2016 (2) TMI 841 - AT - Wealth-tax

Addition of plot of land (agriculture) and a house in the net wealth - it was submitted that the investment in the property at Jubilee Hills was utilized for exemption u/s 54 of IT Act which was upheld by ITAT, Hyderabad. Thus, as the said property is a house eligible for exemption u/s 5(vi) of the Wealth Tax Act, 1961. - Held that - residential house is not includible into the net wealth - the land classified as agricultural land and used for the purpose of agriculture would not fall within the meaning of asset and would be exempt from wealth tax. Moreover, the section 2(ea) Explanation 1(b), the definition of urban land amended by the Finance Act, 2013, w.e.f. 01/04/1993. - No additions - Decided against the revenue.

Summary

Issues:
Appeals by Revenue against CWT(A) orders for AYs 2008-09 and 2009-10 regarding treatment of property as agricultural land and urban land for wealth tax purposes.

Analysis:
1. Property at Jubilee Hills:
- AO believed wealth tax was applicable on a land in Jubilee Hills held by the assessee.
- Assessee claimed exemption under IT Act for the property, upheld by ITAT Hyderabad.
- CWT(A) held the property to be a residential house property, directing deletion of the addition made by AO.
- ITAT's previous decision supported CWT(A)'s ruling, finding the property eligible for exemption under IT Act.

2. Agricultural Lands at Kokapet and Madeenaguda:
- Assessee claimed exemption for agricultural lands used for growing vegetables.
- WTO rejected the claim, levying wealth tax as the lands were within 8 km of municipal limits.
- CWT(A) directed deletion of addition, citing that the lands were not urban lands and exempt from wealth tax.
- Amendment to Explanation 1(b) of section 2(ea) by Finance Act 2013 excluded agricultural lands used for agriculture from urban land definition.
- CWT(A) decision upheld due to lack of evidence that properties were not agricultural lands and used for non-agricultural purposes.

3. Conclusion:
- CWT(A) decisions to delete additions upheld for both property at Jubilee Hills and agricultural lands at Kokapet and Madeenaguda.
- Revenue's appeals dismissed for both AYs 2008-09 and 2009-10.
- Amendment to urban land definition and ITAT's previous rulings supported CWT(A)'s decisions, ensuring exemption from wealth tax for the properties in question.