These two appeals by the assessee relate to the asst. yrs. 1984-85 and 1985-86. Since the issues involved are common, the appeals are disposed of by a common order for the sake of convenience.
2. The assessee is a company. The assessee owns the following items of properties : 3. In the returns filed for the years under consideration, the assessee claimed that all the above properties were exempt from wealth-tax. The WTO accepted the claim of the assessee in respect of the first two items of properties. But in respect of the properties at items (iii) and (iv), he was of the opinion that the value of these properties was includible in the net wealth of the assessee. He, therefore, estimated the value of these properties at the rate of Rs. 5,000 per cent and included the same in the net wealth of the assessee. The assessee appealed to the first appellate authority before whom it was contended that both the properties are agricultural lands and hence not includible in the net wealth, that agricultural operations were carried in the land and the income derived from the sale of coconut was assessed to agricultural income tax, that merely because a portion of the land was used for industrial purposes, it could be said that the entire lands were not agricultural lands and that the land in question are appurtenant to the buildings used for business purposes and, therefore, they are exempt from wealth-tax under s. 40(3) (vi) of the Finance Act, 1983. It was submitted that the value of Rs. 5,000 per cent adopted by the AO was excessive. After considering the above contentions, the learned CIT(A) held that as regards the non-agricultural land of 3.6 acres, the value of the same would have to be included in the net wealth. According to him, the assessee only intended to use the land for setting up a distillery, that the assessee had not obtained no objection certificate for the distillery from the State Government (Pollution Control Board) till June, 1988. He, therefore, held that it could not be said that the land and buildings were used for the purposes of business during the assessment years under consideration. He held that the value of 3.6 acres of land and building and compound wall are includible in the net wealth of the assessee. He also upheld the valuation at the rate of Rs. 5,000 per cent. Being aggrieved, the assessee is in second appeal before the Tribunal.
1. Notice under s. 3 of the Kerala Land Acquisition Act issued by Special Tahsildar dt. 26th July, 1980.
2. Notification by Govt. of Kerala, Housing (A) Department, dt. 17th December, 1984.
3. No objection Certificate issued by Kerala State Pollution Control Board, dt. 2nd June, 1988.
4. Decision of the Tribunal, Madras Bench A reported in Nartan Electrical Industries (P) Ltd. vs. Asstt. CIT (1991) 36 ITD 448 (Mad).
According to the assessee, the assessee could not start the construction of the building due to the land acquisition proceedings.
After getting the no objection certificate the assessee started the construction of the factory building. According to the assessees counsel, the factory building is exempt from wealth-tax in view of s.
40(3) (vi) of the Finance Act, 1983. In support of this contention, he placed reliance on the decision of the Tribunal in Nartan Electrical Industries (P) Ltd. vs. Asstt. CIT (1991) 36 ITD 448 (Mad), wherein it has been held that even though a building as such had not come up so as to take this asset into the next item, i.e., building or land appurtenant used as a factory it would not also be a vacant land lying unused falling under item (v) and, therefore, the asset being a land on which factory was under construction was not an asset falling under either item (v) or under the exemption to item (vi) that is, building not used for business purpose so as to be taxed under s. 40. The learned Departmental Representative supported the orders of the lower authorities.
5. We have heard rival submissions. We find that the facts in the instant case are similar to the facts in the case cited above. In the above decision the Tribunal has held that the land on which the factory building stands is exempt in view of the provisions of s. 40(3) (vi) of the Finance Act, 1983. Since the facts are identical, following the above decision of the Tribunal, we hold that in view of the provisions of s. 40(3) (vi) of the Finance Act, 1983 the assessee is entitled to exemption in respect of the property having extent of 3.60 acres of land. We also hold that the rate of Rs. 5,000 per cent adopted by the lower authorities for the purpose of valuation is just and proper.