a project report. They do not get converted into agricultural land by the deft use of a writing pen on the experts folio paper. We are therefore, satisfied that on the basis of the principles derived from the Supreme Court decision as applied to the very findings of the Tribunal, only 250 acres could be regarded as agricultural of the total extent of 4,465 acres. The questions referred to us are, accordingly, answered in the negative and against the assessee. The Department will be entitled to its costs. Counsels fee Rs. 500 (one set).