1. 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)?"
2. 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.
3. 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.
4. 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.
5. 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.
6. 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 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.
7. 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).
8. 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.
9. 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".
10. 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.
11. 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."
12. 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 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 ; . . . . "
13. 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.
14. 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."
15. 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 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.
16. 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."
17. 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 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.
18. 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".
19. 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."
20. 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 rearing and maintaining the plants. We are of opinion that, for the purpose of the relevant entries in Lists II and III of Schedule 7, the expression, 'agricultural lands', 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 purposes of husbandry. It follows that the mango grove in question is agricultural land in respect of which the Hindu Women's Rights to Property Act, 1937, does not operate to regulate succession."
21. This pronouncement is a clear authority for the proposition ,at 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 expression "agricultural lands".
22. In Insane Nil Govinda Misra v. Rukmini Deby, a Bench of the Calcutta High Court, consisting of Mitter and Sharpe, JJ., pressed 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 fallow land in the middle of agricultural fields would has to be taken as agricultural land, for it is capable of be, 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 hold that the general or wider and not the narrower meaning of the term 'agriculture' should be adopted . . .
23. Lands used or lands though lying unused, but capable of being used, having regard to its general nature and character for raising through the labour of man, food for men and beasts, food grains and vegetables and fodder, and other marketable commodities like cotton, jute, hemp, flax, etc., lama used as orchards or for farming purposes, i.e. For raising or feeding of cattle and other livestock as also lands used as aceessory to the above purposes, e.g., irrigating tanks and sites used for the farmer's residence should be regarded agricultural lands."
24. Jagannadha Das and Narasimham, JJ. Took the same view in Paramananda Das v. Sankar Rath (AIR 1951 Orissa 11).
25. Sri T. Ananta Babu contends that the view taken in the aforesaid decisions that "agricultural land" includes also land which is not actually used but is capable of being used for agriculture is no longer correct in view of the decision of the Supreme Court in Commissioner of Income-tax v. Raja Benoy Kumar Sahas Roy ((1957) 32 I T R 466 (SC)), as held by a Bench of this Court at. Manyarn Meenakshamma v. Commissioner of Wealth Tax. In the case decided by the Supreme Court mentioned above the main question that arose for consideration was whether the income derived by the respondent therein from sale of trees from his forest which was of spontaneous growth and not grown by the aid of human skill and labour, was "agricultural income" and as such exempt from payment of tax under section 4(3)(viii) of the Indian Income-tax Act and it was held that it was not "agricultural income". It is pertinent to note that, in this case, the connotation of the expression "agricultural land" did not fall for consideration. In that case their Lordships were mainly concerned with the expressions "agricultural income" as defined in Article 366(1) of the Constitution and in section 2(1) of the Indian Income-tax Act, 1922. In determining what was "agricultural income", their Lordships had to consider the meanings of the expressions "agriculture" agricultural purpose".
26. In that context, Bhagwati, J., who spoke for the Court, made the following observations at pages 507 to 509: "We have, therefore, to consider when it can be said that the land is used for agricultural purposes or agricultural operations are performed on it. Agriculture is the basic idea underlying the expressions `agricultural purposes' and 'agricul--tural operations' 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 . . . .
27. 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 subsequent operations must necessarily be in conjunction with and a continuation of the basic operations which are the effective cause of the products being raised from the land. It is only if the products are raised from the land by the performance of these basic operations that the subsequent operations attach themselves to the products of the land and acquire the characteristics of agricultural operations. The cultivation of the land does not comprise merely of raising the products of the land in the narrower sense of the term like tilling of the land, sowing of the seeds, planting, and similar work done on the land but also includes the subsequent operations set out above all of which operations, basic as well as subsequent, form one integrated activity of the agriculturist and the term 'agriculture' has got to be understood as connoting this integrated activity of the agriculturist. One cannot dissociate the basic operations from the subsequent operations and say that the subsequent operations, even though they are divorced from the basic operations, can constitute agricultural operations by themselves. If this integrated activity which constitutes agriculture is undertaken and performed in regard to any land that land can be said to have been used for 'agricultural purposes' and the income derived therefrom can be said to be 'agricultural income' derived from the land by agriculture."
