IN HIGH COURT OF JUDICATURE AT MADRAS Dated: 18.04.2017 CORAM HONOURABLE MR. JUSTICE S.MANIKUMAR and HONOURABLE MR. JUSTICE D.KRISHNAKUMAR Tax Case Appeal Nos.1061 to 1064 of 2007 M/s.Balaji Industries Ltd., (Amalgamated with Balaji Hotels & Enterprises Ltd.,) 9, Bazullah Road, T.Nagar, Chennai 600 017. .. Appellant in above appeals. Vs. Deputy Commissioner of Wealth Tax, Special Range IV, 121, Nungambakkam High Road, Chennai 600 034. .. Respondent in above appeals. PRAYER: Tax Case Appeal No.1061 of 2007 filed under Section 27A (1)of Wealth Tax Act, 1957 against common order of Income Tax Appellate Tribunal, Bench, Chennai, dated 19.06.2007 passed in W.T.A.No.58/Mds/1999. Tax Case Appeal No.1062 of 2007 filed under Section 27A (1)of Wealth Tax Act, 1957 against common order of Income Tax Appellate Tribunal, Bench, Chennai, dated 19.06.2007 passed in W.T.A.No.59/Mds/1999. Tax Case Appeal No.1063 of 2007 filed under Section 27A 2 (1)of Wealth Tax Act, 1957 against common order of Income Tax Appellate Tribunal, Bench, Chennai, dated 19.06.2007 passed in W.T.A.No.60/Mds/1999. Tax Case Appeal No.1064 of 2007 filed under Section 27A (1)of Wealth Tax Act, 1957 against common order of Income Tax Appellate Tribunal, Bench, Chennai, dated 19.06.2007 passed in W.T.A.No.61/Mds/1999. For Appellant : Mrs.Mallika Srinivasan For respondent : Mr.T.Ravikumar, Senior Standing Counsel for I.T.Department JUDGMENT (Judgment of Court was delivered by D.KRISHNAKUMAR, J.) These Appeals have been filed under Section 27A (1)of Wealth Tax Act, 1957 against common order of Income Tax Appellate Tribunal, Bench, Chennai, dated 19.06.2007 passed in W.T.A.Nos.58 to 61/Mds/1999 in respect of assessment years 1990-91 to 1993-94, respectively. 2. Since point involved in all these Appeals are similar, these Writ Appeals are taken up together for disposal. 3. For sake of convenience and better understanding 3 of facts, facts of case in TCA No.1061 of 2007 is given hereunder:- assessee company filed its return of wealth for assessment year 1990-91 on 28.8.1995 declaring deficit wealth of Rs.99,38,700/- in response to notice issued under Section 17 of Wealth Tax Act on 7.3.1995. assessee showed following as assets assessable for wealth tax:- (i) Property at Mount Road .. Rs. 5,47,20,000 (Abbotsbury) (ii) Lands at Nellore .. Rs. 22,27,742 Rs. 5,69,47,742 ______________ According to assessee, property at Mount Road was being held for productive use and asset is not assessable to wealth tax. Without prejudice to this contention, assessee contended that, on valuation date, property consisted of buildings and land appurtenant thereto, was to be valued as per Rule 3 of Schedule III to Wealth Tax Act. assessee arrived at value of asset as on 31.3.1991 at Rs.5,47,46,181/- taking into account Gross Maintainable rent at Rs.56,784/- (as per Rule 5 (ii) based on receipt issued by Corporation of Madras. It is further contention of assessee that since property was not let out, annual value fixed for property tax purposes at Rs.56,784/- is to be taken as annual rent payable. 4 4. Pursuant to filing of returns, Assessing Officer issued letter dated 26.12.1996 to assessee with regard to above assets. According to Assessing Officer, provision of Rule 3 for valuation of property cannot be applied to Mount Road Property as property has not fetched any income to assessee and that rule applicable is clause (a) to Rule 8. guideline value of property was ascertained from Sub- Registrar's Office, Madras Central and that guideline value of property per ground was Rs.17,00,000/-. Accordingly, value of Mount Road Property was computed as Rs.14,14,23,000/-. In so far as lands at Nellore is concerned, in view of proviso 3(v) to section 40 of Finance Act, 1983, unused land by assessee for purpose of construction of hotel for period of two years from date of acquisition would be liable to wealth tax. assessee had acquired land during previous year relevant to Assessment Year 1988-89 (i.e. 17.4.1986 to 30.06.1992). Therefore, this property would attract levy. Accordingly, Assessing Officer determined total tax payable as Rs.14,85,990/- by Assessment Order dated 31.3.1991 for assessment year 1991-92. Against this order, appeal was preferred before Commissioner of Income Tax (Appeals). By order dated 17.2.1999 in Appeal Nos.15,16,17 and 18 of 1997-98, Commissioner of Income Tax (Appeals) allowed claim of 5 assessee in respect of lands at Nellore and confirmed findings with regard to property at Mount Road and accordingly, appeal was partly allowed. Against this order, appeals were preferred before Income Tax Appellate Tribunal and same were dismissed confirming order of lower appellate authority. Against this order, present Appeals have been filed before this Court. 5. According to learned counsel for appellant, present appeal has been filed challenging order of Income Tax Tribunal. following substantial questions of law were framed at time of admission:- (i) Whether on facts and in circumstances of case, Tribunal is right in law in holding that assessment to wealth tax in respect of assessment years 1990-91, 1991-92, 1992-93 and 1993-94 of amalgamated company, is valid in law? (ii) Whether on facts and in circumstances of case, Tribunal is right in law in not considering issue of valuation of properties which are under challenge in appeals? 6 (iii) Whether valuation declared by appellant in respect of aforesaid properties ought not to have been accepted? 6. assessment order was passed by Deputy Commissioner of Income Tax, Special Range IV, Chennai, by stating that assessee company filed its return of wealth for assessment year 1991-92 on 28.8.1995 declaring deficit wealth of Rs.1,77,53,000/- in response to notice issued under section 17 of Wealth Tax Act on 7.3.1995. assessee showed assets assessable for wealth-tax as Rs.5,69,73,923/-. Assessment under section 16(3) r/w section 17 of Wealth Tax Act, 1957 was completed by Assessing Officer on 31.3.1991 and net wealth of tax as assessable was determined as Rs.6,75,72,900/- and net tax payable was determined as Rs.14,85,990/-. 