Wealth Tax Officer, Ward-1(3), Visakhapatnam V. Anathakoti Raju Developers Private Limited, Visakhapatnam

WTA 18/VIZ/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 4013 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-05-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 29-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T S N MURTHY
• Keywords: Additional evidence; Corroborative evidences
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO , HONBLE JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , HONBLE ACCOUNTANT MEMBER W TA NO. 1 8 / VIZ /201 8 (ASST. YEAR : 20 0 7 - 0 8 ) WEALTH TAX OFFICER, WARD - 1(3), VISAKHAPATNAM. V S . M/S. ANANTHAKOTI RAJU DEVELOPERS (P) LTD., D.NO. 10 - 27 - 2/4, FACOR LAYOUT, KAILASHMETTA, WALTAIR UPLANDS, VISAKHAPATNAM. PAN NO. AAECA 5387 K (APPELLANT) (RESPONDENT) C.O.NO. 22/VIZ/2019 (ARISING OUT OF W TA NO. 18 / VIZ /201 8) (ASST. YEAR : 20 07 - 08 ) M/S. ANANTHAKOTI RAJU DEVELOPERS (P) LTD., D.NO. 10 - 27 - 2/4, FACOR LAYOUT, KAILASHMETTA, WALTAIR UPLANDS, VISAKHAPATNAM. VS. WEALTH TAX OFFICER, WARD - 1(3), VISAKHAPATNAM. PAN NO. AAECA 5387 K (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI G.V.N. HARI ADV OCATE . DEPARTMENT BY : SHRI T.S.N. MURTHY CIT DR DATE OF HEARING : 12 / 0 2 /201 9 . DATE OF PRONOUNCEMENT : 03 / 0 4 /201 9 . 2 W TA NO. 18/VIZ/2018 C.O.NO.22/VIZ/2019 ( M/S. ANANTHAKOTI RAJU DEVELOPERS (P) LTD. ) O R D E R PER V. DURGA RAO, JUDICIAL MEMBER TH IS APPEAL BY THE DEPARTMENT AND THE C.O. BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF WEALTH TAX (APPEALS) - 1 , VISAKHAPATNAM , DATED 05 /0 9 /201 8 FOR THE ASSESSMENT YEAR 200 7 - 0 8 . 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY, ENGAGED IN AGRICULTURAL ACTIVITIES AND ALSO ENTIT L ED TO PURSUE PURCHASE AND SALE OF IMMOVABLE PROPERTIES. THE ASSESSEE HAS NOT FILED ITS RETURN OF WEALTH FOR THE ASSESSMENT YEAR 2007 - 08 . A NOTICE UNDER SECTION 17(1) OF THE WEALTH TAX ACT, 1957 (FOR SHORT, THE ACT) WAS ISSUED ON 31/05/2010 BY THE DCIT, CIRCLE - 4(1), VISAKHAPATNAM . IN RESPONSE THERETO, THE ASSESSEE - COMPANY FILED ITS RETURN OF NET WEALTH ON 01/07/2010 DECLARING NET WEAL TH AT NIL AND CLAIMED EXEMPTION OF RS.3,39,63,215/ - . THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND AFTER FOLLOWING DUE PROCESS, ASSESSING OFFICER HAS DISALLOWED THE EXEMPTION CLAIMED BY THE ASSESSEE AND ADDED TO THE TAXABLE WEALTH OF RS. 4,96,687/ - . 3 . ON APPEAL BEFORE THE LD. CWT(A) , THE ASSESSEE HAS FILED A DETAILED SUBMISSION , WHICH IS REPRODUCED AS UNDER: - 3 W TA NO. 18/VIZ/2018 C.O.NO.22/VIZ/2019 ( M/S. ANANTHAKOTI RAJU DEVELOPERS (P) LTD. ) 1. NATURE OF LAND AS PER LAND RECORDS: IT IS AN UNDISPUTED FACT THAT THE IMPUGNED LAND IS AN AGRICULTURAL LAND AS PER LAND RECORDS. THE CERTIFICATES DT.17 10 - 2011 ISSUED BY THE TAHSILDAR ENDORSES THE FACT THAT THE IMPUGNED LAND IS AGRICULTURAL LAND' AS PER THE LAND RECORDS OF THE STATE GOVERNMENT. THE COPIES OF THE CERTIFICATES ISSUED BY THE TAHSILDAR, VISAKHAPATNAM RURAL ARE F I LED IN THE PAPER BOOK. 2. RELEVANCY OF AGRICULTURAL OPERATIONS: ONCE, THE IMPUGNED LAND IS HELD TO BE AN 'AGRICULTURAL LAND' AS PER RECORDS OF THE GOVERNMENT, IT IS IMMATERIAL WHETHER AGRICULTURAL OPERATIONS WERE ACTUALLY CARRIED OUT OR NOT. IN THIS