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of <h1>Tribunal Upholds Wealth Tax on Urban Land, Rejects Exclusion Claims</h1> <h3>M/s. Triad Resorts and Hotels (P.) Ltd., M/s. Noorani Properties P. Ltd. ‘APARANTA’, M/s. Verde Developers P. Ltd. ‘APARANTA’ Versus WTO, Ward-12 (2) Bangalore</h3> M/s. Triad Resorts and Hotels (P.) Ltd., M/s. Noorani Properties P. Ltd. ‘APARANTA’, M/s. Verde Developers P. Ltd. ‘APARANTA’ Versus WTO, Ward-12 (2) ... Issues Involved:1. Validity of Reopening u/s 17 of the W.T. Act, 1957.2. Classification of Land as Stock-in-Trade vs. Capital Asset.3. Applicability of Section 53A of the Transfer of Property Act, 1882.4. Chargeability of Wealth Tax on Urban Land.Summary:1. Validity of Reopening u/s 17 of the W.T. Act, 1957:The Tribunal initially quashed the wealth tax assessment order due to the lack of service of notice u/s 17 of the W.T. Act. However, upon remand by the Hon'ble Karnataka High Court, the Tribunal reconsidered the matter, noting that the assessee did not raise any contentions regarding the validity of reopening u/s 17 during the fresh proceedings.2. Classification of Land as Stock-in-Trade vs. Capital Asset:The assessee contended that the land was stock-in-trade and not liable to wealth tax. However, the AO and the first appellate authority rejected this contention, noting that the land was treated as a capital asset in the books of accounts and profits from its sale were offered under 'long term capital gains.' The Tribunal upheld this view, citing the lack of evidence to demonstrate that the land was held as stock-in-trade.3. Applicability of Section 53A of the Transfer of Property Act, 1882:The Tribunal examined whether the possession given to the developer under the Master Development Agreement (MDA) constituted a transfer under Section 53A. It concluded that the possession granted was merely a license for development purposes and did not equate to a transfer of ownership. This conclusion was supported by the Supreme Court's rulings in Balbir Singh Maini and Seshasayee Steels cases, which clarified that a license to enter land for development does not constitute a transfer under Section 53A.4. Chargeability of Wealth Tax on Urban Land:The Tribunal assessed whether the land fell under the exclusions from 'urban land' liable to wealth tax. It determined that the land did not qualify for exclusion as it was neither occupied by a constructed building nor held as stock-in-trade. The Tribunal referenced the Karnataka High Court and Supreme Court rulings, which stated that a building under construction does not exempt the land from wealth tax. Consequently, the Tribunal held that the land was liable for wealth tax for the respective assessment years.Conclusion:The appeals filed by the assessees were dismissed, and the Tribunal upheld the chargeability of wealth tax on the urban land, confirming the assessment orders. The Tribunal found no merit in the arguments presented by the assessee regarding the classification of the land and the applicability of Section 53A.
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