TMI Blog2022 (9) TMI 673X X X X Extracts X X X X X X X X Extracts X X X X ..... ected the Assessing Officer to delete the addition made to wealth in the assessment year 2010-11. See GIRIDHAR G. YADALAM case [ 2016 (1) TMI 826 - SUPREME COURT] wherein it was held that when the property was given for development, unless the building is completed, it will not be construed as building and have liable for wealth tax as urban land. Charging of interest under section 17B of the Wealth Tax Act - Admittedly, in the present case, the assessee has not filed the wealth tax return under section 14 or 15 or under section 17 and moreover, the assessment was made for the first time. Hence, we reverse the order of the ld. CIT(A) on this issue and allow the ground raised by the Revenue. - W.T.A. Nos. 35, 36 & 37/Chny/2018 - - - Dated:- 29-7-2022 - Shri V. Durga Rao , Judicial Member And Shri G. Manjunatha , Accountant Member Appellant by : Shri Guru Bashyam , CIT - DR Respondent by : Shri S. Sridhar , Advocate ORDER PER V. DURGA RAO , JUDICIAL MEMBER : These three appeals filed by the Revenue are directed against different orders of the ld. Commissioner of Income Tax (Appeals) 16, Chennai, all dated 28.02.2018 relevant to the assessment yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dvance of Rs. 22.50 Cr on 11-04.2008 from M/s IGH and M/s Accent, only because of the fact that the developer had applied for reclassification of said property for construction multi-storeyed building and commercial complex. 2.5. The Ld. CIT(A) is erred in holding that subsequent land registration by the assessee made on 05.02.2010 in favour of the buyers M/s IGH and M/s Accent is continuation of JDA, since the buyers refused to register through Power of Attorney Holder and therefore the JDA was cancelled through an unregistered cancellation deed dated 04-02-2010. 3. The Ld. CIT(A) erred in deleting wealth tax levied by the Assessing Officer on the Velachery property. 3.1. The Ld. CIT(A) erred in holding that the transfer of asset u/s 2(47) of the Act took place on 25.06.2007 (as JDA with Srijan Realtors was made on that date) i.e. in F.Y. 2007-08 in view of the fact that the JDA was not registered and no possession was handed to the developer on that date. 3.2 The Ld. CIT(A) erred in not considering the fact that the assessee himself admitted capital gains on sale of Velachery property only in the A.Y. 2014-15, which is evident from the return of income fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ief facts of the case are that the assessee is a non-resident. For the assessment year 2011-12, the assessee has not filed return of wealth. During the course of income tax assessment proceedings for the assessment year 2010-11, the Assessing Officer has noticed that the assessee along with two others during financial year 2009-10 sold vacant land of 1.85 acres out of 9.32 acres at Egattur for ₹.37.50 Crores. The assessee's share being 1/3rd out of the same. The assessee claimed the entire sale consideration as exempt stating that the land was agricultural land. However, it was noticed during scrutiny proceedings that the said land was notified as area for construction of high rise multi-storeyed building by the Government of Tamil Nadu gazette notification. Hence the entire sale consideration was brought to tax as long term capital gains and taxed accordingly. Since the assessee is the 1/3rd owner of the whole property, including the land sold, as on 31.03.2010 and no return of wealth was filed, the Assessing Officer had reasons to believe that wealth chargeable to tax had escaped assessment and hence the case was reopened by issue of notice u/s 17 dated 15.04.2016 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able on record and gone through the orders of authorities below including paper book. In the assessment order, the Assessing Officer has held that the property owned by the assessee i.e. 1/3rd share on 9.32-1.85 = 7.47 acres of land at Egattur as on 31.03.2010 is liable for wealth tax. Accordingly, the Assessing Officer determined the value of the unsold property of 7.47 acres (9.32-1.85) as on 31.03.2010 at ₹.50,47,29,730/- and brought to tax. On appeal, by following the decision of the ld. CIT(A) in income tax matter [ITA No.36/CIT(A)-16/2010-11] dated 27.05.2016, the ld. CIT(A) has directed the Assessing Officer to delete the addition of wealth made on this account. 5.1 Against the appellate order in income tax matter, the Revenue preferred further appeal before the Tribunal. By passing elaborate order in the income tax matter, vide order dated 18.01.2019 in I.T.A. No. 2337/Chny/2016 for the assessment year 2010-11, in page Nos. 51, 52 53, the Tribunal has observed and held as under: A reading of the para 14 of the judgment clearly indicate that primary requirement is classification of land as agricultural in adangal records. Their lordships clearly held that it w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax matter, the Coordinate Bench has observed [reproduced hereinabove in para 5.1] that the decisions in the case of Co-ordinate Bench in the case of Abookucker (supra), Vijay Shah (supra) and that of Cochin Bench in the case of Abdul Rahmin (supra) in our opinion these decisions pale into insignificance, considering the subsequent judgment of Hon ble Jurisdictional High Court in the case of Mansi Finance Limited (supra) which followed the earlier judgments of the very same court. Moreover, in present assessee s case, after considering various judgments of Hon ble Jurisdictional High Court in the case of Mrs. Sakunthala Vedachalam and