1. These appeals by the revenue arise out of the consolidated order dated 18th November, 1992 passed by the Deputy Commissioner of Wealth-tax (Appeals), Bhopal, pertaining to the Assessment years 1981-82 to 1986-87.
On the facts and in the circumstances of the case, the learned DCIT(A) erred in holding that the land was agricultural land even when the claim could not be substantiated by the assessee as D. V. O. has specifically mentioned that it is not agriculture land.
3. The assessee had purchased agricultural land admeasuring 6. 17 acres from Shri Vinodchandra Dwarkadas Shah on 9-9-1977 for a sum of Rs. 45, 000. The assessee not intended to develop a residential colony for which a lay out plan was approved by the Regional Officer, Town & Country Planning, Indore, on 13-2-1979. The diversion of the land was done by the authorised Revenue Department authorities on an express condition that the land so diverted should not be used for any purpose other than the development of a colony. The assessee had sold a plot admeasuring 4800 sq. ft. for a sum of Rs. 21, 000 on 23-10-1982.
Besides, the assessee himself constructed a house on some part of the land. However, during the course of assessment proceedings it was contended that although the assessee got the land diverted from the revenue authorities, he still continued agricultural operations on it.
In support of the above contention, an affidavit sworn by the assessee was also filed. Copies of land revenue record were also filed. The contention of the assessee was not acceptable to the Assessing Officer.
He negatived the assessee's claim that the land owned by the assessee was agricultural land with the following observations- Although entries in revenue records are good prima facie evidence to show that the land was used for agricultural purposes, the same should be supported by evidence such as payment received from parties for commddities sold and such other evidences connecting agricultural operations like evidence for purchase of manure, pesticides, etc. As already stated above there was a clear intention of the assessee to use the land for commercial purposes i.e. after cutting it into small pieces and sale thereof on higher price so as to fetch him profit. The subsequent act of the assessee of sale of one piece of land as stated above strengthen his intention. Unless the assessee come forward with specific evidence that the land was tilled, harvested, even after its diversion, the contention and evidence brought on record cannot be accepted. The circumstances which must necessarily be taken into account in this case is the nature of land after the diversion to non-agricultural in revenue records. As stated above, cutting of land, his subsequent act of sale of one piece of land, absence of evidence regarding agricultural operation all goes against the assessee. I, therefore, hold that for assessment year 1981-82 onwards, the land was not used for agricultural purposes.
4. Before the DCWT(A) it was contended that the assessee had purchased agricultural land in the year 1977 for Rs, 45, 000 whose land revenue was Rs. 20.12 per annum. In support thereof, photocopy of the purchase deed dated 9-9-1977 was submitted when it was mentioned that there was standing crop in some of the area of the agricultural land and that there was one Pakka well and electric motor pump of 7.50 HP was fitted therein. It was argued that even after getting the lay out approved for developing residential colony and even after getting the approval for the diversion of the agricultural land for residential purposes, the land was actually use by the assessee for agricultural purposes and the assessee had declared agricultural income right from the assessment year 1978-79. It was also submitted that copies of Khasra Panchsala issued by the office of the Tehsildar, Burhanpur, for the assessment years 1978-79 to 1981-82 and copies of Khasra Panchsala issued by the Revenue Inspector, Burhanpur, for the assessment years 1983-84 to 1985-86 had been filed before the Assessing Officer. These clearly mentioned that the assessee had grown crops of cotton, wheat, corn flower and vegetables, etc. It was vehemently argued that the Assessing Officer had rejected the above evidence without any valid reasons as the certificate issued by the revenue authority and Patwari is conclusive and final proof that the land was agricultural land and the said land was put to agricultural operations. It was explained t hat the last five years' record is maintained by the Patwari and the records of earlier years are kept in the record room with the revenue authorities. It was due to this reason that the copy of Khasra Panchsala Nakal obtained in 1986 which was available with the revenue authorities was signed and sealed by the revenue authorities and record of Khasra Panchsala which was available with the Patwari was signed by the Patwari only. It was vehemently argued before the DCWT(A) that, there was no reason to disbelieve the Khasra Panchsala issued by the Patwari. It was also submitted that during the course of assessment, proceedings the Assessing Officer had not asked the assessee to produce purchase