Income Tax Appellate Tribunal - Amritsar
Tara Singh vs Dy. Commissioner Of Wealth Tax on 2 July, 2005
Equivalent citations: [2006]97ITD482(ASR), (2006)97TTJ(ASR)941
ORDER
BY THE BENCH This is bunch of five appeals, all filed by the assessee against five orders of Commissioner of Wealth Tax (A), Jalandhar, for the assessment years 1995-96, 1996-97, 1997-98, 1998-99 and 1999-2000. Since the issues raised in all these appeals are identical, these were heard together and are being disposed of by this consolidated order for the sake of convenience.
2. The first issue raised in all these appeals is that Commissioner of Wealth Tax (A) had gravely erred in not appreciating that the land in question owned by the assessee was agricultural and was, therefore, not included within the definition of 'asset' as defined under section 2(ea) of the Wealth Tax Act, 1957. Identical facts of the case are that the assessee owned agricultural land situated within the 'municipal limits' of Jalandhar. The assessing officer observed that the value of such land was to be included in the asset owned by the assessee within the meaning of clause (ea) of section 2 of the Wealth Tax Act, 1957 (hereinafter referred to as the "Act"). According to him, the said land was 'urban-land' within the meaning of Explanation 1 to sub-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 kms 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 for the first time the term urban land was incorporated, it did not include agricultural land, as the power to levy wealth-tax on agriculture 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 lie with the State Government by virtue of art. 370.
(d) Since the Union Government is not vested with the power of levying wealth-tax in the State of J&K so the Government had no intention to include agricultural land in the definition of urban land in section 2(ea)(v) of the Wealth Tax Act, in the Finance Act, 1993.
(e) Had the Union Government intended to include agricultural land in the definition of urban land for area except the State of J&K, specific exclusion (provisions) for the State of J&K might have been there, as the Government provided same by way of proviso to sub-clause (2) of clause (e) of the then section 2 of the Wealth Tax Act, 1957, in the Finance Act, 1969.
(f) The Wealth Tax authorities have wrongly interpreted the definition of urban land of the section 2(ea)(v) of the Wealth Tax Act.
(g) Though the Union Government is not vested with the power of levying wealth-tax on the agricultural land in the State of J&K, still the Government notified through Notification No. 871(E), dated 9-11-1993, in exercise of its powers, referred to in sub-clause (1) having regard to the extent of and scope for urbanization of that area, specified under sub-clause (ii) of clause (b) of Explanation of section 2(ea), according to assessee, Union Government here again meant not to include agricultural land in the urban land, but included non-agricultural land situated in the notified area.
(h) Hon'ble Supreme Court in the case of Commissioner of Wealth Tax v. Dr. Karan Singh & Ors. & Commissioner of Wealth Tax v. P.C. Oswal (1993) 200 ITR 614 (SC) as well as in Circular No. 45, dated 2-9-1970 (1971) 79 ITR (St) 60, corroborated actual position of law, holding that Parliament is out rightly divested of its powers to levy wealth-tax on 'agricultural lands' situated in the State of Jammu & Kashmir.
However, these submissions did not find favour with the assessing officer who observed that even though the land owned by the assessee was agricultural land as per revenue's records, yet the said land was urban land within meaning of Explanation 1 to sub-clause (v) of section 2(ea) as the land was situated within the radius of 8 kms from the municipal limits, Jalandhar. He also observed that no exemption is provided to agricultural land under section 2(ea) or in the section 5 of the Wealth Tax Act, 1957. As regards the exclusions of agricultural land situated in the State of J&K and the exclusion thereof from the purview of wealth-tax the assessing officer observed that Article 370 was applicable only to the State of J&K. Moreover, residuary powers under entry 97 of the Union list are vested with the Union Government and, therefore, 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 J&K Wealth Tax Act, 1957, for these assessment years.
3. Being aggrieved, the assessee filed appeals against the orders of the assessing officer before the Commissioner of Wealth Tax (A). The same arguments which were taken before the assessing officer were reiterated. However, these submissions were rejected by the Commissioner of Wealth Tax (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 2(ea) of Wealth Tax Act, 1957, it has to be taken as included within the definition of assets as contemplated under this section. The arguments of the learned counsel that it was not specifically exempted because it was not required since the lawmakers would have never imagined that anybody could think of agriculture land as taxable asset does not find favour with me. I am of the view that if the intention was to exclude agricultural land within municipal limits, it was essential to have an excluding proviso.
