Judgment

M. H. BEG, J. : - Civil Appeals Nos. 2000-2001 of 1969 from the judgement and order of the Kerala High Court are by grant of special leave by this Court filed on the ground that these appeals raise a question of wide general importance. This question was thus framed, in a reference made by the Madras Bench of the Income-Tax Appellate Tribunal under Section 64 (1) of the Estate Duty Act, 1953 :

"Whether on the facts and in the circumstances of the case the Appellate Tribunal was correct in law in having included the value of the forest lands in the total value of the Estate for the purpose of Estate Duty?

2. The assessee had claimed that large tracts of forest land, covered with wild and natural forest growths, situated in the erstwhile Malabar District, were "agricultural" lands not liable to estate duty under the Estate Duty Act of 1953 (hereinafter referred to as the Act). According to the Revenue, duty had become leviable on the death of the former owner, Smt. Jayalakshmi Devi who died on 6-3-1954, and Shri Madhava Rajah of Kollengode, who died on 9th May, 1955 each owning 1/13th share in the Tarwad properties on the dates of their deaths.

3. No question as to the effect of any amendment of the law upon liability of agricultural land to Estate duty was referred by the Tribunal to the High Court. Nevertheless, it seems to have been considered by reason of the general nature of the question referred involving a determination of the correctness of the inclusion of the value of "forest land in the total value of the estate." We may observe here that the question framed seems to rest on the assumption that the land under consideration was "forest land". However, the general nature of the question framed and the questions argued and decided by the Appellate Tribunal as well as the High Court indicated that the real context was about the very nature of the land involved in order to determine whether it was liable to estate duty.

4. The High Court had observed that the Tribunals findings that land, to the extent of 36,857.16 acres, was not agricultural land was "solely based on the absence of evidence or the assessees failure to prove that the disputed forest lands are agricultural lands."

5. The High Court had also mentioned the basis of this finding relating to two types of land about which it had disagreed with the Appellate Tribunal while agreeing with the Tribunal that 500 acres of rocky land was non-agricultural land. This basis was given by quoting the following two passages from the judgment of the Appellate Tribunal:

"(1) According to the valuers, the remaining extent of 15,000 and odd acres out of the first category, has been leased by the assessee from time to time for cutting of timber and fuel wood, and has never been used by him either by himself or through lessens to bring it under cultivation for any purpose. There is no material on record from which it can be said that this area can at all be brought under cultivation for any purpose. Even if it is assumed that there is a bare possibility of this area being brought under cultivation, the assessee has not placed any material before us from which it can be said that a prudent owner would undertake any process of farming in respect of this land."

(2) "With regard to the second category of the land of the extent of 16,000 and odd acres, the report of the valuers does not throw any light upon the nature of this land, and the only information available is that these lands have been held by the Kerala Government under a perpetual lease on an annual rent of Rupees 5,000/-. The assessee has not shown whether this land was being cultivated by the Kerala Government or whether it was only being exploited by the Kerala Government for its timber value. On the material on record, it is not possible for these lands to come under the category of agricultural lands."

6. The High Court had set out provisions of Section 5 of the Act as they stood before a slight amendment in 1956. It