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2018 (9) TMI 239 - HC - Wealth-taxExemption from wealth tax - whether 28 Acres of ‘urban land’ comes under the ambit of the exemption clause of Section 2(ea) of the Wealth Tax Act, 1957? - person to be the ‘owner’ - protective assessment - Held that:- The words “belonging to” are of wider import and more flexible than the narrower term of ‘ownership’. Sub-section (8) of Section 4 also permits the assets to be taxed in the hands of the Assessee, even if the asset is not yet fully de jure transferred to him and invoking the provisions of Section 53-A of the Transfer of Property Act, 1882, the Assessee retains the possession of such property in part performance of the contract. Section 8 deems such a person to be the ‘owner’ of that building or property and allows taxability in his hands even though the title in favour of the Assessees is not yet crystallized. The intention of the Legislature is, therefore, obvious i.e. to throw the tax net under the provisions of the Wealth-Tax a little wider and not to cover only the ‘owners’ of the assets stricto sensu. In this perspective, we find ourselves fortified in taking the view that the assets in question namely ‘urban lands’ belonging to Assessees for which they are not only claiming ‘ownership’ through litigation but are undoubtedly in possession, dominion and control but also in user of the land yielding income therefrom, they cannot be held to be outside the tax net under the Wealth-Tax Act, 1957. 'Protective Assessments’- Held that:- As already noted above that the demands in question have been raised under the ‘Protective Assessments’ only framed by the Assessing Authority and the recovery on the basis of the same is not enforceable as of now and therefore, the appellate Orders by the Appellate Tribunal and the Commissioner of Wealth-Tax (Appeals) even though decided the Questions on merits would remain in the character of the ‘Protective Assessments’ only, but since the Tribunal has decided the question of law also, that is why it has given rise to the aforesaid Substantial Questions of law which we are called upon to decide. Question No.1 is answered in favour of the Revenue and against the Respondent Assessees and we hold that the Income Tax Appellate Tribunal (ITAT) was not justified in law in holding that 28 Acres of land located within the Corporation limits of the Bangalore City does not fall within the definition of ‘Assets’ in Section 2 (ea)(b) of the Wealth-Tax Act, 1957 and no Wealth Tax on these lands is chargeable. We hold that the Wealth Tax would be chargeable for these Assessment Years in question in the hands of the Respondent Assessees as the “urban lands” in question ‘belonged to’ the Assessees on the respective ‘Valuation Dates’ relevant to A.Y. 1999-2000 to A.Y. 2004-05 in question. Question of law No.2 also in favour of the Revenue and against the Assessees and hold that there was no total prohibition against raising of any sort of construction of a Building on the lands in question either under the interim Orders of the Hon’ble Supreme Court or by virtue of Karnataka Parks, Play Fields and Open Places (Preservation and Regulation) Act, 1985 and in view of the fact that temporary or semi-permanent constructions were raised from time to time on these lands in question, the ‘urban lands’ in question ‘belonging to’ the Assessees could not fall in the Exclusion Clause (b) of Explanation to Section 2 (ea) of the Wealth-Tax Act, defining the term “Assets”. Question of law No.3 in favour of the Revenue and against the Assessees and hold that the Income Tax Appellate Tribunal (ITAT) was not justified in setting aside the “Protective Assessments” made by the Assessing Authority for the Assessment Years A.Y. 1999-2000 to A.Y. 2004-05 in question. The Assessing Authority would be free to now proceed to make substantive assessments in the hands of the Respondent Assessee.
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