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TMI Blog2011 (5) TMI 379X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee. Surplus land - AO took the view that since the possession of the land in issue had not been taken (by the state government), the assessee continued to be its owner and hence, after calculating its value for the purpose of Wealth Tax, brought it to tax. - Held that:- The only reason the Tribunal had concluded that the land in issue was not amenable to tax was that with the passing of the notification under Section 10(3) of the ULCRA it ceased to be the assessees asset. That situation having been reversed, in our view the logical sequitur would be that Tribunals judgment on this aspect would have to be set aside. Accordingly, the question raised before us has to be answered in favour of the revenue and against the assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer has taken into account an area equivalent to 17138.48 sq. metres which consists of a land equivalent to 4158 sq. metres which is „contiguous and „appurtenant to the building(s) erected thereupon and an area of 12619.98 sq. metres which was declared surplus under Urban Land (Ceiling & Regulation) Act, 1976 (hereinafter, referred to as „ULCRA). 4.2 In so far as this question of law is concerned, we are required to deal with the land admeasuring 12619.98 sq. metres (hereinafter referred to as the land in issue). The said parcel of land in issue has been valued by the Assessing Officer at the rate of Rs.2200 per sq. metre, which was, the rate prescribed at the relevant point in time, by the Ministry of Works and Housing for calculation of Governments share in unearned increase. 4.3 The remaining area equivalent to 4518.5 sq. metre has been included by the Assessing Officer in valuation of the buildings constructed thereon as, this portion of land is „contiguous and „appurtenant to the building(s). While there is a certain amount of ambiguity (since the records filed before the authorities below have not been placed before us) as to whethe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be sustained. 7. Having heard the learned counsels for the parties, we are of the view that it may be relevant to briefly advert to the clauses contained in the lease as well as certain important facts which emerge from the record :- (i). First and foremost, the assessee has acquired leasehold interest in the land in issue by virtue of a perpetual lease deed. (ii). A certain portion of the land had already buildings erected thereon. (iii). Under clause 4 of the lease, the assessee was required to maintain the building erected on the land in issue, in good state and, in case the assessee decided to demolish the said buildings, it had to credit the sale proceeds in favour of the lessor. (iv). As per clause 6, the assessee could use the land in issue only for the purposes of running a club and could make no additions thereon without the approval of the lessor and that too only to make the premises „habitable as a club. (v). Under clause 7, on determination of the lease, the assessee is required to surrender to the lessor the premises and the buildings erected thereon including the land appurtenant.(vi). Importantly, under clause 8, the assessee cannot transfer or assign the lan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, which was, essentially a question of fact. Mrs. Bansal, on the other hand, sought to convey that the finding was perverse. 7.5 This line of argument, according to us, is not available to the revenue as no such question has been framed. In any event in the absence of document, we would go by the findings returned by the Tribunal while seeking to appreciate the scope, import and extent of the permission granted by the Lieutenant Governor. 7.6 To be noted a part of those relevant observations have already been extracted by us in paragraph 7.2 above. We, however, consider it appropriate to extract the remaining observations of the Tribunal completely and in continuum so that the reasoning put forth by the Tribunal is easily understood. "…The learned Departmental Representative also did not dispute that the land in question is subject to the various restrictive clauses under lease deed and a further restriction has been placed by the order of the Lieutenant Governor by which the assessee has been permitted to possess the land as long as it is used for the bonafide purposes of the club. Naturally, the permission is to the assessee club and not to any other club. Therefore, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and in issue except with the prior sanction of the lessor. The official rate which the Assessing Officer has applied in order to determine the value of the asset for the purposes of Wealth Tax, is based on a presumption that such a permission would be granted. Fair market value of an asset can be assessed by hypothetically assuming that there is a willing buyer and seller is available for an asset. The hypothesis must however end here. It could not have been further assumed that the lessor would grant permission for transfer. Therefore, in the in the circumstances which obtained in the instant case, it cannot be held that the Tribunals view that the assessees right in the land in issue should be valued at Rs.847/- is erroneous. The question of law is accordingly answered in favour of the assessee and against the revenue. Question No.