Amrit Lal Jindal and Sons (Huf) Vs. the Wealth Tax Officer - Court Judgment

M.M. Kumar, J.

1. This order shall dispose of W.T.A. Nos. 12, 13 and 14, filed by the assessee-appellant under Section 27A of the Wealth Tax Act, 1957 (for brevity, 'the Act') challenging common order dated 16.6.2008 passed by the Income Tax Appellate Tribunal, Chandigarh Bench-A, Chandigarh (for brevity, 'the Tribunal'). The Tribunal has rejected the appeals of the assessee-appellant, bearing W.T.A. Nos. 39/Chandi/1999, 49/Chandi/1998 and 40/Chandi/1999 in respect of Assessment Years 1993-94, 1994-95 and 1995-96 respectively. Since common questions of law and facts are involved, therefore, these appeals have been clubbed together.

FACTS:

2. Amrit Lal Jindal & Sons-assessee-appellant was an HUF. The HUF owned 106 Kanals and 15 Marlas of agricultural land at Sangrur. On 15.7.1992, the Improvement Trust, Sangrur, passed a resolution to acquire 78 Kanals and 1 Marla of land out of aforesaid total land owned by HUF under the provisions of Sections 24 and 28 of the Punjab Town Improvement Trust Act, 1922 (for brevity, 'the 1922 Act') for formation of Transport Nagar Sangrur under a Scheme. On 22.7.1994, 29.7.1994 and 5.8.1994, notifications under Section 36 of the 1922 Act (which is equivalent to Section 4 of the Land Acquisition Act, 1894) were issued acquiring the said land. The assessee-appellant has claimed that the compensation of the acquired land was disbursed in the year 1997. It is relevant and pertinent to mention here that upto the assessment year 199596 the assessee-appellant used to file the returns of net wealth in the status of HUF. However, on 21.3.1996 there was a partition of the HUF, therefore, the individual members of the HUF had filed returns of net wealth in respect of taxable wealth owned by them.

3. The assessee-appellant filed two returns on 29.3.1996 in respect of assessment year 1994-95 & 1995-96 and one return on 2.9.1996 in respect of assessment year 1993-94. In respect of assessment years 199394 to 1995-96, the assessee-appellant declared the total wealth as under:

1993-94 Rs. 30,28,000/1994-95 Rs. 32,73,000/1995-96 Rs. 33,36,000/

4. The case of the assessee-appellant was selected for scrutiny. For the purposes of determination of the value of wealth, the Assessing Authority took the dates as 31.3.1993, 31.3.1994 and 31.3.1995 in respect of the assessment years in question. The Assessing Authority assessed the value of total land measuring 106 Kanals 15 Marlas inclusive of acquired land measuring 78 Kanals 1 Marla. The value of the agricultural land was assessed at Rs. 2,31,09,000/-by the Assessing Authority. However, the total wealth in respect of each assessment year was computed separately, which is tabulated as under:

1993-94 Rs. 2,34,03,100/ Vide order dated 12.12.19971994-95 Rs. 2,31,79,000/ Vide order dated 27.3.19971995-96 Rs. 2,31,79,000/0 Vide order dated 12.12.1997

5. Against the assessment orders passed by the Assessing Authority, the assessee-appellant filed separate appeals under Section 16(3) of the Act before the Commissioner of Wealth Tax (Appeal) Patiala. The Appellate Authority after adjudication reduced the valuation of the property from Rs. 2,31,09,000/-to Rs. 1,26,45,249/-for the entire land measuring 106 Kanals 15 marlas granting relief of Rs. 1,04,63,751/-, vide orders dated 3.3.1998 and 20.4.1999, . The Appellate Authority also found that the entire land falls within the definition of 'asset' as defined in Clause 2(ea) of the Act. The Appellate Authority, however, rejected the claim of the assessee-appellant for exemption of the agricultural land from Wealth Tax. The Appellate Authority also deleted addition of Rs. 70,000/-pertaining to valuation of the residential house of the assessee-appellant. The Assessing Authority was also directed to give consequential benefit of charging of interest under Section 17-B of the Act.

