COMMISSIONER OF INCOME TAX Vs. DESAI S N

JUDGEMENT

(1.) THE only question of law referred to this Court at the instance of the Department is :

(2.) THE assessment years involved in this reference are 1963 64, 1965 66 and 1966 67, for which relevant previous years ended on 1st March, 1963, 31st March, 1965 and 31st March, 1966 respectively. The assessee had extensive lands in the villages of Pahadi, Oshivara, Dindoshi, Goregaon, etc., within the area of Greater Bombay. For the asst. yrs. 1957 58 to 1959 60, the value of these lands was not assessed to wealth tax on the ground that these were agricultural lands to which WT Act was not applicable. For the next two assessment years, i.e., 1960 61 and 1961 62, the WTO took the view that circumstances had changed and the lands in dispute had ceased to be agricultural lands as (i) the assessee had entered into several agreements for sale of these lands with different parties; (ii) as except the area of land admeasuring about 1 acre 33 1/2 gunthas the remaining lands were not used for agricultural purposes during the previous years relevant for the asst. yrs. 1960 61 and 1961 62, and (iii) as the remaining lands were likely to be used for the construction of the industrial units by the purchasers. The said wealth tax assessments were divided into two groups. The first group related to the lands for which agreements for sale had been entered into by the assessee with three different concerns i.e. Ciba of India. New Standard Engineering Co. Ltd. and Nanubhai Industries, and which lands were ultimately purchased by the said concerns. The second related to the lands which were lying fallow. The WTO held that except for an area admeasuring 1 acre and 33 1/2 gunthas, which was used for agricultural purposes, all other lands had ceased to be agricultural lands and were liable to be charged to wealth tax. The wealth tax assessments ultimately reached the stage of the Tribunal who after elaborately considering the facts and case law cited before it, came to the conclusion that the lands to be sold to the aforesaid three concerns were agricultural lands and the value thereof could not, therefore, be included in the assessment of the assessee as they continued to be agricultural lands. As regards the fallow land also the Tribunal further held that the character of this land had ceased to be that of an agricultural land and its value was calculated for the purpose of wealth tax. The matter was taken to this Court and by its judgment, dt. 25th July. 1975 in CWT vs. Sitaram N. Desai 1976 CTR (Bom) 274 : (1977) 109 ITR 13 (Bom), this Court took the view that the decision of the Tribunal involved findings of fact only and, therefore, the decision required to be upheld, being not perverse.

(3.) THE AAC as well as the Tribunal accepted the assessee's claim that the lands were agricultural lands and that therefore the surplus arising on their sale, if any, was not liable to tax. The Tribunal, however, did not accept the assessee's alternative contention that the fair market value of the lands was higher on 1st Jan., 1954 than the sale price. In fact, a question sought to be raised on behalf of the assessee as regards the estimate of fair market value of the lands as on 1st Jan., 1954 as a question of law was rejected by the Tribunal holding that the question involved a finding of fact.