% 1 IN THE fflGH COURT OF DELHI W.T.A. No. 7 OF 2m3 TnHpT-nftTitReservedon :January19,2005 Date of Decision: Fehruarv 03.2005 COMMISSIONEROFWEALTHTAX... Petitioner Tlirough Mr. R.D. Jolly,with Mr. Ajay Jha,Advocates. Versus M/S.D.C.M.LTD. ...Respoondent Through Mr.S.K.Aggaiv/alwith Mr.V.P.Gupta, Advocates. CORAM: HON'BLE MR. JUSTICE .SWATANTRRKUMAR HONHT.E MR-JUSTICE MADAN B. LOKUR 1. Whetherreportersoflocalpapermaybe allowed to see the judgment? 2. ToberefeiTedto thereporteror not? Yes 3. Whetherthejudgmentshouldberefeired A in the Digest? SWATANTERKUMAM, J. Accordingto the appellant,in this appeal, underSection27A ' ofthe WealthTax Act (hereinafterrefen-edto as the Act),the questionof law as to tlie scope and meaningof the expression"land and urbanland chargeable to wealth tax in relation to assets of the assessee for the Digitally Signed By:AMULYA Certify that the digital file and physical file have been compared and the digital data is as per the physical file and no page is missing. Signature Not Verified \J assessmentyear 1993-94Bnderthe amendedprovisionsof the Act arises for considemtionin thepresentappeal. 2, It is well settledprincipleof law that aquestion which has eitherbeen answeredby thejudgmentofthe Courtor on plainreadingof the provisionsof the relevantsection,ttteinterpretationis so clearas not to inviteanylegalcontroversy,there the questionoflaw would not arise V as contemplatedundersection27A of the Act. Theprovisionsofsection 27A of tlte Act at« pari materiato section260A of the Income-taxAct. Thecourtshouldbe satisfiedthatthecasein appealinvolvesasubstantial questionof law. ADivisionBench of this Court, after applyingthe principleenunciatedby the SupremeCourtin differentcasesheld thatm both the abovesaidcitcumstances,the case would not mvolvesubstantial questionoflaw. Referencein this regardcanbe madeto thejudgmentby aDivisionBenchof this Courtin Cnmrnissionerof Income-taxVs. S.R, PragriFincesLtd. 270 ITR 560. 3. Thus, now we have to consider whether the controveniy involved in the present case and particularly as formulated by tlie Departmentin the proposedquestionoflaw is answered by judgmentor on theplainreadingof provisionsofthe Act. Beforediscussingftis pg.2of 11 WTA inms V A- aspect of the case in some elucidation,it v/oiild be necessaiyfor us to refer to the facts giving rise to the presentappeal. The assesseefiled a return of wealth of Rs.95,36,700/-for the assessmentyeaj- 1993-94. Tlie Assessing Officer issued a notice under section 17 of the Act to the assessee on the gi'ound tliat during the course of assessment for the assessmentyear 1994-95 it .was noticed that assesseehas not disclosed urban land worth crores of mpees held by the assesseeas stock-in-trade which were liable to wealth tax for the relevant year of 1993-94. To this notice,the assesseesubmittedtlie reply statingthat tlie urban land owned by the assesseecould not be includedin tlie net wealtliofthe assessee,as such the land and tlie building thereupon was constiiicted without approvalof therelevantautliorities,wereconvertedinto stock-in-tra.deon 1.9.1992. The AssessingOfficerwhilerejectingthe contentionraised on behalf of the assessee, held that no exemption was available to the assessee in case of conversion of urban land into stock-in-trade till the assessmentyear 1993-94. Accordingto the AssessingOfficer,tlie land was acquu-ed in 1980, possession is taken as on 1.4.1981, tluis the assesseeis not covered.underexceptioninsertedw.e.f. 1.4.1994. Thus, the AssessingOfficeradded the value of the land towards the net wealth of the assessee. Aggrieved,from the order of the AssessingOfficer dated 30.3.2001, an appeal was prefen-ed by the assessee before the WVAlf2G03 pg.3ofU V •v' Commissioner,WealthTax (Appeals),who vide his orderdated 2.2.2001, held tliat Supreme Court vide his order 1.5.1991 had pennitted the re developmentofthe millareato flattedfactoiycomplexand grouphousing complex and ordered the existing building to be demolished, thus the remainingbuildingcould not be remained to be standingthere witli the approvalof the appropriateauthority. While dismissingthe appealof the assessee,by adetailedorder,the First AppellateAutliority,interalia,held as under "Tlie assessee in its contention fi'om Nos. 1 to 26 relatingto this 6'^ ground of appeal has not been able to refute the decision of the AO that urban land held by it as stock in trade is not exemptin A.Y. 1993-94. In orderthat there is no ambiguityleft while not allowing exemption to the assesseecompany,the amendmentby Finance Act 1992 in WT Act was also discussed on page 2 of tlie assessment order. It has been discussed that • clause2(ea) to Section2 v,'as inserted to the WT Act w.e.f. 1/4/1993 and the inserted provision providedfor exemptionof any unused land held by the assesseecompany for industrialpurposes for a period of 2 years from the date of its acquisition by it. As discussed further in the I , assessmentorder tlie assessee converted its land into stock in tcade in 1/9/1992 which coiTesponds to A.Y. 1993-94. It is obvious that tlie assessee should not have claimed the exemption because in A.Y. 1993-94 no exemption is available. The exemption in such cases is availablefrom A.Y. 1994-95 and not in 1993-94." 