2. I agree with the constitutional position given by the learned counsel in paras (ii), (iii) and (iv) of the grounds of appeal, but my assessment of the whole situation is that once the land, agricultural or otherwise, comes within the municipal limits, i.e., notified with regard to extent and scope of urbanization of that area by the Central Government, it comes within the scope of urban land and even if it is agriculture land, it loses its character of being one.
3. With due respect to the Hon'ble Courts and the intention of taxing non productive assets only, I would again reiterate that once the land comes within the purview of urban land skyrocketing its price, the intention as it seems to me was to tax such land. Development and use of land in adjoining area would definitely after the character of the land in the urban area even if it is agricultural land as per revenue records,
4. The contention of the assessee that agriculture is a business and specific exemption has been provided under section 2(ea)(i)(3) of Wealth Tax Act, 1967, is also not correct since section 2(ea)(i)(3) excludes any house which the assessee may occupy for the purpose of any business or profession carried by him.
In this case, this is on open plot so this contention is not acceptable.
5. Regarding assessee's contention that construction on this land is prohibited, my view is that there are 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 the forest area and the second is where the construction can be done with permission or after the construction is done regularization can be considered. Assessee's land falls under the latter category where PUDA does give permission to carve out land into a colony, the only thing is that approval of the concerned authorities had to be taken.
6. Even in the case of Commissioner of Wealth Tax v. Hari Singh (1980) 123 ITR 558 (P&H) the Hon'ble Punjab & Haryana High Court has clearly held agricultural land owned by that assessee as an urban asset but exemption was granted because it was exempt under para A(2) of Schedule I, Part I of the Wealth Tax Act. In the present Schedule I Part I there is no such exemption.
7. In the case of Smt. Jaswant Kaur v. Commissioner of Wealth Tax, Patiala, quoted by the assessee, the exemption was granted because certain restriction i.e., upto 1 Kms. 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/CE, dated 9-11-1993 (TC 64S, 1018)". Thus, even agricultural lands in an urban area might constitute assets.
9. Similar issue has been decided by Hon'ble Chandigarh Tribunal in WTA Nos. 49/Chd/99, 33/Chd/2000 and 10/Chd/2002 in the case of M/s. Industrial Cables Ltd. v. Asstt. Commissioner of Wealth Tax, Circle Mandi Gobindgarh, where the agriculture land within the municipal limit has been clearly held as an urban land within the definition and scope of section 2(ea) of the Wealth Tax Act, 1957.
10. In the end, I would say that if the intention of the lawmakers was so clear (as the learned counsel puts it) that agriculture land even within the municipal limit was exempt, why have they not provided any exemption under section 5 or under Schedule I Part I and what stopped them from providing specifically excluding proviso under section 2(ea)?
I hold that the land in question has been rightly treated as an asset under section 2(ea) of the Wealth Tax Act, 1957. "
The assessee is aggrieved with the orders of the Commissioner of Wealth Tax (A). Hence, these appeals before us.
