The Commissioner Of Income Tax, Chennai v. M/S.mil Industries Ltd, 25A Industrial Estate, Ambattur, Chennai 600 098

IN THE HIGH COURT OF JUDICATURE AT MADRAS THE HONOURABLE MR.JUSTICE R.SUDHAKARANDTHE HONOURABLE MS.JUSTICE K.B.K.VASUKI The Commissioner of Income Tax,Chennai....Appellant/Appellant in all TC(A) VsM/s.MIL Industries Ltd,25A Industrial Estate, Ambattur,Chennai 600 098.... Respondent/Respondent in All Tc(A) Prayer:- These Tax Case (Appeals) are filed under Section 27 a ofthe Wealth - Tax Act 1957 against the order of the Income TaxAppellate Tribunal, Madras "B" Bench, Chennai dated 29.7.2011 inWTA Nos.42/Mds/2010, 44/Mds/2010 and 43/Mds/2010 respectively. All these Tax Case Appeals are filed by the Revenue againstthe order of the Tribunal, relating to the Assessment Years 2003-04, 2004-05 and 2005-06 respectively, raising the followingquestions of law : 1) Whether on the facts and circumstances of the case,the Tribunal was right in upholding the order of the CIT(A)who directed the assessing officer to exclude the value ofthe land at Ambattur while computing the net wealth of theassessee? 2) Whether on the facts and circumstances of the case,the land sold at Ambattur would fall within the exclusionclause of proviso to Section 2(ea) of the Wealth Tax Act?https://hcservices.ecourts.gov.in/hcservices/ 2.The issue that arises for consideration herein is as towhether the land at Ambattur sold by the assessee would fall withinthe exclusion clause of Section 2(ea) of the Wealth Tax Act? 3.It is the contention of the assessee that every part of theland sold comprise of factory building i.e. administrative andresearch and development block and considering the nature of use towhich the land sold prior to the sale, it cannot be treated asurban land and the levy of wealth tax on the entire portion of theland is hence against law. Whereas, according to the Revenue, theconstructed area was very less and highly disproportionate ascompared to the total area of the land, as such, the land inquestion is not exclude under Section 2(ea) of the Wealth Tax Act. 4.While the Assessing Officer, accepting the contention of theRevenue, levied Wealth Tax, the learned CIT(A) set aside the orderof the Assessing officer, on the basis of the remand report of theAssessing Officer. The Tribunal, on the basis of the remand reportobtained from the Assessing Officer and objections filed by theassessee on such report and after duly appreciating the facts andcircumstances involved in the present case, in the light ofrelevant provisions of law under Wealth Tax Act, dismissed theappeals filed by the Revenue, thereby upheld the order of thelearned CIT(A). 5.The Tribunal, in para 7 of the impugned order extractedparas 20 to 24 of the order of the learned CIT(A) and found thesame to be well reasoned order by considering all the materials andto be based on materials. The Tribunal was of the view that therewas no infirmity or flaw in the order passed by the learned CIT(A).The relevant paras 7 and 8 of the impugned order of the Tribunalare reproduced hereunder: “7.We have heard both the sides, considered thematerial on record and also gone through the relevantprovisions of law as well as approved site map filedbefore the Assessing Officer and copy placed before us andfind that the ld.CIT(A), while considering the plea of theassessee in the light of remand report obtained from theAssessing Officer and objections filed by the assessee hasconcluded to exclude such land from the definition ofasset as per proviso to section 2(ea) of the Wealth TaxAct. The relevant paras from 20 to 24 reproduced as under:“20. I have carefully considered the arguments of theLd AR and the Remand Report of the Assessing Officer andalso the records and the documents before me. I find thatthe argument of the Appellant that the lands sold duringthe assessment years 2005-06 and 2006-07 cannot be treatedas urban land or unused land has some force. As can behttps://hcservices.ecourts.gov.in/hcservices/ seen from the plan submitted before me and the AssessingOfficer, the land was purchased by the Appellant for thepurpose of putting up a factory at Ambattur and in factthe Appellant has put up the factory as can be seen fromthe plan submitted. The plan submitted by the Appellantclearly indicates the various construction on the land atAmbattur as well as the purpose for which the otherportion of the land have been earmarked including thelands sold during assessment year 2005-06 and 2006-07. 