7. Aggrieved against said assessment, assessee preferred appeal before Commissioner of Income Tax (Appeals) on grounds that Assessing Officer has not properly determined value of property at Mount Road, Madras and Assessing Officer had not appreciated case of appellant that holding of aforesaid property is for productive use and 7 therefore, asset is not amenable to Wealth Tax. Assessing Officer has not accepted contention of appellant that appellant was engaged in business and that property shown by assessee are not assessable to Wealth Tax Act 1993 and further, it was submitted by appellant that Assessing Officer did not consider appellant's claim that property has to be valued as per Rule 3 of Schedule III to Wealth Tax Act. There is no justification by rejecting appellant's claim for Mount Road Property as application of Rule 3 would not give true and correct value of asset. Assessing Officer ought to have seen that under Rule 8, asset could be valued under Rule 20 only if conditions laid down in Rule 8 are satisfied. Therefore, Rule 3 was not adopted by Assessing Officer and determining value of property on basis of guideline value is improper and same is not acceptable one. Further, M/s. Balaji Industries Ltd., Chennai, was not in existence. Therefore, assessment order passed against non-existent entity is ab-intio void. In appeal, various grounds were raised by appellant. It has been held that appellant had purchased land in year 1996 and two year period was already over by assessment year under consideration. On submission of balance sheet for relevant years, it is also seen that property in question was held by appellant as fixed asset and not as stock-in-trade. Therefore, 8 Mount Road Property cannot be exempted under sub.section (iii) to Finance Act 40 of 1983. To aforesaid issue, definition of asset under section 2 of Wealth Tax Act has been considered and held that none of those conditions are fulfilled in cae of lands held. 8. Further, decisions relied on by appellant before Commissioner of Income Tax were considered and they are as follows:- (i) K.P.Varghese vs. ITO (131 ITR 597) (ii)Laksh Shiksha Trust vs. ITO (101 ITR 234) (iii) Indian Chamber of Commerce vs. CIT (101 ITR 234) (iv) CIT vs. Surat Silk Cloth Manufacturers Association (121 ITR 1) (v) Indian Chamber of Commerce vs. CIT (101 ITR 196) appellant/Commissioner has held that aforesaid decision was not applicable to facts of instant case. other contention of appellant before Commissioner is that valuation of property at Mount Road was not taken into consideration as per provisions of law. It is observed by Commissioner of Income Tax that section 7(1) of Wealth Tax act lays down value of any assets, other than cash, shall be valued in manner laid down in Schedule III. Further Rule 3 of 9 Schedule III deals with valuation of any immovable property (including commercial property) unlike analogue Rile IBB, which was operative upto 31.3.1989. Under Rule 5 (ii) where property is not let, amount of annual rent assessed by local authority for purpose of levy of property tax will be gross maintainable rent. Thus, it is pleaded that Assessing Officer was not justified in rejecting application of Rule 3 of Schedule III. Under Rule 8 of Schedule III, asset could be valued under Rule 20 if it is not practicable to apply provisions of rule 3 to case or difference between unbuilt are exceeds twenty per cent of aggregate area of property is constructed on lease hold land and lease expires within period not exceeding 15 years. 9. Rule 8 of Schedule III states: "Nothing contained in rule 3 shall apply,-- (a) where, having regard to facts and circumstances of case, Assessing Officer, with previous approval of Deputy Commissioner, is of opinion that it is not practicable to apply provisions of said rule to such case ; or (b) where difference between unbuilt area and specified area exceeds twenty per cent, of aggregate area ; or (c) where property is constructed on leasehold 10 land and lease expires within period not exceeding fifteen years from relevant valuation date and deed of lease does not give option to lessee for renewal of lease, and in any case referred to in Clause (a) or Clause (b) or Clause (c), value of property shall be determined in manner laid down in Rule 20." 10. By taking into consideration submission of appellant and relevant rules, Commissioner of Income Tax has come to conclusion and directed Assessing Officer to apply Rule 8 of Schedule III for valuing property. other submission, with regard to valuation of lands at Nellore for Assessment Years 1992-93 and 1993-94. These lands were purchased during financial year 1987-88 to 1989-90. lands were purchased in order to establish Aqua Farm. These lands were not suitable for breeding fisheries. Therefore, appellant returned book value as market value. Assessing Officer accepted value returned for assessment years 1990- 91 and 1991-92. However, he enhanced value by 10% for subsequent assessment years. According to appellant, enhancement made by Assessing Officer was contrary to facts and circumstances governing asset. Commissioner of Income Tax found merit in submission. enhancement was found to be made arbitrarily overlooking relevant facts. 11 11. appellant further filed appeal challenging appeal further filed by Commissioner of Income Tax on ground that assessment made after its amalgamation with another company is not valid and Commissioner of Income Tax ought to have accepted value of property at Mount Road, Chennai, as appellant was holding property for productive purpose. Therefore, order of Commissioner of Income Tax is not correct in view of proviso to Sub-Section (3) of Section 40 of Finance Act 1983. aforesaid assets are not assessable as per Act. These are grounds on which appeal has been preferred. 