TaxTMI 
TaxTMI 
2019 (8) TMI 1092
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed by the District Valuation Officer and deciding the issue merely on the basis of A.Y. 1993-94 to 1995-96 without appreciating the fact that the Revenue's appeal is pending before the Hon'ble ITAT for the said assessment years". ii The appellant prays that the order of the CIT(A) on the above grounds be set aside and that of the Assessing Officer be restored. 3. The brief facts of the case are that in the year 1957, the assessee, then known as JK Chemicals Ltd., engaged in manufacturing of chemicals products entered into an agreement with Government of Maharashtra, through Collector, Thane for acquiring a piece of land to be used in its manufacturing of chemical product. Thereafter, the assessee has converted said land use into non-agricultural purpose, which was granted in June, 1957 with certain conditions. As per the terms and conditions of conversion order, out of total land area of 1,06,238 square yards, the assesee could use only 10,607 sq.yards (approximately 10%), for the purpose of its industrial activity, in accordance with the approved plan and the remaining land to the extent of 95,630 sq.yards was to be kept open to the sky. Thereafter, 'Sanad' was....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... for the time being in force in the area, in which such land situate or the land occupied by any building, which has been constructed with the approval of the appropriate authority. Since, the land has been utilized, as per the terms and conditions of 'Sanad' and also the land on which building was constructed with permission of appropriate authority cannot be considered as asset and also land on which construction of the building is not permissible under the law is also cannot be included in the definition of capital asset as defined u/s 2(ea) of the W.T.Act, 1957. In this regard, he relied upon the decision of Hon'ble Bombay High Court in the case of Prabhakar Keshav Kunde Vs CIT [(2010) 194 taxmann.com 306 (Bom)]. 6. The Ld. CWT(A), after considering relevant submissions of the assesee and also taken note of various evidences filed by the assessee, including copy of 'Sanad' and conversion order of the Collector, Thane, Came to the conclusion that the asset in question is covered by the exclusionary clause of the definition of urban land, which is given in clause (b) of the explanation to section 2 (ea) of the W.T.Act,1957. Therefore, the AO was incorrect in determination of v....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t, 1957. The AO has given his remand report as per letter dated 21.12.2017 repeating the facts stated in original assessment order passed by AO, During the course of the hearing, the AR has also pointed Out that even in Assessment Year 2005-06, the AO has not referred the matter to DVO but the property was valued as per Schedule III which was amounting to Rs. 8,19,53,463/-. Without prejudice to the above, the AR also stated that had the value been determined as per Schedule III for Assessment Year 2004-05, then the value would have been Rs. 7,19,95,300/-. The AR has also pointed out that from Assessment Year 2006-07 onwards, the value as declared by the Appellant was accepted by the AO and there was no addition made. The AR has also given a complete chart of the assessments made from Assessment Year 1993-94 to 2015-16 which is reproduced as under:- WEALTH TAX STATUS A.Y. Value declared Value assessed Remarks 1993-94 45,10,350 2,28,94,000 C1T(A) has accepted value declared by the assessee vide its order dt.20.12.1999. Depa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....p; 201314 NIL NIL 201415 NIL NIL Assessed u/s. 16 (1) vide CPC order dated 25.08.2015 201516 NIL NIL Assessed U/S.16 (1) vide CPC order dated 03. 03 .20 16 It could be seen from the above, in the assessment year 1993-94, 1994-95 and 1995-96, the CIT(A) accepted the assessee's valuation; and in the assessment year 2005-06, the CIT(A) decided the issue against the assessee confirming the AO's valuation as per schedule -III of the Wealth Tax Act, However in the earlier assessment year the AO adopted the value as per DVO. Thus, it is observed that there is no consistency in. the value adopted by the AO. In this regard, the AR has pointed out that the learned CIT(A) has decided the issue for Assessment Year 2005-06 against the assessee for which the appeal filed before ITAT is pending. The AR has also pointed out that the ClT(A) has decided the Appeal on 29.12.2009 for Assessment Year 2005-06, while the Bombay High Court has decided the similar issue in the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hin one year from the date on which the possession of the land is handed to the Company and complete