TMI Blog2016 (4) TMI 731X X X X Extracts X X X X X X X X Extracts X X X X ..... actual keeping the same as non-productive and thereby wrongfully getting the exemption from wealth tax from year to year for a long period of more than 10 years. The time limit thus for claiming exemption from wealth tax in case of any land held as stock in trade has been restricted up to 10 years. Once the non-productive asset like urban land is converted to a productive asset like a building which qualifies for exemption, then the assessee can start availing of exemption even during the period of conversion of such non-productive asset to productive asset. See Apollo Tyres Ltd. vs. Assistant Commissioner of Income-tax [2009 (12) TMI 572 - Kerala High Court] The Ld. D.R. has also fairly agreed that so far as the 29000 sq. yds of land which was converted to stock in trade in the financial year 2006-07, the same was not eligible for imposition of wealth tax. - WTA No. 12/M/2015, WTA Nos.1 & 2/M/2016 - - - Dated:- 15-4-2016 - Shri Sanjay Garg, Judicial Member And Shri Ramit Kochar, Accountant Member For the Petitioner : Shri Pankaj R. Toprani, A.R. For the Respondent : Shri Amit Kumar Singh, D.R. ORDER Per Sanjay Garg, Judicial Member The above titled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the above reasons recorded, the delay if any in filing the above wealth tax appeal is hereby condoned. 4. Now we proceed to decide the appeals on merits. For the sake of convenience, the facts have been taken from the appeal for A.Y. 2005-06. The assessee has taken the following grounds of appeal: The Ld. Commissioner of Income Tax (Appeals) has erred in confirming the order of the wealth tax officer ignoring the fact and material and enhancing the value of the land without any documentary evidence. The Appellant reserves the right to add, to delete and / or amend any of the foregoing ground of appeal. Apart from the above ground, the assessee has taken the additional grounds of appeal which read as under: 1. The Ld. CIT (A) erred in upholding the addition of ₹ 6,35,00,000/- to the net wealth of the Appellant. 2. The Ld. (CIT) erred in enhancing the net wealth of the Appellant by ₹ 10,42,00,000/-. 3. The CIT (A) erred in totalling and assessing area of land at 56,400 Sq. yrds. on Page 5 of his order without appreciating that he made totalling mistake as correct total works out to 55,500 Sq. yrds. 4. The lower authorities erred in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . of said leasehold land in Jaipur was converted into stock-in-trade vide Board Resolutions dated 18.06.2006 and 30.04.2007 respectively. The assessee had sold 49890 sq. yds of aforesaid land during F.Y. 2007-08 relevant to A.Y. 2008-09 for a consideration of ₹ 20 crores. 7. The Wealth Tax Officer (AO) noted that the aforesaid leasehold land was situated in the Jaipur City area and, therefore, the same falls in the category of urban land which has been covered within the definition of assets chargeable to wealth tax u/s. 2(ea)(v) of the Act w.e.f. A.Y. 1993-94 and onwards. The AO observed that the assessee had not filed its wealth tax returns for the years under consideration. The AO on adhoc basis adopted the fair market value of the land on estimation basis and calculated the wealth tax there upon. However, in appeal, the Ld. CWT (A) took into consideration the sale price of the land in question sold in financial year 2007-08 relevant to A.Y. 2008-09 and he applied the formula treating that there might have been 10% appreciation in the value of the land in each year and accordingly reverse calculated the fair value of the land of A.Y. 2005-06, 2006-07 2007-08 respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been provided under section 2(2)(ea). In clause (v) to section 2(2)(ea), the urban land has been included in the definition of asset upon which wealth tax has been made chargeable. Further, urban land has been defined in clause (b) of explanation 1 to section 2(2)(ea), but, under the exclusion clause it has been provided that any land held by assessee as stock in trade for a period of 10 years from the date of its acquisition by him, has to be excluded from the definition of urban land for the purpose and scope of Wealth Tax Act. 12. We have considered the above submissions of the Ld. AR of the assessee. We find force in the above submissions of the ld. AR. The land earlier was held by the assessee as non-productive capital asset which was subjected to the wealth tax. However, the assessee had converted 29000 sq. yds. of the land into stock in trade on 31.05.06 and therefore for the relevant assessment year 2007-08, the 29000 sq. yds of the land no longer remain a non-productive capital asset but a business asset in the shape of stock in trade capable of yielding taxable business income and thus exempt from wealth tax. In the wording in relation provided under the exclusion clau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s non-productive. Under the provisions of the amended Act, tax is levied only on the non-productive assets such as residential house, urban land, jewellery, bullion, motor cars, etc. It is useful to refer to the Finance Minister s Speech while introducing the amendment to the Wealth-tax Act by Finance Bill, 1992 which is as follows:- 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 distinction at present between productive and non-productive assets. The Chelliah Committee has suggested that, in order to encourage the taxpayers to invest in productive assets such as shares, securities, bonds, bank deposits, etc., and also to promote investments through Mutual Funds, these financial assets should be exempted from wealth-tax. Wealth-tax should be levied on individuals, Hindu undivided families and all companies only in respect of non-productive assets such as residential houses, including farm houses an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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