(ii). 8. The brief facts which are relevant for the adjudication of the said question are as follows :- 8.1 The assessee at the relevant point in time was the owner of another piece of land situate in Village Gadaipur near Mehrauli. The said land had been purchased for the purposes of carving out one acre plots for each of its members. For this purpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... possession did not inhere any right, in the land in issue, in the assessee and hence, the value of land could not be included in the net wealth of the assessee. According to the Tribunal on acquisition, the only right which would accrue, in favour of the assessee, would be to seek compensation under ULCRA; though according to it even the said compensation could not be brought to tax as it was not an asset specified in section 40(3) of the Finance Act, 1983. Accordingly, the Tribunal directed the exclusion of the land valued in the sum of Rs.48,42,398/- from the net wealth of the assessee. 8.6 Before us, Mrs. Bansal submitted that this court would have to take into account a subsequent event which occurred after the Tribunal had passed the impugned judgment dated 21.10.1991. The event being: the repeal of ULCRA by Urban Land (Ceiling & Regulation) Repeal Act, 1999 ( in short, „Repeal Act). The Repeal Act was passed on 22.03.1999 w.e.f. 11.01.1999. It was contended that on account of the provisions of the Repeal Act, which did not save expressly or by implication a "vacant land" such as that of the assessee, in respect of which, only a notification under section 10(3) of ULCRA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not required to be taken note of by this court, while considering the orders passed by the wealth tax officer, while computing the net wealth of the assessee as on the valuation date." 9. In order to appreciate the submissions made by counsel for both parties it would be helpful if the provisions of the Repeal Act are adverted to hereinbelow: The Repeal Act was passed on 22.03.1999 w.e.f. 11.01.1999. 9.1 Sub-section 1(2) of the Repeal Act stipulates that, in the first instance, the provisions of the Act would apply to the whole of the states of Haryana and Punjab and to all Union Territories. The Act is also mandated to apply all other states which adopt the Act by resolutions passed in that behalf under clause (2) of Article 252 of the Constitution of India. It is not disputed before us that the provisions of the Repeal Act did not apply to Delhi at the relevant point in time. 9.2 Continuing with the narrative, Section 2 of the Repeal Act repeals ULCRA. The transactions which are saved are referred to in section 3 of the Repeal Act. 9.3 Section 3 opens with the words that the repeal of the principal act shall not affect (a) where vesting of any vacant land pursuant to a notif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d but possession has not been taken over. 9.5 Section 4 of the Repeal Act speaks of abatement of proceedings relating to any order made or purported to be made under ULCRA before the commencement of the Repeal Act which are pending before any court or Tribunal or authority. The proviso to Section 4 however makes it clear that the main provision of Section 4 qua abatement of proceedings, shall not apply to proceedings relating to Sections 11, 12, 13 and 14 of ULCRA with regard to land of which possession has already been taken. 9.6 Section 5 pertains to repeal and saving of the Urban Land (Ceiling & Regulation) Repeal Ordinance, 1999. This is a provision which repeals the ordinance which was a precursor to the Repeal Act, and thereby, saves the anything done or any action taken under the said ordinance, as if it had been done or action had been taken under the provisions of the Repeal Act. At this stage for the sake of convenience we wish to extract the provisions of Section 3 of the Repeal Act since it provides a clue as to what the Repeal Act intended to save. "3. (1) The repeal of the principal Act shall not affect (a) The vesting of any vacant land under sub-section (3) of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment year the transactions for those relevant years stood completed, cannot be accepted. The captioned appeals and references exemplify this fact. 9.8 The other submission of Mr Syali which is that if, one were to accept the contention of the revenue then it would amount to the Repeal Act operating retrospectively, is, in our view, flawed. The reason being that; it is not as if the Act operates retrospectively, it only obliterates all such inchoate rights and/or actions from the date of the Repeal Act coming into force except whose which are saved or transactions which are closed. In the view we have taken, it is quite clear that the Repeal Act did not save the transaction of the kind which involved the land in issue, i.e., in respect of land where only a notification under Section 10(3) had been issued. 9.9 Therefore, the Repeal Act quite clearly intended that the State Government would stand divested of its right in land in issue from the date of the Repeal Act coming into force. It cannot also be doubted that the assessment for the relevant assessment years are still at large. Therefore, if one were to take the circumstance of the State Government being divested of i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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