12. appellate Tribunal has considered validity of assessment made after amalgamation and held that as per scheme of amalgamation, all actions and legal proceedings by or against transferor company pending on completion of procedure date shall be continued and be enforced or against transferee company as case may be. Therefore, Tribunal has held even after amalgamation, transferee company, M/s. Balaji Hotels and Enterprises Ltd., will discharge wealth-tax liabilities of transferor company i.e., M/s.Balaji Industries Pvt.Ltd.,. So, other question involved is valuation of 12 property at Mount Road, which was also considered. They say property was not eligible to tax. land already held by assessee was kept for industrial purpose or for construction of hotel for period of two years from date of its acquisition by him for that period it will not be subjected to tax. In present case, assessee did purchase Mount Road Property in year 1986. property in question was not considered by appellant within prescribed period of two years. Therefore, it was held that property was fixed asset and not as stock in trade and hence, liable to pay wealth tax. other contention in respect of conclusion, appellate Tribunal has confirmed order passed by Commissioner of Income Tax (Appeals). Therefore, challenging said order, present appeal has been filed on above said question of law framed by this Court. 13. property at Mount Road was purchased on 25.9.1986 from Sri Sathyasai Central Trust and total cost incurred on purchase of this property amounted to Rs.4.56 crores. total extent of property is 83.19 grounds (1,99,657 sq.ft. total built up area is 61891 sq.ft. said property was purchased by assessee/appellant for purpose of productive use and said asset was not assessable to wealth tax. As per proviso 3(v) to Section 40 of Finance Act, 1983, if 13 land is unused for period of two years from date of acquisition, said property is liable to wealth tax. In this case, assessee had acquired property on 25.9.1986 i.e., during previous year relevant to Assessment Year 1988-89. Therefore, as per above proviso, property would attract levy of wealth tax. Commissioner of Income Tax held that clauses of Scheme of Amalgamation was considered. Clause 9 of Scheme is extracted below:- 9. All action and legal proceedings by or against Transferor Company pending on Completion of Procedures Date shall be continued and be enforced by or against Transferee Company as case may be. Further, clause 10 of Scheme reads as follows that If any suit, appeal or other proceedings of whatever nature (hereinafter called proceedings ) by or against Transferor Company be pending same shall not abate, be discontinued or be in any way prejudicially affected by reason of transfer of undertaking of Transferor Company or anything contained in Scheme but proceedings may be continued, prosecuted and enforced by or against Transferor Company as if this scheme had not been. Therefore, by relying upon aforesaid clause of scheme, 14 proceedings initiated by authority has been continued for completion of wealth tax assessment against appellant company. liability of notices under section 17 was not challenged at relevant time. Therefore, proceedings initiated is valid and in accordance with law as contended by learned standing counsel for revenue. He has further drwan our contention that factum of amalgamation was not disclosed in return filed and only intimated on 5.1.1999 about amalgamation and assessment related to period prior to date of amalgamation. present case relates to period prior to date of amalgamation. Returns were also filed prior to amalgamation and notices were issued before date of amalgamation when assessee existed during assessment. Amalgamation was done with effect from 1.4.1995 before date of completion of assessment. As per scheme, all actions and legal proceedings pending on completion of procedures date shall be continued to enforce transfer as held by Commissioner of Income Tax. existing liability has to be discharged by M/s.Balaji Industries Ltd., as continued. Therefore, contention of appellant would not be valid and cannot be accepted. said proviso for continuation of liabilities forms part and parcel of scheme of amalgamation and same was approved by High Court of Andhra Pradesh. Further, it is seen that both 15 appellate authority and Tribunal has come to conclusion on factual aspects that property at Mount Road was purchased in year 1986 and period of two years from date of purchase was over during relevant assessment year. Therefore, on examination of Balance Sheet for relevant assessment year, property has been held as fixed asset and not stock in trade. Therefore, assessee is liable to be assessed to wealth tax. Insofar as lands at Nellore is concerned, same was purchased to establish Aqua Farm. As water on lands was not suitable for breeding fishes, project had been given up. Therefore, land is amenable to wealth tax. aforesaid contention was decided by appellate authority as well as Tribunal on facts. Therefore, liability of M/s.Balaji Industries Limited would continue against M/s.Balajai Hotels and Enterprises Ltd. Learned counsel for appellant would not raise any of grounds which has already been discussed by appellate Tribunal and in accordance with clause 9 and 10 of scheme. Therefore, we are of opinion that said fact was considered by relying upon relevant clause of amalgamation scheme which was approved by High Court of Andhra Pradesh. Therefore, no interference is required insofar as aforesaid question of law raised by appellant. We confirm factual findings of lower authorities. 