TMI Blog2021 (3) TMI 76X X X X Extracts X X X X X X X X Extracts X X X X ..... upied by any building and such building has been constructed with the approval of appropriate authority. In the present case, the impugned lands are occupied by buildings and said construction was approved by appropriate authority Lands on which any building is constructed with the approval of appropriate authority cannot be considered as urban land, which comes under the definition of asset as defined u/s.2(ea) of WT Act. But, the assessee has taken this argument in light of various additional evidences for the first time before us and further, the AO had no occasion to verify the facts with regard to the arguments of the assessee in light of the definition of section 2(ea) of the WT Act. Hence, we are of the considered view that for the limited purpose of verification of facts with regard to additional evidences filed by the assessee to prove that buildings were constructed on the land with the approval of appropriate authority, the issue has been set aside to the AO and direct him to verify additional evidences filed by the assessee, to ascertain the facts whether building has been constructed with the approval of appropriate authority or not. In case, the AO finds that on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee and allow appropriate relief to the assessee. - WTA Nos. 60, 61 & 62/Chny/2019 S. P. Nos. 222, 223 & 224/Chny/2020 - - - Dated:- 1-3-2021 - WTA No. 63/Chny/2019 S.P. No. 225/Chny/2020 WTA Nos.16,17,18,19 20/Chny/2020 S.P. Nos. 197, 198, 199,200 201/Chny/2020 WTA Nos.21,22,23,24 25/Chny/2020 S.P. Nos. 202,203,204,205 206/Chny/2020 WTA Nos.26,27,28,29 30/Chny/2020 S.P. Nos. 212,213,214,215 216/Chny/2020 WTA Nos.31,32, 33, 34 35/Chny/2020 S.P. Nos. 217, 218, 219, 220 221/Chny/2020 WTA Nos. 36,37,38,39 40/Chny/2020 S.P. Nos. 207, 208, 209, 210 211/Chny/2020 , WTA Nos. 41, 42, 43 44/Chny/2020 S.P. Nos. 226, 227, 228 229/Chny/2020 SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER Appellant by : Shri B. Ramakrishnan, FCA Respondent by : Shri G. Johnson, Addl.CIT ORDER Per BENCH This bunch of 33 appeals filed by different assessees are directed against separate, but identical orders of the learned Commissioner of Income Tax (Appeals)-19, Chennai, dated 25.06.2019 and pertains to the assessment years 2011-12 to 2015-16. Since, the facts are identical and issues are common, for the sake of conv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and during the course of assessment proceedings, on verification of the return of income filed for the subject assessment year, the AO noticed that the assessee owned lands and buildings, however, no Wealth Tax return was filed. Hence, a notice u/s.16(1) r.w.s.17 of the Wealth Tax Act, 1957 (hereinafter the WT Act ) was issued, calling for explanation / details. In response to notice, the assessee had filed details of various assets including lands, from time to time and argued that all lands are leased to two educational trusts and said trusts had constructed buildings for educational and charitable purposes and hence, contented that all assets are exempted u/s.5(i) of the WT Act, 1957. The ld.AO was however, not convinced with the explanations furnished by the assessee and according to him, although the lands were given on lease to two educational trusts, but the trusts voluntarily withdrew exemption u/s.11 for various violations of section 13(1)(c) of the IT Act, and thus, trusts itself admitted it to be assessed in the status of AOP for the years under consideration. Hence, exemption u/s.5(i) of the WT Act is not available for the impugned assets. The AO further was of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as defined u/s.2(ea) of the WT Act. The ld.CIT(A), further noted that although section 5(i) of the WT Act, exempts assets held under trust or other legal obligations for any public purpose of a charitable or religious nature in India, but the claim of the assessee is untenable, because as per section 5(i), the term property does not include urban land. Therefore, he opined that the term property will have a restricted meaning viz-a-viz, the term asset . The term property if we see u/s.2(ea)(i) of the WT Act, is in the context of building or residential property or commercial property, but the same cannot be extended or stretched to mean urban land as the urban land is a different asset altogether. Therefore, by following the decision of Hon ble Supreme Court in the case of Giridhar Yadalam vs. CWT, [2016] 384 ITR 52, opined that urban land comes under the definition of asset as defined u/s.2(ea)(v) of the WT Act, and consequently, the same is not eligible for exemption u/s.5(i) of the WT Act. Accordingly, rejected arguments taken by the assessee and confirmed the findings of the AO to levy tax on lands owned by the assessee and given on lease to Trusts. Being aggrieved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... public charitable or religious