Urban land under development agreement remained chargeable to wealth tax where ownership was not divested and no exemption applied.

A development agreement granting only a limited licence to enter and develop property does not, without the requirements of section 53A of the Transfer of Property Act being met, divest the owner of title for wealth-tax purposes; the urban land therefore remained attributable to the assessees. The land also was not established as stock-in-trade and was consistently treated as an investment in the books and income-tax proceedings, so no exclusion applied on that basis. An exemption for land occupied by a building was unavailable because only boundary walls existed and no completed building was shown. The land remained chargeable to wealth tax.

---

---

Issues: (i) Whether the impugned urban land ceased to belong to the assessees under the master development agreement so as to exclude it from wealth-tax. (ii) Whether the land fell within the exclusion for stock-in-trade or other exempted category under the Wealth-tax Act, 1957.

Issue (i): Whether the impugned urban land ceased to belong to the assessees under the master development agreement so as to exclude it from wealth-tax.

Analysis: The development agreement granted the developer a limited licence to enter and develop the property, and the conduct of the parties did not satisfy the essential requirements of section 53A of the Transfer of Property Act, 1882. The no objection certificate issued under Chapter XX-C and the possession-related correspondence did not establish a transfer of ownership. On the facts, the assessees continued to have the land belonging to them for wealth-tax purposes.

Conclusion: The issue is decided against the assessees and in favour of the Revenue.

Issue (ii): Whether the land fell within the exclusion for stock-in-trade or other exempted category under the Wealth-tax Act, 1957.

Analysis: The land was not shown to be stock-in-trade on the record, and the assessees had consistently treated it as an investment in the books and in income-tax proceedings. The land also did not qualify for the exemption relating to land occupied by a building, since only boundary walls were shown and no completed building existed. The assessee could not take mutually inconsistent stands to avoid wealth-tax liability.

Conclusion: The issue is decided against the assessees and in favour of the Revenue.

Final Conclusion: The assessees remained liable to wealth tax on the impugned urban land, and the appellate challenge failed.

Ratio Decidendi: For wealth-tax purposes, a development agreement that confers only a limited licence to develop the property, without satisfying section 53A of the Transfer of Property Act, 1882, does not by itself divest the owner of the land; absent a valid exclusion under section 2(ea) of the Wealth-tax Act, 1957, the urban land remains chargeable.

---