Case Law Details
Shri S. Peter Vs Asst. Commissioner of Wealth Tax (ITAT Chennai)
The solitary issue that came up for our consideration from the given facts and circumstances of this case is, whether the lands owned by the assessee and leased to trusts comes under the definition of ‘asset’, as defined u/s.2(ea) of the WT Act, or the assets held by him under the trusts or legal obligation for any public purpose of a charitable or religious nature in India, which is exempt u/s.5(i) of the WT Act. The term ‘asset’ has been defined u/s.2(ea) of the WT Act, as per which, assets includes property of every description movable or immovable, but does not include such lands occupied by any building, which had been constructed with the approval of appropriate authority. From plain reading of section 2(ea) of WT Act, it is very clear that any land on which building has been constructed with the approval of appropriate authority, then such lands are outside the scope of the term ‘assets’ as defined u/s.2(ea) of the WT Act. In this case, on perusal of various details filed by the assessee, it is abundantly clear that the lands on which Wealth Tax was levied by the AO are not vacant urban lands, because those lands are leased out to trusts for 99 years and the trusts have constructed buildings on said lands for running various educational institutions. Therefore, once lands on which any buildings are constructed with the approval of competent authority, then it cannot be said that said lands are vacant urban lands, so as to levy Wealth Tax. The purpose and intent of the legislature is to tax certain assets which are non-productive or idle assets. This fact is very clearly spelt out in the budget speech of 1992-93 dated 29.02.1992, where the Finance Minister have made a categorical statement that “The Chelliah Committee had suggested that, in order to encourage the taxpayers to invest in productive assets such as shares and other financial assets, exemption was granted from Wealth Tax. Therefore, an amendment has been brought in, u/s.2(ea) of the WT Act, to levy tax on individuals, HUFs and all companies only in respect of non-productive assets such as residential houses including farm houses, urban land, etc. Thus, from the above, it is evident that the legislative intent was to tax only the nonproductive assets.
We are of the considered view that the AO as well as the CIT(A) were erred in levying taxes on lands owned by the assessee and given on lease for 99 years, even though, the assessee has proved with necessary evidences that the trusts have constructed buildings on the impugned lands with the approval of appropriate authority. We, further noted that the only requirement that needs to be seen is whether the lands in question were urban vacant lands or lands on which building was constructed with the approval of appropriate authority. In this case, evidences filed by the assessee clearly proves that these are not urban vacant lands, but lands on which buildings are constructed with the approval of appropriate authority and hence, in our considered view these lands cannot be brought to tax as urban lands within the meaning of asset, as defined u/s. 2(ea) of the WT Act. Therefore, we are of the considered opinion that the assessee is also entitled for exemption u/s.5(i) of the WT Act, because the lands are held by him under a trust for charitable purpose because said lands were given on lease to a trust and the trust has used the lands for running various educational institutions, which comes under the definition of charitable purpose. Therefore, for all reasons the impugned lands are outside the scope of the Wealth Tax. But, the fact remains that certain additional evidences filed by the assessee including copies of sanction plan, copies of approval letters issued for running educational institutions are not submitted before the AO. Therefore, for limited purpose of verification of additional evidences filed by the assessee, the matter has been set aside to the file of the AO and direct him to verify the additional evidences filed by the assessee and allow appropriate relief to the assessee.
In the result, the appeals filed by the assessee for assessment years 2012-13 to 2014-15 are allowed for statistical purpose.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
Please become a Premium member. If you are already a Premium member, login here to access the full content.
