2019 (1) TMI 1295 - AT - Wealth-tax

Addition by WTO on account of land u/s 2(ea) of the Wealth Tax Act - asset under the Wealth Tax Act for the purpose of levy of Wealth Tax - urban land would exclude land on which construction of a building is not permissible - Held that - The provisions of Karnataka Land Revenue Act are similar to provisions contained under the Delhi Land Reforms Act which provides that the agricultural land could be used only for agricultural purposes otherwise the Bhumidhar or an Asami shall be liable for ejectment from agricultural land. In the sale deeds in questions filed on record, it is nowhere mentioned, if there was any violation by the owner of the agricultural land for raising any construction thereon. The issue is, therefore, covered in favour of the assessee by judgment of Karnataka High Court in the case of M.R. Raghuram 2013 (7) TMI 1116 - KARNATAKA HIGH COURT . It may also be noted here that no evidence has been brought on record that the land in question was not used for agricultural purposes. Thus, the case of the assessee would fall within the exception to the Rule and as such, the same could not be considered as an asset under the Wealth Tax Act for the purpose of levy of Wealth Tax on the same. We, accordingly, set aside the orders of the authorities below and delete the additions. - Decided in favour of assessee.

Summary

Issues:
Challenge to addition of land under Wealth Tax Act

Analysis:
The appeals were filed against the orders of the Ld. CIT(Appeals) confirming the addition of ?1,17,30,000 made by the WTO on account of land under section 2(ea) of the Wealth Tax Act for the assessment year 2013-14. The assessees had declared wealth consisting of jewellery but had not disclosed the purchase of agricultural land valued at ?1,17,30,000 each in their wealth tax return. The dispute arose as to whether the land should be treated as "urban land" and included in the taxable wealth of the assessees.

The assessees argued that the land purchased was agricultural land and should not be considered urban land for wealth tax purposes. They relied on the amended provisions of section 2(ea) of the Wealth Tax Act introduced by the Finance Act, 2013, which excluded land classified as agricultural land in government records and used for agricultural purposes from being considered an asset. The assessees provided evidence, including sale deeds and a search report, to support their claim that the land was agricultural.

The Tribunal examined the sale deeds and noted that the property was specifically mentioned as agricultural land in the documents. The Tribunal also considered the provisions of the Karnataka Land Revenue Act, which were similar to the Delhi Land Reforms Act, indicating that agricultural land could only be used for agricultural purposes. Since there was no evidence of the land being used for non-agricultural purposes, the Tribunal concluded that the land fell within the exception to the rule and could not be considered an asset under the Wealth Tax Act.

Based on the evidence presented and the legal provisions, the Tribunal allowed the appeals of the assessees, setting aside the orders of the authorities below and deleting the additions made on account of the land. The decision was in line with the judgment of the Karnataka High Court in a similar case, supporting the assessees' argument that land where construction of a building is not permissible should not be considered urban land for wealth tax purposes.

In conclusion, the Tribunal ruled in favor of the assessees, holding that the agricultural land purchased by them should not be treated as urban land for the purpose of wealth tax assessment, and therefore, the additions made by the authorities below were deleted.