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TMI Blog2017 (6) TMI 978X X X X Extracts X X X X X X X X Extracts X X X X ..... in trade. Therefore, the assessee is liable to be assessed to the wealth tax. Insofar as the lands at Nellore is concerned, the same was purchased to establish Aqua Farm. As the water on the lands was not suitable for breeding fishes, the project had been given up. Therefore, the land is amenable to wealth tax. The aforesaid contention was decided by the appellate authority as well as the Tribunal on facts. Therefore, the liability of M/s.Balaji Industries Limited would continue against the M/s.Balajai Hotels and Enterprises Ltd. Learned counsel for the appellant would not raise any of the grounds which has already been discussed by the appellate Tribunal and in accordance with clause 9 and 10 of the scheme. Therefore, we are of the opinion that the said fact was considered by relying upon the relevant clause of the amalgamation scheme which was approved by the High Court of Andhra Pradesh. Therefore, no interference is required insofar as the aforesaid question of law raised by the appellant. We confirm the factual findings of the lower authorities. - Tax Case Appeal Nos. 1061 to 1064 of 2007 - - - Dated:- 18-4-2017 - S. Manikumar And D. Krishnakumar, JJ. For the Appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the rule applicable is clause (a) to Rule 8. The guideline value of the property was ascertained from the Sub-Registrar's Office, Madras Central and that the guideline value of the property per ground was ₹ 17,00,000/-. Accordingly, the value of the Mount Road Property was computed as ₹ 14,14,23,000/-. In so far as lands at Nellore is concerned, in view of proviso 3(v) to section 40 of the Finance Act, 1983, the unused land by the assessee for the purpose of construction of a hotel for a period of two years from the date of acquisition would be liable to wealth tax. The assessee had acquired the land during the previous year relevant to Assessment Year 1988-89 (i.e. 17.4.1986 to 30.06.1992). Therefore, this property would attract levy. Accordingly, the Assessing Officer determined the total tax payable as ₹ 14,85,990/- by Assessment Order dated 31.3.1991 for the assessment year 1991-92. Against this order, an appeal was preferred before the Commissioner of Income Tax (Appeals). By order dated 17.2.1999 in Appeal Nos.15,16,17 and 18 of 1997-98, the Commissioner of Income Tax (Appeals) allowed the claim of the assessee in respect of the lands at Nellore an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the business and that the property shown by the assessee are not assessable to Wealth Tax Act 1993 and further, it was submitted by the appellant that the Assessing Officer did not consider the appellant's claim that the property has to be valued as per Rule 3 of Schedule III to Wealth Tax Act. There is no justification by rejecting the appellant's claim for the Mount Road Property as application of Rule 3 would not give the true and correct value of the asset. The Assessing Officer ought to have seen that under Rule 8, an asset could be valued under Rule 20 only if the conditions laid down in Rule 8 are satisfied. Therefore, Rule 3 was not adopted by the Assessing Officer and determining the value of the property on the basis of guideline value is improper and the same is not acceptable one. Further, M/s. Balaji Industries Ltd., Chennai, was not in existence. Therefore, the assessment order passed against a non-existent entity is ab-intio void. In the appeal, various grounds were raised by the appellant. It has been held that the appellant had purchased the land in the year 1996 and the two year period was already over by the assessment year under consideration. On s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revious approval of the Deputy Commissioner, is of opinion that it is not practicable to apply the provisions of the said rule to such a case ; or (b) where the difference between the unbuilt area and the specified area exceeds twenty per cent, of the aggregate area ; or (c) where the property is constructed on leasehold land and the lease expires within a period not exceeding fifteen years from the relevant valuation date and the deed of lease does not give an option to the lessee for the renewal of the lease, and in any case referred to in Clause (a) or Clause (b) or Clause (c), the value of the property shall be determined in the manner laid down in Rule 20. 10. By taking into consideration the submission of the appellant and the relevant rules, the Commissioner of Income Tax has come to the conclusion and directed the Assessing Officer to apply Rule 8 of Schedule III for valuing the property. The other submission, with regard to valuation of lands at Nellore for the Assessment Years 1992-93 and 1993-94. These lands were purchased during the financial year 1987-88 to 1989-90. The lands were purchased in order to establish Aqua Farm. These lands were not suitabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not as stock in trade and hence, liable to pay wealth tax. The other contention in respect of the conclusion, the appellate Tribunal has confirmed the order passed by the Commissioner of Income Tax (Appeals). Therefore, challenging the said order, the present appeal has been filed on the above said question of law framed by this Court. 