H.L. Dattu, J.
1. These appeals arise under the provisions of the Wealth-tax Act, 1957 (hereinafter for the sake of brevity referred to as 'the Act'). In these appeals, we are concerned with the order passed by the Income-tax Appellate Tribunal ('the Tribunal' for short), Bangalore Bench-B, in W.T.A. Nos. 25 of 1999 and 13 of 1998 for the assessment years 1993-94 and 1994-95. By the impugned order, the Tribunal has allowed the Revenue's appeals and has confirmed the order of assessment passed by the assessing authority for the assessment years 1993-94 and 1994-95. The assessee being aggrieved by the order so passed by the Tribunal is before us in these appeals.
2. In these appeals, the assessee has raised the following substantial questions law. They read as under:
(a) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in directing the inclusion of the value of the land in the net wealth of the appellant ?
(b) Whether, on the facts and in the circumstances of the case, the property in question was an asset within the meaning of that term under Section 2(ea)(i)(5) ?
(c) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the provisions of Section 4(8) of the Act were clarificatory and retrospective so as to apply to the assessment years prior to 1997-98, that is, for the assessment year 1993-94 ?
(d) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in applying the provisions of Section 4(8)(a) of the Act in relation to what was admittedly vacant land and not building and land appurtenant thereto ?
(e) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the property in question was the wealth of the appellant merely because the appellant was the 'owner' of the property within the meaning of that term under the Income-tax Act without a finding that the property in question 'belonged' to the appellant within the meaning of that term as laid down by the apex court ?
(f) Whether, on the facts and in the circumstances of the case, the transaction in question fell within the ambit of Section 53A of the Transfer of Property Act so as to attract the provisions of Section 4(8)(a) of the Act?
(g) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that even without the registration of the property in favour of the appellant for the purposes of the Act the appellant was the owner of the property in question on the valuation date and further that the property 'belonged' to the appellant so as to make it chargeable to tax thereof ?
(h) Assuming without admitting that the appellant was liable to tax in respect of the value of the property whether the value of the property as determined by the Assessing officer should have been reduced by the amount that was due by the appellant to the transferors of the land as on the valuation date?
3. We have heard Sri Ashok A. Kulkarni, learned Counsel for the appellant, and Sri M.V. Seshachala, learned standing counsel for the Revenue. Having carefully considered their submission, we are of the opinion, that we should toe the line of the first appellate authority rather than accepting the view of the assessing authority and the Tribunal.
4. Certain dates are relevant for the purpose of disposal of these cases. Therefore, they are noticed.
5. The assessee before us had entered into an agreement for purchase of the property situate at No. 40, M. G. Road, Bangalore, on June 17, 1978. Pursuant to the sale agreement, the assessee was put in possession of the property on September 11, 1978. Thereafter, there were various proceedings initiated by the authorities of the State Government and also by the vendor of the immovable property. Therefore, the assessee was constrained to file a civil suit for specific performance of the agreement dated June 17, 1978. The suit came to be decreed on a compromise decree filed by the parties to the suit on August 24, 1994.
6. The valuation dates for the purpose of the assessment years 1993-94 and 1994-95 are March 31, 1993, and March 31, 1994, respectively.
7. The assessing authority in its order observed, that, since the suit was decreed, it would relate back to the date of filing of the suit and therefore, the assessee has become the owner of the property and therefore, the said immovable property is an asset of the assessee and requires to be included while computing the net wealth of the assessee. In its order, the assessing authority has taken into consideration the existence of the old building on the property in question and also the land appurtenant to the building and also the vacant land surrounding the building.
8. Being aggrieved by the conclusion reached by the assessing authority, the assessee had filed appeals before the first appellate authority, who by his order dated May 13, 1998, and March 26, 1998, has allowed the appeals and has reversed the findings and the conclusion reached by the assessing authority. That is how the Revenue had carried the matter in appeals before the Tribunal in W. T. A. Nos. 13 of 1998 for the assessment year 1994-95 and in W. T. A. No. 25 of 1999 for the assessment year 1993-94. The Tribunal relying on the substituted provision of Sub-section (8) of Section 4 of the Act, has come to the conclusion, that in view of the substituted provision, the assessee is the owner of the property and therefore, the assessing authority was justified in including the vacant land for the purpose of computing the net wealth of the assessee.
9. At the time of hearing of these appeals, Sri Ashok A. Kulkarni, learned Counsel for the assessee, has taken us through the charging provision, namely, Section 3 of the Act and the meanings assigned to certain words in the dictionary' clause of the Act.
