Income Tax Appellate Tribunal - Pune
Hindustan Antibiotics Ltd, Pune vs Assessee on 29 February, 2016
आयकर अपील�य अ�धकरण पुणे �यायपीठ "बी" पुणे म�
IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCH "B", PUNE
सु�ी सुषमा चावला, �या�यक सद�य एवं �ी �द�प कुमार के�डया, लेखा सद�य के सम�
BEFORE MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA, AM
धनकर अपील सं. / WTA Nos.02 to 07/PN/2013
�नधा�रण वष� / Assessment Years: 2004-05 to 2009-10
M/s.Hindustan Antibiotics Ltd.,
Pimpri, Pune - 411018 .... अपीलाथ�/Appellant
PAN: AAACH5155L
Vs.
The Asst. Commissioner of Wealth Tax,
Circle 9, Pune .... ��यथ� / Respondent
अपीलाथ� क� ओर से / Appellant by : Shri Ashok N. Kothary
��यथ� क� ओर से / Respondent by : Shri Hitendra Ninawe
सुनवाई क� तार�ख / घोषणा क� तार�ख /
Date of Hearing : 16.02.2016 Date of Pronouncement: 29.02.2016
आदे श / ORDER
PER SUSHMA CHOWLA, JM:
This bunch of six appeals filed by the same assessee are against separate orders of CWT(A)-V, Pune, all dated 31.05.2013 relating to assessment years 2004-05 to 2009-10 against respective orders passed under section 16(3) r.w.s. 17 of the Wealth Tax Act, 19 57 (in short 'the Act').
2 WTA No s.02 to 07/PN/2013 M/s. Hindustan Antibiotics Ltd.
2. This bunch of appeals relate to the same assessee were heard together and are being disposed of by this consolidated order for the sake of convenience.
3. The assessee in WTA No.02/PN/2013 has raised the following grounds of appeal:-
On the facts and the circumstances the learned Assessing Officer and Commissioner of Wealth Tax(Appeals) erred in:
Treating the land which is part of residential colony as taxable wealth and levying tax thereon by ignoring the exemptions provided for as per the provisions of Wealth Tax Act, 1957 and rules made there under.
The appellant named above craves to add to alter, to amend and to modify the grounds as and when required.
4. The assessee in addition to original grounds of appeal has also filed additional grounds of appeal for all the respective years under appeal, which read as under:-
1. In treating the land which was acquired by the Government under Land Acquisition Act, 1894 for the public purpose, as an asset belonging to the assessee and making it liable to wealth tax under Wealth Tax Act, 1957. The action of the AO being contrary to the facts and being bad in law it is prayed that the said land be treated as not taxable under the Wealth Tax Act, 1957.
2. In including in the net wealth of the company the vacant land, which was acquired by the Government under Land Acquisition Act, 1894 for residential colony of the company. The action of the AO being contrary to the facts and being bad in law it is prayed that the said land be treated as not taxable under the Wealth Tax Act , 1957.
3. Without prejudiced to the contention that the land, which is a part of the residential colony, is exempt from wealth tax, the learned Assessing Officer and the CWT (A) erred in valuing the said land without considering and I or applying provisions of the law. This being bad in law it is prayed that the assessment be set aside.
5. The issue arising in the present appeal is the treatment of land which was acquired by the Government of India under the Land Acquisition Act, 1894 (in short 'LAC') for the construction of residential colony of the assessee company, whether falls within the definition of net wealth of the assessee company under the Wealth Tax Act, 1957. The facts and issue arising in all the appeals are identical and for the sake of adjudicating the issue, reference is being made to issue in WTA No.02/PN/2013 .
