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Devineni Avinash Versus WTO, Ward-2 (3) , Vijayawada

2016 (7) TMI 422 - ITAT VISAKHAPATNAM

Nature of land - whether the land held by the assessee is an urban land coming within the definition of asset as per section 2(ea) of the Act or is a stock in trade, which is kept outside the definition of asset? - Held that:- The assessee has filed a statement of affairs before the assessing officer and claimed that the impugned land is an immovable property. Just because land is under Joint Development, it cannot be considered that the asset is held for the purpose of commercial exploitation t .....

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A is entered for development of the property, it is for the builder who comes under the activity of business but not the assessee. The assessee has purchased the land as an investor, consequently any gains from the land would be assessable under the head income from capital gains. Therefore, we are of the view that the assessee has failed to prove that the impugned land held by him is stock-in-trade. - In the present case on hand, admittedly the land held by the assessee is an urban land. H .....

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rect the A.O. to delete the impugned land from the definition of assets for the purpose of wealth tax. - Decided in favour of assessee. - W.T.A.No.1/Vizag/2015 - Dated:- 10-6-2016 - SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER For The Appellant : Shri C. Subrahmanyam,AR For The Respondent : Smt. D. Komali Krishna,DR ORDER PER G. MANJUNATHA, Accountant Member: This appeal filed by the assessee is directed against the order of CWT(A), Vijayawada dated 15.9.2015 and .....

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to treat the return originally filed on 17.9.2010 as return filed in response to notice u/s 17 of the Act. The case has been selected for scrutiny and accordingly notice u/s 16(2) of the Act was issued. In response to the notice, the authorized representative of the assessee appeared from time to time and furnished the details called for. The A.O. after considering the details furnished by the assessee completed the assessment u/s 16(3) r.w.s. 17 of the Act and determined taxable wealth of S .....

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957 are contrary to the facts of the case and provisions of law. 1.1 The learned Commissioner of Wealth Tax(A)(in short 'CWT(A)') erred in observing that the subject vacant land is liable for Wealth Tax when the same is held by the assessee as his stock-in-trade. 1.2 The learned CWT(A) ought to have held that the subject land is a business asset/stock-in-trade which the assessee can hold for 10 years from the date of purchase, therefore, the same is not liable for Wealth Tax. 1.3 The lea .....

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by the CWT(A) in a judicious manner. 1.5 The learned CWT(A) failed to consider the submission of the assessee in the right perspective instead in a summary and casual manner concluded that the subject asset is liable for Wealth Tax and this way affirmed the action of the assessing officer. 1.6 Aggrieved by the orders the assessee is in appeal before the Hon ble ITAT to seek justice. 4. The assessee also raised an additional ground. However, the same has been not pressed during the course of hea .....

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elopment of the property. Any asset held as stock-in-trade for a period of 10 years from the date of purchase is not an asset for the purpose of wealth tax. The A.R. further submitted that the CWT(A) failed to appreciate the fact that the development agreement entered by the assessee which goes to prove that the assessee has purchased the land for the purpose of business exploitation and till such time, the asset is held in stock in trade. The A.R. further submitted that the lower authorities ta .....

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out appreciating the facts brushed aside the evidences filed by the assessee and held that the land held by the assessee is an urban land, coming within the definition of assets, u/s 2(ea) of the Act. The A.R. further submitted that the impugned land held by the assessee is under dispute. As per the provisions of section 2(ea) of the Act, any land on which construction of a building is not permissible under any law for the time being in force, then the same shall not be considered as asset for t .....

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ssued by the city civil court. On the other hand, the Ld. DR strongly supported CIT(A) order. 6. We have heard both the parties, perused the materials available on record and gone through the orders of the authorities below. The factual matrix of the case which leads to levy of wealth tax is that assessee has purchased a land on 30.7.2007 and on the next day a MOU was entered into with the developer for developing the said land. The A.O. was of the opinion that the land held by the assessee is c .....

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e purpose of commercial exploitation which was evidenced by the fact that he had entered into a JDA on the next day of the purchase of land, therefore, it cannot be considered as asset for the purpose of wealth tax. It was further contended that just because he has disclosed the said land in the statement of affairs filed before the department under immovable properties would not alter the character of land. What is important is the purpose for which it was purchased. The A.O. not denied the fac .....

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is a stock in trade, therefore, it cannot be considered as an asset. We do not find any merit in the contention of the assessee for the reason that the assessee himself has admitted that he had purchased the land as an investor. It is also an admitted fact that the assessee has filed a statement of affairs before the assessing officer and claimed that the impugned land is an immovable property. Just because land is under Joint Development, it cannot be considered that the asset is held for the .....

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the past or in the future. If the JDA is entered for development of the property, it is for the builder who comes under the activity of business but not the assessee. The assessee has purchased the land as an investor, consequently any gains from the land would be assessable under the head income from capital gains. Therefore, we are of the view that the assessee has failed to prove that the impugned land held by him is stock-in-trade. 8. Coming to the alternative plea of the assessee. The asses .....

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any land on which construction of a building is not permissible under any law for the time being in force is not an urban land, which is coming within the definition of assets u/s 2(ea) of the Act. To this effect, filed copy of injection order and decree copy of City Civil Court, Hyderabad and also relied upon the decision of High Court of Bombay at Goa in the case of Prabhakar Kesav Kunde and Others Vs CIT (2010) 235 CTR 119. We find force in the arguments of the assessee for the reason that a .....

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under injection order by a court, therefore no activity can be undertaken. This fact was highlighted in the Memorandum of Understanding dated 31-07-2007 entered between the assessee and the developer. Therefore, we are of the view that in view of the court order, the land was under dispute and hence, the land held by the assessee is not an urban land, coming within the meaning of assets as defined u/s 2(ea) of the Act. 9. Coming to the case law relied upon by the assessee. The assessee relied u .....

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Sec. 2(ea) defines the assets in relation to the assessment year commencing on 1st April, 1993 and subsequent assessment years and includes in it urban land . The expression urban land has been defined in Expln. (b) to s. 2(ea). The definition of urban land excludes from the definition of urban land any land on which construction of a building is not permissible. The land which is unbuildable under any law for the time being in force is not an urban land and, as such, is not an asset within the .....

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