Income Tax Appellate Tribunal - Chennai
M/S Exress Newspapers P Ld.,Chennai vs Dcit, Company Circle-Ii(1), Chennai on 19 March, 2025
आयकर अपीलीय अिधकरण, 'सी' यायपीठ, चे ई।
IN THE INCOME TAX APPELLATE TRIBUNAL
'C' BENCH: CHENNAI
ी एबी टी. वक , ाियक सद एवं
ी एस.आर. रघुनाथा, लेखा सद के सम
BEFORE SHRI ABY T. VARKEY, JUDICIAL MEMBER AND
SHRI S.R.RAGHUNATHA, ACCOUNTANT MEMBER
धनकरअपीलसं ./WTA Nos.7 to 9/Chny/2023
िनधा रणवष /Assessment Years: 2004-05 to 2006-07
M/s. Express Newspapers Pvt. Ltd., v. The DCIT,
Express Estates, No.2, Company Circle-II(1),
Club House Road, Chennai.
Mount Road,
Chennai-600 002.
[PAN: AAACE 1702 G]
(अपीलाथ /Appellant) ( यथ /Respondent)
अपीलाथ क ओर से/ Appellant by : Shri Ajay Vohra, Sr. Advocate
(Virtual)
for Shri P.J. Rishikesh,
Advocate
यथ क ओर से /Respondent by : Shri R. Clement Ramesh
Kumar, CIT
सुनवाईक तारीख/Date of Hearing : 11.02.2025
घोषणाक तारीख /Date of Pronouncement : 19.03.2025
आदेश / O R D E R
PER ABY T. VARKEY, JM:
These are appeals preferred by the assessee company against the order of the Learned Commissioner of Wealth Tax (Appeals)-18, (hereinafter referred to as "the Ld.CWT(A)"), Chennai, dated 05.06.2023 for the Assessment Years (hereinafter referred to as "AY") 2004-05 to 2006-07. Since both the parties agreed that issues involved in all the WTA TA Nos.7 No to 9/Chny/2023 (AYs20 2004-05 to 2006-07) M/s. Express Newspapers Pvt. Ltd :: 2 ::
assessment years are similar/identical; and therefore, we will take up the WTA No.7/Chny/2023 for AY 2004-05 2004 05 as the lead case and decision of which would determine the fate of other appeals.
2. The sole grievance of the assessee is against the action of the Ld.CWT(A) treating 10.64 acres of land, out of the immovable property admeasuring 20.63 acres, as 'vacant urban land' and assessing the same by way of taxable wealth as on the valuation date.
3. Brief facts as noted are that, the assessee company had acquired immovable property measuring 20.63 acres from the Trustees of Madras Club vide Sale Deed dated 24.01.1950, which was registered as Document No.56 of 1950 in the Office Off of the Sub-Registrar, Registrar, Triplicane.
The said land admeasuring 20.63 acres had various buildings which were leased out or were utilized for business purposes by the assessee. Additionally, on the said land, the assessee was carrying on horticulture, running ning cattle sheds and had open green area, pavements, pathways, etc. It is noted that, in AY 2004-05, 2004 the assessee had inter alia declared rental income of Rs.1.66 crores in relation to the buildings housed in the said land and had also offered business income income from the dairy farming of Rs.9,00,539/-.. Similar items of income are noted to have been declared and assessed to income-tax income in AYs 2005-06 & 2006-07.
WTA
TA Nos.7
No to 9/Chny/2023
(AYs20
2004-05 to 2006-07)
M/s. Express Newspapers Pvt. Ltd
:: 3 ::
4. The AO is noted to have issued reopening notice u/s. 17(1) of the Wealth Tax Act, 1957 (hereinafter (hereinafter referred to as 'the Act') for the three (3) years from AYs 2004-05 2004 to 2006-07.
07. According to the AO, he was in possession of information that, the assessee had entered into agreements dated 29.07.2002 & 02.12.2003 with contractors, M/s. Ideal Enterprises & M/s Classic Timbers for demolishing the buildings before 07.09.2002 or 23.12.2003 respectively. In the light of these agreements, the AO was of the view that, the property in question ought to be vacant after demolition, and therefore, he was of the belief belief that such vacant urban land had escaped the levy of wealth tax.
5. In the course of reassessment proceedings, the AO is noted to have show-caused caused the assessee as to why the impugned immovable property should not be treated as 'vacant urban land' and therefore erefore be assessed to wealth-tax.
tax. The assessee is noted to have brought to the AO's notice that, though such demolition agreements were entered into, into but the demolition didn'tt ultimately happen, due to pending litigation in various forums viz., Writ Petition ion filed by Indian National Trust for Art & Cultural Heritage (INTACH) before the Hon'ble Madras Court seeking stay on the same, the disputes raised by various tenants by filing complaints/suits etc in different forums/courts.