24.0From the above it becomes clear that the AR is admittingthat it is only on the basis of the amendmentbrought about by tlie Finance Act WTA 7/2003 pg.4ofll 4. 1993 applicable fi'om A.Y. 1994-95 flial exemption is being claimed by tlie Inspite of it being cleaily and unambiguousy Slonedmat th! amendmenton st^ngft ofwhichtlieexemptionis beingclaimedby appellant would be applicable on y w.eX 1/4/1994, tlie AR is trying to claim flie exemption in the year under consiteation which against the clear unambipraus provisionsofWT Acthad tlieamendmentl»en applicable to A.Y. under consideration, certainly the same would ^ the- amendment. In view of the specitic mention of the date of '/4/1994 mentioned in the amendment, the AR's contention ra exemptionshould be allowed in view of (he amendmentbroughtabout by,lie 1993 in the A.Y. underconsiaerationis cle^ly •misplaced, the same cannotbe acceptedand is accordinglyrejected. 75 0 In view of the foregoingdiscussionthe AO's action in including in tiie appellants net wealth the value of factor7 Remises and residentialcolonyis held to bejustiiied. Aggrieved from the above order,the assesseepreferredan appealbefore fte Income-tax AppellateTribunal,Delhi Bench, which videavery, detailedorderacceptedthe appealof the assesseeby holding as under "We have no doubtin our mind that in ordei-to decidetaxabilityof an asset we haw to po by thetactualpositionas on thevaluationdate^ f, is no. permitted under law to l hypotheticalsituation which never ^ are fully convinced with the factual position as .5 of It WTA 7/2003 P« explainedby thecounselfor the assesseecompany that as on tlie valuation date old factory premises as well as residential colony were existing, except for a small portion which has been demolished. As per the conditionsimposed by the Municipal Corporationof Delhi,completedemolitionhad to be done beforeany activityfor constractioncould be commenced. Approval for consti'uctionnad been granted much later by flie Municipal Corporationof Delhi and that too only for one phase for the factory complex. Above approval had also been withdrawn by way of work stoppage notice. Thei^fore, even as on date of permission for construction does not exist. Residential premiseshad been occupiedby the ex-employees . of the assesseecompany as on the valuationdate. Legal disputes have been going on before the Courts. In view of these factual circumstances premises in question cannot be said to be land. Tlierefore,weare agreeable to the contentionsof the learned counsel for the assessee that said premisescannot be said to be urban land for the purposeofsection2(ea) of W.T. Act. On die basis of above factual position itself, claim of the company deserve to succeed. We find trom the orders of lower authorities that the factual position as submitted by the assessee company has not been consideredand appreciatedby tliem. Tlie AO, in fact did not even consider it necessary to give any weightageto the factualpositionand he justconcludedthat whateverargumentshavebeen put forth it is urban land taxed under WT Act. Further, he has said that under no ch-cumstances the u3-ban land is exempt CWT (A) tliougli considered and recorded factual position in his order, he disregarded the same by taking into accounta a hypotheticalsituationfor each claim, Supreme Court thougli, had permitted redevelopmentof area in principlebut case of the assesseecompanyfor gmnting approval etc. was to be considered by MCD. DDA, etc. with referenceto relevantregulationsand bye-laws. It WTA 7/2003 pg.6ofll V cannotbe said that approvalof maps etc. was only a routine matter. 10. We accordingly uphold claim of the assessee company. Firstly, on the ground that premisesunderreferencecaiinotbe said to be land and, tlierefore,were not in the natiire of ''Urban Land" chargeable to wealth-tax. Fiu'tlier, as per tlie Explanationto sub-section(ea) ofsection2 of W.T. Act also, the land in question is not chai'geablealsofor the reason " 5. As is clear from the above two orders, differentreasons have beengivenby the autlioritiesfor acceptingand/orinjectingtliecase of tlie assessee. Basically, tv/o gi'ounds appeared to have influenced the authoritiesin coming to then- respectiveconclusions. Fustly, that the assesseehimselfhad treatedthe land and buildingas stock-in-trade and thus did not discloseit in the wealthtax returnfor the yeai-1993-94.This by itselfwould an admissionon tlie part of the assesseethat the said land is an asset chaigeable to wealth tax in terms of the statutory provisions. Secondly,on the interpretationof therelevantprovisions,the First AppellateAuthorityhad found that the "stock-in-trade"would not deprive tlie respondentof the benefitavailableto it under the Act, in so fat- as it was exempted specificallyfrom being an asset of land for the purposeofits chai-gabilit}-'underthe WealthTax Act. WTA 7./2003 pg.7 of 11 't-A 6. Section 3 of tlie Act is the chai-ging section which contemplatesthat subject to the provisions of.the Act, there shall be chai-gefor every assessmentyear commencingfrom the specifieddate, a tax in respect of the net wealth as specified in ScheduleI of the