THE COMMISSIONER OF WEALTH TAX, PANAJI., vs. M/S. GOA INTERNATIONAL SCHOOL PVT. LTD.,

ORAL ORDER : Heard Ms. Asha Desai, learned counsel appearing for the appellant and Mr. Jitendra Jain, learned counsel appearing for the respondent. 2 The above appeal inter-alia seeks to set aside the order dated 04.07.2014 passed by the Income Tax Appellate Tribunal, Panaji.

:2: Tax Appeal No. 60 Of 2015 to set up a state of the art international education institution with world class affiliation and as such purchased a plot of land called “CONO” situated at Siridao, Palem, Tiswadi Taluka on 08.03.2004. The said land was converted into stock in trade during the Financial Year ending 31.03.2006. However, as on 31.03.2005, the assessee was in possession of this vacant urban land, which according to the respondent is within 8 kms from the limits from the municipal limits of Panaji and as such, the asset is within the meaning of Section 2(ea) of the Wealth Tax Act and based on the cost of the land, the market value was assessed at Rs.40 lakhs by the Assessing Officer for the purpose of Wealth Tax. Being aggrieved by the said assessment order, the appeal was preferred before the CIT (A). The CIT (A) accordingly, came to the conclusion that the land is not liable for wealth tax and the Assessment Officer was accordingly directed to delete the addition made and consequently, the ground in the appeal was allowed. The learned Tribunal while examining the appeal by the Revenue has observed at para 10 thus : “10.......................From this above definition there is an amendment in Section-2(14) w.e.f 1.4.2014 that the distance has to be measured aerially. The amendment clearly states that amended provisions will be applicable for assessment year 2014-15 and subsequent assessment years. Since the present case pertains

:3: Tax Appeal No. 60 Of 2015 to A.Y. 2005- 06, the pre amended position would not prevail and as stated earlier the judgments have clearly ruled that distance has to be measured by the road and the distance cannot be taken by aerial distance. In the case of CIT v. Satinder Pal Singh 188 Taxman 54, wherein it has held as under: " A perusal of the aforesaid provision shows that `capital asset' would not include any agricultural land which is not situated in any area within such distance as may be specified in this behalf by a notification in the Official Gazette which may be issued by the Central Government. The maximum distance prescribed by section 2(14)(b) of the Act which may be incorporated in the notification could not be more than 8 kms. from the local limits of municipal committee or cantonment board etc. The notification has to take into account the extent of, and scope for urbanization of that area

and other

relevant considerations.

The reckoning

of urbanization as a factor for prescribing the distance is of significant which would yield to the principle of measuring distance in terms of approach road rather than by straight line on horizontal plane. If :4: Tax Appeal No. 60 Of 2015 principle of measurement of distance is considered straight line distance on horizontal plane or as per crow's flight then it would have no relationship with the statutory requirement of keeping in view the extent of urbanization. Such a course would be illusory. It is in pursuance of the aforesaid provision that Notification No.9447, dated 6-1-1994 has been issued by the Central Government. In respect of the State of Punjab, at item No. 18, the Sub-Division, Khanna has been listed at serial No.

:5: Tax Appeal No. 60 Of 2015 we are of the view that the opinion expressed by the Tribunal does not suffer from any legal infirmity warranting interference of this Court. Accordingly question No. 1 is answered against the Revenue and in favour of the assessee by upholding the order of the Tribunal." Looking to the above facts and circumstances of the case, we find that the "net wealth" means the amount by which the aggregate value computed in accordance with the provisions of this Act of all the assets, wherever located belonging to the assessee on the valuation date, including assets required to be included in his net wealth as on the date under this Act, is in excess of the aggregate value of all the debts owned by the assessee on the date of value which have been incurred in relation to the said assets. The net wealth is chargeable to tax. In the assessee's case the net wealth tax that a land situated in any area which is comprised within juri iction of a Municipality 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 and land situated within 8 kms from the local limits of such municipalities or cantonment as the :6: Tax Appeal No. 60 Of 2015 Central Government may specify. In the case of assessee the valuation date is 31 st March, 2005 and the last census preceding this date is that in 2001. The land containing Survey Nos.15,16,17,18,20,21 and 22 is situated in Village Panchayat Siridao, Goa. As per certificate the population of the village is 2872 which is less than 10000. The population is confirmed by the certificate obtained from Census Department. Thus, the land situated at Survey Nos.15,16,17,18,20, 21 and 22 located within juri iction of Survey Nos.15,16,17,18,20, 21 and 22 Village Panchayat Siridao-Goa is not urban land. The village Panchayat of Siridao-Goa nearest Municipalities Corporation is the Panaji Municipal Corporation. As per the certificate the Village Panchayat of Siridao- Goa is more than 8 kms. Therefore, we are of the view that the land of Siridao-Goa of the assessee Survey Nos.15,16,17,18,20,21 and 22 is not urban land as per Section 2(ea), therefore, it is not an asset. Thus, we allow the additional ground. We have allowed appeal on Cross Objection. We did not allow the revenue's appeal on merit. “

“13. In the ruling in the case of DLF United Ltd. vs. Commissioner of Income Tax, (1995) 129 CTR (Del) 33, the Hon'ble Delhi High Court referred to Explanation to S. 2(1A) relied upon by the Counsel for the Revenue and held that the surplus of the compensation amount arising as a result of :8: Tax Appeal No. 60 Of 2015 acquisition of agricultural land in question was a capital asset and not the income at all. The question of change in the definition of agricultural income because of the insertion of the Explanation has no relevance. Thus, in the facts and circumstances of the case, when M/s. DLF United Ltd. was carrying on business as colonisers by purchase, development and selling the plots of lands in and around Delhi in the course of its business and the Company had acquired certain agricultural lands in certain villages around Delhi, out of which some land was acquired by the Government through a notification issued under s.4 of the Land Acquisition Act followed by the declaration issued under Section 6 of the Land Acquisition Act and the Company received compensation for the land after assessment under the Land Acquisition Act, the ITO, while assessing that the Company was a dealer in lands, had held that the acquired land constituted the Company's stock-in-trade and compensation received by the Company was liable to be taxed as an income in three assessment years under consideration. The question which was raised was answered by the :9: Tax Appeal No. 60 Of 2015 Delhi Court in paragraph 9 of the ruling under consideration, which reads thus : ".......This Court further held that, in other words the agricultural lands purchased originally by the assessee for urbanisation or conversion into building plots remained agricultural land till the acquisition and payment of compensation, and in view of the said finding this Court held that the first question has to be answered in the negative, i.e. the profits were not business profits. With regard to the second question, this Court found that as the compensation had been paid for the acquisition of agricultural land, the question really involved a determination as to whether the price paid for the land by way of compensation could be included within the definition of agricultural income. It was further held that agricultural land was excluded from the definition of 'capital asset' occurring in s. 2(14)(iii) and, accordingly, any gain resulting from the acquisition of agricultural land was not income, and accordingly the answer to the said question was that the compensation amount was not income."

:11: Tax Appeal No. 60 Of 2015 stipulates that it takes effect from 1.4.2014 and, therefore, prospectively applies in relation to the assessment year 2014-15 and subsequent assessment years. Hence, the question whether prior to the said assessment year 2014-15 the Authorities erred in computing the distance by road does not arise at all. The IT cannot be questioned on that ground. For these reasons, Section 11 of the General Clauses Act also has no application in the present matter where the ITAT was concerned with the assessment year 2009- 10 or prior to the time when amendment took effect.

accordingly rejected. K. L. WADANE, J F. M. REIS, J at*