6. The assessee-appellant as well as the revenue both filed appeals before the Tribunal challenging the order of the Appellate Authority. It is pertinent to mention here that the family members, who were earlier part of the HUF, also filed their separate appeals before the Tribunal. In this manner, in all 12 appeals were filed before the Tribunal, which were clubbed together. The Tribunal disposed of all the appeals vide common order dated 5.11.2004. The Tribunal considered the issues relating to the assessment of the value of acquired land measuring 78 Kanals 1 Marla; the right to receive compensation and exemption in respect of the residential house owned by the HUF. With regard to first issue relating to assessment of the value of acquired land, after discussing the provisions of Sections 3, 2 (m), 2(e), 2(ea) and Explanation-I below Section 2(b) of the Act, the Tribunal in para Nos. 13 to 16 of its order observed as under:

13. Any land situated in the jurisdiction of the municipality etc. is included in the definition of urban land. The land belonging to the assessee falls within the jurisdiction of the municipal corporation and accordingly, would fall within the definition of urban land. As admitted before us, the assessee has not carried on any agricultural operations on the portion of the land not acquired by the Govt. Therefore, the said portion of the land is included in the definition of the assets Under Section 2(ea) of the Wealth-tax Act, 1957. The value of such land is accordingly, liable to wealth-tax. We accordingly hold that the value of land measuring 28 kanals 14 marlas is includable in the net wealth of the respective owners. The appeal of the assessee to that extent is dismissed.

14. As far as the value of this land is concerned, the Assessing Officer has determined the same on the basis of two sale instances which have been made by the assessee in the year 1994. There cannot be a better evidence of the market rate then the sale made by one of the assessee. No cognizance can be taken of the claim that the said sale was conducted with a view to claim higher compensation as it is unethical. Besides, no evidence has been filed to establish the claim. The Assessing Officer has given a relief of 25% on account of certain disadvantages in comparison to the sale rate for the land sold by the assessee. The Commissioner of Income-tax (Appeals) has allowed further relief of 15%. In other words, the value adopted by the Commissioner on Income-tax (Appeals) is 40% less than the market value determined with reference to two sale instances. In our considered view, the value adopted by the Assessing Officer by allowing deduction of 25% is reasonable. The 15% on account of the provision of roads etc. compulsorily to be made by the assessee as per PUDA rules is also taken care of in allowance of 25%. We accordingly modify the order of the Commissioner of Income-tax (Appeals) and hold that the value of land not acquired by the Government measuring 28 kanals 14 marlas be adopted as per rate fixed by the Assessing Officer.

15. As far as the value of the land measuring 78 kanals and one marlas is concerned, it is not disputed before us that the said land was acquired by the Government by notification dated 15.7.1992. The compensation was also fixed on 22.7.1994 and the same was paid on 30.7.1997. It is evident from the facts stated above that the land measuring 78 kanals and 1 marla vested with the Government after the issue of notification for acquisition of land. The findings of Commissioner of Wealth- tax (Appeals) in the case of Amrit Lal Jindal & Sons being relevant is reproduced hereunder:

In this connection, it is relevant that so far as the 78 kanals 1 marla land is concerned, the same was the subject matter of notification for acquisition by the Improvement Trust, Sangrur. No doubt, the appellant due to this reason was barred from either selling of this land or carrying out any construction thereof but at the same time, the appellant was entitled to receive compensation to be fixed by the land acquisition collector improvement trust, Sangrur. This compensation was ultimately fixed at Rs. 77,20,329/-and in addition to this, the appellant also solution for compulsory acquisition and also a sum of Rs. 27,12,92.66 as increase from 22.7.94 (first notification till the date of payment). The right to receive compensation vested in the appellant from the date when the acquisition proceedings started.16. The assessee had admittedly the right to receive compensation. Their Lordships of the Supreme Court in the case of CWT v. U.C. Mehatab 231 ITR 501, (supra) held that the right to receive compensation is a valuable right and an assets within the meaning of Wealth-tax Act, 1957. So however, w.e.f. 1.4.1993, the definition of assets has undergone a change. As already pointed out, it is not every asset which is assessable to tax from 1.4.1993 as per the provisions of the Wealth-tax Act. Only such assets which are included in the definition of the assets Under Section 2(ea) elsewhere in this order and we are unable to find the 'right to receive the compensation' to fall within the category of any assets referred to in Section 2(ea) of the Wealth-tax Act, 1957 as applicable w.e.f. 1.4.1993. Therefore, though the right to compensation is a valuable right and as an asset for the purpose of Wealth-tax Act, 1957 before 1.4.1993 but as per Section 2(ea) w.e.f. 1.4.1993 the right to receive compensation is not a asset liable to tax. The decision of the Supreme Court in the case of CWT v. U.C. Mehatab 231 ITR 501, (supra) is thus inapplicable. We, therefore, hold that the value of 78 kanals and 1 marla of land which has been acquired by the Govt. has wrongly been included in the net wealth of the assessee. The same is accordingly, deleted.