10. Section 3 of the Act is as under:
3.(1) Subject to the other provisions (including provisions for the levy of additional wealth-tax) contained in this Act, there shall be charged for ever}' assessment year commencing on and from the first day of April, 1957, but before the first day of April, 1993, a tax (hereinafter referred to as wealth-tax) in respect of the net wealth on the corresponding valuation date of every individual, Hindu undivided family and company at the rate or rates specified in Schedule I.
(2) Subject to the other provisions contained in this Act, there shall be charged for every assessment year commencing on and from the 1st day of April, 1993, wealth-tax in respect of the net wealth on the corresponding valuation date of every individual, Hindu undivided family and company, at the rate of one per cent. of the amount by which the net wealth exceeds fifteen lakh rupees.
11. An analysis of the charging provision would indicate, that the charge is on the net wealth of the assessee as on the corresponding valuation date.
12. The meaning of the expression 'assets' has been defined under Section 2(ea) of the Act. It would include even the 'urban land'. The meaning of the expression 'urban land' is also defined under Section 2(ea)(b) of the Act. It means, a land comprised within the jurisdiction of a municipality, municipal council, town area committee, etc.
13. Omitting what is not necessary, the meaning of the expression 'assets' as defined under the Act is extracted and the same reads as under:
2.(ea) 'assets', in relation to the assessment year commencing on the 1st day of April, 1993, or any subsequent assessment year, means-
(i) any building or land appurtenant thereto (hereinafter referred to as house), whether used for residential or commercial purposes or for the purpose of maintaining a guest house or otherwise including a farm house situated within twenty-five kilometres from local limits of any municipality (whether known as Municipality, Municipal Corporation or by any other name) or a Cantonment Board, but does not include-
(1) a house meant exclusively for residential purposes and which is allotted by a company to an employee or an officer or a director who is in whole-time employment, having a gross annual salary of less than five lakh rupees ;
(2) any house for residential or commercial purposes which forms part of stock-in-trade;
(3) any house which the assessee may occupy for the purposes of any business or profession carried on by him ;
(4) any residential property that has been let-out for a minimum period of three hundred days in the previous year ;
(5) any property in the nature of commercial establishments or complexes;....
Explanation 1.-For the purposes of this clause,-...(b) 'urban land' means land situate-
(i) in any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee, or by any other name) or a cantonment board and which has a population of not less than ten thousand according to the last preceding census of which the relevant figures have been published before the valuation date ; or
(ii) in any area within such distance, not being more than eight kilometres from the local limits of any municipality or cantonment board referred to in Sub-clause (i), as the Central Government may, having regard to the extent of, and scope for, urbanisation of that area and other relevant considerations, specify in this behalf by notification in the Official Gazette,
but does not include land on which construction of a building is not permissible under any law for the time being in force in the area in which such land is situated or the land occupied by any building which has been constructed with the approval of the appropriate authority or any unused land held by the assessee for industrial purposes for a period of two years from the date of its acquisition by him or any land held by the assessee as stock-in-trade for a period of ten years from the date of its acquisition by him ;
14. Sri Ashok A. Kulkarni, learned Counsel for the assessee, would argue, that in view of the decision of the apex court in the case of CWT v. Bishwanath Chatterjee : [1976]103ITR536(SC) and Nawab Sir Mir Osman Ali Khan (Late) v. CWT : [1986]162ITR888(SC) , the meaning of the expression 'assets' is no more res integra. According to learned Counsel, the assessee may be in possession of the property, but, for the purpose of the wealth-tax, it is the vendor in whose hands the assets require to be included for the purpose of computation of the net wealth. Learned Counsel has also brought to our notice the meaning of the expression 'belonging to' as explained by the apex court in both the decisions. Therefore, learned Counsel would contend that the Tribunal was not justified in invoking the substituted provision of Section 4(8) of the Act and then come to a conclusion, that as on the valuation date, the assessee was the owner of the property and therefore, the property requires to be included in the net wealth of the assessee. Learned Counsel also submits that the substituted provision of Sub-section (8) of Section 4 of the Act has been introduced by the Finance (No. 2) Act of 1996 with effect from April 1, 1997, and, therefore, the Tribunal could not have relied on the amended provisions for upsetting the order passed by the first appellate authority for the assessment years 1993-94 and 1994-95. Learned Counsel would further submit that in the amended provisions, the Legislature has consciously used the expression 'any building' and according to learned Counsel, 'any building' would not include the vacant land. For all these reasons, learned Counsel would submit that the Tribunal was not justified in coming to the conclusion, that as on the valuation date, the assessee was the owner of the property in question and the same requires to be included in the net wealth of the assessee.
15. The apex court in the case of Bislnvanath Chntterjee [1976] 103 ITR 536 (page 539):
The expression 'belong' has been defined as follows in the Oxford English Dictionary :-'To be the property or rightful possession of.
