Income Tax Appellate Tribunal - Chennai
Ito Non Corp Ward 15 (5), Chennai vs Mrs Sushila Devi Kejriwal, Chennai on 8 February, 2019
आयकर अपीलीय अिधकरण, 'सी' यायपीठ, चे ई
IN THE INCOME TAX APPELLATE TRIBUNAL , 'C' BENCH, CHENNAI
ी एन.आर.एस. गणेशन, याियक सद य एवं ए. मोहन अलंकामणी, लेखा सद य के सम
BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND
SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER
धनकर अपील सं./WTA Nos. 18 to 20/Chny/2017
िनधारण वष / Assessment Years : 2008-09 to 2011-12
The Income Tax Officer, Vs Mrs. Sushila Devi Kejriwal,
Non-Corporate Ward - 15(5), Plot No.A-6, 1st Main Road,
Chennai - 34. Rangareddy Garden, Neelankarai,
Chennai - 600 115.
PAN: AAIPK7177N
(अपीलाथ /Appellant) ( यथ /Respondent)
अपीलाथ क ओर से /Revenue by : Shri R.V. Aroon Prasad, JCIT
यथ क ओर से /Assessee by : Shri Vinay Kejriwal, Assessee's
son
सुनवाई क तारीख/Da te of he ar i ng : 27.12.2018
घोषणा क तारीख /Da te of Pr on o un c em en t : 08.02.2019
आदेश /O R D E R
Per A. Mohan Alankamony, AM:-
These appeals by the Revenue are directed against the orders passed by the Learned Commissioner of Wealth Tax (Appeals)-15, Chennai both dated 29.12.2017 in ITA No.174&175/2016-17/CIT(A)-15 & 176&178/2016-17/CIT(A)-15, for the assessment years 2008-09, 2009-10 & 2010-11,2011-12 respectively passed U/s.16(3) r.w.s. 17 of the Wealth Tax Act. Since the issue in all these appeals is identical they are taken up for hearing together and disposed off by this common order.
2 WTA Nos. 17 to 20/Chny/20182. The Revenue has raised several identical grounds in its appeals however the crux of the issue is that the Ld.CWT(A) has erred in holding that the vacant land measuring 2000 Sq.ft., located at Neelangarai Village owned by the assessee does not fall within the definition of "asset" and "urban land" as per Section 2(ea) of the WT Act and therefore not assessable to Wealth Tax.
3. The brief facts of the case are that the assessee is an individual possessing assets assessable to Wealth Tax. The assessment in the case of the assessee was reopened because it was found that the assessee owned vacant residential housing site measuring 9 grounds which was assessable to Wealth Tax from the assessment year 2008-09 onwards. It was also observed from the information gathered from SRO, Neelangarai that the classification of land was housing site in Survey No.92/1598, 1134, Neelangarai Village and the guideline value was Rs.521 per Sq.ft. When the assessee was queried as to why the vacant residential land was not declared as assessable wealth, it was stated that the land is situated between 200 mtrs., to 500 mtrs., from high tide line and thus falls under the Coastal Regulation Zone (CRZ) wherein construction of building is prohibited and hence as per Section 2(ea) of the WT Act, the vacant land does not fall within the meaning of 3 WTA Nos. 17 to 20/Chny/2018 "urban land" and accordingly the same cannot be termed as "asset"
and therefore the vacant land cannot be assessed to wealth tax.
However the Ld.WTO rejecting the explanation offered by the assessee held that the vacant land is assessable to Wealth Tax for all the relevant four assessment years by passing separate order as under:-
After perusal of the assessees' submissions, the following arguments are put forth:
a. The assessee's plea that the land falls under CRZ and hence cannot be subjected to Wealth Tax, is only an afterthought. Whether approval for any construction on this plot would be granted or not will be known only when the approval is sought for from the local authority. As on the date of agreement, the assessee had fully exploited the commercial benefit arising out of the land and had entered into an agreement with the buyer on 20.12.2004 for a huge consideration, though, fully aware that no.
Construction could be raised on this plot. Hence, assessee's contradictions while emphasizing the tax incidence is inexplicable.
b. The assessee, other than disclosing a meagre income as agricultural income in the Income tax return of income, has not advanced any valid contemporaneous proof or evidence of having involved in any agricultural activity. The SRO's classification of the land is a house site and in the agreement of sale entered into by the assessee and the buyer, it is referred to as vacant site. Further, as per Patta o. 1642, dated 09.06.1993 issued by the Tahsildar, the land is only classified as "Punja land".
