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2009 (9) TMI 25 - HC - Wealth-taxLand Urban Land - Wealth Asset - Date of acquisition Inclusion Held that - once no construction is permissible in law then such land would not be urban land . Therefore it would not be included in the expression assets . Accordingly it has been held that such land would not be exigible to wealth-tax - where two opinions are possible then it would not be within the sweep of the power of the Tribunal to invoke jurisdiction for rectification of an order. It is evident from the discussion in the preceding paras that the issue whether the date of resolution with regard to adopting the development scheme or building scheme would be relevant or any other date would be relevant as a debatable issue. Once an issue is debatable then rectification jurisdiction cannot be invoked
Issues Involved:
1. Date of acquisition of property and right to receive compensation. 2. Inclusion of land in urban land as defined in Section 2(ea) of the Wealth Tax Act. 3. Scope of rectification under Section 35 of the Wealth Tax Act. Issue-wise Detailed Analysis: 1. Date of Acquisition of Property and Right to Receive Compensation: The Tribunal initially held that the value of the land acquired by the government should not be included in the net wealth of the assessee, as the right to receive compensation did not fall within the definition of "assets" under Section 2(ea) of the Wealth Tax Act, 1957, effective from April 1, 1993. The Tribunal observed that the right to receive compensation is not an asset liable to tax under the amended definition. However, upon rectification, the Tribunal modified its order, stating that the acquisition proceedings initiated on March 21, 1997, made the value of the land assessable for the assessment years 1993-94, 1994-95, and 1995-96. 2. Inclusion of Land in Urban Land as Defined in Section 2(ea) of the Wealth Tax Act: The Tribunal considered whether the land in question fell within the definition of "urban land" under Section 2(ea) of the Act. It was argued that the land could not be regarded as "urban land" since no construction was permissible due to the acquisition proceedings. The Tribunal initially excluded the value of the acquired land from the net wealth but later, upon rectification, included it, asserting that the acquisition proceedings were initiated in 1997, thus making it assessable for the relevant assessment years. 3. Scope of Rectification under Section 35 of the Wealth Tax Act: The assessee argued that the Tribunal exceeded its jurisdiction under Section 35 of the Act by assuming appellate power or power of review, which is not permissible under the scope of rectification. The Tribunal's rectification order was challenged on the grounds that it involved a debatable issue, which cannot be rectified under Section 35. The High Court held that rectification under Section 35 is limited to correcting mistakes apparent on the face of the record and cannot involve long drawn reasoning or debatable issues. The High Court cited the Supreme Court's judgment in T.S. Balaram v. M/s Volkart Brothers, emphasizing that a mistake apparent from the record must be obvious and patent. Judgment: The High Court concluded that the date of the resolution for framing the scheme (July 15, 1992) was relevant for determining the prohibition on construction and the applicability of wealth tax. The High Court held that the land could not be included in the definition of "urban land" as no construction was permissible due to the acquisition proceedings. Consequently, the land did not fall within the definition of "assets" under Section 2(ea) and was not assessable to wealth tax for the relevant assessment years. The High Court also ruled that the Tribunal's rectification order exceeded its jurisdiction under Section 35, as the issue was debatable and not a mistake apparent from the record. The rectification order was set aside, and the original order was modified to exempt the land from wealth tax for the assessment years 1993-94, 1994-95, and 1995-96. The appeals were allowed in favor of the assessee, and the assessments were directed to be re-framed accordingly.
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