So it is the property of a person, or that which is in his possession as of right, which is liable to wealth-tax. In other words, the liability to wealth-tax arises out of ownership of the asset, and not otherwise. Mere possession, or joint possession, unaccompanied by the right to, or ownership of property would therefore not bring the property within the definition of 'net wealth' for it would not then be an asset 'belonging' to the assessee.
16. The apex court in the case of (Late) Nawab Sir Mir Osman Ali Khan : [1986]162ITR888(SC) has observed (page 899):
In all these cases, as was reiterated by the Calcutta High Court in S.B. (House and Land) P. Ltd. v. CIT : [1979]119ITR785(Cal) , the question of ownership had to be considered only in the light of the particular facts of a case. The Patna High Court in Addl. CIT v. Sahay Properties and Investment Co. P. Ltd. : [1983]144ITR357(Patna) was concerned with the construction of the expression 'owner' in Section 22 of the Income-tax Act, 1961. There, the assessee had paid the consideration in full and had been in exclusive and absolute possession of the property, and had been empowered to dispose of or even alienate the property. The assessee had the right to get the conveyance duly registered and executed in its favour, but had not exercised that option. The assessee was not entitled to say that because of its own default in having a deed registered in its name, the assessee was not the owner of the property. In the circumstances, it was held that the assessee must be deemed to be the owner of the property within the meaning of Section 22 of the Income-tax Act, 1961, and was assessable as such on the income from the property.17. Per contra, Sri Seshachala, learned Counsel for the Revenue, would submit, that the substituted provision of Sub-section (8) of Section 4 of the Act has been introduced by the Legislature after the decision of the apex court in the cases of the CWT v. Bishwanath Chatterjee [1976] 103 1TR 536 and Nawab Sir Mir Osman Ali Khan (Late) v. CWT : [1986]162ITR888(SC) . According to learned Counsel, in view of the substitution of the provision, it would relate back to the date when Sub-section (8) of Section 4 of the Act was in force. Therefore, learned Counsel would submit that the Tribunal is justified in coming to the conclusion, that as on the valuation date, the assessee was the owner of the property in question and the same requires to be included in the net wealth of the assessee.
18. Having heard learned Counsel for the parties to the lis, the only substantial question of law that would arise for our consideration and decision is, whether the assessing authority and the Tribunal were justified in coming to the conclusion that as on the valuation dates for the assessment years 1993-94 and 1994-95, whether the assessee was the owner of the asset, namely, the vacant land situate at No. 40, M. G. Road, Bangalore ?
19. The Tribunal to upset the order passed by the first appellate authority, has primarily relied on the substituted provision of Sub-section (8) of Section 4 of the Act. The substituted provision has come into force with effect from April 1, 1997. When the Legislature itself says that the substituted provision would come into effect from a particular date, in our view, it will not have retrospective effect. Therefore, the Tribunal was not justified in invoking the substituted provision of Sub-section (8) of Section 4 of the Act to come to a conclusion that the property would include even the vacant land. Apart from this, the amended provisions would speak of only 'any building'. That only means, it speaks of building and the land appurtenant to the building and it cannot be applied to the vacant land.
20. In the present case, we are concerned with a vacant land, which is included in the net wealth of the assessee for computing the wealth of the assessee for the purpose of the wealth-tax provisions. In view of the language employed by the Legislature to include a building for the purpose of Sub-section (8) of Section 4 of the Act, the vacant land cannot be included in the said provision. Even on this count also, the Tribunal was not justified in coming to the conclusion that it is the substituted provision, which takes care of the issue posed in the appeal.
21. In our opinion, in view of the law declared by the apex court in the case of CWT v. Bishwanath Chatterjee : [1976]103ITR536(SC) and Nawab Sir Mir Osman Ali Khan (Late) v. CWT : [1986]162ITR888(SC) , the assessing authority was not justified in including the vacant land in the net wealth of the assessee for the purpose of computation of the wealth as on the valuation date for the purpose of the Wealth-tax Act. In view of the above discussions, we are of the opinion, that the order passed by the Tribunal confirming the order passed by the assessing authority requires to be set aside. Accordingly, the following:
Order
I. The appeals are allowed.
II. The order passed by the Tribunal in W. T. A. Nos. 13 of 1998 and 25 of 1999 for the assessment years 1993-94 and 1994-95 dated August 30, 2002, is set aside.
III. The orders passed by the first appellate authority in No. W. T. A. N 2/DCSR-6/CIT(A)/1997-98 dated May 13, 1998 and W.T.A 8/SR-6/ CIT(AQ-I)1998-99 dated March 26, 1998, are confirmed.