2019 (5) TMI 797 - AT - Wealth-tax

Lands exigible to Wealth-tax Act - 'urban lands' or 'agricultural lands' - AO brought the lands situated at Akkelenahalli- Mallenahalli villages under the ambit of wealth and adopting the guideline value of the lands, brought the same to tax under the Act - calculation of the distance of 8 KMs from BBMP limits - HELD THAT - The assessee has filed a letter from the Anneshwara Gram Panchayat office confirming that the land does not come within the limits of any Corporation or Municipality and confirmation from the office of the Tahsildar, Devarahalli measuring the distance from BBMP limits. Per contra, Revenue's case is that the said lands are situated within BIAPPA which has an authority as per the definition of 'asset' which proposition has been negative by a co-ordinate bench of this Tribunal in the case of M.R.Seetharam 2013 (4) TMI 745 - ITAT BANGALORE . In the case of CIT vs. Satinder Pal Singh 2010 (1) TMI 752 - PUNJAB AND HARYANA HIGH COURT it was held that the reckoning of urbanization as a factor for prescribing the distance is of significance which would yield to the principle of measuring distance in terms of approach roads rather than by straight line or horizontal plane or as per crows flight'. Thus, it is clear to us that for the period under consideration, in the appeals before us i.e. assessment years 2007-08 and 2009-10 the distance has to be calculated by road and not as the crow flies or by straight line. In this factual and legal matrix of the case, as discussed above, this ground and argument raised by Revenue is dismissed. The said lands in question are not 'urban lands' but 'agricultural lands' and hence not exigible to wealth-tax.

Summary

Issues Involved:
1. Whether the land in question qualifies as 'urban land' under the Wealth-tax Act.
2. Validity of reopening assessments under Section 17 of the Wealth-tax Act.

Issue-wise Detailed Analysis:

1. Whether the land in question qualifies as 'urban land' under the Wealth-tax Act:

The primary issue was whether the land owned by the assessee, situated at Akkelenahalli-Mallenahalli village, falls under the definition of 'urban land' as per Explanation 1(b) to Section 2(ea) of the Wealth-tax Act, 1957. The Assessing Officer (AO) contended that the land was within 8 kilometers from the BBMP limits when measured in a straight line, thus qualifying as 'urban land'. The AO further argued that the land fell within the jurisdiction of BIAPPA, an authority akin to a Municipality, making it subject to wealth tax.

The assessee argued that the land was situated 11 kilometers away from BBMP limits and did not qualify as 'urban land'. The Commissioner of Wealth-tax (Appeals) [CIT(A)] sided with the assessee, following the ITAT Bangalore's decision in similar cases, concluding the land was agricultural and not 'urban land'.

The Tribunal upheld the CIT(A)'s decision, emphasizing that the distance should be measured by road, not aerially, and that the substituted provisions of Section 2(14)(iii)(b) of the Income-tax Act, 1961, effective from April 1, 2014, could not be applied retrospectively. The Tribunal also noted that BIAPPA did not qualify as an authority under the Wealth-tax Act, as per previous Tribunal rulings. Consequently, the Tribunal held the land was agricultural, not 'urban land', and thus not subject to wealth tax.

2. Validity of reopening assessments under Section 17 of the Wealth-tax Act:

The assessee challenged the validity of the AO's jurisdiction to reopen assessments under Section 17 of the Wealth-tax Act. The assessee contended that the notice for reopening was flawed and did not meet the mandatory jurisdictional requirements. The CIT(A) did not address this issue in detail, given that the primary issue was decided in favor of the assessee.

The Tribunal, having already determined that the land was not 'urban land' and thus not subject to wealth tax, found the jurisdictional challenge moot. Therefore, the Tribunal did not adjudicate on the jurisdictional issue, rendering the cross-objections academic and infructuous.

Conclusion:

The Tribunal dismissed the Revenue's appeals for the assessment years 2007-08 and 2009-10, upholding the CIT(A)'s decision that the land in question was agricultural and not 'urban land', thus not subject to wealth tax. The assessee's cross-objections regarding the reopening of assessments were also dismissed as academic and infructuous.