forums/courts The assessee is noted to have filed complete details of litigation pending before various forums through which it sought to demonstrate that the demolitions didn't did t take place and the immovable WTA TA Nos.7 No to 9/Chny/2023 (AYs20 2004-05 to 2006-07) M/s. Express Newspapers Pvt. Ltd :: 4 ::
property comprising of buildings and land appurtenant thereto remained as it is i.e. status-quo quo ante (prior to agreements dated 29.07.2002 & 02.12.2003).. Accordingly, it was urged that since the foundational premise of the reopening of wealth-tax wealth tax assessment was unjustified, the AO should not draw adverse inference based on the agreements entered ente for demolition, which ultimately were never acted upon. The assessee is noted to have also brought to the AO's notice that, the entire land parcel of 20.63 acres was a contiguous one acquired in 1950 having several buildings on it, from which it derived derived income from letting out properties and business income from dairy farming, etc. Taking note of these facts, the AO is found to have accepted the assessee's contention that, the buildings were in existence, but observed that these buildings occupied only land admeasuring 9.99 acres and that the remaining balance land i.e. 10.64 acres was vacant. The AO is noted to have observed that, the said remaining balance land comprised of built-up built up area, which was less than 5% of the land area, and that it comprised area occupied by Madras Club, staff quarters, whose constructed space was only 21,302 sq.ft. The AO also disregarded the assessee's submission that, there were litigations going on due to which demolition didn't did t happen. According to AO, the assessee had sold ld the land parcel to its subsidiary company vide transfer deed dated 26.03.2007, which according to him, showed that the land was vacant. The AO also referred to one lease deed dated 18.01.2006 WTA TA Nos.7 No to 9/Chny/2023 (AYs20 2004-05 to 2006-07) M/s. Express Newspapers Pvt. Ltd :: 5 ::
where in the recitals, the impugned land parcel was mentioned as vacant.
According to the AO therefore, the land to the extent of 10.64 acres was separate and independent vacant urban land and accordingly treated it as taxable "asset" being urban land under clause (v) of section 2(ea) 2 of the Act.
6. Being aggrieved by the aforesaid action of the AO, the assessee preferred an appeal before the Ld. CWT(A) who, by his consolidated order dated 05.06.2023, confirmed the action of the AO. Aggrieved, the assessee is now in appeal before us. Since we have taken up the lead case as AY 2004-05, 05, the concise grounds of appeal raised by the assessee is taken note as under:
"1.
1. That on the facts and circumstances of the case and in law, the Commissioner of Wealth-tax Wealth tax (Appeals) ['CWT(A)'] erred in not quashing order dated 19.12.2011 passed by the assessing officer ('AO') under section 16(3) r.w.s 17 of the Wealth Tax Act, 1957 ("the Act") as being beyond jurisdiction, illegal and bad in law. 1.1 That the CWT(A) erred on facts and in law in not appreciating that the reassessment proceedings proceedings initiated by the AO and consequent reassessment order, passed without there being any valid 'reason to believe' is beyond jurisdiction, illegal and bad in law. 1.2 That the CWT(A) erred on facts and in law in not appreciating that the reassessment proceedings proceedings initiated in contravention of provisions of section 17 of the Act and factually incorrect premise, are beyond jurisdiction, illegal and bad in law.
2. That the CWT(A) erred on the facts and in law in upholding the stand/ case of the assessing officer officer in treating the property with land admeasuring 10.64 acres held by the appellant in Chennai as 'urban land' in terms of section 2(ea)(v) of the Act. 2.1 That the CWT(A)/ AO erred on facts and in law in bifurcating and considering property with land admeasuring admeasuring 10.64 acres as separate and independent land, without appreciating that the same is part of WTA TA Nos.7 No to 9/Chny/2023 (AYs20 2004-05 to 2006-07) M/s. Express Newspapers Pvt. Ltd :: 6 ::
consolidated/ undivided land parcel/ property of 20.63 acres, which is occupied by building(s) and cannot be construed as vacant 'urban land' 2.2 That the e CWT(A)/ AO erred on facts and in law in not appreciating that any part of land which is vacant primarily constitutes lawns, car parking space, pavement area, sheds, horticulture area etc. and is thus land appurtenant to the buildings constructed on the land land which are leased out or used for business purposes.
Without Prejudice
3. That the CWT(A)erred on facts and in law in adopting guideline value (GLV) of Rs.5515 per sq ft. of Whites Road to compute value of alleged 'urban land' without appreciating that the GLV does not conclusively depict the fair market value of the property, especially in the facts of the case.
3.1 That the CWT(A)/ AO erred on the facts and in law in not referring the valuation to the Departmental Valuation Officer ("DVO")in terms of section ection 16A read with Rule 20 under Schedule III of the Act."
Act.
7. Assailing the action of the lower authorities, the Ld. Sr. Counsel appearing for the assessee, Shri Ajay Vohra, submitted that the AO was unjustified in artificially bifurcating the contiguous contiguous land parcel of 20.63 acres into 9.99 acres and 10.64 acres. He brought to our notice that, the property in question admeasuring 20.63 acres was acquired from the trustees of Madras Club vide registered Sale Deed No.56 of 1950 dated 24.01.1950 and that the the entire land admeasuring more than 20 acres of land had a common Survey No.315/1 which is evidenced from the Certificate issued by the Revenue Official, Tahsildar dated 21.08.1992, copy of which is found placed at the last page of paper book Annexure -1. He showed us that, the entire land parcel was described by a single survey number and that the description column showed that the land was occupied with buildings. According to him, therefore the action of the WTA TA Nos.7 No to 9/Chny/2023 (AYs20 2004-05 to 2006-07) M/s. Express Newspapers Pvt. Ltd :: 7 ::
lower authorities artificially bifurcating and carving out land of 10.64 acres, from the single contiguous land parcel of 20.63 acres was erroneous and instead the impugned immovable property was in the nature of building with land appurtenant thereto. To buttress this contention, he also showed us that, that, it was only later on vide PLR dated 13.06.2008 and that too for administrative convenience, that the Revenue Authorities within the Triplicane Division, allotted two more survey numbers 315/3 & 315/6 apart from the existing 315/1 vide PLR dated 13.06.2008 (which event happened later in AY 2009-10) 2009 10). According to him therefore, the land admeasuring 10.64 acres could not be treated as separate and independent land, and that it formed part of the consolidated/undivided undivided land parcel of 20.63 acres, which was occupied by buildings. Since the buildings were let out and used for business purposes, and the adjoining land was being used for horticulture, cattle farming etc., it was his contention that the impugned property did not qualify as 'taxable asset' as it fell fell under the exception set out in Section 2(ea)(i) of the Act.