7. The Tribunal also modified the order of the Appellate Authority to the extent it has granted relief of 15% while determining the value of the un-acquired land as against 25% assessed by the Assessing Authority. The Tribunal accordingly ordered that the value of the un-acquired land be adopted as per the rate fixed by the Assessing Officer. The Tribunal, however, deleted inclusion of the value of the acquired land measuring 78 Kanals and 1 Marlas from assessment. On the issue of exemption in respect of residential house owned by the HUF, the Tribunal has held that the assessee was not entitled to exemption in respect of more than one house. Accordingly, the Tribunal restored the addition of Rs. 70,000/-for the relevant assessment years.

8. Thereafter, the revenue filed a rectification application under Section 35(3) of the Act before the Tribunal for rectification of the order dated 5.11.2004 claiming that there was mistake in para 15 (supra) of the said order. It was asserted that the Tribunal proceeded on the basis that the land was acquired by the Government vide notification dated 15.7.1992 and as such the assessee was not the owner of the said land as on 31.3.1993, 31.3.1994 and 31.3.1995 for the purpose of the Act. It was further claimed by the revenue that the acquisition proceedings were initiated on 21.3.1997 and, thus, the basis of the Tribunal to decide the issue was factually incorrect. The Tribunal has accepted the aforementioned rectification application vide order dated 18.9.2007 and partially recalled its order dated 5.11.2004 relating to taxability of the value of the land measuring 78 Kanals and 1 Marlas. Thereafter the matter was again listed before the same Bench of the Tribunal, which had passed the order dated 5.11.2004. The final order on rectification was passed by the Tribunal on 16.6.2008. After noticing paras 15 and 16 of the earlier order dated 5.11.2004, the Tribunal has passed the following order:

4. It has been pointed out before us that in respect of the land measuring 78 kanal and one marla the Land Acquisition Collector Improvement Trust had initiated the acquisition proceedings on 21.3.1997 and therefore, the value of the said land was assessable to Wealth-tax for the assessment year 1993-94, 1994-95 and 1995-96. We accordingly reject the ground of appeal raised by the assessee and hold that the value of the land measuring 78 kanal and one marla was rightly assessed to Wealth-tax for the aforementioned assessment years. We hold accordingly. The earlier order of the Tribunal is modified accordingly.

QUESTIONS OF LAW:

9. In the backdrop of the aforementioned factual matrix, the assessee-appellant has filed the instant appeals raising the following substantial questions of law for determination of this Court:

(i) Whether on the facts and circumstances of the case, the Ld. ITAT has erred in law in modifying its earlier order Annexure A-5 by passing orders Annexure A-11 and A12, when the matter relating to date of acquisition of property measuring 78 Kanal 1 Marla and the date on which the Right to receive compensation accrued to the assessee, was a debatable issue?

(ii) Whether on the facts and circumstances of the case, the acquisition proceedings in the present case were initiated on 15.7.1992 when the Resolution was passed by Improvement Trust and alternatively on 22.7.1994, 29.7.1994 or 5.8.1994, when the Notifications as such were published in the Official Gazette of Punjab Govt.? Therefore, the Ld. ITAT has erred in law to hold that the proceedings of acquisition were initiated in 1997.

(iii) Whether on the facts and circumstances of the case, the right to receive compensation is vested in the owner of the property on the date of passing of the Resolution by Improvement Trust or its vests on the date of notification in the Official Gazette or on the date when the property is actually acquired?

(iv) Whether on the facts and circumstances of the case, the Ld. ITAT has erred in law in upholding the order of the lower authorities, whereby the entire chunk of land measuring 106 Kanal 15 Marla was included in the urban land as defined in Section 2(ea) of the Act ibid, when no construction activity was possible on the land under the provisions of local Acts of Punjab as in force during those assessment years and also after the passing of the Resolution by the Improvement Trust before 31.3.1993?

(v) Whether the Ld. ITAT has erred in law in accepting the application for rectification filed by the Department that land measuring 78 Kanal 1 Marla was includible in the net wealth of the assessee, when the Department has not challenged the finding of the 1st Appellate Authority to the extent that it was only a right to receive compensation as no construction activity was possible on that land during the impugned assessment year.

