TMI Blog2005 (7) TMI 281X X X X Extracts X X X X X X X X Extracts X X X X ..... the Wealth-tax Act, 1957 ("the Act"). According to him, the said land was 'Urban Land' within the meaning of Explanation 1 to clause (v) of section 2(ea) of the Act. He, therefore, initiated proceedings under section 17 of the Act for the above mentioned assessment years. However, the assessee made following submissions before the Assessing Officer and contended that the Parliament had no power to levy Wealth-tax on agricultural land situated within the distance of 8 K.M. from local limits of the Municipal Corporation: (a) According to the assessee, the levy of wealth tax on agricultural land is specifically excluded from the union list and is regulated by the residuary powers. (b) In the Finance Act, 1993, when the first time the term urban land was incorporated does not include agricultural land, as the power to levy wealth tax on agricultural land is not in the union list. (c) Powers to levy wealth tax on agricultural land in the State of J K is vested only with the State Government, as the residuary powers in the case of J K is lie with the State Government by virtue of Article 370. (d) Since the Union Government is not vested with the power of levying wealth tax in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, the Parliament was competent to levy Wealth-tax on agricultural land owned by the assessee which fall in the definition of urban land. He, therefore, levied wealth tax in respect of the value of land falling in the definition of 'Urban Land' and completed assessments under section 16(3) read with section 17 of the Wealth-tax Act, 1957 for these assessment years. 3. Being aggrieved, the assessee filed appeals against the orders of the Assessing Officer before the CWT(A). The same arguments which were taken before the Assessing Officer were reiterated. However, these submissions were rejected by the CWT(A) by recording following identical findings in the impugned orders: "I have considered both sides of the case and have gone through all relevant facts and records. My opinion on the issue is discussed in the following para with reference to the submissions of the assessee: 1. Since the agricultural land is not excluded from the definition of assets under section 3(ea) of W.T. Act, 1957, it has to be taken as included within the definition of assets as contemplated under this section. The arguments of the ld. counsel that it was not specifically exempted because it was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was exempt under para A(2) of Schedule 1, Part 1 of the W.T. Act. In the present Schedule I para I there is no such exemption. 7. In the case of Smt. Jaswant Kaur v. CWT (A), Patiala, quoted by the assessee, the exemption was granted because certain restriction i.e. upto 150 meters was restricted as per the earlier schedule Roads and Controlled areas restriction on unregulated Development Act, 1963 (Now PUDA). 8. As per the CTR encyclopaedia commentary on section 2(ea) it has been held that "the CBDT has issued notification No. S.O. 871(E), dated 9th November, 1993 (TC 643 1018)". Thus, even agricultural lands in an urban area might constitute assets. 9. Similar issue has been decided by Hon'ble Chandigarh Appellate Tribunal in WTA Nos. 49/Chd./99, 33/Chd./2000 and 10/Chd./2002 in the case of M/s. Industrial Cables Ltd v. ACWT, Circle Mandi Gobindgarh where the agricultural land within the municipal limit has been clearly held as an urban land within the definition and scope of section 2(ea) of the W.T. Act, 1957. 10. In the end, I would say that if the intention of the law-makers was so clear (as the ld. counsel puts it) that agricultural land even within the municipal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rm in which they apply to the State of Jammu Kashmir, do not cover taxes on the capital value of assets being agricultural land. Therefore, the provisions of wealth-tax was amended by the Finance Act, 1969 to state that levy of tax on agricultural property would not apply in relation to agricultural land in the State of J K He further relied on the judgment of Hon'ble Supreme Court in the case of CWT v. Dr. Karan Singh [1993] 200 ITR 614, where it was held that the levy of wealth-tax in respect of agricultural property situated within the State of J K was not within the powers of Parliament. However, sum and substance of his arguments was that levy of wealth-tax in respect of agricultural land to the State of J K was outside the purview of the powers of the Parliament. However, he submitted that when sub-section (ea) of section 2 of the Wealth-tax Act has been inserted, there is no proviso for excluding the operation of this section in regard to agricultural land situated in the State of J K This according to him shows the intention of the Parliament that it had not subjected 'agricultural land' to the chargeability of wealth-tax, even though the same may be situated in the urban ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urban land. He also relied on the following judgments: (1) In the case of CWT v. Tara Chand Jain [1987] 164 ITR 516 (Pat.), where it was held that if