3 WTA No s.02 to 07/PN/2013 M/s. Hindustan Antibiotics Ltd.
6. Briefly, in the facts of the present case, during the scrutiny assessment proceedings under section 143(3) for assessment year 2004-05, the Assessing Officer noted that the assessee had shown huge unused urban land, as an asset in the Balance Sheet, which as per the Assessing Officer was chargeable to Wealth Tax , but the assessee had not furnished any Wealth Tax Return for the said assessment year 2004-05. Thereby, the Assessing Officer was of the view that the wealth had escaped assessment. Accordingly, notice under section 17(1) of the Act was issued on 30.03.2011. In response to the said notice, the assessee furnished the return of wealth declaring total wealth of Rs.4,21,800/-. During the course of wealth tax assessment proceedings, the Assessing Officer noted that the assessee had declared total wealth to be on account of movable property valued at Rs.4,21,800/-. The assessee had not declared any immovable property as its wealth during the year, but had claimed the same as exempt. The contention of the assessee before the Assessing Officer was that the said asset was urban land and since 60 acres of unbuilt colony area did not exceed specified area as defined in Rule 6 of Schedule III of Wealth Tax Rules, the same was exempt. The Assessing Officer rejected the contention of assessee and noted that such Rule only specified the adjustment to be made to the value of assets mentioned under Rule 3 of WT Rules. Hence, the claim of the assessee that unbuilt colony land was not taxable, was not accepted. Another issue noted by the Assessing Officer was that over a period of time, large tracts of unbuilt colony land had become independent in themselves, since they do not cause any detriment to the enjoyment of the building as such. Moreover, the Asset Sale Committee of HAL formed under the Rehabilitation Scheme of BIFR had felt that such land could be ceded from the remaining part of land in occupation by HAL and can be sold in the market. The Assessing Officer thus, held that the above finding that the unbuilt colony land had remained unused for long makes it amenable to be included in the taxable wealth of the assessee company. The Assessing Officer vide para 5.4 observed that during the course of income-tax assessment proceedings, the assessee had admitted on its own that the market value of 20 acres of land lying at its disposal was about 100 to 150 4 WTA No s.02 to 07/PN/2013 M/s. Hindustan Antibiotics Ltd.
crores for financial year 2010-11. Thus, taking the average value of land at Rs.138 crores for 20 acres, the value of land per acre was worked out at Rs.6.25 crores for financial year 2010-11. Taking 10% step down value per year for inflationary factors, the market value of the land unused of 60 acres was extrapolated backwards for last few years and it was worked out as under:-
Financial Year Assessment Year Value of land of 66 acres
2010-11 2011-12 66 x 6.25 = 412.5 crores
2009-10 2010-11 375 crores
2008-09 2009-10 340.90 crores
2007-08 2008-09 309.92 crores
2006-07 2007-08 281.74 crores
2005-06 2006-07 256.12 crores
2004-05 2005-06 232.84 crores
2003-04 2004-05 211.67 crores
7. The Assessing Officer thus, added the value of land at Rs.211.67 crores to the net taxable wealth of the assessee and completed the wealth tax assessment.
8. Before the Commissioner of Wealth Tax (Appeals) [in short 'CWT(A)'], the contention of the assessee was that the Special Land Acquisition Officer, Pune vide order dated 27.03.1967 had passed the land acquisition award under section 11 of the LAC Act and the lands were acquired for the expansion of present residential colony of HAL, which was a Government Undertaking. The said land was acquired by LAC Officer free of cost as Grant, which was exclusively for residential colony purpose only and that too only for HAL and no other usage or diversion was allowed. The assessee further claimed that the lands granted were subject to several conditions as to its usage and disposal and no sale or disposal for commercial purpose was allowed. However, 69.33 acres of land acquired for colony expansion remained unused for construction and was used for welfare activities of the colony. Thereafter, submission s were made that the assessee since was running into huge losses for the past many years, there was a proposal for revival of the assessee company, which included the proposal for selling the unused colony land for raising funds. However, the sale of the land never materialized due to various legal complications and efforts to sell the said colony land 5 WTA No s.02 to 07/PN/2013 M/s. Hindustan Antibiotics Ltd.
was canceled by the Government of India, on a later date. The said sanction was never implemented. Further, the plea of the assessee before the CWT(A) was that the land in question was meant for residential colony and fell squarely under exemption provided under section 2(ea) of the Act. Further, since the land was not saleable, there was no merit in working out the market value of saleable land. The letter of withdrawal of permission given to sell the colony land was requested to be admitted as additional evidence and the copy of the same was forwarded to Assessing Officer and further, the contentions were made in this regard. The CWT(A) noted the factual aspects of the case and also noted that on a later date, there was an intimation to the BIFR Chairman, Government had decided to consider a second revival package without taking recourse to sell the land, which was on a later date reversed and hence, there was no merit in the admission of the aforesaid additional evidence. The CWT(A) thus, was of the view that the land in question was acquired for the purpose of expansion of colony of the assessee and though the land remained unused urban land. As per the definition of urban land in Explanation (b) to section 2(ea) of the Act, where any unused land held for industrial purposes for a period of two years of its acquisition was an asset chargeable to wealth tax. The contention of the assessee that the said land in question was exempt from Wealth Tax, was not accepted by CWT(A) and the order of Assessing Officer in treating the unused urban land chargeable to Wealth Tax was upheld.
