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Hyderabad Bottling Co. Limited Versus Asst. Commissioner of Income Tax, Circle-2 (2) , Hyderabad

2015 (5) TMI 874 - ITAT HYDERABAD

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 population not less than 10,000 according .....

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lusionary 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 admitted that there is no such approval. T .....

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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. Briefly, the facts relating to the above said is .....

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ant 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 an opinion that wealth chargeable to tax ha .....

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tted 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 was to be demolished by the assessee and .....

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. 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 not acceptable. Thus, the AO concluded th .....

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ade 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, the same was demolished in the year 2002 .....

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olished 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 finished building which is ready for comme .....

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ntion 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 approval from the competent authority was demoli .....

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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 that there was a building standing over the .....

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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(ea), urban land is included within the defi .....

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g 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 in the Official Gazette, [but does not inc .....

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[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 or Cantonment Board as notified by the Ce .....

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). 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 land was demolished in April 2002 and the d .....

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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'ble Karnataka High Court held that the ex .....

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d 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, in the case on hand, the building is not .....

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39;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 by the learned counsel for the appellant. .....

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