1. The Income-tax Appellate Tribunal (Delhi Bench ' B ') has referred the following question of law to this court for opinion along with the statement of the case:
' Whether, on the facts and in the circumstances of the case, the land bearing present Khasra No. 598 (old Khasra No. 434), measuring 25 kanals and 16 marlas, and the land bearing present Khasra Nos. 1058 and 1059 (old Khasra Nos. 1242 and 1243), measuring 24 kanals and 16 marlas, belonging to the applicant are ' agricultural lands ' within the meaning of Section 2(e)(i) of the Wealth-tax Act, 1957 '
2. This reference relates to assessment years 1962-63 and 1963-64, the relevant valuation dates being March 31, 1962, and March 31, 1963.
3. The facts giving rise to this reference are that for the assessment years 1962-63 and 1963-64 the two plots of land mentioned in the question were included in the wealth of the petitioner and their valuation was determined as rupees one lakh by the Wealth-tax Officer, ' A ' Ward, Amritsar. The assessee had declared the value of this land as Rs. 9,450. In the appeal, the learned Appellate Assistant Commissioner of Wealth-tax reduced the value of the land on the two valuation dates to Rs. 62,250 and Rs. 82,000, respectively. The assessee filed a further appeal to the Income-tax Appellate Tribunal which reduced the value of the land to Rs 30,000, on both the valuation dates. The contention of the assessee throughout was that the laid was agricultural land and, therefore, could not be included in his wealth for the assessment of wealth-tax. This contention of the assessee was not accepted by any departmental authority, with the result that the present reference has been made to this court.
4. The learned counsel for the assessee has submitted that the land in question was and is agricultural land, assessed to land revenue and is being irrigated by canal water from Jethuwal distributory, which irrigates the agricultural lands situate to the east and north of the assessee's land. The land is, thus, claimed to be agricultural arid nehri. It was requisitioned by the Punjab Government in 1946 for the police department and is still in its possession. The compensation which is being paid by the Punjab Government to the assessee is Rs. 78-12-0 per mouth, that is, Rs. 945 per year. It is not disputed that the land was agricultural land till 1946 when the Punjab Government requisitioned it. What is stated on behalf of the revenue is that the land is not being used as agricultural land but as a parade ground by the police authorities so that the nature of the land has to be determined in accordance with its use being made on the date of valuation. It is not denied that grass grows on the land and it is still being irrigated by the Jethuwal distributory. The land is assessed to land revenue, and abiana is also paid for the use of canal water. The assessee thus claims that the land continues to retain its agricultural character which it bore in 1946 before it was requisitioned by the Punjab Government. It is submitted that the compulsory requisition of the land and putting it to any use by the Government does not change the nature and character of the land' which continues to be agricultural. On behalf of the revenue, it is vehemently argued that the land has been included in a town planning scheme and is situated within the municipal limits of Amritsar and cannot be said to be agricultural land any more. All these facts are admitted and on these facts we are to decide whether the land is agricultural land which cannot be included in the wealth of the assessee. The learned counsel for the assessee has referred to certain decided cases in support of his submissions, the first one being Megh Raj v. Allah Rakhia, [1942] F.C.R. 53.64; A.I.R. 1942 F.C. 27, 32; [1942] F.L.J. 33, 45. The following observation occurs:
' In this state of the authorities, it seems to us best to refrain from deciding the precise scope of the expression ' agricultural land ' or the propriety of excluding ' land on which a grove has been planted', from the category of agricultural land. It may on a proper occasion be necessary to consider whether for the purposes of the relevant entries in Lists II and III of the Constitution Act, it will not be right to take into account the general character of the land (as agricultural land) and not the use to which it may be put at a particular point of time. It is difficult to impute to Parliament the intention that a piece of land should, so long as it is used to produce certain things, be governed by and descend according to laws framed under List II, but that when the same parcel of land is used to produce something else (as often happens in this country), it should be governed by and descend according to laws framed under List III. '
5. On the basis of these observations, it is emphasised that it is the general character of the land that has to be considered and not the use to which it may be put at a particular point of time. A similar question came up for decision before a Division Bench of the Madras High Court in T. Sarojini Devi v. Sri Kristna, A.I.R. 1944 Mad. 401, 402 wherein the exact point for determination was whether a mango-grove was agricultural land within the meaning of entry No. 21 of List II and entry No. 7 of List. III of Schedule 7 to the Government of India Act, 1935. Patanjali Sastri J., speaking for the court, held that the mango-grove was an agricultural land and in support of that opinion observed as under:
'.... it seems to us that the expression ' agricultural land' must receive the widest meaning for it would be somewhat grotesque to suppose that Parliament intended that lands devoted to the production of one kind of crop should devolve according to laws passed by provincial legislatures, while those used for growing another kind should pass according to laws made by the Central Legislature, or that 'the circumstances in which the cultivation is carried on ' (per Reilly J. in 54 Mad. 900 Satchidananda Chandrasekara Bharati Swamigal v. Duraiswami Naidu A.I.R.1931 Mad. 659) should determine the law which governs the devolution of the land. Nor could it have been intended that succession to such lands should depend on the degree of tillage or preparation of the soil or of the skill and labour expended in rearing and maintaining the plants. We are of opinion that for the purposes of the relevant entries in Lists II and III of Schedule 7, the expression ' agricultural lands ' must be taken to include lands which are used or are capable of being used for raising any valuable plants or trees or for any other purpose of husbandry. It follows that the mango-grove in question is agricultural land in respect of which the Hindu Women's Rights to Property Act, 1937, does not operate to regulate succession. '
6. Their Lordships of the Supreme Court considered the meaning of ' agricultural income ', ' agricultural' and ' agricultural purposes ' in Commissioner of Income-tax v. Raja Benoy Kumar Sahas Roy, [1957] 32 I.T.R. 466; [1958] S.C.R. 101(S.C.) but no help can be derived from that decision because it is not directly in point. A Division Bench of the Gujarat High Court considered this matter in Rasiklal Chimanlal Nagri v. Commissioner of Wealth-tax, [1965] 56 I.T.R. 608, 614 (Guj.). The facts found in that case were that lands were :
(i) situated within the municipal limits ;
(ii) were brought under the town planning scheme 12 years prior to the assessment order ;
(iii) the area in which these plots were situate was a residential area;
(iv) there were numerous residential houses around the lands;
(v) the lands were cultivated by the assessee till 1934 whereafter they were lying fallow, that is, for about 22 years before the assessment proceedings were started:
(vi) another adjacent land was purchased by the assessee jointly with M in 1951 for a comparatively high valuation; and
(vii) that adjacent land was not put to agricultural use.
7. On these facts it was held that the lands were not agricultural lands within the meaning of Section 2(e)(i) of the Wealth-tax Act, 1957. P. N. Bhagwati J. (as the learned Chief Justice then was) delivering the judgment of the court observed as under :.
' Now, considering the expression according to its ordinary natural sense, what is it that distinguishes agricultural land from other land One thing is clear that the intention of the owner of the land to put it to any particular use at a given point of time cannot be the determining factor. Whether a land is agricultural land or not cannot depend on the fluctuating or ambulatory intention of the owner of the land. The criterion must be something more defined, something more objective, something related to the nature or character of the land and not varying with the intention of the owner as to the use to which he wants to put the land at a particular point of time. Of course when we say this, we must not be understood to mean that the intention as to user is altogether an irrelevant consideration; it is certainly a factor which would bear on the nature or character of the land but it does not afford a sole or exclusive criterion for determining whether a land is agricultural land or not. Where the land is actually put to use, there is usually not much difficulty in ascertaining the nature or character of the land. If the land is used for agricultural purposes, ordinarily it would be correct to say that the land is agricultural land and vice versa. But even this test may not always furnish a correct answer, for there may be cases where land admittedly non-agricultural (such as a building site) may be used temporarily for agricultural purposes. In such cases it would not be correct to say that merely because the land is in fact being used for agricultural purposes, it is agricultural land. But, as a general proposition, it may be stated without any fear of contradiction that ordinarily the actual user to which the land is being put would furnish prima facie evidence of the true nature or character of the land and, therefore, whenever a question arises whether a particular land is agricultural land or not, primarily regard must be had to the purpose for which the land is being actually used at or about the relevant time and that would ordinarily provide a satisfactory answer to the problem. '
8. A Division Bench of the Patna High Court in Syed Rafiqur Rahman v.Commissioner of Wealth-tax, [1970] 751.T.R. 318 (Pat.) held a piece of land measuring 1 bigha 9kathas 17 dhurs belonging to the assessee as non-agricultural on the groundthat there was no evidence of the land having been actually cultivated atthe relevant date and that basic operations and subsequent operation aslaid down in the Supreme Court decision in Raja Benoy Kumar Sahas Roy'scase, were not being carried on at the relevant point of time. The mere fact that there were some banana trees and some other trees on the land did not make it agricultural. The land was situated in the heart of the city and surrounded by residential buildings. Another fact taken into consideration was that if the land had been agricultural land, it would not have fetched such an enormous price on its sale. This judgment only refers to the judgments referred to above and there is no discussion by the learned judges themselves. The matter was, however, considered at great length by a Division Bench of this court in Commissioner of Wealth-tax v. Smt. Sheela Devi, [1970] 77 I.T.R. 693, 703 (Punj.) In that case the assessee owned two plots of land on either side of the central plot which originally belonged to her but had been sold by her earlier to the Government for establishment of the Government postal colony. The land was originally agricultural land which had been brought within municipal limits of Ludhiana and a part of which was sold to the Government for establishing a postal colony. With regard to the two plots of land negotiations were going on with the income-tax department for their purchase for building residential accommodation for officers of the income-tax department. The learned judges reviewed the various judgments and observed as under :
