IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD B BENCH

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD B BENCH Before: Shri D.K. Tyagi, Judicial Member and Shri A. Mohan Alankamony, Accountant Member W.T.A. No.28/Ahd/2009 A. Y. 2000-01 Shri Vijaybhai H. Shah C/o Shah Enterprise, Dena Bank Building, Pritamnagar, Ahmedabad PAN-ADFPS0868J Appellant Vs. The Dy. Commissioner of Wealth Tax, Circle-9 Ahmedabad Respondent Department by : Shri B.K.S. Pandya, CIT- D.R. Assessee by : Shri M.G. Patel, A.R. Date of hearing : 04.09.2012 Date of pronouncement : 21.09.2012 आद श/ORDER PER : D.K. TYAGI, JUDICIAL MEMBER This is assessee s appeal against the order of Ld.CWT(A)-XV, Ahmedabad dated 18 th June, 2009. 2. At the time of hearing, only ground No.2 was pressed by the assessee which reads as under:- The ld. CWT(A)-XV, Ahmedabad has erred in law as well as on facts of the case by confirming the additions made by the ld. A.O. holding that the lands situated at village Ambali, Vejalpur and Makarba are urban lands and cannot be considered as agricultural lands and accordingly, making addition of Rs.1,21,78,250/-, Rs.2,32,50,850/- and Rs.1,08,78,300/- on the basis of estimated valuation adopted in

A. Y. 2000-01 2 respect of Ambali, Vejalpur and Makarba lands respectively to the total wealth of the appellant. 3. The A.O. has dealt this issue as under:- List of agricultural lands owned by the assessee which are claimed not to be urban land within the meaning of section 2(2)(ea)(v) of the Wealth Tax Act, 1957. Sr. No Name of Village Survey No. Remarks 1. Ambali 509 + 511 Construction of Building not permissible under the law. 2. Ambali 479 3. Ambali 480 4. Ambali 176 5. Vejalpur 1037 6. Vejalpur 1038 7. Vejalpur 1044 8. Vejalpur 1050/1 9. Makarba 714 10. Makarba 715/1 11. Makarba 715/2 12. Manipur 389 More than 8 Kms. away from local limits of Ahmedabad Municipal Corporation. 13. Godhavi 744 & 779 14. Chabasar -

A. Y. 2000-01 3 The assessee was asked to explain how the above land is not urban land within the meaning of section 2(2)(ea)(v) of the Wealth Tax Act, 1957. The assessee vide his reply dated 6 th Nov., 2007 submitted as under: "Regarding land of Ambli, Vejalpur and Makarba, it is submitted that construction of building is not permissible under the law and, therefore, same are not urban land within the meaning of section 2(2)(ea)(v) of the W.T. Act, 1957. In this regard, we draw your attention to section 65 of the Bombay Land Revenue Code which requires to obtain Collector s permission for the purpose of using land for other than agricultural purposes. In the present case, I have not at all made any application for using agricultural land for other than agricultural purposes. To support the claim, the assessee has produced copies of abstract from the relevant law i.e. Bombay Land Revenue Code, 1849. The assessee has merely contended that construction of building is not permissible under the law as he has not taken the permission from the authorities for using agricultural land for other than agricultural purposes and hence no construction is permissible on the land. It may be stated here that permission of the authorities is always necessary for starting building construction on a plot of land. Mere fact that no permission has sought by the assessee for non agricultural use of the land would not change the status of urban land. Amabli Land The details of land holding at Ambali, Ahmedabad by the assessee is as under: Survey No.509 + 511 : 14872 sq. mtrs. Survey No.479 : ½ share 9611 sq. mtrs. Survey No.480 : ½ share 4350 sq. mtrs. Survey No.176 : ½ share 19880 sq. mtrs. Total : 48713 sq. mtrs. Land This land is situated just 4 to 5 Km. from S.G. Highway (ISCON Temple). Assessee has claimed that construction is not permissible hence it is not an urban land. For starting construction, formal approvals have to be obtained for getting N.A. permission and building plan approvals etc. from appropriate authority. If the assessee has not done the necessary formality to get permission for construction on the land, the character of the said plot of urban land would not change. Therefore, it is not correct to say that Ambli land is not an urban land. In Ambli and beyond that there are many residential complexes of bungalows, flats and commercial complexes etc. Hence these lands are