13. The property at Mount Road was purchased on 25.9.1986 from Sri Sathyasai Central Trust and the total cost incurred on the purchase of this property amounted to ₹ 4.56 crores. The total extent of the property is 83.19 grounds (1,99,657 sq.ft. The total built up area is 61891 sq.ft. The said property was purchased by the assessee/appellant for the purpose of productive use and the said asset was not assessable to wealth tax. As per proviso 3(v) to Section 40 of the Finance Act, 1983, if the land is unused for a period of two years from the date of acquisition, the said property is liable to wealth tax. In this case, the assessee had acquired the property on 25.9.1986 i.e., during the previous year relevant to Assessment Year 1988-89. Therefore, as per the above proviso, the property would attract levy of wealth tax. The Commissioner of I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellate authority and the Tribunal has come to the conclusion on factual aspects that the property at Mount Road was purchased in the year 1986 and the period of two years from the date of purchase was over during the relevant assessment year. Therefore, on examination of the Balance Sheet for the relevant assessment year, the property has been held as fixed asset and not stock in trade. Therefore, the assessee is liable to be assessed to the wealth tax. Insofar as the lands at Nellore is concerned, the same was purchased to establish Aqua Farm. As the water on the lands was not suitable for breeding fishes, the project had been given up. Therefore, the land is amenable to wealth tax. The aforesaid contention was decided by the appellate authority as well as the Tribunal on facts. Therefore, the liability of M/s.Balaji Industries Limited would continue against the M/s.Balajai Hotels and Enterprises Ltd. Learned counsel for the appellant would not raise any of the grounds which has already been discussed by the appellate Tribunal and in accordance with clause 9 and 10 of the scheme. Therefore, we are of the opinion that the said fact was considered by relying upon the relevant clau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acquisition or the cost of construction, as increased, in either case, by the cost of any improvement to the property, the cost of acquisition or, as the case may be, the cost of construction, as so increased, shall be taken to be the value of the property under this rule. 17. The guideline value fixed by the State Government for value of the property disputed by the appellant before the Court. Therefore, in the absence of any other evidence produced before the authority by the assessee, the authority has considered the guideline value fixed by the Commissioner of Income Tax and directed the Assessing Officer for valuation and directing the Assessing Officer to apply Rule 3. Therefore, that was also confirmed by the Tax Tribunal. The contention of the appellant for the valuation of the property which are not in accordance with the law cannot be accepted. In the absence of any documentary evidence produced before the appellate authority, there cannot be an acceptance of valuation as declared in the declaration in respect of the aforesaid properties. 18. In Marshall Sons and Co.(India) Ltd., vs. Income Tax Officer reported in 1997 Income Tax Reports 809 [Volume 223] wherein i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch was to stimulate investment in productive and non-productive assets and only specified assets were subject to wealth tax. On that premise, he emphasised that in each of the aforesaid clauses this objective was kept in the forefront. Qua Exception (I) he stressed that where land is classified as agricultural and used for agricultural purposes, it will not fall within the definition of urban land and is exempted from wealth tax. Agricultural land, although vacant, if put to agricultural use (i.e. productive) is exempt from wealth-tax. He argued that this exception is with reference to land which is vacant for the reason that construction is not permissible under any law. As the reason for non-construction of a building cannot be attributed to the assessee, an exception has been made on account of which it will not be considered as an asset and is exempted from wealth tax. 9. Mr. Jain further argued that in this very hue, exception (ii) also needed to be interpreted. His submission was that the word constructed is used in the context of exempting a land occupied by any building which is being constructed with the approval of appropriate authority . With the commencement o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the decision of this Court in the case of M. Nizamuden v.Chemplast Sanmar Limited and Others [2010] 4 SCC 240, wherein it is held that: It is well settled that if exception has been added to remedy the mischief or defect, it should be so construed that remedies the mischief and not in a manner which frustrates the very purpose. Purposive construction has often been employed to avoid a lacuna and to suppress the mischief and advance the remedy. It is again a settled rule that if the language used is capable of bearing more than one construction and if construction is employed that results in absurdity or anomaly, such construction has to be rejected and preference should be given to such a construction that brings it into harmony with its purpose and avoids absurdity or anomaly as it may always be presumed that while employing a particular language in the provision absurdity or anomaly was never intended. 