28. Again at pages 510 and 511, the following observations were made: "If the term 'agriculture' is thus understood as comprising within its scope the basic as well as subsequent operations in the process of agriculture and the raising on the land of products which have some utility either tot consumption or for trade and commerce, it will be seen that the term 'agriculture' receives a wider interpretation both in regard to its operations as well as the results of the same. Nevertheless there is present all throughout the basic idea that there must be at the bottom of it cultivation of land in the sense of tilling of the land, sowing of the seeds, planting, and similar work done on the land itself. This basic conception is the essential sine qua non of any operation performed on the land constituting agricultural operations. If the basic operation are there, the rest of the operations found themselves upon the same. But it these basic operations are wanting the subsequent operations do not acquire the characteristic of agricultural operations."
29. 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 expressed 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.
30. This decision, therefore, cannot lend any support to the contention advanced by the learned counsel for the revenue.
31. Sri T. Ananta Babu relies upon the decision of this Court in Smt. Manyam Meenakshamma v.
32. Commissioner of Wealth Tax where Krishna Rao and Sharfuddin Ahmad, JJ. Held that the view taken in Megh R.I v. Allah Rakhia and Sarojini Devi v. Sri Kristna could not be supported in view of the pronounce--ment of the Supreme Court in Commissioner of Income-tax v. Raja Benoy Kumar Sahas Roy. The said case, Smt. Manyam Meenakshamma v. Commissioner of Wealth Tax arose out of a reference under section 27(1) of the Wealth Tax Act. The assessee, Smt. M. Meenakshamma, was assessed to wealth tax. Her properties included forest and agricultural land and buildings situated at various places. The Wealth Tax Officer determined the value of the forest at rupees two lakhs and included the same in the total wealth of the assessee. The assessee filed an appeal before the Appellate Assistant Commissioner on various grounds. But the assessment was confirmed with slight modifica--tion with regard to valuation of the house property. The assessee took the matter in appeal to the Income-tax Appellate Tribunal. Before the Tribunal a further contention was raised that forest land constituted agricultural land and could not be included in the total wealth. This contention was negatived by the Tribunal. Two questions were referred to the High Court for its decision. The first of the questions referred, with which alone we are concerned for the purpose of this case, was "whether forest lands, trees in which are of spontaneous growth, constitute agricultural land within the meaning of section 2(e)(i) of the Act, and liable to exemption."
33. N. D. Krishna Rao, J., delivering the judgment of the Court, referred to the observations of the Supreme Court at pages 505, 509 and 511 in Commissioner of Income-tax v. Raja Benoy Kumar Sahas Roy, answered the question referred to in the negative, and in that context made the following observations at pages 543 and 544: "Both the learned Judges had in mind the meanings given to the word 'agriculture' based on the nature of the products raised on the land. This consideration, however, arises no longer in view of the pronouncement of the Supreme Court in Commissioner of Income-tax v. Raja Benoy Kumar Sahas Roy. The general character of a land, if 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 agri--culture is a criterion, as observed by Bhagwati, J. In Rasiklal Chimanlal Nagri v. Commissioner of Wealth Tax (1965) 56 I T R 608 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 (1963) 48 I T R 472 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 special reason, it would not cease to be agricultural land."
34. It will be noticed that in the said case the main question was whether forest land in which trees had grown spontaneously would fall within the meaning of "agricultural land". In the case of forest land, before the land could be brought under cultivation, operations other than the agricultural operations sire necessary for altering the physical character of the land to snake it fit for cultivation. It is unnecessary for us to express any opinion as to whether forest land would constitute "agri--cultural land" or not. But it may be pointed out that the observations made by their Lordships cannot be understood as 'paving laid down the sole fact that vacant land which is capable If being used for agriculture, would not fall within the meaning of ---agricultural land". If their Lordships intended to lay down any such proposition, with great respect, we cannot agree with the same. That their Lordships did not mean to lay down sup a proposition, is clear from the later observations : "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 special reason, it would not cease to be agricultural land."
35. The question whether vacant land which is capable of being used for agriculture, is "agricultural land" or not, did not arise for consideration in the said case. Further, the sat observations made on the basis of the decision of the Supreme Court in Commissioner of Income-tax v. Raja Benoy Kumar Sahas Roy cannot be supported inasmuch as the Supreme Court in that case did not consider the expression "agricultural lane and was only considering the expressions "agriculture" at, "agricultural purpose" and "agricultural income". Sarojini Devi v. Sri Kristna and Megh Raj v. Allah Rakhia were referred to and the expressions of opinion in the said two cases wit regard to the meaning of agricultural land appear to have been viewed with approval by His Lordship, Bhagwati, J.
