COMMISSIONER OF WEALTH TAX Vs. E UDAYAKUMAR

JUDGEMENT

(1.) THE above tax case appeals are directed against the order of the Income-tax Appellate Tribunal in WTA. Nos. 12& 13/mds/2004, dated 07. 03. 2005.

(2.) THE Revenue is the appellant. THE assessment years involved are 1997-98 and 1998-99. THE assessee filed returns of wealth admitting the wealth of Rs. 15,000/- and Rs. 25,000/ -. He owns 2. 25 acres of agricultural land within the corporation of Tirunelveli and its value is rs. 78,75,000/ -. THE assessee claimed exemption under Section 2 (ea) of the wealth Tax Act (herein after referred to as'the Act') on the ground that those lands are agricultural lands and construction of building thereon is not permissible under the Urban Land Ceiling Act. THE assessing officer found that the land has the potential to be used for non-agricultural purposes subject to prior permission from the concerned authorities. THE assessing officer also found that a hospital building has been constructed on the adjacent land. THErefore the assessing officer decided to assess the said land also for taxable purpose and brought the value of Rs. 78,75,000/- to tax.

(3.) FROM the plain reading of Section 54b of the Income tax Act, 1961, it is clear that to claim the benefit of this provision, the following conditions are required to be satisfied: (i) the capital gain must arise from the transfer of land which, in the two years immediately preceding the date on which the transfer took place, was being used by the assessee or his parent for agricultural purposes; and (ii) the assessee must have purchased the land within a period of two years after the sale of the above land for being used for agricultural purposes.