REGARD, THE APPELLANT PLACES RELIANCE IN THE FOLLOWING DECISIONS: A) CIT VS. SMT.DEBBIE ALEMAO (2011) 331 ITR 59 (BO M ) B ) SAKUNTALA VEDACHALARN VS.VANITHA MANICKAVASAGARN (2014) 369 ITR 558 (MAD) 3. WHETHER CONSTRUCTION OF BUILDING IS PERMISSIBLE: THE AO SOUGHT TO MAKE O UT A DISTINCTION BETWEEN LANDS ON WHICH CONSTRUCTION OF BUILDINGS IS PROHIBITED AND LANDS ON WHICH CONSTRUCTION OF BUILDINGS IS POSSIBLE SUBJECT TO CERTAIN APPROVALS FOR CONVERSION OF THE NATURE OF LAND. SUCH A DISTINCTION IS NOWHERE MENTIONED IN THE PROVISIONS OF THE WEALTH TAX ACT, 1951. THE EXPRESSION USED IN THE ACT IS 'ANY LAND ON WH ICH CONSTRUCTION OF BUILDINGS IS NOT PERMISSIBLE ON ACCOUNT OF ANY LAW FOR THE TIME BEING IN FORCE'. THE LAND HELD BY THE APPELLANT FITS INTO THIS EXPRESSION IN AS MUCH AS CONSTRUCTION OF BUILDINGS IS NOT PERMISSIBLE ON AGRICULTURAL LANDS'. ONLY AFTER THE USAGE OF THE LAND IS CONVERTED INTO 'NON - AGRICULTURAL LANDS'. ONLY AFTER THE USAGE POSSIBLE/PERMISSIBLE. IN THE CASE OF THE APPELLANT NO SUCH APPLICATION WAS FILED FOR CONVERSION OF LAND INTO 'NON AGRICULTURAL LAND'. THE AO OBSERVED THAT AS PER THE REPORT OF THE TAHSILDAR, THE USAGE OF LAND WAS STATED TO BE NON - AGRICULTURAL AND HENCE CONSTRUCTION OF BUILDING IS PERMISSIBLE. IT IS ONE THING TO SAY THAT NO AGRICULTURAL OPERATIONS WERE CARRIED OUT IN A LAND WHICH IS OTHERWISE AGRICULTURAL LAND AS PER LAND RECO RDS AND IT IS COMPLETELY ANOTHER THING TO SAY THAT THE USAGE OF THE LAND IS ALTERED INTO NON - AGRICULTURAL USE'. MERE ABSENCE OF THE AGRICULTURAL OPERATIONS DOES NOT AUTOMATICALLY CONVERT AN AGRICULTURAL LAND INTO NON - AGRICULTURAL LAND. THE APPELLANT PLACE S RELIANCE IN THE CASE OF AMIN CHAND MEHTA VS. COMMISSIONER OF WEALTH TAX (2014) 227 CTR 150(HP). 4. REPORT ISSUED BY REMOTE SENSING INSTRUMENTS HYDERABAD : T H E APPELLANT SUBMITTED THE REPO RT ON STUDY OF VEGETATIVE COVER /LAND USE PATTERN CONDUCTED BY THE REMOTE SENSING INSTRUMENTS, HYDERABAD (NRSC) BEFORE THE LEARNED 4 W TA NO. 18/VIZ/2018 C.O.NO.22/VIZ/2019 ( M/S. ANANTHAKOTI RAJU DEVELOPERS (P) LTD. ) CIT(A) ON 30 - 07 - 2015. AS PER THIS REPORT, IT IS ASCERT AINED THAT AGRICULTURAL FIELDS/ CROPS EXISTS ON THE IMPUGNED LAND. THE INFORMATION U/S 133(6) OF THE ACT FROM THE SIGNATORY OF THE REPORT DT.30 - 07 - 2015. ACCORDINGLY, HE COMMENTED THAT THERE WERE NO AGRICULTURAL OPERATIONS DURING F.Y.2006 - 07. HOWEVER, THE FACT STATED IN THE SAID REPORT TO THE EFFECT THAT THERE WERE TREES ALONG THE BOUNDARIES OF THE SITE RIGHT SINCE 01 - 05 - 2004 IS NOT DISPUTED. FURTHER, W.R.T LAND AT KOMMADI, THE REPORT CLEARLY STATES THAT THERE ARE AGRICULTURAL OPERATIONS. FURTHER, IN A SIMILAR CASE, THE LEARNED CIT(A) - 2, GUNTUR HELD THAT IN THE ABSENCE OF ANY CONTRADICTING MATERIAL OR REPORT G ATHERED BY THE ASSESSING OFFICER THE VALIDITY OF THE REPORT ISSUED BY REMOTE SENSING INSTRUMENTS SHALL NOT BE QUESTIONED AND THE CONTENTS OF THE REPORT CAN BE RELIED UPON FOR ASCERTAINING THE NATURE OF THE LAND. A COPY OF ORDER OF THE LEARNED CIT(A) - 2,GUNT UR IS ENCLOSED HEREWITH. IN VIEW OF THE ABOVE, THE APPELLANT PRAYS THAT THE ASSESSING OFFICER MAY BE DIRECTED TO DELETE THE ADDITION MADE TO NET WORTH BY TREATING THE IMPUGNED LAND A S URBAN LAND. 5. A REMAND REPORT WAS CALLED FOR TO EXAMINE THE ADDITIONAL