-1- IN THE HIGH COURT OF BOMBAY AT GOA TAX APPEAL NOS – 12 OF 2004, 13 OF 2004, 14 OF 2004, 15 OF 2004, 16 OF 2004, 17 OF 2004, 18 OF 2004, 19 OF 2004, 20 OF 2004, 21 OF 2004, 22 OF 2004, 23 OF 2004, 24 OF 2004, 25 OF 2004, 26 OF 2004, 27 OF 2004, 28 OF 2004, 29 OF 2004, 30 OF 2004 AND 31 OF 2004 TAX APPEAL NO.12 OF 2004 Shri Prabhakar Keshav Kunde, 58 years of age, occupation business, residing at “Laxmi-Niwas”, Comba, Margao – Goa. …... Appellant Versus 1. The Commissioner of Income Tax Aaykar Bhavan, Patto Panaji – Goa. 2. The Asstt. Commissioner of Income Tax, Circle – I, Margao Goa having office at 3rd floor, “Gomant Vidya Niketan”, Margao Goa. …... Respondents WITH TAX APPEAL NO.13 OF 2004 Shri Prabhakar Keshav Kunde, 58 years of age, occupation business, residing at “Laxmi-Niwas”, Comba, Margao – Goa. …... Appellant Versus 1. The Commissioner of Income Tax Aaykar Bhavan, Patto Panaji – Goa. 2. The Asstt. Commissioner of Income Tax, Circle – I, Margao Goa having office at 3rd floor, “Gomant Vidya Niketan”, Margao Goa. …... Respondents -2- WITH TAX APPEAL NO.14 OF 2004 Shri Vithaldas Poi Kakode, Son of late Shri Yeshwant Kakode, Aged 71 years, residing at Near Bank of India, Aquem, Margao – Goa. …... Appellant Versus 1. The Commissioner of Income Tax Aaykar Bhavan, Patto Panaji – Goa. 2. The Asstt. Commissioner of Income Tax, Circle – I, Margao Goa having office at 3rd floor, “Gomant Vidya Niketan”, Margao Goa. …... Respondents WITH TAX APPEAL NO.15 OF 2004 Shri Divakar Keshav Kunde, Son of late Shri Keshav Sinai Kunde, Aged 59 years, resident of “Laxmi-Niwas”, Comba, Margao-Goa. Through its Power of Attorney holder, Shri Prabhakar Keshav Kunde, 58 years of age, occupation business, residing at “Laxmi-Niwas”, Comba, Margao – Goa. …... Appellant Versus 1. The Commissioner of Income Tax Aaykar Bhavan, Patto Panaji – Goa. 2. The Asstt. Commissioner of Income Tax, Circle – I, Margao Goa having office at 3rd floor, “Gomant Vidya Niketan”, Margao Goa. …... Respondents -3- WITH TAX APPEAL NO.16 OF 2004 Shri Divakar Keshav Kunde, Son of late Shri Keshav Sinai Kunde, Aged 59 years, resident of “Laxmi-Niwas”, Comba, Margao-Goa. Through its Power of Attorney holder, Shri Prabhakar Keshav Kunde, 58 years of age, occupation business, residing at “Laxmi-Niwas”, Comba, Margao – Goa. …... Appellant Versus 1. The Commissioner of Income Tax Aaykar Bhavan, Patto Panaji – Goa. 2. The Asstt. Commissioner of Income Tax, Circle – I, Margao Goa having office at 3rd floor, “Gomant Vidya Niketan”, Margao Goa. …... Respondents WITH TAX APPEAL NO.17 OF 2004 Smt. Neela Divakar Kunde Wife of late Shri Divakar K. Kunde, Aged 57 years, residing at “Laxmi-Niwas”, Comba, Margao – Goa. Through Power of Attorney holder, Shri Prabhakar Keshav Kunde, 58 years of age, occupation business, residing at “Laxmi-Niwas”, Comba, Margao – Goa. …... Appellants Versus 1. The Commissioner of Income Tax Aaykar Bhavan, Patto Panaji – Goa. 2. The Asstt. Commissioner of Income Tax, Circle – I, Margao Goa having office at 3rd floor, “Gomant Vidya Niketan”, Margao Goa. …... Respondents -4- WITH TAX APPEAL NO.18 OF 2004 Shri Kamlakar Keshav Kunde, Aged 56 years, , residing at “Laxmi-Niwas”, Comba, Margao – Goa. Through Power of Attorney holder, Shri Prabhakar Keshav Kunde, 58 years of age, occupation business, residing at “Laxmi-Niwas”, Comba, Margao – Goa. …... Appellant Versus 1. The Commissioner of Income Tax Aaykar Bhavan, Patto Panaji – Goa. 2. The Asstt. Commissioner of Income Tax, Circle – I, Margao Goa having office at 3rd floor, “Gomant Vidya Niketan”, Margao Goa. …... Respondents WITH TAX APPEAL NO.19 OF 2004 Smt. Neela Divakar Kunde