9. The assessee is in appeal against the order of CWT(A).
10. The learned Authorized Representative for the assessee pointed out that in order to adjudicate the present issue raised before the Tribunal, the additional grounds of appeal have to be first adjudicated. It was proposed by the learned Authorized Representative for the assessee that the said land was not includable as net wealth of the company since the land was acquired by the Government under the LAC Act for residential colony of the company and was not the wealth of the assessee. The 6 WTA No s.02 to 07/PN/2013 M/s. Hindustan Antibiotics Ltd.
learned Authorized Representative for the assessee pointed out that initially 200 acres of land was acquired by the assessee, which was a Government company and residential colony for its employees was constructed. In 1965 additional land of about 69 acres were acquired by the Government of India for use of the assessee company, against which in 1967 award money was paid by the Government of India. The learned Authorized Representative for the assessee further pointed out that in 1997 since the assessee company became sick, BIFR proceedings were started and because of huge losses, Government of India decided to sell about 20 acres out of 69 acres, but nothing could be sold by the Government of India. The learned Authorized Representative for the assessee stressed that throughout the assessment proceedings and appellate proceedings, the presumption was that the land belonged to the assessee. Reference was made to clause (f) (iv) of section 3 of the LAC Act to point out that the acquisition was for public purposes or for the purpose of Government company and under section 16 of the Act after acquisition of such land, the vesting of the property was in the hands of Government of India. He stressed that the property acquired vests with the Government of India, which was to be used for public purposes, which includes the Government company. Our attention was drawn to the order of Hon'ble Bombay High Court in the proceedings relating to acquisition of land, wherein the original owners had made a claim for restoration of their rights in the said land acquired by the Government of India. The Hon'ble Bombay High Court vide judgment dated 17.11.2000 held that the assessee company was wholly owned by Government of India under section 617 of the Companies Act, for which entire share capital has held by the Government of India. The Hon'ble High Court further held that the lands were acquired for the assessee company under the provision of Part - II of Land Acquisition Act and not under Part VII of the LAC Act and secondly, the lands vests absolutely in the Government. Where once the land is vested in the Government, the land can be utilized for any other public purpose on account of change or surplus thereof, was held by the Hon'ble Bombay High Court. It was further pointed out by learned Authorized Representative for the assessee that Special Leave 7 WTA No s.02 to 07/PN/2013 M/s. Hindustan Antibiotics Ltd.
Petition against the order of Hon'ble High Court has been dismissed by the Hon'ble Supreme Court. The learned Authorized Representative for the assessee fairly submitted that all the submissions before the lower authorities were on the presumption that the said land belonged to the company. However, in view of the awareness of legal aspects, a new legal plea was being raised before the Tribunal and hence, the additional grounds of appeal were raised. He further submitted that the assessee had no right over the said land, except to use the land for residential colony i.e. a limited right and the entire land belonged to the Government of India. With regard to the meaning of ownership, the learned Authorized Representative for the assessee referred to the decision in Osman Ali Khan (late) v. CWT [1986] 162 ITR 888 (SC) and pointed out that an asset is to belong to a person i.e. he is the owner of asset and then, the possession or joint possession of the said property would bring the property within connotation of expression "belonging to". It was further stressed by the learned Authorized Representative for the assessee that the ownership of the land was never transferred to the assessee and only possession was handed over to the assessee company for the construction of residential colony. The learned Authorized Representative for the assessee further placed reliance on the ratio laid down by the Hon'ble Supreme Court in V. Chandrasekaran & Anr. Vs. The Ad ministrative Officer & Ors. reported in (2012) 10 S.C.R. 603, wherein the legal connotation of nature of land acquired by the Government of India has been explained elaborately. While summarizing its submissions, the learned Authorized Representative for the assessee stated that the company was a Public Sector Undertaking and under clause (f) of section 3 of the LAC Act, public purpose also includes clause (iv) i.e. provision of land for a corporation owned or controlled by the State. However, under section 16 of the LAC Act, the land belongs to the Government and not to the assessee, so, it could not be said that the land is "belonging to" the assessee for inclusion under the Wealth Tax Act. With reference to additional grounds of appeal No.1 and 2, the learned Authorized Representative for the assessee summarized that since the land does not belong to the assessee, so the same was not includable as its wealth. With regard to additional 8 WTA No s.02 to 07/PN/2013 M/s. Hindustan Antibiotics Ltd.
