2023 (1) TMI 1039 - AT - Wealth-tax

Supreme Court allows appeal delay due to COVID-19. Tribunal rules lands not subject to wealth tax.

The Supreme Court condoned the delay in filing the appeal due to the COVID-19 pandemic, admitting it for adjudication. The Tribunal ruled in favor of the ... Wealth tax assessment - 'assets' within the meaning of Section 2(ea) of the Wealth Tax Act - assessee submitted that the land at Sakarda which is an agricultural land, hence not an asset within the meaning of explanation (1)(b)(ii) to Section 2(ea) of the Wealth Tax Act - AO held that the land was situated within the distance of 2-3 k.m. from the municipal limits of Vadodara and the assessee failed to establish the said land was used for agricultural purpose and therefore added as an asset for Wealth Tax purpose - HELD THAT:- The findings of the Ld. CIT(A) in the penalty proceedings that the land at Sakarda is treated as business asset not liable to Wealth Tax. Similarly, the land at Kapurai wherein the assessee is the Power of Attorney holder and agreement to sell the above land to third party. Thus the assessee is not the owner of the land at Kapurai and the same is treated as business activity of the assessee, which is not an asset u/s. 2(ea) of the Wealth Tax Act. The Ld. D.R. appearing for the Revenue could not able to inform, whether this penalty order is also a subject matter of appeal before this Tribunal. Thus the findings made by the Ld. CIT(A) in penalty proceedings has attained finality. Addition made on the land at Sakarda and land at Kapurai are not an “asset” within the meaning of Section 2(ea) of the Wealth Tax Act. Therefore the additions made by the A.O. are hereby deleted. Thus the grounds raised by the Assessee is hereby allowed. Issues Involved:1. Delay in filing the appeal.2. Taxability of land at Sakarda under Wealth Tax.3. Taxability of land at Kapurai under Wealth Tax.4. Taxability of property at BIDC, Gorwa under Wealth Tax.Detailed Analysis:1. Delay in Filing the Appeal:The appeal was filed with a delay of 53 days, falling within the COVID-19 pandemic period. The Supreme Court's judgment dated 23.03.2020 extended the time limit for filing appeals from 15.03.2020 onwards. Therefore, the delay was condoned, and the appeal was admitted for adjudication.2. Taxability of Land at Sakarda:The assessee argued that the land at Sakarda, worth Rs. 27,39,000/-, is agricultural land and thus not an asset under Section 2(ea) of the Wealth Tax Act. The Assessing Officer (AO) added this land to the wealth tax, citing its proximity to municipal limits and lack of evidence of agricultural use. The Commissioner of Income Tax (Appeals) [CIT(A)] upheld this addition, noting the absence of proof for agricultural use.However, during penalty proceedings for the same assessment year, the CIT(A) recognized the land as a business asset, not liable to wealth tax, based on prior income tax assessments. The Tribunal accepted this finding, noting that the land was treated as a business asset and not an 'asset' under Section 2(ea) of the Wealth Tax Act. Thus, the addition was deleted.3. Taxability of Land at Kapurai:The assessee contended that the land at Kapurai, valued at Rs. 3,11,175/-, was an agricultural land advance and not an asset under Section 2(ea) of the Wealth Tax Act. The AO included this land in the wealth tax, citing its urban location and lack of ownership transfer. The CIT(A) upheld this addition due to insufficient evidence of agricultural use.In the penalty proceedings, the CIT(A) found that the assessee held the land as a Power of Attorney holder, engaging in business activities, not as an owner. This land was thus treated as a business asset, not subject to wealth tax. The Tribunal upheld this finding, confirming that the land at Kapurai is not an asset under Section 2(ea) of the Wealth Tax Act. Consequently, the addition was deleted.4. Taxability of Property at BIDC, Gorwa:The AO included the property at BIDC, Gorwa, in the wealth tax, rejecting the assessee's claim that it was a commercial property not liable to wealth tax. The CIT(A) excluded this property from the definition of 'assets' under sub-clause (5) of Section 2(ea)(i) of the Wealth Tax Act, thereby partly allowing the appeal.The Tribunal did not explicitly address this issue in the final judgment, focusing on the lands at Sakarda and Kapurai. However, the CIT(A)'s exclusion of the BIDC property from wealth tax liability stands as part of the partially allowed appeal.Conclusion:The Tribunal allowed the appeal filed by the assessee, deleting the additions made by the AO for the lands at Sakarda and Kapurai, recognizing them as business assets not liable to wealth tax under Section 2(ea) of the Wealth Tax Act. The appeal was pronounced in the open court on 16-12-2022.