PRINCIPAL COMMISSIONER OF IN vs. M.BALASUBRAMANIAM

T.C.A.Nos.909 & 910 of 2019 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 21.11.2019 CORAM : THE HONOURABLE MR.JUSTICE N.KIRUBAKARAN and THE HONOURABLE MR.JUSTICE P.VELMURUGAN T.C.A.Nos.909 & 910 of 2019 and C.M.P.Nos.24437 & 24439 of 2019 Principal Commissioner of Income Tax 1 No.63, Race Course Road, Coimbatore. ... Appellant in both the appeals Vs Shri.M.Balasubramaniam, Shakthi Nilayam, No.92/51, Nachimuthu Gounder Street, Pollachi - 642 001. ...Respondent in both the appeals COMMON PRAYER: Tax Case Appeals filed under Section 260A of Income Tax Act, 1961 against the order dated 19.02.2016 in WTA Nos.8 & 9/Mds/2015 on the file of the Income Tax Appellate Tribunal Chennai 'A' Bench for the assessment years 2009-10 & 2010-11. For Appellant : Mr.T.R.Senthil Kumar, Senior Standing Counsel. 1/7 http://www.judis.nic.in T.C.A.Nos.909 & 910 of 2019 For Respondent : Mr.Venkata Narayanan for M/s.Subbaraya Aiyar padmanathan C O M M O N J U D G M E N T (Order of the Court was delivered by N.KIRUBAKARAN, J)

The assessee (respondent herein) is the Director of M/s. ABT Industries Limited, Coimbatore and has filed his wealth Tax return for the Assessment Years 2008-2009 to 2010-2011. The Wealth Tax return was processed under Section 16 (1). The Assessing Officer noticed that the Assessee owns 9 acres of non-agricultural land and the assessee claimed that 40% of the land has to be provided for amenities such as road, park etc. Hence, the marketable title would be with respect to 5.40 Acre of land. The assessee valued the land as Rs.83/- per sq.ft. 2.Further the assessee submitted a letter said to be received from the Member Secretary CMDA stating that the land in question is situated in I.T. corridor and Coastal Regulation Zone II and the assessee claimed that there was a street alignment proposal to the extent to 30.5 meter road to ECR through this said land. Therefore, the 2/7 http://www.judis.nic.in T.C.A.Nos.909 & 910 of 2019 Member Secretary CMDA clarified that till the proposed 100 ft road is finalized, the construction cannot be permitted in the land. Since the construction cannot be permitted, the land will not come under the urban land for the purpose of Wealth Tax Act. 3.Hence, the Assessing Officer rejected the claim of the assessee as the land is located within the Chennai Metropolitan limits and falls under the Sub-Registrar Office, Neelangarai and estimated the value at Rs.1200/- per sq.ft. on the basis of guideline value for the Assessment Year 2008-09 and valued at Rs.26,14,908/- and for the Assessment years 2009-10 & 2010-11 valued at Rs.23,35,230/- and Rs.23,35,230/- respectively. 4.Aggrieved by the assessment orders, the Assessee filed appeals before the Commissioner of Wealth Tax (Appeals). The Commissioner of Wealth Tax (Appeals) dismissed the assessee's appeals by holding that the letter from Chennai Metropolitan Authority was not addressed to the assessee at all and clear demarcation of the land with respect to CMDA was not produced. 3/7 http://www.judis.nic.in T.C.A.Nos.909 & 910 of 2019 5.Aggrieved by the appellate orders, the assessee filed appeals before the Income Tax Appellate Tribunal. The Tribunal by common order following the proviso to Explanation 1 (b) to Section 2 (ea) of the wealth-tax Act, held that the land on which construction of a building is not permissible under any law for the time being in force in the area, in which the land is situated would not form part of urban land and thereby allowed the assessee's appeals. Hence, against the said order of the Tribunal, these present appeals have been filed. 6.These appeals are admitted on the following substantial questions of law; “(i)Whether theTribunal 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? (ii)Whether the Tribunal is correct in holding that once the construction is not permissible the land in question 4/7 http://www.judis.nic.in T.C.A.Nos.909 & 910 of 2019 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?"

7.However, when the matter is called today, Mr.T.R.Senthil Kumar, learned Senior Standing Counsel appearing on behalf of the appellant would submit that this issue is covered by Circular No.5 of 2019 dated 05.02.2019 by which if the wealth tax effect is not more than one crore, there should not be any proceedings against any order passed in this regard. This Court has perused the said circular dated 05.02.2019 8.Hence, in view of the submissions made by the learned counsel appearing on behalf of the appellant and also in view of the Circular No.5 of 2019 dated 05.02.2019, these Tax Case Appeals are dismissed as withdrawn. 9.However, the substantial questions of law framed are left 5/7 http://www.judis.nic.in T.C.A.Nos.909 & 910 of 2019 open. In the event the tax effect is above the limit fixed in the said N.KIRUBAKARAN, J. and P.VELMURUGAN, J. ay circular, liberty is granted to the Revenue to make a mention to this Court to restore the appeal to be heard and decided on merits. No costs. Consequently, connected miscellaneous petitions are closed. (N.K.K.,J.) (P.V.,J.) 21.11.2019 ay To Principal Commissioner of Income Tax 1 No.63, Race Course Road, Coimbatore.

T.C.A.Nos.909 & 910 of 2019 and 6/7 http://www.judis.nic.in T.C.A.Nos.909 & 910 of 2019 C.M.P.Nos.24437 & 24439 of 2019 7/7 http://www.judis.nic.in