Income Tax Appellate Tribunal - Chennai
Sunhera Realty Pvt. Ltd.,, Chennai vs Wto, Corporate Ward - 6 (4),, Chennai on 28 February, 2022
आयकर अपील य अ धकरण,'ए' यायपीठ, चे नई
IN THE INCOME TAX APPELLATE TRIBUNAL , 'A' BENCH, CHENNAI
ी वी. दग
ु ा राव, या यक सद य एवं ी जी.मंजुनाथ, लेखा सद य के सम%
BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER
AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER
आयकरअपीलसं./W.T. A.Nos.1 to 4/Chny/2020
( नधारणवष / Assessm ent Years: 2 012-13 to 2015-16)
M/s.Sunhera Realty Pvt. Ltd. Vs Wealth Tax Officer
rd Corporate Ward-6(4)
TL-2, 3 floor, Alsa Mall,
Montieth Road, Egmore, Chennai.
Chennai-600 008.
PAN: AAJCS 6485K
(अपीलाथ /Appellant) ( यथ /Respondent)
अपीलाथ क ओरसे/ Appellant by : Mr. G. Ramakrishnan, C.A.
यथ क ओरसे/Respondentby : Mr. AR V Sreenivasan, Addl.CIT
सुनवाईक तार ख/Da t e of h ear in g : 24.02.2022
घोषणाक तार ख /D at e of Pr on o unc e m en t : 28.02.2022
आदे श / O R D E R
PER G.MANJUNATHA, AM:
These four appeals filed by the assessee are directed against separate, but identical orders against of the learned Commissioner of Wealth Tax (Appeals)-15, Chennai, all dated 31.10.2019 and pertain to assessment years 2012-13 to 2015-
16. Since, facts are identical and issues are common, for the sake of convenience, these appeals were heard together and are being disposed off, by this consolidated order.
2. The assessee has more or less raised common grounds of appeal for all these assessment years, therefore, for the 2 WTA Nos.1 to 4/Chny/2020 sake of brevity, grounds of appeal filed for the assessment year 2012-13 are reproduced as under:-
"1. For that the order of the Learned Commissioner of Wealth Tax (Appeals) is contrary to law, facts and circumstances of the case and at any rate is opposed to the principles of equity, natural justice and fair play.
2. URBAN LAND EXEMPT U/S 2(ea)(v):
(a) The Learned Commissioner of Wealth Tax (Appeals) failed to consider the fact that the appellant is in business of real estate and builder which is a fact established from it object clause of the Memorandum of Association and hence the urban land should be classified as stock in trade exempt for 10 years from the date of its purchase as per section 2(ea)(v) and not to be included for net wealth.
(b) The Learned Commissioner of Wealth Tax (Appeals) also failed to consider the fact that the appellant could not obtain approval from CMDA authorities and proceed to construct building on the urban land (on account of series of land acquisition)
3. RESIDENTIAL BUILDING TREATED AS GUEST HOUE
(a) The Learned Commissioner of Wealth Tax (Appeals) failed to consider the fact that the residential building of the appellant was for the use of its employee director whose remuneration does not exceed the limits prescribed and as such should be exempted under the provisions of section 2(ea)(i)(1).
4. For these grounds and such other grounds that may be adduced before or during the hearing of this appeal with the leave of the Hon'ble Tribunal, it is prayed that the Hon'ble Tribunal may be pleased to:
(a) Treat the land as exempt under section 2(ea)(v) of the Wealth Tax Act, 1957.3
WTA Nos.1 to 4/Chny/2020
(b) Treat the residential building as exempt under section 2(ea)(i)(1)
(c) Restrict the levy of Interest under section 17B.
(d) Such other orders as may be passed as this respectful authority may deem fit."
3. Brief facts of the case are that the assessee is a private limited company, engaged in the business of real estate development and builders. The assessee did not file wealth tax returns for four assessment years. The assessments have been subsequently reopened u/s.17 of the Wealth Tax Act, 1957, for the reasons recorded as per which wealth chargeable to tax had been escaped assessment. In response to notice, the assessee filed return of wealth on 25.05.2017 admitting Nil taxable wealth. The case was taken up for scrutiny and during the course of assessment proceedings, the Assessing Officer noticed that the appellant company possessed various lands at Koyambedu, building at Teynampet which are liable for wealth tax. However, the assessee has not disclosed any taxable wealth in the return of wealth filed for relevant assessment years. Therefore, the Assessing Officer called upon the assessee to explain as to why lands possessed by the 4 WTA Nos.1 to 4/Chny/2020 assessee, including building cannot be taxed under Wealth Tax Act, 1957.
