TaxTMI 
TaxTMI 
2016 (1) TMI 826
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....IKRI, J. In these cases, we are concerned with the interpretation that is to be accorded to the provisions of Explanation 1(b) to Section 2(ea)(v) of the Wealth Tax Act, 1957 (hereinafter referred to as the 'Act'). This Explanation defines 'Urban Land'. Urban land is exigible to wealth tax under the aforesaid Act. However, the definition of 'urban land' in explanation 1(b) excludes certain category of lands. As per Explanation 1(b) to Section 2(ea)(v), 'urban land' to mean land situate - but does not includes:- (i) land classified as 'agricultural land' in the records of the Government and used for agricultural purposes or land on which construction of a building is not permissible under any law for the time being in force in the area in which such land is situated; or (ii) the land occupied by any building which has been constructed with the approval of the appropriate authority; or (iii) any unused land held by the assessee for industrial purposes for a period of two years from the date of its acquisition by him; or (iv) any land held by the assessee as 'stock-in-trade' for a period of ten years from the date of its acquisit....
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....l the sale of flats. Notice under Section 17 of the Act was issued to the assessee and he filed return of wealth of Rs. 8,48,000/- on 20.08.2003. After considering the contention to treat the property as urban land and brought it to tax under an order dated 31.03.2005, an appeal was filed before the Assistant Commissioner of Wealth Tax (Appeals), Bangalore. The appeal stood allowed in the light of an earlier order of the Tribunal. Revenue thereafter filed an appeal to the Tribunal. The Tribunal following its decision in WTA No. 4-5/B/03 dated 22.03.2004 dismissed the appeal filed by the Revenue. The Revenue took up the matter in further appeals before the High Court of Karnataka. The High Court has upset the order of the ITAT holding that the assessee is not entitled to the benefit of clause (ii) of Explanation 1(b) to Section 2(e)(a)(v) of the Act, as the building had not been constructed and was still under construction during the Assessment Year. 7. It is not in dispute that 'urban land' is to be included to calculate 'net wealth' for the purpose of wealth tax under the Act. However, certain lands are not to be treated as 'urban land' which are mentioned....
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....exception has been made on account of which it will not be considered as an asset and is exempted from wealth tax. 9. Mr. Jain further argued that in this very hue, exception (ii) also needed to be interpreted. His submission was that the word 'constructed' is used in the context of exempting a land "occupied by any building which is being constructed with the approval of appropriate authority". With the commencement of construction of a building, land ceases to be identifiable as 'urban land' due to constructive utilization of vacant land. When a building is under construction, it is 'work-in-progress'/construction activity is on-going but spills over. However, the character of land has changed - it is being put to use and, therefore, it ceases to be urban land during the period of conversion. 10. According to Mr. Jain, if a building is constructed and construction is complete, the asset will go out of the definition of 'urban land' contained in Section 2(ea)(v) read with Explanation 1(b) as it would fall under Section 2(ea)(i) which covers buildings. Section 2(ea)(i) reads as follows: "(i) any building or land appurtenant thereto (hereinafter r....
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....ony with its purpose and avoids absurdity or anomaly as it may always be presumed that while employing a particular language in the provision absurdity or anomaly was never intended." 12. Taking his argument further, Mr. Jain submitted that likewise, exception (iii) is with reference to 'unused land' held by the assessee for industrial purposes. The exemption from wealth tax for such land is for a period of two years from the date of its acquisition by the assessee. After two years, such land, if unused is amenable to wealth tax. However, if an assessee starts construction of either a factory or any building for industrial purpose within a period of two years and construction spills over beyond the exempted period, the exemption would still continue irrespective of whether the construction is completed within two years. Similarly, land held as 'stock-in-trade' is exempt from wealth tax for a period of ten years since, though vacant, it is held for business purposes. 13. Learned senior counsel also extensively read the judgment of the Kerala High Court wherein the interpretation suggested by him has been accepted and the benefit of exemption from wealth tax in res....
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....nted us to give the benefit of this provision even in such cases by reading the expression to mean the same as 'is being constructed'. His submission was that the moment construction starts the urban land is put to 'productive use' and that entitles the land from exemption of wealth-tax. This argument of giving so called purposive interpretation has to be rejected for more than one reasons. These are: (i) In taxing statute, it is the plain language of the provision that has to be preferred where language is plain and is capable of one definite meaning. (ii) Strict interpretation to the exemption provision is to be accorded, which is the case at hand. (iii) The purposive interpretation can be given only when there is some ambiguity in the language of the statutory provision or it leads to absurd results. We do not find it to be so in the present case. 17. No doubt, the purpose and objective of introducing Section 2(e)(a) in the Act was to stimulate productive assets. However, the event when such a provision is to be attracted is also mentioned in Explanation 1(b) itself carving out those situations when the land is not to be treated urban land. The Legislature....