EVIDENCE IN THE FORM OF 'SATELLITE IMAGES AND REPORTS' SUBMITTED BY THE ASSESSEE AND THE REMAND REPORT WAS REPRODUCED HEREUNDER: 6. REMAND REPORT: IN ORDER TO VERIFY THE VERACITY OF APPELLANT'S CLAIM, INFORMATION WAS CALLED FOR FROM GENERAL MANAGER, REMO TE SENSING INSTRUMENTS, HYDERABAD AND THE GENERAL MANAGER REMOTE SENSING INSTRUMENTS, HYDERABAD INFORMED THAT THE SATELLITE IMAGES OF THESE TWO VILLAGES COULD NOT BE PROVIDED AS THE SAME ARE NOT AVAILABLE DURING THE F.Y.2006 - 07. SINCE, ADDITIONAL EVIDENCE OF THE ASSESSEE IS NOTHING BUT THE 'IMAGES AND REPORTS' ISSUED BY THE REMOTE SENSING INSTRUMENTS, HYDERABAD THE SAME CANNOT BE ACCEPTED AS ADDITIONAL EVIDENCE TO DECIDE THE ASSESSEE'S CLAIM. FURTHER, IN HIS SWORN STATEMENT , SHRI V. RAGHU RAMA RAJU HAS STATED THAT AGRICULTURAL ACTIVITIES WERE CONDUCTED IN THE LAND AT POTHINAMALLAYYAPALEM AND KOMMADI DURING THE F.Y. 2006 - 07. WHEN HE WAS ASKED TO FURNISH THE SUPPORTING E V IDENCES TO HIS C LAIM , NE H AS SUBMITTED ENDORSEMENT CERT IFICATE AND COPY OF ADANGAL ISSUED BY THE TAHSILDAR, VISAKHAPATNAM RURAL MANDAL, VISAKHAPATNAM DISTRICT. ON PERUSAL OF THESE EVIDENCES, IT IS OBSERVED THAT THEY ARE SHOWING OWNERSHIP AND TYPE OF LAND ONLY BUT NO SUPPORTING EVIDENCES SUBSTANTIATING HIS CLAI MS THAT THOSE LANDS WERE PUT TO USE FOR AGRICULTURAL ACTIVITIES. THE 5 W TA NO. 18/VIZ/2018 C.O.NO.22/VIZ/2019 ( M/S. ANANTHAKOTI RAJU DEVELOPERS (P) LTD. ) ADDITIONAL EVIDENCE PRODUCED BY THE ASSESSEE COMPANY IN THE FORM OF SATELLITE IMAGES OF THE PROPERTIES DO NOT SHOW ANY IMAGES RELATING TO THE PERIOD 2006 - 07. THE IMAGES OF THE LANDS HAVE NOT SHOWN THE TRACE OF PLANTATION OVER THE LAND RATHER REFLECTING THE IMAGE AS BARREN LAND OR LAND WITH CONSTRUCTIONS. HENCE, UNDER THESE CIRCUMSTANCES THE EVIDENCE PRODUCED BY THE ASSESSEE FOUND TO BE INSUFFICIENT TO PROVE HIS CLAIMS AND MAY NOT BE ACCEPT ED. 7. THE ASSESSEE HAS SUBMITTED HIS COMMENTS/ OBJECTIONS ON THE REMAND REPORT WHICH WAS REPRODUCED HEREUNDER: THE APPELLANT SUBMITTED THE REPORT ON STUDY OF VEGETATIVE COVER/ LAND USE PATTERN CONDUCTED BY THE REMOTE SENSING INSTRUMENTS, HYDERABAD (NRSC) BEFORE THE LEARNED CIT(A) ON 30 - 07 - 2015. AS PER THIS REPORT, IT IS ASCERTAINED THAT A GRICULTURAL FIELDS/ CROPS EXISTS ON THE IMPUGNED LAND. THE AG IN HIS REMAND REPORT DATED 20 - 09 - 2017 MENTIONED THAT HE ELICITED INFORMATION U/S.133(6) IF THE ACT FROM THE S IGNATORY OF THE REPORT DATED 30 - 07 - 2015. ACCORDINGLY, HE COMMENTED THAT THERE WERE NO AGRICULTURAL OPERATIONS DURING FY 2006 - 07. HOWEVER, THE FACT STATED IN THE SAID REPORT 01 - 05 - 2004 IS NOT DISPUTED. FURTHER, W.R.T LAND AT KOMMADI, THE REPORT CLEARLY STAT ES THAT THERE ARE AGRICULTURAL OPERATIONS. FURTHER, IN A SIMILAR CASE, THE LEARNED CIT(A) - 2, GUNTUR HELD THAT IN THE ABSENCE OF ANY CONTRADICTING MATERIAL OR REPORT GATHERED BY THE AO THE VALIDITY OF THE REPORT ISSUED BY THE REMOTE SENSING INSTRUMENTS SHAL L NOT BE QUESTIONED AND THE CONTENTS OF THE REPORT CAN BE RELIED UPON FOR ASCERTAINING THE NATURE OF THE LAND. A COPY OF THE ORDER OF THE LEARNED CIT(A) - 2, GUNTUR IS ENCLOSED HEREWITH. IN VIEW OF THE ABOVE, THE APPELLANT PRAYS THAT THE A O MAY BE DIRECTED T O DELETE THE ADDITION MADE TO NET WEALTH BY TREATING THE IMPUGNED LANDS AS URBAN LAND. 4 . THE