8. The Ld. Sr. Counsel further submitted that, the AO had misdirected himself by taking note of the demolition agreements dated 29.07.2002 & 02.12.2003, without appreciating the contemporaneous contemporaneous fact that, these agreements were never acted upon due to litigations. Though all these evidences regarding the litigations had been brought on record, the AO WTA TA Nos.7 No to 9/Chny/2023 (AYs20 2004-05 to 2006-07) M/s. Express Newspapers Pvt. Ltd :: 8 ::
had refused to accept the same. He showed us that, the action of the AO was primarily influenced influenced by the later fact that, the assessee had transferred land of 10.64 acres to subsidiary company i.e. M/s. Express Infrastructure Pvt. Ltd [M/s.EIPL] on 28.02.2007, on which M/s EIPL had constructed shopping mall and therefore the AO was of the view that the t said land parcel ought to have been vacant in the earlier years. The Ld. Sr. Counsel explained to us that, the inference drawn by the AO was factually incorrect. Reiterating the background facts, the Ld. Sr. Counsel, submitted that, though there was a demolition agreements entered into in 2002 & 2003 for demolishing the buildings in 10.64 acres of land, but the same could not be executed because of various litigations launched by tenants, Writ Petitions filed by Indian National Trust for Art & Cultural Heritage eritage [INTACH] etc. The assessee, later on, vide agreement dated 18.01.2006 had initially leased out the alleged land for 99 years to M/s.
EIPL, which was also cancelled;
cancelled and that, the assessee finally transferred, 9.59 acres to M/s EIPL for a consideration consideration of Rs 225 cr and gifted 1.05 acres to CMDA on 28.02.2007. According to him however, the land so transferred was not fully vacant and that it housed the buildings which existed earlier, as the demolition never took place in 2002 & 2003. According to him,, the demolition took place when all the disputes were resolved which was after the last valuation date before us i.e., 31.03.2006. He further submitted that,, only because the assessee sold WTA TA Nos.7 No to 9/Chny/2023 (AYs20 2004-05 to 2006-07) M/s. Express Newspapers Pvt. Ltd :: 9 ::
10.64 acres out of 20.63 acres later on, will not change the fact that, the land sold constituted "appurtenant land" to the buildings occupied within the 20.63 acres and hence could not be termed as separate & independent "vacant land". According to him, the land sold was all along part of the contiguous piece of land admeasuring admeasuring 20.63 acres purchased in the year 1950 and it was always held under one survey survey number across the impugned AYs 2004-05 2004 to 2006-07 and that, only after the assessee identified and sold the said land in 2007 that, the new survey numbers were given in 2008 viz., after the relevant AYs in question. Prior thereto, according to the assessee, the land was in the nature of 'appurtenant land' to the buildings in the said land parcel of 20.63 acres and did not constitute 'vacant land'.
9. In this regard, the he Ld. Sr. Counsel further drew our attention to the order of the Commissioner of Land Reforms, Ezhilagam, Chennai, under the Tamil Nadu Urban (Ceiling & Regulation) Act, 1992, which is i found placed at Page Nos.1-12 12 of the Paper Book - (Volume-I).
I). He submitted that the Commissioner had ha initially put the assessee to notice regarding acquisition of excess vacant land, land but after conducting inspection and verifying the facts, had passed an order dated 03.10.1997 in respect of proceedings u/s.9 (5)/10(1) of that Act holding that, there was no excess vacant land which could be acquired and that the adjoining vacant lands were integral part of the buildings occupied in the said land and therefore WTA TA Nos.7 No to 9/Chny/2023 (AYs20 2004-05 to 2006-07) M/s. Express Newspapers Pvt. Ltd :: 10 ::
constituted land appurtenant thereto. According to him, this material mat piece of evidence clearly dislodged the findings of the lower authorities that the assessee held vacant land of 10.64 acres.
10. The Ld. Sr. Counsel also referred to the detailed sketch map of the subject land admeasuring 20.63 acres, which is found kept at page 382 of paper-book (Vol IV),, whose better enlarged copy on A3 sheet was handed over to us at the time of hearing. Taking us through the sketch map, he highlighted the large coverage of land with buildings and other constructions scattered over the land, which were leased out or are utilized for business purposes; and showed us that the vacant portion of the lands in between the said buildings was in the nature of land appurtenant to the said buildings and that it could not be regarded as vacant urban land.
11. The Ld. Sr. Counsel also emphasized on the fact that, the relevant land authorities had treated the entire land parcel as single & independent and found it to be occupied with buildings in excess of 47% of the land area. According to him therefore, the findings of the lower authorities that only 2-5% 5% of the land is non-vacant non vacant was grossly erroneous, contra-factual contra and devoid of merit.
12. Overall therefore, the Ld. d. Sr. Counsel contended that, any portion of vacant land in the impugned property prope could only be considered as land WTA TA Nos.7 No to 9/Chny/2023 (AYs20 2004-05 to 2006-07) M/s. Express Newspapers Pvt. Ltd :: 11 ::
appurtenant to the buildings(s) and cannot be considered as separate 'urban land' for purposes of wealth tax. In support of his contentions, he also relied on several judicial precedents, which we shall discuss in the ensuing nsuing paragraphs. Apart from the foregoing, and without prejudice, the Ld. Sr. Counsel also objected to the valuation methodology adopted by the AO for wealth tax purposes.