A. Y. 2000-01 4 held to be urban lands taxable to wealth tax. Total land at Ambali admeasures about 48713 sq. mtrs. Out of this land the assessee has sold 14872 sq. mtrs. Of land in December, 2003 for Rs.44,61,600/- which works out to Rs.300/- per sq. mtrs. Considering this the value of this plot as on 31/3/2000 is adopted at Rs.25Q/- per sq.yds. The valuation of 48713 sq. mtrs of land is accordingly taken at Rs.1,21,78,250/-. The assessee has furnished inaccurate particulars of net wealth and penalty proceedings are separately initiated by issue of notice u/s. 18(1)(c) of the W.T. Act. 6. Vejalpur land The assessee himself has shown other Vejalpur lands (survey Nos.1183, 1184) as taxable assets and net wealth Rs.17,00,000/- has been offered for taxation. This land was a plot of 2000 sq. mtrs and valued @ 850 per sq. mtrs. The assessee has, however, not offered similar wealth for the following lands for taxation: Survey No.1037 25597 sq. mtr. 1/7 share 3200 sq. mtr. Survey No.1038 9713 sq. mtr. ½ share 4856 sq. mtr. Survey No.1044 9914 sq. mtrs ½ share 4957 sq. mtr. Survey No.1050/1 14340 sq.mtrs Full share 14340 sq. mtr. When this land was purchased it was in Vejalpur Area. Afterwards this land was transferred in the jurisdiction of Jodhpur Nagarpaljka. The Jodpur Nagarpalika encompasses Satellite Road which is since merged in the limits of Ahmedabad Municipal Corporation w.e.f. July, 2006. On the valuation date it was a separate Nagarpalika and the land is situated in posh area (near Big Bazar and ISCON Temple). This land is surrounded by many shopping Malls and residential societies like Big Bazar, Gallops Mall etc. Therefore, assessee's contention that construction is not permissible is not tenable. The construction on these land is not permissible, because the assessee has not made application for starting construction activity. This fact would not change the status of the land that of urban land. Hence these lands are held to be urban lands liable to wealth tax. For this land, therefore, the same value as of the land as per valuation shown by the assessee (i.e. for survey Nos.1183, 1184) of Rs.850 per sq. mtr is adopted for valuation of these lands. Total land 27353 sq. mtrs. @ Rs.850 per sq.mtrs. = Rs.2.32.50.850/- Assessee has furnished inaccurate particulars of net wealth and penalty proceedings are separately initiated by issue of notice u/s.18(1)(c) of the W. T. Act. 7. Makarba Land

A. Y. 2000-01 5 Assessee has claimed that these lands are not urban lands since construction is not permissible. These lands are again lands adjoining the land on which assessee has constructed residential house (i.e. border of Makarba and Vejalpur Nagar Palika). These lands are situated in the jurisdiction of Makarba Nagarpalika (Municipality) on the valuation date, since merged in the limits of Ahmedabad Municipal Corporation. Makarba Nagarpalika encompasses area between Karnavati Club and Big Bazar. On the adjoining land assessee has already constructed residential house. These lands being situated in urban area in the jurisdiction of Ahmedabad Municipality are held to be urban lands. For this land also, therefore, the same value as of the land valuation shown by the assessee (i.e. for survey Nos.1183, 1184) Rs.850/- per sq. metr. is adopted for valuation and valued as under: i) Survey No.714 : 100% share 8397 sq. mtr. ii) Survey No.715/1 : ½ share 2175 sq. mtr. iii) Survey No.715/2 : ½ share 2226 sq. mtr. Total land : 12798 sq. mtrs. @ Rs.850 per sq. mtrs. = Rs.1,08,78,300/- Assessee has furnished inaccurate particulars of net wealth and penalty proceedings are separately initiated by issue of notice u/s 18(1)(c ) of the W.T. Act. Subject to above discussion the net taxable wealth is determined as under:- Net wealth as per return - Rs.51,93,100/- Gandhikunj Bungalow (16,57,000-42,000/-)- Rs.16,32,500/- Ambli Land - Rs.1,21,78,250/- Vejalpur Land (Jodhpur) - Rs.2,32,50,850/- Makarba Land - Rs.1,08,78,300/- Net Wealth Rs.5,31,33,000/- Assessed u/s 16(3) r.w.s. 17 OF THE Wealth Tax Act, 1957. Give credit for prepaid taxes after due verification. Charge interest as applicable. Issue demand notice and challan. Issue show cause for penalty u/s 18(1)(c ) of the W.T. Act for concealment of taxable wealth and for furnishing of inaccurate particulars of wealth. 4. Before ld. CWT(A) assessee s contention was that the agricultural lands at Ambali, Vejalpur and Makarba cannot be taxed as urban lands, because as per provisions of Section 65 of the Bombay Land Revenue Code, 1879, prior permission of the District Collector should be obtained for the use

