Urban land classification turns on complete legal prohibition on construction, not merely prior permission for non-agricultural use.

Land situated within eight kilometres of municipal limits is treated as urban land under the Wealth-tax Act unless construction is legally prohibited altogether under the applicable law. A requirement of prior Collector's permission under section 65 of the Bombay Land Revenue Code, 1879 does not amount to a complete prohibition on construction; it only regulates non-agricultural use. Because construction was not impermissible in law, the statutory exclusion from urban land was unavailable. The lands were therefore included in net wealth, and the value of the lands was sustained in taxation.

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Issues: Whether lands situated within eight kilometres of municipal limits, on which construction is subject to Collector's permission under the land revenue law, fall within the definition of urban land under the Wealth-tax Act.

Analysis: The statutory exclusion from "urban land" applies only where construction of a building is not permissible under any law in force in the relevant area. Section 65 of the Bombay Land Revenue Code, 1879 does not prohibit non-agricultural use absolutely; it only requires prior Collector's permission. The lands in question were admittedly within eight kilometres of the municipal limits, and the inability to construct without obtaining permission did not make construction impermissible under law. The exemption was therefore unavailable.

Conclusion: The lands were rightly treated as urban land and included in the taxable net wealth; the issue is decided against the assessee and in favour of the Revenue.

Final Conclusion: The addition of the value of the lands to net wealth was sustained, and the appeal failed.

Ratio Decidendi: Land situated within the prescribed municipal distance remains urban land unless construction is legally prohibited altogether; a requirement of prior permission for non-agricultural use does not by itself attract the statutory exclusion.

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