ARGUMENTS:

10. Mr. K.L. Goyal, learned Counsel for the appellant has argued that under Section 35 of the Act the scope of rectification is limited to rectify the mistake apparent on the face of the record. According to the learned Counsel under the garb of exercising jurisdiction for rectification of the order, the Tribunal cannot assume the appellate power or power of review. He has firstly referred to the order dated 5.11.2004 (A-5) passed by the Tribunal to highlight that the Tribunal has partly allowed the appeal of the assessee holding that value of 78 Kanals 1 Marla of land, which has been acquired by the Government, was wrongly included in the net wealth of the assessee for the purposes of assessment under the Act. Accordingly assessment in respect of the value of 78 Kanals 1 Marla of land was deleted. In respect of the remaining land measuring 28 Kanals 14 Marlas, the Tribunal had held that it was not acquired by the Government and the value was as per the rate fixed by the Assessing Authority. In the process the Tribunal has referred to the definition of expressions 'asset' as well as 'urban land' given in Section 2(ea) of the Act. Learned Counsel then referred to the order of rectification dated 16.6.2008, whereby the Tribunal has excluded land measuring 78 Kanals 1 Marla by stating that the acquisition proceedings were initiated on 21.3.1997 and, therefore, the value of the land was assessable to wealth tax for the assessment years 1993-94, 1994-95 and 1995-96. On that basis the grounds of appeal raised by the assessee which were earlier accepted, stood rejected. According to the learned Counsel such is not the scope of rectification proceedings under Section 35 of the Act. In support of his submission, he has placed reliance on a judgment of Hon'ble the Supreme Court in the case of T.S. Balaram v. Vokart Brothers : AIR 1971 SC 2204, and argued that a mistake apparent from the record must be obvious and patent mistake. Referring to para 8 of the judgment, learned Counsel submits that such a mistake is not required to be established by long drawn process of reasoning on points on which there may be conceivably two opinions.

11. On the other issue, Mr. Goyal, learned Counsel for the assessee appellant has further submitted that notification under Section 36 of the Punjab Town Improvement Act, 1922, was issued on 22.7.1994. Thereafter award was announced and compensation was disbursed on 21.3.1997/30.7.1997. Learned Counsel has maintained that by virtue of acquisition process having been initiated on 22.7.1994, the assessee appellant in any case was not assessable to wealth tax in respect of assessment years 1993-94, 1994-95 and 1995-96 because no construction could be raised by the assessee-appellant on the land. In that regard, he has placed reliance on Section 2(ea) of the Act, which defines the expression 'asset'. He has also referred to the expression 'urban land', defined in Section 2(ea) Explanation 1(b) of the Act and argued that 'urban land' is not to include any land on which construction of building is not permissible in any law for the time being in force in the area in which such land is situated. According to the learned Counsel once notification under Section 36 of the 1922 Act was issued on 22.7.1994, which resulted into acquisition of land measuring 78 Kanals 1 Marla in the year 1997 then no construction on the aforesaid land was possible. Therefore, the land was not assessable to wealth tax as per the provisions of Section 2(ea) of the Act. To buttress his stand, learned Counsel has referred to Section 49 of the 1922 Act, which provides that after issuance of notification under Section 36 of the 1922 Act, the provisions of the Punjab Municipal Act, 1911, would apply which includes Section 189(1) & (2) and Section 193. In support of his submission, learned Counsel has placed reliance on a Division Bench judgment of Delhi High Court rendered in the case of Commissioner of Wealth-Tax v. D.C.M. Ltd. : [2007] 290 ITR 615 (Delhi), which has taken the view that if the sanction of the site plan for construction on the land has not been obtained then such a land would not be assessable to wealth tax as it cannot be regarded as 'urban land' and 'asset'.

12. Mr. Rajesh Katoch, learned Counsel for the revenue-respondent has, however, submitted that there is no prohibition of raising construction nor any provision has been cited by the assessee-appellant showing that in any case construction cannot be raised on the land in respect of which declaration under Section 36 of the 1922 Act has been issued. According to the learned Counsel in the absence of any prohibition, the assessee-appellant cannot place any reliance on the notification under Section 36 which might have culminated into passing of an award and taking of compensation of the land belonging to the assessee-appellant. He has maintained that right to receive compensation has not extinguished by virtue of notification under Section 36 and by virtue of pronouncement of award. The payment in any case has been received by the assessee-appellant.