ground of appeal No.3, without prejudice to the above said grounds of appeal, the learned Authorized Representative for the assessee pointed out that the valuation is done based on what seller expects. He stressed that 66 acres of land was valued at seller's expectations and not at market value, which is difficult to understand. With regard to the decision of Government to sell the property and then withdrawn the permission and then again give the permission, he stated that since the land belong to the Government of India, it had every right to take any such steps.
11. The learned Departmental Representative for the Revenue in turn, pointed out that admittedly the assessee was Government company, but the land was allocated by Government of India to the assessee, which in turn, was to be used for construction of residential colony of its employees. When the assessee went in liquidation, permission was given by the Government of India to sell the land in order to recoup the losses and this establishes that the land belongs to the assessee and hence, includable in the hands of assessee for computing its wealth for captioned assessment years.
12. We have heard the rival contentions and perused the record. The assessee before us is a Government company, which is owned by the Government of India. There is no dispute about the said fact that the assessee is a Government company and is owned by the Government. The Government initiated acquisition proceedings of land from Village Pimpri, Wagheri, Taluka Haveli, district Pune for expansion of residential colony of assessee company. In view thereof, certain land was acquired by the Government of India as per the award of Special Land Acquisition Officer, dated 27.03.1967. The copy of the award is placed at pages 8 to 13 to second Paper Book filed by the assessee. Pursuant to the said acquisition of land by the Government of India, against which the Land Acquisition Collector gave award. Then document of right (Register of Mutation) dated 15.01.1968 was issued and the possession of the said land was given to the assessee company for construction of quarters vide Possession Note dated 10.11.1965 through M.S.M. Chinchwad. Survey Nos., the 9 WTA No s.02 to 07/PN/2013 M/s. Hindustan Antibiotics Ltd.
Area, Cess and the nature of holder from whom the land was acquired is mentioned in the said document and the same was passed on perusal of Possession Note. Admittedly, vide the said document issued on 22.02.2002 by the Revenue authorities, the possession of the land for occupation by HAL i.e. the assessee before us, for the construction of residential colony of its employees, was handed over to the assessee.
13. In order to understand the acquisition proceedings, reference is to be made to the provisions of Land Acquisition Act, 1894, under which the said land was acquired by the assessee. The LAC Act prescribes the said Act to amend the law for acquisition of land needed for public purposes and for Government companies and for determining the amount of compensation to be made on account of such acquisition, the Act was enacted. Under section 3(f) of LAC Act, expression "public purpose" has been defined and the relevant clause for deciding the present issue is clause (4), under which it is provided that the provisions of land for Corporation owned or controlled by the State would be included under the expression "public purpose". The claim of the assessee before us was that the Government of India started the acquisition proceedings in order to acquire land for the benefit of company owned by it, for the construction of residential colony of the employees of the assessee company. Under section 4 of the LAC Act, it is provided that whenever it appears to the Appropriate Government that the land in any locality, is needed or is likely to be needed for public purpose or for a company, then a notification to that effect shall be published in official Gazette and in two daily newspapers, and the Collector shall cause publish notice of the substance of such notification to be given at convenient places in the said locality. Thereupon, under clause (2) of section 4 it shall be lawful for any officer, either generally or specially authorized by such Government in this behalf, to enter upon and survey and take levels of land and to do or every acts necessary to ascertain whether the land is adaptable for such purposes and to set out the boundaries of the land, etc. Under section 6 of LAC Act, subject to the provisions of Part VII of the Act, where the appropriate Government is satisfied after considering the report, if any, made under 10 WTA No s.02 to 07/PN/2013 M/s. Hindustan Antibiotics Ltd.