13. Per contra, the Ld. CIT, DR appearing for the Revenue Shri R. Clement Ramesh Kumar, vehemently relied on the findings of the lower authorities, which according to him, were detailed and exhaustive. He submitted that, the very fact that the assessee had later on identified and transferred 10.64 acres of land to its subsidiary and CMDA CMDA showed that the impugned land parcel was lying vacant and therefore it was rightly assessed to wealth tax. He submitted that, the reference being made by the assessee to the details/orders details orders the land authorities was of little relevance as these documents did not have any decisive bearing for wealth tax purposes. The Ld. DR further relied on the agreement for the transfer of the land to the subsidiary, where in the recitals, the land was being referred as vacant. According to him therefore, such large parcel parce of land cannot be said to be 'land appurtenant' to the buildings housed in the overall land area of 20.63 acres. He thus urged us that the order of the lower authorities does not call for any interference.
WTA TA Nos.7 No to 9/Chny/2023 (AYs20 2004-05 to 2006-07) M/s. Express Newspapers Pvt. Ltd :: 12 ::
14. We have heard both the parties and perused the the materials placed before us. The issue before us for consideration is that, whether the land of 10.64 acres separately identified by the AO could be regarded as a 'vacant urban land' for the purposes of levying wealth tax in terms of Section 2(ea)(v) of the Act, or whether it constituted as 'land appurtenant' to let-out out houses/buildings houses buildings and thus fell under the exception set out in Section 2(ea)(i) of the Act. Before considering the rival submissions, it is necessary to refer to the relevant statutory provisions prov of the Wealth Tax Act, 1957. The term 'asset' has been defined in Section 2(ea) of the Act, as follows:
(ea) "assets", in relation to the assessment year commencing on the 1st day of April, 1993, or any subsequent assessment year, means
(i) any building or land appurtenant thereto (hereinafter referred to as "house"), whether used for residential or commercial purposes or for the purpose of maintaining a guest-house guest or otherwise including a farm-house farm house situated within twenty-five twenty kilometres from from local limits of any municipality (whether known as Municipality, Municipal Corporation or by any other name) or a Cantonment Board, but does not include-
(1) a house meant exclusively for residential purposes and which is allotted by a company to an employee employee or an officer or a director who is in whole-time whole time employment, having a gross annual salary of less than five lakh rupees;
(2) any house for residential residential or commercial purposes which forms part of stoke-in-trade;
stoke (3) any house which the assessee may occupy occupy for the purposes of any business or profession carried on by him;
WTA
TA Nos.7
No to 9/Chny/2023
(AYs20
2004-05 to 2006-07)
M/s. Express Newspapers Pvt. Ltd
:: 13 ::
(4) any residential property that has been let-out let for a minimum period of three hundred days in the previous year;
(5) any property in the nature of commercial establishments or complexes"
compl
(ii) ....
(iii) .....
(iv) ......
(v) urban land;
land [emphasized by us]
15. From the above, it is noted that, in terms of Section 2(ea)(i), any 'building or land appurtenant thereto' thereto shall not be regarded as a taxable asset, where such building along with the land appurtenant thereto, is either let out or is occupied for business purposes or is in the nature of commercial establishments. Further, Section 2(ea)(v) is noted to include 'urban land' within the purview of 'taxable asset' for wealth tax ta purposes.
The term 'urban land' has been defined in Explanation 1(b) as follows: -
"(v) urban land Explanation for the purpose of this clause--
clause
(a)..........
(b) "urban land" means land situate--
situate
(i) in any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation...) ... ...and which has a population of not less than ten thousand....; or
(ii) ... (regarding area outside the municipal limits), WTA TA Nos.7 No to 9/Chny/2023 (AYs20 2004-05 to 2006-07) M/s. Express Newspapers Pvt. Ltd :: 14 ::
but does not include 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 the land occupied by any building which has been constructed with the approval of the appropriate authority or 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 any land held by the assessee as a stock-in-trade trade for a period of five years from the date of its acquisition by him."
him.
[emphasized by us]
16. We find that,, the term 'urban land' excludes such land which is already occupied by building. Further, as noted earlier, Section 2(ea)(i) of the Act provides that, such building along with land appurtenant thereto will not be regarded as a taxable asset, if such building building is either let out or is occupied for business purposes or is in the nature of commercial establishments. It is therefore observed that, the land which is appurtenant to a building will not qualify as 'urban land'.
17. The case of the assessee before us us is that, the land of 10.64 acres was appurtenant to the several buildings in the overall land parcel of 20.63 acres and assessee was running business from the dairy farming & horticulture, and therefore, fell under the exceptions set out in Section 2(ea)(i)
(i) of the Act. On the other hand, the case of the Revenue is that, the said land of 10.64 acres was separate and independent and therefore qualified as vacant 'urban land' under Section 2(ea)(v) of the Act.
18. It is noted that, the term 'land appurtenant' appurtenant' has not been defined in the Wealth Tax Act, 1957, as it stood during the impugned AYs. It was WTA TA Nos.7 No to 9/Chny/2023 (AYs20 2004-05 to 2006-07) M/s. Express Newspapers Pvt. Ltd :: 15 ::
however brought to our notice that, earlier there was a definition of 'land-
'land appurtenant' which existed during 01.04.1976 to 31.03.1993 which was very narrow and nd included only the minimum extent of land contiguous to the building required to be kept open as per the 'building by-laws' or in laws 1/3rd of the plinth area. However, the said absence of such by-laws definition was explicitly removed/omitted removed by the Finance Act, 1993 and therefore, we are in agreement with the assessee that, the Legislature consciously had omitted the t narrow definition, and that the definition of 'land appurtenant' has to be understood in common parlance along with the broad meaning given by the jurisprudence which prevailed prior to 1976.
