TaxTMI 
TaxTMI 
2009 (9) TMI 25
X X X X Extracts X X X X
X X X X Extracts X X X X
..... The HUF owned 106 Kanals and 15 Marlas of agricultural land at Sangrur. On 15.7.1992, the Improvement Trust, Sangrur, passed a resolution to acquire 78 Kanals and 1 Marla of land out of aforesaid total land owned by HUF under the provisions of Sections 24 and 28 of the Punjab Town Improvement Trust Act, 1922 (for brevity, 'the 1922 Act') for formation of Transport Nagar Sangrur under a Scheme. On 22.7.1994, 29.7.1994 and 5.8.1994, notifications under Section 36 of the 1922 Act (which is equivalent to Section 4 of the Land Acquisition Act, 1894) were issued acquiring the said land. The assessee-appellant has claimed that the compensation of the acquired land was disbursed in the year 1997. It is relevant and pertinent to mention here that upto the assessment year 1995-96 the assessee-appellant used to file the returns of net wealth in the status of HUF. However, on 21.3.1996 there was a partition of the HUF, therefore, the individual members of the HUF had filed returns of net wealth in respect of taxable wealth owned by them. 3. The assessee-appellant filed two returns on 29.3.1996 in respect of assessment year 1994-95 & 1995-96 and one return on 2.9.1996 in respect of assessm....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ogether. The Tribunal disposed of all the appeals vide common order dated 5.11.2004. The Tribunal considered the issues relating to the assessment of the value of acquired land measuring 78 Kanals 1 Marla; the right to receive compensation and exemption in respect of the residential house owned by the HUF. With regard to first issue relating to assessment of the value of acquired land, after discussing the provisions of Sections 3, 2 (m), 2(e), 2(ea) and Explanation-I below Section 2(b) of the Act, the Tribunal in para Nos. 13 to 16 of its order observed as under:- "13. Any land situated in the jurisdiction of the municipality Etc. Is included in the definition of urban land. The land Belonging to the assessee falls within the jurisdiction of the Municipal corporation and accordingly, would fall within the Definition of urban land. As admitted before us, the assessee Has not carried on any agricultural operations on the portion of The land not acquired by the Govt. Therefore, the said portion Of the land is included in the definition of the assets u/s 2(ea) of The Wealth-tax Act, 1957. The value of such land is Accordingly, liable to wealth-tax. We accordingly hold that the Valu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....onstruction thereof but at the same time, the appellant was entitled to receive compensation to be fixed by the land acquisition collector improvement trust, Sangrur. This compensation was ultimately fixed at Rs. 77,20,329/- and in addition to this, the appellant also solution for compulsory acquisition and also a sum of Rs. 27,12,92.66 as increase from 22.7.94 (first notification till the date of payment). The right to receive compensation vested in the appellant from the date when the acquisition proceedings started." 16. The assessee had admittedly the right to receive compensation. Their Lordships of the Supreme Court in the case of CWT Vs. U.C. Mehatab, 231 ITR 501, (supra) held that the right to receive compensation is a valuable right and an assets within the meaning of Wealth-tax Act, 1957. So however, w.e.f. 1.4.1993, the definition of assets has undergone a change. As already pointed out, it is not every asset which is assessable to tax from 1.4.1993 as per the provisions of the Wealth-tax Act. Only such assets which are included in the definition of the assets u/s 2(ea) elsewhere in this order and we are unable to find the "right to receive the compensation" to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the same Bench of the Tribunal, which had passed the order dated 5.11.2004. The final order on rectification was passed by the Tribunal on 16.6.2008. After noticing paras 15 and 16 of the earlier order dated 5.11.2004, the Tribunal has passed the following order:- "4. It has been pointed out before us that in respect of the land measuring 78 kanal and one marla the Land Acquisition Collector Improvement Trust had initiated the acquisition proceedings on 21.3.1997 and therefore, the value of the said land was assessable to Wealth-tax for the assessment year 1993-94, 1994-95 and 1995-96. We accordingly reject the ground of appeal raised by the assessee and hold that the value of the land measuring 78 kanal and one marla was rightly assessed to Wealth-tax for the aforementioned assessment years. We hold accordingly. The earlier order of the Tribunal is modified accordingly." QUESTIONS OF LAW: 9. In the backdrop of the aforementioned factual matrix, the assessee-appellant has filed the instant appeals raising the following substantial questions of law for determination of this Court:- "(i) Whether on the facts and circumstances of the case, the Ld. ITAT has erred in law in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....order dated 5.11.2004 (A-5) passed by the Tribunal to highlight that the Tribunal has partly allowed the appeal of the assessee holding that value of 78 Kanals 1 Marla of land, which has been acquired by the Government, was wrongly included in the net wealth of the assessee for the purposes of assessment under the Act. Accordingly assessment in respect of the value of 78 Kanals 1 Marla of land was deleted. In respect of the remaining land measuring 28 Kanals 14 Marlas, the Tribunal had held that it was not acquired by the Government and the value was as per the rate fixed by the Assessing Authority. In the process the Tribunal has referred to the definition of expressions 'asset' as well as 'urban land' given in Section 2(ea) of the Act. Learned counsel then referred to the order of rectification dated 16.6.2008, whereby the Tribunal has excluded land measuring 78 Kanals 1 Marla by stating that the acquisition proceedings were initiated on 21.3.1997 and, therefore, the value of the land was assessable to wealth tax for the assessment years 1993-94, 1994-95 and 1995-96. On that basis the grounds of appeal raised by the assessee which were earlier accepted, stood rejected. Acco....
