TMI Blog1968 (11) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... ecision rendered by a Bench of the Madras High Court in Sarojini Devi v. Sri Kristna and a decision of another Bench of this court in Smt. Manyam Meenakshamma v. Commissioner of Wealth-tax. The brief facts as found in the statement of the case are as follows : By a notification dated 4th August, 1960, the court of wards of the erstwhile Hyderabad State Government took over the administration of the estate of late Sir Vicar-ul-Umra, and an officer-in-charge was appointed to administer the said Paigah. The Paigah owned various assets, such as buildings, vacant lands, etc., and the total value of the immovable property was determined at Rs. 30,18,569. An amount of Rs. 17,77,973 representing the value of the vacant lands situated at Begumpet, Lallaguda, Jaiaguda, Subzimandi, Yerragedda, Zamboorkhana and Vicarabad, was included in the said total value. The assessee claimed that these lands were agricultural lands and that their value was not includible in the net wealth as they are excluded from the assets under the provisions of section 2(e)(i) of the Act. The main item was the land situated at Begumpet which was valued at Rs. 15,69,052. It was agreed by both parties before the In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al land " in item 86 of List I of the VIIth Schedule of the Constitution is used in its widest amplitude, that agriculture and agricultural land fall within the exclusive field of the legislative power of the State and that the expression " agricultural land " in section 2(e)(i) of the Act similarly should receive the widest construction. He submits that expressions used in the heads of legislation should be given a large and liberal interpretation, as held by their Lordships of the Privy Council in Megh Raj v. Allah Rakhia and by their Lordships of the Supreme Court in Sri Ram Ram Narain v. State of Bombay. If the expression " agricultural land " is given a wide and liberal meaning, the learned counsel contends that the lands which are not actually cultivated, in the sense of having been ploughed or tilled, but which are capable of being cultivated, also fall within the description of " agricultural lands " and they should be excluded from the computation of the net wealth of the assessee. In support of his contention, the learned counsel relies upon two decisions, one of a Bench of the Madras High Court in Sarojini Devi v. Sri Kristna and another of the Calcutta High Court in Ins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been excluded. We are concerned here only with the provisions of section 2(e)(i) of the Act which exclude agricultural land from the said definition. The said provision reads as follows: " 2. (e) ' assets' includes property of every description, movable or immovable, but does not include (i) agricultural land and growing crops, grass or standing trees on such land; ..........." The other portions of the said section, are not relevant for the purpose of this case. Before we consider the interpretation of the words " agricultural land ", it is necessary to decide the question whether the said words occurring in section 2(e)(i) of the Act should be given a liberal and widest meaning as contended for by Sri D. Narasaraju, or it should bear only a restricted meaning as urged by Sri T. Ananta Babu. In deciding this question it is well to remember that the genesis of the power to enact the Wealth-tax Act, which authorises levy of a tax on the capital value of certain assets, is traceable to entry 86 of List I of the VIIth Schedule to the Constitution. The said entry expressly refers to agricultural land and excludes it in the computation of the capital value of the assets. As, under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 9 of the Agricultural Rates Act, 1896, and hence it is not relevant or useful. According to the Chamber's 20th Century Dictionary, the word " agriculture " means, the art or practice of cultivating the land. In Webster's Dictionary, " agriculture " is given the meaning of " the science or art of cultivating the soil, harvesting crops and raising livestock also as " the science or art of production of plants and animals useful to man and in varying degrees the preparation of these products for man's use and their disposal (as by marketing) ". According to the same dictionary, the word " agricultural " means " of relating to or used in agriculture ". But these meanings by themselves do not sufficiently indicate the meaning to be given to the expression " agricultural land ". In our opinion, the adjective " agricultural " is only descriptive of the character of the land. It cannot be ascribed the same meaning as the noun " agriculture " in the context in which it occurs. Words like " agriculture " or " agricultural " are used in different senses and bear different meanings according to the context in which they occur and they cannot be construed as having been used only in the one s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he State List is widened on such a construction, that meaning must equally be given to the expression used in List I from which it is excluded. We cannot accept the contention of Sri Ananta Babu that we must place a narrow interpretation while construing that expression for the purpose of a Central enactment. If this is done, there will be a conflict between the two powers which will have to be resolved in favour of the State on which an exclusive power in respect of that subject has been conferred. It is well to remember in this context that sovereigns have, in exercise of their prerogative, claimed a share of the produce of the lands and