TMI Blog2019 (8) TMI 1092X X X X Extracts X X X X X X X X Extracts X X X X ..... or the purpose of construction of factory and other buildings, as per the terms and conditions of acquisition, accordingly 10% of the land was used for setting up manufacturing facility and 90% of land has been kept open to the sky First arguments in light of Sanad executed between the assessee and Government of Maharashtra and land in question was Sanad land and the assessee does not have absolute right over the land, therefore the same cannot be considered as asset, for the purpose of Wealth Tax Act, 1957, does not hold water, because as per the terms and conditions of Sanad , it was very clear that the assessee is owner of the land subject to certain conditions, therefore merely for the reason of imposition of certain conditions, at the time of acquisition of land, it cannot be said that, the assessee does not have any absolute right over the land and accordingly, the first argument of the AR of the assessee fails. Hon ble Punjab Haryana High Court in the case of CWT vs R.K.Mehra [ 2009 (7) TMI 29 - PUNJAB AND HARYANA HIGH COURT] had considered an identical issue and held that a farm land, on which construction was not permissible under municipal law, would not be in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... EMBER SHRI G. MANJUNATHA, ACCOUNTANT MEMBER Assessee by Rakesh Mohan Nirav Poddar Revenue by Sushil Kumar Poddar ORDER These appeals filed by the assessee, as well as the revenue are directed against separate, but identical orders of the Commissioner of Wealth Tax (Appeals) 5, Mumbai, dated 29/12/2009 and 29/12/2017 for the Assessment Years 2004-05 and 2005-06. Since, the facts are identical and the issues are common, for the sake of convenience, these appeals were heard together and are disposed-off by this consolidated order. WTA No. 02/Mum/2018 2. The revenue has raised the following grounds of appeal:- i) Whether on facts and circumstances of the case and in law, the Ld. CIT(A) erred in taking the value of property @ ₹ 93,44,364/- as against the value of ₹ 23,07,00,998/- without considering the valuation report submitted by the District Valuation Officer and deciding the issue merely on the basis of A.Y. 1993-94 to 1995-96 without appreciating the fact that the Revenue's appeal is pending before the Hon'ble ITAT for the said assessment years . ii The appellant prays th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the CWT(A), the assessee has filed elaborate returns submissions on the issue, which has been reproduced at para no. 4.2 on pages 4 to 13 of Ld. CWT (appeal) order. The sum and substance of arguments of the assessee before the Ld. CWT(A) are that land in question was a Sanad land, which was used for the purpose, for which such land has been acquired by the Government and also the utilization of the land has been strictly, as per the terms and conditions of acquisitions, as well as conversion and accordingly, the same cannot be considered within the definition of asset as defined u/s 2(ea) of the W.T.Act, 1957. The assessee has also made alternate submissions in the light of definition of urban land, as per which the land in question does not come within the definition of urban land, because, as per explanation to definition of urban land, urban land means, but does not include land on which construction of building is not permissible under any law, for the time being in force in the area, in which such land situate or the land occupied by any building, which has been constructed with the approval of the appropriate authority. Since, the land has been utilized, as per the terms ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the issue in favour of the assessee as per order dt,20-12-1999. Thereafter, the appeal for the AY. 3994-95 and 1995-96 was are decided by the C1T(A) in favour of the assessee- The Dept, has filed appeal against the order of A-Y. 1993-94 to 1995-96 which are still pending before ITAT. The value of the land for the A.Y. 1996-97 to 2003-04 was accepted by the AO as declared by the Appellant, It is again for the A.Y. 2004-05 i.e, in the present Appeal that the AO has referred the value to the DVO who has valued the property at ₹ 23, 07, 00 ,998/- as per his preliminary report dated 26-12-2006. The AO has adopted the said value of ₹ 23,07,00,998/- and made addition of ₹ 22,13,56,634/- in the Wealthtax assessment. As the assessee filed, contended that its case was covered under exclusion part of definition of clause (b) of explanation to Section 2(ea) of the Wealth Tax Act, 1957. The AO has been asked to comment on the applicability of Rule 21 of Schedule-III of Wealth Tax Act, 1957. The AO has given his remand report as per letter dated 21.12.2017 repeating the facts stated in original assessment order passed by AO, During the course of the hearing, the AR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1998-99 84,56,880 84,56,880 1999-00 69,00,000 84,56,880 2000-01 69,00,000 69,00,000 2001-02 69,00,000 69,00,000 2002-03 69,00,000 69,00,000 200304 69,00,000 69,00,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) vide CPC order dated 03. 