16 14. other contention in respect of provision under clause (v) sub-section 3 is as follows:- land holding for purpose of construction of Hotel for period of two years from date of acquisition is exempted from wealth tax. appellant had purchased property in 1986 and period of two years was over during relevant assessment year. As per explanation to Section 2 of Wealth Tax Act, following categories of lands are exempted:- (i) Land on which construction of building is not permissible. (ii) Land occupied by any building which has been constructed with approval of appropriate authority. (iii) Unused land held for industrial purpose for period of two years from date of acquisition. (iv) Any land which is held as stock-in-trade for period of five years from date of acquisition. 15. None of these conditions are fulfilled in case of land held by appellant. appellate authority has also gave its finding confirming order of Commissioner of Income tax. Insofar as valuation of property, Rule 3 of Schedule III of Wealth Tax Act governs valuation of immovable property with effect from 1.4.1989. 17 Rule 3 of Schedule III states as follows:- "3. Subject to provisions of Rules 4, 5, 6, 7 and 8, for purposes of Sub-section (1) of Section 7, value of any immovable property, being building or land, appurtenant thereto, or part thereof, shall be amount arrived at by multiplying net maintainable rent by figure 12.5. Provided that in relation to any such property which is constructed on leasehold land, this rule shall have effect as if for figure 12.5, (a) where unexpired period of lease of such land is fifty years or more, figure 10.0 had been substituted ; and (b) where unexpired period of lease of such land is less than fifty years, figure 8.0 had been substituted. Provided further that where such property is acquired or construction of which is completed after March 31, 1974, if value so arrived at is lower than cost of acquisition or cost of construction, as increased, in either case, by cost of any improvement to property, cost of acquisition or, as case may be, cost of construction, as so increased, shall be taken to be value of property under this rule." 17. guideline value fixed by State Government for value of property disputed by appellant before Court. Therefore, in absence of any other evidence produced before 18 authority by assessee, authority has considered guideline value fixed by Commissioner of Income Tax and directed Assessing Officer for valuation and directing Assessing Officer to apply Rule 3. Therefore, that was also confirmed by Tax Tribunal. contention of appellant for valuation of property which are not in accordance with law cannot be accepted. In absence of any documentary evidence produced before appellate authority, there cannot be acceptance of valuation as declared in declaration in respect of aforesaid properties. 18. In Marshall Sons and Co.(India) Ltd., vs. Income Tax Officer reported in 1997 Income Tax Reports 809 [Volume 223] wherein it has been held that every scheme of amalgamation of companies has necessarily to provide date with effect from which amalgamation/transfer shall take place. It is true that while sanctioning scheme, it is open to company court to modify said date and prescribe such date of amalgamation/ date of transfer is date specified in scheme as transfer date . It cannot be otherwise. 19. In Giridhar G.Yadalam v. Commissioner of Wealth Tax and another reported in [2016] 384 ITR 52 (SC), 19 Hon'ble Supreme Court of India, has held as follows:- 7. It is not in dispute that "urban land" is to be included to calculate "net wealth" for purpose of wealth tax under Act. However, certain lands are not to be treated as "urban land" which are mentioned in Explanation 1(b). But Section 2(e)(a) of Act was inserted by Finance Act 1992 (Act No.18/1992) w.e.f. 01.04.1993. purpose was to exempt some of lands from wealth tax with objective of stimulating investment in productive assets. It is in context that land occupied by any building which has been constructed with approval of appropriate authority is excluded from definition of urban land. On plain reading of said clause it becomes clear that in order to avail benefit, following conditions have to be satisfied: (a) land is occupied by any building; (b) Such building has been constructed; (c) construction is done with approval of appropriate authority; 8. Notwithstanding aforesaid plain language, endeavour of Mr. Gopal Jain is to impress upon us to read said clause to include even that land where 20 construction of building activity has been started. He, thus, wants that words "has been constructed" is to be read as is being constructed. His attempt to persuade us is predicated on following premise. Mr. Jain argued that clause added purposes interpretation i.e. objective for which this clause was added, namely, to stimulate investment in productive assets, has to be kept in mind. In this behalf, he argued that Explanation 1(b) has carved out exceptions/exemptions based on object and purpose of amendment to Wealth Tax Act in 1992. These exceptions have to be construed in line with legislative intent at time which Section 2(ea) was inserted, which was to stimulate investment in productive and non-productive assets and only specified assets were subject to wealth tax. On that premise, he emphasised that in each of aforesaid clauses this objective was kept in forefront. Qua Exception (I) he stressed that where land is classified as "agricultural" and used for agricultural purposes, it 21 will not fall within definition of urban land and is exempted from wealth tax. Agricultural land, although vacant, if put to agricultural use (i.e. productive) is exempt from wealth- tax. He argued that this exception is with reference to land which is vacant for reason