fixed that share or its commuted money value from time to time. It is unnecessary to refer to the several systems of land tenures which were prevalent in India. Suffice it to mention that all arable lands are classified according to the nature of the soil and the assessment was fixed according to the quality and extent of the land. Under the ryotwari system, land revenue was fixed on the basis of taram in the Andhra area and bhaganna or anawari principle in the Telangana area of the State of Andhra Pradesh. The principles of classification based ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onstitution 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 2, 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 3. " The next case in which the question directly arose is Sarojini Devi v. Sri Kristma. The question that arose for consideration there was whether a mango grove was agricultural land within the meaning of entry 21 of List II and entry 7 of List III of the VIIth Schedule to the Government of India Act, 1935. There, the widow of a coparcener, who died undivided from his sons, sued for partition and recovery of a share in the family properties, on the basis of the provisions of the Hindu Women's Rights to Property Act, 1937. Though the claim was initially made in respect of all properties, it was conceded that she was not enti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Hindu Women's Rights to Property Act, 1937, does not operate to regulate succession. " This pronouncement is a clear authority for the proposition that not only the actual user of the land but also its capacity for being used for agricultural purposes should be taken into consideration for determining whether a particular land falls within the expression " agricultural lands ". In Insane Nil Govinda Misra v. Rukmini Deby, a Bench of the Calcutta High Court, consisting of Mitter and Sharpe JJ., expressed the same view in the following words: " Where, however, a piece of land is not being actually used but is lying waste, its general nature and character must be the determining factor. Surroundings and situation would have an important bearing in such cases. A piece of fallow land in the middle of agricultural fields would have to be taken as agricultural land, for it is capable of being brought under tillage and would in all probability be brought under tillage and not used for building a residential house, if in future it is to be put to beneficial use. We would further bold that the general or wider and not the narrower meaning of the term ' agriculture ' should be adop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns ' and it is pertinent therefore to enquire what is the connotation of the term ' agriculture '. As we have noted above, the primary sense in which the term ' agriculture ' is understood is agar-field and cultra-cultivation, i.e., the cultivation of the field, and if the term is understood only in that sense agriculture would be restricted only to cultivation of the land in the strict sense of the term meaning thereby, tilling of the land, sowing of the seeds, planting and similar operations on the land. They would be the basic operations and would require the expenditure of human skill and labour upon the land itself. There are however other operations which have got to be resorted to by the agriculturist and which are absolutely necessary for the purpose of effectively raising the produce from the land ... We are of opinion that the mere performance of these subsequent operations on the products of the land, where such products have not been raised on the land by the performance of the basic operations which we have described above would not be enough to characterise them as agricultural operations. In order to invest them with the character of agricultural operations, these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he subsequent operations do not acquire the characteristic of agricultural operations." But these observations were made only for the purpose of determining the main question whether the income derived from forest growth could be said to be " agricultural income " and the question as to what constitutes " agricultural land " did not arise for consideration, and the scope and meaning of the expression " agricultural land " was therefore not considered in the said decision. The decisions, Megh Raj v. Allah Rakhia and Sarojini Devi v. Sri Kristna , were cited before their Lordships of the Supreme Court as authority for the proposition that the expression " agricultural land " in entry 21 of List II of VII th Schedule to the Government of India Act, 1935, should be interpreted in its wider sense as including lands which are used or are capable of being used for agriculture. His Lordship, Bhagwati J., while recognising the force of the opinions expresed therein, observed at page 476, that the expressions of opinion in the said cases were not relevant for the purpose of determining the meaning of " agricultural income " which is expressly defined in article 366 (1) of the Constitution. