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Petitioner: OFFICER-IN-CHARGE (COURT OF WARDS), HYDERABAD VS Respondent: COMMISSIONER OF WEALTH TAX, A. P.
Court Name: Andhra Paradesh High Court Judge(s): P. Jaganmohan Reddy, Ramachandra Rao, Parthasarathi Title:OFFICER-IN-CHARGE (COURT OF WARDS), HYDERABAD vs COMMISSIONER OF
WEALTH TAX, A. P. Case No.: Case Referred No. 40 of 1964 Date of Judgment:1968-11-26 Reported As: 1972 PTD 552 Result: case decided Judgment ORDER OF REFERENCE JAGANMOHAN REDDY, C. J.-An important question as to what is the meaning of the words "agricultural land" for the purpose of Wealth Tax falls for determination in this referred case. A Division Bench of the Madras High Court in Sarojini Devi v. Sri Kristna (AIR 1944 Mad. 401), while interpreting the words "agricultural lands" occurring in Lists II and III of Schedule 7 to the Govern-- ment of India Act, 1935, held that the expression 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. The question there was whether a mango grove is an agricultural land in respect of which the Hindu Women's Rights to Property Act, 1937, does not operate to regulate succession. The words "agricultural lands" occur in Lists I and II of the Seventh Schedule to the Constitution of India, i.e., in entries 86, 87 and 88 of the Union List in the Constitution of India corresponding to entries 55, 55-A and 56 of the List of Government of India Act, 1935, and entries 16, if air, List II of the Constitution of India corresponding to entries 21 43 and 43-A of the Government of India Act, 1935. It is contended that the decision of the Madras High Court define words "agricultural lands", to mean also lands which are capable of being used for agriculture, is binding upon this court in interpreting similar words used in the Constitution the framers of which must be taken to have adopted judicial interpretation of the words used in some of the provisions of the Government of India Act, 1935, which are in pari materia with the corresponding provisions in the Constitution. In a recent case, Smt. Manyam Meenakshamma v. Commissioner of Wealth Tax ((1967) 63 I T R 534), N. D. Krishna Rao, J. (as he then was) and Sharfuddin Ahmad, J. Held that an agricultural land is o which is used for agricultural purposes and not otherwise, a question how a land is ordinarily
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used being one of fact depending on the evidence in each case. The Bench observed that the learned Judges, who decided the Madras case, had mind the meanings given to the word "agriculture" based on the nature of the products raised on the land. This does not prima facie appear to us as a correct reading of that decision. In order to determine the question referred to us, it necessary first to ascertain the meaning of the words "agricultural land" used in the Wealth Tax Act, vis-a-vis, Lists I and of the Seventh Schedule to the Constitution, and in view of the apparent conflict between the definition given by the Macs High Court, which is binding on this Court, and our own Bench we refer the case to a Full Bench. JUDGMENT RAMACHANDRA RAO, J.-This case is referred under section 27(1) of the Wealth Tax Act of 1957 for a decision of this Court of the question: "Whether, on the facts and in the circumstances of the case, the lands situated at Begumpet, Lallaguda, Jiaguda Subzimandi, Yerragedda, Zamboorkhana and Vicarabad, were agricultural lands within the meaning of section 2(e)(i) of the Wealth Tax Act (hereinafter referred to as the Act)?" When this case came up before a Bench of this Court consisting of one of us, the Hon'ble the Chief Justice, and Sambasiva Rao, J., they referred the same to a Full Bench as important question as to the meaning of the words "agricultural land" falls for determination, and as there is an apparent conflict between the decision rendered by a Bench of the Madras High Court in Sarojini Devi v. Sri Kristna (AIR 1944 Mad. 401) 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 follows: By a notification dated 4 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 Income-tax Appellate Tribunal that the facts relating to this lands and the conclusion arrived at in respect of them, would equally apply to the other lands mentioned above. There was also no dispute with regard to the actual valuation adopted in respect of the several items. The property at Begumpet was known as "Begumpet Palace, Hyderabad." The buildings in this property were valued at Rs. 8,81,336 while the vacant land comprising an area of about 108 acres was valued at Rs. 15,69,052. The entire plot of land was enclosed in a compound wall and the various buildings inside it had their own compound walls. The property is situated within the limits of the Hyderabad Municipal Corporation. The land had never been actually used for agriculture, in the sense that it had never been ploughed or tilled. The property is situated adjacent to the tank known as "Hussain sagar" on the southern side, and there are two wells in the said land. The land was capable of being used for agriculture and land revenue was being assessed and paid in respect of the said lands. A portion of the land was acquired by the Government of Hyderabad on 15th September 1955, and utilised by them for construction of buildings thereon. On these facts, the Wealth Tax Officer came to the conclu--sion that the lards could not be treated as "agricultural lands" as no agricultural operations were carried on, in the sense of ploughing and tilling the land and raising any crop thereon, The Appellate Assistant Commissioner confirmed theth
