Wealth-tax on urban land: possession and control can suffice, narrow construction ban exclusion rejected, protective assessments upheld.

For wealth-tax, the phrase "belonging to" is wider than legal title and includes land under the assessee's possession, dominion and control, even where title is disputed; land within municipal limits used for income generation was therefore treated as taxable urban land. The exclusion for land on which construction is not permissible applies only where construction is absolutely barred by law, and does not extend to cases where temporary or semi-permanent structures are allowed. Protective assessments remain valid where ownership or taxability is unsettled, even though immediate recovery is not enforceable.

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Issues: (i) whether 28 acres of land within Bengaluru city limits fell within the definition of urban land under section 2(ea)(v) of the Wealth Tax Act, 1957 and was therefore chargeable to wealth-tax; (ii) whether the exclusion for land on which construction of a building is not permissible under any law applied on the facts; and (iii) whether the protective assessments made by the Assessing Officer were liable to be set aside.

Issue (i): whether 28 acres of land within Bengaluru city limits fell within the definition of urban land under section 2(ea)(v) of the Wealth Tax Act, 1957 and was therefore chargeable to wealth-tax.

Analysis: The Court held that the expression "belonging to" in section 2(m) is wider than strict ownership and covers assets over which the assessee has possession, dominion and control, even if title is under litigation. The lands were within municipal limits, were being used to earn income, and remained under the assessees' control during the relevant valuation dates. On that basis, they continued to be assets belonging to the assessees for wealth-tax purposes.

Conclusion: The issue was decided against the assessee and in favour of the Revenue.

Issue (ii): whether the exclusion for land on which construction of a building is not permissible under any law applied on the facts.

Analysis: The Court held that the exclusion is intended for land on which construction is absolutely prohibited. It found that the interim arrangements and the applicable regulatory position did not amount to a total bar on all construction, because temporary or semi-permanent structures and sheds had been permitted and the land was being used for income-generating functions. The lands therefore did not fall within the exclusion in the definition of urban land.

Conclusion: The issue was decided against the assessee and in favour of the Revenue.

Issue (iii): whether the protective assessments made by the Assessing Officer were liable to be set aside.

Analysis: The Court accepted that protective assessments are permissible where ownership or taxability is under doubt and the Revenue seeks to preserve its position pending final determination. It held that, although recovery under a protective assessment is not immediately enforceable, the assessments themselves were not invalid and could not be quashed merely because they were protective in nature.

Conclusion: The issue was decided against the assessee and in favour of the Revenue.

Final Conclusion: The lands were held taxable as urban land in the hands of the assessees, the exclusion clause was held inapplicable, and the protective assessments were sustained, with liberty for the Revenue to proceed further in accordance with law.

Ratio Decidendi: For wealth-tax, the phrase "belonging to" is of wider import than legal ownership and includes assets under the assessee's possession, dominion or control; land within municipal limits used for income-generating purposes does not fall within the urban-land exclusion merely because only permanent construction is restricted, and protective assessments are valid where taxability remains unresolved.

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