TMI Blog2009 (9) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... , J. - This order shall dispose of W.T.A. Nos. 12, 13 and 14, filed by the assessee-appellant under Section 27A of the Wealth Tax Act, 1957 (for brevity, 'the Act') challenging common order dated 16.6.2008 passed by the Income Tax Appellate Tribunal, Chandigarh Bench-A, Chandigarh (for brevity, 'the Tribunal'). The Tribunal has rejected the appeals of the assessee-appellant, bearing W.T.A. Nos. 39/Chandi/1999, 49/Chandi/1998 and 40/Chandi/1999 in respect of Assessment Years 1993-94, 1994-95 and 1995-96 respectively. Since common questions of law and facts are involved, therefore, these appeals have been clubbed together. FACTS: 2. Amrit Lal Jindal Sons-assessee-appellant was an HUF. The HUF owned 106 Kanals and 15 Marlas of agricultural land at Sangrur. On 15.7.1992, the Improvement Trust, Sangrur, passed a resolution to acquire 78 Kanals and 1 Marla of land out of aforesaid total land owned by HUF under the provisions of Sections 24 and 28 of the Punjab Town Improvement Trust Act, 1922 (for brevity, 'the 1922 Act') for formation of Transport Nagar Sangrur under a Scheme. On 22.7.1994, 29.7.1994 and 5.8.1994, notifications under Section 36 of the 1922 Act (which is equiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthority, however, rejected the claim of the assessee-appellant for exemption of the agricultural land from Wealth Tax. The Appellate Authority also deleted addition of Rs. 70,000/- pertaining to valuation of the residential house of the assessee-appellant. The Assessing Authority was also directed to give consequential benefit of charging of interest under Section 17-B of the Act. 6. The assessee-appellant as well as the revenue both filed appeals before the Tribunal challenging the order of the Appellate Authority. It is pertinent to mention here that the family members, who were earlier part of the HUF, also filed their separate appeals before the Tribunal. In this manner, in all 12 appeals were filed before the Tribunal, which were clubbed together. The Tribunal disposed of all the appeals vide common order dated 5.11.2004. The Tribunal considered the issues relating to the assessment of the value of acquired land measuring 78 Kanals 1 Marla; the right to receive compensation and exemption in respect of the residential house owned by the HUF. With regard to first issue relating to assessment of the value of acquired land, after discussing the provisions of Sections 3, 2 (m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was acquired by the Government by notification dated 15.7.1992. The compensation was also fixed on 22.7.1994 and the same was paid on 30.7.1997. It is evident from the facts stated above that the land measuring 78 kanals and 1 marla vested with the Government after the issue of notification for acquisition of land. The findings of Commissioner of Wealthtax (Appeals) in the case of Amrit Lal Jindal Sons being relevant is reproduced hereunder:- "In this connection, it is relevant that so far as the 78 kanals 1 marla land is concerned, the same was the subject matter of notification for acquisition by the Improvement Trust, Sangrur. No doubt, the appellant due to this reason was barred from either selling of this land or carrying out any construction thereof but at the same time, the appellant was entitled to receive compensation to be fixed by the land acquisition collector improvement trust, Sangrur. This compensation was ultimately fixed at Rs. 77,20,329/- and in addition to this, the appellant also solution for compulsory acquisition and also a sum of Rs. 27,12,92.66 as increase from 22.7.94 (first notification till the date of payment). The right to receive compensation ves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the said order. It was asserted that the Tribunal proceeded on the basis that the land was acquired by the Government vide notification dated 15.7.1992 and as such the assessee was not the owner of the said land as on 31.3.1993, 31.3.1994 and 31.3.1995 for the purpose of the Act. It was further claimed by the revenue that the acquisition proceedings were initiated on 21.3.1997 and, thus, the basis of the Tribunal to decide the issue was factually incorrect. The Tribunal has accepted the aforementioned rectification application vide order dated 18.9.2007 and partially recalled its order dated 5.11.2004 relating to taxability of the value of the land measuring 78 Kanals and 1 Marlas. Thereafter the matter was again listed before the same Bench of the Tribunal, which had passed the order dated 5.11.2004. The final order on rectification was passed by the Tribunal on 16.6.2008. After noticing paras 15 and 16 of the earlier order dated 5.11.2004, the Tribunal has passed the following order:- "4. It has been pointed out before us that in respect of the land measuring 78 kanal and one marla the Land Acquisition Collector Improvement Trust had initiated the acquisition proceedings o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... measuring 78 Kanal 1 Marla was includible in the net wealth of the assessee, when the Department has not challenged the finding of the 1 st Appellate Authority to the extent that it was only a right to receive compensation as no construction activity was possible on that land during the impugned assessment year. ARGUMENTS: 10. Mr. K.L. Goyal, learned counsel for the appellant has argued that under Section 35 of the Act the scope of rectification is limited to rectify the mistake apparent on the face of the record. According to the learned counsel under the garb of exercising jurisdiction for rectification of the order, the Tribunal cannot assume the appellate power or power of review. He has firstly referred to the order dated 5.11.2004 (A-5) passed by the Tribunal to highlight that the Tribunal has partly allowed the appeal of the assessee holding that value of 78 Kanals 1 Marla of land, which has been acquired by the Government, was wrongly included in the net wealth of the assessee for the purposes of assessment under the Act. Accordingly assessment in respect of the value of 78 Kanals 1 Marla of land was deleted. In respect