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2015 (5) TMI 874 - AT - Wealth-taxExemption claim - Urban land - assessee submitted that since the property in question is not a vacant land but there was a building under construction over the said land, it cannot be treated as urban land u/s. 2(ea)(v) - Failure to furnish documentary evidence - whether the property subjected to Wealth Tax is an urban land as per Section 2(ea)(v)- Held that - Any area comprised within the jurisdiction of a municipality or Cantonment Board which has a population not less than 10,000 according to the land census or in any area which is within such distance not being more than 8 KMs from the local limits of any municipality or Cantonment Board as notified by the Central Government shall be treated as urban land. However, the said provisions also excludes certain categories of land from being treated as urban land if they satisfy conditions mentioned therein. Structure standing over the land during the relevant period being a half/semi-finished one cannot come within the exclusionary clause so as to take it out from the ambit of urban land. - even accepting assessee s claim that there was a building under construction over the land during the relevant time, but no documentary evidence has been brought on record to indicate approval of the appropriate authority for such construction. In course of hearing when the Ld. AR was specifically asked whether there is an approval of the appropriate authority for the construction, he admitted that there is no such approval. That being the case, the conditions of clause-1(b) to Section 2(ea) is not satisfied for claiming exemption from Wealth Tax. - Decision in the case of Commissioner of Wealth Tax and another Vs. Giridhar G.Yadalam 2007 (3) TMI 334 - KARNATAKA HIGH COURT followed - Decided against assessee.
Issues Involved:
1. Whether the immovable property at 8-3-949/1, Punjagutta, Hyderabad, should be treated as 'urban land' and subjected to Wealth Tax. Issue-wise Detailed Analysis: 1. Treatment of Immoveable Property as 'Urban Land': The primary issue in both appeals revolves around the classification of the immovable property at Punjagutta, Hyderabad, as 'urban land' under the Wealth Tax Act. The Assessing Officer (AO) and the Commissioner of Income Tax (Appeals) [CIT(A)] treated the property as urban land and subjected it to Wealth Tax. The assessee, a company, argued that the property included factory buildings, godowns, and offices, and after selling its soft drink business, it continued to seek new business opportunities on the premises. The property was eventually given to a developer for commercial development, and the existing structures were demolished to make way for new construction. The assessee contended that since a building was under construction during the relevant assessment years, the property should not be classified as urban land under Section 2(ea)(v) of the Wealth Tax Act. 2. AO's and CIT(A)'s Findings: The AO observed that the documentary evidence did not support the claim that the property included a building. The AO concluded that the property should be treated as urban land as the assessee failed to provide adequate evidence of a building. The CIT(A) upheld this view, noting that the old building was demolished, and any new construction was illegal and subsequently demolished by municipal authorities. The CIT(A) emphasized that for the property to be excluded from urban land classification, it must contain a finished building ready for commercial use. 3. Assessee's Arguments: The assessee reiterated its claim that a building was under construction during the relevant years. It argued that even a building under construction should exempt the property from being classified as urban land. The assessee relied on the ITAT Cochin bench decision in Smt. Meera Jacob Vs. WTO, which held that land with a building under construction should not be treated as urban land. 4. Department's Arguments: The Department, represented by the Ld. DR, argued that the assessee failed to provide evidence of a building on the property during the relevant period. The Department further contended that even if there was a building under construction, it would not qualify for exemption as it was not a completed structure. The Department cited decisions from the Karnataka High Court and Calcutta High Court, which held that only fully constructed buildings qualify for exemption from urban land classification. 5. Tribunal's Analysis and Conclusion: The Tribunal considered the statutory provisions, particularly Explanation 1(b) to Section 2(ea) of the Wealth Tax Act, which defines urban land. The Tribunal noted that the definition includes land within municipal limits but excludes land occupied by a building constructed with appropriate authority approval. The Tribunal found that the assessee admitted the old building was demolished, and the new construction was incomplete during the relevant period. The Tribunal referred to decisions by the Karnataka High Court and Calcutta High Court, which interpreted "any building which has been constructed" to mean a fully constructed building, not one under construction. The Tribunal also noted that the assessee failed to provide evidence of approval from the appropriate authority for the new construction. Therefore, the Tribunal upheld the CIT(A)'s decision to classify the property as urban land and subject it to Wealth Tax. Conclusion: The Tribunal dismissed both appeals, concluding that the property at Punjagutta, Hyderabad, should be treated as urban land and subjected to Wealth Tax, as it did not meet the criteria for exemption under the Wealth Tax Act. Order Pronounced: The order was pronounced in open Court on 29th April, 2015.
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