X X X X Extracts X X X X
X X X X Extracts X X X X
....., [2007] 290 ITR 615 (Delhi), which has taken the view that if the sanction of the site plan for construction on the land has not been obtained then such a land would not be assessable to wealth tax as it cannot be regarded as 'urban land' and 'asset'. 12. Mr. Rajesh Katoch, learned counsel for the revenue-respondent has, however, submitted that there is no prohibition of raising construction nor any provision has been cited by the assessee-appellant showing that in any case construction cannot be raised on the land in respect of which declaration under Section 36 of the 1922 Act has been issued. According to the learned counsel in the absence of any prohibition, the assessee-appellant cannot place any reliance on the notification under Section 36 which might have culminated into passing of an award and taking of compensation of the land belonging to the assessee-appellant. He has maintained that right to receive compensation has not extinguished by virtue of notification under Section 36 and by virtue of pronouncement of award. The payment in any case has been received by the assessee-appellant. Re: Question Nos. (ii), (iii) and (iv) 13. It would first be appropriate to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f building. According to sub-section (1) of Section 31 of the 1922 Act in the locality comprised in a scheme framed under this Act no person is permitted to erect and re-erect, add to or alter any building so as to make the same project beyond a street alignment or building line duly prescribed by the trust. According to sub-section (2) of Section 31 of the 1922 Act in the locality comprised in a development scheme or an expansion scheme, if any person keen to erect, re-erect, add to or alter any building on his land so as to make the same project beyond a street alignment or a building line duly prescribed by the Trust then he has to obtain specific permission from the Trust. The definitions of 'street', 'alignment' and 'building alignment' are available in Section 2(3) & (4) of the 1922 Act. It is matter of common knowledge that when an Improvement Trust frames a scheme as contemplated by various sections to which reference has been made in the preceding paras then intimation in that regard is sent to the other local bodies including the Municipal Committee, Municipal Corporation and Notified Area Committee. Such local bodies are debarred from sanctioning a site plan in respect o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....resolved to construct Transport Nagar (A-7). The resolution requires to be quoted in extensor, which reads thus:- "Copy of Resolution No. 82 Dated: 15-7-1992. Agenda regarding Formation of Transport Nagar (Truck Stand) Sangrur as per notification of Improvement Trust, Sangrur for 5 years Programme. Decision:- In the presence of the members present in the meeting it has been unanimously resolved to construct Transport Nagar (Truck Stand) Sangrur within the Municipal Limits over 25-30 acres of land under Section 24 and 28 of Punjab Town Improvement Trust Act. Its boundaries/limits will be within the purview of the site plan of the city. The commercial part of this scheme has been decided to be constructed adjoining to the Trust's earlier Tobha Scheme (Maharaja Ranjit Singh Nagar Market) and the parking of the Trucks be made at a far away distance from it so as to facilitate the general public at large regarding Traffic problems. This scheme may be got published as per section 36 of the Act and the survey should be got completed at the earliest and scheme be formulated. The approval for the expenses for formulation of the scheme, survey and notification is being accorded. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 kilometers from the local limits of any municipality or cantonment board referred to in sub-clause (i), as the Central Government may, having regard to the extent of, and scope for, urbanization of that area and other relevant considerations, specify in this behalf by notification in the Official Gazette, but does not include 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 the land occupied by any building which has been constructed with the approval of the appropriate authority or 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 any land held by the assessee as stock-in-trade for a period of three years from the date of its acquisition by him;" (emphasis added) 18. The aforesaid provisio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....M/s Volkart Brothers, AIR 1971 SC 2204. In the concluding para 8 of the judgment their Lordships' have observed as under:- "8. From what has been said above, it is clear that the question whether S. 17 (i) of the Indian Income-tax Act, 1922 was applicable to the case of the first respondent is not free from doubt. Therefore the Income-tax Officer was not justified in thinking that on that question there can be no two opinions. It was not open to the Income-tax Officer to go into the true scope of the relevant provisions of the Act in a proceeding under section 154 of the Income-tax Act, 1961. A mistake apparent on the record must be an obvious and patent mistake and not something which can be established by a long drawn process of reasoning on points on which there may conceivably be two opinions. As seen earlier, the High Court of Bombay opined that the original assessments were in accordance with law though in our opinion the High Court was not justified in going into that question. In Satyanarayan Laxminarayan Hegde v. Mallikarjun Bhavanappa Tirumale, (1960) 1 S. C. R. 890 = (AIR 1960 S. C. 137) this Court while spelling out the scope of the power of a High Court under ....