LD. CWT(A) BY CONSIDERING THE DETAI L ED SUBMISSION AND ALSO THE COMMENTS ON REMAND REPORT HAS HELD THAT THE LANDS IN QUESTION ARE EXEMPTED FOR WEALTH TAX UNDER SECTION 2(EA) OF THE ACT, HENCE, NOT CHARGEABLE TO WEALTH TAX. THE RELEVANT PORTION OF THE LD. CWT(A)S ORDER IS EXTRACTED AS UNDER: - 6 W TA NO. 18/VIZ/2018 C.O.NO.22/VIZ/2019 ( M/S. ANANTHAKOTI RAJU DEVELOPERS (P) LTD. ) 8. I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE ASSESSEE AND HAVE ALSO GONE THROUGH THE ASSESSMENT ORDER, REMAND REPORT AND REBUTTAL. GROUND NO.1 AND 5 ARE COMMON IN NATURE AND DO NOT NEED ANY ADJUDICATION. GROUND NO. 2, 3 AND 4 R ELATE TO DISALLOWANCE OF EXEMPTIONS CLAIMED OF RS. 3,39,63,215/ - BY THE ASSESSEE ON LANDS AT POTHINAMA L LAYYAPALEM AND KOMMADI BY TREATING THEM AS URBAN LANDS. IN THIS CASE, THE ASSESSEE IS HO/DING THE AGRICULTURAL LANDS IN POTHINAMA L LAYAAPALEM VILLAGE, AND KOMMADI VILLAGE OF VIS A KHAPATNAM TOTAL ADMEASURING 7 .46 CENTS VALUED AT RS.3,39,63,215/ - . THE IMPUGNED PROPERTY WAS CLAIMED AS EXEMPT U/S. 2(EA) OF W.T ACT BY THE ASSESSEE. THE ASSESSEE HAS FURNISHED THE ENDORSEMENT OF THE TAHSILDAR, VISAKHAPATNAM RURAL THAT THE LANDS ARE ZEROITH DRY LANDS AS PER REVENUE RECORDS. THE CONTENTION OF ASSESSING OFFICER IS THAT, THE SAID LANDS ARE NON AGRICULTURAL LAND S BUT NO EVIDENCE BROUGHT ON RECORD THAT THE IMPUGNED LANDS WERE NOT AGRICULTURAL LANDS FURTHER THE AO HAS NOT BROUGHT ON RECORD ANY EVIDENCE TO SHOW THAT THE LANDS ARE CONVERTED AS NON AGRICULTURAL LANDS. THE A O C ONCLUDED THE ASSESSMENT, NOTING THAT TI NO LAW UNDER THE STATE ACT IS PROHIBITING THE ASSESSEE FOR CONSTRUCTION OF THE BUILDING IF THE ASSESSEE INTENDS TO DO SO AFTER CONVERTING THE SAID LAND TO HOME STEAD LAND BY PAYING NECESSARY FEE AS FIXED BY THE STATE GOVERNMENT. HOWEVER, NO BUILDING HAS B EEN CONSTRUCTED IN THE SAID LAND SO FAR. FROM THE CONCLUSION OF THE A. 0., IT IS DEAR THAT THE LANDS WERE NOT CONVERTED IN TO NON AGRICULTURAL LANDS. HENCE, I HOLD THAT THE ASSESSING OFFICER IS NOT CORRECT IN TREATING THE SAID LANDS AS URBAN LANDS. THE SAID LAND IS ENTITLED FOR EXEMPTION U/S.2(EA) OF WT ACT WHICH IS AMENDED RETROSPECTIVELY W.E. F . 0 1. 0 4.1993 READS AS UNDER: 'URBAN LAND' MEANS LAND SITUATED - (1) IN ANY AREA WHICH IS COMPRISED 2(AE)(B) URBAN LAND MEANS LAND SITUATED (1) 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, TOWN COMMITTEE, OR BY ANY OTHER NAME) OR A CANTONMENT BOARD AND WHICH HAS A POPULATION OF NOT LES S THAN TEN THOUSAND ACCORDING TO THE LAST PRECEDING CENSUS OF WHICH THE RELEVANT FIGURES HAVE BEEN PUBLISHED BEFORE THE VALUATION DATE OR (II) 7 W TA NO. 18/VIZ/2018 C.O.NO.22/VIZ/2019 ( M/S. ANANTHAKOTI RAJU DEVELOPERS (P) LTD. ) IN AN AREA WITHIN SUCH DISTANCE, DISTANCE, NOT BEING MORE THAN EIGHT KILOMETERS FROM THE LOCAL LIMITS OF ANY MUNI CIPALITY OR CANTONMENT BOARD REFERRED TO IN SUB - CLAUSE (1) URBANIZATION OF THAT AREA AND OTHER RELEVANT CONSIDERATIONS, SPECIFY IN THIS BEHALF BY NOTIFICATION IN THE OFFICIAL GAZETTE, BUT DOES NOT INCLUDE LAND CLASSIFIED AS AGRICULTURAL LAND IN THE RECORD OF THE GOVERNMENT AND USED FOR AGRICULTURAL PURPOSES OR LAND ON WHICH CONSTRUCTION OF A BUILDING IS NOT PERMISSIBLE UNDER ANY LAW FOR TIME BEING IN FORCE IN THE AREA IN WHICH SUCH LAND IS SITUATED OR THE LAND