APPOLLO TYRES LIMITED Vs. ASSITANT COMMISSIONER

JUDGEMENT

(1.) This Wealth Tax Appeal is filed by the assessee challenging the order of the Tribunal upholding wealth tax assessment on the value of the land on which a commercial building was under construction as on the valuation date. The appellant-assessee is a public limited company engaged in production and sale of automotive tyres. It was allotted a plot in Gurgaon earmarked for institutions by the Haryana Urban Development Authority on 29-12-1995. The appellant commenced construction of a commercial building in the plot in November, 1997, completed construction of a four storied building with basement and started occupying it from 29-3-2000. After completion of construction of the building, the land and building are granted exemption from wealth-tax as the said asset falls under the exempted category. However, in the course of assessment for the assessment year 1998-99, the Wealth Tax Officer assessed the value of the land treating it as urban land under Clause (v) of Section 2(ea) under which "assets" are defined. Even though the assessee contended that construction of building was in progress on the valuation date, that is, 31-3-1998, and so much so the land cannot be treated as urban land under Explanation (b) to Clause (vi) of Section 2(ea) of the Act and the first appellate authority upheld the claim of exemption to the assessee, the Tribunal on second appeal by the department, reversed the order of the first appellate authority and upheld the assessment by relying on the decision of the Karnataka High Court in CWT v. Giridhar G. Yadakm,2007 163 Taxman 372. We have heard senior counsel Sri G. Sarangan along with Sri Vinod Chandran appearing for the appellant and senior counsel Sri P.K.R. Menon along with Sri Jose Joseph, appearing for the respondent.

(2.) Since the question involved is on the interpretation of meaning of the term "urban land" as defined under the Act we have necessarily to refer to the definition clause and for easy reference the relevant portions of the definition clause is extracted hereunder : -

(3.) Senior counsel Sri Sarangan appearing for the appellant submitted that Karnataka High Court judgment has no application to the facts of this case because the building involved in that case was a flat complex and what the Karnataka High Court held was that urban land on which building was constructed does not qualify for exemption until the building is fully constructed. However, in this case, admittedly the urban land allotted to the appellant under the category "institutional allotment" was used by them for construction of a commercial building which when completed qualifies for wealth-tax exemption. The contention of the assessee is that the land allotted to the assessee is for commercial purpose, that is for industrial use, and under the exemption clause contained in the definition of "urban land" all the unutilised industrial land qualifies for exemption for two years from the date of acquisition by the assessee. The contention of the assessee is that exemption ceases to be available only if after two years, the land is continuously kept vacant without utilising it for construction of building for industrial or commercial purposes. Senior counsel for the revenue on the other hand contended that the intention of the Legislature in limiting the exemption for vacant land up to two years is only to ensure that if the assessee wants to get exemption beyond two years, assessee should have completed construction of the building in the course of two years and used the building for industrial purposes. Of course, vacant urban land could be used for industrial purpose without even construction, if it is used for purposes like storage. However, in this case, admittedly the assessee started construction of a commercial building as on the valuation date and in the course of two years thereafter the assessee completed constructed and started using the building which is no longer assessed by the Wealth Tax Officer as the building qualifies for exemption.