N Civil Appeals Nos
2552 2556 of 1969
From the Judgment and Order dated 26111968 of the Andhra Pradesh High Court in Case Referred No 4064 arising from RA Nos
1709 171362 63
B Sen SP Nayar for the Appellants
K Vasudeva Pillai HR Puri and PK Pillai for the respondent
The Judgment of the Court was delivered by BEG J
Civil Appeals Nos
2552 2556 of 1969 are directed against a judgment of the Full Bench of the High Court of Andhra Pradesh
The case was certified as fit under Articles 132 and 133 of the Constitution for an appeal to this Court
The question involved as framed in the Andhra Pradesh Case is on the facts and circumstances of the present case are certain lands situated at Begum pet Lalguda Jaiguda Subzimandi Yerraguda Zamboorkhana and Vicarabad agricultural lands within the meaning of section 2e i of the Wealth Tax Act hereinafter referred to as the Act   If any of the lands mentioned above are agri cultural lands as defined by the Act they would be excluded from the definition of assets given in Section 2e of the Act and therefore exempt from wealth tax
Section 2e says 2e assets  includes property of every description movable or imovable but does not include XXX XXX XXX XXX i agricultural land and growing crops grass or standing tress on such land The word agricultural land  occurs in entries 86 87 and 83 of List 1 to 7th Schedule of our Constitution relating to matters on which Parlia ment may legislate
Entry 86 here says  Taxes on the capital value of the assets exclusive of agricultural land of individuals and companies taxes on the capital of companies Entries 87 and 88 deal with Estate duty and duties of succes sion to property and each of them excludes agricul tural land from property on which 148 taxes may be levied by Parliament
Entry 18 of List II giving subjects of exclusively state legis lation says Land that is to say rights in or over land land tenures including the relation of landlord and tenant and the collection of
rents transfer and alienation of agricultural land land improvement and agricultural loans colonization
 It is thus clear that agricultural land is only a species of land
The main question before us is whether it should stand for all land which is capable of being utilised for agricultural purposes or for some land which either is being actually used or has been set apart or prepared for use for agricultural purposes so as to indicate the inten tion of the owner or occupier of the land to put it to agricultural uses
This raises the further questionWhat is an agricultural purpose or agri culture  The term agriculture was discussed very thoroughly by this Court in Commissioner of Income Tax West Bengal Calcutta vs Raja Benoy Kumar Sahas Roy1 This Court said there at p 472 473 The term agriculture  and agricultural purpose  not having been defined in the Indian Income tax Act we must necessarily fall back upon the general sense in which they have been under stood in common parlance Agriculture  in its root sense means ager a field and culture cultivation cultivation of a field which of course implies expenditure of human skill and labour upon land
The term has however acquired a wider significance and that is to be found in the various dictionary meanings ascribed to it
It may be permisible to look to the dictionary meaning of the term in the absence of any definition thereof in the relevant statutes
 Therefore this Court beginning with the decision of Lord Coleridge in Rv Peters2 scanned and discussed various decisions of English and Indian Courts and the meanings given in var ious dictionaries of the English language as well as in the law dictionaries
It then reached the conclusion at p 510 If the term agriculture  is thus understood as comprising within its scope the basic
as well as subsequent operations in the process of agricul ture and the raising on the land of products which have some utility either for 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 plant ing and similar work done on the land itself
This basic conception is the essential sine qua non of any operation performed on the 1 1957 32 LTRp 466 at 472  510
2  641
149 land constituting agricultural operation
If the basic operations are there the rest of the operations found themselves upon the same
But if these basic operations are wanting the subsequent operations do not acquire the characteristic of agricultural operations
 In Raja Benoy Kumar Sahas Roy s case supra the question before this Court was whether income from forest lands derived from sal and piyasal trees not grown by human skill and labour could constitute agricultural income
The test applied there was whether there was some integrated activity which could be described as agricultural operation yielding income
It was pointed out that although a mere wild or spontaneous growth of trees not involving the employment of any human labour or skill for raising them could not be agricultural income yet when there was a forest more than 150 years old which had been carefully nursed and attended to by its owners the income would be agricultural
It is true that this case is not a direct authority upon what is agricultural land
 Nevertheless it goes a long way in helping us to decide what could be agricultural land