Mrs. Vanitha Manickavasagam vs. ACIT, (2014) 369 ITR 558, CIT vs. Smt. Sakunthala Rangarajan, (2016) 389 ITR 103, CIT vs. KRN Prabhakaran (Huf) T.C.A. No.1189/2015, dated 17.08.2016 and PCIT vs. Mansi Finance Ltd, (2016) 388 ITR 514, wherein, it has been clearly stated that the basic test on the nature of the land was what was mentioned in the Revenue records, and the Tribunal decided the issue in favour of the assessee. Over and above, while adjudicating the appeal proceedings in the case of ITO v. Aboobucker (supra), the Bench had no occasion to con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion Wing of the Income tax Department on 05.03.2014. During the said operation, it was ascertained that the assessee and 13 others had entered into Joint Development Agreement with M/s P.S. Housing Finance Ltd and M/s Srijan Realty Private Limited for development of property situated at Velachery, Chennai - 600 042, for construction of building complex, food court and residential building, in which the assessee has 4.70% of shareholding. It was further ascertained from the return of wealth filed by the assessee for the assessment year 2011-12 that this property was not shown as wealth in the return filed on 19.09.2016. The case was posted for hearing on 29.09.2016, however none appeared. As the assessee has not appeared for hearing, a show-cause notice dated 04.11.2016 was issued to file objection to the following proposal and the case was posted for hearing on 15.11.2016: Further the assessee is the owner of landed property (having 4. 70 % of shareholding) in the property situated at No. 137, Velachery Main Road, Velachery, Chennai -42 totalling to 51.54 grounds (1,23,710 sq. ft). However the assessee has not reported the said wealth in the return of wealth filed for the A.Y. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s an urban land, which was not declared in the wealth tax return, is liable to wealth tax in view of the decision of the Hon ble Supreme Court in the case of Giridhar Yedalam v. CWT Another (supra) as well as in the case of CIT v. Balbir Singh Maini (2017) 398 ITR 531. However, the case of the assessee is that as on the assessment year 2010-11, the property at Velachery was not an urban land as per section 2(ea)(v) of the Wealth Tax Act and liable for wealth tax since the construction of the building was completed in the financial year 2009-10 relevant to the assessment year 2010-11 and started selling the super build-up area and undivided share of land from the financial year 2009-10 onwards. 6.4 We have gone through the judgement of the Hon ble Supreme Court in the case of Giridhar Yedalam v. CWT Another (supra), wherein it was held that when the property was given for development, unless the building is completed, it will not be construed as building and have liable for wealth tax as urban land. The relevant head-notes are reproduced as under: On the plain language of clause (ii) of Explanation 1(b) to section 2(ea)(v) of the Wealth-tax Act, 1957, by which land ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder the above facts and circumstances of the case and in view of the judgement of the Hon ble Supreme Court in the case of Giridhar Yedalam v. CWT (supra), the ground raised by the Revenue is dismissed for all the assessment years under consideration. 7. The next common ground raised in the appeals of the Revenue relates to charging of interest under section 17B of the Wealth Tax Act. In the assessment order, the Assessing Officer has levied the interest from the original due date of filing of wealth tax return. On appeal, the ld. CIT(A) directed the Assessing Officer to recalculate the interest under section 17B(3) of the Wealth Tax Act. 7.1 Before us, the ld. DR has submitted that the calculation of interest under sub-section (3) of section 17B of the Wealth Tax Act is applicable only in case where notice under section 17(1) was issued after determination of net wealth under section 16(1) or 16(3) or 16(5) or section 17. Since the assessee has not filed wealth tax return under section 14 or 15 or section 17 and also the assessment was made for the first time, by relying upon the decision of ITAT Bangalore Bench in the case of Smt. M.R. Prabhavathy v. ACIT [2002] 80 ITD 520 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of reopening of assessment in case of escapement of net wealth for assessment or a fresh assessment for an assessment year for which the normal time for assessment has elapsed Section 17 inter alia provides that the provisions of the Act shall, so far as may be, apply as if the return filed under the section were a return required to be furnished under section 14. Explanation 3 under section 17B(1) makes it clear that where in relation to an assessment year an assessment is made for the first time under section 17, the assessment so made shall be regarded as a regular assessment for the purpose of this section. When the assessees were served with notices under section 17, they requested, by a letter dated 26.12.1994 to treat the returns originally filed on 15.2.1994 as filed in pursuance to notice under section 17. This meant that the returns filed on 15.2.1994 bad been regularized and treated as the returns for the purpose of the assessment under section 17. Since these assessments had been made for the first time, they were regular assessments made under the Act. Therefore, the assumption that a regular assessment had been completed under the Act and all natural consequence ..... X X X X Extracts X X X X X X X X Extracts X X X X
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