12. Taking his argument further, Mr. Jain submitted that likewise, exception (iii) is with reference to unused land held by the assessee for industrial purposes. The exemption from wealth tax for such land is for a period of two years from the date of its acquisitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the land occupied by any building . The land cannot be treated to be occupied by a building where it is still under construction. If the contention of Mr. Jain is accepted, an assessee would become entitled to the benefit of the said clause, at that very moment, the commencement of construction even with construction the moment one brick is laid. It would be too far fetch, in such a situation, to say that the land stands occupied by a building that has been constructed thereon. Even Mr. Jain was candid in accepting that when the construction of building is still going on and is not completed, literally speaking, it cannot be said that the building has been constructed . It is for this reason that he wanted us to give the benefit of this provision even in such cases by reading the expression to mean the same as is being constructed . His submission was that the moment construction starts the urban land is put to productive use and that entitles the land from exemption of wealth-tax. This argument of giving so called purposive interpretation has to be rejected for more than one reasons. These are: (i) In taxing statute, it is the plain language of the provision that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be included as an asset for the purpose of giving extended meaning to it. Urban Land is defined in Explanation 1 Clause (b) to Section 2(e)(a). 19. The Kerala High Court as well as Madras High Court have been influenced by the arguments premised on purposeful construction which was the argument of Mr. Jain and has not been accepted by us. 20. In CWT v. Giridhar G.Yadalam [2010] 325 ITR 223 (Karn), Karnataka High Court has held as follows:- 6. We have to see as to whether the vacant land owned by the land owner is exempt for the purpose of Wealth Tax proceedings. 7. Section 2(ea) would define the term 'asset' and Urban land has been defined in Section 2(ea)(b). The said definition reads as under; 8. Urban land means land situate- (i) in any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, tow committee, or by any other name) or a cantonment board and which has a population of not less than ten thousand according to the last preceding census of which relevant figures have been published before the valuation date; or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epted then neither the owner nor the builder nor the occupant would pay any tax to the Government in terms of the Wealth Tax Act. In these circumstances, we are unable to accept that argument advanced by the learned counsel for the appellant. On the other hand, we would accept the reasonable argument of the learned Counsel for the department in the matter of the proper understanding of the word 'land occupied by any building which has been constructed', since that would fulfill the intention of legislature. 10. In fact, we have been provided with the order of the tribunal, passed on an earlier occasion, on which reliance is placed by the tribunal. We have also gone though the order in WTA 4/2003. A reading of the said order would show that the tribunal seems to have not properly considered the word 'constructed' in the said order. The tribunal seems to have been swayed away by the theory of openness of the land for he purpose of taxation. The tribunal has failed to notice the principle that each word in taxing statute has its own significance for the purpose of taxation. The word, land on which the building is constructed has not been properly appreciated cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he word 'house' for the purpose of Wealth Tax Act. The said case is of no assistance to the assessee since in the said case, the court was considering only the word 'house' in that case and not building construction as in the present case. Even otherwise, it is seen from the said case, the court was considering as to the house being habitable or not, as we see from the order itself. That judgment is of no assistance to the assessee. 13. AIR 66 SC 991 is a case dealing with Madhya Pradesh Abolition of Proprietary Rights Act. The Apex Court in para 11 noticed as to whether 'ottas' and 'chabutras' can be regarded as buildings. The court ruled that the word 'buildings' should therefore be given its literal meaning as something, which is built. Sri Bindra, learned Counsel in the said case contended that for a structure to be regarded as building it should have walls and a roof and in support of this contention he relied upon the decision in Moir v. Williams (1892)1 QB 264. In that case Lord Esher has observed that the term generally means all enclosures of brick and stone covered by a roof. But he has also made it clear that the meaning to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (MP), a Division Bench of the Madhya Pradesh High Court has held as follows:- 3. We have seen and perused the memo of appeal. What we find therein is that the issue raised in appeal relates to imposition of penalty on the assessee for the alleged concealment in the year in question. The penalty imposed by the Assessing Officer was set aside by the Commissioner of Income-tax (Appeals) and a latter order of the Commissioner of Income-tax (Appeals) was upheld by the Tribunal in an appeal filed by the Revenue. It is against this order of the Tribunal which resulted in upholding of the order of the Commissioner of Income-tax (Appeals) which is impugned by the Revenue in this appeal. 4. In our opinion, the Tribunal seems to be right in upholding the order of the Commissioner of Income-tax (Appeals). When the assessees surrendered their full income, there was no question of any concealment on their part. This was one of the factors which weighed in the mind of the Commissioner of Income-tax (Appeals) in setting aside the penalty imposed by the Assessing Officer. In substance, there was no deliberate intention to evade payment of lawful tax by indulging in concealment of true inc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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