Wife of late Shri Divakar K. Kunde, Aged 57 years, residing at “Laxmi-Niwas”, Comba, Margao – Goa. Through Power of Attorney holder, Shri Prabhakar Keshav Kunde, 58 years of age, occupation business, residing at “Laxmi-Niwas”, Comba, Margao – Goa. …... Appellants Versus 1. The Commissioner of Income Tax Aaykar Bhavan, Patto Panaji – Goa. 2. The Asstt. Commissioner of Income Tax, Circle – I, Margao Goa having office at 3rd floor, “Gomant Vidya Niketan”, Margao Goa. …... Respondents -5- WITH TAX APPEAL NO.20 OF 2004 Shri Kamlakar Keshav Kunde, Aged 56 years, , residing at “Laxmi-Niwas”, Comba, Margao – Goa. …... Appellants Versus 1. The Commissioner of Income Tax Aaykar Bhavan, Patto Panaji – Goa. 2. The Asstt. Commissioner of Income Tax, Circle – I, Margao Goa having office at 3rd floor, “Gomant Vidya Niketan”, Margao Goa. …... Respondents WITH TAX APPEAL NO.21 OF 2004 Smt. Vilasini Vithaldas Poi Kakode (since deceased) Through her legal representatives Shri Vithaldas Poi Kakode, Son of late Shri Yeshwant Kakode, Aged 71 years, residing at Near Bank of India, Aquem, Margao – Goa. …... Appellant Versus 1. The Commissioner of Income Tax Aaykar Bhavan, Patto Panaji – Goa. 2. The Asstt. Commissioner of Income Tax, Circle – I, Margao Goa having office at 3rd floor, “Gomant Vidya Niketan”, Margao Goa. ` …... Respondents WITH TAX APPEAL NO.22 OF 2004 Smt. Anusuya Keshav Kunde, Daughter of Shri Mukund Kirtany, Aged 76 years, residing at “Laxmi-Niwas”, Comba, Margao-Goa. Through Power of Attorney holder, Shri Prabhakar Keshav Kunde, -6- 58 years of age, occupation business, residing at “Laxmi-Niwas”, Comba, Margao – Goa. …... Appellant Versus 1. The Commissioner of Income Tax Aaykar Bhavan, Patto Panaji – Goa. 2. The Asstt. Commissioner of Income Tax, Circle – I, Margao Goa having office at 3rd floor, “Gomant Vidya Niketan”, Margao Goa. …... Respondents WITH TAX APPEAL NO.23 OF 2004 Smt. Anusuya Keshav Kunde, Daughter of Shri Mukund Kirtany, Aged 76 years, residing at “Laxmi-Niwas”, Comba, Margao-Goa. Through Power of Attorney holder, Shri Prabhakar Keshav Kunde, 58 years of age, occupation business, residing at “Laxmi-Niwas”, Comba, Margao – Goa. …... Appellant Versus 1. The Commissioner of Income Tax Aaykar Bhavan, Patto Panaji – Goa. 2. The Asstt. Commissioner of Income Tax, Circle – I, Margao Goa having office at 3rd floor, “Gomant Vidya Niketan”, Margao Goa. …... Respondents WITH TAX APPEAL NO.24 OF 2004 Smt. Vilasini Vithaldas Poi Kakode (since deceased) Through her legal representatives Shri Vithaldas Poi Kakode, Son of late Shri Yeshwant Kakode, Aged 71 years, residing at Near Bank of India, Aquem, Margao – Goa. …... Appellant -7- Versus 1. The Commissioner of Income Tax Aaykar Bhavan, Patto Panaji – Goa. 2. The Asstt. Commissioner of Income Tax, Circle – I, Margao Goa having office at 3rd floor, “Gomant Vidya Niketan”, Margao Goa. …... Respondents WITH TAX APPEAL NO.25 OF 2004 Shri Vithaldas Poi Kakode, Son of late Shri Yeshwant Kakode, Aged 71 years, residing at Near Bank of India, Aquem, Margao – Goa. …... Appellant Versus 1. The Commissioner of Income Tax Aaykar Bhavan, Patto Panaji – Goa. 2. The Asstt. Commissioner of Income Tax, Circle – I, Margao Goa having office at 3rd floor, “Gomant Vidya Niketan”, Margao Goa. ….. Respondents WITH TAX APPEAL NO.26 OF 2004 Smt. Jyoti Kamlakar Kunde, Wife of Shri Kamlakar K. Kunde, Aged 51 years, , residing at “Laxmi-Niwas”, Comba, Margao-Goa. …... Appellant Versus 1. The Commissioner of Income Tax Aaykar Bhavan, Patto Panaji – Goa. 2. The Asstt. Commissioner of Income Tax, Circle – I, Margao Goa having office at 3rd floor, “Gomant Vidya Niketan”, Margao