TMI Blog2009 (12) TMI 572X X X X Extracts X X X X X X X X Extracts X X X X ..... see is a public limited company engaged in production and sale of automotive tyres. It was allotted a plot in Gurgaon earmarked for institutions by the Haryana Urban Development Authority on December 29, 1995. The appel-lant commenced construction of a commercial building in the plot in November, 1997, completed construction of a four storeyed building with basement and started occupying it from March 29, 2000. After completion of the construction of the building, the land and building are granted exemption from wealth-tax as the said asset falls under the exempted category. However, in the course of assessment for the assessment year 1998-99, the Wealth-tax Officer assessed the value of the land treating it as urban land under clause (v) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lometres from the local limits of any municipality (whether known as municipality, municipal corporation or by any other name) or a cantonment board, but does not include- . . . (3) any house which the assessee may occupy for the purposes of any business or profession carried on by him ; (v) urban land ; Explanation.- . . . (b) "urban land" means land situate- (i) in any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corpora-tion, notified area committee, town area committee, town committee, or by any other name) or a cantonment board and which has a population of not less than ten thousand according to the last pre-ceding census of which the relevant figures have been p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g which when completed qualifies for wealth-tax exemption. The contention of the assessee is that the land allotted to the assessee is for commercial purpose, that is for industrial use, and under the exemption clause contained in the definition of "urban land" all the unutilised industrial land qualifies for exemption for two years from the date of acquisition by the assessee. The contention of the assessee is that the exemption ceases to be available only if after two years, the land is continuously kept vacant without utilising it for con-struction of building for industrial or commercial purposes. Senior counsel for the Revenue on the other hand contended that the intention of the Legislature in limiting the exemption for vacant lan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ful to refer to the Finance Minister's Speech while introducing the amendment to the Wealth-tax Act by the Finance Bill, 1992, which is as follows ([1992] 194 ITR (St.) 1, 21) : "67. The Wealth-tax Act, 1957, has far too many exemptions making its administration enormously complicated. The valuation of certain assets such as shares also presents problems, since very high market values reflecting speculative activity can lead to a heavy burden on shareholders who are long-term investors. There is also no dis-tinction at present between productive and non-productive assets. The Chelliah Committee has suggested that, in order to encourage the tax-payers to invest in productive assets such as shares, securities, bonds, bank deposits, etc., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "asset" and is subject to wealth-tax. However, urban land acquired for industrial purpose enjoys tax holiday from wealth-tax for two years from the date of acquisition by the assessee. If the land is not utilised for industrial purpose within two years, the value of such urban land will be subject to wealth-tax from the year following. The controversy is whether commencement of construction of the building for commercial or industrial purpose is use of the land for such purpose qualifying for exemption or whether exemption is available only on com-pletion of construction of the building, and after building is put to use for industrial purpose. While the contention of the assessee is that commence-ment of construction of the building on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which in this case on completion falls within the exception clause. Now, the question to be con-sidered is whether during the period of construction of the building, the urban land on which such construction is made could be assessed to wealth-tax. In our view, once the land is utilised for construction purposes, the land ceases to have its identity as vacant land and it cannot be inde-pendently valued and considering the value of the building under con-struction the land value may be insignificant. It is pertinent to note that building under construction which is work-in-progress is not brought within the definition of "assets" for the purpose of levy of wealth-tax. The Department does not dispute the fact that as and when construction of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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