section 5A(2) that any particular land is needed for public purpose, or for a company, a declaration shall be made to that effect, under the signature of the Secretary to such Government or of some officer duly authorized to certify its orders, and declarations may be made from time to time in respect of different parcels of any land covered by the same notification under section 4. After declaration, the Collector is to take order for acquisition of land as per section 7 of LAC Act. Thereafter, procedure has to be followed as per different provisions of the Act for acquisition of land and once the said land has been earmarked for acquisition. Then under section 11 of the LAC Act, the Collector shall proceed to enquire into the objections, if any, which any interested person had stated pursuant to the notice given under section 9, to the measurements made under section 8 and into value of land, at the date of publication of notification under section 4 and into the respective interest of persons claiming the compensation and thereafter, shall made an award under his hand of the true area of the land, the compensation which in his opinion should be allowed for that land and the apportionment of the said compensation among all the persons known or believed to be interest in the land. The said award has to be made by the Collector after receiving the approval of appropriate Government or by any such officer as authorized by the Government. Thereafter, under section 16 of the LAC Act, when the Collector has a made an award under section 11, then, he may take possession of the land, which shall thereupon vests absolutely in the Government, free from all encumbrances. Reading the above said provisions of the Land Acquisition Act, we find that the procedure for acquisition of land required for public purpose by the Government is governed by the aforesaid provisions and after the said procedure is so complied with and the award has been finalized by the Collector for acquiring any piece of land, against which the compensation is paid to the rightful owners of the land or the persons who are interested in the land, then once, the land is available for acquisition by the Government, the Collector is to take the possession of the land, which thereupon vests in the Government absolutely free from all encumbrances.
11 WTA No s.02 to 07/PN/2013 M/s. Hindustan Antibiotics Ltd.
14. The Hon'ble Supreme Court while deciding the issue under the Land Acquisition Act for acquisition of certain piece of land in V. Chandrasekaran & Anr. Vs. The Administrative Officer & Ors. (supra) after taking note of various judicial precedents on the issue held as under:-
"16. It is a settled legal proposition, that once the land is vested in the State, free from all encumbrances, it cannot be divested and proceedings under the Act would not lapse, even if an award is not made, within the statutorily stipulated period. (Vide:
Avadh Behari Yadav v. State of Bihar & Ors., (1995) 6 SCC 31; U.P. Jal Nigam v. Kalra Properties (P) Ltd. (Supra); Allahabad Development Authority v. Nasiruzzaman & Ors., (1996) 6 SCC 424, M. Ramalinga Thevar v. State of Tamil Nadu & Ors., (2000) 4 SCC 322; and Government of Andhra Pradesh vs. Syed Akbar & Ors., AIR 2005 SC 491).
17. The said land, once acquired, cannot be restored to the tenure holders/persons- interest, even if it is not used for the purpose for which it was so acquired, or for any other purpose either. The proceedings cannot be withdrawn/abandoned under the provisions of Section 48 of the Act, or under Section 21 of the General Clauses Act, once the possession of the land has been taken and the land vests in the State, free from all encumbrances. (Vide: State of Madhya Pradesh v. V.P. Sharma, AIR 1966 SC 1593; Lt. Governor of Himachal Pradesh & Anr. V. Shri Avinash Sharma, AIR 1970 SC 1576; Satendra Prasad Jain v. State of U.P. & Ors., AIR 1993 SC 2517; Rajasthan Housing Board & Ors. V. Shri Kishan & Ors., (1993) 271(1)(c) of the Act SCC 84 and Dedicated Freight Corridor Corporation of India v. Subodh Singh & Ors., (2011) 11 SCC
100)."
15. Before the Hon'ble Supreme Court, the issue was that where the land has been acquired by the Government and the possession of the land has been taken by the Government, then where the land stands vested in the State, free from all encumbrances provided under section 16 and 17(2) of the Act, no benefit can be taken by the interested person where he had not filed an objection to the notice issued under section 5A, then the land vested in the State absolutely.
