BEGUM MUNAWAR-UL-NISHA vs. COMMISSIONER OF WEALTH TAX

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WTA/1/2001HC Punjab & HaryanaPHHC01056126200122 December 2008Author: MR. JUSTICE ADARSH KUMAR GOEL,MR. JUSTICE L.N. MITTAL4 pages

AI SummaryDismissed

What did the High Court hold?

The High Court held that the appeal is dismissed. The court referred to its order passed on the same day in a connected case (WTA No.33 of 2002, Commissioner of Wealth Tax II v. Begum Munawar-UI-Nisha), where it was decided that the assessee's property was liable to tax under the Wealth Tax Act, 1957. In the present case, the assessee's plea was that since a building was exempted, the appurtenant land should also be exempted. However, the Tribunal had not accepted this plea. The High Court reiterated that in the connected case, it had held that buildings are also liable to tax. Consequently, the assessee's claim for exemption of the appurtenant land would not survive. The court did not provide separate findings on each of the questions of law framed by the assessee, but rather disposed of the entire appeal based on the overarching principle established in the connected case that properties are liable to wealth tax. The ratio decidendi is that if buildings are taxable, then appurtenant land cannot claim exemption on the basis of building exemption, and all properties are liable to wealth tax.

What were the facts?

The assessee, Begum Munawar-UI-Nisha, filed an appeal before the High Court of Punjab and Haryana against an order of the Income Tax Appellate Tribunal (ITAT), Chandigarh Bench. The appeal pertains to assessment year 1993-94 and challenges the ITAT's decision in Wealth Tax Appeal No.106/Chandi/1998. The core dispute revolves around whether certain agricultural land and an old kothi constitute taxable assets under the Wealth Tax Act, 1957. The High Court notes that it has already dealt with a connected case (WTA No.33 of 2002) involving the same assessee and has held that property is liable to tax under the Wealth Tax Act. This present appeal concerns appurtenant land and the assessee's plea for exemption based on the exemption of a building, which the Tribunal did not accept. The High Court also mentions that in the connected case, buildings were held to be liable to tax.

What were the issues?

The High Court was asked to decide the following substantial questions of law: 1. Whether the orders of the ITAT are legally sustainable. 2. Whether the ITAT was correct in holding that agricultural land under cultivation, measuring 75 kanals 9 1/3 marlas, is an asset under section 2(ea) of the Wealth Tax Act, 1957. 3. Whether the ITAT's confirmation of the agricultural land as an asset under section 2(ea) was based on a wrong interpretation, considering previous High Court judgments in Commissioner of Wealth Tax, Patiala v. Hari Singh (123 ITR 558), Commissioner of Wealth Tax, Patiala v. Smt.Devinder Kaur (146 ITR 234), and Commissioner of Wealth Tax v. Jaidev Inder Singh (195 ITR 367). 4. Whether the valuation of the land by the ITAT is sustainable, given that 66 kanals were acquired by the Improvement Trust and were subject to litigation (CWP No.8007 of 1989). 5. Whether the addition of Rs.2,00,000/- as the value of the old kothi is sustainable, based on presumptions and surmises without independent evidence. 6. Whether the ITAT was right in upholding the valuation of the land by using the value of a small plot as a basis, ignoring the Chandra Committee Report. Assessee's Contentions: The assessee argued that the agricultural land under cultivation should not be treated as a taxable asset, particularly in light of previous High Court judgments. They also questioned the valuation of the land and the old kothi, citing issues of acquisition, pending litigation, and lack of evidence. The assessee contended that if a building is exempted, the appurtenant land should also be exempted. Revenue's Contentions: The judgment does not explicitly record the revenue's contentions on each specific issue, but it implies that the revenue supported the ITAT's findings which held the property liable to tax.

Which sections of the Income-tax Act were involved?

2(ea), 27A

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Wealth Tax Appeal No.1 of 2001 Date of decision: 22.12.2008 Begum Munawar-UI-Nisha -----Appellant Vs. Commissioner of Wealth Tax, Patiala and another --Respondents CORAM:- HON'BLE MR JUSTICE ADARSH KUMAR GOEL HON'BLE MR JUSTICE L.N.MITTAL Present: Mr. Akshay Bhan, Advocate for the appellant. Mr. Rajesh Sethi, Sr.Standing Counsel for the revenue. Adarsh Kumar Goel,J.

This appeal has been preferred by the assessee under section 27A of the Wealth tax Act, 1957 against the order of the Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh passed in Wealth Tax Appeal No.106/Chandi/1998 relating to assessment year 1993-94, proposing to raise following substantial questions of law:- “a) Whether in the facts and circumstances of the case, the orders Annexures P.1, P.2 and P.3 are legally sustainable?

b) Whether in the facts and circumstances of the case, the ITAT was right in holding that agricultural land under cultivation measuring 75 kanals 9 1/3 marlas was in asset in terms of the provisions of section 2(ea) of the Wealth Tax Act, 1957? c) Whether in the facts and circumstances of the case, the confirmation of the agricultural land under cultivation measuring 75 kanals 9 1/3 marlas being an asset in terms of section 2(ea) of the Wealth Tax Act, 1957 is based on wrong interpretation in view of the mandate laid down by this Hon’ble Court in the cases of Commissioner of Wealth Tax, Patiala v. Hari Singh’ reported in 123 ITR 558, Commissioner of Wealth Tax, Patiala v. Smt.Devinder Kaur reported in 146 ITR 234 and Commissioner of wealth Tax v. Jaidev Inder Singh reported in 195 ITR 367. d) Whether in the facts and circumstances of the case, the valuation arrived at by the ITAT can be sustained at law ignoring the fact that 66 kanals has been acquired by the improvement Trust in terms of award dated 7.7.1989, the same being the subject matter of litigation in view of pendency of CWP No.8007 of 1989? e) Whether in the facts and circumstances of the case, the confirmation of the addition of Rs.2,00,000/- as the value of the old Kothi can be sustained at law the same being based on mere presumptions and surmises without there being any independent evidence on record to corroborate the same? f) Whether in the facts and circumstances of the case, the ITAT was right in upholding the valuation of the land measuring 75 kanals 9 1/3 marlas estimating the value of a small plot as the basis ignoring the valuation as recommended by the Chandra Committee Report as the basis?

We have dealt with the case of the assessee in our order passed today in WTA No.33 of 2002 (Commissioner of Wealth Tax II v. Begum Munawar-UI-Nisha), holding that property of the assessee was liable to tax under the Wealth Tax Act. Present case relates to appurtenant land and plea of the assessee is that since building was exempted, appurtenant land should also be exempted, which plea has not been accepted by the Tribunal. In the connected case decided today, referred to above, it has been held that buildings are also liable to tax. This being the position, claim of the assessee for exemption of the appurtenant land will not survive.

Accordingly, the appeal is dismissed. (Adarsh Kumar Goel) Judge December 22, 2008 (L.N.Mittal) ‘gs’ Judge

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