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TMI Blog2019 (8) TMI 1092X X X X Extracts X X X X X X X X Extracts X X X X ..... he issue merely on the basis of A.Y. 1993-94 to 1995-96 without appreciating the fact that the Revenue's appeal is pending before the Hon'ble ITAT for the said assessment years". ii The appellant prays that the order of the CIT(A) on the above grounds be set aside and that of the Assessing Officer be restored. 3. The brief facts of the case are that in the year 1957, the assessee, then known as JK Chemicals Ltd., engaged in manufacturing of chemicals products entered into an agreement with Government of Maharashtra, through Collector, Thane for acquiring a piece of land to be used in its manufacturing of chemical product. Thereafter, the assessee has converted said land use into non-agricultural purpose, which was granted in June, 1957 with certain conditions. As per the terms and conditions of conversion order, out of total land area of 1,06,238 square yards, the assesee could use only 10,607 sq.yards (approximately 10%), for the purpose of its industrial activity, in accordance with the approved plan and the remaining land to the extent of 95,630 sq.yards was to be kept open to the sky. Thereafter, 'Sanad' was duly executed on 13/04/1957 and as per said Sanad, in pursu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uate or the land occupied by any building, which has been constructed with the approval of the appropriate authority. Since, the land has been utilized, as per the terms and conditions of 'Sanad' and also the land on which building was constructed with permission of appropriate authority cannot be considered as asset and also land on which construction of the building is not permissible under the law is also cannot be included in the definition of capital asset as defined u/s 2(ea) of the W.T.Act, 1957. In this regard, he relied upon the decision of Hon'ble Bombay High Court in the case of Prabhakar Keshav Kunde Vs CIT [(2010) 194 taxmann.com 306 (Bom)]. 6. The Ld. CWT(A), after considering relevant submissions of the assesee and also taken note of various evidences filed by the assessee, including copy of 'Sanad' and conversion order of the Collector, Thane, Came to the conclusion that the asset in question is covered by the exclusionary clause of the definition of urban land, which is given in clause (b) of the explanation to section 2 (ea) of the W.T.Act,1957. Therefore, the AO was incorrect in determination of value of the land, over and above, value determined by the assesee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts stated in original assessment order passed by AO, During the course of the hearing, the AR has also pointed Out that even in Assessment Year 2005-06, the AO has not referred the matter to DVO but the property was valued as per Schedule III which was amounting to Rs. 8,19,53,463/-. Without prejudice to the above, the AR also stated that had the value been determined as per Schedule III for Assessment Year 2004-05, then the value would have been Rs. 7,19,95,300/-. The AR has also pointed out that from Assessment Year 2006-07 onwards, the value as declared by the Appellant was accepted by the AO and there was no addition made. The AR has also given a complete chart of the assessments made from Assessment Year 1993-94 to 2015-16 which is reproduced as under:- WEALTH TAX STATUS A.Y. Value declared Value assessed Remarks 1993-94 45,10,350 2,28,94,000 C1T(A) has accepted value declared by the assessee vide its order dt.20.12.1999. Department is in appeal against above order in ITAT. 1994-95 56,37,920 2,71,96,000 CIT(A.) has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e AO adopted the value as per DVO. Thus, it is observed that there is no consistency in. the value adopted by the AO. In this regard, the AR has pointed out that the learned CIT(A) has decided the issue for Assessment Year 2005-06 against the assessee for which the appeal filed before ITAT is pending. The AR has also pointed out that the ClT(A) has decided the Appeal on 29.12.2009 for Assessment Year 2005-06, while the Bombay High Court has decided the similar issue in the case of Prabhakar Keshav Kunde vs. CIT reported in 194 ITR 306 on 30.08.2010. The AR has also submitted that the Bombay High Court decision came after the decision of CIT(A) had the above Bombay High Court decision been there before the CIT(A) for the Assessment Year 2005-06, then the decision would have been in favour of the Appellant The AR has further pointed out that while valuing the property, DVO has not considered the fact of Sanad land. Thereafter the value adopted by the AO on the basis of preliminary report of the DVO was completely unjustified. The AR has stated that the Appellant's case is fully covered by Bombay High Court in the case of Prabhakar Keshav Kunde stated herein above and also dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or special observe and carry the govt. may from time to time issue with respect to such markets, roads, parks and other amenities including the directions as regards the maintenance or use thereof or entry therein. 2. The Company shall, from time to time and all times permit the Government, or any officer or officers authorized by the Government in that behalf to inspect the said land and any. works of the Company upon the said land whether in the course of construction or otherwise, and shall furnish to the Government from time to time on demand correct statements of the monies expended by the Company', in the construction of the said work of the Company upon the said land. 3. In case of the said land is not used for the purpose for which it is acquired as hereinbefore recited or is used for any other purpose or in case the Managing Director commits a breach of the conditions hereof, the said Land together with the buildings if any erected thereon shall be liable to resumption by the Government subject however to the condition that the amount spent by the Company for the acquisition of the said land or its value as undeveloped land at the time of resumption whichever is les ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 5 0 86 3 0 18 0 86 4 0 13 0 86 5 0 21 0 86 6 0 4 12 115 1 1 11 4 115 2 0 34 8 115 3 0 12 0 115 4 0 15 8 115 5 0 22 12 115 6 0 9 0 115 7 0 29 8 115 8 0 10 S 115 9 0 36 0 116 I 2 17 0 116 2 0 37 0 116 3 1 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It is guaranteed upt o 31/7/1939. 4. The area and non-agricultural agreement is liable to alteration according to the actual area approved at by measurement by the land's Department and that any further order fixing such area and NA amendment consequent upon the final measurement shall form part of the Sanad and be binding on you. 5. You shall build on 10607 sq yards 36 sq ft by numbers 1 to 21 in the approved plane dated 11.6.1957(copy enclosed] and shall leave remaining area vis 95630 sq yards 64 sq ft open to the sky. 6- you shall not erupt any additional structure make addition or alteration in the building without obtaining permission of the undersigned. 