16. The Hon'ble Supreme Court vide para 20 and 21 referred to the decision of Hon'ble Supreme Court in other cases and observed as under:-
"20. Similarly, in State of Kerala & Anr. V. M. Bhaskaran Pillai & Anr., (1997) 5 SCC 432, this Could held as under: "It is settled law that if the land is acquired for a public purpose, after the public purpose was achieved, the rest of the land could be used for any other purpose. In case there is no other public purpose for which the land is needed, then instead of disposal by way of sale to the erstwhile owner, the land should be put to public auction and the amount fetched in the public auction can be better utilized for the public purpose envisaged in the Directive Principles of the Constitution. (See also: C. Padma & Ors. V. Deputy Secretary to the Government of Tamil Nadu & Ors., (1997) 2 SCC 627; Bhagat Singh v. State of U.P. & Ors., AIR 1999 SC 436; Niladri Narayan Chandradhurja v. State of West Bengal, AIR 2002 SC 2532; Northern India Glass Industries v. Jaswant Singh & Ors., (2003) 1 SCC 335; and Leelawanti & Ors. V. State of Haryana & Ors., (2012) 1 SCC 66).
12 WTA No s.02 to 07/PN/2013 M/s. Hindustan Antibiotics Ltd.
21. In Government of Andhra Pradesh & Anr. V. Syed Akbar (Supra), this Court considered this very issue and held that, once the land has vested in the State, it can neither be divested, by virtue of Section 48 of the Act, nor can it be reconveyed to the persons-interested/tenure holders, and that therefore, the question of restitution of possession to the tenure holder, does not arise. (See also: Pratap v. State of Rajasthan, AIR 1996 SC 1296; Chandragaudaj Ramgonda Patil v. State of Maharashtra, (1996) 6 SCC 405; State of Kerala & Ors. V. M. Bhaskaran Pillai & Anr., AIR 1997 SC 2703; Printers (Mysore) Ltd. v. M.A. Rasheed & Ors., (2004) 4 SCC 460; Bangalore Development Authority v. R. Hanumaiah, (2005) 12 SCC 508; and Delhi Airtech Services (P) Ltd. & Anr. V. State of U.P. & Anr. (2011) 9 SCC 3 54)."
17. The conclusion of the Hon'ble Supreme Court in para 22, which reads as under:-
"22. In view of the above, the law can be crystallized to mean, that once the land is acquired and it vests in the State, free from all encumbrances, it is not the concern of the land owner, whether the land is being used for the purpose for which it was acquired or for any other purpose. He becomes persona non-grata once the land vests in the State. He has a right to only receive compensation for the same, unless the acquisition proceeding is itself challenged. The State neither has the requisite power to reconvey the land to the person-interest, nor can such person claim any right of restitution on any ground, whatsoever, unless there is some statutory amendment to this effect."
18. In view of the ratio laid down by the Hon'ble Supreme Court, where the land is acquired by the Government, then the same vests in the State, free from all encumbrances, as per the provisions of section 16 of LAC Act. Further, the said land is to be used for the purpose for which it was acquired or for any other purpose and the persons whose land is so acquired, he becomes persona non-grata once the land vests in the State. He at best had right to receive compensation for the same. It has further been laid down by the Hon'ble Supreme Court that the State neither has the requisite power to reconvey the land to the person interest nor can such person claim any right of restoration on any ground.
19. Now, coming to the facts of the present case. The land in question which is sought to be included in the net wealth of the assessee for the captioned assessment year was acquired by the Government of India. The assessee company was incorporated in the year 1954 and which had set-up of Pharmaceutical unit to manufacture Pensulin at Pimpri, Pune. Initially, an area of 200 acres of land was acquired for the setting up of the factory for the manufacture of such drugs. In 1962, a 13 WTA No s.02 to 07/PN/2013 M/s. Hindustan Antibiotics Ltd.
