COMMISSIONER OF WEALTH-TAX, ANDHRA PRADESH versus OFFICER-IN-CHARGE (COURT OF WARDS) PAIGAH

Citation: [1977] 1 S.C.R. 146 · Decided: 06-08-1976 · Supreme Court of India · Bench: A.N. RAY · Disposal: Appeal(s) allowed

Cited by 3 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

A 
COMMISSIONER OF WEALTH-TAX, ANDHRA PRADESH 
v. 
OFFICER-IN-CHARGE (COURT OF WARDS) PAIGAH 
August 6, 1976 
[A. N. RAY. C.J., M. H. BEG, R. s. SARKARIA, P. N. SHINGI-IAL AND 
B 
JASWANT SINGH, JJ.] 
c 
D 
Wealth Tax Act (27 of 1957)-Agricultural Lands, What are-Tests for 
determining. 
The assessee was the owner of more than I 00 acres of land within municipal 
limits and enclosed by a compound wall. The land was adjacent to a 
tank, 
had two wells ih it, was capable of being used for agriculture, was assessed 
to )and revenue as agricultural land, but had not been actually put to any 
non.agricul!ural use. 
· 
The HiQ:h Court held that the land was 'agricultural land' under s. 2(e) (i) 
of' the Wealth. Tax Act, 1957 and exempt from wealth tax on the basis that, 
(1) the expression 'agricultural land', hot having been defined in the Act, must 
be given the widest possible meaning; (2) so interpreted, all land which is 
capable of being utili~d for agricultural purposes would be 'agricultural land' 
unless il is actnally put to some non.agricultural use like construction of 
buildings etc; and (3) 'the land has been assessed to land revemie as agricultural 
land under the State Revenue Law. 
Allowing the appeal, 
. ,.... 
HELD : It is only land, which either is being actually used or ordinarily 
used, or has been set apart or prepared for use for agricultural pmposes so as 
to indicate the intention of the owner or occupier of the Jahd to put it to agri' 
,.._ 
E 
F 
G 
H 
cultural use, that would be 'agricultural !'and'. [156 A] 
(I) It is not correct to give the expression a wide meaning mere! y because 
the statute does not define it. 
The1 correct rule is for the Court to endeavour 
to find out logically the exact sense i'n which the words have been used in a 
particular context, reading the statute as a whole, giving an interpretation in 
consonance with the purposes of the statute, and avoiding absurd results. [153 
A-Bl 
(2) The object of the Wealth Tax Act is to tax surplus wealth. 
It is not 
all land but only 'agricultural land' that is excluded from the definition of assets. 
Therefore, it is imperative to give reasonable limits to the scope of the ex-
• pression 'agricultural land'. 
[153 CJ 
· 
. 
(3) The determination of the character of land, according to the purpose 
for which it i> meant or set apart and can be used, is a matter which. ought to 
be determined on the facts of each particular case. 
What is really required 
to be shown is the connection with an agricultural purpose and user, and not 
the mere possibility of user by some possible future owner or possessor, for 
an agricultural purpose. It is not the potentiality, but its actual condition and 
intended user which has to be seen for purposes of exemption from wealth tax. 
The correct test to apply would be to.find out whether human labour had been 
applied to the land itself, in order to extract from its natural powors, added to 
or aided by other nautral or artificial sources of strength, a product which can 
yield .income. If there is nothing in its condition, or in the evidence to indicate 
the intention of its 9wner or possessor, so as to connect it with a'n agricultural 
purpose, the land could not be 'agricultural land. 
The person claiming that 
any property is exempt must satisf'y the conditions of the exemption. [155 G-H] 
The extent of the lahd, its situation, that it was capable of being used for 
agricultural purposes and has not been actually put to any use which would 
make it unfit for immediate 
cultivation, are, therefore, 
inconclusive 
being 
based on absence of user for non-agricultural purpose. Entries in revenue 
records are. however, good vrima facie evidence since they are based on some 
quasi-judicial enquiry but they raise only a rebuttable presumption.. Tf such 
146 
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"t,, 
COMMR. OF WEALTH TAX v. OFFICER-IN-CHARGE (Beg, J.) 
147 
prima facie evidence was. enough for the assessee to discharge his burden to 
establish an exemption, evidence to rebut it should have been led on . behalf 
of the Department. In the present case, however_, the High Court relted 'not 
only on the entries, but also, on the inconclusive circumstances based on ?ot~n­
tialities. 
While doing so, the High Court did not hold that cate~oncal findmg 
of the taxing authorities and Tribunal that the la!!d was never used, no.r was 
intended to be used for an agricultural purpose did not. rest on. any evidence 
at all; nor did i

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