Case Law Details
Brief of the Case
ITAT Bangalore held In the case of M.R Pattabhiram (HUF) vs. Asst. Commissioner of Wealth tax that mere conversion of land from agriculture to non-agriculture could not be taken as the sole criteria to hold it as a capital asset under section 2(14) of the Income tax act. Also if that land is used for agricultural purposes till the date of sale, despite the fact that it is converted to non-agricultural use , it will be treated as agricultural lands and not capital assets under section 2(14). Accordingly, it will be an agriculture land on which wealth tax exemption is available.
Facts of the Case
The assessee is a HUF filed itsreturn of net wealth for the A.Y. 2006-07 on 30-03-2007 declaring net wealth of Rs. 1,29,08,300/-. During course of income tax proceedings of the assessee for the A.Y. 2008-09, the AO noticed that the assessee has transferred certain lands and computed the capital gains and paid tax. Subsequently, the assessee has filed revised return and claimed the exemption on capital gain admitted in the original return, as the lands transferred is agricultural lands. The AO gathered information from the income tax proceedings, verified the wealth –tax returns filed by the assessee and observed that the assessee has declared the lands situated at Akkalenahalli- Mallenahalli Village in the return, but claimed same was not urban land as defined u/s 2(ea) of the Wealth – tax Act, 1957 as exempt assets.
The Assessing Officer believed that there was escapement of wealth chargeable to wealth –tax for the assessment years in question. Therefore, the AO sought to reopen the assessment and issued a notice u/s 17 of the wealth –tax Act, 1957. In response to notice issued u/s 17, the assessee filed a letter along with copies of wealth – tax returns filed earlier for the asst. year under consideration and requested to treat the same as returns filed in response to notice issued u/s 17 of the Act. Subsequently, the case was selected for scrutiny assessment. The AO after considering the explanations, held that the impugned lands are converted lands, situated within 8 KM from the local limits of BBMP and also within the local limits of BIAAPA and brought to wealth tax.
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