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order of the Wealth Tax Officer on this point. The assessee preferred an appeal to the Income-tax Appellate Tribunal. The Tribunal also took the view that the said land was never intended to be used for agriculture and that the lands were never ploughed or tilled and that the lands were situated within the limits of the Hyderabad Municipal Corporation and that the presumption would be that they were not agricultural lands and that the said presumption was not rebutted, as no agricultural operations were ever carried on in the said land. In this view, the Tribunal confirmed the order of the Appellate Assistant Corn missioner on this point. Sri D. Narasaraju, the learned counsel for the assesses after referring to the several items in the Legislative Lists of the Government of India Act of 1935 and the Constitution of India, contends that the expression "agricultural land" in item 86 of List I of the With 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 by given a large and liberal interpretation, as held by their Lordships of the Privy Council in Megh Raj v. Allah Rakhia (AIR 1947 P C 72) and by their Lordships of the Supreme Court in Sri Ram Narain v. State of Bombay (AIR 1959 SC 459). If the expression "agricultural land" is given a wide and liberal meaning, the learned counsel contend 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 Insane Nil Govinda Misra v. Rukmini Deby (AIR 1944 Cal. 421). The learned counsel further submits that the view taken by a Bench of this Court in Smt. Manyam Meenakshamma v. Commissioner of Wealth Tax was not correct. Sri T. Ananta Babu, the learned counsel for the Income-tax Department, contends that the expression "agricultural land' used in section 2(e)(i) of the Act should not be given a wid.. Or liberal meaning as contended for by the appellant, that in determining whether a particular land is agricultural land or net, the nature or character of the land during the relevant accounting year is the criterion, that the time factor is relevant in determining the exigibility to tax, that the circumstances prevailing during the relevant accounting year should alone be taken into consideration and that mere potentiality of the land or its capacity for being used for agriculture is not the deciding factor, that the expression "agricultural land" is intended to cover only the lands with respect to which some agricultural operations had been carried on either during the accounting year or at least in the immediate past, and that in the instant case, the lands having not been ploughed or tilled at any point of time, they would not fall within the category of "agricultural lands". Sri Anwarulla Pasha, in reply, submitted that the lands have been actually classified as agricultural lands, that the land-owners have not done any act to convert the lands into non-agricultural lands, and, therefore, the land in question retains the character as agricultural land. The wealth Tax Act has been enacted by Parliament in exercise of the powers conferred by entry 86 of List I of the VII th Schedule of the Constitution. The said entry is in the following terms: "Taxes on the capital value of the assets, exclusive of agricultural land, of individuals and companies ; taxes on the capital of companies." Under section 3 of the said Act, wealth tax is leviable on the net wealth of every individual, Hindu undivided family and company at the rate or rates specified in the Schedule. In computing the net wealth of an individual not only the assets belonging to him, but also certain other assets mentioned in section 4 of the Act, have to be included as belonging to him. The word "assets" has been defined in section 2(e) of the Act. In the definition of the said expression, certain properties
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have 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 VII th 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 the aforesaid entry, there is no power in Parliament to make a law to include agricultural land in the assets for purposes of levying tax on capital value, Parliament had taken care to provide that agricultural land exempted under entry 86 of List I should also be excluded from the assets whose capital value is chargeable to Wealth Tax under the Act. To achieve this object, the word "assets" has been so defined in the Act as to exclude agricultural lands. The inference is, therefore, irresistible that Parliament intended that the words "agricultural land" employed in section 2(e)(i) of the Act should bear the same meaning as it bears in entry 86 of List I of the VII th Schedule to the Constitution. It is a well established proposition that the words occurring in a head of legislation should be interpreted liberally and given the widest meaning. It, therefore, follows that the words "agricultural lands" in section 2(e)(i) of the Act should bear a liberal construc--tion, and given the widest meaning. Bearing in mind the aforesaid principle of construction we have to next determine the content and meaning of expression "agricultural land". The said expression has yen defined either in the Constitution or in the Act. We can therefore, have recourse only to the ordinary meaning of word "agriculture" or the expression "agricultural land--- reference to the dictionaries may perhaps assist us in this context. In Murray's Oxford Dictionary, it is stated that the word "agricultural" means : "of or pertaining to agriculture " connected with husbandry or tillage of the ground" and the meaning of the word "agriculture" is given as "the science and art of cultivating the soil including the allied pursuits of gathering in the crops and rearing livestock or tillage, husbandry and farming in the widest sense." In Wharton's Law Lexicon, "agricultural land" is described "any land used as arable, meadow or pasture ground only, cottage gardens exceeding one quarter of an acre, market gardens, nursery grounds, orchards or allotments, but does not include land occupied together with a house as a park, gardens other than "is aforesaid, pleasure-grounds, or any land kept or preserved mainly or exclusively for purposes of sport or recreation or grid used as a race course". But we find that this meaning is been given on the basis of section 9 of the Agricultural Rates Act, 1896, and hence it is not relevant or useful. According 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)". Cording 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 discriptive of the character of the land. It cannot be ascribed the same meaning is the noun "agriculture" in the context in which it occurs. Words like "agriculture" or "agricultural" are used in different senses and bear different