03 .20 16 It could be seen from the above, in the assessment year 1993-94, 1994-95 and 1995-96, the CIT(A) accepted the assessee's valuation; and in the assessment year 2005-06, the CIT(A) decided the issue against the assessee confirming the AO's valuation as per schedule -III of the Wealth Tax Act, However in the earlier assessment year the AO adopted the value as per DVO. Thus, it is observed that there is no consistency in. the value adopted by the AO. In this regard, the AR has pointed out that the learned CIT(A) has decided the issue for Assessment Year 2005-06 against the assessee for which the appeal filed before ITAT is pending. The AR has also pointed out that the ClT(A) has decided the Appeal on 29.12.2009 for Assessment Year 2005-06, while the Bombay High Court has decided the similar issue in the case of Prabhakar Keshav Kunde vs. CIT reported in 194 ITR 306 on 30.08.2010. The AR has also submitted that the Bombay High Court decision came after the decision of CIT(A) had the above Bombay High Court decision been there before the CIT(A) for the Assessment Year 2005-06, then the decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the satisfaction of the collector. (iv) maintain all records of the Company properly and supply to the Government punctually such information as may from time to time be required by Government. (v) not use the said land or any building that may be erected upon it for any purpose which in the opinion of the Government is objectionable. vi) at its own cost provide, and continue to provide on the said land such markets, roads, parks and other amenities as the Gov, may be general or special observe and carry the govt. may from time to time issue with respect to such markets, roads, parks and other amenities including the directions as regards the maintenance or use thereof or entry therein. 2. The Company shall, from time to time and all times permit the Government, or any officer or officers authorized by the Government in that behalf to inspect the said land and any. works of the Company upon the said land whether in the course of construction or otherwise, and shall furnish to the Government from time to time on demand correct statements of the monies expended by the Company', in the construction of the said work of the Company upon the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evious permission in writing of Government. Schedule--------- Schedule above referred to District Thane Taluka Thane Village Panchpankhadi Survey No. Hissa No. Approximate area of the land required Acre Gunthe Annas 86 1 3 3 0 86 2 0 5 0 86 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 29 8 115 8 0 10 S 115 9 0 36 0 116 I 2 17 0 116 2 0 37 0 116 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 28 8 117 3 0 17 0 117 9 0 1 8 117 10 0 3 4 117 11 0 1 4 Approximate area of the land required 21 acre 38 gunthas. This Sanad is executed on behalf of the Governor of Bombay by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se. If you fail to appeal before the M of Town for executing the Sanad within the stipulated time. The non-agricultural permission shall be canceled. 9. That the NA use of the land must commence within a period of 6 months from the date of the permission. 10. You shall inform the M of Thana in writing through the village officer the date on which the NA use within a period of one month from such commencement failing which you shall be liable to pay in addition to the NA agreement fine as the Collector may direct. 11. If you contravene any of the forgoing condition, the collector may without prejudice to any other penalty to which you may liable under the provisions of the said Code. Continue the said plot in you occupation to payment of such fine and or agreement as he may direct. I2. Notwithstanding anything contained in sub clause (a) above. It shall be lawful for the collector to direct the removal or alteration or any building or structure created to the provisions of this grant within the time prescribed in that behalf by the undersigned or the authority superior to him and on such removal or alteration not being carried out within t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time to time. There are other terms and conditions mentioned in the Sanad itself. Therefore, ownership of the land is vested with the Appellant subject to various terms and conditions which will have effect on the fair market value of the property. It is also necessary to consider the Appellant's contention of unearned income- In terms of Rule 31 of the Maharashtra Land Revenue (Disposal of Government Lands] Rule, 1971 which deals with grant of land for industrial and commercial purpose, the State Govt. is entitled to unearned income at the rate mentioned in that Act- - In the Appellant's case, the State Govt. is entitled to claim upto 90% of unearned income. The said land is also out of the purview of definition of assets as defined u/s. 2(ea) of the Wealth-tax Act 57 for the reason that the Appellant pursuant to the agreement dated 13/04/1957 acquired the said land as required by the provisions of section 41 of the Land Acquisition Act, 1894. The Appellant therefore applied to the office of the Collector for nonagricultural use of the said unit. Permission was obtained with a condition that the Appellant shall leave an area of 95,630 sq.yds,, 64 sq.ft. open to sky. Theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. Therefore, this ground of appeal is allowed. 