' After careful consideration of the matter, we are inclined to think that, though it is neither proper nor safe to lay down any hard and fast rule in this respect, the tests laid down by their Lordships of the Federal Court in Megh Raj v. Allah Rakhia, and by the Madras High Court in T. Sarojini Devi v. Sri Kristna, both of which have been impliedly approved for purposes of defining agricultural land in the course of the judgment of their Lordships of the Supreme Court in Commissioner of Income-tax v. Raja Benoy Kumar Sahas Roy, still hold the field and are correct tests. In the case of Megh Raj, the Federal Court was considering the meaning of the expression 'agricultural land' in entry No. 21 of List II of the Seventh Schedule to the Government of India Act, 1935. After referring to the narrower as well as the wider sense in which the expression ' agricultural land' had been interpreted in various different contexts, their Lordships of the Federal Court observed that no reason had been suggested by the appellant why ' agricultural land' mentioned in entry No. 21 of List II of the Seventh Schedule should be limited to what had been described in the case as the narrower meaning of the expression. In T. Sarojini Devi's case the Madras High Court expressly laid down that the expression 'agricultural land' in entry No. 21 of List II and entry No. 7 of List III of the Seventh Schedule to the Government of India Act, 1935, 'must be taken to include lands which are used or are capable of being used for raising any valuable plants or trees or for any other purposes of husbandry '. The tests laid down by the Andhra Pradesh High Court in the case of Ojficer-in-charge (Court of Wards) v. Commissioner of Wealth-tax, [1969] 72 I.T.R. 552 (A.P.) [F.B.] are also helpful subject to the overall consideration which weighed with the Madras High Court in T. Sarojini Devi's case though, as already stated, the question whether a particular piece of land is or is not ' agricultural land ' within the meaning of Section 2(e)(i) of the Wealth-tax Act is necessarily a question of fact to be decided in the circumstances of a given case depending on the nature and character of the land, its environment, the use to which it has been previously put or is capable of being put, sometimes possibly the intention of the owner, its assessment or non-assessment to the land revenue, its situation within a municipal or a town planning area, its potential value, and various other relevant factors.
In the instant case, the Income-tax Appellate Tribunal had, in our opinion, no option but to hold, on the findings of fact recorded by it, that the disputed lands of the assessee were ' agricultural lands' within the meaning of Section 2(e)(i) of the Act, as both the pieces of land not only satisfied the test laid down by the Madras High Court in T, Sarojini Devi's case which was approved by the Supreme Court in Raja Benoy Kumar Sahas Roy's case but also satisfied most of the tests laid down by the Andhra Pradesh High Court in the case of Officer-in-charge (Court of Wards).'
9. The learned counsel for the revenue has greatly relied on a Division Bench judgment of the Mysore High Court in Sri Krishna Rao L. Balekai v. Third Wealth-tax Officer, City Circle I, Bangalore, [1963] 48 I.T.R. 472 (Mys.) on the ground that that was also a case of requisition of agricultural land by the Government. In that case the land was requisitioned some time in 1944 or 1945 for the purpose of locating a military aerodrome. The land had been levelled, an air strip had been constructed thereon and for over 15 years the land was being used as an air strip. On those facts, it was held that the land was not ' agricultural land' within the meaning of that expression found either in the Constitution or in the Wealth-tax Act and it was not exempt from the Wealth-tax Act. The fact that at some future time the Government may de-requisition the land and thereafter the owner of the land may take steps to reconvert it into agricultural land was not a relevant consideration. One of the factors taken into consideration by the learned judges was that in order to convert that land again into agricultural land, it will require a considerable expense in labour and money. In our opinion that case does not serve as a guide for the decision of the case before us. It is a well-established principle of tax laws that no case can be decided on the pattern of another case if the facts are not completely identical. Even a slight difference in the facts may lead to a different decision. In the instant case the land has not been put to any use which can be said to detract from its nature as an agricultural land. According to khasra girdawari prepared by the irrigation department with regard to Jethuwal distributory of Upper Bari Doab Canal for kharif 1963 the commodity grown therein is described as ghas giarwan (grass No. 11). This phrase has a technical meaning as far as the irrigation department is concerned. In the schedule of occupiers' rates in force in canals in the Punjab prepared by the irrigation department class XI relates to the crops of jawar, cheena, grass which has received