PRINCIPAL COMMISSIONER OF IN vs. M.BALASUBRAMANIAM

TCA.No.908 of 2019 In the High Court of Judicature at Madras Dated : 14.10.2020 Coram : The Honourable Mr.Justice T.S.SIVAGNANAM and The Honourable Mrs.Justice V.BHAVANI SUBBAROYAN Tax Case Appeal No.908 of 2019 Principal Commissioner of Income Tax 1 No.63, Race Course Road, Coimbatore. ...Appellant -vs- Shri M.Balasubramaniam PAN: ABEPB2022Q ...Respondent APPEAL under Section 260A of the Income Tax Act, 1961 against the order dated 19.02.2016 in WTA.No.7/Mds/2015 on the file of the Income Tax Appellate Tribunal, Madras 'A' Bench for the assessment year 2008-09. For Appellant : M/s.K.G.Usharani Junior Standing Counsel For Respondent : Mr.R.Vijayaraghavan for M/s.Subbaraya Aiyar Padmanabhan Judgment was delivered by

T.S.Sivagnanam,J

This appeal, filed by the Revenue under Section 27A of the Wealth Tax Act, 1957 [hereinafter referred to as “the Act”] is directed against the order 1/13 http://www.judis.nic.in TCA.No.908 of 2019 dated 19.02.2016 in WTA.No.7/Mds/2015 on the file of the Income Tax Appellate Tribunal, Madras 'A' Bench for the assessment year 2008-09. 2.The following substantial questions of law have been raised for consideration: “1.Whether the Tribunal was right in holding that the AO's estimation on the basis of guideline value is not justified in view of the proposed road through the subject land and pending finalisation and demarcation of exact location, the authorities concerned may not permit any construction over the land? 2.Whether the Tribunal is correct in holding that once the construction is not permissible the land in question cannot fall within the definition of “Urban Land” u/s. 2(ea) of the Wealth Tax Act when the assessee himself classified this property as an asset as per Section 2(ea) of the Wealth Tax Act?” 3.We have elaborately heard M/s.K.G.Usharani, learned Junior Standing Counsel appearing for the appellant/revenue and Mr.R.Vijayaraghavan, learned counsel appearing for the 2/13 http://www.judis.nic.in TCA.No.908 of 2019 respondent/assessee. 4.The short issue which falls for consideration is whether the Assessing Officer was right in considering the fact as to whether the lands owned by the assessee would fall within the definition of “Urban Land” as defined under Section 2(ea) of the Act. The Assessing Officer while completing the assessment under Section 16(3) r/w. 17 of the Act by order dated 20.12.2013 brushed aside this issue and computed the value of the land as per the guidelines adopted by the Registration Department by the Government of Tamil Nadu and computed the wealth tax payable thereon. 5.We have perused the assessment order dated 20.12.2013 and we find that the assessee has specifically raised the issue that the land in question would not come within the ambit of asset as defined under Section 2(ea) of the Act. The assessee carried the matter by way of an appeal to the Commissioner of Wealth Tax (Appeals)-1, Coimbatore [CWT(A)]. Even before the CWT(A), the assessee had raised the specific issue with regard to the issue that the asset will not come within the definition of Section 2(ea) 3/13 http://www.judis.nic.in TCA.No.908 of 2019 of the Act. Apart from that, the assessee also stated that the CMDA by letter dated 17.04.2012 have stated that no construction can put up on the land as 100 ft road has been proposed to be formed in those lands and other adjacent lands. Therefore, it was argued that the order passed by the Assessing Officer is erroneous. The CWT(A) did not specifically deal with the said issue to reject the case of the assessee by stating that the letter of the Member Secretary, CMDA dated 17.04.2012 is not addressed to the assessee and accordingly, confirmed the wealth tax assessment. The assessee filed an appeal before the Tribunal which in our considered view rightly took note of Section 2(ea) of the Act and more particularly, Proviso to Explanation 1(b) which defines Urban Land. After noting that there was proposal to form a 100 ft road and that no construction can be put up on the land and that apart, the land has been classified as coastal region, zone-Ii and allowed the assessee's appeal and set aside the orders passed by the Assessing Officer as well as the CWT(A). 6.We find that the order passed by the Tribunal is perfectly legal and valid. Furthermore, we note that very recently, the Government of Tamil 4/13 http://www.judis.nic.in TCA.No.908 of 2019 Nadu, in G.O.