TaxTMI 
TaxTMI 
2015 (5) TMI 874
X X X X Extracts X X X X
X X X X Extracts X X X X
....remain under the ownership and possession of the assessee. As observed by the AO in the assessment order, during the assessment proceedings for the AY.2005- 06, it was noticed that the assessee was in possession of vacant land admeasuring 7,236 sq. yards at Ameerpet which was sold for a consideration of Rs. 13 Crores during the FY.2004-05 relevant to the AY.2005-06. However, it was noticed by the AO that the assessee has not filed any Wealth Tax return for the AY. 2003-04 and 2004-05. The AO being of the view that vacant urban land is subject to Wealth Tax and since the value of such asset is more than the minimum prescribed limit liable to Wealth Tax, he formed an opinion that wealth chargeable to tax has escaped assessment and accordingly issued a notice u/s. 17 of the Wealth Tax Act both for the AYs. 2003-04 and 2004-05. During the assessment proceedings, when the AO called upon the assessee to explain why the vacant land should not be treated as asset u/s. 2(ea) and subjected to Wealth Tax, it was submitted by the assessee that the property consisted of factory buildings, godowns and office wherein the assessee was carrying on the business of manufacture and sale of soft drinks....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ound that though there was an old building over the subject land, however, the same was demolished in the year 2002 and construction of a new building was started without obtaining any approval from the competent authority. Since the construction made without approval was illegal, the same was demolished by the competent authorities on 02-05-2002. From the aforesaid facts, Ld.CIT(A) concluded that though originally there was a building over the said property, but the same was demolished in the year 2001-02 and the land became vacant land. The further illegal constructions made over the said land was also demolished by the municipal authorities which indicates that there is no structure standing over the land during the relevant period. Thus, the vacant land has to be treated as urban land as per the provisions contained u/s. 2(ea)(v) of the Wealth Tax Act. The Ld.CIT(A) further observed, even if assessee's claim that there was a building under construction is accepted, then also, it will not help the assessee because the land in question must contain a finished building which is ready for commercial use. Thus, on the aforesaid basis, Ld.CIT(A), upheld the view expressed by the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....-03-2013 of Calcutta High Court in AWT No. 1 of 2012 G.A.No. 2711 of 2012) 8. We have considered the submissions of the parties and perused the materials on record. The issue in dispute lies within a very narrow compass i.e., whether the property subjected to Wealth Tax is an 'urban land' as per Section 2(ea)(v) of the Act. Before examining the merits of rival contentions, it is worth taking note of the relevant statutory provisions. As per clause-(v) of Section 2(ea), urban land is included within the definition of 'assets' subject to Wealth Tax. Explanation 1(b) to Section 2(ea) defines urban land. The same is extracted here under for convenience: "(b) "urban land" means land situate- (i) in any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee, or by any other name) or a cantonment board and which has a population of not less than ten thousand according to the last preceding census of which the relevant figures have been published before the valuation date; or (ii) in any area within such distance, not being more than eight kil....
X X X X Extracts X X X X
X X X X Extracts X X X X
....itted by the assessee that the construction was still in progress and not completed at the time of sale of the property. In spite of such factual position, assessee still claims exemption contending that even a half constructed/semi finished building standing over a plot of land will take it away from the purview of 'urban land'. For such proposition Ld. AR has relied upon a decision of ITAT Cochin Bench (supra) wherein it is held that a building under construction also qualifies for exemption under explanation 1(b) of Section 2(ea)(v) of the Act. However, the expression 'land occupied by any building' which has been constructed as provided in explanation 1(b) of Section 2(ea)(v) came up for interpretation by the Hon'ble Karnataka High Court in the case of Commissioner of Wealth Tax and another Vs. Giridhar G.Yadalam (325 ITR 223). The Hon'ble Karnataka High Court held that the expression 'any building which has been constructed' would mean a fully constructed building and not a semiconstructed building or a building under construction. The observation of the Hon'ble High Court is extracted here under for convenience: "7. The said definition of ....