We think that this must be land which could be said to be either actually used or ordinarily used or meant to be used for agricultural purposes
In other words agricultural land must have a connection with an agricultural user or purpose
It is on the nature of the user that the very large number of definitions and authorities discussed by this Court in Raja Benoy Kumar Sahas Roy s case supra have a direct bearing
In that case this Court held that the wider meaning given to agri cultural operations such as breeding and rearing of live stock poultry farming or dairy farming will not be ap plicable
It held that 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 powers added to or aided by other natural or artificial sources of strength to the soil a product which can yield an income
In the case before us the question is a connected one
Here also the term agricultural land has not been defined
That however does not mean that the land to be considered can be divorced from its actual or natural or ordinary user
If all land which is capable of being used for agriculture could be intended to be excluded from assets practically every type of land including that covered by buildings would fall within that class
Hence it seems to us to be impossible to adopt so wide a test as would obviously defeat the purpose of the exemption given
Apparently agricul tural land is excluded from the definition of assets as it was
thought that Parliament was not competent to impose taxes which will fall on agricultural land
Whatever may be the reason for the exemption we think that the exemp tion is connected with the user of land for a purpose which must be agricultural It is an enactment to tax wealth which includes all that is ordinarily understood as assets The person claiming an exemption of any proper ty of his from the scope of his assets must satisfy the conditions of the exemption
150 It is true that in Rain Benoy Kumar Sahas Roy s case supra this Court pointed out that meanings of words used in Acts of Parliament are not necessarily to be gathered from dictionaries which are not authorities on what Parlia ment must have meant
Nevertheless it was also indicated there that where there is nothing better to rely upon dictionaries may be used as an aid to resolve an ambiguity
The ordinary dictionary meaning cannot be discarded simply because it is given in a dictionary
To do that would be to destroy the literal rule of interpretation
This is a basic rule relying upon the ordinary dictionary meaning which in the absence of some overriding or special reasons to justify a departure
must prevail
Moreover it was held there that the dictionary meanings
of the word agri cultural were wider than what was meant by agricultural income as that term was used in the Income tax Act
Even if we could give a wider connotation to the term agricul tural than the one it carries with it in the Income tax Act we cannot dispense with credible evidence of at least appropriation or setting apart of the land for a purpose which could be regarded as agricultural and for which the land under consideration could be reasonably used without an alteration of its character
This we think is the minimal test of agricultural land which should be applied in such cases
In stating the facts of the case with regard to the Begumpet property which according to a rather surprising agreement between parties was to be used for reaching an inference applicable to all other lands in the case the High Court said The property at Begumpet was known as Begumpet Palace Hyderabad  The buildings in this property were valued at Rs 881336 while the vacant land comprising an area of about 108 acres was valued at Rs 1569052
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 construc tion of buildings thereon
 The High Court then stated the views of the taxing authorities as follows On these facts the Wealth Tax Officer came to  the conclusion that the lands 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 151 confirms the 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 in
tended 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 Hyd erabad Municipal Corporation and that the presump tion 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
On this view the Tribunal con firmed the order of the Appellate Assistant Commis sioner on this point
 The High Court had discussed the various mean ings of the term agriculture and pointed out how it had acquired a wide sweep
It also discussed a number of cases including Sarojini Devi vs Srikrishna1 which had not been followed by a Division Bench of the Andhra Pradesh High Court in Manyarn Meenakshamma vs Commissioner of Wealth Tax AP2 on the ground that the Madras view that it was enough that the land was capable of being used for agricultural purposes was no longer good law in view of the pronouncement of this Court in Raja Benoy Kumar Sahas Roys case supra
The Andhra Pradesh Division Bench had said in Smt
Manyam Meenaksharnma s case supra at p 544  We are inclined to agree with the observa tion of Hegde and Ahmed Ali Khan JJ
