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TMI Blog2025 (5) TMI 151X X X X Extracts X X X X X X X X Extracts X X X X ..... ion as a business asset? (iii) Whether the land on which a complete building would alone qualify for exemption or not ? (iv) Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the assessee's 'vacant urban land' is not an 'asset' and not liable to tax under Section (ea) of the Wealth Tax Act? (v) Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that even a 'building under construction' exempts the land being assessed as 'vacant urban' from the Wealth Tax provisions?" 2. Since these Appeals were filed by the Revenue against the same Assessee in respect of three Assessment Years, i.e., 2007-08, 2008-09 and 2009-10 under Section 27A of the Wealth Tax Act, 1957, all these Appeals were heard together and are disposed of by this common order. 3. The necessary facts which are required to be noticed for the disposal of these Appeals are as follows : 3.1. The respondent Assessee, herein after called as "Assessee Company" develops and maintains commercial complexes which had not filed any Wealth Tax Return initially. Since the assessing au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of the Madras High Court in Rohini Hotels (Madras) Limited, case cited supra, allowed the Appeals filed by the Assessee. As against the order of dismissal in respect of the two Appeals filed by the Revenue for the Assessment Years 2008-09 and 2009-10 by order, dated 30.09.2013 as well as the allowing of the Appeal in W.T.A.No.4 of 2013 for the Assessment Year 2007-08 by order, dated 13.11.2014, the present appeals have been filed. That is how all these three Appeals came to be filed before this Court raising the Substantial Questions of Law as quoted herein above. 3.8. Since the order passed by the ITAT, dated 30.09.2013 in respect of the Assessment Years 2008-09, 2009-10 is concerned, it is a very short order, where the ITAT having simply followed the decision in the Rohini Hotels (Madras) Limited case (cited supra) has dismissed the Appeals filed by the Revenue. However insofar as the order passed by the ITAT on 13.11.2014 in W.T.A.No.4 of 2013 in respect of the Assessment Year 2007- 08, a detailed order has been passed by the ITAT. Therefore the said order has been traversed mainly in this disposal. 3.9. It is the contention of the Appellant / Revenue that, Section 2(ea) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny alloy containing one or more of such precious metals, whether or not containing any precious or semiprecious stones, and whether or not worked or sewn into any wearing apparel; (ii) precious or semi-precious stones, whether or not set in any furniture, utensils or other article or worked or sewn into any wearing apparel; (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; or (ii) in any area within the distance, measured aerially,- (I) not being more than two kilometres, from the local limits of any municipality or cantonment board referred to in sub-clause (i) and which has a population of more than ten thousand but not exceeding one lakh; or (II) not being more than six kilometres, from the local limits of any municipality or cantonment board referred to in sub-clause (i) and which has a population of more than one lakh but not exceeding ten lakh; or (III) not being more than eight kil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision under explanation 1 to Section (ea) of the Act, the assessee had taken a stand right from the beginning, i.e., from the Assessing Authority till the Tribunal that, after the land was taken on lease on 18.01.2006, the assessee started making constructions by laying the pile foundations for the proposed construction of a commercial complex consisting of three basements, one stilt plus 11 floors and such construction has been continuing after the lease was surrendered on 26.03.2007 and the sale was effected on the same day. Therefore insofar as the Assessment Year 2007-08 is concerned, the date for valuation and assessment is 31.03.2007, on that date, already construction since has been commenced in the land in question, which cannot be considered as a vacant land, especially urban vacant land and therefore the assessee is not liable to be assessed for any wealth tax within the meaning of the provisions of the Wealth Tax Act. 3.15. This was the stand taken by the assessee from the beginning and this was accepted by the ITAT in both the Judgments, of course by following the decision of the Rohini Hotels (Madras) Limited cited supra. 3.16. In this context, the learned counsel ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... truction activities were commenced and even after the sale was effected w.e.f 26.03.2007, where the construction activities already commenced was continued and it was completed in 2010, where the commercial complex constructed by the assessee company was inaugurated in May 2010. Therefore at no point of time, covering these Assessment Years, i.e., 2007-08, 2008-09 and 2009-10, the land was urban vacant and therefore the very charging of wealth tax on the landed property belongs to the assessee itself is out of the purview of the Wealth Tax Act, therefore such a notice issued by the Assessing Authority and ultimately imposing the Wealth Tax is thoroughly outside the scope of the Act, he contended. 3.22. The learned Senior counsel appearing for the Assessee would also submit that, in respect of the exclusion clause, one of the situation under which the land could be excluded from the purview of the urban land under Explanation 1 to Section 2(ea) of the Act is that, any unused land held by the assessee for Industrial purposes for the period of two years from the date of its acquisition by him. He would submit that, the said exclusion clause or one of the situation under exclusion cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee not in favour of the Revenue. Therefore insofar as the interpretation sought for with regard to the exclusion clause under Section 2(ea) is concerned, that should be interpreted only in favour of the assessee, he contended. 3.26. Insofar as the decision that has been made by the Hon'ble Supreme Court in Giridhar G.Yadalam v. Commissioner of Wealth Tax and another reported in (2015) 17 SCC 664 cited supra is concerned, the learned Senior counsel by giving his interpretation to what has been stated by the Hon'ble Supreme Court in para 16 of the order that, the benefit of the said clause would be applicable only in respect of the building which has been constructed, means constructed after getting necessary approval or permission from the planning authorities, therefore it cannot be stretched upon beyond what has been stated therein, he contended. 