2021 (7) TMI 50 - AT - Wealth-tax

Wealth tax assessment - AO treated the lands situated at Dundigal, Bowrampet and Ravada villages as urban lands chargeable to wealth tax - HELD THAT - We are of the view that once the lands are declared by the govt in its records as agricultural lands, the CWT(A) finding that the assessee failed to produce any evidence that the same are put to use for agricultural purposes is contrary to the law. The assessee has received subsidy announced by the Andhra Govt, which was directly credited into his bank account. We, therefore, set aside the order of CIT(A) and direct the AO to treat the same as agricultural lands. Accordingly, the grounds Nos. 1 to 4 raised by the assessee on this issue are allowed. AO denied exemption u/s 2(ea)(i)(4) of the Act in respect of the residential flat at Banjara Hills - revenue authorities held that the property was let out for a period of two months during the previous year relevant to impugned AY, therefore, the assessee is not eligible to claim exemption u/s 2(ea)(i)(4) - As argued the said flat was purchased by the assessee during the month of September, 2006, the question of holding the property for more than 300 days does not arise and hence, the same should be considered as an exempted asset - We are of the view that since the assessee has purchased the property in the month of September, 2006, the question of holding the property for more than 300 days does not arise and, we direct the AO to consider the said property as exempted asset. Accordingly, the ground no. 5 raised by the assessee on this issue is allowed.

Summary

Issues Involved:
Appeals against CWT(A) orders for AY 2009-10 under Wealth Tax Act, 1957 involving sections 16(3) and 17.

Analysis:

Issue 1: Classification of Lands as Urban or Agricultural
The AO treated lands at Dundigal, Bowrampet, and Ravada villages as urban lands chargeable to wealth tax, denying exemption. The assessee contended that these lands were purely agricultural, supported by revenue records and certificates. The ITAT held that once lands are classified as agricultural in government records, fulfilling the first condition, they should be considered agricultural unless evidence shows otherwise. The ITAT found the assessee's evidence, including subsidies and bank statements, sufficient to prove agricultural use, overturning the CWT(A) decision. Grounds 1 to 4 in favor of the assessee were allowed.

Issue 2: Exemption for Residential Flat
The revenue authorities denied exemption u/s 2(ea)(i)(4) for a residential flat in Banjara Hills, stating it was let out for two months. The assessee argued that the property was purchased in September 2006, making the 300-day holding period irrelevant. The ITAT agreed with the assessee, directing the AO to consider the flat as an exempted asset. Ground 5 in favor of the assessee was allowed.

Conclusion:
Both appeals were allowed based on the above decisions, with the ITAT directing the AO to treat the lands as agricultural and the flat as an exempted asset. The ITAT decision in AY 2007-08 was applied to AY 2008-09 due to similar facts and grounds. The common order was pronounced on 29th June 2021 by the ITAT Hyderabad.