4. The learned counsel for the assessee filed written submissions reiterating the same arguments, which were taken before the authorities below. He submitted that the Parliament had no power to levy wealth-tax on agricultural land as the same falls in the State list. He submitted that it is not in dispute that the assessee was carrying on agricultural operations and the land in question was indeed agricultural as per revenue records. He submitted that the levy of wealth-tax on agricultural land was introduced by the Finance Act, 1969 from the assessment year 1970-71. He submitted that when the amendment to Wealth Tax Act, 1957 was introduced by the Finance Act, 1969, the then Finance Minister was very clear of the legal position that the Entry '86' of Union List in the with Schedule to the Constitution clearly divested the Parliament from its cause (sic) to legislate as regards leviability of taxes on capital value of agricultural land. But the powers to legislate as regards the leviability of taxes on capital value of agricultural land still remained vested with the Parliament, as per Entry '97' of the Union List which dealt with residuary powers. However, he submitted that as per Art. 370 of the Constitution, the power of the Parliament to legislate upon levy of wealth-tax on capital value of agricultural land did not extend to the State of J&K. Therefore, proviso to sub-clause (2) of clause (e) vide Finance Act, 1970, with retrospective effect from 1-4-1969 was introduced which excluded the levy of wealth-tax in respect of agricultural property in the State of J&K. He referred to Board's Circular reported in (1971) 79 ITR (St) 60 where it was mentioned that the Parliament's competence to legislate for the extension of the levy of wealth-tax to agricultural property is derived from Art. 248 of the Constitution (relating to the residuary powers of legislation) and Entry '97' of the Union List in the Seventh Schedule of the Constitution. However, Art. 248 and Entry '97 of the Union List, in the form 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 Commissioner of Wealth Tax v. Dr. Karan Singh & Ors. (supra), 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 clause (ea) of section 2 of the J&K 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 areas. Thus, he contended that the urban land included within the purview of clause (ea) of section 2 does not bring within its scope of agricultural land. To stress his contention, the learned Authorised Representative invited our attention to Notification No. S.O. 871(E) dated 9-11-1993, which was issued under Explanation (b) of clause (ii) of section 2(ea) of the Act as per which if (sic) every land including in the State of J&K was regarded to be urban land. It is settled position that Parliament has no power to levy tax on agricultural property in the State of J&K. The very fact that even the land located in the State of J&K is included in the definition of urban land shows that Parliament never intended to include agricultural land in the definition of urban land. If agricultural lands situated in the State of J&K were made liable to wealth-tax under the garb of urban land, this would make the section ultra vires of the Constitution. He, therefore, submitted that provisions of the Act should be interpreted in such a manner that these do not lead to absurdity and unjust consequences by frustrating the very framework of the Constitution of India. For this proposition, he relied on the following three judgments :
(1) K.P. Varghese v. ITO & Anr. (1981) 131 ITR 597 (SC).
(2) Harshad Shantilal Mehta v. Custodian & Ors. (1998) 231 ITR 871 (SC).
(3) Oxford University Press, Etc. v. CIT (2001) 247 ITR 658 (SC).
Thus, he submitted that literal interpretation of section 2(ea) which leads to unreasonable or absurd consequences should not be adopted. He further submitted that while including the urban land for the purpose of wealth-tax levy, the then Finance Minister had underlined the intention of channelising investments from unproductive assets into productive assets. He further drew our attention to the speech of the Finance Minister in the Parliament (copy placed at pp. 33 to 35 of the paper book) where he had accepted that agriculture was the foundation of the national prosperity and no strategy of economic development could succeed in India if it does not ensure rapid growth of production and employment in agriculture. He submitted that in view of such observations of the then Finance Minister, agricultural land could not be considered to be unproductive assets. He, therefore, submitted that agricultural land falling within municipal limits does not fall in the definition of 'urban land' and the same was never intended to be included in definition of urban land. He also relied on the following judgments :
(1) In the case of Commissioner of Wealth Tax 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 Commissioner of Wealth Tax 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 Commissioner of Wealth Tax v. P. Sankaran Nair (1976) 103 ITR 366 (Mad), 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 Act and the authorities below wrongly included in the total wealth.
5. The learned Departmental Representative, on the other hand, heavily relied on the orders of the authorities below.
6. We have heard both the parties and carefully considered the rival contentions with reference to facts, evidence and material on record. We have also referred to the relevant pages of the paper book to which our attention has been drawn. The learned Authorised Representative has contended that the agricultural land does not fall within the purview of 'urban land' and, therefore, no wealth-tax can be imposed. According to him, wealth-tax can be imposed only on non-productive assets and since agricultural land is a productive asset, the same cannot be considered to fall in the definition of urban land. He has also pressed into service speech of the then Finance Minister to be used while interpreting the provisions of section 2.(ea) of the Wealth Tax Act. He has also contended that as if provisions of section 2(ea) are to be interpreted in the manner to include agricultural land within the purview of urban land, such provisions would become ultra wires, as the Parliament has no powers to extend such provisions to the State of J&K. We are of the considered view that this is not proper forum for raising these issues. The Tribunal is a creature of law and is required to apply law as it is. The constitutional validity of the Act could not be challenged before the Tribunal as it has no such powers and authority to examine and decide such issue. Even the cases relied upon by the learned counsel were not decided by the Tribunal. The same were decided by the Hon'ble Supreme Court and High Courts who had powers and authority to decide such matters. Therefore, the ratio of those judgments cannot be applied to the facts of the present case because the Tribunal has no jurisdiction to go into the constitutional validity of the provisions of the Act. Therefore, these submissions are rejected.