purpose and the trusts have constructed the buildings for running educational institutions and hence, all assets are used for productive purpose. He further submitted that for inclusion of the property in the net wealth, what is relevant is, to whom the property belongs and not who owns it. In this case, the impugned lands are leased to trusts for a period of 99 years and thus, even though the lands are legally owned by the assessee but actually belong to the trusts, and are used by the trusts for educational purpose. Therefore, the impugned lands are very much eligible for exemption u/s.5(i) of the WT Act. 8. The ld.DR, on the other hand strongly supporting order of the CIT(A), submitted that in order to give benefit of exemption u/s.5(i) of the WT Act, the land should be held under the trusts or other legal obligation for any public purpose of a charitable or religious nature in India. In this case, the lands are owned by the assessee but given on lease to trusts. Although, the trusts have constructed building on leased lands but the trusts itself had withdrew exemption claimed u/s.11 of the IT Act, for various violations as referred to u/s.13(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was granted from Wealth Tax. Therefore, an amendment has been brought in, u/s.2(ea) of the WT Act, to levy tax on individuals, HUFs and all companies only in respect of non-productive assets such as residential houses including farm houses, urban land, etc. Thus, from the above, it is evident that the legislative intent was to tax only the nonproductive assets. 10. In the present case, the lands are leased to trusts and trusts utilized the lands by constructing buildings on which educational institutions are running. Hence, by no stretch of imagination, the said lands can be construed as non-productive assets. Even, the Hon ble Supreme Court in the case of Giridhar Yadalam vs. CWT, supra, which was relied upon by the CIT(A), though on a different footing in para No.7 observed that section 2(ea) of the WT Act was inserted by the Finance Act, 1992 and the purpose was to exempt some of the assets from Wealth Tax with the objective of stimulating investments in productive assets. It is in this context that the lands occupied by any building which has been constructed with the approval of appropriate authority is excluded from the definition of urban land and on plain reading of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly the lands were held under a trust for charitable purpose, which is evident from the fact that all lands were given on lease for 15 to 99 years and the trust has constructed buildings on the impugned lands with the approval of appropriate authority and further various charitable activities including imparting education was provided on the impugned lands. Therefore, once lands are held under a trust for public purpose of charitable or religious nature in India, then such lands are outside the purview of Wealth Tax, as per section 5(i) of the WT Act. Further, exemption provided u/s.5(i) of the WT Act, cannot be denied merely for the reason that lands were legally not transferred to the trust. For a assessee to claim exemption u/s.5(i), the only condition that needs to be satisfied is that the said property is used for public charitable or religious purpose in India. In the present case, there is no doubt for whatsoever with regard to the fact that the impugned lands are held by trusts for charitable purpose. Although, the AO has assigned a reason to deny the exemption that the trust has voluntarily withdrew exemption claimed u/s.11 of the IT Act, but fact remains that even if exemp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be considered as vacant land. Therefore, even on this count, exemption claimed by the assessee on lands is in accordance with provisions of section 5(i) of the WT Act. 12. In this view of the matter and considering facts and circumstances of this case, we are of the considered view that the AO as well as the CIT(A) were erred in levying taxes on lands owned by the assessee and given on lease for 99 years, even though, the assessee has proved with necessary evidences that the trusts have constructed buildings on the impugned lands with the approval of appropriate authority. We, further noted that the only requirement that needs to be seen is whether the lands in question were urban vacant lands or lands on which building was constructed with the approval of appropriate authority. In this case, evidences filed by the assessee clearly proves that these are not urban vacant lands, but lands on which buildings are constructed with the approval of appropriate authority and hence, in our considered view these lands cannot be brought to tax as urban lands within the meaning of asset, as defined u/s. 2(ea) of the WT Act. Therefore, we are of the considered opinion that the assessee is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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