decision was taken to further acquire land of 69 acres for the residential colony of the employees of the assessee. Consequently, notification was issued on 03.09.1964 under section 4 of LAC Act, which was followed by declaration issued under section 6 of the LAC Act on 10.12.1964. After giving notice under section 9 of the LAC Act, the possession of the said land was handed over to the assessee company on 10.11.1965. An award was published by the Special Land Acquisition Officer on 27.03.1967 and the compensation was awarded to the landholders, who duly accepted the same. Since the assessee company ran into losses, expansion of the said residential colony could not be constructed over the said land and about 66 acres of land could not be developed. A Writ Petition was filed before the Hon'ble Bombay High Court by the successors of original owners of land and they challenged the sale of land on the ground that since the lands of petitioners were acquired under Chapter VII of the LAC Act, provisions of section 44A are attracted, the lands could not be sold by the appropriate Government without the permission of the State Government. Further, it was contended that the restoration of the said land should be given to the original land owners since the same was not utilized for the purpose for which it was acquired. The Hon'ble High Court in WP No.3886/1996 in Nivrutti Shankar Waghere and Ors. Vs. the assessee company and others including Union of India and the State of Maharashtra vide judgment dated 17.11.2000 deliberated upon the issue of acquisition proceedings and held as under:-
" At the outset we may mention that the submission based on section 44A of the Land Acquisition Act is completely misconceived. In the instant case the 1 st respondent is a wholly owned Government company under section 617 of the Companies Act for which entire share capital has been held by the Government of India. Provision of the said section are not applicable to the government companies inasmuch as under
section 3(e) of the Land Acquisition Act which defines the word "Company" the Government companies are excluded from the purview thereof. The lands were acquired for the 1st respondent being a wholly owned government company of the Central Government under the provisions of Part II of the Land Acquisition Act and not under Part VII of the Land Acquisition Act as alleged by the petitioners and secondly the lands vest absolutely in the Government and hence prior permission from the State Government is unnecessary. The State Government has filed its counter to the petition and has confirmed the position that prior permission from the State Government is not required. Mr. Walawalkar fairly stated that the provisions of section 44A are not attracted to the facts of the present case."
14 WTA No s.02 to 07/PN/2013 M/s. Hindustan Antibiotics Ltd.
20. The Hon'ble High Court thus, gave a mandate with regard to the ownership of land, which was acquired by the Government for the purpose of construction of residential colony of the employees of assessee company, vested absolutely in the Government and since the said lands were acquired for the assessee company, which was wholly owned Government company of the Central Government, there was no merit in the claim of the petitioners that it was acquired under Part VII of the LAC Act. It was further held that the provisions of Part II of LAC Act would apply. The Hon'ble High Court further held that It is also equally settled that once the land is vested in the Government, the land can be utilized for any other public purpose on account of change or surplus thereof. The acquisition validly made does not become invalid by change of the use or change of the user in the scheme as per the approved plan. The SLP filed against the said judgment of the Hon'ble High Court has been dismissed by the Hon'ble Supreme Court vide its order dated 30.08.2001 in SLP (Civil) No.11976/2001. The copy of the judgment of Hon'ble High Court and the order of dismissal of SLP by Hon'ble Supreme Court are filed on record by the assessee along with additional grounds of appeal raised by it.
21. The first issue to be addressed by us in this regard is the admission of additional grounds of appeal raised by the assessee. Admittedly, before the authorities below, the claim of the assessee was that the land which was allocated to it, was not being used and hence, was not 'urban land' under the provisions of section 2(ea) of LAC Act. However, before us the learned Authorized Representative for the assessee has raised another issue that the land which was acquired by the Government under the LAC Act for public purpose, is not an asset "belonging to" the assessee, since the said vacant land which has been acquired by the Government under the LAC Act, vests absolutely in the Government. The additional grounds of appeal raised by the assessee are purely legal grounds and in view thereof, we admit the said additional grounds of appeal. Further, the issue has been crystallized by the Hon'ble Bombay High Court in the above mentioned Writ Petition, against which SLP has been dismissed by the 15 WTA No s.02 to 07/PN/2013 M/s. Hindustan Antibiotics Ltd.
Hon'ble Supreme Court, wherein assessee was party along with Union of India. Accordingly, we proceed to decide the issue raised before us.
22. In the facts of the present case, it is undisputed fact that the land was acquired by the Government under the LAC Act for the purpose of construction of residential colony by the assessee company. The proceedings under the LAC Act were completed and compensation was paid to the erstwhile owners of the said land and the award was issued by the Special Land Acquisition Collector in this regard. Thereafter, in view of the provisions of section 11 of the LAC, the land vested absolutely with the Government. The assessee has filed on record the copy of Rights (Register of Mutation) dated 15.01.1968, which was issued on 22.02.2002 by the Government / Revenue authority by which the possession of the land was handed over for occupation by the assessee company for residential quarters. The assessee has furnished copy of the said document in Marathi along with English transaction. The perusal of the said document placed in additional Paper Book at pages 1 and 2 reflects that the entry is 15.01.1968 and reads as under:
Serial No of entry Nature of right acquire 2287 Date 15/01/1968 In view of the order bearing No.LAQ/8/SR 22/66 dated 09/01/1968 passed by Special Land Acquisition Officer (8) Pune, the possession of th following acquired land, is given to Hindustan Antibiotics Companies Ltd.
for construction of quarters, vide Possession Note 10/11/1965 through M.S.M. Chinchwad. Hence, the under mentioned division has taken place.