7. Now the next aspect of the case that requires to be decided by this Bench whether agricultural land, if located within the distance of 8 kms from the limits of the municipal corporation, falls within the definition of urban land and is liable to wealth-tax or not? However, it must be stated that as per findings recorded by the authorities below, there is no doubt about the fact that the land was being used for agricultural purposes and this fact has not been disputed by the assessing officer and Commissioner of Wealth Tax (A). There is also no dispute about the fact that the land falls within the radius of 8 kms 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 assets under section 2(ea) of the Wealth Tax Act, "(ea) 'assets' in relation to the assessment year commencing on the 1-4-1993, or any subsequent assessment years, means
(v) '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 kilometers from the local limits of any municipality or cantonment board referred to in sub-clause (i), as the Central Government may, having regard to the extent of, and scope for, urbanization of that area and other relevant considerations, specify in this behalf by notification in the Official Gazette, 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 stock-in-trade for a period of ten years from the date of its acquisition by him."
A bare reading of the above Explanation would show that the urban land is one which is situated in any area which is comprised within the jurisdiction of municipality or any other corporation mentioned therein, if the population of that city/town is not less than ten thousand and falls in the area within such distance, not being more than 8 kms from the local limits of any municipality or cantonment board referred to in sub-clause (1) that the Central Government may having regard to the extent of and scope for urbanization of that area notify in the Official Gazette. There is no dispute about the fact that the land in question falls within the definition of 'urban land' i.e., it is in the city having population of more than ten thousand and is located within the area notified under Government Notification for this purpose. The only exceptions provided for exclusion of the land falling in the definition of urban land are as under :
(a) The land on which construction of a building is not permissible under any law for the time being in force.
(b) The land occupied by any building, which has been constructed with the approval of the appropriate authority.
(c) Any unused land held by the assessee for industrial purpose for the period of two years from the date of its acquisition by him.
It is relevant to note that in the definition the expression used is "means" and not "includes". The expression "means" is different from expression "includes". The expression "means" restricts the definition as given in the statute than the expression "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 & Anr. (1975) 100 ITR 483 (AP), where on p. 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 forms 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 (Ori), where the High Court at p. 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 Insurance Co. v. Fraser & Ross (1960) 30 Comp Cas (Ins.) 13 : AIR 1960 SC 971. Where, however, the word defined is declared to include certain things, the definition is extensive, (See Ardeshir H. Bhiwandiwala v. State of Bombay (now Maharashtra) AIR 1962 SC 29, Sant Ram v. Klab Singh, AIR 1965 SC 314). In the case of Dr. P. Vadamalayan v. CIT (1969) 74 ITR 94 (Mad), the Madras High Court has said that the definition being inclusive and not exhaustive is indicative of extension and expansion and not restriction. Jessel M.R. in Smith v. Anderson (1880) 15 Ch. D. 247 (CA) pointed out that the word "business" is a word of large and indefinite import. It is something, which occupies attention and labour of a person for the purpose of profit. The word means almost anything, which is an occupation or duty requiring attention as distinguished from sports or pleasure and is used in the sense of occupation continuously carried on for the purpose of profit. To the same effect was the test indicated in the case of CIT v. Shaw Wallace & Co. (1932) 2 Comp Cas 276 : AIR 1932 PC 138. The Supreme Court very aptly indicated in the case of CIT v. Lahore Electric Supply Co. Ltd. (1966) 60 ITR 1 (SC) that "business" (so far as the Income Tax Act is concerned) is an activity capable of producing a profit which can be taxed. The definition of "business" in section 2(13) of the Act is similar to the definition of the same word in section 2(b) of the Indian Partnership Act, 1932. Authorities have interpreted the word "business" appearing in the Partnership Act in the same strain. Rangnekar J. in the supplementing judgment in the case of CIT v. National Mutual Life Association of Australasia Ltd. (1933) 1 ITR 350 (Bom) observed :
"The word 'includes' in the interpretation clauses is intended to be enumerative and not exhaustive and it has an extending force and does not limit the meaning of the term.' .
