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.
Contention of the Assessee
The ld counsel of the assessee submitted that the issue in this appeal is covered by assessee own case in ITA. No. 262/B/2013 for the A.Y.2008-09. He further, submitted that the ITAT in the assessee own case, for the A.Y. 2008-09 in income –tax proceedings, while deciding the issue of capital gains has held the impugned lands are agricultural lands and not capital assets under section 2(14) of the Act. The AR further, submitted that the issue is also covered in favour of assessee by the decision of ITAT orders in assessee family members case in WTA. No. 16/B/2014 to 29/B/2014. The ITAT, under similar facts and circumstances held that the impugned lands are not urban lands exigible to wealth-tax
Contention of the Revenue
The ld counsel of the revenue strongly supported the orders of Assessing Officer and CWT (A)
Held by CWT (A)
The CWT (A) held that the impugned lands are converted from agricultural to non-agricultural purpose, situated within the limits of BIAAPA and BIAAPA is a municipality. With this observation, the CWT (A) confirmed the assessment order.
Held by ITAT
We find that the co-ordinate bench of this tribunal in assessee own case in ITA No. 262/B/2013 had examined the issue whether the lands in question are capital assets, situated within the municipal limits of BIAPPA and the BIAPPA is a municipality or notified area. It was held 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 and that if that land is used for agricultural purposes till the date of sale, despite the fact that it is converted to non-agricultural use are agricultural lands and not capital assets under section 2(14).Further it was decided that we are also in agreement with the view taken by the co-ordinate bench in the case of M.R. Seetharam (HUF) ITA No.1654/Bang/2012 that BIAPPA is not a Municipality but a mere planning body.
A similar issue came up for consideration before the coordinate bench of this tribunal in bunch of Wealth-tax cases in WTA No. 16/B/2014 to 29/B/2014, wherein the ITAT under similar set of facts held that the impugned lands are not urban lands exigible for wealth tax.
Therefore, respectfully following the co-ordinate bench decisions in assessee own case in ITA.No. 262/B/2013 and also coordinate bench decision in WTA.No. 16/B/2014 to 29/B/2014, we hold that the impugned lands are not urban lands within the meaning of section 2(ea) of the Wealth tax Act, 1957 and not exigible to wealth-tax.
On the matter of charging of interest u/s 17B of wealth tax, it was decided that charging of interest is mandatory and consequential, wherever there is a incidence of tax. Accordingly, dismiss the ground raised by the assessee.
Accordingly appeal of the assessee partly allowed.