vouchers of manure and pesticides, etc. However, photocopies of the purchase bills of manures and pesticides, etc. had been filed before him. It was further contended that once it is established that particular land is used for agricultural purposes, the same has to be taken to be an agricultural land whose value cannot be included in the taxable wealth of the assessee because the agricultural land has been exempted from the definition of "asset. " from the assessment year 1981-82 onwards. Reliance was placed on a number of decisions. It was thus urged that the value of agricultural land be excluded from the taxable wealth of the assessee for all the six assessment years involved. The submissions of the assessee found favour with the DCWT(A). Relying on the ratios of the decisions in the cases of CIT v, MLM, Mahalingam Chettiar [1977] 107 ITR 236 (Mad,); Mambhai Motihhai Patel v. CIT [1981] 131 ITR 120 (Guj.); Smt Chandravati Atmaram Patel v. CIT [1978] 114 ITR 302 (Guj.) and Dr. Motihhai D. Palel v. CIT [1981] 127 ITR 671 (Guj.), the DCWT(A) held thus- If the agricultural operations are carried on a land even though that has been approved for residential colony, the character of the land would be the agricultural land. Besides, in view of the documentary evidence in the shape of khasra panchsala brought on record and the agricultural income shown by the appellant for the assessment years 1978-79 to 1986-87, it becomes obvious that the land in question was actually put to agricultural operations.
Therefore, when the character of the land was agricultural, the Assessing Officer was not justified in including the value of the agricultural land in the taxable wealth of the appellant from 1981-82. onwards because the agricultural land has been excluded from the definition of the asset w. e. f assessment year 1981-82.
Accordingly, the Assessing Officer is directed to exclude the value of the agricultural land from the taxable wealth of the appellant for the assessment years 1981-82 to 1986-87.
Aggrieved by the above directions, the revenue is in appeal before the Appellate Tribunal.
5. Shri M. Y. Kulkarai, the learned DR, strongly defended the order of the Assessing Officer. He highlighted the point that the nature of the agricultural land underwent change as it was diverted for non-agricultural purposes, namely, development of a colony. He further argued that though the assessee had declared agricultural income yet no evidence was forthcoming so as to prove that the land was tilled, harvested even after its diversion. In the absence of evidence in respect of agricultural operations, Shri Kulkarni argued, the Assessing Officer was justified in holding that the land was not agricultural as it was not used for a agricultural purposes. The contentions of the learned D. R. were opposed by Shri R. Tarwala, the learned counsel for the assessee. He supported the order of the DCWT(A). He submitted that the revenue has not disputed that the assessee had purchased 6. 17 acres of agricultural land in the year ] 977. He pointed out that the agricultural operations are being carried out on the said land and the documentary evidence brought on record by the assessee in support of his claim that the land was actually used for agricultural operations cannot be brushed aside. It is submitted that though the permission to divert the land for non-agricultural purposes was obtained as early as 13-2-1979, but it was not acted upon and the assessee continued to use the land for the purposes of growing crops, etc. as is evidenced by the certificates issued by the land revenue authorities. He further argued that necessary evidence in support of the purchase of seeds, fertilizers, pesticides, etc. have also been brought on record. The assessee had sold the agricultural produce in Krishi Upaj Mandi Prangan through licensed commission agents. He further submitted that the assessee declared agricultural income right from the assessment year 1978-79 which has also been brought to tax and in support thereof the filed copies of assessment orders which appear at pages 34-37 of the paper-book. He concluded his arguments by stating that once it is proved that the land has been actually used for agricultural operations, the land has to be classified as agricultural land. In support he referred to the following decisions- 6. We have carefully considered the rival submissions, perused the material available on record as also the case laws cited on behalf of the assessee. It is now well established that the determination of the issue whether or not a particular land is agricultural depends upon the facts and circumstances of each case and that in each case the conclusion will have to be arrived at upon due consideration of all factors available on record. In this connection reference may be made to the observations of their Lordships of the Supreme Court in the case of CWT v. Officer In-charge [1976] 105 ITR 133 at page 143 which reads thus- ...The determination of the character of land, according to the purpose for which it is meant or set apart and can be used, is a matter which ought to be determined on the facts of each particular case.