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is to be considered independently of its connection with agriculture, would give little content to the adjective ' agricultural ' in the expression ' agricultural land '. If the capacity for being used for agriculture is a criterion, as observed by Bhagwati J. in Rasiklal Chimanlal Nagri v. Commissioner of Wealth-tax, even building sites lying idle would be agricultural lands ' since it would always be possible to say of them that they are capable of being used for agricultural purposes '. We are inclined to agree with the observation of Hegde and Ahmed Ali Khan JJ. in Sri Krishna Rao L. Balekai v. Third Wealth-tax Officer that the present characteristics and not the potentialities of a land are the proper criterion. If a land is ordinarily used for purposes of agriculture or for purposes subservient to or allied to agriculture, it would be agricultural land. If it is not so used, it would not be agricultural land. The question how a land is ordinarily used would be one of fact depending on the evidence in each case. If, for instance, an agricultural land, as we have interpreted above, is left fallow in a particular year owing to adverse seasonal conditions or to some other spe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 years, could be said to be agricultural land. In the said case there was a clear finding that the land was actually converted into an air field and that in no sense it could be termed as an "agricultural land ". There, there was a change in the physical character of the land itself and it was actually being put to use for non-agricultural purpose. Their Lordships were not concerned with vacant lands which are capable of being put to use for agriculture. Sri T. Ananta Babu next relies upon a ruling of the Gujarat High Court in Rasiklal Chimanlal Nagri v. Commissioner of Wealth-tax. J. M. Shelat C.J. and P. N. Bhagwati J., as they then were, were considering whether certain plots of land situate in the city of Ahmedabad were agricultural lands within the meaning of section 2(e)(i) of the Act. In dealing with the said question their Lordships made the following observations at pages 615 and 616 : " Whether a particular land is agricultural land or not, must depend on the general nature or character of the land, and various factors would have to be taken into account. The development and use of the lands in the adjoining area and the surroundings and situation of the land would b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive factor in deciding whether the land is agricultural land or not." We may, however, point out that the ultimate decision of the said case was arrived at on a consideration of several factors, and the decision did not merely rest upon the sole fact that the lands were not put to actual agricultural use. This is clear from this observations at page 619 of the said report : " It is, therefore, clear that the true test to be applied for the purpose of determining whether a particular land is agricultural land or not, in a case where the land is not being actually put to any use, is not whether the land is capable of being used for agricultural purpose but whether having regard to the various factors to which we have referred earlier, the general nature or character of the land is such that it can be regarded as agricultural land." The fact that the lands were situated in a wholly residential area with numerous residential buildings around the plots and that they were situated in an area in respect of which a town planning scheme was enforced since about 1945 and that they had ceased to be cultivated are the main factors which were considered by the Bench, as determining the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... set which is claimed to be exempted by the assessee as ' agricultural land ' is essentially connected with or an integral part of the primary or basic agricultural operations. To say that any asset which is useful or beneficial to the agricultural operation should be treated as agricultural land or to conclude that any land which is capable of being used as an agricultural land would be too wide an extension of the term ' agricultural land ' not warranted by the scope and language of the Wealth-tax Act. In all cases where land not under agricultural operation is claimed as agricultural land within the meaning of section 2(e)(i), there should be a clear finding that the land in question is vitally connected with the basic agricultural operations." It is relevant to note that in this case also, the Bench was dealing with land on which forest had grown spontaneously and which was not in its then state capable of being used for agricultural purposes without taking further effective steps to put the land in a cultivable condition. It is this fact that appears to have considerably weighed with the learned judges in coming to the conclusion that the said land was not "agricultural land ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te revenue law, it is a strong piece of evidence of its character as agricultural land; (6) mere enclosure of the land does not by itself render it a nonagricultural land; (7) the character of the land is not determined by the nature of the products raised, so long as the land is used or can be used for raising valuable plants or crops or trees or for any other purpose of husbandry; (8) the situation of the land in a village or in an urban area is not by itself determinative of its character. Applying the aforesaid principles, the next question for determination is what is the character of the land which is the subject-matter of this reference. The land is of a large extent of 108 acres and abuts Hussainsagar tank and has two wells in the land itself. These indicate that the land possesses all the characteristics of agricultural land and that it is capable of being put to agriculture. It is also not disputed that the land is vacant and has not been actually put to any purpose other than agriculture and that the physical character of the land is not such as to render it unfit for immediate cultivation. The other relevant fact is that the land has been admittedly assessed to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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