Smt. Chandravati Atmaram Patel vs Commissioner of Wealth Tax

Shah, J.—On being moved u/s 27 of the Wealth-tax Act, 1957 (''the Act'') the Tribunal has referred the following question for our determination:

"Whether, on the facts and in the circumstances of the case, the 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 relevant facts herein:

(i) The assessee is an individual and the relevant assessment years are 1967-68 and 1968-69. The WTO completed the assessment and included in the wealth of the assessee value of two parcels of lands bearing S. Nos. 51/1/1/1 and 51/1/2/2/2. The contention of the assessee that the said parcels of lands were agricultural lands and were, therefore, not liable to be included in the wealth of the assessee was negatived by the WTO on his finding that the said parcels of lands were non-agricultural lands.

(ii) The assessee preferred appeal to the AAC who allowed the appeal holding that the aforesaid two parcels of lands were agricultural lands.

(iii) Being aggrieved by the said order, the revenue preferred appeal to the Tribunal and the Tribunal by following its earlier decision in the income tax case of the very assessee in IT Appeal No. 1477 (Ahd.) of 1972-73 held that the lands in question were non-agricultural lands and reversed the order of the AAC.

(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 Tribunal has based its decision mainly on its earlier order in IT Appeal No. 1477 (Ahd.) of 1972-73. The said order of the Tribunal was subject to reference to this Court and the following question was referred to this Court for its decision in IT Ref. No. 51 of 1975:

"Whether, on the facts and in the circumstances of the case, the land in question is an 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 situation prevailing before it two courses were open to it, i.e., (i) to call for the supplementary statement of the case from the Tribunal or (ii) to decline to answer the question raised by the Tribunal and to leave the Tribunal to take 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:

"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, has not considered the question whether the land under consideration was agricultural land or not from the proper perspective and the proper angle and has not applied 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 appropriate provisions 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 observations made by us in this decision after approaching the question from the correct angle as explained by us [Vide COMMISSIONER OF Income Tax, WEST BENGAL I Vs. INDIAN MOLASSES CO. P. LTD., . There will be no order as to costs of this reference." (p. 315)

It, therefore, becomes clear that the decision of the Tribunal in IT Appeal No. 1477 of 1972-73 no longer holds the field and because of the decision rendered in the case of Smt. Chandravati Atmaram Patel (supra) this Court has left the matter to the Tribunal for decision u/s 260(1). Therefore, the decision on which the judgment of the Tribunal is based in the case before us, i.e., decision dated 24-1-1977 cannot stand and we shall have to issue same directions which were issued by the Division Bench of this Court in the case of Smt. Chandravati Atmaram Patel (supra). 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 proper perspective, from proper angle and has not applied correct law to this point and its whole approach was erroneous in the light of 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 to the Tribunal to dispose of the appeal u/s 27(1) in the light of observations made by the Division Bench in the case of Smt. Chandravati Atmaram Patel (supra) after approaching the question from the correct angle as explained by the Division Bench in the said judgment. There shall be no costs.