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2016 (4) TMI 654

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....ions of Wealth Tax Act, 1957 and rules made there under. The appellant named above craves to add to alter, to amend and to modify the grounds as and when required. 4. The assessee in addition to original grounds of appeal has also filed additional grounds of appeal for all the respective years under appeal, which read as under:- 1. In treating the land which was acquired by the Government under Land Acquisition Act, 1894 for the public purpose, as an asset belonging to the assessee and making it liable to wealth tax under Wealth Tax Act, 1957. The action of the AO being contrary to the facts and being bad in law it is prayed that the said land be treated as not taxable under the Wealth Tax Act, 1957. 2. In including in the net wealth of the company the vacant land, which was acquired by the Government under Land Acquisition Act, 1894 for residential colony of the company. The action of the AO being contrary to the facts and being bad in law it is prayed that the said land be treated as not taxable under the Wealth Tax Act , 1957. 3. Without prejudiced to the contention that the land, which is a part of the residential colony, is exempt from wealth tax, the learned Asse....

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....ause any detriment to the enjoyment of the building as such. Moreover, the Asset Sale Committee of HAL formed under the Rehabilitation Scheme of BIFR had felt that such land could be ceded from the remaining part of land in occupation by HAL and can be sold in the market. The Assessing Officer thus, held that the above finding that the unbuilt colony land had remained unused for long makes it amenable to be included in the taxable wealth of the assessee company. The Assessing Officer vide para 5.4 observed that during the course of income-tax assessment proceedings, the assessee had admitted on its own that the market value of 20 acres of land lying at its disposal was about 100 to 150 crores for financial year 2010-11. Thus, taking the average value of land at Rs. 138 crores for 20 acres, the value of land per acre was worked out at Rs. 6.25 crores for financial year 2010-11. Taking 10% step down value per year for inflationary factors, the market value of the land unused of 60 acres was extrapolated backwards for last few years and it was worked out as under:- Financial Year Assessment Year Value of land of 66 acres 2010-11 2011-12 66 x 6.25 = 412.5 crores 2009-10 2010-11....

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....an, Government had decided to consider a second revival package without taking recourse to sell the land, which was on a later date reversed and hence, there was no merit in the admission of the aforesaid additional evidence. The CWT(A) thus, was of the view that the land in question was acquired for the purpose of expansion of colony of the assessee and though the land remained unused urban land. As per the definition of urban land in Explanation (b) to section 2(ea) of the Act, where any unused land held for industrial purposes for a period of two years of its acquisition was an asset chargeable to wealth tax. The contention of the assessee that the said land in question was exempt from Wealth Tax, was not accepted by CWT(A) and the order of Assessing Officer in treating the unused urban land chargeable to Wealth Tax was upheld. 9. The assessee is in appeal against the order of CWT(A). 10. The learned Authorized Representative for the assessee pointed out that in order to adjudicate the present issue raised before the Tribunal, the additional grounds of appeal have to be first adjudicated. It was proposed by the learned Authorized Representative for the assessee that the said l....

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....unt of change or surplus thereof, was held by the Hon'ble Bombay High Court. It was further pointed out by learned Authorized Representative for the assessee that Special Leave Petition against the order of Hon'ble High Court has been dismissed by the Hon'ble Supreme Court. The learned Authorized Representative for the assessee fairly submitted that all the submissions before the lower authorities were on the presumption that the said land belonged to the company. However, in view of the awareness of legal aspects, a new legal plea was being raised before the Tribunal and hence, the additional grounds of appeal were raised. He further submitted that the assessee had no right over the said land, except to use the land for residential colony i.e. a limited right and the entire land belonged to the Government of India. With regard to the meaning of ownership, the learned Authorized Representative for the assessee referred to the decision in Osman Ali Khan (late) v. CWT [1986] 162 ITR 888 (SC) and pointed out that an asset is to belong to a person i.e. he is the owner of asset and then, the possession or joint possession of the said property would bring the property within connotation ....

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....s and this establishes that the land belongs to the assessee and hence, includable in the hands of assessee for computing its wealth for captioned assessment years. 12. We have heard the rival contentions and perused the record. The assessee before us is a Government company, which is owned by the Government of India. There is no dispute about the said fact that the assessee is a Government company and is owned by the Government. The Government initiated acquisition proceedings of land from Village Pimpri, Wagheri, Taluka Haveli, district Pune for expansion of residential colony of assessee company. In view thereof, certain land was acquired by the Government of India as per the award of Special Land Acquisition Officer, dated 27.03.1967. The copy of the award is placed at pages 8 to 13 to second Paper Book filed by the assessee. Pursuant to the said acquisition of land by the Government of India, against which the Land Acquisition Collector gave award. Then document of right (Register of Mutation) dated 15.01.1968 was issued and the possession of the said land was given to the assessee company for construction of quarters vide Possession Note dated 10.11.1965 through M.S.M. Chinc....