in Sri Krish na Rao L Balekeai vs Third Wealth Tax Officer that the present characteris tics 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 agricul tural 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 ad verse seasonal conditions or to some other special reason it would not cease to be agricultural land
 Apparently the conflict between the views contained in Sarojini Devi s case supra and in Smt
Manyam Meenakshamrna s case supra had led to a reference of the case to a larger bench
The Full Bench of the Andhra Pradesh High Court after discussing a number of cases of various High Courts preferred the Madras High Court view principally on two grounds firstly because as wide a connotation as was possible to give to the words agricultural land was preferable in a taxing statute and secondly because the entry to the large tract of vacant land in the Begumpet Palace in revenue records as assessable to land revenue raised a presumption of its agricultural character
AIR 1944 Mad 401
2 at 544
152 The Full Bench stated its conclusions on ques tions of law as follows 1  The words agricultural land  occurring in Section 2ei 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 bears in the English language and as understood in ordinary parlance 3 The actual user of the land for agricul ture 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 agricul tural land  unless the said land is actually put to some other non agricultural purpose like con struction of buildings or an aerodrome runway etc
thereon which alters the physical character of the land rendering it unfit for immediate culti vation 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 land is not determined by the nature of the products raised so long as the land is used or can be used for raising valu able plants or crops or trees or for any other purpose of husbandary 8 The situation of the land in a village or in an urban area is not by itself determinative of its character
 The Full Bench rejecting the effect of such features as construction of a Palace and the loca tion of the land within its compound said 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 agri culture
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 rele vant 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
 153 We think that it is not correct to give as wide a mean ing as possible to terms used in a statute simply because the statute does not define an expression
The correct rule is that we have to endeavour to find out the exact sense in which the words have been used in a particular context
We are entitled to look at the statute as a whole and give an interpretation in consonance with the purposes of the statute and what logically follows from the terms used
We are to avoid absurd results
If we were to give the widest possible connotation to the words agricultural land as the Full Bench of the Andhra Pradesh High Court seemed inclined to give to the term agricultural land we would reach the conclusion that practically all land even that covered by buildings is agricultural land inasmuch as its potential or possible use could be agricultural
The object of the Wealth Tax Act is to tax surplus wealth
It is clear that all land is not excluded from the definition of assets
It is only agricultural land which could be exempted
Therefore it is imperative to give reasonable limits to the scope of the agricultural land or in other words this exemption had to be necessarily given a more restricted meaning than the very wide ambit given to it by the Andhra Pradesh Full Bench
The Full Bench itself saw the need for some kind of limitation to the application of widest purpose principle if one may call it that
Therefore evidently in an attempt to avoid the unreasonable conclusion to which too wide a definition of agricultural land would naturally lead to the Full Bench
 in the fourth conclusion recorded by it held that if some vacant land is actually built upon it changes its physical characteristics and becomes unfit for immediate cultivation
It thus qualified its view that the widest possible meaning must be given to land
Its final view was that only such land could cease to be agricultural land as had actually become unfit for immediate use for an agricultural purpose
This view seems to imply that one has to start with the presumption that all land as such is agricultural land
If one were to start with such a pre sumption although we must in fairness to the views actually expressed by the Full Bench observe that it did  not expressly say so even desert land will have to be first presumed to be agricultural land
We feel certain that the Full Bench did not mean to carry the application of assumptions or principles which seem to follow from its reasoning so far as that
Conclusions 6 7 and 8 are only negative in character
They merely indicated what could not be conclusive in decid ing whether the land was agricultural
Conclusions 6 to 8 as stated above would seem to be correct
But in our opinion they do not carry us far in formulating a test of what is agricultural land
Conclusion No 5 seems to have been the real or positive test based on entries in revenue records actually adopted by the Full Bench for determining the nature the land