OCCUPIED BY ANY BUILDING WHICH HAS BEEN CONSTRU CTED WITH THE APPROVAL OF THE APPROPRIATE AUTHORITY OR ANY UNUSED LAND HELD BY THE ACQUISITION BY HIM OR ANY LAND HELD BY THE ASSESSEE AS STOCK IN TRADE FOR A PERIOD OFTEN YEARS FROM THE DATE OF ITS ACQUISITION BY HIM . IN THIS CASE THE ASSESSING OFFICER H AS NOT BROUGHT ON RECORD ANY EVIDENCE TO SHOW THAT THE LANDS ARE CONVERTED. ON SIMILAR FACTS, HON'BLE DELHI HIGH COURT IN THE CASE OF C OMMISSIONER OF WEALTH TAX VS D. C. M. LTD (2007) (290 ITR 615( DELHI), HON 'BLE PUNJAB AND HARYANA HUGH COURT IN THE CASE OF COMMISSIONER OF WEALTH TAX VS L T. GEN(RTD . ) R.K MEHTA REPORTED (201 0)(284 CTR 205), HON 'BLE HIGH COURT OF MADRAS IN THE CASE OF COMMISSIONER OF WEALTH TAX VS. E. UDAYAKUMAR 284 ITR 511 HELD THAT THE URBAN LAND ON WHICH CONSTRUCTION OF BUILDING IS NOT PERM ISSIBLE AND NO PERMISSION TILL DATE HAD BEEN GRANTED BY THE APPROPRIATE AUTHORITY, THE LANDS ARE EXCLUDED FROM THE DEFINITION OF URBAN LAND CHARGEABLE TO WEALTH TAX. IT IS ALSO HELD THAT AGRICULTURAL LANDS SIT UATED WITHIN THE LIMITS OF CITY CORPORATION ON WHICH NO CONSTRUCTION IS PUT UP IS NOT CHARGEABLE TO WEALTH TAX. THEREFORE, THE ASSESSEE CASE SQUARELY FALLS WITHIN THE DEFINITION OF AGRICULTURAL LANDS AS WELL AS THE AMENDED PROVISIONS OF WEALTH TAX ACT. ACCORDINGLY, I HOLD THAT THE LANDS IN QUESTION ARE EXEMPTED FOR WEALTH TAX U/S . 2(EA), HENCE NOT CHARGEABLE TO WEALTH TAX. 5. ON BEING AGGRIEVED, REVENUE CARRIED THE MATTER IN APPEAL BEFORE THIS TRIBUNAL. 6 . WHEN THIS APPEAL IS TAKEN UP FOR HEARING, LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ISSUE INVOLVED IN THIS APPEAL IS 8 W TA NO. 18/VIZ/2018 C.O.NO.22/VIZ/2019 ( M/S. ANANTHAKOTI RAJU DEVELOPERS (P) LTD. ) SQUARELY COVERED BY THE DECISION OF THE ITAT, VISAKHAPATNAM IN THE CASE OF SRI VEGESNA ANANTHA KOTI RAJU VS. DCWT (INT.TAXATION) IN WTA NOS. 32 TO 36/VIZ/2017 FOR THE ASSESSMENT YEARS 2008 - 09 TO 2012 - 13 BY ORDER DATED 21/02/ 2018 . 7 . ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDER PASSED BY THE ASSESSING OFFICER. 8 . WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATERIAL AVAILABLE ON RECORD AND ORDERS OF THE AUTHORITIES BELOW. 9. WE FIND THAT THE VERY SAME ISSUE HAS BEEN CONSIDERED BY T H E COORDINATE BENCH OF THE VISAKHAPATNAM TRIBUNAL IN THE CASE OF SRI VEGESNA ANANTHA KOTI RAJU (SUPRA) AND HELD THAT THE LANDS IN QUESTION ARE EXEMPTED FROM WEALTH TAX UNDER SECTION 2(EA) OF THE WEALTH TAX ACT, HENCE, NOT CHARGEABLE TO WEALTH TAX. FOR THE SAKE OF CONVENIENCE, THE RELEVANT PORTION OF THE ORDER IS EXTRACTED AS UNDER: - 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. THE ASSESSEE IS HOLDING THE AGRICULTURAL LANDS IN SURVEY NO.170/1 AND 188/1 ADMEASURING 1560 SQ.YDS AND 1754 SQ.YDS RESPECTIVELY VALUED AT RS.1,81,06,000/ - . THE IMPUGNED PROPERTY WAS CLAIMED AS EXEMPT U/S 2(EA) OF WEALTH TAX AC T BY THE ASSESSEE. THE ASSESSEE HAS FURNISHED THE LAND RECORDS IN THE FORM OF ADANGAL AND ARGUED THAT THE LANDS IN QUESTION WERE AGRICULTURAL LANDS AS PER GOVERNMENT RECORDS AND ALSO SUBMITTED THAT VARIOUS CROPS ARE GROWN IN THE AGRICULTURAL LAND. THE FA CT THE LANDS IN QUESTION WERE AGRICULTURAL LANDS WAS SUPPORTED BY THE REPORT OF RSI, AN ISO COMPANY INDEPENDENT SURVEYOR. THE ASSESSEE ALSO FURNISHED THE TENANCY