2018 (7) TMI 592 - HC - Wealth-tax

Interpretation of 'urban land' exclusion provision under Wealth Tax Act clarified by High Court

The High Court interpreted the exclusionary provision under Explanation (1)(b)(ii) of Section 2(ea) of the Wealth Tax Act, 1957, regarding the definition ... Wealth tax assessment - Whether a land in which construction is being carried on could be excluded from the definition of “urban land” and thus from the definition of “assets” as available in Section 2(ea) of the WT Act - Held that:- The issue is one covered by the judgment of the Hon'ble Supreme Court in Giridhar G.Yadalam v. CWT [2016 (1) TMI 826 - SUPREME COURT OF INDIA] as found that only a land in which the building is completely constructed stands excluded under the exclusionary provision under Explanation (1)(b)(ii) of Section 2(ea). Respectfully following the aforesaid decision, we set aside the orders of the Tribunal and affirm the order of the Assessing Officer. The Wealth Tax Appeals would stand allowed, answering the question of law in favour of the Revenue and against the assessee. However, there is question of valuation which has to be considered by the Tribunal, which the Tribunal did not consider. Hence, to decide on the quantum, the matter is remanded back to the Tribunal Issues:1. Interpretation of the exclusionary provision under Explanation (1)(b)(ii) of Section 2(ea) of the Wealth Tax Act, 1957 regarding the definition of 'urban land' and 'assets.'Analysis:The High Court, in this judgment, addressed the question of law raised in appeals concerning different assessment years of the same assessee. The issue revolved around whether a land under construction could be excluded from the definition of 'urban land' and thus from the definition of 'assets' as per Section 2(ea) of the Wealth Tax Act, 1957. The Court referred to the judgment of the Hon'ble Supreme Court in Giridhar G. Yadalam v. CWT, which clarified that only a land with a completely constructed building stands excluded under the exclusionary provision of Explanation (1)(b)(ii) of Section 2(ea).The Court, in line with the Supreme Court decision, set aside the Tribunal's orders and upheld the Assessing Officer's order. The Wealth Tax Appeals were allowed, favoring the Revenue and going against the assessee. However, the Court noted a valuation issue that the Tribunal did not consider. Therefore, the matter was remanded back to the Tribunal to decide on the quantum of valuation. The Court emphasized the need for expedited consideration by the Tribunal, given the timeframe of the orders being from the early and late 1990s. Additionally, the Court directed the parties to bear their respective costs in the matter.