HIMATLAL GOVINDJI Vs. COMMISSIONER OF WEALTH TAX

JUDGEMENT

(1.) THE question which arises in this reference is whether a piece or parcel of land of which the assessee is a co -owner is agricultural land within the meaning of section 2(e)(i) of the Wealth -tax Act, 1957, and, therefore, exempt from assessment to wealth -tax under the said Act. The question has arisen in the course of the assessee's assessment to wealth -tax for assessment years 1963 -64 and 1964 -65 and is required to be determined in the light of the facts which are set out hereunder.

(2.) THE assessee and his brothers had jointly purchased a plot of land situate on Jamnagar Road within the municipal limits of the city of Rajkot. The assessee had one -half share in the land. After the plot was purchased, two applications were made to the Collector of Rajkot for permission to put the land to non -agricultural use. These applications were made on 12th August, 1958, and 2nd September, 1959. the Collector of Rajkot granted the necessary permission by his order dated 11th November, 1959, subject to certain conditions. The relevant conditions which are required to be noted for the purpose of the present reference were that the land should be used only for the purpose of erection of residential buildings, that such buildings should be constructed only one -third portion of the land and that one -third portion of the land should be set apart for laying out public roads etc. The assessee accepted these conditions and the acceptance was recorded in an agreement executed on 13th January, 1960. The plot of land admeasured 1,58,752 sq. yds. and out of that an area of about 53,955 sq. yds. was set apart for lying out roads, parks and other projects of public utility. The remaining portion of the land was then parcelled out into 108 plots. Out of those plots, 48 plots totally admeasuring 45,372 sq. yds. were sold by the assessee in S. Y. 2016 (1960 -61), 21 plots totally admeasuring 19,683 sq. yds. were sold by the assessee in S. Y. 2017 (1961 -62), 1,757 sq. yds. of land was sold by the assessee in S. Y. 2019 (1962 -63) and one plot of land admeasuring 955 sq. yds. was sold by the assessee in S. Y. 2021 (1965 -66). The remaining plots totally admeasuring 37,985 sq. yds. were sold in 1966 -67.

(3.) THE assessee carried the matter in appeal to the Appellate Assistant Commissioner. Before the Appellate Assistant Commissioner, the assessee produced copies of pahani patrak (revenue record) as well as receipts evidencing payment of the land revenue. The assessee also produced sale memos (ankadas) issued by commission agents in respect of sale of agricultural produce made in October and November, 1963, and October, 1964, as also receipts issued by the Rajkot Borough Municipality evidencing payment of octroi duty. The assessee contented that the materials produced by him showed that the assessee had cultivated the land in question and raised agricultural crops thereon during S. Ys. 2017, 2018 and 2019 (1961 -62, 1962 -63 and 1963 -64) and the land was, therefore, agricultural land. The Appellate Assistant Commissioner found that the land in question was primarily agricultural land and that on the relevant valuation dates, the assessee had continued to use the land for agricultural purposes. In the opinion of the Appellate Assistant Commissioner, there was no justification for treating the land as non -agricultural land on the relevant valuation dates only on the ground that the assessee had obtained permission to convert the land to non -agricultural use and parcelled it out into plots of various dimensions with a view to using it for non -agricultural purposes at an opportune time in future. The Appellate Assistant Commissioner, therefore, held that the plots of land were agricultural land within the meaning of Section 2(e)(i) and directed that they should be excluded from the assessee's net wealth.