RASIKLAL CHIMANLAL NAGRI Vs. COMMISSIONER OF WEALTH TAX

JUDGEMENT

(1.) THE short question that arises on this reference is whether certain lands belonging to the assessee, an HUF, are agricultural lands within the meaning of S. 2(e)(i) of the WT. Act and are, therefore, exempt from the assessment to wealth -tax under the Act. The lands consist of four plots bearing Nos. 801, 964, 970 and 346/4 -A situate in Ellis Bridge area in the City of Ahmedabad. Out of the four plots, the first is situate on the main road leading to Sarkhej while the other three are situate on the 80 -feet road leading from the High Court and joining the Sarkhej Road some distance away from Paldi. All the four plots are situate within municipal limits and are comprised in the town planning scheme which came into force some time in 1945. The area in which these plots are situate is a residential area and there are numerous residential houses around these plots. The first three out of these plots were obtained by the assessee on partition, plot No. 801, on 14th Dec., 1926, and plots Nos. 964 and 970 on 2nd March, 1918, and they were cultivated by the assessee until about 1934 -35, but since that time they have not been used for any agricultural purpose. The last plot, No. 346/4 - A, admeasuring 670 sq. yds. was acquired by the assessee jointly with one Kantilal C. Mehta on 16th Dec. 1951, for the price of Rs. 13,711, i.e., at the rate of about Rs. 20 per sq. yard and ever since it was acquired it has not been put to any agricultural use. All these plots are assessed to land revenue for the purpose of agriculture and the assessee has not obtained permission of the revenue authorities under the provisions of the Bombay Land Revenue Code to make non -agricultural use of them. On these facts the assessee contended before the WTO assessing it to wealth -tax for the asst. year 1957 -58, the relevant valuation date being 2nd Nov., 1956, that these plots were agricultural lands and their value was not liable to be included in computing the net wealth of the assessee. A similar claim was also made by the assessee in regard to the assessment to wealth -tax for the asst. year 1958 -59, for which the relevant valuation date was 23rd Oct., 1957, but that claim was confined only to plots Nos. 964 and 346/4 -A since the other two plots had gone out of the HUF of the assessee prior to the valuation date as a result of partition effected on 16th Oct., 1957. The claim for exclusion of the value of these plots was rejected by the WTO, but on appeal it was allowed by the AAC. The revenue thereupon appealed to the Tribunal. The Tribunal took the view that these plots were not agricultural lands within the meaning of S. 2(e)(i) and their value was, therefore, not liable to be included in computing the net wealth of the assessee. This view of the Tribunal is now challenged before us on the present reference on behalf of the assessee.

(2.) THE WT Act imposes a tax on the net wealth of the assessee and "net wealth" is defined in S. 2(m) to mean the amount by which the aggregate value computed in accordance with the provisions of the Act of all the assets, wherever located, belonging to the assessee on the valuation date, including assets required to be included in his net wealth as on that date under the Act, is in excess of the aggregate value of all the debts owed by the assessee on the valuation date barring certain debts specified in the section. The wealth -tax is thus a tax on the capital value of assets held by an assessee. It is, therefore, clear that this legislation has been enacted by Parliament under entry 86 of List I of the Seventh Schedule to the Constitution but, as that entry itself expressly provides, the power of Parliament to make a law imposing tax on the capital value of assets held by an assessee under that entry does not extend to agricultural land and Parliament cannot, therefore, make a law imposing tax on the capital value of agricultural land. Recognizing this inhibition on its legislative competence and with a view to giving effect to it, Parliament while defining "assets" in S. 2(e) of the WT Act excluded, inter alia, agricultural land so that the value of agricultural land held by an assessee would not be includible in the net wealth of the assessee chargeable to tax under the Act. s. 2(e)(i) provides for this exclusion in the following terms : "2(e) 'assets 'include property of every description, movable or immovable, but does not include - (i) agricultural land and growing crops, grass or standing trees on such land . . ." The argument of the assessee was that the four plots in question were agricultural lands within the meaning of S. 2(e)(i) on the relevant valuation dates and were, therefore, exempt from assessment to wealth -tax and the question which, therefore, requires to be considered is what is "agricultural land" within meaning of this provision. Now it is evident from the object and purpose of the exclusion provided in S. 2(e)(i) that the expression "agricultural land" in S. 2(e)(i) must have the same meaning as in entry 86 of List I of the Seventh Schedule to the Constitution. But when we turn to the Constitution, we find that this expression has nowhere been defined in the Constitution. We are, therefore, left with the plain, ordinary meaning of the expression according to English language and we must interpret the expression accordingly bearing in mind the fundamental principle of construction that the expression occurs in a head of legislative power and should, therefore, receive the widest and most liberal meaning.

(3.) NOW considering the expression according to its ordinary natural sense, what is it that distinguishes agricultural land from other land ? One thing is clear that the intention of the owner of the land to put it to any particular use at a given point of time cannot be the determining factor. Whether a land is agricultural land or not cannot depend on the fluctuating or ambulatory intention of the owner of the land. The criterion must be something more definite, something more objective, something related to the nature or character of the land and not varying with the intention of the owner as to the use to which he wants to put the land at a particular point of time. Of course when we say this we must not be understood to mean that the intention as to user is altogether an irrelevant consideration ; it is certainly a factor which would bear on the nature or character of the land but it does not afford a sole or exclusive criterion for determining whether a land is agricultural land or not. Where the land is actually put to use, there is usually not much difficulty in ascertaining the nature or character of the land. 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 building 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 is being actually used at or about the relevant time and that would ordinarily provide a satisfactory answer to the problem. Where, however, as in the present case, the land is not being used for any purpose and is lying idle, the question of determining the true nature or character of the land presents some difficulty. What is the test to be applied in such a case ?