Re: Question Nos. (ii), (iii) and (iv)

13. It would first be appropriate to answer question Nos. (ii), (iii) and (iv) first because all the questions are inter-connected. Accordingly, we proceed to answer these questions jointly. One of significant issue which permeate all the questions is the date on which the assessee became disentitled to raise construction on the acquired land by virtue of acquisition of land by Improvement Trust, Sangrur. Would it be the date when the Trust has passed the resolution for framing the scheme or the date when declaration is made under Section 36 of the 1922 Act (which is equivalent to Section 4 of the Land Acquisition Act, 1894). The answer to the aforesaid question would depend upon the possibility of the assessee to raise construction by erecting or re-erecting the building. In that regard it would be necessary to read the provisions of the 1922 Act. Chapter IV of the 1922 Act, from Sections 22 to 24 deals with various types of Schemes and the matter which are required to be provided for, mode and manner of framing of the scheme leading to the sanctioning of the same by the Government under Section 42. If any of the schemes as contemplated by Sections 23, 24, 25, 26, 27 and 28 is framed then the owner of the land is covered by the Scheme and could be refused permission to raise construction by virtue of the provisions made in Section 31 of the 1922 Act, which reads thus:

31. Prohibiting of building beyond a street alignment.

(1) In the locality comprised in a scheme under this Act, no person, shall, except with the written permission of the Trust, erect, re-erect, add to or alter any building so as to make the same project beyond a street alignment or building line duly prescribed by the Trust.

(2) In the locality comprised in a development scheme or an expansion scheme, if any person desires to erect, re-erect, add to or alter any building on his land so as to make the same project beyond a street alignment or a building line duly prescribed by the Trust, he shall apply to the Trust for permission to do so, and if the Trust refuses to grant permission to such person according to his application, and does not proceed to acquire such land within one year from the date of such refusal, it shall pay reasonable compensation to such person for any damage or loss sustained by him in consequence of such refusal.

14. A perusal of the aforesaid section shows that there is express prohibition of building. According to Sub-section (1) of Section 31 of the 1922 Act in the locality comprised in a scheme framed under this Act no person is permitted to erect and re-erect, add to or alter any building so as to make the same project beyond a street alignment or building line duly prescribed by the trust. According to Sub-section (2) of Section 31 of the 1922 Act in the locality comprised in a development scheme or an expansion scheme, if any person keen to erect, re-erect, add to or alter any building on his land so as to make the same project beyond a street alignment or a building line duly prescribed by the Trust then he has to obtain specific permission from the Trust. The definitions of 'street', 'alignment' and 'building alignment' are available in Section 2(3) & (4) of the 1922 Act. It is matter of common knowledge that when an Improvement Trust frames a scheme as contemplated by various sections to which reference has been made in the preceding paras then intimation in that regard is sent to the other local bodies including the Municipal Committee, Municipal Corporation and Notified Area Committee. Such local bodies are debarred from sanctioning a site plan in respect of the area covered by the scheme. Accordingly it follows that erection, re-erection addition or alteration of any building on the land by the owner is prohibited as no person is entitled to erect or re-erect, add to or alter any building so as to allow the same project beyond a street alignment or building line prescribed by the Trust. It is Improvement Trust alone which could exercise power in respect of area covered by the Scheme. If the owner is permitted to raise construction beyond building line prescribed by the Trust then it would simply interfere with the scheme prepared by the Trust. Therefore it has to be concluded that the provisions come into force when the resolution by the Trust is passed. It is also well known that no site plan is ever sanctioned by the Trust if the land is under a Scheme. The declaration made under Section 36 of the 1922 Act may come much later. What calls for our specific notice in this regard is the peculiar provision which is distinct from the provisions of the Land Acquisition Act, 1894. Sections 22 to 24 of the 1922 Act deals with the framing, processing and sanctioning of various schemes such as improvement, land building, devel opment, extension and housing accommodation scheme etc. The provisions made in Sections 22 to 35 of the 1922 Act have nothing to do with the acquisition of the land till the notification is issued under Section 36 of the 1922 Act. After the scheme is framed by the Trust the same is forwarded to the Government for according sanction by following the procedure as per the provisions of Sections 36, 38 and 42 of the 1922 Act. It is well settled that no agency of State including the Trust has power to acquire the land. The power of acquisition vests with the Government although the land is acquired for the purposes of scheme framed by the Trust. In that regard reliance may be placed on the judgment of Hon'ble the Supreme Court rendered in the case of Nagpur Improvement Trust v. Vithal Rao AIR 1973 SC 689. Therefore it is evident from the peculiar provisions of Sections 22 to 35 of the 1922 Act that the right of the owner to erect or re-erect add to or alter any building is clogged by prohibition.