Goa. …... Respondents -8- WITH TAX APPEAL NO.27 OF 2004 Shri Keshav S. Kunde (Since Deceased) Through his legal representative Smt. Anusuya Keshav Kunde, Aged 76 years, residing at “Laxmi-Niwas”, Comba, Margao-Goa. Represented herein by her Power of Attorney holder, Shri Prabhakar Keshav Kunde, Aged 58 years, residing at “Laxmi-Niwas”, Comba, Margao – Goa. …... Appellant Versus 1. The Commissioner of Income Tax Aaykar Bhavan, Patto Panaji – Goa. 2. The Asstt. Commissioner of Income Tax, Circle – I, Margao Goa having office at 3rd floor, “Gomant Vidya Niketan”, Margao Goa. …... Respondents WITH TAX APPEAL NO.28 OF 2004 Shri Keshav S. Kunde (Since Deceased) Through his legal representative Smt. Anusuya Keshav Kunde, Aged 76 years, residing at “Laxmi-Niwas”, Comba, Margao-Goa. Represented herein by her Power of Attorney holder, Shri Prabhakar K. Kunde, Aged 58 years, residing at “Laxmi-Niwas”, Comba, Margao – Goa. …... Appellant Versus 1. The Commissioner of Income Tax Aaykar Bhavan, Patto Panaji – Goa. 2. The Asstt. Commissioner of Income Tax, Circle – I, Margao Goa having office at 3rd floor, “Gomant Vidya Niketan”, Margao Goa. …... Respondents -9- WITH TAX APPEAL NO.29 OF 2004 Smt. Jyoti Kamlakar Kunde, Wife of Shri Kamlakar K. Kunde, Aged 51 years, residing at “Laxmi-Niwas”, Comba, Margao-Goa. …... Appellant Versus 1. The Commissioner of Income Tax Aaykar Bhavan, Patto Panaji – Goa. 2. The Asstt. Commissioner of Income Tax, Circle – I, Margao Goa having office at 3rd floor, “Gomant Vidya Niketan”, Margao Goa. …... Respondents WITH TAX APPEAL NO.30 OF 2004 Smt. Neeta Prabhakar Kunde, Daughter of Shri Vasudev Salkar, Aged 50 years, residing at “Laxmi-Niwas”, Comba, Margao-Goa. Through her Power of Attorney holder, Shri Prabhakar Keshav Kunde, 58 years of age, occupation business, residing at “Laxmi-Niwas”, Comba, Margao – Goa. …... Appellant Versus 1. The Commissioner of Income Tax Aaykar Bhavan, Patto Panaji – Goa. 2. The Asstt. Commissioner of Income Tax, Circle – I, Margao Goa having office at 3rd floor, “Gomant Vidya Niketan”, Margao Goa. …... Respondents AND TAX APPEAL NO.31 OF 2004 Smt. Neeta Prabhakar Kunde, Daughter of Shri Vasudev Salkar, Aged 50 years, residing at “Laxmi-Niwas”, Comba, Margao-Goa. -10- Through her Power of Attorney holder, Shri Prabhakar Keshav Kunde, 58 years of age, occupation business, residing at “Laxmi-Niwas”, Comba, Margao – Goa. …... Appellant Versus 1. The Commissioner of Income Tax Aaykar Bhavan, Patto Panaji – Goa. 2. The Asstt. Commissioner of Income Tax, Circle – I, Margao Goa having office at 3rd floor, “Gomant Vidya Niketan”, Margao Goa. …... Respondents Mr. S. G. Bhobe, Advocate for the Appellants. Ms. Asha Dessai, Advocate for the Respondents. CORAM: D. G. KARNIK, F. M. REIS, JJ. DATE : 25 th August, 2010. CONTINUED ON : 30 th August, 2010. ORAL JUDGMENT : (Per: D. G. KARNIK, J) All these Appeals involve a common issue and were disposed by the Income Tax Appellate Tribunal, Panaji Branch, Panaji, by a common Order dated 13th February, 2004, and hence they are heard and disposed of by this common Order. 2. The Appellants are family members and were co-owners of the property surveyed under No. 28/1 admeasuring 1,66,750 square metres, Survey no. -11- 33/1 admeasuring 39,700 square metres and Survey no. 33/2 admeasuring 550 square metres, known as “Rajabaga” or “Quindelibaga”, situated at Village Nagorcem, Palolem, (hereinafter referred to as 'the said property”). The property is included in the jurisdiction of Canacona Municipal Council, in Sub-District of Canacona, District of South Goa. 3. By a Sale Deed dated 11.05.1994, the Appellants sold the said