2018 (9) TMI 1567 - AT - Wealth-tax

Validity of re-opening the assessments of wealth - 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 - land is situated within 8 Km from BBMP by following Straight Line method (SLM) for measurement of distance - Held that - We find that the said issue is covered in favour of the assessee by decision of the co-ordinate bench of this Tribunal in the aforesaid two assessees cases, along with other co-owners in which the Tribunal held that BIAPPA does not qualify to be an authority and therefore, the said lands are agricultural lands and not urban land or capital assets as canvassed by Revenue. Consequently, ground of Revenue s appeal is dismissed. Whether the distance has to be considered as the crow flies i.e the distance has to be calculated aerially and not by road? - Held that - 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 year 2007-08 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, ground No.2 raised Revenue is dismissed. The said lands in question are not urban lands but agricultural lands and hence not exigible to wealth-tax. Consequently, Revenue s appeals are dismissed. See assessee s own case 2015 (11) TMI 951 - ITAT BANGLORE . - Decided in favour of assessee

Summary

Issues Involved:
1. Validity of re-opening assessments under Section 17 of the Wealth-tax Act.
2. Classification of lands as 'urban land' within the meaning of Explanation 1(b) to Section 2(ea) of the Wealth-tax Act.
3. Measurement of distance from BBMP limits for determining 'urban land'.
4. Status of BIAPPA as a local authority akin to a Municipality or Cantonment Board.

Detailed Analysis:

1. Validity of Re-opening Assessments under Section 17 of the Wealth-tax Act:
The assessees contested the re-opening of assessments for the year 2007-08, arguing that the mandatory requirements to assume jurisdiction under Section 17 were not met, including the lack of sanction from the Joint Commissioner of Wealth Tax. However, since the Tribunal held that the lands in question were not 'urban land' and thus not subject to wealth-tax, the issue of jurisdiction became academic and was not adjudicated further.

2. Classification of Lands as 'Urban Land':
The assessees argued that the lands situated at Akkelenahalli-Mallenahalli villages did not fall under the definition of 'urban land' as per Explanation 1(b) to Section 2(ea) of the Wealth-tax Act because they were situated 11 kilometers away from BBMP limits. The Tribunal referred to its previous decision in the assessees' own case for the assessment year 2005-06, where it was held that the lands were agricultural and did not partake the character of 'urban land'. Consequently, the Tribunal upheld the CIT(A)'s decision that the lands were not 'urban land' and thus not subject to wealth-tax.

3. Measurement of Distance from BBMP Limits:
The Revenue contended that the distance of 8 kilometers from BBMP limits should be measured aerially (as the crow flies) rather than by road, citing the substituted provisions of sub-clause (b) of clause (iii) of Section 2(14) of the Income-tax Act, 1961, effective from 01/04/2014. The Tribunal rejected this argument, stating that the substituted provisions were prospective and applicable only from the assessment year 2014-15 onwards. The Tribunal emphasized that for the assessment year 2007-08, the distance should be measured by road. This view was supported by the Hon'ble Apex Court's decision in Vatika Township Pvt. Ltd. and the case of CIT vs. Satinder Pal Singh, which held that urbanization should be measured by approach roads rather than aerial distance.

4. Status of BIAPPA as a Local Authority:
The AO had argued that BIAPPA was an authority akin to a Municipality or Cantonment Board, and thus the lands fell within the definition of 'urban land'. However, the Tribunal referred to its previous decision in the case of one of the co-owners, Shri M.R. Seetharam, where it was held that BIAPPA did not qualify as an authority. Consequently, the Tribunal dismissed the Revenue's contention, holding that the lands were agricultural and not 'urban land'.

Conclusion:
The Tribunal dismissed the Revenue's appeals, upholding the CIT(A)'s orders that the lands in question were not 'urban land' and thus not subject to wealth-tax. The assessees' cross-objections regarding the jurisdictional issue were also dismissed as academic and infructuous. The decision was pronounced in the open court on 17th August 2018.