2017 (11) TMI 227 - AT - Wealth-tax

Chargeability of wealth-tax on certain parcels of land - whether parcels of land being agricultural land are excluded from definition of Urban Land given under s.2(ea) of the Wealth Tax Act, 1957? - Held that - We notice from the purchase-deed dated 09/09/2005 with reference to agricultural land at Suratas referred to at the course of hearing on behalf of the assessee that aforesaid agricultural land was held as agricultural land and cultivated for agricultural purposes. Likewise, reference was made to the purchasedeed dated 23/10/2008 for acquisition of the land at Vadaj in the course of hearing. From specific assertions in the sale-deed, we note that the aforesaid land was claimed to be acquired as agricultural land. However, it is not clear whether the aforesaid land was actually used for agricultural purposes as contemplated in the definition of Urban Land . The assessee shall be entitled to relief subject to production of evidence towards agricultural use of the aforesaid land at Vadaj to the satisfaction of the AO. For this limited purpose, the matter is remanded back to the file of AO for necessary verification.

Summary

Issues:
1. Appeal against the order of the Commissioner of Wealth Tax (Appeals) confirming the chargeability of wealth-tax on certain parcels of land.
2. Exclusion of agricultural land from the definition of 'Urban Land' under the Wealth Tax Act, 1957.
3. Verification of agricultural use of the land for relief from wealth-tax.

Analysis:
The appeal was filed against the order of the Commissioner of Wealth Tax (Appeals) confirming the chargeability of wealth-tax on specific parcels of land. The assessee contended that the parcels of land in question, located at Surat and Vadaj, qualified as agricultural land and should be excluded from the definition of 'Urban Land' as per s.2(ea) of the Wealth Tax Act, 1957. The key issue was whether these lands fell within the purview of exempt assets under the Act. The Tribunal carefully reviewed the arguments presented by both parties and examined the relevant legal provisions.

The definition of 'Urban Land' under s.2(ea) of the Act, along with Explanation-1(b), was crucial in determining the chargeability of wealth-tax on the disputed parcels of land. The assessee claimed that the lands were used for agricultural purposes, thus falling within the exemption provided for agricultural land. The Tribunal noted the details from the purchase deeds of the lands and observed that the agricultural land at Surat was indeed held and cultivated for agricultural purposes. However, regarding the land at Vadaj, while the purchase deed indicated acquisition as agricultural land, the actual agricultural use was not definitively established.

In light of the evidence presented, the Tribunal decided to remand the matter back to the Assessing Officer (AO) for further verification specifically regarding the agricultural use of the land at Vadaj. The Tribunal emphasized that the assessee would be entitled to relief from wealth-tax only upon satisfactory evidence of agricultural use being provided to the AO. Consequently, the appeal of the assessee was allowed for statistical purposes, subject to the verification of agricultural use of the land at Vadaj.

In conclusion, the Tribunal's decision highlighted the importance of establishing the agricultural use of land to claim exemption from wealth-tax under the Act. The case was remanded for verification, underscoring the significance of providing conclusive evidence to support the claim of agricultural use for the purpose of tax relief.