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.... 5A(2) that any particular land is needed for public purpose, or for a company, a declaration shall be made to that effect, under the signature of the Secretary to such Government or of some officer duly authorized to certify its orders, and declarations may be made from time to time in respect of different parcels of any land covered by the same notification under section 4. After declaration, the Collector is to take order for acquisition of land as per section 7 of LAC Act. Thereafter, procedure has to be followed as per different provisions of the Act for acquisition of land and once the said land has been earmarked for acquisition. Then under section 11 of the LAC Act, the Collector shall proceed to enquire into the objections, if any, which any interested person had stated pursuant to the notice given under section 9, to the measurements made under section 8 and into value of land, at the date of publication of notification under section 4 and into the respective interest of persons claiming the compensation and thereafter, shall made an award under his hand of the true area of the land, the compensation which in his opinion should be allowed for that land and the apportionme....

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....he land vests in the State, free from all encumbrances. (Vide: State of Madhya Pradesh v. V.P. Sharma, AIR 1966 SC 1593; Lt. Governor of Himachal Pradesh & Anr. V. Shri Avinash Sharma, AIR 1970 SC 1576; Satendra Prasad Jain v. State of U.P. & Ors., AIR 1993 SC 2517; Rajasthan Housing Board & Ors. V. Shri Kishan & Ors., (1993) 271(1)(c) of the Act SCC 84 and Dedicated Freight Corridor Corporation of India v. Subodh Singh & Ors., (2011) 11 SCC 100)." 15. Before the Hon'ble Supreme Court, the issue was that where the land has been acquired by the Government and the possession of the land has been taken by the Government, then where the land stands vested in the State, free from all encumbrances provided under section 16 and 17(2) of the Act, no benefit can be taken by the interested person where he had not filed an objection to the notice issued under section 5A, then the land vested in the State absolutely. 16. The Hon'ble Supreme Court vide para 20 and 21 referred to the decision of Hon'ble Supreme Court in other cases and observed as under:- "20. Similarly, in State of Kerala & Anr. V. M. Bhaskaran Pillai & Anr., (1997) 5 SCC 432, this Could held as under: "It is settled law t....

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....some statutory amendment to this effect." 18. In view of the ratio laid down by the Hon'ble Supreme Court, where the land is acquired by the Government, then the same vests in the State, free from all encumbrances, as per the provisions of section 16 of LAC Act. Further, the said land is to be used for the purpose for which it was acquired or for any other purpose and the persons whose land is so acquired, he becomes persona non-grata once the land vests in the State. He at best had right to receive compensation for the same. It has further been laid down by the Hon'ble Supreme Court that the State neither has the requisite power to reconvey the land to the person interest nor can such person claim any right of restoration on any ground. 19. Now, coming to the facts of the present case. The land in question which is sought to be included in the net wealth of the assessee for the captioned assessment year was acquired by the Government of India. The assessee company was incorporated in the year 1954 and which had set-up of Pharmaceutical unit to manufacture Pensulin at Pimpri, Pune. Initially, an area of 200 acres of land was acquired for the setting up of the factory for the man....

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....Acquisition Act as alleged by the petitioners and secondly the lands vest absolutely in the Government and hence prior permission from the State Government is unnecessary. The State Government has filed its counter to the petition and has confirmed the position that prior permission from the State Government is not required. Mr. Walawalkar fairly stated that the provisions of section 44A are not attracted to the facts of the present case." 20. The Hon'ble High Court thus, gave a mandate with regard to the ownership of land, which was acquired by the Government for the purpose of construction of residential colony of the employees of assessee company, vested absolutely in the Government and since the said lands were acquired for the assessee company, which was wholly owned Government company of the Central Government, there was no merit in the claim of the petitioners that it was acquired under Part VII of the LAC Act. It was further held that the provisions of Part II of LAC Act would apply. The Hon'ble High Court further held that It is also equally settled that once the land is vested in the Government, the land can be utilized for any other public purpose on account of change ....

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....er for occupation by the assessee company for residential quarters. The assessee has furnished copy of the said document in Marathi along with English transaction. The perusal of the said document placed in additional Paper Book at pages 1 and 2 reflects that the entry is 15.01.1968 and reads as under: Serial No of entry Nature of right acquire 2287 Date 15/01/1968 In view of the order bearing No.LAQ/8/SR 22/66 dated 09/01/1968 passed by Special Land Acquisition Officer (8) Pune, the possession of th following acquired land, is given to Hindustan Antibiotics Companies Ltd. for construction of quarters, vide Possession Note 10/11/1965 through M.S.M. Chinchwad. Hence, the under mentioned division has taken place. 23. Thereafter, Survey Nos., the Area Cess and the nature of holder from whom the land was acquired is mentioned therein and the remarks by the accepting Officer is "passed on the perusal of Possession Note". The perusal of the above said document of Right reflects that pursuant to the order of Special Land Acquisition Officer, Pune, the possession of the acquired land was given to the assessee for construction of quarters. The case of the assessee before us is that whe....