3.27. By making all these arguments, the learned Senior counsel would canvass the point that, the decision rendered by the Tribunal in both the Judgments, which are impugned herein, are to be sustained and these appeals filed by the Revenue are liable to be dismissed. 4. We have given our anxious consideration to the said s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed by the Revenue insofar as the AY 2008-09 and AY 2009-10 is concerned. 7. After an year, the other Appeal, i.e., WTA No.4/Mad/2013 pertaining to AY 2007-08 came to be dismissed by the ITAT, where though a detailed order has been passed, here also the ITAT has mainly relied upon the decision of this Court in Rohini Hotels (Madras) Limited case. 8. Though the decision of the Karnataka High Court in Commissioner of Wealth Tax and another v. Giridhar G.Yadalam reported in (2010) 325 ITR 223 = 2007 SCC Online Karnataka 662 was cited by the Revenue, the Tribunal has held in paragraph 16 of the order, dated 13.11.2014 to the following effect : "16. This leaves us with the last question. We find that in case law Rohini Hotels (Madras) Ltd., as well as the Tribunal's order (supra), it has been held that even a 'building under construction' exempts the land from being assessed as 'vacant urban' from the Wealth-tax provisions. We have already discussed in the preceding paragraphs that the assessee's 'pile foundation work' which is very much mandatory for the superstructure's safety stood commenced in the year 2006 itself. This culminated into raisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 2(ea)(v), 'urban land' to mean land situate - but does not includes:- (i) land classified as 'agricultural land' in the records of the Government and used for agricultural purposes or land on which construction of a building is not permissible under any law for the time being in force in the area in which such land is situated; or (ii) the land occupied by any building which has been constructed with the approval of the appropriate authority; or (iii) any unused land held by the assessee for industrial purposes for a period of two years from the date of its acquisition by him; or (iv) any land held by the assessee as 'stock-in-trade' for a period of ten years from the date of its acquisition." 13. The question that was posed for consideration before the Hon'ble Supreme Court as recorded in paragraph 3 of the order is that, as to whether the land would be excluded from the urban land only when building is completely constructed there upon or it would be covered by the aforesaid clause even if the building activity is started and the building is not yet completed ? 14. In paragraph 5 of the order, the Hon'ble Supreme Court has further recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that 'the land occupied by any building'. The land cannot be treated to be occupied by a building where it is still under construction. If the contention of Mr. Jain is accepted, an assessee would become entitled to the benefit of the said clause, at that very moment, the commencement of construction even with construction the moment one brick is laid. It would be too far fetch, in such a situation, to say that the land stands occupied by a building that has been constructed thereon. Even Mr. Jain was candid in accepting that when the construction of building is still going on and is not completed, literally speaking, it cannot be said that the building 'has been constructed'. It is for this reason that he wanted us to give the benefit of this provision even in such cases by reading the expression to mean the same as 'is being constructed'. His submission was that the moment construction starts the urban land is put to 'productive use' and that entitles the land from exemption of wealth-tax. This argument of giving so called purposive interpretation has to be rejected for more than one reasons. These are: (i) In taxing statute, it is the plain lang ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... des urban land. Thus, urban land is to be included as an 'asset' for the purpose of giving extended meaning to it. Urban Land is defined in Explanation 1 Clause (b) to Section 2(e)(a). 19. The Kerala High Court as well as Madras High Court have been influenced by the arguments premised on purposeful construction which was the argument of Mr. Jain and has not been accepted by us." 17. From the reading of the said decision of the Hon'ble Supreme Court in Giridhar G.Yadalam's case cited supra, the issue raised on behalf of the assessee right from the beginning till the ITAT has been given a complete answer. In fact the ITAT in the first order in respect of the AY 2008-09 and 2009-10 dated 30.09.2013, in a very short order had dismissed the appeals filed by the Revenue on a short ground that, the issue was covered by the decision of this Court in the case of Rohini Hotels (Madras) Limited. Almost same view has been taken by the ITAT in the order, dated 13.11.2014 pertains to AY 2007-08, where also even though the Judgment of the Karnataka High Court in Commissioner of Wealth Tax and another v. Giridhar G.Yadalam and another Judgment in Karur Vysya Bank Ltd., v. Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision made by the Hon'ble Supreme Court in the Giridhar G.Yadalam's case cited supra.
21. Before the decision was made by the Hon'ble Supreme Court since the orders were passed by the ITAT on 30.09.2013 and 13.11.2014, the Tribunal's decision was saved by the decision of this Court in Rohini Hotels (Madras) Limited case. Since the Rohini Hotels (Madras) Limited case decision has been reversed by the decision of the Hon'ble Supreme Court as cited supra, the orders passed by the ITAT which are impugned herein would have no legs to stand.
22. Resultantly, the arguments advanced by the learned Senior counsel appearing for the assessee since could not be accepted, the Revenue's stand and the arguments advanced by the Revenue counsel is to be accepted.
23. In the result, the following orders are passed in these Appeals :
(a) that the orders of the ITAT which are impugned herein are set aside.
(b) The Questions of Law that have been framed in these cases are answered in favour of the Revenue and against the assessee.
24. Accordingly, all these Appeals filed by the Revenue are allowed. However there is no order as to costs. X X X X Extracts X X X X X X X X Extracts X X X X
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