NALLASENAPATHI SARKARAI MANDRADIAR Vs. COMMISSIONER OF WEALTH TAX

JUDGEMENT

(1.) THE assessee in this case seeks a direction from this court to the Income-tax Appellate Tribunal to refer the following five questions :

(2.) THE assessee in this case is an individual and he was holding extensive agricultural lands. For the assessment year 1971-72, the wealth-tax assessment was completed adopting the market value of the agricultural lands owned by the assessee. Subsequently, the assessee filed a petition under s. 35 if the W.T. Act requesting the WTO for a rectification on the ground that the adoption of the market value in respect of the agricultural lands was a mistake and that in so far as the lands in excess of the ceiling fixed by the Tamil Nadu Land Reforms (Fixation of Ceiling on Land) Act, 1961, are concerned, they have to be valued not on the basis of the market value but on the basis of the compensation which they are likely to get on acquisition under s. 18. This rectification was sought on the basis of the judgment of a single judge of this court in Balakrishnan v. Commr. of Agrl. I.T. , wherein it was held that for the purpose of agricultural income-tax, the lands found to be in excess of the ceiling limit should not be taken into account. But, subsequently, the said decision has been reversed by a Division Bench of this court in Commr. of Agrl. I.T. v. Balakrishnan [1976] 104 ITR 368, wherein the Bench held that so long as s. 18 notification has not been issued, the lands cannot be taken to have been vested with the Government and that, therefore, so long as the acquisition under s. 18 has not taken place, the lands are to be included in the holding of the owner for the purpose of the Agrl. I.T. Act. However, the WTO taking note of the decision in K. S. Balakrishnan v. Commr. Agrl. I.T. , rectified the wealth-tax assessment and substituted the value of compensation fixed at Rs. 71,540 in the place of the market value adopted by him so far as the excess lands were concerned. THE CWT thereafter initiated revisional proceedings under s. 25(2) on the ground that the order made by the WTO under s. 35 is erroneous and it is prejudicial to the interests of the Revenue. THE Commissioner found in the proceedings initiated under s. 25(2) that the WTO has gone into the question of valuation of the agricultural lands on the basis of fresh materials and there is no case for rectification of the original order of the WTO. THE Commissioner also felt that as the compensation amount has not yet been quantified and the quantification also involves a process, the WTO is not justified in adopting a figure as the compensation to be given for the excess lands. So long as there is no acquisition at all by the Government under the provisions of the Tamil Nadu Land Reforms Act, there is no question of the lands being valued on the basis of compensation. THE Commissioner also found that the WTO has himself depreciated the value of the excess lands taking into account the fact that in view of the provisions of the Land Reforms Act, the excess lands may not fetch the same price as the lands which are within the ceiling limit. Aggrieved by the decisions of the Commissioner, the assessee filed an appeal before the Tribunal contending that under s. 18 of the Tamil Nadu Land Reforms Act, the notification was published on June 29, 1979, that, therefore, compensation has become payable for the use of the lands from the date of the commencement of the Act and that even though the divesting of the lands is after the valuation date, the lands cannot be valued at the market value by the WTO on a unilateral basis. THE Tribunal rejected these contentions observing that the rectification order passed by the WTO under s. 35 is not in order as there is no mistake apparent from the record. THE Tribunal also has chosen to rely on the decision of the Supreme Court in T. S. Balaram, ITO v. Volkart Brothers , in support of the conclusion that the rectification order under s. 35 is wrong and erroneous.