Parliament has the competence to enact tax laws on the capital value of assets, excluding agricultural land, and the present characteristics of land determine its classification as agricultural or non-agricultural.

Hegde, J.—The petitioner, who is assessed to wealth-tax during the assessment years 1957-58 and 1958-59, has these petitions challenging the validity of the assessments made on him. Two contentions were urged in support of these petitions. They are : (i) Parliament had no competence to enact any law imposing tax on the capital value of the land; and (ii) on a proper appreciation of the material on record, the "land" that is in dispute in these petitions is an "agricultural land"

2. Sri E. S. Venkataramiah, the learned counsel for the Assesses, contended that Parliament could not have enacted any law levying tax on the capital value of "land", be it agricultural or otherwise. According to him, "land" is included in the entry 49 of List II of the Seventh Schedule of the Constitution and, therefore, Parliament could not have enacted any law imposing tax on the capital value of "land". We do not think that there is any force in this contention. The Wealth-tax Act was enacted evidently on the basis of the power conferred on Parliament under entry 86 of List I of the Seventh Schedule, which entry reads :

"Taxes on the capital value of the assets, exclusive of agricultural land, of individuals and companies; taxes on the capital of companies."

3. It cannot be denied, nor had it been denied before us, that the word "asset" includes within its fold "land" as well. If that be so, then "land" other than "agricultural land" comes within the scope of entry 86. It is trite to say that every entry found in the Seventh Schedule is a topic of legislation. Hence, we are clearly of the opinion that Parliament had competence to enact the law in question.

4. In support of his contention that Parliament had no legislative competence to enact any law imposing tax on "land", Sri Venkataramiah tried to rely on the decision of this court, to which one of us was a party, in W. P. 1077/59 (D. H. Hazareth v. Gift-tax Officer). We not think that any support is available from the decision for the contention advanced on behalf of the petitioner. In that case this court had to consider whether parliament was competent to enact the Gift-tax Act. Therein it was conceded that there was no specific entry in List I authorising or empowering Parliament to enact the Gift-tax Act could be justified on the basis of the residuary powers. This court came to the conclusion that so far as "lands and buildings" are concerned, the legislative power to levy gift-tax vests with the State legislature and, therefore, Parliament was not competent to enact the Gift-tax Act under the residuary powers. The ratio of that decision is not applicable to the facts of the present cases.

5. This takes us to the next question whether the "land" with which we are concerned in these cases could be considered as "agricultural land". It is conceded by both the sides that if the land with which we are concerned in these cases are considered as "agricultural land" then no tax can be levied on the net value of the land on the basis of the Wealth-tax Act. Therefore, the question that has to be decided is whether the land in question is an "agricultural land". It is not denied that at one time this land was "agricultural land". That was requisitioned by the Government some time in the year 1944 or 1945 for the purpose of locating a military aerodrome. We are told that the land in question has now been levelled and an air strip constructed thereon. For the last over 15 year this land has been used as an air strip. But Sri Venkataramiah contended that the fact that at present it is utilised for a non-agricultural purpose is irrelevant while deciding its basic character and what is relevant is its general characteristics. "Agricultural land" has not been defined either in the Constitution or in the Wealth-tax Act. Therefore, we have to take into consideration the ordinary meaning attached to that expression. Normally, when we say that a land is an "agricultural land", we mean that that land is used