2012 (5) TMI 205 - AT - Wealth-tax

Addition to the net wealth on account of Urban Land - agriculture land under wealth tax act 1957 - held that - There is no dispute about the fact that the impugned lands were within the Municipal limits of Shamli. U/s 2(ea) of the Act, Urban land is liable to wealth tax. - from 1.4.1993, any urban land whether it is agriculture land or otherwise is liable to wealth tax if it falls under the definition of urban land. - The construction of building is not permissible under any law does not mean that agricultural land will falls under such category. - Decided against the assessee.

Summary

Issues:
1. Validity of notice issued under section 17 of the Wealth Tax Act.
2. Classification of agriculture lands as urban land for wealth tax assessment.

Issue 1: Validity of notice under section 17:
The appellant challenged the initiation of proceedings under section 17 of the Wealth Tax Act, contending that the notice was illegal and the subsequent re-assessment orders were without jurisdiction. The Assessing Officer issued the notice on 25.3.2010, followed by a notice under section 16(2) on 22.11.2010. The appellant argued before the ITAT that the assessment framed under section 16(3) read with section 17 was invalid as the notice under section 16(2) was issued before the filing of wealth returns. However, the ITAT held that since the appellant did not raise arguments before the CWT(A) regarding the reopening of assessments under section 17, such contentions could not be considered at the Tribunal level. Therefore, the ITAT upheld the dismissal of the ground related to the notice issued under section 17 for all the assessment years.

Issue 2: Classification of agriculture lands as urban land:
The second issue revolved around the classification of agriculture lands as urban land for wealth tax assessment purposes. The Assessing Officer determined that certain agricultural lands sold by the appellant were situated within municipal limits and had not been used for agricultural activities for several years, thus classifying them as urban land. The appellant contended that agricultural activities were ongoing on the lands till the date of sale, supported by certificates and revenue records. The CWT(A) conducted inquiries and concluded that the lands were to be treated as urban land for wealth tax assessment as per the provisions of the Wealth Tax Act. The ITAT agreed with the CWT(A) that the lands fell under the definition of urban land as per the Act, emphasizing that the prohibition on building construction did not apply to agricultural lands. Therefore, the ITAT upheld the decision to treat the agricultural lands as urban land for wealth tax assessment, dismissing the appeals for all the assessment years.

In conclusion, the ITAT affirmed the dismissal of the appellant's appeals for all the assessment years, upholding the classification of the agricultural lands as urban land for wealth tax assessment and rejecting the challenge to the validity of the notice issued under section 17 of the Wealth Tax Act.