AGREEMENT FROM G.MALLESU FOR PAYMENT OF 9 W TA NO. 18/VIZ/2018 C.O.NO.22/VIZ/2019 ( M/S. ANANTHAKOTI RAJU DEVELOPERS (P) LTD. ) RS.4,000 PER ANNUM, PER ACRE DATED 22.02.2014 WHICH W AS A NOTARISE D AFFIDAVIT. THOUGH THE LD.AO AND THE CWT(A) PLACED HEAVY RELIANCE ON THE REPORT GIVEN BY TAHSILDAR, VISAKHAPATNAM (RURAL) FOR TREATING THE LANDS IN QUESTION AS NON AGRICULTURAL LANDS, THE TAHSILDAR VISAKHAPATNAM HAS SUBMITTED REPORT ON 25.0 3.2015 ON THE BASIS OF REPORT SUBMITTED BY THE FIELD STAFF DATED 20.03.2015, BUT NOT MADE ANY PERSONAL INSPECTION ON HIS OWN ON THE IMPUGNED LANDS. THE REPORT OF THE FIELD STAFF WAS ALSO NOT FURNISHED. THE LD.TAHSILDAR EXPRESSED OPINION OF NON AGRICULTUR AL LAND SINCE THE LAND PARTICULARS ARE RECORDED IN SQ.YDS., BUT NOT ON ANY FACTUAL FINDINGS. THE REPORT OF THE LD. TAHSILDAR CANNOT BE TAKEN AS FACTUAL REPORT AND SUFFERING FROM MANY DEFECTS SUCH AS NOT MAKING ANY PERSONAL INSPECTION OF THE LAND BY HIMSEL F AND NOT CONDUCTING ANY ENQUIRIES AND THE REPLY IS BASED ON FIELD INSPECTION REPORT OF THE STAFF. THE RELEVANT A.YS ARE 2008 - 09 TO 2012 - 13 RELATING TO THE F.Y. 2007 - 08 TO 2011 - 12, BUT INSPECTION WAS CONDUCTED ON 20.03.2015 AND THE TAHSILDAR HAS NOT GIVEN ANY BASIS FOR COMING TO CONCLUSION THAT NO AGRICULTURAL ACTIVITIES WERE CONDUCTED IN THE SAID LANDS. IT APPEARS THAT NEITHER THE LD.TAHSILDAR NOR THE FIELD STAFF HAVE CONDUCTED ANY ENQUIRIES REGARDING THE FACTUAL POSITION. SINCE THE ADANGAL IS A REVENUE R ECORD AND THE ASSESSEE HAS FILED AFFIDAVITS FROM THE TENANT SUPPORTED BY REMOTE SENSING INSTRUMENTS REPORT WE ARE UNABLE TO ACCEPT THE AOS CONTENTION. IN THIS CASE, NEITHER THE TAHSILDAR NOR THE AO HIMSELF HAS INSPECTED THE LAND. THE LAND RECORDS CLEARLY SHOW THAT AS PER THE GOVERNMENT RECORDS, THE LANDS ARE AGRICULTURAL LANDS. THE SALE DEEDS ALSO SUBSTANTIATE THAT THE LANDS IN QUESTION WERE AGRICULTURAL LANDS. THERE IS NO OTHER EVIDENCE BROUGHT ON RECORD TO CONTROVERT THAT THE IMPUGNED LANDS WERE NOT A GRICULTURAL LANDS. THEREFORE, WE ARE UNABLE TO UPHOLD THE CONTENTION OF THE LOWER AUTHORITIES THAT THE LANDS ARE NON AGRICULTURAL LANDS AND ACCORDINGLY HOLD THAT THE LANDS ARE AGRICULTURAL LANDS AND ENTITLED FOR EXEMPTION U/S 2(EA) OF WT ACT. FURTHER, SE CTION 2(EA)(B) WAS AMENDED RETROSPECTIVELY W.E.F. 01.04.1993 AS PER FINANCE ACT, 2013 AS PER WHICH THE LANDS ON WHICH CONSTRUCTION OF BUILDING IS NOT PERMISSIBLE ARE EXCLUDED FROM THE DEFINITION OF URBAN LAND. FOR READY REFERENCE, WE EXTRACT RELEVANT SECT ION 2(EA)(B) OF I.T.ACT WHICH READS AS UNDER : 6. MR. VISHAL MOHAN, ADVOCATE, FOR THE APPELLANT HAS DRAWN THE ATTENTION OF THIS COURT TO THE AMENDMENT CARRIED OUT IN SECTION 2 (EA)(B) RETROSPECTIVELY W.E.F 1.4.1993, AS PER THE FINANCE ACT, 2013. IT RE ADS AS UNDER: 10 W TA NO. 18/VIZ/2018 C.O.NO.22/VIZ/2019 ( M/S. ANANTHAKOTI RAJU DEVELOPERS (P) LTD. ) '2 (EA) ( B). 