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2021 (3) TMI 76 - AT - Wealth-taxWealth tax assessment - whether the lands owned by the assessee and leased to trusts comes under the definition of asset , as defined u/s.2(ea) of the WT Act, or the assets held by him under the trusts or legal obligation for any public purpose of a charitable or religious nature in India, which is exempt u/s.5(i) of the WT Act? - Admission of additional evidences - HELD THAT - In the present case, the lands are leased to trusts and trusts utilized the lands by constructing buildings on which educational institutions are running. Hence, by no stretch of imagination, the said lands can be construed as non-productive assets. Lands occupied by any building which has been constructed with the approval of appropriate authority is excluded from the definition of urban land and on plain reading of the said clause, it is clear that in order to avail the benefit, only condition required to be satisfied is, land is occupied by any building and such building has been constructed with the approval of appropriate authority. In the present case, the impugned lands are occupied by buildings and said construction was approved by appropriate authority Lands on which any building is constructed with the approval of appropriate authority cannot be considered as urban land, which comes under the definition of asset as defined u/s.2(ea) of WT Act. But, the assessee has taken this argument in light of various additional evidences for the first time before us and further, the AO had no occasion to verify the facts with regard to the arguments of the assessee in light of the definition of section 2(ea) of the WT Act. Hence, we are of the considered view that for the limited purpose of verification of facts with regard to additional evidences filed by the assessee to prove that buildings were constructed on the land with the approval of appropriate authority, the issue has been set aside to the AO and direct him to verify additional evidences filed by the assessee, to ascertain the facts whether building has been constructed with the approval of appropriate authority or not. In case, the AO finds that on the impugned lands any building was constructed with the approval of appropriate authority, then the AO is directed to exclude those lands for the purpose of Wealth Tax. AO himself has allowed the exemption u/s.5(i) for some of the assessment years wherever the trust deeds are registered, but the ld.CIT(A) has rejected the exemptions only on the ground that the impugned lands are vacant urban lands. But, fact remains that the lands in question as on the date of valuation are not a vacant urban lands but lands on which building was constructed with the approval of competent authority. Therefore, once any land on which building was constructed with the approval of appropriate authority, the same cannot be considered as vacant land. Therefore, even on this count, exemption claimed by the assessee on lands is in accordance with provisions of section 5(i) of the WT Act. AO as well as the CIT(A) were erred in levying taxes on lands owned by the assessee and given on lease for 99 years, even though, the assessee has proved with necessary evidences that the trusts have constructed buildings on the impugned lands with the approval of appropriate authority. In this case, evidences filed by the assessee clearly proves that these are not urban vacant lands, but lands on which buildings are constructed with the approval of appropriate authority and hence, in our considered view these lands cannot be brought to tax as urban lands within the meaning of asset, as defined u/s. 2(ea) of the WT Act. Therefore, we are of the considered opinion that the assessee is also entitled for exemption u/s.5(i) of the WT Act, because the lands are held by him under a trust for charitable purpose because said lands were given on lease to a trust and the trust has used the lands for running various educational institutions, which comes under the definition of charitable purpose. Therefore, for all reasons the impugned lands are outside the scope of the Wealth Tax. But, the fact remains that certain additional evidences filed by the assessee including copies of sanction plan, copies of approval letters issued for running educational institutions are not submitted before the AO. Therefore, for limited purpose of verification of additional evidences filed by the assessee, the matter has been set aside to the file of the AO and direct him to verify the additional evidences filed by the assessee and allow appropriate relief to the assessee.
Issues Involved:
1. Interpretation of the term "property" under sections 2 and 5 of the Wealth Tax Act, 1957. 2. Eligibility for exemption under section 5(i) of the Wealth Tax Act, 1957. 3. Treatment of lands leased to educational trusts for Wealth Tax purposes. 4. Consistency in applying exemptions based on previous assessments. Issue-wise Detailed Analysis: 1. Interpretation of the term "property" under sections 2 and 5 of the Wealth Tax Act, 1957: The primary issue was whether the term "property" under sections 2 and 5 of the Wealth Tax Act, 1957, includes urban lands leased to educational trusts. The appellant argued that the word "property" has a broad meaning and should cover all types of assets, including urban lands leased for educational purposes. The CIT(A) and AO, however, interpreted the term narrowly, limiting it to buildings and not including urban lands. 2. Eligibility for exemption under section 5(i) of the Wealth Tax Act, 1957: The appellants contended that the lands leased to educational trusts should be exempt under section 5(i) of the Wealth Tax Act, which exempts properties held for charitable or religious purposes. The AO denied the exemption on the grounds that the trusts had withdrawn their exemption under section 11 of the Income Tax Act due to violations and that the lands were not transferred to the trusts. The CIT(A) upheld this view, stating that the term "property" in section 5(i) does not include urban land. 3. Treatment of lands leased to educational trusts for Wealth Tax purposes: The appellants argued that the lands leased to educational trusts, where buildings were constructed with the approval of appropriate authorities, should not be considered as urban vacant lands under section 2(ea) of the Wealth Tax Act. The Tribunal agreed with this view, noting that lands with buildings constructed for educational purposes are productive assets and should not be taxed as non-productive urban lands. 4. Consistency in applying exemptions based on previous assessments: The appellants pointed out that exemptions under section 5(i) were allowed for the same properties in previous assessment years (2010-11 and 2011-12). The AO and CIT(A) did not follow this principle of consistency, leading to the appellants' challenge. The Tribunal emphasized the need for consistency and directed the AO to verify the additional evidence provided by the appellants to ascertain whether buildings were constructed with the approval of appropriate authorities. Conclusion: The Tribunal concluded that lands leased to educational trusts, where buildings were constructed with the approval of appropriate authorities, should not be considered as urban vacant lands and are eligible for exemption under section 5(i) of the Wealth Tax Act. The Tribunal set aside the assessments to the AO for verification of additional evidence and directed appropriate relief based on the findings. The appeals were allowed for statistical purposes, and the stay petitions were dismissed as infructuous.
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