the same within 1*1/2 years from the aforesaid date. (iii) at all times, keep and maintain the said land and the building or buildings erected thereon in good order and condition to the satisfaction of the collector. (iv) maintain all records of the Company properly and supply to the Government punctually such information as may from time to time be required by Government. (v) not use the said land or any building that may be erected upon it for any purpose which in the opinion of the Government is objectionable. vi) at its own cost provide, and continue to provide on the said land such markets, roads, parks and other amenities as the Gov, may be general or special observe and carry the govt. may from time to time issue with respect to such markets, roads, parks and other amenities including the directions as regards the maintenance or use thereof or entry therein. 2. The Company shall, from time to time and all times permit the Government, or any officer or officers authorized by the Government in that behalf to inspect the said land and any. wor....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng is on the land so transferred and part is on adjoining land, reasonable compensation for the injurious affection of the part of the building on the adjoining land. 5. The Company shall not in anyway alienate the said land or any portion thereof except with the previous permission in writing of Government. Schedule--------- Schedule above referred to - District Thane Taluka Thane Village Panchpankhadi Survey No. Hissa No. Approximate area of the land required Acre Gunthe Annas 86 1 3 3 0 86 2 0 5 0 86 3 0 18 0 86 4 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 4 4 117 1 0 12 12 117 2 0 12 12 117 3 1 18 0 117 4 0 3 0 117 5 0 1 12 117 6 0 13 4 117 7 0 28 8 117 3 0 17 0 117 9 0 1 8 117 10 0 3 4 117 11 0 1 4 Approximate area of the land required 21 acre 38 gunthas. This Sanad is executed on behalf of the Governor of Bombay by the Collector of Thane this twenty seventh day of February one thousand nine hundred fifty nine." It is also seen that the assessee obtained permission from the Collector to make ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eriod of 6 months from the date of the permission. 10. You shall inform the M of Thana in writing through the village officer the date on which the NA use within a period of one month from such commencement failing which you shall be liable to pay in addition to the NA agreement fine as the Collector may direct. 11. If you contravene any of the forgoing condition, the collector may without prejudice to any other penalty to which you may liable under the provisions of the said Code. Continue the said plot in you occupation to payment of such fine and or agreement as he may direct. I2. Notwithstanding anything contained in sub clause (a) above. It shall be lawful for the collector to direct the removal or alteration or any building or structure created to the provisions of this grant within the time prescribed in that behalf by the undersigned or the authority superior to him and on such removal or alteration not being carried out within the prescribed period he may cause to be carried out and recover the cost of carrying out the same from you as arrear of land revenue. 13. Same as herein provided, the grant should be subject to the provision of th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... It is also necessary to consider the Appellant's contention of unearned income- In terms of Rule 31 of the Maharashtra Land Revenue (Disposal of Government Lands] Rule, 1971 which deals with grant of land for industrial and commercial purpose, the State Govt. is entitled to unearned income at the rate mentioned in that Act- - In the Appellant's case, the State Govt. is entitled to claim upto 90% of unearned income. The said land is also out of the purview of definition of assets as defined u/s. 2(ea) of the Wealth-tax Act 57 for the reason that the Appellant pursuant to the agreement dated 13/04/1957 acquired the said land as required by the provisions of section 41 of the Land Acquisition Act, 1894. The Appellant therefore applied to the office of the Collector for nonagricultural use of the said unit. Permission was obtained with a condition that the Appellant shall leave an area of 95,630 sq.yds,, 64 sq.ft. open to sky. Therefore, the Appellant was allowed to build on 10,607 sq.yds, 36 sq.ft. The open [and was kept vacant because no construction was permissible in the said condition. Therefore, the Appellant's case is covered by the exclusionary part of the definiti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....thout considering the valuation report submitted by the DVO and deciding the issue merely on the basis of findings recorded for Assessment Year 1993-94 to 1995-96 without appreciating the fact that the revenue is in appeal before the ITAT for the said assessment years. The Ld. DR, further submitted that the AO was brought out clear fact in light of valuation report of the DVO that the value determined by the assessee in its wealth tax return is incorrect. Therefore, the Ld. CWT(A) without assigning any reason deleted additions made by the AO towards valuation of property. 