The attempted application of the principles laid down by the Full Bench shows that what were treated as tests were really presumptions arising from the following facts first ly that the area was 108 acres abutting Hussain Sagar tank secondly that this land had two wells in 12 1003 SCI76 154 thirdly that it was capable of being used for agricul tural purposes fourthly that it had not been actually put to any use which could change the character of land by making it unfit for immediate cultivation and fifthly that it was classified and assessed to land revenue as agricultural land under the provisions of the Andhra Pradesh Land Revenue Act 8 of 1317 Fasli perhaps on the assumption that it could be used for agriculture
We may observe that the first four indicia set out above are based on absence of any user for non agricultural purposes
Hence they are inconclusive
The last feature does seem to provide some evidence of the character of the land from the point of view of its purpose
Section 50 of the Hyderabad Land Revenue Act No VIII of 1317F now called the Andhra Pradesh Land Revenue Act lays down
Land revenue shall be assessed accord ing to the various modes of use
a Agricultural use
b In addition to agricultural use any other use from which profit or advantage is derived
When rate is assessed on any land for any one of the aforesaid purposes and the land is appropri ated for any other purpose the rate thereof shall be altered and fixed again although the term of subsisting settlement may not have expired
If any land granted by the Government with remission of land revenue for any special purpose is appropriated to some other purpose against the intention of the grant the land revenue thereof shall be recovered
It shall be lawful for the Taluqdar and in case a taluqa is under settlement for the Commis sioner of Survey Settlement or Commissioner of land Records after giving a hearing to the land holder to prohibit its appropriation for any particular purpose and record reasons therefor and to summari ly evict the holder who may have appropriated the said land to prohibited purpose
Provisions of the Andhra Pradesh Land Revenue Act seem to involve quasi judicial proceedings or atleast an en quiry into the purposes for which land to be assessed has been appropriated
The Full Bench of the Andhra Pradesh High Court has held these entries to be strong prima facie evidence and it practically decided the case on the basis of these entries
But the difficulty seems to us to be that the taxing authorities had given a categorical finding that the land under consideration had neither been used for an agricultural purpose nor was it ever tended to be so used
It may be that this finding was based on no evidence or was based on the circumstance that the land appeared to have been kept as the environs of a huge palace unused for any agricultural purpose
It may be that the past history of such lands could give rise to some guess work that no agricultural user was intended by the owners of the Begum pet Palace
But is it possible to 155 reach a categorical finding or conclusion on the basis of general notion based on past history of the way in which such lands were treated by their aristocratic owners At any rate there presumably was sore possibly quasi judicial enquiry at the time of classification of land agricultural under the provisions of Section 50 of the Andhra Pradesh land Revenue Act
There must have been some evidence given such a classification
Learned Counsel for the assessee respondents submitted that evidence had been led on the question of intended user before the Taxing authorities as the prima facie evidence provided by the entries in the revenue records was consid ered enough
It has however to be remembered that such entries could raise only a rebuttable presumption
It could therefore be contended that some evidence should have been led before the Taxing authorities of the purpose intended user of the land under consideration before the presumption could be rebutted
If the prima facie evi dence of the entries was enough for the assessee to dis charge his burden to establish an exemption as it seemed to be evidence to rebut it should have been led behalf of the Department
We think that this aspect of the question was not exam ined by the Full Bench from a correct angle
Although it seems to have based in conclusion primarily on the prima facie evidence provided by the entries under Section 50 of the Andhra Pradesh Land Revenue Act it had also used other indicia which were really not very helpful
The had a bear ing on potentialities for agricultural user
The Full Ben had however not recorded a finding that conclusion reached by the Taxing authorities that the land was never even intended to be use for an agricultural purpose rested on no evidence at all
It had n given its reasons for rejecting this finding of the Tribunal
We also think that the Full Bench was not correct in adopting view expressed in Sarojini Devi s case supra by the Madras High Court where it was held that it was enough to show that the land under consideration was capable of being used for agricultural purpose This erroneous view also seems to us to have affected the conclusion of the Full Bench on what was essentially a question of fact