19. Having regard to the above position of law, we now revert back to the facts involved in the present case. It is noted that, the assessee had acquired land of 20.63 acres in the year 1950 1950 through a single deed of transfer and the said land was allotted a single Survey Number. The description of the said land as appearing in the records of the land revenue authorities was that, it was occupied by buildings. It is not in dispute that, the said aid land of 20.63 acres housed 51 independent buildings which were either let out or being used for business purposes. Apart from the foregoing, the appurtenant land to these buildings are noted to have been inter alia being used for horticulture and dairy farming. These contemporaneous facts are noted to be evidenced by the WTA TA Nos.7 No to 9/Chny/2023 (AYs20 2004-05 to 2006-07) M/s. Express Newspapers Pvt. Ltd :: 16 ::
rental income/business income declared from the subject property, which is as under:
Particulars AY 2004-05 AY 2005-06 AY 2006-07 2006 Rental Income Rs.1,66,25,361 Rs.2,19,58,839 Rs.2,68,24,790 (from Chennai Property) Income From Dairy Rs.9,00,539 Rs.9,57,523 Rs. 9,39,474 Farming
20. It is noted that, the assessee has provided the tenant wise details of the rental income derived from letting out the buildings occupied in the land or 20.63 acres. The assessee is also found to have derived income from dairy farming, which understandably would require open spaces, sheds and garden. After perusing the detailed sketch map of the subject land admeasuring 20.63 acres, it is seen that, the land is indeed covered by several buildings and other constructions which are scattered all over the land. As noted above, the buildings/constructions were leased out or utilized for business purposes. Reading of the sketch map is found to support the assessee's plea that, the vacant portions of the land in between the buildings/constructed spaces constituted land appurtenant thereto. In light of this sketch map, having regard to the size of the land, and number of buildings therein, we agree with the assessee that, there would be open areas, common spaces, lawns, car parkings, pavements, etc. in the said land parcel appurtenant to the buildings. It was also brought to our notice that, the said land parcel also housed the Madras WTA TA Nos.7 No to 9/Chny/2023 (AYs20 2004-05 to 2006-07) M/s. Express Newspapers Pvt. Ltd :: 17 ::
Club, to which open space and garden would be an integral part of the Club for public gathering, social events and relaxation etc. Overall Over therefore, on the given facts of this particular case, it is observed that, the impugned land of 10.64 acres which inter alia comprised of land in between the buildings occupied in the single contiguous land parcel of 20.63 acres was appurtenant thereto, thereto, and therefore in our considered view, the AO was unjustified in artificially bifurcating the same and holding it to be separate and independent vacant land. We find the reliance placed by the assessee on the PLR issued by the Tahsildar dated 21.08.1992 wherein the land of 20.63 acres has been described to be one single independent land parcel having one survey number 315/1 and the description field mentions that the land is occupied by buildings to be relevant in this context.
21. It is further observed that, one of the reasons given by the AO for holding the land of 10.64 acres to be vacant was that, it was occupied by building, which constituted only 2-5% 2 of the land area. What the AO has done is that, he has left out the land which is occupied by buildings/constructed dings/constructed space and has only considered the appurtenant land as the balance remaining land and since on such remaining land, the construction was minimal/negligible, he has inferred it to be 'vacant'. Having perused the facts placed before us and in in light of the sketch map submitted by the assessee, we find this inference drawn by the AO to be WTA TA Nos.7 No to 9/Chny/2023 (AYs20 2004-05 to 2006-07) M/s. Express Newspapers Pvt. Ltd :: 18 ::
factually incorrect. According to us, for the reasons already discussed above, land of 20.63 acres was to be considered together for the purposes of ascertaining ing the vacant and non-vacant non vacant area. It is seen that almost half of the land area is covered by construction and the balance half was used for horticulture, dairy farming, gardens, open spaces, pavements and lawns for club purposes etc. On these facts therefore, there we therefore do not countenance such finding of the AO that the land was largely vacant.
22. We now proceed to take note of the order of the Commissioner of Land Reforms, Ezhilagam, Chennai, under the Tamil Nadu Urban (Ceiling & Regulation) Act, 1992 1992 dated 03.10.1997, which in our view, is the crucial material in the context of the dispute in the present case. It is noted that, the he competent authority had issued notice to the assessee for acquiring the "excess vacant" land lying unused in the land parcel pa of 20.63 acres. The basis of this notice was the State Government order dated 7.10.1991 which had computed total non-vacant vacant land at about 4,24,96,300 out of 8,67,34,585 (20.63 acres), acres), according to which, around 47.35% is not vacant.. The relevant portion contained in the said order is extracted below:-
WTA TA Nos.7 No to 9/Chny/2023 (AYs20 2004-05 to 2006-07) M/s. Express Newspapers Pvt. Ltd :: 19 ::
23. It is further observed by us that, after examining the relevant facts, and after carrying out physical inspection, the Commissioner had noted, at Para 4 of the said order, order the factum of various s buildings on the said land. Thereafter, the Para 7 of the said order recorded that the old files revealed the details of building numbering to 45 on the land used for different purposes. The Commissioner is therefore noted to have ordered physical inspection tion and found that, the Circle Officer who had inspected the land and building(s) had issued report which contained details of 51 independent buildings on the land with description about use thereof, whose detailed list is found placed at pages 7 to 9 of paper-book paper Vol I. The description contained in the order clearly mentioned that, the buildings include director's residence, temples, cow sheds, staff quarters, outhouses, yoga center,, fridge house, paper go-down go down and canteen, record room, Max-muller muller Bhawan, Bhawan, meditation hall, transformer, pump room etc. WTA TA Nos.7 No to 9/Chny/2023 (AYs20 2004-05 to 2006-07) M/s. Express Newspapers Pvt. Ltd :: 20 ::
It was also noted by the Circle Officer that, the Land covered with lawn, car park, pavement area etc. which cannot be considered as vacant as they are crucial for running hotel/ madras club where public gather gathe for relaxation. It was also noted by the Circle Officer, the assessee was doing dairy farming and horticulture on the appurtenant land. In light of these facts and physical inspection report, the competent authority concluded that there was no "excess excess vacant va land" in the premises and detailed the utilization of premises on page 12 of the paper book Vol I; which is extracted hereunder for ready reference:
WTA TA Nos.7 No to 9/Chny/2023 (AYs20 2004-05 to 2006-07) M/s. Express Newspapers Pvt. Ltd :: 21 ::
24. In light of the above, it is noted that, the competent authority after physically inspecting the property and upon considering the entire conspectus of facts found that, there was no "excess vacant land" and accordingly dropped the proposed show cause.