agricultural operations were carried out on land, the same would be an agricultural land within the meaning to section 2(ea) of the Wealth-tax Act. (2) In the case of CWT v. Officer-in-charge (Court of Wards), Paigah [1976] 105 ITR 133 (SC), where it was held that the mere fact that the land was not used for non-agricultural purposes and it was capable of being used for agricultural purposes, was not conclusive and, therefore, the case was remanded to Tribunal to examine whether the land was classified and assessed to land Revenue as agricultural land. This is not even disputed by the Revenue. (3) In the case of CWT v. P. Sankaran Nair [1976] 103 ITR 366, where the Madras High Court held that the issue whether the land was agricultural land or not had to be decided by taking into account the circumstances of the case. He submitted that in the present case, the Assessing Officer himself has accepted that this was an agricultural land and was being used as such. He, therefore, submitted that the same was not liable to Wealth-tax A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disputed by the Assessing Officer and CW (Appeals). There is also no dispute about the fact that the land falls within the radius of 8 K.M. from the limits of Municipal Corporation and as such falls in the definition of 'urban land'. Before deciding the issue whether such land is to be treated as 'asset' or not, it will be relevant to reproduce hereunder the definition of asset under section 2(ea) of the Wealth-tax Act, "(ea) "assets" in relation to the assessment year commencing on the 1st day of April, 1993, or any subsequent assessment year, means- (a) "Urban Land" "Urban Land" is defined under Explanation 1(b) to section 2(ea), which is reproduced hereunder: (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion "includes" which is extensive. For this proposition, we rely on the judgment of Hon'ble Andhra Pradesh High Court in the case of Addl. CIT v. ITAT [1975] 100 ITR 483, where on page 488, it was observed as under: 'Even on a cursory reading of section 2(16), the definition, it would be clear that the words "means" and "includes" both are used. These are the two forums of interpretation clause usually employed. In the first, where the word defined is stated to "mean" so and so, the definition is explanatory and prima facie restrictive. In the second, where the word defined is declared to "include" so and so, the definition is extensive'." Reliance is also placed on the judgment of Hon'ble Orissa High Court in the case of Narasingha Kar Co. v. CIT [1978] 113 ITR 712, where the High Court at page 715 observed as under: "Section 2(13) of the Act defines "business" to include- '... any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture'. When a word is defined to mean something, the definition is prima facie restrictive and exhaustive as was indicated by the Supreme Court in the case of Vanguard Fire General Insuran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been used for defining the urban land, the meaning as given in the definition is alone to be accepted and not extended meaning can to be given as canvassed by the Ld. AR. Nowhere the definition excludes from the purview of urban land, the agricultural land situated within the municipal limits of the city. 7.1 The ld, counsel for the assessee has advanced his arguments on the issue of productive and non-productive assets as in his view agricultural land even falling in the definition of urban land is a productive asset and not includible in the same. The classification of assets in the section 2(ea) has not been done on the basis of productive and non-productive assets. Since the language used in the section is very simple, clear and unambiguous literal rule of interpretation has to be applied. The speech of the Finance Minister or even other provisions of the Act can be pressed into service if there is some ambiguity about the meaning of the section. But this is not the case here. Even the principles of liberal interpretation cannot be applied where the language is clear, simple and the meaning of the word is apparent. In the case of CIT v. N.C. Budhiraja Co. [1993] 204 ITR 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to clause (ea) of section 2 of the Wealth-tax Act wherein urban land has been defined to mean "land situate in any area which is comprised within the jurisdiction of a municipality 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". It is, thus, clear, that any agricultural land which falls within the jurisdiction of municipality would be urban land and chargeable to wealth-tax. The finding recorded by the Tribunal is in accord with the statutory definition and we are clearly of the view that no other interpretation is possible. We are, therefore, of the view that no substantial question of law arises from the order of the Tribunal." This judgment of the jurisdictional High Court is directly applicable to the facts of the present case. Having regards to these facts and circumstances of the case, legal position discussed above and respectfully following the judgment of Hon'ble Punjab Haryana High Court in the above case, we confirm the orders of the CWT(A) and reject this common ground of appeals. 