(D).No.91, Highways and Minor Ports (HW 2) Department, dated 06.06.2019 has acquired the part of the land in Survey No.406/78 Part to an extent of 6500 sqm. Further, the learned counsel for the assessee has submitted that till date no permission is being granted to put up any construction on the said property and the stand taken by the CMDA in the letter dated 17.04.2012 has been reiterated in the letter addressed to the assessee himself dated 21.12.2015. In the said communication, the assessee has been informed that the site under reference lies in the IT corridor and CRZ-II within 100m from Buckingham Canal and the street alignment of proposed 30.5m (100ft) road to ECR is passing through the said survey number. Land use assigned as per FMB has been furnished to the applicant/assessee. Further, it has been stated that any sub-division or construction of building or development in the land in question is not valid in law unless planning permission is applied for and duly granted for sub- division, construction or development. Therefore, as on date, the assessee cannot put up any construction on the said property. More or less, an identical issue came up for consideration before this Court in the case of The Principal Commissioner of Wealth Tax, Central-2, Chennai vs. 5/13 http://www.judis.nic.in TCA.No.908 of 2019 Mrs.Sushila Devi Kejriwal in T.C.A.Nos.683 to 686 of 2019, wherein the said property fell within the Coastal Region Zone-III and identical submissions were made by the revenue to sustain the revenue to sustain the wealth tax assessment. The appeal filed by the revenue was dismissed by judgment dated 01.10.2020, in which, we had followed the decision in T.C.A.Nos.622 to 624 of 2018 dated 30.09.2020. The operative portion of the judgment reads as follows: “5.In the assessee’s own case for the assessment years from 2005-2006 to 2007-2008 the Tribunal rejected the Department’s appeals on the ground of low tax effect. The Revenue carried the matter by way of appeals to this Court contending that the matter arose under the Wealth Tax Act and the relevant circular of the Central Board of Direct Taxes relied upon by the assessee was inapplicable. By common judgment dated 30.9.2020 in TCA.Nos.622 to 624 of 2018, we rejected the said contention raised by the Revenue and dismissed the appeals filed by the Revenue. 6.In the said common judgment, we dealt with the merits of the claim and held in favour of the assessee on the following lines : “4. The first two substantial questions of law have to be 6/13 http://www.judis.nic.in TCA.No.908 of 2019 answered against the revenue, in the light of the Circular issued by Central Board Direct Taxes [for brevity, 'CBDT'] bearing Circular No.5/2019 dated 05.02.2019, which reads as follows: 'Reference is invited to Board's Circular No.3 of 2018 dated 11.07.2018 (hereinafter, referred to as "the Circular") vide which monetary limits for filing of income tax appeals by the Department before Income Tax Appellate Tribunal, High Courts and SLPs/appeals before Supreme Court were specified. Para 11 of the Circular states that the monetary limits specified in para 3 shall not apply to writ matters and Direct tax matters other than Income tax and filing of appeals in such cases shall continue to be governed by relevant provisions of statute and rules. 2.There is no charge under Wealth Tax Act, 1957 w.e.f 1st April, 2016. Therefore, as a step towards litigation management, it has been decided by the Board that monetary limits for filing of appeals in Income tax case as prescribed in Para 3 of the Circular shall also apply to Wealth Tax appeals through extension of the Circular to Wealth tax matters in a mutatis mutandis manner and with modifications as prescribed hereunder: 3.For the purpose of Wealth Tax appeals: 7/13 http://www.judis.nic.in TCA.No.908 of 2019 A. Para 4 of the Circular shall be read as follows: "For this purpose, 'tax effect' means the difference between the tax on Net Wealth assessed and the tax that would have been chargeable had such Net Wealth been reduced by the amount of wealth in respect of the issues against which appeals is intended to be filed. However, the tax will not include any interest thereon, except where chargeability of interest itself is in dispute. In case the chargeability of interest is the issue under dispute, the amount of interest shall be the tax effect. In case of penalty orders, the tax effect will mean quantum of penalty deleted or reduced in the order to be appealed against" B. Para 11 of the circular shall read as follows: "The monetary limits specified in para 3shall not apply to writ matters." 