cause Having regard to this order passed by the competent authority, we not not only find merit in the assessee's plea that, the land of 20.63 acres was a single contiguous one, but also that the land of 10.64 acres was appurtenant to the several buildings comprised in the overall land parcel and was also being inter alia used for commercial purposes and therefore relying upon the said order, we hold that the AO was unjustified in holding the land of 10.64 crores to vacant urban land for wealth tax purposes.
25. It is further observed that, the case of the Revenue bringing to tax the he land of 10.64 acres as 'urban vacant land' also hinged on two additional aspects viz., (a) the assessee had entered into demolition agreements for vacating the land of 10.64 acres in the year 2002 and 2003 and therefore the said land was lying vacant during during the impugned AYs and (b) later on the said land was sold by the assessee to its subsidiary on which the latter constructed a shopping complex and therefore it was held to be vacant land.
26. From the facts available on record, we observe that, the case ca of the Revenue suffered from hindsight bias. It was only because the assessee's WTA TA Nos.7 No to 9/Chny/2023 (AYs20 2004-05 to 2006-07) M/s. Express Newspapers Pvt. Ltd :: 22 ::
subsidiary constructed the shopping complex complex that, the Revenue has assumed sumed that the land transferred by the assessee was lying vacant. From the material placed on record, we note that, though the assessee had entered into demolition agreements with contractors in the years 2002 & 2003, but the same didn't did materialize/take place during the period 2003 to 2007 due to several ongoing disputes and litigations with the tenants and other stakeholders. It was brought to our notice that, a writ w petitionagainst the demolition activity was filed by the INTACH before the Madras High Court, which though was dismissed vide order dated 17.11.2003,, but the assessee was advised not to start demolition de immediately thereafter as the party may approach higher Court for appropriate orders. Simultaneously, the occupying tenants had also objected to the demolition activity and that after prolonged litigation/arbitration the disputes were finally settled settled only in the years 2006 & 2007, which showed that the demolition could not have taken place prior thereto. For instance, the Ld. AR invited our attention to the memo emo of compromise dated 28.04.2006 with one tenant, M/s Chandra-
Automobile, found placed at a Pages 55 to 57 of paper-book, paper which revealed that the said tenant was occupying the appurtenant land for parking, test drives, workshop etc., and in terms of the compromise, the tenant was to vacate and deliver the possession of the property to the assessee only by 30.06.2006 and that the said tenant finally did so only WTA TA Nos.7 No to 9/Chny/2023 (AYs20 2004-05 to 2006-07) M/s. Express Newspapers Pvt. Ltd :: 23 ::
on 17.07.2006 (AY 2007-08).
2007 . Similarly, the assessee has also placed on record the plaint filed by certain tenants in the year 2003, in terms of which the assessee was refrained from interfering ing with their property and that later on the surrender urrender of leases leases only happened in 2006. All these facts, taken note of by us, supported the assessee's plea that, the demolition didn'tt take place until 2006. However, the Revenue is noted to have disagreed agreed because the land of 10.64 acres was mentioned as 'vacant- land' in the lease dated 18.01.2006. To this, the Ld. AR submitted that, the land was casually mentioned as vacant land but building, shops, etc., existed at that time as explained above. He showed us the receipts of property taxes paid in December 2006 in respect of the buildings on subject land to support their case that demolition never took place. Having regard to these contemporaneous facts, we find merit in the assessee's submission that, that, the AO had proceeded on the incorrect presumption that, the impugned land was completely vacant, whereas the fact remained that the demolition never took place and that the property was continued to be occupied with building.
27. Qua the he transfer deed dated 26.03.2007 between the assessee and its subsidiary, which has been relied upon by the Revenue, it was brought to our notice that, the lower authorities had conspicuously referred to only specific recitals and ignored the contents of the transfer deed as a whole. It was shown to us by the assessee that, the recitals clearly WTA TA Nos.7 No to 9/Chny/2023 (AYs20 2004-05 to 2006-07) M/s. Express Newspapers Pvt. Ltd :: 24 ::
described the entire land of 20.63 acres as a contiguous one, one including the land and the buildings, which was also shown as Schedule "A" property. Further, the subsequent recital att page No.209 showed show that, the assessee had decided to transfer only a portion of the land from Schedule "A", i.e., 10.64 acres. Accordingly, the said land which until then was appurtenant to the buildings in the overall single contiguous land parcel was being eing transferred by the assessee. It was further brought to our notice by the Ld. Sr. Counsel that, the said land of 10.64 acres was mentioned in Schedule 'B' property as vacant land, as the demolition had taken place by then, which was after the relevant valuation date of 31.03.2006. We find this contention to be supported by the fact that there was payment of property taxes until December 2006, and also that the land revenue authorities had allotted new survey numbers to the appurtenant land, identified and and sold in 2007, only in the year 2008.
