2018 (1) TMI 34 - AT - Wealth-tax

Wealth tax assessment - treatment to agricultural land - Held that - Agricultural land on its conversion for nonagricultural purposes ceased to be an agricultural land. Therefore, it becomes an asset for the purposes of Wealth-tax Act. See Shri. A.N. Manidatta (HUF) , Versus Assistant Commissioner of Wealth-Tax, Circle -2 (2) (1) , Bengaluru 2017 (3) TMI 1603 - ITAT BANGALORE

Summary

Issues Involved:
1. Jurisdiction under Section 17 of the Wealth-tax Act.
2. Validity of reassessment under Section 16(3) read with Section 17.
3. Nature of land for Wealth-tax purposes.
4. Classification and valuation of land.
5. Levy of interest under Section 17B of the Wealth-tax Act.

Issue-wise Detailed Analysis:

1. Jurisdiction under Section 17 of the Wealth-tax Act:
The appellant contended that the CIT(A) erred in invoking the jurisdiction under Section 17 of the Act, arguing that the conditions required for such invocation were absent. The appellant claimed there was no omission in the declaration of wealth for the relevant assessment year. The Tribunal, however, upheld the CIT(A)'s decision, finding no error in the invocation of jurisdiction under Section 17.

2. Validity of Reassessment under Section 16(3) read with Section 17:
The appellant argued that the reassessment under Section 16(3) read with Section 17 was opposed to law, as the assessing officer proceeded with the order without adjudicating the objections raised by the appellant. The Tribunal referenced the case of A.N. Manidatta (HUF), where it was held that once land is converted for non-agricultural purposes, it becomes an asset for Wealth-tax purposes. The Tribunal found no merit in the appellant's arguments and upheld the reassessment.

3. Nature of Land for Wealth-tax Purposes:
The core issue was whether the land in question, despite being converted for non-agricultural purposes, remained agricultural land for Wealth-tax purposes. The appellant contended that the land continued to be used for agricultural purposes and was classified as such in government records until 2013. The Tribunal, however, referenced its previous decision in the case of A.N. Manidatta (HUF), where it was determined that the land ceased to be agricultural upon conversion. The Tribunal reiterated that the land, after conversion, is considered an asset under the Wealth-tax Act.

4. Classification and Valuation of Land:
The appellant argued that the land should not be included as an asset under Section 2(ea) of the Wealth-tax Act and that the valuation by the DVO was excessive and arbitrary. The Tribunal examined the conditions under which land is classified as "urban land" and found that the appellant's land met these conditions post-conversion. The Tribunal upheld the DVO's valuation, noting that the objections were considered during the valuation process.

5. Levy of Interest under Section 17B of the Wealth-tax Act:
The appellant contested the levy of interest under Section 17B. The Tribunal found no error in the CIT(A)'s confirmation of the interest levy, as it was in accordance with the provisions of the Wealth-tax Act.

Conclusion:
The Tribunal dismissed the appeals, confirming the CIT(A)'s decision and holding that the land, upon conversion for non-agricultural purposes, became an asset for Wealth-tax purposes. The Tribunal found no merit in the appellant's arguments regarding jurisdiction, reassessment procedures, land classification, valuation, and interest levy. The appeals were thus dismissed in their entirety.