4. In response, the assessee submitted that the land owned by the company at Koyambedu was under continuous acquisition from the National Highways Authority of India for widening of road and because of this, the assessee could not taken up land for development. It was further argued that although the asset was classified as fixed asset in the books of account of the assessee, but land was held for the purpose of business and thus, it partakes nature of stock in trade, which is outside scope of definition of 'asset' as defined u/s.2(ea) of the Wealth Tax Act, 1957. Insofar as building, the assessee submitted that building is used for the purpose of residential accommodation of the director of the assessee company as and when the director visits India and thus, said building is outside scope of the term 'asset' as defined u/s. 2(ea) of the Wealth Tax Act, 1957, because, if the building is used for residential purpose of employee Director, whose remuneration does not exceed limit prescribed then, it should be exempted u/s.2(ea)(i)(1) of the Wealth Tax Act, 1957. 5
WTA Nos.1 to 4/Chny/2020
5. The Assessing Officer, however, was not convinced with the explanation furnished by the assessee and according to him, the assessee has purchased land in the year 2006, and kept unutilised and therefore, opined that although, the land is industrial land, but because said land was not used for industrial purpose, it comes under definition of 'asset' and hence, rejected arguments of the assessee and included land parcels owned by the assessee within the definition of asset u/s.2(ea) of the Wealth Tax Act, 1957. The Assessing Officer further held that insofar as flat No.1, 'HM Elegance' owned by the assessee, the assessee has used the building as guest house, but not as residential accommodation for employee director to exclude said building from the definition of term asset u/s.2(ea) of the Wealth Tax Act, 1957. Therefore, rejected arguments of the assessee and included land possessed by the assessee at Koyambedu and building at Teynampet under definition of assets as defined u/s.2(ea) of the Wealth Tax Act, 1957, and computed taxable wealth.
6. Being aggrieved by the assessment order, the assessee preferred an appeal before the learned CWT(A). Before the learned CWT(A), the assessee has reiterated its arguments 6 WTA Nos.1 to 4/Chny/2020 taken before the Assessing Officer and argued that the lands could not be developed, for the purpose of business, because it was under continuous acquisition proceedings by National Highways Authority of India and further, building plan could not be obtained from CMDA, because of acquisition notice issued by National Highways Authority of India . Therefore, merely for the reason that land was kept idle, it cannot be treated as asset, even though the assessee held impugned land as stock in trade. The assessee had also challenged findings of the Assessing Officer in bringing to tax residential building at Teynampet as guesthouse within the meaning of asset as defined u/s.2(ea) of the Wealth Tax Act, 1957.
7. The learned CWT(A), after considering relevant submissions of the assessee and also taken note of various finding of facts brought out by the Assessing Officer, held that even though, the assessee possessed huge extent of lands, but same was not utilized for the stated purpose to exclude impugned asset from the definition of assets as defined u/s.2(ea) of the Wealth Tax Act, 1957. The learned CWT(A) further observed that contention of the assessee that land was 7 WTA Nos.1 to 4/Chny/2020 under continuous acquisition / proceedings by National Highways Authority of India is incorrect, because the National Highways Authority of India has acquired only 551.20 Sq. Meter land, out of total land of 6077.20 Sq.Mt owned by the assessee and thus, if at all is there any restriction for development of land, it was only for land which was under
dispute, because of possession notice issued by NHAI, but not for entire land. Therefore, the learned CWT(A) opined that the assessee is liable to pay wealth tax on vacant land, excluding land under dispute and thus, directed the Assessing Officer to restrict wealth tax liability to the extent of vacant land measuring 5353 Sq.Mts. As regards residential building owned by the assessee, the CWT(A) observed that if a house is meant exclusively for residential purpose which is allotted by a company to an employee or director, who is in whole time employment having gross annual salary of less than Rs.5 lakhs then same is exempt from wealth tax. In this case, the assessee did not furnish any evidence to prove that in fact, house was allotted as residential accommodation for any of the employee or director, who is in whole time employment having annual salary of less than Rs.5 lakhs. Therefore, he 8 WTA Nos.1 to 4/Chny/2020 opined that there is no error in the reasons given by the Assessing Officer to assess residential building within the meaning of asset as defined u/s.2(ea) of the Wealth Tax Act, 1957, and thus, rejected arguments of the assessee and sustained additions made towards residential building. Aggrieved by the learned CWT(A) order, the assessee is in appeal before us.
8. The first issue that came up for our consideration from ground no.2 of assessee appeal for all assessment years is assessment of vacant land possessed by the assessee at Koyambedu within the meaning of asset as defined u/s.2(ea) of the Wealth Tax Act, 1957. The learned A.R for the assessee submitted that this issue is squarely covered in favour of the assessee by the decision of ITAT., Chennai in assessee's own case for assessment years 2009-10 to 2011-12 in WTA Nos.2 to 4/Chny/2019 vide order dated 30.01.2020, where on very same asset, the Tribunal after considering relevant facts held that impugned asset is held by the assessee as stock in trade in the business and the same is outside scope of the term 'asset' as defined u/s.2(ea) of the Wealth Tax Act, 1957. 9
WTA Nos.1 to 4/Chny/2020
9. The learned DR, on the other hand, strongly supporting order of the learned CWT(A) submitted that although very same asset had been considered by the Tribunal for earlier assessment year, but fact remains that the Tribunal has not considered reasons given by the Assessing Officer as well as CWT(A) to bring particular asset within the ambit of the Wealth Tax Act, 1957. Although, the assessee claims to have not developed property for various reasons, but fact remains that out of the total extent of land owned by the assessee, a small portion was under dispute because of acquisition proceedings from NHAI and remaining portion of land was kept vacant and thus, the learned CWT(A), has very well apprised facts to sustain additions made by the Assessing Officer towards wealth tax and his order should be upheld.