'URBAN LAND' MEANS L AND 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, TOWN 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 THE RELEVANT FIGURES HAVE BEEN PUBLISHED BEFORE THE VALUATION DATE ; OR (II) IN ANY AREA WITHIN SUCH DISTANCE, NOT BEING MORE THAN EIGHT KILOMETERS FROM THE LOCAL LIMITS OF ANY MUNICIPALITY OR CANTONMENT BOARD REFERRED TO IN SUB - CLAUSE '(1), AS THE CENTRAL GOVERNMENT MAY, HAVING REGARD T O THE EXTENT OF, AND SCOPE FOR, URBANIZATION OF THAT AREA AND OTHER, RELEVANT CONSIDERATIONS, SPECIFY IN THIS BEHALF BY NOTIFICATION IN THE OFFICIAL GAZETTE, BUT DOES NOT INCLUDE LAND CLASSIFIED AS AGRICULTURAL L AND I N THE RECORDS OF THE G OVERNMENTAND USED FOR AG RICULTURAL PURPOSES OR LAND ON WHICH CONSTRUCTION OF A BUILDING IS NOT PERMISSIBLE UNDER ANY LAW FOR TIME BEING IN FORCE IN THE AREA IN WHICH SUCH LAND IS SITUATED OR THE LAND OCCUPIED BY ANY BUILDING WHICH HAS BEEN CONSTRUCTED WITH THE APPROVAL OF THE APPROPRIATE AUTHORITY OR ANY UNUSED LAND HELD BY THE ASSESSEE FOR INDUSTR IAL PURPOSES FOR A PERIOD OF TWO YEARS FROM THE DATE OF ITS ACQUISITION BY HIM OR ANY LAND HELD BY THE ASSESSEE AS STOCK - IN - TRADE FOR A PERIOD OF TEN YEARS FROM THE DATE OF ITS ACQUISITION BY HIM. 7. IN THE INSTANT CASE, THE AO HAS NOT BROUGHT ON RECORD A NY EVIDENCE TO SHOW THAT THE LANDS ARE CONVERTED. ONCE THE LANDS ARE NOT CONVERTED AS NON AGRICULTURAL LANDS, CONSTRUCTION OF BUILDING IS NOT PERMISSIBLE. HONBLE DELHI HIGH COURT IN THE CASE OF COMMISSIONER OF WEALTH TAX VS. D.C.M.LTD. (2007) [290 ITR 6 15(DELHI)] HELD THAT THE URBAN LAND ON WHICH CONSTRUCTION OF BUILDING IS NOT PERMISSIBLE AND NO PERMISSION TILL DATE HAD BEEN GRANTED BY THE APPROPRIATE AUTHORITY, THE LANDS ARE EXCLUDED FROM THE DEFINITION OF URBAN LAND CHARGEABLE TO WEALTH TAX. FOR READ Y REFERENCE, WE EXTRACT THE RELEVANT PARAGRAPH OF THE ORDER OF THE DELHI HIGH COURT IN PARA NO.6 WHICH READS AS UNDER: 6. THE PROVISIONS UNDE RL INED, ITALICIS ED IN PRINT, BY US IN THE ABOVE PROVISION WERE INSER T ED B Y THE FINANCE ACT, 1993 AND MADE EFFECTIVE FROM 1ST APRIL, 1994. WE ARE DEALING WITH THE RELEVANT ASSESSMENT YEAR FOR 1993 - 94. ON THE BARE READING OF THE ABOVE PROVISION , IT IS CL EAR THAT URBAN LAND WOULD NOT INCLUDE A LAND, ON WHICH CONSTRUCTION OF A BU IL DING I S NOT PERMISSIBLE UND ER ANY LAW FOR THE TIME BEING IN FARCE IN THE AREA WHERE LAND IS SITUATED, OR THE LAND OCCUPIED BY ANY BUILDING WHICH HAS BEEN CONSTRUCTED WITH THE APPROVAL OF THE APPROPRIATE AUTHORITY OR I N AN Y UNUSED LAND HELD BY THE ASSESSEE FOR AN INDUSTRIAL PURPOSE FOR A P ERIOD OF TWO YEARS FROM THE DATE OF ITS ACQUISITION . IT IS AN ADMITTED CASE BEFORE US THAT THE ASSES S E E D OES NOT CLAIM BENEFIT OF THE THIRD CLAUSE OF THE CATEGORY SPECIFIED IN THE PROVISIONS . THE ASSESSEE WOULD OBVIOUSLY HAVE ADVANTAGE OF THE LAND, BEING N OT INCLUDED AS AN URBAN LAND BECAUSE NO CONSTRUCTION AT THE RELE VANT - TI ME WAS PERMISSIBLE ON THE LAND IN QUESTION. IN ALTERNATIVE, THE BUILDING WHICH HAS BEEN CONS TRUCTED, IF AT ALL, WITH THE APPROVAL O F THE APPROPRIATE AUTHORITIES. I N MAXIM, GENERALIAVERB ASUNT - GENERALITERINTE LLIGEN DA I T WOULD BE A HELPFUL PRECEPT TO I NTERPRETATION OF THE PROV IS IONS WHICH USED WORDS OF GENERAL NATURE AND DESPITE THE FACT THAT IT RELATES TO LAW OF REVENUE W OULD HAVETO BE C ONST RUED GENERALLY. THE INTENTION OF THE LEGISLATURE APPEARS TO BE THAT LAND WHICH F AL LS WITHIN THE EXCEPTION AF ORE REFERRED WOULD HAVE TO BE EXC LUDED FR O M THE A MBIT AND SCOPE OF THE EX PRESSION URBAN LAND'. ONCE T HE LAND OR ANY BUILDING THEREU PO N MAKING IT A COMBINATION OF LA ND AND BUILDING IS NOT A N URBAN LAND, THEN IT COULD NOT BE AN ASSET AS DEFINED UNDER S. 2(EA) OR THE ACT. THE RESULT THEREOF WOULD BE NOT TO TREAT THE SAME AS NET WEALTH OF A N ASSESSEE FOR THE PURPOSES OF THE PROVISIONS OF WT ACT. 11 W TA NO. 18/VIZ/2018 C.O.NO.22/VIZ/2019 ( M/S. ANANTHAKOTI RAJU DEVELOPERS (P) LTD. ) THE FIRST THE WT ACT. THE FIRST APPELLATE AUTHORITY HAD PROCEEDED ON THE ASSUMPTION THAT NOW ORDERS OF SUPREME COURT DT . 