It has led the Full Bench into giving excessive weight to consider ations which had a bearing only on potentialities of the land for use for agriculture purposes
For the reasons already given we do not think that the term agr cultural land had such a wide scope as the Full Bench appears have given it for the purposes of the Act we have before us
We agree that the determination of the character of land according to the purpose for which it is 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 rural purpose and user and not the mere possibility of user of land by some possible future owner or possessor for an agricultural purpose
It is not the mere potentiality which will only affect its valuation as part of assets but its actual condition and intended use which has to be seen for purposes of exemption from wealth tax
On 156 the objects of the exemption seemed to be to encourage cultivation actual utilisation of land for agricultural purposes
If there is neither anything in its condition nor anything in evidence to indicate the intention of its owners or possessors so as to connect it with an agriculal pur pose the land could not be agricultural land for the purses of earning an exemption under the Act
Entries in revenue ords are however good prima facie evidence
We do not think that all these considerations were kept in view by the taxing authorities deciding the question of fact which was really for the assessing authorities to determine having regard to all the relevant evidence and law laid down by this Court
The High Court should have sent the case to the assessing authorities for deciding the question of t after stating the law correctly
We think that this is a fit case in which we should set aside the judgment of the Full Bench of the High Court and hold that the tribute should determine afresh from a correct angle the question of fact ether any of the lands under consideration were agricultural or t for the purposes of the Act before it
Accordingly we allow these peals set aside the judgment and order of the Full Bench and send the cases to the Tribunal for appropriate orders for giving opporpriate both sides to lead further evidence if they so desire and the decision of the cases in accordance with the law as declared w by this Court
The parties will bear their own costs throughout
PS Appeals allowed


Summary:
The assessee was the owner of more than 100 acres of land within municipal limits and enclosed by a compound wall
The land was adjacent to a tank had two wells in it was capable of being used for agriculture was assessed to land revenue as agricultural land but had not been actually put to any non agricultural use
The High COurt held that the land was agricultural land  under section 2ei of the Wealth Tax Act 1957 and exempt from wealth tax on the basis that 1  the expres sion agricultural land  not having been defined in the Act must be given the widest possible meaning 2 so interpreted all land which is capable of being utilised for agricultural purposes would be agricultural land unless it is actually put to some non agricultural use like construc tion of buildings etc and 3 the land has been assessed to land revenue 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 purposes so as to indicate the intention of the owner or occupier of the land to put it to agricultural use that would be agricultural land 
156 A 1  It is not correct to give
the expression a wide meaning merely because the statute does not define it
The correct rule is for the Court to endeavour to find out logically the exact sense in 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 B 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 expression agricultural land 
153 C 3 The determination of the character of land accord ing to the purpose for which it is 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 in tended 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 it self in order to extract from its natural powers added to or aided by other natural 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 owner or possessor so
as to connect it with an agricultural purpose the land could not be agricultural land
The person claiming that any property is exempt must satisfy the conditions of the exemption
155 G H The extent of the land 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 prima facie evidence since they are based on some quasi judicial enquiry but they raise only a rebuttable presumption
If such 147 pritma facie evidence was enough for the assessee to dis charge 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 relied not only on the entries but also on the inconclusive circumstances based on potentialities
While doing so the High Court did not hold that categorical finding of the taxing authorities and Tribunal that the land was never used nor was intended to be used for an agricultural purpose did not rest on any evidence at all nor did it give any reasons for rejecting the finding
it is therefore a fit case for being remanded to the Tribunal for deciding the question of fact after giving opportunity to both sides to adduce evidence
155 B E CITW
Bengal vs Raja Benoy Kumar 1957 ITR 466 followed
Sarojini Devi vs Raja Sri Krishno AIR 1944 Mad 401 overruled