36. Sri T. Ananta Babu next relies upon a decision of the Mysore High Court in Sri Krishna Rao L. Balekai v. Third Wealth Tax Officer ((1963) 48 I T R 472). In the said case, the main question was whether the land, which was requisitioned by the Government for the purpose of locating a military aerodrome and which was being used as an air strip for the last 15 years, could be said to be agricultural land.
37. 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 the land itself and it was actually being put to use for non-agricultural purpose.
38. Their Lordships were not concern, with vacant lands which are capable of being put to use for agriculture.
39. Sri T. Ananta Babu next relies upon a ruling of the Gujarat High Court in Rasiklal Chimanlal Nagri v.
40. Commissioner Wealth Tax ((1965) 56 I T R 607). J. M. Shelat, C. J. And P. N. Bhagwati, J., they then were, were considering whether certain plots of land situate in the city of Ahmadabad were agricultural lands with the meaning of section 2(e)(i) of the Act. In dealing with the said question their Lordships made the following observations pages 615 and 616: "Whether a particular land is agricultural land or not must depend on the general nature or character of the late 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 be an important factor which would have a bearing on the question whether the land is agricultural land or not. This factor may affect the land and its capacity of being used for agriculture and would also indicate the purpose of which the land would ordinarily be likely to be used. The physical characteristics of the land would be another factor to be taken into account. The physical characteristics may show the general nature or character of the land particularly in regard to its adaptability for being used for agricultural purpose. Then the intention of the owner as gathered from all the relevant circumstances would also have a bearing on the general nature or character of the land. Of course, as we pointed out above, the intention of the owner of the land to put it to a particular use at any given point of time cannot be the determining factor. But the intention of the owner in regard to the user of the land would certainly be a relevant factor which would have to be taken into account. Where, for example, as in the present case, the land has not been used for agricultural purposes for over a number of years without any particular reason, it would certainly indicate that the land is no longer meant for agricultural purposes but is meant for being used for non-agricultural purposes and cannot, therefore, be regarded is agricultural land. The fact that the land is assessed for agricultural purposes would also be a relevant consideration and due effect would have to be given to this factor in arriving it the conclusion whether the land is agricultural land or not taut we cannot agree that the capacity of the land for being put to agricultural use is a determinative factor in deciding whether the land is agricultural land or not. If that were 6e correct test, even building sites assessed for non-agricultural purpose would be agricultural land so long as they are not actually put to non-agricultural use, since it would always be possible to say of them that they are capable of being used or agricultural purposes. As a matter of fact all land which has not actually been put to non-agricultural use would be liable to be regarded as agricultural land if this test were the correct test."
41. The learned counsel relies particularly on the observation of the Bench: "But we cannot agree that the capacity of the land for being put to agricultural use is a determinative factor in deciding whether the land is agricultural land or not."
42. 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 the 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 agri--cultural 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 of character of the land is such that it can be regarded as agricultural land."
43. The fact that the lands were situated en a wholly residential with numerous residential buildings around the plots and that they were situated in an area in respect of which a town tanning scheme was enforced since about 1945 and that they ad ceased to be cultivated are the main factors which were considered by the Bench, as determining the character of the land as non-agricultural land. All that was held in that case was that mere capacity of the land for being put to agricultural use was not a determinative factor. On the other hand, it was held that the location of the plots, the physical characteristics of the land, the intention of the owner and the assessment of she land for agricultural purposes would also be relevant considerations in determining whether a particular land was agricultural land or not. But the learned Judges did not mean to lay down that the capacity of the land for being put to agricul--tural use cannot be taken into consideration along with the other relevant factors mentioned above in determining whether a particular land is agricultural land or not.
44. While we do not wish to be understood as in any way accept--ing the several criteria laid down in this decision for determining whether a land is agricultural land or not, on the facts as found, there can be no doubt that the land in question ceased be agricultural land. As we had indicated earlier, the constitution did not intend to lay down a variable test changing from time to time or year by year either by the actual user to which the land was put for agricultural purpose or on the particular crops grown on it. If such a test was applied, land that is left fallow either because the land-holder is economically unable to cultivate it or because of natural calamity or drought conditions occasioned by failure of rains in successive years would cease to be agricultural land.