that construction is not permissible under any law. As reason for non-construction of building cannot be attributed to assessee, exception has been made on account of which it will not be considered as asset and is exempted from wealth tax. 9. Mr. Jain further argued that in this very hue, exception (ii) also needed to be interpreted. His submission was that word "constructed" is used in context of exempting land occupied by any building which is being constructed with approval of appropriate authority . With commencement of construction of building, land ceases to be identifiable as "urban land" due to constructive utilization of vacant land. When building is under construction, it is work-in- progress or construction activity is on- going but spills over. However, character of land has changed - it is being put 22 to use and, therefore, it ceases to be urban land during period of conversion. 10. According to Mr. Jain, if building is constructed and construction is complete, asset will go out of definition of "urban land" contained in Section 2(ea)(v) read with Explanation 1(b) as it would fall under Section 2(ea)(i) which covers buildings. Section 2(ea)(i) reads as follows: (i) any building or land appurtenant thereto (hereinafter referred to as " house" ), whether used for residential or commercial purposes or for purpose of maintaining guest house or otherwise including farm house situated with twenty- five kilometers from local limits of any municipality (whether known as Municipality, Municipal Corporation or by any other name) or Cantonment Board, but does not include-- (1) house meant exclusively for residential purposes and which is allotted by company to employee or officer or director who is in whole-time employment, having gross annual salary of less than ten lakh rupees; (2) any house for residential or commercial purposes which forms part of stock-in-trade; (3) any house which assessee may occupy for purposes of any business or profession carried on by him; (4) any residential property that has been let-out for minimum period of three hundred days 23 in previous year; (5) any property in nature of commercial establishments or complexes; ? 11. Mr. Jain also submitted that stand of respondent that only completed buildings are to be brought into ambit of word "has been constructed" is not tenable since completed buildings fall under different clause i.e. clause (ea)(i). According to him, if that is accepted then in such cases, Section 2 (ea)(v) read with Explanation 1(b) would not be required at all since completed building is covered independently in Section 2(ea)(i). He, thus, submitted that seen in this context, expression "has been constructed" must be read as " is being constructed" in order to give effect to legislative intent. He relied upon decision of this Court in case of M. Nizamuden v.Chemplast Sanmar Limited and Others [2010] 4 SCC 240, wherein it is held that: It is well settled that if exception has been added to remedy mischief or defect, it should be so construed that remedies mischief and not in manner which frustrates very purpose. 24 Purposive construction has often been employed to avoid lacuna and to suppress mischief and advance remedy. It is again settled rule that if language used is capable of bearing more than one construction and if construction is employed that results in absurdity or anomaly, such construction has to be rejected and preference should be given to such construction that brings it into harmony with its purpose and avoids absurdity or anomaly as it may always be presumed that while employing particular language in provision absurdity or anomaly was never intended. 12. Taking his argument further, Mr. Jain submitted that likewise, exception (iii) is with reference to " unused land" held by assessee for industrial purposes. exemption from wealth tax for such land is for period of two years from date of its acquisition by assessee. After two years, such land, if unused is amenable to wealth tax. However, if assessee starts construction of either factory or any building for industrial purpose within period of two years 25 and construction spills over beyond exempted period, exemption would still continue irrespective of whether construction is completed within two years. Similarly, land held as " stock-in- trade" is exempt from wealth tax for period of ten years since, though vacant, it is held for business purposes. 13. Learned senior counsel also extensively read judgment of Kerala High Court wherein interpretation suggested by him has been accepted and benefit of exemption from wealth tax in respect of such land where building is still under construction has been extended. 14. Mr. Rupesh Kumar, learned counsel appearing for Revenueemphatically countered aforesaid submissions of Mr. Jain. He submitted that cardinal principle of interpreting taxing statute was to give literal construction to language used therein. He further submitted that provision in question was in nature of " exemption provision" where again strict interpretation is to be accorded and onus is upon assessee to show that he falls within four corners of exempted clause. He also submitted that when language of statute was unambiguous and clear, question 26 of giving purposive interpretation does not arise in matters pertaining to taxing statutes. 15. After giving our due consideration to submissions of learned counsel for both parties and after going through judgments of different High Courts, we are of opinion that view taken by High Court of Karnataka in its judgment dated 21.03.2007 is correct view in law and contrary view taken by Kerala and Madras High Courts is erroneous and is liable to be set aside. 