TMI Blog1972 (7) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... Collector of Rajkot granted the necessary permission by his order dated 11th November, 1959, subject to certain conditions. The relevant conditions which are required to be noted for the purposes of the present reference were that the land should be used only for the purpose of erection of residential buildings, that such buildings should be constructed only on one-third portion of the land and that one-third portion of the land should be set apart for laying out public roads, etc. The assessee accepted these conditions and the acceptance was recorded in an agreement executed on 13th January, 1960. The plot of land admeasured 1,58,752 sq. yds. and out of that an area of about 53,955 sq. yds. was set apart for laying out roads, parks and other projects of public utility. The remaining portion of the land was then parcelled out into 108 plots. Out of those plots, 48 plots totally admeasuring 45,372 sq. yds. were sold by the assessee in S. Y. 2016 (1960-61), 21 plots totally admeasuring 19,683 sq. yds. were sold by the assessee in S. Y. 2017 (1961-62), 1,757 sq. yds. of land was sold by the assessee in S.Y. 2019 (1962-63) and one plot of land admeasuring 955 sq. yds. was sold by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it for non-agricultural purposes at an opportune time in future. The Appellate Assistant Commissioner, therefore, held that the plots of land were agricultural land within the meaning of section 2(e)(i) and directed that they should be excluded from the assessee's net wealth. The revenue carried the matter in appeal to the Appellate Tribunal. The revenue urged before the Tribunal that the nature and character of the land, which was originally agricultural land, had changed completely and that it had ceased to be agricultural land notwithstanding the fact that the assessee had continued to carry on agricultural operations thereon. The Tribunal observed that the totality of the circumstances emerging, from the record indicated that there was a change, in the nature and character of the land in question and that even though the land was continued to be put to agricultural use by the assessee, it had ceased to be agricultural land. The circumstances which, according to the Tribunal, led to the aforesaid inference were that the land was situated within municipal limits, permission was granted for its non-agricultural use, pursuant to the permission the land was divided into 108 plots ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he question whether a particular land is agricultural land or not. Let us now proceed to consider the question whether the land in the present case is agricultural land or not by application of the aforesaid test to the facts found by the Tribunal. It is true that on the relevant valuation dates, the remaining portion of the land which had not been sold was used by the assessee for agricultural purposes and it was assessed to land revenue. The Tribunal has found, however, that the use of the land for agricultural purposes was by way of a stop-gap arrangement till the assessee found ready and willing buyers for the plots laid out in the land. Such use would necessarily be for a temporary period or short duration and cannot in the very nature of things be decisive. It would, therefore, be necessary to take into account the other relevant circumstances to which reference has been made by the Tribunal. The most important circumstance is that after the assessee and his brother jointly purchased the land, the total area of which was 1,58,752 sq. yds., permission for non-agricultural use of the land was sought for and granted to the assessee on November 11, 1959, subject to certain cond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the land was put to agricultural use by the assessee on the relevant valuation dates since buyers were not found for it, the land had ceased to be agricultural land and become non-agricultural land. Mr. Kaji, learned advocate appearing on behalf of the assessee, urged that since the land in question was actually used for agricultural purposes, there was prima facie evidence that the land was agricultural land. Merely because the land was situated within municipal limits and it was parcelled out into plots intended to be used for construction of residential buildings, the prima facie presumption about agricultural character of the land could not be said to have been displaced. The parcelling out of the land into small plots at best indicated an intention to trade in land and such an intention would not necessarily alter the intrinsic character of the land since the assessee was entitled to adopt all possible means to realise best price for the land. In support of his submission Mr. Kaji relied upon the decision of this court in Commissioner of Wealth-tax v. Narandas Motilal [1971] 80 ITR 39 (Guj). We are unable to accede to the submission made on behalf of the assessee. As poi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icultural operations were carried out on the land in question right from 1952 up to 1963-64. Throughout this period, there was no building activity in the vicinity of the land and there was not even an approach road to the land. In the course of proceedings for assessment to wealth-tax for assessment years 1957-58 to 1963-64, the assessee contended that the land was agricultural land. The Wealth-tax Officer and, on appeal, the Appellate Assistant Commissioner rejected the assessee's contention, but in second appeal, the Tribunal accepted it. The matter thereupon came to this court on a reference at the instance of the Commissioner. This court held that, having regard to the circumstances noted above, the prima facie presumption which arose on account of the present use of the land was not displaced merely because the land was plotted out and sold on yardage basis and that circumstance was not sufficient to change the nature and character of the land. The factors which were present in Narandas Motilal's case [1971] 80 ITR 39 (Guj) are not present here and the decision cannot help the assessee in the present case. We are, therefore, of the opinion that the Tribunal was right in com ..... X X X X Extracts X X X X X X X X Extracts X X X X
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