Urban land exempt from wealth tax only after building construction is completely finished, not during construction phase.

The SC upheld the HC's decision that urban land is excluded from wealth tax only when a building is completely constructed thereupon, not during construction. The court rejected the assessee's argument for purposive interpretation, holding that the statutory language "has been constructed" cannot include buildings under construction. The expression "land occupied by any building" requires complete construction, as land cannot be considered occupied by a building still under construction. The court found that accepting the assessee's contention would grant exemption from the moment construction commences, even with laying one brick, which would be too far-fetched. The assessee's submission for wealth tax exemption was rejected.

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Issues Involved:
1. Interpretation of Explanation 1(b) to Section 2(ea)(v) of the Wealth Tax Act, 1957.
2. Whether land would be excluded from 'urban land' only when a building is completely constructed or even if the building activity has started but is not yet complete.

Issue-wise Detailed Analysis:

1. Interpretation of Explanation 1(b) to Section 2(ea)(v) of the Wealth Tax Act, 1957:

The Supreme Court was tasked with interpreting the provisions of Explanation 1(b) to Section 2(ea)(v) of the Wealth Tax Act, 1957, which defines 'urban land'. Urban land is subject to wealth tax under the Act, but certain categories of land are excluded from this definition. Specifically, the Court needed to interpret clause (ii) of Explanation 1(b), which states that 'urban land' does not include "the land occupied by any building which has been constructed with the approval of the appropriate authority."

2. Whether land would be excluded from 'urban land' only when a building is completely constructed or even if the building activity has started but is not yet complete:

The core question was whether the land would be excluded from 'urban land' only when the building is completely constructed or if it could be excluded even if the building activity has started but is not yet complete.

- Arguments by the Assessee:
The assessee argued that the term "has been constructed" should be interpreted to include land where construction activity has begun. The rationale was that the legislative intent behind the amendment was to stimulate investment in productive assets. The assessee contended that once construction starts, the land is put to productive use, thus changing its character from 'urban land' to land under productive use.

- Arguments by the Revenue:
The Revenue countered that the language of the statute is clear and unambiguous, and the benefit of the clause should only apply to land where the building is fully constructed. They emphasized that a strict interpretation should be given to exemption provisions in taxing statutes, and the onus is on the assessee to prove that they fall within the exemption.

Judgment:

The Supreme Court sided with the interpretation that the benefit of the clause would apply only when the building is fully constructed. The Court held that the plain language of the provision indicates that the land must be occupied by a building that "has been constructed" to avail the exemption. The Court rejected the assessee's argument for a purposive interpretation, stating that in taxing statutes, the language of the provision must be given its plain meaning unless it leads to absurd results, which was not the case here.

The Court noted that if the legislature intended to include land where construction had merely started, it would have explicitly stated so. The Court also pointed out the potential absurdity of granting an exemption when construction starts but is later abandoned.

Conclusion:

The Supreme Court upheld the Karnataka High Court's view that the land must have a fully constructed building to be excluded from 'urban land' under Explanation 1(b) to Section 2(ea)(v) of the Wealth Tax Act. The judgments of the Kerala and Madras High Courts, which had taken a contrary view, were set aside. The appeals by the assessee were dismissed, and those by the Revenue were allowed, with each party bearing its own costs.

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