2019 (6) TMI 1656 - AT - Wealth-tax

Reopening of Wealth tax assessment - whether the piece of land in Pineville held by the assessee was its Stock in Trade, or taxable within the provisions of Wealth Tax Act? - HELD THAT - AO despite recording the liabilities against the land, failed to appreciate that undoubtedly the land was Stock in Trade of assessee. Furthermore, Explanation 1(b) attached with section 2(ea) of the Act clearly specified that any land held by assessee as Stock in Trade for a period of 10 year from the date of acquisition, will not include in the definition of Urban Land . No contrary fact is brought to our notice despite the fact that the assessee throughout the proceedings taken a firm stand that the land is a forming part of their stock in trade. We are also in agreement with the submissions of the assessee that that as per section 2 (m) of Wealth Tax Act, while determining the Wealth Tax liability of the assessee, the aggregate value of debt owned by the assessee in respect of the asset owned by the assessee have to be reduced from the aggregate value of assets belonging to the assessee.- Decided against revenue.

Summary

Issues Involved:
1. Whether the land acquired by the assessee for industrial purposes and held as stock in trade is taxable under the Wealth Tax Act.
2. Whether the land falls within the definition of "Urban Land" under Section 2(ea) of the Wealth Tax Act.
3. Whether the assessee is entitled to exemption under the Wealth Tax Act for the land held as stock in trade for a period of 10 years from the date of acquisition.
4. Whether the Assessing Officer correctly assessed the land as taxable wealth despite it being classified as stock in trade by the assessee.
5. Whether the decision of the Hon'ble Supreme Court in Giridhar G. Yadalam Vs. Commissioner of Wealth Tax is applicable to the present case.

Detailed Analysis:

Issue 1: Taxability of Land Acquired for Industrial Purposes
The revenue contended that the land acquired by the assessee for industrial purposes should be taxable under the Wealth Tax Act as it was not used for more than three years from the date of acquisition. The assessee argued that the land was held as stock in trade and thus not exigible to wealth tax. The Commissioner (Appeals) accepted the assessee's contention, noting that the land was part of the assessee's stock in trade and business asset under development.

Issue 2: Definition of "Urban Land"
The revenue argued that the land falls within the definition of "Urban Land" under Section 2(ea) of the Wealth Tax Act, as it was within 8 km of the Panvel Municipal Council and acquired for industrial purposes. The assessee maintained that the land was held as stock in trade, which is excluded from the definition of "Urban Land" for a period of 10 years from the date of acquisition. The Tribunal upheld the Commissioner (Appeals)'s decision, agreeing that the land held as stock in trade does not fall within the definition of "Urban Land."

Issue 3: Exemption Under Wealth Tax Act
The assessee claimed exemption under the Wealth Tax Act for the land held as stock in trade for a period of 10 years from the date of acquisition. The Tribunal agreed with the assessee, noting that the land was reflected as inventory in the balance sheet and the liabilities against the land were recorded. The Tribunal concluded that the land was indeed stock in trade and thus eligible for exemption.

Issue 4: Assessment by the Assessing Officer
The Assessing Officer treated the land as taxable wealth, arguing that the land was not used for industrial purposes within three years and the assessee was not a dealer in land. The Commissioner (Appeals) and the Tribunal disagreed, noting that the land was part of the assessee's stock in trade and the development of the Special Township was ongoing with proper government approvals. The Tribunal affirmed that the land should not be considered taxable under the Wealth Tax Act.

Issue 5: Applicability of Supreme Court Decision
The revenue relied on the Supreme Court decision in Giridhar G. Yadalam Vs. Commissioner of Wealth Tax to argue against the assessee's exemption claim. The Tribunal found the facts of the present case distinguishable, noting that the Supreme Court decision pertained to land occupied by a building under construction, whereas the present case involved land held as stock in trade. The Tribunal concluded that the Supreme Court decision was not applicable to the present case.

Conclusion:
The Tribunal dismissed the revenue's appeals, affirming the Commissioner (Appeals)'s decision that the land held by the assessee as stock in trade is not taxable under the Wealth Tax Act. The Tribunal upheld the exemption for land held as stock in trade for a period of 10 years from the date of acquisition and concluded that the land does not fall within the definition of "Urban Land." The Tribunal also found that the Supreme Court decision relied upon by the revenue was not applicable to the present case.