A. Y. 2000-01 6 of said agricultural lands for any purpose other than agricultural land and that the assessee had neither made any application nor obtained any permission for using the said agricultural lands for non-agricultural purpose. Argument was raised before the A.O. that as per Section 63 of the Bombay Tenancy and Agricultural Lands Act, 1948, transfer of the said agricultural lands to any person who is not an agriculturist, cannot be made. It was also pleaded that the AO had visited the said lands during the course of assessment proceedings and was satisfied that the lands were agricultural and that the AO was wrong in disregarding and ignoring the sub missions and explanations given by the assessee without bringing any materials, documents, or evidences to support the conclusion drawn by him that the said agricultural lands at Ambali, Vejalpur and Makarba were urban lands liable to be included in the total wealth of the assessee. 5. Ld. CWT(A), however, agreed with the findings of the A.O. and dismissed the appeal of the assessee by observing as under:- I have gone through rival submissions and am of the view as under:- i. that the lands in Ambali, Vejalpur and Makarba are urban land covered by Explanation (b)(ii) to Section 2(ea) (v) of the Wealth-tax Act. The explanation says that urban land would mean land situated in any area within such distance not being more than 8 kms from the local limits of any municipality. The AO argued on hearing dated 28.4.2008 that this land is within 8 kms of municipal limits of AMC. ii The appellant claimed these lands exempt under the Wealth Tax Act on the ground that these lands are agricultural lands because construction is not permissible on these lands.

A. Y. 2000-01 7 The AO s argument has force that big residential and commercial complexes like Iscon Mall, Big Bazaar have come up on these lands and it is just a matter of time when the appellant will complete the formalities and begin construction. iii Even before these lands were incorporated in Ahmedabad Municipal Corporation limits that is w.e.f. 16.2.2006, THE Vejalpur land was under the jurisdiction of Jodhpur (Vejalpur) Nagarpalika and Makarba land was in the jurisdiction of Makarba Nagarpalika, as such these lands were within municipal limits. iv 7/12 extracts and Talati certificates given in the appellate proceedings of this case of A.Y. 2003-04 in support of the claim that these lands are agricultural lands, cannot stand above clear cut provisions of the Wealth Tax Act according to which (Explanation (b)(ii) to Section 2(ea) (v) any land would be an urban land if it falls within 8 kms from the local limits of any municipality. These lands fall within 8 km limit from municipal limits of AMC for the period under consideration and fall within municipal limits of AMC from 16.2.2006. In view of the above arguments, the decision of the AO treating Ambali, Vejalpur and Makarba lands as taxable assets is upheld. Further aggrieved, now the assessee is in appeal before us. 6. At the time of hearing, ld. counsel of the assessee, reiterating the submissions made before the lower authorities further submitted that since construction of building is not permissible under the law on the lands at Ambali, Vejalpur and Makarba, the same are not urban lands within the meaning of Section 2(ea) (v) of the Wealth Tax Act. Ld. counsel drew our attention to section 65 of the Bombay Land Revenue Code, 1879 and submitted that permission of the collector is required to be obtained for the purpose of using these lands for other than the agricultural purposes. It was further submitted that assessee has not made any application for using these