In the instant case, it is not in dispute that the assessee had pruchased an agricultural land admeasuring 6. 17 acres on 9-9-1977 for a sum of Rs. 45, 000 whose land revenue was Rs. 20. 12 per annum. It is also an admitted position that ever since the assessee purchased the said land, his intention was not to carry on cultivation but to divert the said land for non-agricultural purpose, namely, to develop a residential colony for which a lay out plan was approved by the Regional Officer, Town & Country Planning, Indore, on 13-2-1979. To achieve the said end, the assessee moved the revenue authorities to accord permission to divert the agricultural land for non-agricultural purposes, namely, development of a colony. The revenue authorities accorded permission vide order dated 22-6-1979. Since the said order of the revenue authorities was not on the record, the Bench required the assessee to file a copy thereof. This was done and a copy of the said order was filed on 12-7-1995, A perusal of the said order reveals that the revenue authorities had granted permission for diversion of the agricultural land from agricultural use to non-agricultural use with certain conditions. Important among those are that the assessee shall use the land for the purpose for which the land has been permitted to be converted and that the assessee shall pay 'Lagan' as also 'Parivartan Lagan' as determined. The assessee shall also abide by the orders of the Government issued from time to time. The assessee undertook to abide by the conditions prescribed under the said order dated 22-6-1979 through an Ikrarnama of the same date, a copy of which has also been filed by the assessee. It is thus evident that soon after purchase of the agricultural land, the assessee took steps to convert the land for nonagricultural use and started paying Parivartan Lagan of Rs. 2687. 65 per annum which is evident by the receipts brought on record by the assessee pertaining to each of the assessment years involved. Thereafter, the assessee undertook plotting of the land, as observed by the Assessing Officer, which finding has not been controverted by the assessee at any stage of the proceedings. It appears that after plotting of the land, the assessee sold one plot of land measuring 4800 sq. ft. on 28-10-1982 for a consideration of Rs. 21, 000. It is also an admitted position that on one plot of land of the same size i.e. 4800 sq. ft. the assessee himself constructed a house between the period from June, 1981 to December, 1983. From what has been stated above it becomes crystal clear that the character of the agricultural land had undergone change as early as 22nd June, 1979 and it was no more an agricultural land on the valuation date (s) relevant to the assessment years presently under consideration. The land, in question, stood reclassified in the revenue records as is evident from the conversion lagan levied and realised by the revenue authorities as stated earlier. The main thrust of the arguments of the learned counsel for the assessee is that even after conversion of the agricultural land for non-agricultural purposes, the land had to be treated as agricultural land as it was put to agricultural use and the assessee had shown agricultural income since the assessment year 1978-79 onwards in his income-tax returns. We are not impressed by the above argument. In out opinion, this argument can render on assistance to the assessee in the matter. We observe that the income-tax assessments had been completed by the Assessing Officer under Section 143(1) of the Income-tax Act and the income declared had been accepted.
In those assessments the Assessing Officer had no occasion to inquire into the nature and character of the land. It appears to us that the entire land after its conversion into non-agricultural land could not be sold at once and certain formalities like obtaining necessary licence for development of the colony had not yet been completed and in the meantime the assesssee started some agricultural operations purely by way of a stop-gap arrangement with a view to derive some income from the land. In the given circumstances, were are unable to hold that even after conversion of the agricultural land for non-agricultural purposes, the character of the land was agricultural for the purposes of levy of wealth-tax. In none of the decisions cited on behalf of the assessee it has been held that if agricultural operations are carried on over the residential/non-agricultural land, then such a land will be treated as agricultural land for the purposes of wealth-tax. We, therefore, hold that for the purposes of valuation of the land, in question, under the Wealth-tax Act, the land has to be treated as* non-agricultural. In this view of the matter, the findings of the DCWT(A) that the land owned by the assessee is agricultural land exempt from wealth-tax are not sustained and accordingly reversed. Since the DCWT(A) has not determined the valuation of the land, in question, on the relevant valuation date(s), we consider it appropriate to set aside his impugned order so that he may determine the valuation after affording an opportunity of being heard to the parties and the Departmental Valuation Officer. We direct accordingly.