Tested on such basis, the activity undertaken by Narashingha under the agreement with the Headmaster was certainly not outside the ambit of business".
Thus, from the above it is clear that when expression 'means' is used in the section it has restricted meaning and where the term 'includes' has been used in the definition, it has extended meaning beyond the natural meaning. Now in this case specific definition of urban land given in Explanation I to section 2(ea) where expression 'means' has been used for defining the urban land, the meaning as given in the definition is alone to be accepted and no extended meaning can be given as canvassed by the learned Authorised Representative. Nowhere the definition excludes from the purview of urban land, the agricultural land situated within the municipal limits of the city.
7.1 The learned 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. Budharaja & Co. & Anr. (1993) 204 ITR 412 (SC), the Hon'ble Supreme Court has held as under :
"The principle of adopting a liberal interpretation which advances the purpose and object of beneficent provisions cannot be carried to the extent of doing violence to the plain and simple language used in the enactment. It would not be reasonable or permissible for the court to rewrite the section or substitute words of its own for the actual words employed by the legislature in the name of giving effect to the supposed underlying object. After all, the underlying object of any provision has to be gathered on a reasonable interpretation of the language employed by the legislature."
Considering that language of the section is very clear and unambiguous and there is no room for any intendment and there is no scope for reading the section otherwise that tax could be levied only on productive assets, we are of the considered opinion that agricultural land even if, falls within the distance of 8 kms from the limits of municipal corporation and is located in a town with population of more than ten thousand, the same would fall in the definition of urban land and would be included in the value of assets for the purpose of levy of wealth-tax. Similar issue was considered by the Tribunal, Chandigarh Bench, in the case of Charan Paul Singh Mann & Jagra) Singh v. Asstt. Commissioner of Wealth Tax in WTA Nos. 49 & 60/Chd/1997 and the Tribunal vide its order dated 6-8-2002, decided the matter in favour of the revenue and against the assessee. It must be mentioned that identical arguments as taken by the learned Authorised Representative before us, were advanced before the Tribunal in the above cases and the same were rejected. The assessees carried the matter in appeals before the Hon'ble Punjab & Haryana High Court and the Hon'ble High Court vide order dated 8-9-2003, in WTA Nos. I & 2 of 2003 by referring to Explanation 1(b) to clause (ea) of section 2 of the Wealth Tax Act, upheld the view of the Tribunal and held that any agricultural land which falls within the jurisdiction of municipality would be urban land and chargeable to wealth-tax. The relevant findings of the order of the Hon'ble High Court are as under :
"The only question that arises for consideration in these two appeals is whether agricultural land situated within the municipal limits is an asset chargeable to wealth-tax. This question has been answered by all the authorities below relying upon the definition of "urban land" given in Explanation (b) 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 regard 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 Commissioner of Wealth Tax (A) and reject this common ground of appeals.
8. The next common ground of appeals relates to the fact that Commissioner of Wealth Tax (A) was not justified in not accepting the plea of the assessee that the land was used for business of agriculture and was, therefore, not includible in view of clause (3) of section 2(ea)(i) of the Act. Briefly stated, the claim of the assessee was that agriculture is a business and, therefore, was covered under section 2(ea)(i)(3) of the Act. This claim was rejected by the Commissioner of Wealth Tax (A) on the ground that exemption under this section was available only in respect of any house which the assessee may occupy for the purpose of any business or profession carried on by him. But in the present case, land was open plot. Therefore, the assessee was not entitled to such exemption. Assessee has now brought this issue in appeal before us.
9. The learned Authorised Representative submitted that assessing officer has accepted that the assessee was in the business of growing potatoes. He drew our attention to pp. 14-15 of the paper book, which is a copy of the assessment order for the assessment year 1998-99. Relying on the following judgments of jurisdictional High Court, the learned Authorised Representative submitted that agriculture is accepted as business :
(i) Commissioner of Wealth Tax v. Jagdev Inder Singh (1991) 192 ITR 557 (P&H).
(ii) Commissioner of Wealth Tax v. Jagdev Inder Singh (1992) 195 TTR 367 (P&H).
