Urban land under construction may fall outside wealth tax where it is being used as capital work-in-progress.

Land used for construction of a building and reflected as capital work-in-progress did not retain the character of taxable vacant urban land under the Wealth Tax Act. On the facts, the plot had ceased to be a vacant open land during the relevant year because construction was underway, so it could not be separately brought to wealth tax as an asset. Where two reasonable views were possible, the view favourable to the assessee was preferred. The deletion of the wealth-tax addition was therefore upheld, and the Revenue's challenge failed.

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Issues: Whether land on which a building was under construction could be treated as an asset chargeable to wealth tax under section 2(ea) of the Wealth Tax Act, 1957.

Analysis: The land in question was shown in the balance sheet along with capital work-in-progress for construction of a building, and the construction was not complete during the relevant year. The charge to wealth tax under the statutory definition of asset was considered in the context of urban land and the exception for land utilised for construction. On the facts found, the land had ceased to be a vacant open plot and was being used for construction of a building, so it could not be separately valued as taxable urban land. Where two reasonable views were available, the view favourable to the assessee was preferred.

Conclusion: The addition of the land value to net wealth was not sustainable and was rightly deleted; the issue was decided in favour of the assessee.

Final Conclusion: The Revenue's challenge to the deletion of the wealth-tax addition failed, and the assessment was not interfered with.

Ratio Decidendi: Land put to use for construction of a building and shown as capital work-in-progress does not retain the character of taxable vacant urban land for wealth-tax purposes.

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