1ST MAY, 1991, QUA REDEVELOPMEN T HAD BEEN PERMITTED OF THE MILL AREA TO FLATTED FACTORY COMPLEX AND GROUP HOUSING COMPLEX . LEAVE WAS ALSO GRANTED TO DEMOLISH THE EXISTING BUILDING. IT IS NOT IN DISPUTE BEFORE US THAT TILL DATE NO PERMISSION/APPROVAL HAS BEEN GRANTED BY THE A PPROPRIATE AUTHORITY TO THE ASS SE SSEE TO RAISE THE BUILDING I N CONSONANCE WITH THE PLANS AND AS SUCH TH E OLD STRUCTURE EXISTING IS NOT IN CONFORMITY , WITH L AW AND HAD NOT BEEN RAISED WITH THE LEAVE OF ANY AUTHO RI TY. IN OTHER WORDS, ON THE LAND I N QUESTION, NO CONSTRUCTION WAS PERMITTED AND THE AUTHORITIES CONCERNED HAVE NOT GRANTED ITS APPROVAL SO FAR FOR R AISING CONSTRUCTION ON THAT LAND IN O THER OF THESE CASES, THE LAND WOULD STAND E XCLUDED FROM THE DEFINITION OF URBAN LAND' CHARGEABLE TO WEALTH - TAX. 8. SIMILAR VIEW WAS EXPRESSED BY THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF COMMISSIONER OF WE ALTH TAX VS. LT.GEN.(RETD.) R.K.MEHRA REPORTED (2010) [284 CTR 205]. HONBLE HIGH COURT OF MADRAS IN THE CASE OF COMMISSIONER OF WEALTH TAX VS. E.UDAYAKUMAR 284 ITR 511 HELD THAT AGRICULTURAL LANDS SITUATED WITHIN THE LIMITS OF CITY CORPORATION ON WHICH NO CONSTRUCTION IS PUT UP IS NOT CHARGEABLE TO WEALTH TAX. THEREFORE, THE ASSESSEES CASE SQUARELY FALLS WITHIN THE DEFINITION OF AGRICULTURAL LAND AS WELL AS THE AMENDED PROVISIONS OF WEALTH TAX ACT, WHERE CONSTRUCTION IS NOT PERMISSIBLE. ACCORDINGLY WE H OLD THAT THE LANDS IN QUESTION ARE EXEMPTED FOR WEALTH TAX U/S 2(EA), HENCE NOT CHARGEABLE TO WEALTH TAX. WE ARE UNABLE TO SUSTAIN THE ORDERS OF THE LOWER AUTHORITIES AND AL LOW THE APPEAL OF THE ASSESSEE. 10 . T HEREFORE RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF SRI VEGESNA ANANTHA KOTI RAJU (SUPRA), WE FIND NO REASON TO INTERFERE WITH THE ORDER PASSED BY THE LD. CW T(A). THUS, THIS APPEAL FILED BY THE REVENUE IS D ISMISSED. 11. SO FAR AS CROSS OBJECTION FILED BY THE ASSESSEE IS CONCERNED, IT IS ONLY SUPPORTIVE TO THE ORDER OF THE LD. CWT(A). IN VIEW OF OUR DECISION ABOVE, THE CROSS OBJECTION FILED BY THE ASSESSEE HAS BECOME INFRUCTUOUS AND IS DISMISSED ACCORDINGLY. 12 W TA NO. 18/VIZ/2018 C.O.NO.22/VIZ/2019 ( M/S. ANANTHAKOTI RAJU DEVELOPERS (P) LTD. ) 1 2 . IN THE RESULT, APPEAL FILED BY THE REVENUE AND THE CROSS OBJECTION FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON TH IS 0 3 R D DAY OF APRIL , 201 9 . S D / - S D / - ( D.S. SUNDER SINGH ) ( V. DURGA RAO ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 0 3 R D APRIL , 201 9 . VR/ - COPY TO: 1. THE ASSESSEE - M/S. ANANTHAKOTI RAJU DEVELOPERS (P) LTD., D.NO. 10 - 27 - 2/4, FACOR LAYOUT, KAILASHMETTA, WALTAIR UPLANDS, VISAKHAPATNAM. 2. THE REVENUE WEALTH TAX OFFICER, WARD - 1(3), VISAKHAPATNAM. 3. THE CIT - 1, VISAKHAPATNAM. 4. THE CW T(A) - 1, VISAKHAPATNAM. 5. THE D.R . , VISAKHAPATNAM. 6. GUARD FILE. BY ORDER (VUKKEM RAMBABU) SR. PRIVATE SECRETARY, ITAT, VISAKHAPATNAM.