Agricultural land and urban land distinction under wealth-tax turns on conversion permission, not mere municipal location.

Agricultural land does not become "urban land" for wealth-tax purposes merely because it lies within municipal limits or a notified urban area. Under the Karnataka Land Revenue Act, land remains agricultural until conversion permission is obtained from the Deputy Commissioner for non-agricultural use or construction; accordingly, where building construction is not permissible without such approval, the exclusion in Explanation 1(b) to Section 2(ea) of the Wealth-tax Act applies. On that reasoning, the land retained its agricultural character and the wealth-tax assessment treating it as urban land was unsustainable.

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Issues: Whether the petitioner's agricultural land could be treated as "urban land" and brought to wealth-tax under Section 2(ea) of the Wealth-tax Act, 1957.

Analysis: The exclusion in clause (b) of Explanation 1 to Section 2(ea) applies where construction of a building is not permissible. Under the Karnataka Land Revenue Act, 1964, agricultural land cannot be put to non-agricultural use or used for construction unless permission is obtained from the Deputy Commissioner under Section 95. Until such conversion is granted, the land continues to retain its agricultural character. The mere fact that the land is situated within an area notified for urban development or within municipal limits does not by itself make it urban land for wealth-tax purposes.

Conclusion: The land could not be treated as urban land merely on the basis of potential conversion, and the wealth-tax assessment on that footing was unsustainable.

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