of the remaining land measuring 28 Kanals 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ued on 22.7.1994, which resulted into acquisition of land measuring 78 Kanals 1 Marla in the year 1997 then no construction on the aforesaid land was possible. Therefore, the land was not assessable to wealth tax as per the provisions of Section 2(ea) of the Act. To buttress his stand, learned counsel has referred to Section 49 of the 1922 Act, which provides that after issuance of notification under Section 36 of the 1922 Act, the provisions of the Punjab Municipal Act, 1911, would apply which includes Section 189(1) (2) and Section 193. In support of his submission, learned counsel has placed reliance on a Division Bench judgment of Delhi High Court rendered in the case of Commissioner of Wealth-Tax v. D.C.M. Ltd., [2007] 290 ITR 615 (Delhi), which has taken the view that if the sanction of the site plan for construction on the land has not been obtained then such a land would not be assessable to wealth tax as it cannot be regarded as 'urban land' and 'asset'. 12. Mr. Rajesh Katoch, learned counsel for the revenue-respondent has, however, submitted that there is no prohibition of raising construction nor any provision has been cited by the assessee-appellant showing th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rescribed by the Trust. (2) In the locality comprised in a development scheme or an expansion scheme, if any person desires to erect, re-erect, add to or alter any building on his land so as to make the same project beyond a street alignment or a building line duly prescribed by the Trust, he shall apply to the Trust for permission to do so, and if the Trust refuses to grant permission to such person according to his application, and does not proceed to acquire such land within one year from the date of such refusal, it shall pay reasonable compensation to such person for any damage or loss sustained by him in consequence of such refusal." 14. A perusal of the aforesaid section shows that there is express prohibition of building. According to sub-section (1) of Section 31 of the 1922 Act in the locality comprised in a scheme framed under this Act no person is permitted to erect and re-erect, add to or alter any building so as to make the same project beyond a street alignment or building line duly prescribed by the trust. According to sub-section (2) of Section 31 of the 1922 Act in the locality comprised in a development scheme or an expansion scheme, if any person keen to e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Trust has power to acquire the land. The power of acquisition vests with the Government although the land is acquired for the purposes of scheme framed by the Trust. In that regard reliance may be placed on the judgment of Hon'ble the Supreme Court rendered in the case of Nagpur Improvement Trust v. Vithal Rao, AIR 1973 SC 689. Therefore it is evident from the peculiar provisions of Sections 22 to 35 of the 1922 Act that the right of the owner to erect or re-erect add to or alter any building is clogged by prohibition. 15. When the aforesaid provisions are applied to the facts of the instant appeals it becomes patent that the Improvement Trust passed Resolution No. 82 on 15.7.1992. It was unanimously resolved to construct Transport Nagar (A-7). The resolution requires to be quoted in extensor, which reads thus:- "Copy of Resolution No. 82 Dated: 15-7-1992 . Agenda regarding Formation of Transport Nagar (Truck Stand) Sangrur as per notification of Improvement Trust, Sangrur for 5 years Programme. Decision:- In the presence of the members present in the meeting it has been unanimously resolved to construct Transport Nagar (Truck Stand) Sangrur within th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause (b) of the explanation to Section 2 (ea) of the Act elaborates what is 'urban land' and which landed property is not to be included and covered by that expression. It would be necessary to read the aforesaid provisions, which reads thus: "2(ea)"assets", in relation to the assessment year commencing on the 1st day of April, 1993, or any subsequent assessment year, means- (i) to (iv) xxx xxx xxx (v) urban land; (vi) xxx xxx xxx Explanation 1.- For the purposes of this clause,- (a) xxx xxx xxx (b) "urban land" means land situate- (i) in any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee, or by any other name) or a cantonment board and which has a population of not less than ten thousand according to the last preceding census of which the relevant figures have been published before the valuation date; or (ii) in any area within such distance, not being more than eight kilometers from the local limits of any municipality or cantonment board referred to in sub-clause (i), as the Central Government may, having regard to the exte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -cluded in the expression 'assets'. Accordingly, it has been held that such land would not be exigible to wealth-tax. 19. The aforesaid discussion makes it clear that once the land could not be covered by definition of expression 'assets' then it would not be exigible under the Act. The question then is whether the Tribunal has validly exercised the power of rectification under Section 35(e) of the Act. The opening words in Section 35(1) of the Act are 'With a view to rectifying any mistake apparent from the record'. Similar expression has been used in Section 154 of the Income-tax Act, 1961. The aforesaid provision came up for consideration before Hon'ble the Supreme Court in the well known case of T.S. Balaram v. M/s Volkart Brothers, AIR 1971 SC 2204. In the concluding para 8 of the judgment their Lordships' have observed as under:- "8. From what has been said above, it is clear that the question whether S. 17 (i) of the Indian Income-tax Act, 1922 was applicable to the case of the first respondent is not free from doubt. Therefore the Income-tax Officer was not justified in thinking that on that question there can be no two opinions. It was not open to the Income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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