10. We have heard both the parties, perused material available on record and gone through orders of the authorities below. We find that the Tribunal had considered an identical issue in light of identical assets owned by the assessee for assessment years 2009-10 to 2011-12 in WTA No. 2 to 4/Chny/2019 dated 30.01.2020, where after considering 10 WTA Nos.1 to 4/Chny/2020 various arguments of the assessee in light of reasons given by the Assessing Officer to bring impugned assets within the ambit of asset as defined u/s.2(ea) of the Wealth Tax Act, 1957, held that when the assessee held a particular asset in the business as stock in trade, then the same is outside scope of definition of asset as defined u/s.2(ea) of the Wealth Tax Act, 1957 and thus, impugned asset is not liable for wealth tax. The relevant findings of the Tribunal are as under:-
"5. We have considered the rival submissions and gone through the relevant materials on record. it is clear from the objects of the company that the assessee is in the business of Real Estate and Builders. The assessee's plea, supra, that the impugned land was actually stock in trade for the business of the assessee and the assessee had shown the land as a flxed assets in its financial statement for the reason that they were not able to undertake any construction activity on account of series of lands acquisition made by the national Highways Authority from the year 2006 onwards etc., appears plausible. Therefore, we find merits in the assessee's submission. In view that Section 2(ea) of the Wealth Tax Act would not attract in the case of the assessee as the land is meant for stock in trade. Therefore, the corresponding grounds of the assessee are allowed."
11. In this view of the matter and consistent with the view taken by the co-ordinate Bench, we direct the Assessing Officer 11 WTA Nos.1 to 4/Chny/2020 to exclude land owned by the assessee at Koyambedu from the definition of asset as defined u/s.2(ea) of the Wealth Tax Act, 1957.
12. The next issue that came up for our consideration from ground no.3 of the assessee appeal is taxation of building owned by the assessee in IHBM Elegant at Teynampet along with undivided share in land . The learned A.R for the assessee submitted that the Assessing Officer has erred in including residential building owned by the assessee within the meaning of asset, without appreciating fact that said building was used as residential accommodation for the director, who visits India frequently and thus, same cannot be treated as guesthouse for the purpose of the Wealth Tax Act, 1957.
13. The learned DR, on the other hand, supporting order of the CWT(A) submitted that no doubt, if any residential accommodation is provided to any employee, officer or whole time director, whose salary is less than Rs.5 lakhs per annum for their residential purpose, then the same is outside scope of the term 'asset'. But, fact remains that the assessee was using 12 WTA Nos.1 to 4/Chny/2020 residential building as guesthouse and further, failed to furnish any evidence to prove that same was given to whole time director for his residential purpose and whose salary is less than prescribed limit under the Wealth Tax Act, 1957.
14. We have heard both the parties, perused material available on record and gone through orders of the authorities below. If any residential building is used as residential accommodation for an employee, officer or whole time director of a company, whose salary is less than prescribed limit, then said residential accommodation is exempt u/s.2(ea)(i)(1) of the Wealth Tax Act, 1957. In this case, facts brought on record by the Assessing Officer had very clearly established fact that the assessee had used impugned building along with undivided share of land as guesthouse for the purpose of their business, but not given to a director for his residential purpose. Even before us, the assessee could not furnish any evidence to prove that building was in fact, used as residential accommodation of the director. In absence of any evidence to prove that impugned building was used as residential accommodation, then it is difficult for us to accept arguments of 13 WTA Nos.1 to 4/Chny/2020 the assessee that impugned building had been used as residential accommodation. On the other hand, the Assessing Officer has brought out clear fact to the effect that impugned land and building has been used as guesthouse for the purpose of business of the assessee. Therefore, we are of the considered view that building owned by the assessee at Teynampet and used as guesthouse for the purpose of business comes within the definition of asset as defined u/s.2(ea) of the Wealth Tax Act, 1957 and thus, we are of the considered view that there is no error in the reasons given by the learned CWT(A) to sustain additions made by the Assessing Officer towards building and land owned by the assessee at Teynampet for the purpose of wealth tax. Hence, we are inclined to uphold findings of the learned CWT(A) and reject ground taken by the assessee.
15. In the result, appeals filed by the assessee for all assessment years are partly allowed.
Order pronounced in the open court on 28th February, 2022 Sd/- Sd/-
(वी. दग
ु ा राव) (जी. मंजुनाथ)
(V.Durga Rao) (G.Manjunatha)
#या यक सद&य /Judicial Member लेखा सद&य / Accountant Member
14
WTA Nos.1 to 4/Chny/2020
चे#नई/Chennai,
th
)दनांक/Dated 28 February, 2022
DS
आदे श क त+ल,प अ-े,षत/Copy to:
1. Appellant 2. Respondent 3. आयकर आयु.त (अपील)/CIT(A)
4. आयकर आयु.त/CIT 5. ,वभागीय त न2ध/DR 6. गाड फाईल/GF.