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2016 (2) TMI 290 - ITAT CHENNAI

2016 (2) TMI 290 - ITAT CHENNAI - TMI - Reassessment - Inclusion of land in the wealth tax assessment - Appellant contended that land in question was not permitted for construction and a civil suit was also pending before the Sub-court - Held that:- , merely because a civil suit is pending on the basis of the amount due to the said Smt V. Kamalam and other creditors, it cannot be said that the assessee has not acquired any title over the said land in question. Therefore, this Tribunal is of the .....

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er the Wealth-tax Act. - Decided partly in favor of assessee. - W.T.A.No.5/Mds/2015 - Dated:- 7-1-2016 - SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER For The Appellant : Shri P Radhakrishnan, JCIT For The Respondent : Shri N Anush Shanker, CA ORDER PER N.R.S.GANESAN, JUDICIAL MEMBER This appeal of the Revenue is directed against the order of the Commissioner of Wealth-tax(Appeals)-1, Coimbatore, dated 27.2.2015 and pertains to assessment year 2008-09. 2. S .....

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o sec. 2(ea) of the Wealthtax Act. The assessee claimed before the Assessing Officer that the land in question was not permitted for construction and a civil suit was also pending before the Sub-court, Coimbatore. However, the Assessing Officer rejected the claim of the assessee and found that what was prohibited is the construction of multistoried building for commercial purpose and there was no restriction under the Tamil Nadu Town and Country Planning Act for construction of residential unit. .....

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e assessed as an asset, it has to be assessed only in the assessment year 2011-12 and not during the year under consideration. After referring to the pendency of the civil suit, the CWT(A) found that the land in Sowripalayam cannot be treated as an asset within the meaning of sec. 2(ea) of the Wealth-tax Act. The ld. DR further submitted that what was prohibited is construction of a multistoried building and not a residential building. Referring to sec. 2(ea) of the Wealth-tax Act, the ld. DR su .....

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r the assessee submitted that the only dispute is with regard to land at Sowripalayam. According to the ld. Representative, sec. 2(ea) Explanation 1(b) clearly says that the land on which construction is not permissible under the existing law of the land cannot be construed as an asset. The assessee, in fact, applied for approval of a multistoried building before the local authority and the local authority hesitated to grant approval since the access road is not available. The assessee was able .....

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he land was classified as residential use zone under the Development Control Regulations and the assessee has applied for change of the classification as commercial zone since the assessee intended to put up a multistoried commercial complex. According to the ld. Representative, as per the Development Control Regulations, for construction of a multistoried building, the approach road shall be of 9 mtrs, therefore, the assessee was not permitted to construct the building. Since the assessee was n .....

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he assessee as fraudulent. The plaintiff before the sub-court has also prayed for mandatory injunction restraining the assessee from altering the physical features of the property. In view of the pendency of the suit, according to the ld. Representative, the land in question cannot be construed as an asset. On a query from the Bench, the ld. Representative clarified that no interim order was passed by the Subordinate judge, Coimbatore, on the pending suit. Therefore, according to the ld. Represe .....

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rom the material available on record it appears that the land in question at Sowripalayam was classified as residential use zone under the Development Control Regulations. When the said land itself is classified as residential use zone, it is not known how the assessee claims that construction of the building is not permitted. The assessee claims that unless 9 mtrs access road is available, the local authority may not approve the building plan. Admittedly, the assessee has not filed any building .....

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o the extent of 0.74 acres. Therefore, it is obvious that the land in question was a residential zone for the year under consideration and subsequently by order dated 11.6.2014 the Government converted the land into a commercial land. Under the Development Control Regulations for construction of a multistoried commercial complex, the assessee has to necessarily provide not less than 12.5 mtrs of access road. Therefore, what was prohibited is construction of a multistoried commercial complex duri .....

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on that it may not be correct to say that the construction of the building was not permissible in the land. 6. We have gone through the provisions of sec. 2(ea) of the Wealth-tax Act. Explanation 1(b) to sec. 2(ea) says that the land on which construction of a building is not permissible under the law in force then same cannot be treated as an urban land. In this case, the construction of the residential building is not prohibited. In fact construction of residential building is permissible unde .....

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e said that construction of a building is not permissible in the land in question. Therefore, the CWT(A) is not justified in saying that construction of a building in the land is not permissible. 7. Admittedly, two civil suits are pending before the subordinate judge, Coimbatore. OS No.270 of 2014 filed by Smt V. Kamalam for herself and on behalf of creditors of Ramakrishna Industries. OS No.294 of 2014 was also filed by the very same Smt. V Kamalam on her individual capacity. A bare reading of .....

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