23. Thereafter, Survey Nos., the Area Cess and the nature of holder from whom the land was acquired is mentioned therein and the remarks by the accepting Officer is "passed on the perusal of Possession Note". The perusal of the above said document of Right reflects that pursuant to the order of Special Land Acquisition Officer, Pune, the possession of the acquired land was given to the assessee for construction of quarters. The case of the assessee before us is that where only possession was given 16 WTA No s.02 to 07/PN/2013 M/s. Hindustan Antibiotics Ltd.
to it and the ownership remained with the Government of India, it cannot be held that the said asset belongs to the assessee, in order to make to liable for inclusion as an asset in the hands of assessee and being part of its net wealth. Applying the ratio laid down by the Hon'ble Supreme Court in V. Chandrasekaran & Anr. Vs. The Administrative Officer & Ors. (supra) and also the ratio laid down in assessee's own case while disposing of Writ Petition by the Hon'ble Bombay High Court, we hold that the land which was acquired under the LAC Act for public purpose by making it available for Corporation owned or controlled by the State, then the said land after its acquisition and the announcement of award under section 11 of the LAC Act, the possession of which has to be taken by the Collector, shall thereupon vests absolutely in the Government free from all encumbrances. The assessee does not hold any ownership rights in the said portion of land and it is absolutely with the Government. Once the ownership of land is vested with the Government and where only possession of the said land has been given to the assessee, we find merit in the plea of the assessee that the said land does not belong to the assessee in order to make it liable to the provisions of Wealth Ta x Act, under which the value of asset belonging to the assessee is to be included in the hands of the assessee as part of its net wealth. Accordingly, we hold so. Merely because a decision was taken by the Government to sell the land in order to meet the liabilities of assessee company does not make the assessee the owner of the land. The assessee was a Government company and the land was acquired by the Government for the purpose of assessee company, which admittedly, is a public purpose under the provisions of LAC Act, but the land vests with the Government and it has every right to take a decision with regard to the said land in order to liquidate the financial crunch of its company i.e. the assessee before us, which is a Government company. However, the said decision of the Government was withdrawn on a later date and funds were decided to be infused into the assessee company. Once the asset does not belong to the assessee, we find no merit in the orders of authorities below in assessing the value of the said assets in the hands of assessee and accordingly, we direct the Assessing Officer to delete the same.
17 WTA No s.02 to 07/PN/2013 M/s. Hindustan Antibiotics Ltd.
Accordingly, the additional grounds of appeal No.1 and 2 raised by the assessee are thus, allowed and the ground of appeal No.3 being without prejudice, is dismissed.
24. In view of our adjudicating the additional grounds of appeal in favour of the assessee, the original grounds of appeal raised by the assessee become infructuous.
25. The facts and issue in WTA Nos.03/PN/2013 to 07/PN/2013 are i dentical to the facts and issue in WTA No.02/PN/2013 and our decision in WTA No.02/PN/2013 shall apply mutatis mutandis to WTA Nos.03/PN/2013 to 07/PN/2013 .
26. In the result, all the appeals of the assessee are allowed.
Order pronounced on this 29th day February, 2016.
Sd/- Sd/-
(PRADIP KUMAR KEDIA) (SUSHMA CHOWLA)
लेखा सद�य / ACCOUNTANT MEMBER �या�यक सद�य / JUDICIAL MEMBER
पुणे / Pune; �दनांक Dated : 29th February, 2016.
GCVSR
आदे श क� ��त�ल�प अ�े�षत/Copy of the Order is forwarded to :
1. अपीलाथ� / The Appellant;
2. ��यथ� / The Respondent;
3. आयकर आयु�त(अपील) / The CWT(A)-V, Pune;
4. आयकर आयु�त / The CWT/CIT-V, Pune;
5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, पुणे "बी" / DR
'B', ITAT, Pune;
6. गाड� फाईल / Guard file.
आदे शानुसार/ BY ORDER,
स�या�पत ��त //True Copy //
व�र�ठ �नजी स�चव / Sr. Private Secretary
आयकर अपील�य अ�धकरण ,पुणे / ITAT, Pune