two or more waterings and all fodder crops including turnips. The rate has been stated as per acre and with regard to grass it is mentioned per half year while with regard to the rest the rate is per crop. It is, thus, clear that while allowing irrigation facilities for grass under class XI the irrigation department considers the grass grown on the land as a crop on which the occupier's rate is assessed per half year. Constant water supply is provided for the growing of grass. We can also not lose sight of the fact that grass is mowed at regular intervals which means that the crop of grass is regularly attended to in order to maintain it in the proper form. Pasture lands on which nothing but grass is grown in the villages are always considered to be agricultural lands and the land in question cannot be of a different kind to the pasture land. It is no doubt true that on the dates of valuation for both the assessment years the land was being used by the police department as a parade ground but that did not affect the kind of the land and it continued to be agricultural land as it was in 1946 when it was requisitioned. The purpose or the use to which the land has been put is neither residential nor commercial. It is lying in the same condition in which it was requisitioned except that for regular crops of foodgrains or fodder, grass is grown which can also be used as a fodder for the cattle. If the Government were to de-requisition the land at any time, it can at once be put to Agricultural use, that is, the same use to which it was being put before its requisition in 1946 without any appreciable expenditure in labour or money. It will require ploughing, tilling and manuring in the ordinary way and, therefore, one of the factors taken into consideration by the learned judges of the Mysore High Court is completely lacking in the instant case. Moreover, under Section 6 of the Punjab Requisitioning and Acquisition of Immovable Property Act, 1962 (hereinafter called 'the Act'), whenever the land is to be released from requisition, it has to be restored to the owner in as good a condition as it was in when possession thereof was taken subject only to the changes caused by reasonable wear and tear and irresistible force, so that if any expenses are to be incurred in restoring the land to the condition in which it was when requisitioned, the expenses will have to be incurred by the Punjab Government and not by the owner of the land. So, merely on the ground that the land has been requisitioned since 1944 or 1945 and has been used as a police parade ground for about 18/19 years prior to the dates of valuation as also on the dates of valuation cannot lead to the conclusion that the land has ceased to be agricultural land.
10. The second factor considered by the Income-tax Appellate Tribunal was that the land had been included in a town improvement scheme. In our opinion, this fact alone does not change the nature or the kind of the land. The land will continue to be agricultural land till its possession is actually acquired by the improvement trust. The owner is not in any way prohibited from continuing to use the agricultural land as such even if it is included in a town improvement scheme. It may change its character when the town improvement trust acquires it and puts it to some other use.
11. The third factor taken into consideration by the Income-tax Appellate Tribunal is that the land is situate within the municipal limits of Amritsar. That fact also does not lead to the conclusion that every land situate in the town of Amritsar cannot be agricultural land. In urban areas and within the municipal limits agricultural land can exist. It is further to be proved that it is incapable of being used as an agricultural land in the sense that all around it buildings have sprung up and the area is so small that keeping it as agricultural land will not be in any way remunerative. In the instant case it has been proved that the lands in the east and north of the land in dispute are still agricultural lands and are being irrigated from the same distributory so that the land in dispute is surrounded by agricultural lands.
12. The learned Appellate Tribunal also referred to the compensation that is being paid by the Government to the assessee for the use of the land at the rate of Rs. 78-12-0 per month, that is, Rs, 945 per annum. Out of that compensation the assessee pays land revenue amounting to Rs. 618 and thus he is left with Rs. 328 per annum. The learned Appellate Tribunal, on this aspect of the case, expressed the opinion that the compensation paid by the Government was too meagre but it did not lead to the conclusion that the land was still agricultural. We have to see the kind of the land on the date on which it was requisitioned because, in our opinion, the Government after requisition cannot change the kind or the nature of the land in view of the obligation cast upon it by Section 6 of the Act to restore it in as good a condition as it was in when possession thereof was taken. This provision clearly implies that the Government after requisition cannot make such alterations as will make it well nigh impossible to restore it to the condition in which it was taken possession of at the time of requisition.
13. For the reasons given above, we hold that, on the facts found by the Tribunal, the land was agricultural land on the dates of valuation for both the assessment years and is exempt from being included in the assessable wealth of the assessee under Section 2(e)(i) of the Wealth-tax Act. Accordingly, our answer to the question referred to us is in the affirmative, that is, in favour of the assessee and against the department. The assessee will be entitled to his costs which we assess at Rs. 200.