Chandravati Atmaram Patel vs Commissioner of Wealth-tax

S.D Shah, J.—On being moved u/s 27 of the Wealth-tax, 1957 (hereafter referred to as ""the said Act""), the Income Tax Appellate Tribunal

has referred the following question for our determination :

Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is justified in holding that the land in question was

non-agricultural land ?

In order to answer the said question, it would be necessary for us to set out the relevant facts herein :

(i) The assessee is an individual and the relevant assessment years are 1967-68 and 1968-69. The Wealth-tax Officer completed the assessment

and included in the wealth of the assessee the value of two pieces of land bearing S. Nos. 51/1/11 and 51/1/2/2/2. The contention of the assessee

that the said percales of land were agricultural lands and were, therefore, not liable to be included in the net wealth of the assessee was negatived

by the Wealth-tax Officer on his finding that the said percales of land were non-agricultural lands.

(ii) The assessee preferred appeals to the Appellate Assistant Commissioners who allowed the appeals holding that the aforesaid two percales of

land were agricultural lands.

(iii) Being aggrieved by the said order, the Revenue preferred appeals to the Tribunal and the Tribunal, by following its earlier decision in the

Income Tax case of this very in Income Tax Appeal No. 1477/Ahd. of 1972-73, held that the land in question were nonagricultural lands reversed

the order of the Appellate Assistant Commissioner.

(iv) From the aforesaid decision of the Tribunal, the assessee has got referred the aforesaid question for our decision.

From the aforesaid facts, it becomes clear that the Income Tax Appellate Tribunal has based its decisions mainly on its earlier order in Income

Tax Appeal No. 1477/Ahd. of 1972-73. The said order of the Tribunal was the subject of reference to this court and the following question was

referred to this court for its decision in Income Tax Reference No. 51 of 1975 (see Chandravati Atmaram Patel Vs. Commissioner of Income Tax,

Gujarat-III, Ahmedabad, :

Whether, on the facts and in the circumstances of the case, the land in question is agricultural land within the meaning of section 2(14)(iii) of the

Income Tax Act, 1961, and, therefore, whether the capital gains arising from the sale thereof is exempt from assessment to Income Tax under the

said Act ?

The Division Bench of this court, in the case of Chandravati Atmaram Patel Vs. Commissioner of Income Tax, Gujarat-III, Ahmedabad, , has

declined to answer the aforesaid question inasmuch as the Division Bench was of the View that various relevant factors which were required to be

taken into consideration for the purpose of deciding the nature of the land were, in fact, not taken into consideration by the Tribunal. Therefore,

following the decision of the Supreme Court, the Division Bench found that, on the facts and in the light of the situation prevailing before it, two

courses were open to it, i.e., (i) to call for a supplementary statement if the case from the Tribunal or (ii) to decline to answer the question raised by

the Tribunal and to leave the Tribunal to take a appropriate steps to adjust its decision u/s 260(1) of the Income Tax Act, 1961. The Division

Bench, therefore, in the aforesaid case passed the following order (at page 315) :

In the circumstances, we think it appropriate to decline to answer the question on the ground that the Tribunal has failed to consider and decide

the question whether the land was agricultural land from the correct angle, that is, it has not considered the question whether the land under

consideration was agricultural land or not from the proper perspective and from the proper angle and has not applicable the correct law to this

point and its whole approach was erroneous in the light of law as explained by this court in Commissioner of Income Tax, Gujarat-III Vs. Manilal

Somnath, and by the Supreme Court in Commissioner of Wealth Tax, Andhra Pradesh Vs. Officer-in-charge (Court of Wards), Paigah, , and the

Tribunal has not considered all the appropriate provision of law applicable to this question. It would be open to the Tribunal to dispose of the

appeal u/s 260, sub-section (1), of the Income Tax Act, 1961, in the light of the observation made by us in this decision after approaching the

question from the correct angle as explained by us COMMISSIONER OF Income Tax, WEST BENGAL I Vs. INDIAN MOLASSES CO. P.

LTD., . There will be no order as to costs of this reference.

It, therefore, becomes clear that the decision of the Income Tax Appellate Tribunal in Income Tax Appeal No. 1477 of 1972-73 no longer

holds the field and because of the decision rendered in the case of Chandravati Atmaram Patel Vs. Commissioner of Income Tax, Gujarat-III,

Ahmedabad, , this court has left the matter to the Income Tax Appellate Tribunal for decision u/s 260(1) of the Income Tax Act. Therefore, the

decision on which the judgment of the Tribunal is based in the case before us, i.e., the decision dated January 24, 1977, cannot stand and we shall

have to the issue same direction which were issued by the Division Bench of this court in the case of Chandravati Atmaram Patel Vs.

Commissioner of Income Tax, Gujarat-III, Ahmedabad, .

We, accordingly, decline to answer the question on the ground that the Tribunal has failed to consider and decide the question whether the land

was agricultural land from the correct angle, i.e., it has not considered the question whether the land in question was agricultural land or not from

the proper perspective and from the proper angle and has no applied the correct law to this point and its whole approach was erroneous in the

light of the law as explained by this court in the case of Commissioner of Income Tax, Gujarat-III Vs. Manilal Somnath, and by the Supreme Court

in the case of Commissioner of Wealth Tax, Andhra Pradesh Vs. Officer-in-charge (Court of Wards), Paigah, . It will be open the Tribunal to

dispose of the appeal u/s 27(1) of the Wealth-tax Act, 1957, in the light of the observations made by the Division Bench in the case of Chandravati

Atmaram Patel Vs. Commissioner of Income Tax, Gujarat-III, Ahmedabad, , after approaching the question from the correct angle as explained

by the Division Bench in the said judgment. There shall be no order as to costs.