According to us, therefore, the reliance placed by the lower authorities on this transfer deed to infer that the impugned land was a vacant 'urban land' in AYs 2004-05 05 to 2006-07 2006 was factually misplaced.
28. Before us the Ld. CIT, DR for the Revenue argued that, such huge land of 10.64 acres which was almost 50% of the total land area could not be regarded as appurtenant land to the buildings occupied in 20.63 acres and that it ought to be restricted to reasonable reasonable limits. For this, as noted earlier, there is no definition of appurtenant land in the Act and the WTA TA Nos.7 No to 9/Chny/2023 (AYs20 2004-05 to 2006-07) M/s. Express Newspapers Pvt. Ltd :: 25 ::
earlier narrow definition which was provided in the Explanation (b) between 01.04.1976 to 31.03.1993 had been specifically omitted with effect from 01.04.1993.
.1993. It is observed that, the Finance Act, 1992 had amended the term 'asset' by inserting clause (ea)
a) in section 2 of the Act, and defined it to include building along with land appurtenant thereto, but no principle was laid down to determine as to how much uch land is to be considered as land appurtenant to a building. It is observed that the Hon'ble Calcutta High Court in Kalipada Ghosh vs Tulsidas Dutt AIR 1960 Cal. 467held that a house includes land appurtenant to the house.
house It was held that, the term 'building' 'building' would not only include the structure but also the appurtenant land viz., garden, court-yard, yard, orchard, and all that is considered necessary by the occupier for the convenient occupation of the house.
house. We also take note of the decision of the Hon'ble Supreme Courtin the case of Larsen & Toubro Ltd v. Trustees of Dharmamurthy Rao Bahadur Calavaila Cunnan Chetty's Charities 1988 (4) SCC 260,, while considering the word 'appurtenant', had held that whether a particular piece of land is appurtenant to the main m building or not depends upon the facts and circumstance of each case. The relevant observations, taken note of by us, is as under:-
under:
"13. The question, therefore, whether certain land is appurtenant or not is one of fact. The High Court has applied its mind to the nature of the building as well as to the terms of the lease deed. It has kept in mind that the lease relates to a period about 35 years ago, a time when residential houses occupied large extents of land. There used to be a building in the middle middle surrounded by a vast area covered by garden, WTA TA Nos.7 No to 9/Chny/2023 (AYs20 2004-05 to 2006-07) M/s. Express Newspapers Pvt. Ltd :: 26 ::
arbor, trees and the like. The lease also describes the building as ('Club Chambers') with a municipal door number. The building is itself a substantial one occupying as many as two grounds. Having regard to the he position pertaining at the time when the lease was executed, the first appellate Court and High Court came to the conclusion that the land in this case was appurtenant to the building. We see no reason to disturb this finding. On the other hand, we agree agree that the use of the land, in the circumstances of this case, was incidental to the enjoyment and beneficial use of the building and, therefore, squarely fell within the definition which has been discussed above."
29. From the above, we therefore find that, that, there is no single prescribed test for ascertaining the land which is to be considered appurtenant to the building but the same would depend on the facts of each case. In this background, we take note of the Hon'ble jurisdictional High Court in i the case of M.K. Kuppuraj (HUF) v. CWT (257 ITR 718).
718). In the decided case, the assessee owned a house property consisting of 175 cents of land with built up area of only 1187 sq. meters. The assessee claimed the benefit of the proviso to section 7(4) of Wealth Wealt tax ax Act, Act 1957 giving exemption to one residential sidential house.
house The AO granted exemption in relation to land to the extent of 88 cents out of 175 cents, after expressing his view that the same was reasonable area which could be regarded as the land appurtenant to the house and that the balance was vacant urban land liable to wealth tax. For arriving at this figure, the AO is noted to have relied upon the Town Planning Rules. The action of the AO was upheld by this Tribunal. On further appeal, the Hon'ble High Court held that, it was unnecessary for purpose of the Act to determine extent of land which could be regarded as either reasonably necessary or as being WTA TA Nos.7 No to 9/Chny/2023 (AYs20 2004-05 to 2006-07) M/s. Express Newspapers Pvt. Ltd :: 27 ::
appurtenant to house.. It was held that, once it is found that house is a residential house and that land is being used as ground attached to house for benefit of residents of house, the same remains a part of the house for purpose of proviso to section 7(4) of the Act. The Th Court accordingly held that the exemption cannot be whittled down arbitrarily by the assessing officer by importing their private notions of reasonableness into provisions of the Act,, which has otherwise not been provided in the Act.
Act
30. We also take note e of another decision of jurisdictional Madras High Court in the case of CIT vs Smt. M. Kalpagam (227 ITR 733) where, in context to exemption under section 54 of the Income Tax Act 1961, it was held that, the entire plot used by the assessee should be considered cons as one unit and that no part of the land could be separated and treated as a separate asset. In the decided case, the assessee had sold a land occupied with main building, cow sheds, sit outs, pathways and vacant land, whose sale proceeds was used for for purchase of new house and the assessee claimed relief under section 54 of the Income Tax Act. The AO partially denied the exemption u/s 54 of the Income Tax Act by bifurcating the land into two parts viz., building along with cow sheds, sit- outs, etc., which was considered as appurtenant to main building and another consisting of vacant land holding it to be separate and independent, not eligible for exemption u/s 54 of the Income Tax Act. For doing this bifurcation, the AO referred to the limits laid down own in the Urban WTA TA Nos.7 No to 9/Chny/2023 (AYs20 2004-05 to 2006-07) M/s. Express Newspapers Pvt. Ltd :: 28 ::
Land Ceiling Act. On appeal, this Tribunal, after looking into the property-
property plan, held that as the entire property was utilized by the assessee, the entire plot should be considered as one unit and that no part of the land could be separated ted and treated as a separate asset. On appeal by Revenue, the he Madras High Court upheld the order of this Tribunal.
