2010 (1) TMI 751 - HC - Wealth-tax

Agricultural land for industrial purpose - permission to change of the land use for industrial purpose was granted by the Department of Town and Country Planning, on 26th July, 1995 - assessing authority included the value of the plots while assessing the amount of wealth-tax - Held that - two years exemption period of tax of industrial plots held by the assessee would be reckoned from the date of acquisition of plots by it for the purpose of relevant asst. yrs. 1996-97 to 1998-99 and would remain an industrial plot liable to the wealth-tax in the subsequent relevant asst. yrs. 1997-98 and 1998-99 and action of the authorities below in this respect, is in conformity with legal process, justified and legally sustainable, assessee appeal dismissed.

Issues Involved:
1. Whether the exemption period for wealth-tax on industrial plots should start from the date of acquisition or the date of permission to change land use.
2. Whether the land could be included in the computation of total wealth for wealth-tax purposes if the land was not used for industrial purposes due to non-fulfillment of certain conditions by the assessee.

Issue-wise Detailed Analysis:

1. Exemption Period for Wealth-Tax on Industrial Plots:
The primary issue revolves around the interpretation of the exemption period under Section 2(ea) of the Wealth Tax Act, 1957. The assessee argued that the two-year exemption period should commence from the date when permission to change land use was granted (26th and 28th July 1995) rather than from the date of acquisition of the land. The Revenue, however, contended that the exemption period should start from the date of acquisition.

The court examined the relevant provisions of Section 2(ea) of the Act, which defines "assets" and includes urban land with specific exclusions, such as land held for industrial purposes for two years from the date of acquisition. The court concluded that the legislative intent was clear that the two-year exemption period should be reckoned from the date of acquisition. The court found no ambiguity in the legislative language that would allow for an alternative interpretation.

The court also reviewed precedents, such as the Delhi High Court's decision in CWT vs. D.C.M. Ltd. and the Punjab and Haryana High Court's decision in CWT vs. R.K. Mehra, but found them inapplicable to the present case due to differing facts. The court emphasized that the specific clause regarding the two-year exemption period for industrial land could not be mixed with other distinct exemption clauses.

2. Inclusion of Land in Wealth Computation:
The second issue was whether the land could be included in the computation of total wealth for wealth-tax purposes if the land was not used for industrial purposes due to the assessee's failure to fulfill certain conditions. The assessee argued that since the land could not be used for industrial purposes without fulfilling these conditions, it should not be included in the wealth computation.

The court rejected this argument, stating that the permission to change land use had been granted, subject to certain terms and conditions. The failure to fulfill these conditions was attributed to the assessee, not to any legal bar on construction. Therefore, the court held that the land should be included in the computation of total wealth for the relevant assessment years.

Conclusion:
The court held that the two-year exemption period for wealth-tax on industrial plots starts from the date of acquisition of the plots. The land was to be included in the computation of total wealth for the relevant assessment years, as the failure to use the land for industrial purposes was due to the assessee's non-fulfillment of conditions, not due to any legal prohibition. Consequently, the appeals were dismissed, and the actions of the authorities were deemed legally sustainable.

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