property to M/s. Deeksha Holding Pvt. Ltd., for a consideration of Rs.3,27,49,000/-. In pursuance of a notice issued under Section 17(1) of the Wealth Tax Act, 1957, each of the Appellants filed a return of their Wealth on 16.08.2000. Mr. Prabhakar Kunde, the Appellant in Appeal No. 12/2004, who had 25% share in the property, declared his taxable wealth to be Rs.3,42,500/-. He claimed that the value of the said property was Rs.86,600/- and declared the value of one fourth share therein to be Rs.21,400/-. Before the Assessing Officer, he contended that though the said property was sold for a sum of Rs.3,27,49,000/-, the entire sale price could not be taken as the value of the property assessible to Wealth Tax. According to him, the said property was abutting Arabian Sea on the western side and abutting a river on the northern side. In view of the Environment (Protection) Act, 1986, a large portion of the said property abutting and falling within 500 metres of the Arabian Sea and the river was not build-able. According to him, the portion which was not buildable could not be treated as “an urban” property in view of explanation 1(b) of Section 2(ea)(v) of the Wealth Tax Act. According to him, about 90 percent of the said property fell within 500 metres of the High Tide Line and as per the CRZ Regulations framed as per the Environment (Protection) Act was not buildable. Consequently, the only ten -12- percent of the property which was buildable and could be regarded as “an urban area” and the value of that urban area could only be included in computing his total wealth assessible to tax under the Wealth Tax Act. The Assessing Officer did not accept the contention. The Appellate Commissioner held that under the CRZ Regulations, Ministry of Environment permits constructions of the area between 200 metres to 500 metres of High Tide line and as such the construction was permissible even under the CRZ Regulations. He, therefore, held that the entire property was an urban property and the value of the entire property was to be taken into consideration while computing the total wealth of the Appellants. The Tribunal also confirmed the view of the two authorities below. Hence, this Appeal. 4. By an Order dated 26th June, 2004, this Court admitted the Appeal by framing the following substantial Question of Law : 1. Whether on the facts and circumstances of the case and in law, the Income Tax Appellate Tribunal is right in coming to the conclusion that as the entire area was used for developing into “Beach Resort”, the said landed property is liable to Wealth Tax under the Wealth Tax Act ? 2. Whether the entire land in question is an “asset” within the meaning of Section 2(ea) of the W.T. Act ? 5. By the Sale Deed dated 11.05.1994, M/s. Deeksha Holding Private Limited, purchased the said property for establishing Holiday Beach Resort. Since then, the said property is being used as a Holiday Resort. The price paid by M/s. -13- Deeksha Holding Pvt. Ltd., was for the entire property which consists of partly buildable area and partly unbuildable area. It is not disputed before us that the price paid by M/s. Deeksha Holding Pvt. Ltd. was a market price and represents the market value of the total property. Part of the total property is undoubtedly buildable and the part of the property is unbuildable. There was no apportionment of the price i.e. the Sale Deed does not specify what price was paid for the buildable portion of the property and what price was paid for the unbuildable portion of the property. 