On the basis of the aforesaid, and on the facts and circumstances of the case, and due to the preponderance of probability pointing towards the assessee while weighing the above factors, the said property is included in the net taxable wealth and the fair market value computed by the District Valuation Officer as on 19.03.2013 vide his valuation report is adopted and the wealth tax assessment is concluded as under:-
4 WTA Nos. 17 to 20/Chny/20184. On appeal, the Ld.CWT(A) agreeing with the submission of the assessee reverse the order of the Ld.WTO and thus decided the issue in favour of the assessee for all the four relevant assessment years. The relevant portion of the order of the Ld.CWT(A) is extracted herein for reference:-
Assessment year 2008-09 & 2009-10
"5.3.CIT(A)'S remarks and decision:
I have carefully gone through the observation of the AO in the assessment order as mentioned above under para 5.1 and the appellant's submission before the CIT(A) under para 5.2.
5.3.1. The AO noticed that the appellant had nine grounds of vacant land at Neelankarai, Chennai which was not declared in Wealth Tax Return.
Therefore, the AO re-opened the assessment u/s 17 of the Wealth Tax Act and brought to Wealth tax, the aforesaid vacant land by observing that there was no proof of agricultural activity and therefore, it was an urban land. For this purpose, the AO had taken valuation from the Valuation Officer.
5.3.2. Before the CIT(A), the appellant objected to re-opening of Wealth tax assessment. I have considered the appellant's contention. The appellant basically argues against re-opening for the purpose of assessing vacant land which was outside the purview of the definition of "asset". The appellant has not proved that she had declared fully and correctly all the material evidence relevant to the issue under consideration. I find that the AO has given the reasons for re-opening in the assessment order and rejected the appellant's objection. The appellant has only reiterated the same objection which has been duly considered and rejected by the AO in the assessment order. There is no fresh submission submitted by the appellant before the CIT(A), on the issue of re-opening of wealth tax assessment. For the above reasons, I am of the considered opinion that the appellant has no valid objection to the re- opening of wealth tax assessment and therefore, the appellant's ground against re-opening of wealth tax assessment is dismissed.
5.3.3. Now coming to the issue on merit in this appeal, the appellant has contended that the said land was under Coastal Regulation Zone on which no 5 WTA Nos. 17 to 20/Chny/2018 construction was permissible. The appellant has pointed out that under the definition of "asset", and "urban land", the vacant land on which construction is not permissible should be excluded from the definition of "asset" hargeable to Wealth Tax u/s 2(ea) of the Wealth Tax Act. The appellant has relied on the decisions reproduced above under para 5.2. The appellant's appeals in AY 2005-06, 2006-07 and 2007-08 have been allowed by the then CIT(A). The Department's appeals against the CIT(A) orders were dismissed by the Hon'ble ITAT, Chennai citing low tax effect. The appellant has relied on the CIT(A)'s order in the appellant's own case on the issue under consideration.
5.3.4. I have perused the CIT(A)'s order in ITA No. 205/CIT(AO-15/ 14-15 dated 20-5-2016 in which under para 5.2.2., the CIT(A)-15, Chennai has allowed the appellant's appeals on the issue under consideration with the following observation:' "The DVO in his report has stated that the AO should decide whether the property is a subject matter of WT Act or not. The appellant has submitted that the, said property falls within CRZ-III category and the agreement for sale was cancelled on 04-06-2005 since it was known that no construction was permitted because of regulations in CRZ-III. The appellant has claimed this property to be Punja land or dry land. Due to strict restrictions imposed on lands falling in CRZ-III, the land cannot be termed as urban land for wealth tax purposes. The Hon'ble Bombay High Court in the case cited supra has held that the definition of urban land excludes from the definition of urban land any land on which construction of a building is not permissible. The land which is unbuildable under any law for the time being in force is not an urban land and, as such, is not an asset within the meaning of section 2(ea). Consequently, the land which is not buildable under any law for the time being in force is not included in assessable wealth of·a person. Since the said property consists of a part of a land which is buildable and part of the land which is not buildable, the Assessing Officer ought to have excluded the value of the portion of the land which was unbuildable while computing the wealth of the appellants. The AO is directed to delete the addition of Rs.1,80,70,000/ -. This ground is allowed. " .