31. It is noted that, similar issue came up for consideration before the ITAT,, Jaipur in the case of WTO Vs N N Atal (64 ITD 348).
348) In the decided case, the assessee had disclosed building along with appurtenant land of 9735 sq mtr. The AO disputed the land claimed to be appurtenant to the said building and held that 600 sq mtr was reasonable. On appeal this Tribunal observed that, the the house also accommodated facilities like a tennis court, swimming pool and such other facilities in the open land for the personal and exclusive use of the owners thereof. It accordingly held that, open pen area is necessary for quiet, peaceful and convenient convenien enjoyment of the property, depending upon one's means and taste. Hence, benefit of section 7(4) has to be extended to the open land which is appurtenant to the house property. Following the view taken by the coordinate Madras Bench of the Tribunal in ITO v. Smt. M. Kalpagam (10 10 TTJ 201) and the Indore Bench in the case of Sobharam Gambhirmal v. WTO [1985] Tax. 76 (6)- 57 and by the Allahabad Bench in Masood Halin v. WTO [1987] 20 ITD 310, 310, it was held that the benefit of section 7(4) had to be extended to the remaining 9735 mtrs of land also.
also
WTA
TA Nos.7
No to 9/Chny/2023
(AYs20
2004-05 to 2006-07)
M/s. Express Newspapers Pvt. Ltd
:: 29 ::
32. We now test the ratio laid down in the above decisions in the given facts of the case before us. In the present case, as noted earlier, the land of 20.63 acres was occupied by fifty-one (51 buildings) along with Madras Ma Club and other constructions as well, scattered all around, as noted from the sketch map. The said buildings were either leased out or utilized for business purposes and therefore fell within the exception laid down in Section 2(ea)(i) of the Act. The land adjoining these buildings are noted to comprise inter alia of the following:-
following:
- Open area which is accessible accessible to all the persons residing/working residing/ in the building(s) for walks, recreation etc.;
- Pathways, lawns, walking trails which are noted to be integral integ part of building;
- Open spaces occupied for car parking etc.
- Cow sheds constructed for dairy farming business and large open spaces for moving and grazing of animals.
- Lawns & gardens for use by the club for social gathering, relaxation etc.
33. Overall therefore, on the given facts, and having regard to decisions (supra), we are of the considered view that, not only was the land of 10.64 acres not completely vacant but was occupied by certain constructions, but the said land was only a portion/part out of the single contiguous land of 20.63 acres, in form of open area, and constituted land WTA TA Nos.7 No to 9/Chny/2023 (AYs20 2004-05 to 2006-07) M/s. Express Newspapers Pvt. Ltd :: 30 ::
appurtenant to the buildings constructed on the said land for the enjoyment of people utilizing/occupying these buildings, which was leased or utilized for business purposes. According to us therefore, the lower authorities had erred in artificially bifurcating land of 10.64 acres from the contiguous plot of 20.63 acres and considering it as separate 'urban land' for purposes of wealth tax purposes.
34. Having held so above, since the buildings to which the impugned land has been held to be appurtenant thereto, are- (i) in the nature of commercial establishments which are leased out; or (ii) residential properties which are also leased out by the appellant on long term basis;
or (iii) utilized by the assessee for its own business purposes such as dairy farming; the assessee has rightly pointed out that it falls under the specific exclusion/s set out in Section 2(ea)(i) of the Act. We thus hold that, the lower authorities authorities were unjustified in assessing the impugned land of 10.64 acres to wealth tax and therefore reverse the same and direct the AO to exclude/deduct the same from the computation of net wealth for wealth tax purposes. Ground No. 2 of the appeal is therefore allowed.
35. In view of our above findings, Ground No. 1 challenging the validity of reopening of wealth--tax tax assessment and Ground No. 3 (raised without prejudice to Ground No.2) objecting to the manner of valuation of the WTA TA Nos.7 No to 9/Chny/2023 (AYs20 2004-05 to 2006-07) M/s. Express Newspapers Pvt. Ltd :: 31 ::
land has become academic in nature.
natur . Accordingly, the wealth tax appeal of the assessee for AY 2004-05 2004 stands allowed.
36. Our above findings shall mutatis mutandis apply to the appeals filed by the assessee for subsequent AYs 2005-06 2005 06 & 2006-07 2006 in WTA Nos.8/Chny/2023 and 9/Chny/2023 9/Chny respectively.
ively. The AO shall accordingly delete the addition made in respect of the impugned land by way of taxable asset to the net wealth of the assessee for these AYs as well. The assessee thus succeeds in these appeals.
37. In the result, all these wealth tax appeals of the assessee stand allowed.
Order pronounced on the 19th day of March, 2025,, in Chennai.
Sd/- Sd/
Sd/-
(एस.आर. रघुनाथा) (एबी टी.. वक )
(S.R.RAGHUNATHA )
(S.R.RAGHUNATHA, (ABY
ABY T. VARKEY)
VARKEY
लेखा सद /ACCOUNTANT
ACCOUNTANT MEMBER याियक सद य/JUDICIAL MEMBER
चे ई/Chennai,
दनांक/Dated: 19th March,, 2025.
20
TLN
आदेश क ितिलिप अ ेिषत/Copy
Copy to:
to
1. अपीलाथ /Appellant
2. थ /Respondent
3. आयकरआयु /CWT,, Chennai / Madurai / Salem / Coimbatore.
4. िवभागीय ितिनिध/DR
5. गाडफाईल/GF