8. The next common ground of appeals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f capital and labour with a view to earn profits and the element of risk But such business premises would be entitled to exemption from the charge of additional wealth tax on urban asset, which was provided in the Act. No such exemption is provided for business premises except house which the assessee may occupy for the purpose of any business or profession carried on by him. This clause does not provide any exemption in respect of land or plot of land, which is otherwise not a house occupied by the assessee. As per assessment order for the assessment year 1995-96, assessee owned 10.5 acres of land. This huge plot of land on which agricultural operations were admittedly carried out by the assessee could not be considered as part of the house or building. It is not the case of the assessee that any house, which was occupied by the assessee, was included in the value of 'asset'. Thus, even if the contention of the assessee that he was engaged in the business of agriculture is accepted the same would not entitle him for exclusion of the value of land in the definition of "assets". 12. Before parting with this ground, we wish to point out that clause (3) of section 2(ea)(i) refers to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question was agricultural land and, therefore, no construction on the same was permissible and hence it does not in the definition of urban land. However, the CWT(A) rejected such plea by observing that there were only two kinds of restrictions on construction, one is total prohibition i.e., if it comes within the Air Force Zone (for security or other reasons) or if it comes within forest area and the second is where the construction can be done with the permission or after the construction is done regularization can be considered. She observed that assessee's land falls under the second category where PUDA does give permission to carve out land into a colony. The only thing is that approval of the concerned authorities has to be obtained. Thus, she rejected the submission of the assessee and held that on the land owned by the assessee, the construction was possible. The assessee has now brought this issue in appeal before us. 14. The Ld. AR reiterated the submissions, which were made before the authorities below. He submitted that as per section 86 of the Punjab Regional Town Planning and Development Act, 1995, if any person undertakes construction which is not in conformity w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is also not case here. The claim of the assessee is also not supported by the subsequent notification dated 6-3-2000 when such area was earmarked for residential colony. This shows that construction on the same was permissible. The mere fact that as per the procedure for getting permission to convert urban land into colony or it requires approval of the competent authority for undertaking construction or constructing a colony does not support the claim that there was a prohibition under any law for the construction of the building on the land in question. Now in the present case, the assessee has himself admitted that subsequently there was a Notification for earmarking the land as a site for new town. This apparently shows that the construction on the same was permitted. At page 56 of the paper book, there is a copy of letter from Punjab Regional Development Authority, Jalandhar, which refers to Notification No. 7/5/2000/4MOI/728 dated 6-3-2000 for preparing Master Plan for Development of nearby areas of Jalandhar and Kapurthala. In this letter, it has been mentioned that in the declared area, construction is not permissible without the approval of the competent authority. Thus, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concerned for carving out the colony for the purpose of which certain portion is to be left for civic amenities like roads, open space, schools and community buildings etc. When the matter was brought in appeals, the Tribunal upheld the orders of CWT(A) by observing as under: "6. In our considered view, the controversy as to whether the construction of the building on agricultural land was permissible or not may not be crucial for determining the issue if one reads the exception carved out under the definition of 'urban land' carefully. The exception, in our view, is in regard to, the land on which construction of the building is not permissible under any law for the time being in force in the area in which such land is situated. The words "on which construction of the building is not permissible", in our view, have not to be read in isolation. These words have to be read in conjunction with the words "under any law for the time being in force in the area in which such land is situated". When read in conjunction, it becomes abundantly clear that the prohibition for the construction of the building must be under any law for the area in which the land is situated, e.g., green belt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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