7. You shall keep a 60 on the road wide and 10 along with the rent of the thereon. 8. You (c)hall execute Sanad 10 from within a period of two months from the date of actual commencement of the NA use. If you fail to appeal before the M of Town for executing the Sanad within the stipulated time. The non-agricultural permission shall be canceled. 9. That the NA use of the land must commence within a period of 6 months from the date of the permission. 10. You shall inform the M of Thana in writing through the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as reason to believe that any misrepresentation or concealment is made in regard to the sale price, the sale shall be voidable at the discretion of the State Government. Bombay High Court have decided identical case similar to us, in the case of Prabhakar Keshav Kunde V/s. CIT, Goa (2010), where it was held that "Where properties in question consists of a part of land on which construction is possible and part of land which is not so value of, latter type of land should be excluded while computing Wealth Tax of Assessee." From the above, ft is very clearly stated in the Sanad that the land has been, vested with the Appellant subject to the provisions of Bombay Land Revenue Code 1879 and various other rules framed thereunder from time to time. There are other terms and conditions mentioned in the Sanad itself. Therefore, ownership of the land is vested with the Appellant subject to various terms and conditions which will have effect on the fair market value of the property. It is also necessary to consider the Appellant's contention of unearned income- In terms of Rule 31 of the Maharashtra Land Revenue (Disposal of Government Lands] Rule, 1971 which deals with grant of land ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iscussion and following the Bombay High Court decision in the case of Prabhakar Keshav Kunde and also the Order of my predecessor for Assessment Year 1993-94 to 1995-96, I hold that the Appellant's case is covered by the exclusionary part of the definition of Urban Land which is given in Clause (b) of the explanation to section 2(ea) of the Act. In view of the above discussion and various restrictions placed on the land, the value shown by the Appellant as fair market value is just and proper. The fair market value determined by the valuer cannot be adopted in its place. Accordingly, the original value shown by the appellant is restored and the addition made by the AO is deleted. Therefore, this ground of appeal is allowed. 5. In the result, the appeal of the assesses is allowed, 7. The Ld. DR submitted that Ld. CIT(A) erred in taking the value of property at Rs. 93,44,364/-, as against the value of Rs. 23,07,00,998/- without considering the valuation report submitted by the DVO and deciding the issue merely on the basis of findings recorded for Assessment Year 1993-94 to 1995-96 without appreciating the fact that the revenue is in appeal before the ITAT for the said assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee has utilized land for the purpose of construction of factory and other buildings, as per the terms and conditions of acquisition, accordingly 10% of the land was used for setting up manufacturing facility and 90% of land has been kept open to the sky. In this factual back ground, if you examine, the arguments of the AR for the assesee, we find that the first arguments in light of 'Sanad' executed between the assessee and Government of Maharashtra and land in question was Sanad land and the assessee does not have absolute right over the land, therefore the same cannot be considered as asset, for the purpose of Wealth Tax Act, 1957, does not hold water, because as per the terms and conditions of 'Sanad', it was very clear that the assessee is owner of the land subject to certain conditions, therefore merely for the reason of imposition of certain conditions, at the time of acquisition of land, it cannot be said that, the assessee does not have any absolute right over the land and accordingly, the first argument of the AR of the assessee fails. 10. Coming to the second arguments of the assessee. The Ld. AR for the assessee referring to the definition of asset, as defined u/s 2(ea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a), where the Court held that land on which any construction is not allowed under any law for time being in force is not an asset within the meaning of section 2(ea) and consequently is not included in assessable wealth. Further, where property in question consists of a part of land on which construction is possible and part of land which is not so, value of second type of land should be excluded, while computing wealth of assesee. The Hon'ble Delhi High Court in the case of CWT vs DCM Ltd. (290 ITR 615) held that once land or any building there upon making it a combination of land and building is not a urban land, then it could not be an asset as defined u/s 2(ea) of W.T.Act, 1957. Further, the Hon'ble Punjab & Haryana High Court in the case of CWT vs R.K.Mehra (supra) had considered an identical issue and held that a farm land, on which construction was not permissible under municipal law, would not be includable in definition of urban land chargeable to wealth tax, even though assessee has constructed a farm house on said land. Therefore, we are of the considered view that the land in question does not come within definition of asset as defined u/s 2(ea) of the Act, becaus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt in the case of Radhasoami Satsang vs CIT (Supra), where the Hon'ble Supreme Court has reiterated the principles of consistency in income tax proceedings. Therefore, we are of the considered view that even on this count the AO was incorrect in determination of net wealth on the basis of report of DVO for the impugned assessment years. 12. In this view of the matter and respectfully following, the ratio of case laws discussed hereinabove, we are of the considered view that the AO was incorrect in determination of net wealth on the basis of DVO report. The Ld. CIT(A) after considering relevant facts has rightly deleted additions made by the AO towards valuation of property for the purpose of charging wealth tax. We do not find any error in the findings of ld.CIT(A) and hence , we are inclined to uphold the CIT(A) order and dismissed appeal filed by the revenue. 13. In the result, appeal of the revenue is dismissed. WTA.No. 05/Mum/2010 14. The assessee has raised the following grounds of appeal which are reproduced are as under:- 1) The learned CWT (A) has erred both in Law as well as on facts in assessing the value of Sanad land at Rs. 8,19,53,463/- under schedule in of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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