16. We have already pointed out that on plain language of provision in question, benefit of said clause would be applicable only in respect of building " which has been constructed" . expression "has been constructed" obviously cannot include within its sweep building which is not fully constructed or in process of construction. opening words of clause (ii) also become important in this behalf, where it is stated that " land occupied by any building" . land cannot be treated to be occupied by building where it is still under construction. If contention of Mr. Jain is accepted, assessee would 27 become entitled to benefit of said clause, at that very moment, commencement of construction even with construction moment one brick is laid. It would be too far fetch, in such situation, to say that land stands occupied by building that has been constructed thereon. Even Mr. Jain was candid in accepting that when construction of building is still going on and is not completed, literally speaking, it cannot be said that building "has been constructed". It is for this reason that he wanted us to give benefit of this provision even in such cases by reading expression to mean same as " is being constructed". His submission was that moment construction starts urban land is put to " productive use" and that entitles land from exemption of wealth-tax. This argument of giving so called purposive interpretation has to be rejected for more than one reasons. These are: (i) In taxing statute, it is plain language of provision that has to be preferred where language is plain and is capable of one definite meaning. (ii)Strict interpretation to exemption provision is to be accorded, which is case at hand. (iii) purposive interpretation can be given only when there is some ambiguity in language of 28 statutory provision or it leads to absurd results. We do not find it to be so in present case. 17. No doubt, purpose and objective of introducing Section 2(e)(a) in Act was to stimulate productive assets. However, event when such provision is to be attracted is also mentioned in Explanation 1(b) itself carving out those situations when land is not to be treated urban land. Legislature in its wisdom conferred benefit of exemption in respect of urban vacant land only when building is fully constructed and not when construction activity has merely started. On contrary, if argument of assessee is accepted, that would lead to absurd results in certain cases. For example, what would be position if construction of building starts but said construction is abandoned mid way? If we accept argument of assessee, in such case, assessee would be given exemption from payment of wealth tax in initial years and same benefit would be denied in year when it is found that construction was abandoned and, therefore, not complete. It would result in granting of benefit in previous year(s), though that was not admissible. Such 29 situation cannot be countenanced. Presumably, because of this reason, Legislature wanted to treat only that land to be excluded from definition of "urban land" at stage when building has been fully constructed on said land. 18. We do not agree with submission of Mr. Jain that situation when building is fully constructed has been covered by Section 2(e)(a)(v) read with Explanation 1(b) as it would fall under Section 2(e)(a)(i). We have already reproduced aforesaid Section and find that it deals with altogether different situations. As pointed out above, Explanation (1) thereof excludes certain categories of "urban land" and we are concerned herewith clause (ii) of this Explanation. By 1992 amendment, Section 2(e)(a) was added which contains definition of " asset" . Clause (v) thereof includes urban land. Thus, urban land is to be included as " asset" for purpose of giving extended meaning to it. Urban Land is defined in Explanation 1 Clause (b) to Section 2(e)(a). 19. Kerala High Court as well as Madras High Court have been influenced by arguments premised on purposeful construction which was argument of Mr. Jain and has not been 30 accepted by us. 20. In CWT v. Giridhar G.Yadalam [2010] 325 ITR 223 (Karn), Karnataka High Court has held as follows:- 6. We have to see as to whether vacant land owned by land owner is exempt for purpose of Wealth Tax proceedings. 7. Section 2(ea) would define term 'asset' and Urban land has been defined in Section 2(ea)(b). said definition reads as under; 8. Urban land means land situate- (i) in any area which is comprised within jurisdiction of municipality (whether known as municipality, municipal corporation, notified area committee, town area committee, tow committee, or by any other name) or cantonment board and which has population of not less than ten thousand according to last preceding census of which relevant figures have been published before valuation date; or (ii) in any area within such distance, not being more than eight kilometres from local limits of any municipality or cantonment board referred to in subclause (i) , as Central Government may, having regard to extent of, and scope for, urbanisation of 31 that area and other relevant considerations, specify in this behalf by notification in Official Gazette, but does not include land on which construction of building is not permissible under any law for time being in force in area in which such land is situated or land occupied by any building which has been constructed with approval o appropriate authority or any unused land held by assessee for industrial purposes for period of two years from date of its acquisition by him or any land held by asses see as stock-in-trade for period of ten years from date of its acquisition by him;" 9. said definition of urban land would show that certain lands are not includable for purpose of 'urban land'. We are concerned in case on hand with regard to lands occupied by any building which has been constructed with approval of appropriate authority. Approval by appropriate