COMMISSIONER OF WEALTH TAX Vs. NATHMAL JALAN

JUDGEMENT

(1.) THE assessee purchased 0.19 acre land corresponding to 6 kathas according to local measurement units some time in 1970. THE land contained 12 mango trees. He included the value of the said land in the returns of net wealth filed for the assessment years 1970-71 to 1976-77. As, however, the land contained mango trees, he claimed exemption from assessment in terms of Section 5(1)(iva) of the Wealth-tax Act, 1957, on the ground that it was agricultural land. THE Wealth-tax Officer got enquiry made by the Income-tax Inspector and concluded on the basis of his report that the same was not agricultural in nature. He, therefore, declined to exclude the value of the land from the net assets. THE assessee preferred appeal before the Appellate Assistant Commissioner who too did not accept his case. On further appeal to the Income-tax Appellate Tribunal, the learned Members of the Tribunal differed in their views. THE Vice President of the Tribunal on reference agreed with the views of the Accountant Member to the effect that the land in question was agricultural in nature and, therefore, liable for exemption under Section 5(1)(iva) of the Act.

(2.) IN the above backdrop the following questions of law at the instance of the Revenue have been referred to this court for its opinion :

(3.) IN Raja Mustafa Ali Khan v. CIT [1948] 16 ITR 530, the Privy Council observed that although it may always be difficult to draw a line of demarcation between agricultural and non-agricultural land, yet unless there is some measure of cultivation on the land, some expenditure of skill and labour upon it, it cannot be said to be used for agricultural purposes within the meaning of the Act. It also held that income from the sale of forest trees growing on land naturally or without the intervention of human agency, even if the land is assessed to land revenue, is not agricultural income within the meaning of Section 2(1)(a) of the INcome-tax Act. According to the Privy Council, unless there is some evidence of some measure of on-going cultivation on the land it cannot be said to be agricultural land.