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2015 (5) TMI 874 - ITAT HYDERABAD

2015 (5) TMI 874 - ITAT HYDERABAD - TMI - Exemption claim - Urban land - assessee submitted that since the property in question is not a vacant land but there was a building under construction over the said land, it cannot be treated as urban land u/s. 2(ea)(v) - Failure to furnish documentary evidence - whether the property subjected to Wealth Tax is an 'urban land' as per Section 2(ea)(v)- Held that:- Any area comprised within the jurisdiction of a municipality or Cantonment Board which has a .....

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mi-finished one cannot come within the exclusionary clause so as to take it out from the ambit of urban land. - even accepting assessee's claim that there was a building under construction over the land during the relevant time, but no documentary evidence has been brought on record to indicate approval of the appropriate authority for such construction. In course of hearing when the Ld. AR was specifically asked whether there is an approval of the appropriate authority for the construction, he .....

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Rajat Mitra, DR ORDER Per Saktijit Dey, J.M. These two appeals filed by the assessee are against two separate orders, both dated 08-02-2013, of the Ld. Commissioner of Income Tax(Appeals)-III, Hyderabad pertaining to AY. 2003-04 and 2004-05. 2. The only common issue arising in both the appeals relate to the decision of the Assessing Officer (AO) and Ld.CIT(A) in treating the immoveable property at 8-3-949/1, Punjagutta, Hyderabad as 'urban land' and subjecting it to Wealth Tax. 3. Briefl .....

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that the assessee was in possession of vacant land admeasuring 7,236 sq. yards at Ameerpet which was sold for a consideration of ₹ 13 Crores during the FY.2004-05 relevant to the AY.2005-06. However, it was noticed by the AO that the assessee has not filed any Wealth Tax return for the AY. 2003-04 and 2004-05. The AO being of the view that vacant urban land is subject to Wealth Tax and since the value of such asset is more than the minimum prescribed limit liable to Wealth Tax, he formed a .....

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ture and sale of soft drinks. It was submitted that even after sale of the soft drink business, the building continued to exist there and assessee was looking into opportunities for setting up a new business in the said premises. However, when the assessee failed to set up a suitable business in the said premises, property was given to a developer for commercial development on as is where is condition. The assessee submitted that as per the terms of the agreement with developer, the old building .....

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nd, it cannot be treated as urban land u/s. 2(ea)(v) of the Wealth Tax Act. The AO after considering the submissions of the assessee vis-à-vis the facts and material on record observed that the documentary evidences available on record do not indicate that what has been sold by the assessee is land along with building appurtenant thereto. He observed that the explanation of the assessee that for the purpose of reducing the stamp duty, the property was described as land in the agreement is .....

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the First Appellate Authority, assessee made elaborate submissions to substantiate its claim that the property is not a vacant land but there was a structure constructed over the said land. In support, assessee also furnished certain documentary evidences. On the basis of the submissions made by the assessee, Ld.CIT(A) called for a Remand Report from the AO. After perusing the Remand Report submitted by the AO, Ld.CIT(A) found that though there was an old building over the subject land, however .....

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tions made over the said land was also demolished by the municipal authorities which indicates that there is no structure standing over the land during the relevant period. Thus, the vacant land has to be treated as urban land as per the provisions contained u/s. 2(ea)(v) of the Wealth Tax Act. The Ld.CIT(A) further observed, even if assessee's claim that there was a building under construction is accepted, then also, it will not help the assessee because the land in question must contain a .....

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ment agreement. 6. Ld. AR drawing our attention to the written submissions filed before the First Appellate Authority submitted that facts have been clearly laid out before the CIT(A) to the affect that after demolition of the old building standing over the property, construction of a new commercial complex has started after April 2002 itself. The Ld. AR strongly contesting the observations made by the CIT(A) that the illegal constructions made over the said property without obtaining the approv .....

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ars, it cannot be subjected to Wealth Tax by treating it as urban land. In support of such contention, the assessee relied upon the decision of the ITAT Cochin bench in the case of Smt. Meera Jacob Vs. WTO (14 SOT 486) wherein it is held that a land on which a building is under construction cannot be treated as urban land. 7. The Ld. DR on the other hand strongly relying upon the findings of Ld.CIT(A) submitted that since the assessee failed to submit any documentary evidence to prove the fact t .....

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Hegde (Judgment dt. 14-03-2013 of Calcutta High Court in AWT No. 1 of 2012 G.A.No. 2711 of 2012) 8. We have considered the submissions of the parties and perused the materials on record. The issue in dispute lies within a very narrow compass i.e., whether the property subjected to Wealth Tax is an 'urban land' as per Section 2(ea)(v) of the Act. Before examining the merits of rival contentions, it is worth taking note of the relevant statutory provisions. As per clause-(v) of Section 2(e .....

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ion of not less than ten thousand according to the last preceding census of which the relevant figures have been published before the valuation date; or (ii) in any area within such distance, not being more than eight kilometres from the local limits of any municipality or cantonment board referred to in sub-clause (i), as the Central Government may, having regard to the extent of, and scope for, urbanisation of that area and other relevant considerations, specify in this behalf by notification .....

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s from the date of its acquisition by him [or any land held by the assessee as stock-in-trade for a period of ten years from the date of its acquisition by him]"; 9. A plain reading of the aforesaid provision makes it clear that any area comprised within the jurisdiction of a municipality or Cantonment Board which has a population not less than 10,000 according to the land census or in any area which is within such distance not being more than 8 KMs from the local limits of any municipality .....

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and' as provided under explanation 1(b). However, the assessee seeks exclusion of the property from being treated as 'urban land' on the plea that there is a building constructed over the said land. Keeping in view the aforesaid statutory provision, it is to be decided whether assessee's claim is acceptable? As we have stated earlier, the assessee itself has submitted not only before us but also before the Departmental authorities that the old building standing over the subject l .....

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ied upon a decision of ITAT Cochin Bench (supra) wherein it is held that a building under construction also qualifies for exemption under explanation 1(b) of Section 2(ea)(v) of the Act. However, the expression 'land occupied by any building' which has been constructed as provided in explanation 1(b) of Section 2(ea)(v) came up for interpretation by the Hon'ble Karnataka High Court in the case of Commissioner of Wealth Tax and another Vs. Giridhar G.Yadalam (325 ITR 223). The Hon' .....

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by any building which has been constructed with the approval of the appropriate authority. Approval by appropriate authority is not disputed. What is argued before us is that since the building is being constructed, the same is exempt for the purpose of wealth-tax in terms of the meaning to be given to urban land. A careful reading of the said definition would show that what is excluded is the land occupied by any building which has been constructed (italicized, in print, supplied). Admittedly, .....

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its own meaning. Constructed would mean 'fully constructed' as understood in the common parlance. The Tribunal unfortunately, without noticing the intention of the legislature and the specific wordings in the section has chosen to blindly follow its earlier order. If the order of the Tribunal is accepted then neither the owner nor the builder nor the occupant would pay any tax to the Government in terms of the WT Act. In these circumstances, we are unable to accept that argument advanced .....

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Thus, when decisions of the superior judicial authority i.e., Hon'ble High Courts are available wherein it is held that any building constructed over the land would mean a fully constructed building, the view expressed by the Hon'ble High Courts would certainly get precedence over the decision of ITAT Cochin Bench relied upon by assessee. That being the case, the structure standing over the land during the relevant period being a half/semi-finished one cannot come within the exclusionary .....

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