21.I find that the argument of the Assessing Officerthat only 31100sq.ft of land can be said to be covered bybuilding constructed with the approval of the concernedauthorities and that the balance land is to be treated asvacant unused land is misconceived. In any land, theowner has to leave a certain portion of the land inaccordancewiththeregulationsgoverningtheconstructions at the place where the land situated. It isalso necessary that the owner has to provide for parkingspace for the executives, visitors and also0 for theemployees which is true in all the buildings constructed. 22.Every building has to have open space for theproper enjoyment of the buildings constructed on the land.In this sense, the argument of the Ld AR has force thatonce a building is constructed on the land, then it ceasesto be vacant land and becomes land and building. Areading of the provisions of Section 2(ea) would make itclear that the terms “urban land” does not include land onwhich any building is constructed. 23.In this connection, it may be appropriate to referto the observations of the Delhi High Court in the case ofCWT vs. D.C.M.Ltd., (290 ITR 615) wherein at page 621, thesaid High Court has held as under : “In the maxim, generalia verba sunt generaliterinterlligenda – it would be helpful precept tointerpretation of the provisions which uses the wordsof general would have to be construed generally. Theintention of the Legislature appears to be that landwhich falls within the exception afore referred wouldhave to be excluded form the ambit and scope of theexpression “urban land”. Once the land or anybuilding thereupon making it a combination of land andbuilding is not urban land, then it could not be anasset as defined under Section 2(ea) of the Act.” 24.In view of the foregoing provisions of law andhaving regard to the facts and circumstances of the case.I hold that the Assessing Officer erred in treating theentire land as well as the lands sold during thehttps://hcservices.ecourts.gov.in/hcservices/ assessment years 2005-06 and 2006-07 as urban land andincluding the same in the net wealth of the Appellant.The Assessing Officer is directed to exclude the value ofthe land at Ambattur while computing the net wealth of theAppellant. 8.From the perusal of the conclusion of the ld.CIT(A) as reproduced above. It is seen that he has passed awell reasoned order by considering each and every aspectof the matter in the light of factual aspect, which hasalso been properly demonstrated by the ld. Counsel for theassessee before us while referring to the approved sitemap of Superintendent of Central Excise. No infirmity orflaw has been pointed out by the ld.Dr or noticed by us inthe conclusion as drawn by the ld.CIT(A). Therefore, inview of the facts, circumstances and material on record,we concur with the finding and conclusion of the ld.CIT(A)and uphold his action while dismissing the appeals of theDepartment being devoid of any merits.” 6.Thus, as the issue involved herein being pure question offact and as both the Appellate Authorities, after verifying therecords, arrived at such conclusion, we find no question of lawmuch less any substantial question of law arises for considerationin these appeals. rk To1.The Income Tax Appellate Tribunal Chennai-'B' Bench, Chennai.2.The Commissioner of Income Tax(A)-V, Chennai. 3.The Assistant Commissioner of Income Tax, Company Circle -IV(3), (I/c) Chennai-34 6.Thus, as the issue involved herein being pure question offact and as both the Appellate Authorities, after verifying therecords, arrived at such conclusion, we find no question of lawmuch less any substantial question of law arises for considerationin these appeals. rk To1.The Income Tax Appellate Tribunal Chennai-'B' Bench, Chennai.2.The Commissioner of Income Tax(A)-V, Chennai. 3.The Assistant Commissioner of Income Tax, Company Circle -IV(3), (I/c) Chennai-34 https://hcservices.ecourts.gov.in/hcservices/