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TMI Blog2018 (5) TMI 1495X X X X Extracts X X X X X X X X Extracts X X X X ..... truction which favors the assessee must be adopted. Appeal dismissed - decided against Revenue. - W.T.A. No. 01/Ahd/2014 - - - Dated:- 24-5-2018 - Shri Waseem Ahmed, Accountant Member And Shri Mahavir Prasad, Judicial Member Appellant by : Dr. Jayant Jhaveri, Sr. D.R. Respondent by : Ms. Arti N. Shah, A.R. ORDER Per Waseem Ahmed, Accountant Member The captioned appeal has been filed at the instance of the Revenue against the appellate order of the Commissioner of Wealth Tax(Appeals)- III, Ahmedabad [CWT(A) in short] vide appeal no. CIT(A)- III/587/DCWT.Cir.1/13-14 dated 22/11/2013 arising in the assessment order passed under s. 16(3) r.w.s. 17 of the Wealth Tax Act, 1961 (hereinafter referred to as the Act ) dated 20/12/2012 relevant to Assessment Year (AY) 2006-07. 2. The Revenue has raised the following grounds of appeal. The CIT(A) has erred in law and on fact in deleting the addition of ₹ 3.30 crores to Net Wealth despite the fact that the land owned by the assessee during the financial year was an asset as per the provisions of section 2(ea) of the W.T. Act,1957. 3. The solitary issue raised by the Revenue in this appeal is that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. A building under construction cannot be considered as asset for the purpose of section 2(ea) of the Wealth Tax Act. However, AO has rejected this contention of the appellant without assigning any reasons. 8. It has been held by Hon'ble High Court of Kerala in the case of Appollo Tyres, Hon'ble High Court of Karnataka in the case of Giridhar G Yadalam and Hon'ble High Court of Punjab Haryana in the case of Smt. Neena Jain that value of building under construction and the investment on construction is not to be included to the total wealth of an assessee. Respectfully following these decisions, I hold that AO is not justified in making addition of ₹ 3,30,00,032/-and the same is directed to be deleted. Ground No.1 of the appeal is thus allowed. Being aggrieved by the order of Ld. CWT(A) revenue is in second appeal before us. The Ld. DR before us submitted that the Urban Land is chargeable to Wealth Tax if it remains unused for the period of 2 years from the date of acquisition. 8. The Ld. DR further submitted that the building was under construction on such land therefore, the land can be identified separately for the purpose of charging the We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Ld. CWT(A) by observing that the building was under construction on such land. 15. It is undisputed fact that the assessee has incurred capital work-inprogress for ₹ 4,82,68,218/- only, on such land as evident from the audited balance sheet which is placed on page 18 of the paper book. The building on such land was not completed till 31st March, 2006 i.e. the year under consideration. Now the issue before us arises so as to whether the land on which building is under construction is liable for wealth tax under the provisions of law. In this regard, we note that the Urban Land subject to other conditions if remains unused for the period of 2 years from the date of acquisition is liable for the Wealth Tax. However, in the case on hand, we note that the building under construction has been shown on such land as capital work-in-progress and this fact has not been disputed by the lower authorities. Therefore, in our considered view, the land on which building is under construction seized from the chargeability of Wealth Tax under the Wealth Tax Law. In this connection, we find support and guidance from the judgment of Apollo Tyres Ltd. (supra) wherein, it has been held as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ban land, that is subject to tax under the definition of 'assets', generally covers only vacant land. In fact, under the exception clause 'the land occupied by any building which has been constructed with the approval of the appropriate authority' is exempt from the purview of tax. This provision makes it clear that when urban land is utilized for construction of a building with the approval of the prescribed authority, then the land ceases to be identifiable as an urban land. What the section contemplates is that if an illegal construction is made on an urban land, that is, construction without approval by the appropriate authority, then such land will still be treated as an urban land, no matter building is illegally constructed thereon. However, if a building is constructed with the approval of the prescribed authority, then such land goes out of the meaning of 'urban land' and what is assessable is obviously the building which in the instant case on completion fell within the exception clause. Once the land is utilized for construction purposes, it ceases to have its identity as vacant land and it cannot be independently valued and considering the value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Apollo Tyres (supra) has decided the impugned issue after considering the judgment of Karnataka High Court in the case of Giridhar G. Yadalam (supra). Therefore this case law relied by the ld. DR will be not extend any help to the Revenue. Besides the above, we also note that there was no judgment of the Jurisdictional High Court brought to our notice on the issue under consideration. Therefore the judgment of non-jurisdictional High Court favouring the assessee will be considered for adjudicating the issue on hand. In this regard, we find support and guidance from the judgment of Hon'ble Supreme Court, in the case of CIT v. Vegetables Products Ltd. [1973] 88 ITR 192 (SC), wherein the Hon'ble Supreme Court held that if two reasonable constructions of a taxing provision are possible then that construction which favors the assessee must be adopted. Therefore, by respectfully following the decision of Hon'ble Supreme Court, when divergent views are expressed by different judicial forums, we prefer to follow the views expressed by the Courts which are in favour of the assessee. We also note that the assessee has incorporated the land and the building in its books of a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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