5.3 5. I have also perused the ITAT's order vide WPA No. 25, 26 and 27/Mds/16 in Assessment orders 2005-06, 2006-07 and 2007-08 dated 23-11- 2016 in which the Hon'ble ITAT, Chennai has dismissed the Department's appeal citing low tax effect with the following remarks:
6 WTA Nos. 17 to 20/Chny/2018"We have perused the orders and heard the rival contentions. Wealth Tax levied on the assessee for the assessment year 2005-06 was Nil, and for assessment years 2006-07 and 2007-08 were Rs.1, 79,850/ - each. Circular No..05/2008, dated 15-05-2008 relied on by the Id. Authorised Representative clearly mentions that appeals where tax effect was than Rupees two lakhs should not be filed before this Tribunal and clause (10) of the said circular excludes only writ matters. The question whether subsequent circulars which superseded the earlier circular would effect the applicability of the earlier circulars on Wealth tax matters was an issue which came up before this Tribunal, in the case of Dr. M. P. Naresh. Kumar in W. T.A. 34 to 40/ Mds/2012 and C.O. No. 119/ Mds/2012 dated 28-08-2012. The Co-ordinate bench while holding that appeals filed by the Revenue were not maintainable in view of CBDT instruction No.03/2011 dated 09-02-2011 had observed"
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"We are thus of the opinion that substitution of the earlier circulars with subsequent circulars would not in any way affect the applicability of earlier circulars, in so far as it covered direct tax matters other than income tax. Accordingly, we are of the opinion that appeals of the Revenue are not maintainable", 5.3.6, In line with my predecessor's decision in AYs 2005-06, 2006-07 and 2007 -08 mentioned above, I am of the considered opinion that the vacant land does not fall within the definition of "asset" and "urban land" as per Section 2(ea) of the Wealth Tax Act. Therefore, the AO's additions in both the AYs 2008-09 and 2009-10 are deleted and the appellant's grounds are allowed."
The Ld.CWT(A) passed identical order for the assessment year 2010-11 & 2011-12 also.
5. Before us the Ld.DR vehemently argued in support of the order of the Ld.WTO while as the Ld.AR relied on the orders of the Ld.CWT(A).
7 WTA Nos. 17 to 20/Chny/20186. We have heard the rival submissions and carefully perused the materials on record. In the case of the assessee, it is not disputed that the vacant land owned by the assessee falls between 200 to 500 mtrs., from the High Tide Line (HTL) wherein construction of building is not permitted. The Ld.DVO is also in agreement with the location of the vacant land owned by the assessee as evident from his report at Page No.7 (PB Page No.14) which is extracted herein below:-
DVO Report page No.7
1. FAIR MARKET VALUE OF LAND FROM 01.04.2005 to 31.07.2007:
Guide line rate of Land for nearby Kapaleeswarar Nagar (as certified by SRO/Neelangarai) = Rs.812/ sqft.
Less for:
1.Disadvantageous location and situation of tile property:
Situated at about 500 metres away from the main East Coast Road (ECR), No basic civic amenities, the property is situated only about 250 metres away from the High Tide Line & thus said to be coming under the Coastal Regulation Zone which restricts the construction activities. @ 15% of basic guide line land rate i.e., on Rs.812/- =(-)Rs.121.80 6.1 Further Section 2(ea) of the Wealth Tax Act, amended by the Finance Act, 2013 with retrospective effect from 01.04.1993 makes it abundantly clear that any vacant land wherein construction of a 8 WTA Nos. 17 to 20/Chny/2018 building is prohibited by law cannot be considered as "urban land"
within the scope of the term "asset". The relevant portion of the Wealth Tax Act is extracted herein below for reference:-
Wealth Tax Act 2(ea) "assets", in relation to the assessment year commencing on the 1st day of April, 1993, or any subsequent assessment year, means-
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(v) urban land;
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Explanation [1] - For the purposes of this clause,-
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(b) "urban land" means land situate-
"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 kilometres 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 extent of, and scope for, urbanisation of that area and other relevant considerations, specify in this behalf by notification in the Official Gazette, [but does not include 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 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 stock-in-
trade for a period of [ten] years from the date of its acquisition by him.] 9 WTA Nos. 17 to 20/Chny/2018 6.2 Moreover the Ld.CIT(A) on the identical issue in the case of the assessee for the assessment years 2005-06, 2006-07 and 2007-08 has also held the issue in favour of the assessee. For the above stated reasons and from the plain reading of the provisions of Section 2(ea) of the Wealth Tax Act, we do not find any infirmity in the order of the Ld.CWT(A) on this issue. Accordingly we hereby uphold the orders of the Ld.CWT(A) for all the relevant assessment years 2008-09, 2009-10, 2010-11 & 2011-12.
7 In the result, the appeals of the Revenue for all the four relevant assessment years are dismissed.
Order pronounced on the 8th February, 2019 at Chennai.
Sd/- Sd/-
(एन.आर.एस. गणेशन) (ए. मोहन अलंकामणी)
(N.R.S. Ganesan) (A. Mohan Alankamony)
याियक सद य/Judicial Member लेखा सद य/Accountant Member
चे ई/Chennai,
दनांक/Dated 8th February, 2019
RSR
आदेश क ितिलिप अ ेिषत/Copy to:
1. िनधा रती/Assessee 2. राज व/Revenue 3. आयकर आयु (अपील)/CIT(A)
4. आयकर आयु /CIT 5. िवभागीय ितिनिध/DR 6. गाड फाईल/GF