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meanings according to the context in which they occur and they cannot be construed as having been used only in the one sense of actual tilling or ploughing. If such a construction is to be placed on the word "agricultural" it will be giving a restricted meaning to the expression "agricultural land" and not the widest meaning. Ultimately, therefore, "agricultural land" has to be understood and interpreted accord--ing to ordinary notions of common sense and in the sense in which it is understood in ordinary parlance. If so understood, we are of the opinion that "agricultural land" is an open land which is either cultivated or which is fit for cultivation. It is the inherent quality of the land that has to be taken into consideration in determining whether it has the characteristic of agricultural land or not. The basic characteristic of the land as "agricultural land" is not dependent upon the nature of the produce cultivated thereon. If a land is fit for carrying on agriculture, in the sense of being tilled and ploughed without further necessity for undertaking extensive or expensive measures for converting the basic characteristic of the land and taking it fit for cultivation in the above sense, it can be termed "agricultural land". In this sense, every land which is presently or prospectively capable of cultivation can be said to be agricultural land". If it is shown that the land is actually cultivated either presently or in the immediate past or if it is shown that it is lying fallow, but is capable of being cultivated, so long as the land has not been actually diverted to purposes there than agricultural purposes by construction of buildings thereon and other operations which render the land itself is capable of being cultivated without undertaking some other operations for making it fit for carrying on agricultural operati--ons, it can be said to answer the description of agricultural and in its widest significance. It is equally true that the central Legislature under the Government of India Act had, and Parliament under entry 86 of List I of Schedule VII to the Constitution, has no legislative competence in respect of agricultural land, unless, of course, under article 252(1) two or more States by a resolution confer that power. In these circum--stances, in construing the meaning of the expression "agricultural land" which occurs in the Legislative Lists, a liberal construction must be placed on it ; and if the meaning accorded to the expression in the State List is widened on such a construc--tion, 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 on taram are contained in the Board's Standing Orders, whereas in the Telangana area, the same was under the Hyderabad Land Revenue Act (8 of 1317 Fasli). We may also refer in this connection to a recent enactment of the State of Andhra Pradesh, viz. , the Andhra Pradesh Land Revenue Enhancement Act (No. 8 of 1967) which declared the Government's right to levy and collect land revenue and also to provide for the levy of additional land revenue on certain lands in the State of Andhra Pradesh. The Act provides for classification of the ands and fixation of the assessm ent payable in respect of Ach category of land. If, therefore, a land is classified under the ate revenue law in force as "agricultural land" and land revenue collected therefrom it is prima facie strong evidence of the character of the land as "agricultural land." The mere fact that a land is situated in a village or in a town or in a city is not conclusive of its character. It is well known that even in major cities and towns, large tracts of land are actually
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under cultivation, and unless they are shown to have been actually converted or put to some other use which alters Its basic character and renders it unfit for agriculture, it cannot be said that they cease to be agricultural ands. Therefore, in determining whether the lands in question are agricultural lands or not the aforesaid principles or tests have to be borne in mind. The question may now be examined with reference to decided cases on the point, which are not many. Cases which dealt with expression like "agriculture", "agricultural purpose" or "agricultural income" as defined in various statutes, English or Indian, are not relevant or useful in determining the connotation of the expression "agricultural land". In Megh Raj v. Allah Rakhia (AIR 1942 FC 27) their Lordships of the Federal Court noticed the difficulty in determining the precise scope and meaning of the expression "agricultural land" and left the question open, with the following observations: "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 2 and 3, 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 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 in Sarojini Devi v. Sri Kristna. 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 VII th Schedule to the Government of India Act, 1935. There, the widow of a coparcener, who died undivid--ed 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, a was conceded that she was not entitled to a share in agricultural ands forming part of the estate, in view of the decision of the Federal Court in In re: Hindu Women's Rights to Property Act, 937 (AIR 1941 FC72), that the said Act did not operate to regulate succes--sion to agricultural land in the Governor's Provinces. But one of the items was a mango grove in which the widow claimed a share on the ground that it was not agricultural land. Their Lordships held that the expression "agricultural land" included not only lands which were used but were capable of being used for raising any valuable plants or trees or for any other purpose of husbandry. Patanjali Sastri, J., as he then was, delivering the judgment of the Court, observed as follows at page 402: "As we have already pointed out, the term 'agriculture' is used in different senses gad in order to ascertain is what sense it is used in the Legislative Lists in Schedule 7, Constitution Act, we must have regard to the object and purpose of section 100 of which these Lists really form part. That section deals with the distribution of legislative powers as between the Federal and Provincial Legislatures, and the Lists enumerate the 'matters' in respect of which those Legislatures have or have not power to make laws. In such context 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 circum--stances in which the cultivation is carried on' (per Reilly, J. An 54 Mad. 900) 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
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rearing and…
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