Act. Section2(e) defines the expression"assets"which includesproperty of every descriptionmoveableor immovablebut does not includewhat is specifically included in that definition. Section 2(ea) again defines ^assets'in relationto the assessmentyearcommencingon the first day of April, 1993 and/or in subsequentassessmentyeai'; whereinurban land is stated to be inclusivein tiie definitionof the assets. Sub-clause(b) of explanationto section2(ea)explainsthe"urbanland"as well as illusti-ates what exemptionis peimissiblefor landed propertynot to be includedas netwealth/assetofthe assessee. The saidprovisionreadsas undei (b) "urbanland" meanslandsiUiate-- (i)in any area which is comprised within the jurisdictionof a municipality(whetherknown as a municipality',municipal coiporation, notified area committee,'townarea committee,town committee or by any other name) or acantonmentboai'd and whichhas apopulationof not less tlian ten thousand accordingto the last precedingcensus of which the relevant figui-es have been published before the valuation date; or ai)in any area witliin such distance, not being more than eight kilometei^from, the local limits of any municipality'or cantonmentboardrefeiredto in sub- clause (i), as the Centralgovernmentmay, having ps.Sofll V/TA 7/2003 rj P u xi regard to the extent of, and scope for, ubranisation of that area and other relevant considerations, specify in this behalfby notificationin the Official Gazette, but does not include land land on which constiuction of a buildingis not permissibleunder any law for the time being in force in tlie area in which such land is situatedor the land occupiedby any building which has been constracted with the approval of the appropriateauthorityor any unusedland held by tlie assesseefor industrialpurposes for a period of two years from tlie date of its acquisitionby him *[or any lartd held by the assesseeas stock-in-tradefor a period of threeyearsfrom the date of its acquisition by him];" 7. Tlie above provisionswere insertedby the FinanceAct, 1993 and made effective from 1.4.1994. We ai-e dealing with the relevant assessmentyearfor 1993-94. On thebarereadingof theaboveprovision, it is deal- that urbanland would not includea land, on whichconstraction ofabuildingis not permissibleunder any law for die timebeing in force in the area where land is situated or the land occupiedby any building whichhas beenconstnictedwith the approvalof the appropriateautliority or in any unusedland held by the assesseefor an industiialpuiT30sefor a periodoftwoyearsfrom the dateofits acquisition. It is an admittedcase beforeus that the assesseedoes notclaimbenefitof the thirdclauseof the categoiyspecifiedin the provisions. The assesseewouldobviouslyhave WTA 7/2003 pg.9of 11 advantageof the land being not included as an urban land because no constractionat the relevanttime was permissibleon tlie land in question. In alternative.Hie buildingwhich has been constructed,ifat all, with the approvalof the appropriateauthorities. The Maxim, Generaliaveiba sunt generaliterintelligenda- wouldbe afair perceptto inteipietationof tlie provisions as tlie words used being of general nature should be understoodgenerallyand despite the fact that they relate to the law of revenue, the general consti-uction Hiereof would further the cause of legislation. The intentionof the legislativeappearsto be thatland which falls within the exceptionafore-refenedwould have to be excludedfiom the ambit and scopeof theexpression"urbanland". Oncethelandor any buildingthereuponmakingit acombinationoflandand buildingis not an urbanland,thenit couldnot be an assetas definedundersection2(EA) of the Act. The rcsuitthereofwouldbe not to ti-eat the same as net-wealth of an assesseefor the purposesof the provisionsof the Wealth Tax Act. The Firet AppellateAutlioritj'had proceededon the assumptionthat now orders of SupremeCourt dated L5.1991 qua re-developmenthad been permittedof the mill aiea to flatted factory complexand group housing complex. Leavewas also grantedto demolishthe existingbuilding. It is not in dispute before us that till date no pennission/approvalhas been grantedby the appi'opriateauthorityto the assesseeto raise tlie building WA 7/2003 pg.lOofll r-'- 11 in-consonance with tlie plans and as such the old structure existing is not in-confirmity with law and had not been raised with the leave of any autliority. In other words, on the land in question, no constraction was permitted and tlie authorities concerned have not granted its approval so fat" for raising constraction on that land. In either of these cases, tlie land would stand excluded from the definition of '\irban land" chargeable to wealth tax. In relation to one phase, the permission was granted much subsequent to the relevant yeai- of assessment, which as stated on record before us, had also been witlidrawn and work was stopped. In tlie facts and circumstances afore noted, we are of the considered view that no substantial question of law arises for consideration of the Court in the present appeal, as such the appeal is dismissed leaving the parties to beai' tlieir own costs. Febniary 03,2005 rds NTER KUMAR JUDGE ^tjADArTB. LGKUR .TUDGE