45. The next case relied upon by the learned counsel for the department is Tea Estates India (Private)
46. Ltd. v. Commissioner of Wealth Tax ((1966) 59 I T R 428). In that case also, the question that arose for consideration was, whether a part of the tea estate land in which forest grew spontaneously and which was not used for rowing tea bushes, was agricultural land within the meaning of section 2(e)(i) of the Act. The Bench while holding that the lands in question were not agricultural lands, made the following: observations at Pages 438 and 539, which are said to support the contention of the learned counsel for the revenue: "It is common knowledge that all tea estates contain a portion of non-agricultural land, i.e., land where actual cultiva--tion or even any processing for tillage is not done in our opinion, in solving such difficulties, we must find out whether the asset 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."
47. 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 it the land in a cultivable condition. It is this fact that pears to have considerably weighed with the learned Judges coming to the conclusion that the said land was not "agri--cultural land", as it appears from the further observation at page 439: "With respect to the second question in this reference, applying the aforesaid principles, we are of opinion that part of the tea estate land in which the forest grows spontaneously and was not used for growing tea bushes was not `agricultural land' within the meaning of section 2(e) (i) of the Act.
48. Admittedly forests in the instant case have grown spontaneously without any expenditure of human labour and skill. There is also a clear finding of the Tribunal that no part of it is used for `agricultural purpose' and that the land in its present state is riot capable of being used for agricultural purposes. There is neither any finding that effective steps nave been taken by the tea garden authorities to put the land in a cultivable condition as part of their future expansion scheme."
49. As these observations would show, the Bench was not ding with land which was vacant but which was readily capable of being put to agricultural use without the necessity taking any further steps for conversion of the physical character of the land to put the land in a cultivable condition. Further, if the construction placed by the Bench is to be accepted, it amounts to giving a narrow and restricted meaning to the expression "agricultural land" which, as we have held earlier, not permissible. As a result of the foregoing discussion, the position may be summarised thus:
(1) the words "agricultural land" occurring in section 2(e)(i) of the Wealth Tax Act should be given the same meaning as the said expression bears in entry 86 of List I and given the widest meaning ;
(2) the said expression not having been defined in the Constitution, it must be given the meaning which it ordinarily years in the English language and as understood in ordinary parlance ;
(3) the actual user of the land for agriculture is one of the indicia for determining the character of the land as agricultural land
(4) land which is left barren but which is capable of being cultivated can also be "agricultural land" unless the said land is actually put to some other non-agricultural ,purpose, like construction of buildings or an aerodrome runway, etc., thereon, which alters the physical character of the land rendering it unfit for immediate cultivation ;
(5) if land is assessed to land revenue as agricultural land under the State 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 non-agricultural 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.
50. Applying the aforesaid principles, the next question for termination 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 Hussain-sagar 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 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 land revenue as "agricultural land" under section 50 of the Hyderabad Land Revenue Act. These factors, in our opinion strongly indicate that the land in question is agricultural land.
51. Sri Ananta Babu contends that there are other factors which indicate to the contrary. He submits that the land has not been actually used for agriculture, in the sense that it has never been ploughed. Or tilled, that the land is situate within a limits of the Hyderabad Municipal Corporation, an urban area, that a portion of the land was acquired by the Government in 1955 and utilised for construction of buildings and that the land itself is enclosed by a compound wall. It is not the contention of the learned counsel that the fact that the land is enclosed by a compound wall renders the land unfit for cultivation. It is mentioned in the statement of the case that the buildings situate inside that area have each compound walls of their own. Therefore, this large extent of land of 108 acres cannot be treated as a courtyard or a land merely appurtenant the said buildings. The circumstances relied upon by the learned counsel for the department do not outweigh the other factors which indicate the character of the land as "agricultural land---.
52. Sri Ananta Babu contends that every land is capable of being cultivated, and that, if mere capacity for cultivation is to be taken into consideration no distinction can be drawn between the expressions, `land' and "agricultural land". But as we have mentioned earlier, the mere capability is also a strong factor which should also be taken into consideration for determining the true character of the land.
53. For the foregoing reasons, the question referred is, therefore, answered in the affirmative and in favour of the assessee. The assessee will have his costs. Advocate's fee, Rs. 250.