authority is not disputed. What is argued before us is that since building is being constructed, same is exempt for purpose of wealth tax in terms of meaning to be given to urban land. careful reading of said definition would show that what is excluded is land occupied by any building which has been constructed (underlining is ours). Admittedly, in case 32 on hand, building is not fully constructed. It is in process of construction. Building in process of construction cannot be understood as building which has been constructed as sought to be argued before us. Courts have to interpret any definition in reasonable manner for purpose of fulfilling object of Act. Courts cannot interpret term in such unreasonable manner making thereby unworkable of Act as sought to be argued before us. Constructed has its own meaning. Constructed would mean 'fully constructed' as understood in common parlance. tribunal unfortunately, without noticing intention of legislature and specific wordings in section has chosen to blindly follow its earlier order. If order of tribunal is accepted then neither owner nor builder nor occupant would pay any tax to Government in terms of Wealth Tax Act. In these circumstances, we are unable to accept that argument advanced by learned counsel for appellant. On other hand, we would accept reasonable argument of learned Counsel for department in matter of proper understanding of word 'land occupied by any building which has been constructed', since that would fulfill intention of legislature. 33 10. In fact, we have been provided with order of tribunal, passed on earlier occasion, on which reliance is placed by tribunal. We have also gone though order in WTA 4/2003. reading of said order would show that tribunal seems to have not properly considered word 'constructed' in said order. tribunal seems to have been swayed away by theory of openness of land for he purpose of taxation. tribunal has failed to notice principle that each word in taxing statute has its own significance for purpose of taxation. word, land on which building is constructed has not been properly appreciated considered by tribunal. said order can not be bar for department to seek tax in respect of land on which building is constructed in terms of defence. 11. Sri Parthasarathy, learned Counsel would place before us Law Lexicon in matter of meaning of word 'building'. We have noticed various definitions in terms of case laws as referred to us. interpretation of any word would depend upon wordings in particular statute and object of Act as understood in law. Therefore, we are not prepared to blindly accept contention of assessee on basis of meaning given to building in 34 terms of Law Lexicon. However wordings in case on hand would support department and those words 'building constructed' would make all difference for purpose of interpretation. At this stage, we must notice recent Bench judgment of this Court in WTA No. 7/2003 c/w 8/2003. facts as narrated by Division Bench in that case would show that assessee Vysya Bank has entered into agreement for purchase of property on 17-6-1978. Assessee was put in possession of property. Proceedings were initiated by State Government. Thereafter, assessment proceedings were initiated by assessee. Assessing officer ruled that assessee has become owner of property for purpose of taxation. Appeals were filed before appellate authority. Appeals were allowed and findings were reversed. revenue took up matter before tribunal. tribunal ruled in favour of revenue. On further appeal by assessee to this Court, this Court noticed terminology 'assets' and also meaning of word 'urban land' in its order. Division Bench also noticed Section 4(8) of Act and also judgment of Apex Court in 103 ITR 536 and ultimately ruled that assessing authority was not justified in including vacant land in net wealth of assessee for 35 purpose of computation of wealth as on valuation date for purpose of Wealth Tax Act. said judgment to certain extent would support revenue. 12. We must also refer to judgment of Orissa High Court and judgment of Supreme Court as referred to by Sri Parthasarathi, learned Counsel. 130 ITR 393, is case in which court was considering word 'house' for purpose of Wealth Tax Act. said case is of no assistance to assessee since in said case, court was considering only word 'house' in that case and not building construction as in present case. Even otherwise, it is seen from said case, court was considering as to house being habitable or not, as we see from order itself. That judgment is of no assistance to assessee. 13. AIR 66 SC 991 is case dealing with Madhya Pradesh Abolition of Proprietary Rights Act. Apex Court in para 11 noticed as to whether 'ottas' and 'chabutras' can be regarded as buildings. court ruled that word 'buildings' should therefore be given its literal meaning as something, which is built. Sri Bindra, learned Counsel in said case contended that for structure to be regarded as building it should have walls and roof and in support of this contention he relied upon decision in Moir v. Williams 36 (1892)1 QB 264. In that case Lord Esher has observed that term generally means all enclosures of brick and stone covered by roof. But he has also made it clear that meaning to be given to that word must depend upon enactment in which word is used and context in which it is used. Supreme Court ultimately ruled that these observations must be considered in context of Act which was being construed and in context in which they were made. That case is also of no assistance to assessee in light of clear words available in case on hand. 14. This court cannot forget that parliament in its wisdom has chosen to provide exemption only under certain circumstances. Court cannot extend exemption without any legal compulsion in terms of Act. Since in our view, wordings that urban land would mean land on which complete building stands, such lands alone would qualify for exemption. That conclusion is inevitable and we accept appeal of revenue. 