5. In the result, the appeal of the assesses is allowed , 7. The Ld. DR submitted that Ld. CIT(A) erred in taking the value of property at ₹ 93,44,364/-, as against the value of ₹ 23,07,00,998/- without considering the valuation report submitted by the DVO and deciding the issue merely on the basis of findings recorded for Assessment Year 1993-94 to 1995-96 without appreciating the fact that the revenue is in appeal before the ITAT for the said assessment years. The Ld. DR, further submitted that the AO was brought out clear fact in light of valuation report of the DVO that the value determined by the assessee in its wealth tax return is incorrect. Therefore, the Ld. CWT(A) without assigning any reason deleted additions made by the AO towards valuation of property. 8. The Ld. AR for the assessee, on the other hand strongly, supporting order of the Ld. CIT(A) submitted that first up all, the land in question does not comes under the definition of asset as defined u/s 2(ea) of the W.T.Act, 1957, because, the land in question is a Sanad , which was acquired for the purpose of setting up of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oes not hold water, because as per the terms and conditions of Sanad , it was very clear that the assessee is owner of the land subject to certain conditions, therefore merely for the reason of imposition of certain conditions, at the time of acquisition of land, it cannot be said that, the assessee does not have any absolute right over the land and accordingly, the first argument of the AR of the assessee fails. 10. Coming to the second arguments of the assessee. The Ld. AR for the assessee referring to the definition of asset, as defined u/s 2(ea) of the W.T.Act, 1957 and the term urban land argued that the land in question does not come under the definition of urban land because, the assessee has constructed factory buildings on 10% of the land with the permission of appropriate authority and remaining 90% of land was kept open to the sky, where any kind of construction of building is not permissible, as per, the Bombay Land Revenue Code, 1879 and Rules framed there under from time to time. We find that the term asset has been defined u/s 2(ea) of the W.T.Act, 1957. As per clause (b) of the explanation to section 2 (ea) of the W.T.Act, the term urban land has been def ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld not be an asset as defined u/s 2(ea) of W.T.Act, 1957. Further, the Hon ble Punjab Haryana High Court in the case of CWT vs R.K.Mehra (supra) had considered an identical issue and held that a farm land, on which construction was not permissible under municipal law, would not be includable in definition of urban land chargeable to wealth tax, even though assessee has constructed a farm house on said land. Therefore, we are of the considered view that the land in question does not come within definition of asset as defined u/s 2(ea) of the Act, because 10% of the land has been used for the purpose, for which it has been acquired and also constructed building thereon by the approval of appropriate authority and the remaining 90% of land has been kept open to the sky, as per the terms and conditions of acquisition, as well as conversion order and consequently, the remaining 90% of the land is covered in exclusionary clause (b) of the explanation to section 2 (ea) of the W.T.Act, 1957 11. Coming to third argument of the Ld. AR for the assessee. The Ld. AR for the assesee has advanced an alternative argument in light of the decision of Hon ble Apex Court in the case of Radh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eted additions made by the AO towards valuation of property for the purpose of charging wealth tax. We do not find any error in the findings of ld.CIT(A) and hence , we are inclined to uphold the CIT(A) order and dismissed appeal filed by the revenue. 13. In the result, appeal of the revenue is dismissed. WTA.No. 05/Mum/2010 14. The assessee has raised the following grounds of appeal which are reproduced are as under:- 1) The learned CWT (A) has erred both in Law as well as on facts in assessing the value of Sanad land at ₹ 8,19,53,463/- under schedule in of the Wealth Tax Act 1957.Without appreciating the fact that the said land is not liable for Wealth Tax. 2) The learned CWT (Appeal) has further erred is not appreciating the fact that the appellant was not allowed construction on the open land, Therefore the appellant's case is covered by the exclusionary part of the definition of 'urban land Under section 2(ea)(ii)(b). Therefore the said land is outside purview of Wealth Tax. 3) Without prejudice to above it is submitted that if at all the Sanad land is assessable to wealth tax, then the value of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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