15. When the aforesaid provisions are applied to the facts of the instant appeals it becomes patent that the Improvement Trust passed Resolution No. 82 on 15.7.1992. It was unanimously resolved to construct Transport Nagar (A-7). The resolution requires to be quoted in extensor, which reads thus:

Copy of Resolution No. 82 Dated: 15-7-1992. Agenda regarding Formation of Transport Nagar (Truck Stand) Sangrur as per notification of Improvement Trust, Sangrur for 5 years Programme.

Decision:In the presence of the members present in the meeting it has been unanimously resolved to construct Transport Nagar (Truck Stand) Sangrur within the Municipal Limits over 25-30 acres of land under Section 24 and 28 of Punjab Town Improvement Trust Act. Its boundaries/limits will be within the purview of the site plan of the city. The commercial part of this scheme has been decided to be constructed adjoining to the Trust's earlier Tobha Scheme (Maharaja Ranjit Singh Nagar Market) and the parking of the Trucks be made at a far away distance from it so as to facilitate the general public at large regarding Traffic problems. This scheme may be got published as per Section 36 of the Act and the survey should be got completed at the earliest and scheme be formulated. The approval for the expenses for formulation of the scheme, survey and notification is being accorded. Notice should be issued as per the prescribed time period of Section 37 and 38 of the Trust Act. Further proceedings should be taken by Chairman/Executive Officer.

Sd/Chairman,

Improvement Trust,

Sangrur.

It was thereafter notification under Section 36 of the 1922 Act was issued on 22.7.1994 (A-8)

16. In view of the aforesaid discussion it is established that the date of resolution for framing the scheme would be the relevant date which in the present case is 15.7.1992.

Re: Question Nos. (i) and (v)

17. The question then is whether the property under the scheme since 15.7.1992 would be exigible to wealth-tax. The answer lies in Sections 2 and 3. Chapter II of the Act is titled as 'Charge of Wealth-tax and assets subject to such charge'. In the present case, we are concerned with assessment years 1993-94, 1994-95 and 1995-96. Section 3(2) of the Act is the charging section which provides that subject to other provisions of the Act, wealth-tax has to be charged for every assessment year commencing on and from April 1, 1993 in respect of the net wealth on the corresponding valuation date of every individual HUF and company at the rate of one per cent of the amount by which the net wealth exceeds 15 lacs rupees. Section 2(e) of the Act defines the expression 'assets', which includes property of every description, movable or immovable but does not include what is specifically excluded in that definition. Section 2(ea) of the Act defines 'assets' in relation to the assessment year commencing from April 1, 1993 and/or subsequent assessment years. The 'urban land' is included in the definition of 'assets'. However, Clause (b) of the explanation to Section 2 (ea) of the Act elaborates what is 'urban land' and which landed property is not to be included and covered by that expression. It would be necessary to read the aforesaid provisions, which reads thus:

2(ea)'assets', in relation to the assessment year commencing on the 1st day of April, 1993, or any subsequent assessment year, means

(i) to (iv) xxx xxx xxx

(v) urban land;

(vi) xxx xxx xxx

Explanation 1.- For the purposes of this clause,

(a) xxx xxx xxx

(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 kilometers 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 asses- see 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 three years from the date of its acquisition by him;