21. In Amrit Banaspati Co.Ltd., v. Commissioner of Income Tax reported in [2002]256 ITR 337 (All)], Divison Bench of Allahabad High Court has held as follows:- 37 6. It may be noted that where Rule 8 is applicable Rule 3 will not be applicable. question in this case is whether it could be said that it was not practicable to apply Rule 3. 7. Tribunal has held in paragraphs 2.10 and 2.11 of its judgment that Rule 8 was rightly applied in this case and it has given cogent reasons for its opinion as mentioned in said paragraphs. There was wide variation between market value of property and valuation done by assessee on basis of municipal authorities where rateable value determined by municipal authorities was Rs. 6,573 and valuation so arrived was Rs. 1,55, 130. In fact assessee himself agreed to sell his property through his agreement dated May 11, 1995, for sum of Rs. 10.26 crores. assessee had also made improvements. 8. In our opinion, it would be shocking to say that flat in locality like Worli in Bombay was worth only Rs. 1,55, 130. Everyone knows that prices of flats in Bombay are very high and petitioner himself had agreed to sell it on September 15, 1995, at Rs. 10.26 crores. It would be rediculous to say that price of flat is only Rs. 1,55, 130. Moreover, we cannot interfere with findings of fact of Tribunal. 21. In Commissioner of Income Tax v. S.V.Electricals Pvt.Ltd., reported in [2005] 274 ITR 334 (MP), Division Bench of Madhya Pradesh High Court has held as follows:- 38 3. We have seen and perused memo of appeal. What we find therein is that issue raised in appeal relates to imposition of penalty on assessee for alleged concealment in year in question. penalty imposed by Assessing Officer was set aside by Commissioner of Income-tax (Appeals) and latter order of Commissioner of Income-tax (Appeals) was upheld by Tribunal in appeal filed by Revenue. It is against this order of Tribunal which resulted in upholding of order of Commissioner of Income-tax (Appeals) which is impugned by Revenue in this appeal. 4. In our opinion, Tribunal seems to be right in upholding order of Commissioner of Income-tax (Appeals). When assessees surrendered their full income, there was no question of any concealment on their part. This was one of factors which weighed in mind of Commissioner of Income-tax (Appeals) in setting aside penalty imposed by Assessing Officer. In substance, there was no deliberate intention to evade payment of lawful tax by indulging in concealment of true income. When disclosure was total though at later stage, authorities in their discretion did not consider it proper to impose any penalty under Section 271(1)(c) ibid as case of concealment. We do not consider it to be fit 39 case to upturn concurrent finding of two appellate authorities on this issue as in our opinion, appeal though admitted does not involve any question of law much less substantial question of law within meaning of Section 260A of Act. This aspect we can always look into at time of final hearing by virtue of Section 260A(4) of Act. We can frame any additional question of law though not framed but is noticed to have arisen or may hold that what is framed does not satisfy requirement of Section 260A ibid at instance of respondent. It is pursuant to this power, we have formed opinion that view taken by Tribunal does not call for any interference as no question of law is involved in appeal, calling any interference. 23. In Helios and Metheson Information Technology Ltd., v. Assistant Commissioner of Income Tax reported in [2011] 332 ITR 403 (Mad), Hon'ble Supreme Court has held as follows:- 4. When we consider submission of this particular issue viz., as to raising substantial question of lw apart from what has been framed by this Court while entertaining 40 this appeal, as matter of fact, we find that when appellant was issued with notice under section 148 of Income tax Act (hereinafter referred to as Act ), on December 20, 2003, appellant submitted reply on March 21, 2005. In paragraph (b)(vi) of reply, appellant raised contention to effect that there was no fresh material to conclude that transaction has not taken place at all and therefore, notice issued under section 148 of Act was not in accordance with law. That apart, under section 260A of Act, proviso to sub-section (4) specifically provides that nothing in sub-section should be deemed to take away or abridge power of court to hear, for reasons to be recorded, appeal on any other substantial question of law not formulated by it, if it is specified that case involved such question. Therefore, there is every power vested in this Court to deal with substantial question of law not formulated at time when appeal was entertained, subject however to satisfaction of Court, that such question was involved in case and for reasons to be recorded for that purpose. 24. Therefore, no question of law arises as contended. There is no question of law muchless substantial questions of law 41 involved in above appeal as framed by this Court. 25. In light of decision and discussion, we answer substantial questions of law against assessee. Accordingly, instant Appeals are dismissed. No costs. (S.M.K., J.) (D.K.K., J.) 18.04.2017 Index : Yes / No Internet : Yes / No. asvm To Deputy Commissioner of Wealth Tax, Special Range IV, 121, Nungambakkam High Road, Chennai 600 034. 42 S.MANIKUMAR, J AND D.KRISHNAKUMAR, J (asvm) Pre-delivery Judgment in T.C.A.Nos.1061 to 1064 of 2007 18.04.2017 http://www.judis.nic.in Balaji Industries Ltd. (Amalgamated with Balaji Hotels & Enterprises Ltd.) v. Deputy Commissioner of Wealth-tax, Special Range IV, Chennai