8. The Ld. AR for the assessee, on the other hand strongly, supporting order of the Ld. CIT(A) submitted that first up all, the land in question does not comes under the definition of asset as defined u/s 2(ea) of the W.T.Act, 1957, because, the land in question is a 'Sanad', which was acquired for the purpose of setting up of chemical factory and also the utilization of land has been specified in the conversion order, as per which the assessee could use only 10% of the land for its manufacturing activity and remaining 90% land to be kpet open to the sky. The Ld. AR, further referring to the definition of asset....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssessee does not have any absolute right over the land and accordingly, the first argument of the AR of the assessee fails. 10. Coming to the second arguments of the assessee. The Ld. AR for the assessee referring to the definition of asset, as defined u/s 2(ea) of the W.T.Act, 1957 and the term urban land argued that the land in question does not come under the definition of urban land because, the assessee has constructed factory buildings on 10% of the land with the permission of appropriate authority and remaining 90% of land was kept open to the sky, where any kind of construction of building is not permissible, as per, the Bombay Land Revenue Code, 1879 and Rules framed there under from time to time. We find that the term asset has been defined u/s 2(ea) of the W.T.Act, 1957. As per clause (b) of the explanation to section 2 (ea) of the W.T.Act, the term urban land has been defined, as per which any urban land means and situate, but does not include land on which construction of building is not permissible under any law for the time being in force in the area in which such land situated or the land occupied by any building which has been constructed with the approval of th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n definition of urban land chargeable to wealth tax, even though assessee has constructed a farm house on said land. Therefore, we are of the considered view that the land in question does not come within definition of asset as defined u/s 2(ea) of the Act, because 10% of the land has been used for the purpose, for which it has been acquired and also constructed building thereon by the approval of appropriate authority and the remaining 90% of land has been kept open to the sky, as per the terms and conditions of acquisition, as well as conversion order and consequently, the remaining 90% of the land is covered in exclusionary clause (b) of the explanation to section 2 (ea) of the W.T.Act, 1957 11. Coming to third argument of the Ld. AR for the assessee. The Ld. AR for the assesee has advanced an alternative argument in light of the decision of Hon'ble Apex Court in the case of Radhasoami Satsang vs CIT (1992 60 taxmann.com 248) (SC) to the effect that department has utterly disregarded the rule of principles of consistency, which is evident from the fact that where, the AO has accepted wealth tax returns filed by the assessee for some years, whereas in some years, the AO has ad....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... WTA.No. 05/Mum/2010 14. The assessee has raised the following grounds of appeal which are reproduced are as under:- 1) The learned CWT (A) has erred both in Law as well as on facts in assessing the value of Sanad land at Rs. 8,19,53,463/- under schedule in of the Wealth Tax Act 1957.Without appreciating the fact that the said land is not liable for Wealth Tax. 2) The learned CWT (Appeal) has further erred is not appreciating the fact that the appellant was not allowed construction on the open land, Therefore the appellant's case is covered by the exclusionary part of the definition of 'urban land' Under section 2(ea)(ii)(b). Therefore the said land is outside purview of Wealth Tax. 3) Without prejudice to above it is submitted that if at all the Sanad land is assessable to wealth tax, then the value of the said Land should be restricted to the value of Rs. 89,30,000 as declared by the appellant and not as per Schedule III as assessed by the W.T.O. The appellant submits that the appellant had let out house property which yielded income & the same is not for letting out land and as such schedule III valuation would not be relevant in valuing....