(iii) Commissioner of Wealth Tax v. Jagdev Inder Singh (1994) 209 ITR 169 (P&H).
He submitted that assessee has building where tube-well/electric motor is kept and place where agricultural produce is stored. He submitted that such building along with land appurtenant thereto would not fall within definition of "asset" under section 2(ea)(i)(3) of the Act.
10. The learned Departmental Representative, on the other hand, relied on the orders of authorities below.
11. We have heard both the parties and considered the rival contentions. From the facts placed on record, it is clear that assessee had made claim only under clause (3) of section 2(ea)(i) of the Act. Clause (3) of the aforesaid section excludes from the definition of 'asset' any house which the assessee may occupy for the purpose of any business or profession carried on by him. Otherwise clause (i) of section 2(ea) includes in the definition of "assets" any building or land appurtenant thereto. In the case of Commissioner of Wealth Tax v. Hari Singh (supra), the Hon'ble Punjab & Haryana High Court has held that carrying on agricultural operations involve systematic entrepreneurial activity with the help of 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 any house which the assessee may occupy for the purpose of any business or profession carried on by him. A careful reading of the same shows that in order to entitle to exclusion of the value of such asset, it is necessary that there must be a house and it must be occupied for the purpose of business or profession carried on by him. The word 'house' has not been defined in the Wealth Tax Act. However, as per dictionary meaning house means dwelling place or a building for dwelling. The second aspect is that it must have been occupied by the assessee for the purpose of carrying on its business. Now the place where electric motor/power engine is stored, could not be called as a dwelling house because it is only for the purpose of protection of such electric motor or engine. Similarly, a shed where agricultural produce is stored could not be caned a house for the purpose of excluding the value of the same from the definition of assets given under section 2(ea)(i)(3) of the Wealth Tax Act. In the case of CIT v. Jai Kishan Gupta (2003) 264 ITR 482 (All), Hon'ble Allahabad High Court has held that all buildings cannot be regarded as houses. In common parlance a house means where people live. It was held by no stretch of imagination a cinema hall be regarded as house because it is not a building for human habitation. Thus, a small room meant to cover electric motor/shed and place where agricultural produce is stored cannot be regarded as 'house' as these are not the places used by the assessee for his dwelling. Even otherwise, by no stretch of imagination, expression 'house' occupied by the assessee for the purpose of 'business' would include land owned by the assessee as the same is not part of the house occupied by the assessee. Therefore, this ground for all the assessment years is also devoid of any merit. Hence rejected.
13. The next common ground of appeals is that the Commissioner of Wealth Tax (A) failed to appreciate that the land owned by the assessee was agricultural land and was, therefore, subject to cultivation and as per provisions of sections 86 and 87 of the Punjab Regional & Town Planning and Development Act, 1995, no construction was permissible on the said land. Therefore, the same would require to he excluded from the purview of assets as per Explanation 1(b) of section 2(ea) of the Wealth Tax Act. The facts of the case are that the assessee claimed that the land in question was agricultural land and, therefore, no construction on the same was permissible and hence it does not fall in the definition of urban land. However, the Commissioner of Wealth Tax (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 learned Authorised Representative 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 with the master plan, he exposes himself to penalty for the same, besides prosecution. He submitted that as per master plan, the land could be used only for agricultural operation. However, a copy of the master plan has not been placed on our record. He has also submitted that the land of the assessee (is) at a place where there had been a proposal vide Notification dated 6-3-2000 to declare the area to be a site for a new town, but on the valuation date for the assessment years, the land squarely fell under the 'Green Belt' and, therefore, it could have been used only for agricultural operations.