18. The aforesaid provision in italics were added by the Finance Act, 1993 and was made applicable from April 1, 1993. As already noticed, the relevant assessment years in the present case are 1993-94, 1994-95 and 1995-96. On a bare reading of the aforesaid provisions it becomes evident that the definition of 'urban land' does not envelop that land on which construction of a building is not permissible under any law for the time being in force in the area where the land is situated or the land occupied by any building which has been constructed with the approval of the appropriate authority or to any unused land held by an assessee for an industrial purpose for a period of two years from the date of application. The assessee in the present proceedings has claimed the benefit of the provisions to the extent that the land cannot be regarded as 'urban land' because no construction was permissible on the land in question at the relevant time relating to the assessment years 1993-94 and onward. Accordingly, the land which falls within the exception would have to be excluded from the ambit and scope of expression 'urban land' and, therefore, such land would not be covered by the expression 'assets' as defined in Section 2(ea) of the Act. As a result of the aforesaid bare provision that such land would not be treated as net- wealth of an assessee for the purposes of provisions of the Act. In somewhat similar circumstances a Division Bench of Delhi High Court in the case of Commissioner of Wealth-tax v. D.C.M. Ltd. : [2007] 290 ITR 615 (Delhi), has taken the view that once no construction is permissible in law then such land would not be 'urban land'. Therefore, it would not be in clouded in the expression 'assets'. Accordingly, it has been held that such land would not be exigible to wealth-tax.

19. The aforesaid discussion makes it clear that once the land could not be covered by definition of expression 'assets' then it would not be exigible under the Act. The question then is whether the Tribunal has validly exercised the power of rectification under Section 35(e) of the Act. The opening words in Section 35(1) of the Act are 'With a view to rectifying any mistake apparent from the record'. Similar expression has been used in Section 154 of the Income-tax Act, 1961. The aforesaid provision came up for consideration before Hon'ble the Supreme Court in the well known case of T.S. Balaram v. Volkart Brothers : AIR 1971 SC 2204. In the concluding para 8 of the judgment their Lordships' have observed as under:

8. From what has been said above, it is clear that the question whether Section 17 (i) of the Indian Income-tax Act, 1922 was applicable to the case of the first respondent is not free from doubt. Therefore the Income-tax Officer was not justified in thinking that on that question there can be no two opinions. It was not open to the Income-tax Officer to go into the true scope of the relevant provisions of the Act in a proceeding under Section 154 of the Income-tax Act, 1961. A mistake apparent on the record must be an obvious and patent mistake and not something which can be established by a long drawn process of reasoning on points on which there may conceivably be two opinions. As seen earlier, the High Court of Bombay opined that the original assessments were in accordance with law though in our opinion the High Court was not justified in going into that question. In Satyanarayan Laxminarayan Hegde v. Mallikarjun Bhavanappa Tirumale : (1960) 1 S. C. R. 890 : AIR 1960 S. C. 137 this Court while spelling out the scope of the power of a High Court under Article 226 of the Constitution ruled that an error which has to be established by a long drawn process of reasoning on points where there may conceivably be two opinions cannot be said to be an error apparent on the face of the record. A decision on a debatable point of law is not a mistake apparent from the record-see Sidhramappa v. ComMr. of Income-tax, Bombay : (1952) 21 ITR 333 : AIR 1952 Bom 287. The power of the officers mentioned in Section 154 of the Income-tax Act, 1961 to correct 'any mistake apparent from the record' is undoubtedly not more than that of the High Court to entertain a writ petition on the basis of an 'error apparent on the face of the record'. In this case it is not necessary for us to spell out the distinction between the expressions 'error apparent on the face of the record' and 'mistake apparent from the record'. But suffice it to say that the Income-tax Officer was wholly wrong in holding that there was a mistake apparent from the record of the assessments of the first respondent.

20. It is, thus, evident that in cases where two opinions are possible then it would not be within the sweep of the power of the Tribunal to invoke jurisdiction for rectification of an order. It is evident from the discussion in the preceding paras that the issue whether the date of resolution with regard to adopting the development scheme or building scheme would be relevant or any other date would be relevant, as a debatable issue. Once an issue is debatable then rectification jurisdiction cannot be invoked. Similar view has been taken by Hon'ble the Supreme Court in the cases of Commissioner of Central Excise, Calcutta v. ASCU Ltd., Calcutta : (2003) 9 SCC 230 and Deva Metal Powbers (P) Ltd. v. Commissioner Trade Tax, U.T. : 2008(2) SCC 439. Therefore, question Nos. (i) and (v) have to be answered against the revenue and in favour of the assessee.

21. For the reasons stated above, these appeals are allowed. All the questions are answered in favour of the assessee and against the revenue. The impugned common rectification order dated 16.6.2008 passed by the Tribunal is set aside. The original order passed by the Tribunal is modified to the extent that even with regard to the assessment years 1993-94, 1994-95 and 1995-96 the appellant-assessee would be entitled to exemption from the wealth-tax. Accordingly, the assessment be re-framed.

22. These appeals stand disposed of in the above terms.