6. Counsel for the Revenue submitted that since the property was sold as a whole, it was not necessary to bifurcate the buildable portion and the non-buildable portion and the entire price must be treated as a price of the said property and must be included in the total wealth of the Appellants. 7. Counsel for the Appellants submitted that since the part of the property was buildable and part of the property was not buildable, the price of the property which was not buildable was required to be segregated from the price of the property which is buildable because under Section 2(ea) of the Wealth Tax Act, the non buildable property was not liable to be included while computing the Wealth (assets) under the Wealth Tax Act. Section 2(ea) of the Wealth Tax Act, defines “the assets” in relation to the assessment year commencing on 01.04.1993 or under subsequent assessment years and includes in it “urban land”. The expression 'urban land' has been defined in explanation (b) to Section 2(ea) of the Wealth Tax Act and reads thus : “(b) “urban land” means land situate- -14- (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 kilometres 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, urbanisation of that area and other relevant considerations, specified 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 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 industrial 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 period of [ten] years from the date of its acquisition by him.] 8. The definition of urban land excludes from the definition of urban land any land on which construction of a building is not permissible. The land which is unbuildable under any law for the time being in force is not an urban land and, as such, is not an asset within the meaning of Section 2(ea). Consequently, the land which is not buildable under any law for the time being in force is not included in -15- assessible wealth of a person. Since the said property consists of a part of a land which is buildable and part of the land which is not buildable, the Assessing Officer ought to have excluded the value of the portion of the land which was unbuildable while computing the wealth of the Appellants. JUDGMENT CONTINUED ON 30 th AUGUST, 2010 9. The learned Counsel for the Respondent-CIT submitted that a very small portion of the said land was not buildable while the Counsel for the Appellants submitted that a large part of the said land was non buildable. Perusal of the Order of the Assessing Officer as well as the Appellate Authority does not disclose what portion of the said land was buildable and what portion was not buildable. That is a question of fact, which we cannot determine. In the absence of any findings of the two authorities below on the question of fact as to what portion of said land i.e. how much area of the total area was buildable and what portion of land was not buildable and what would be the market value of the buildable portion of the said property excluding the nonbuildable (non-urban land). The above matter would have to be remanded back to the Assessing Officer for determining what portion of the land was buildable and what portion of the land was not buildable, and the value of the respective portions. Needless to say that the portion which was not buildable cannot be regarded as “an urban land” within the meaning of Section 2(ea) of the Wealth Tax Act and cannot be included in computing taxable wealth of the Assessee. -16- 10. For these reasons, the Appeals are allowed. The impugned Orders are set aside and the matters are remanded back to the Assessing Officer for determination and computation of the taxable wealth afresh in the light of what is stated above. D. G. KARNIK, J. F. M. REIS, J. arp/*