15. The learned Departmental Representative, on the other hand, relied on the orders of the authorities below.
16. We have heard both the parties and carefully considered the rival contentions with reference to facts, evidence and material on record. The exception provided from the definition of urban land in clause (b) of Explanation I is in regard to the 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. The expression "on which construction of the building is not permissible" in our view 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 i.e., any area notified for the purpose other than construction of the building. For example, in places like Bombay, certain area near the sea (coastal belt) upto certain distance, no construction at all is permitted. Now in case the land falls in such area, even though the same may be urban land, no construction on the same is at all allowed. Therefore, such land would fall in the exception mentioned hereinabove. The other category of land falling under such exception would be one where construction is prohibited under the Defence/Security Act or adjacent to the airport. There also the construction is not permitted because of security reasons. No such claim was made either before the authorities below or even before us. The third category would be where the land falls under the 'Urban Land Ceiling Act' and on such land neither the construction is possible nor owner can sell such land to any person. This is also not the 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 p. 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, the assessee failed to produce any evidence to establish that construction on the said land owned by the assessee was prohibited under any law, order or notification issued thereunder. Sections 86 and 87 of the Punjab Regional & Town Planning and Development Act, referred to by the learned Authorised Representative only spell out the consequences if construction is not undertaken with the approval of competent authority. But these sections do not provide that construction is banned/prohibited on the land owned by the assessee. It may be mentioned that even construction on a plot on non -agricultural land in the urban area is not permitted without the approval of the approved authority/municipal corporation. But this does not mean that the said land is not an 'urban land' or is not a land on which construction is prohibited under the law. In any case, the assessee has failed to place a copy of specific Act, notification of the Government as per which assessee was prohibited under the law for undertaking such construction.
17. Now in this case, the learned Commissioner of Wealth Tax (A), has observed that construction on the land owned by the assessee was permitted. Permission of the PUDA was required only if assessee wanted to carve out land into a colony. In fact, when PUDA earmarked the land for a new town vide subsequent notification dated 6-3-2000 (i.e., not relevant to assessment years under consideration as the previous year relevant to last assessment year 1999-2000 ended on 31-3-1999), the PUDA had clarified vide letters at pp. 56-57 of the paper book that in the declared area construction is not permissible without the approval of competent authority. This only shows the construction was otherwise permissible with the approval of the competent authority.
18. While deciding the present appeals, the learned Commissioner of Wealth Tax (A) has relied on the decision of Tribunal Chandigarh Bench, in the case of M/s. Industrial Cables (P) Ltd. v. Asstt. Commissioner of Wealth Tax in WTA Nos. 49/Chd/99, 33/Chd/2000 and 10/Chd/2000 for assessment years 1996-97, 1997-98 and 1998-99. We have referred to the said decision. In this case the learned Commissioner of Wealth Tax (A) had rejected the plea of the assessee by observing that as per the provisions of the Punjab Apartment Regulation Act, 1995, there is no bar on any construction activity on the said land. Under the said regulation, if the assessee wants to carve out the land into a colony, then the provision of the Act comes into force and the owner has to take the approval of the authorities concerned for carrying 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 appeal, the Tribunal, upheld the orders of Commissioner of Wealth Tax (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 area or any other area notified for the purpose other than the construction of the buildings. In this view of the matter, we are of the considered view that since there was no bar for the construction of the buildings in the area in which the land of the assessee was situated, the land in question does not fall within the exception to the definition of 'urban land' under Explanation 1(b) to section 2(ea) of the Wealth Tax Act, 1957.
7. Even otherwise, the mere fact that the assessee has to follow procedure for getting permission to convert the urban land into colony does not support the claim that there is prohibition under any law for the construction of buildings on the land in question. We are, therefore, of the considered view that assessing officer was justified in including the value of the land of Rs. 66,61,500 as an asset assessable under the provisions of the Wealth Tax Act, 1957. The decision of the Commissioner of Wealth Tax (A) for the assessment years 1996-97 and 1997-98 is accordingly upheld. The decision of the Commissioner of Wealth Tax (A) for the assessment year 1998-99 is set aside and that of the assessing officer is restored."
19. In the present case also the Commissioner of Wealth Tax (A) has given similar reasons and assessee has not brought any material on record to controvert the findings of Commissioner of Wealth Tax (A). In the light of these facts and circumstances of the case and respectfully following the aforesaid decision of Tribunal, Chandigarh Bench, in the above case, we do not find any justification to interfere with the orders of Commissioner of Wealth Tax (A). The same are upheld and this ground of appeal is also dismissed for all the assessment years.
20. The last ground of appeal relates to initiation of reassessment proceedings. This ground has not at all been argued either before the authorities below or even before us. Even in the written submissions filed, the assessee has not covered this ground. Therefore, the same is dismissed as not pressed.
21. In the result, all these appeals filed by the assessee are dismissed.