A. Y. 2000-01 8 agricultural lands for any other purposes, therefore, the same cannot be held to be urban lands. Ld. counsel also placed reliance on Section 66 of Bombay Land Revenue Code, 1879 to submit that in case these lands are used for the purpose other than agriculture, penal provisions will be attracted and the assessee will be liable to be evicted by the collector from the land so used and may be also asked to pay fine for doing so. Concluding his argument ld. counsel of the assessee submitted that the addition made to the wealth of the assessee by the A.O. by treating these agricultural lands as urban land and sustained by ld. CWT(A) may kindly be deleted. Ld. D.R., on the other hand, relied on the order of the lower authorities. Though both the parties cited certain case laws but during the course of hearing itself they agreed that the same were not directly on the issue involved in this appeal hence, the same are not being considered by us. 7. After hearing both the parties and perusing the record we find that there is no dispute about the fact that the lands in Ambali, Vejalpur and Makarba are situated within 8 kms. of municipal limits of Ahmedabad Municipal Corporation. The A.O. has treated these lands as urban lands in view of explanation (b)(ii) to section 2(ea) (v) of the Wealth Tax Act. The assessee s claim, on the other hand, has been that these lands are exempt under the Wealth Tax Act on the ground that construction of building is not permissible on these lands. For making this submission, the assessee has placed heavy reliance on Section 65 of the Bombay Land Revenue Code, 1879 which reads as under:-

A. Y. 2000-01 9 65. Uses to which occupant of land for purposes of agriculture may put his land- An occupant of land [assessed or held for the purpose of agriculture] is entitled by himself, his servants, agents, or other legal representatives, to erect farm, buildings, construct wells or tanks, or make any other improvements thereon for the cultivation of the land, or its more convenient [use for the purpose aforesaid]. Procedure if occupant wishes to apply his land to any other purpose.- But, if any occupant [wishes to use his holding or any part thereof for any other purpose the Collector s permission shall in the first place be applied for by the occupant. The Collector, on receipt of such application, (a) shall send to the applicant a written acknowledgement of its receipt, and (b) may, after due injury, either grant or refuse the permission applied for: Provided that, where the Collector fails to inform the applicant of his decision on the application within a period of three months, the permission applied for shall be deemed to have been granted; such period shall, if the Collector sends a written acknowledgement within seven days from the date of receipt of the application, be reckoned from the date of the acknowledgement, but in any other case it shall be reckoned from the date of receipt of the application. 8. It is clear from the above that this section does not prohibit the occupant of these lands to use these lands to any other purpose other than agriculture. It only mentions that if an occupant wishes to use his holding for any other purpose than agriculture, Collector s permission will have to be obtained by him. The procedure for seeking/obtaining such permission is also mentioned therein. It means that the construction of building on these lands was subject to permission by Collector and it is not the case that construction of building was not permissible at all. We further find that the finding of the A.O. that on similarly placed lands residential and commercial complexes like ISCON Mall and Big Bazar have come up, has remained

A. Y. 2000-01 10 undisputed at the time of hearing. In view of this, the contention of the assessee that no application for using these agricultural lands for any other purpose was made on behalf of the assessee, is irrelevant for deciding the issue. 9. Now we come to the relevant provisions of Section 2(ea) (v) which reads as under:- 2. In this Act, unless the context otherwise requires,- (ea) assets, in relation to the assessment year commencing on the 1 st day of April, 1993, or any subsequent assessment year, means- (v) urban land; Explanation - For the purpose of this clause,-. (b) urban land means land situate-. (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 (i), as the Central Government may, having regard to 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 on which construction of a building is not permissible under any law for the time being in force in the area in which such land is situated... It is clear from the above that the urban land will be exempt only if the construction of a building is not permissible under any law for the time being in force in the area in which such land is situated. As we

A. Y. 2000-01 11 have already held that in the instant case such is not the position, we have no hesitation in holding that the lower authorities have rightly held that the agricultural land at Ambali, Vejalpur and Makarba were urban lands for the purpose of wealth tax as they were situated within 8 kms limit of municipal area of Ahmedabad Municipal Corporation. 11. In the result, assessee s appeal is dismissed. Order pronounced in open Court on 21.09.2012 Sd/- (A. Mohan Alankamony) Accountant Member N.K. Chaudhary, Sr. P.S. Copy of the Order forwarded to: 1. The applicant 2. The Respondent 3. The CIT Concerned 4. The Ld. CIT (Appeals) 5. The DR, Ahmedabad 6. The Guard File Sd/- (D.K. Tyagi) Judicial Member By order AR,ITAT,Ahmedabad