4.The said extension of the Circular to wealth tax appeals shall come into effect from the date of issue of this circular. 5.The same may be brought to the notice of all concerned. 6. Hindi version will follow.' 5.In view of the above circular, the threshold limit fixed by the CBDT for the revenue to pursue the appeals has 8/13 http://www.judis.nic.in TCA.No.908 of 2019 been made applicable to Wealth Tax Appeals also with effect from 05.02.2019. In the light of the above circular, the substantial questions of law Nos.1 and 2 are answered against the revenue. 6.Mr.J.Narayanasamy, learned counsel appearing for the appellant / revenue contended that the Tribunal erred in dismissing the appeals on the ground of law tax effect without taking note of the fact that the revenue audit objection is there in the assessee's case and therefore, the cases would come within the exemption culled out in the circular. 7.It is not clear what is the revenue audit objection in the instant matter. Nevertheless, we have heard the learned counsel for the parties on the merits of the matter. The issue pertains to valuation of a property in Neelankarai village. The assessee contended that the property falls within the high tide zone and in the terms of the coastal zone regulations, the property cannot be put to use for the purpose of constructing any building there on and even if an application is made to the local planning authority / local body, the same will be rejected, as the planning authorities have no jurisdiction to deal with any application for grant of planning permission on a land, which falls within CRZ limits. 9/13 http://www.judis.nic.in TCA.No.908 of 2019 8.The assessing officer did not agree with the same, however, the Commissioner of Income Tax [Appeals] - 15 Chennai, [for brevity, 'CITA'] agreed with the assessee by taking note of the fact that the property falls within the CRZ III Category and the agreement of sale, which was entered into by the assessee was cancelled on 04.06.2005 since at the time of entering into an agreement, the parties were not aware that no construction can be put up on the land. 9.The CITA has recorded the factual finding that the land, which is unbuiltable 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(e) (a) of the Wealth Tax Act. The CITA also referred to a decision in the case of Prabhakar Keshav Kunde Vs. CIT reported in (2010) 194 Taxman 306 (Bom). Thus, considering that factually, the CITA on verification found that the land falls within the prohibited zone CRZ III category. 10.We find no question of law arises for consideration in the instant cases and therefore, we are not inclined to entertain the appeals filed by the revenue. As mentioned above, the substantial question of law no.3 raised by the revenue is, stating that the Tribunal ought not to have 10/13 http://www.judis.nic.in TCA.No.908 of 2019 rejected the revenue's appeal on the ground of low tax effect, without noting the revenue audit objection. Since we have decided in favour of the assessee on merits, substantial question of law no.3 does not arise for consideration. 11.For the above reasons, the appeals filed by the revenue are dismissed against the revenue and substantial question of law nos.1 and 2 are answered against the revenue and substantial question of law no.3 is held to be unnecessary in the facts and circumstances.” 7.In the light of the above position, taking note of the said decision in the assessee’s own case for the earlier assessment years, these appeals have to be necessarily rejected. 8.Accordingly, the above tax case appeals are dismissed and the substantial questions of law are answered against the Revenue. Consequently, the connected CMPs are also dismissed. No costs. 7.In the light of the above discussion, we are of the considered view 11/13 http://www.judis.nic.in TCA.No.908 of 2019 that the order passed by the Tribunal is perfectly legal and valid. Accordingly, the appeal is dismissed and the Substantial Questions of law framed for consideration are answered against the revenue. No costs. (T.S.S., J.) (V.B.S, J.) 14.10.2020 Index: Yes/No Internet: Yes Speaking Order/Non-Speaking Order cse To The Income Tax Appellate Tribunal, Madras 'A' Bench 12/13 http://www.judis.nic.in TCA.No.908 of 2019 T.S.SIVAGNANAM, J. AND V.BHAVANI SUBBAROYAN, J. cse TCA.No.908 of 2019 14.10.2020 13/13 http://www.judis.nic.in