BirlaNu Limited v. The Assistant Commissioner of Wealth Tax, Central Circle -'l (4), Hyderabad

Counsel for the Respondent: Ms. B. SAPNA REDDY (SENIOR SC INCOME TAX) WEALTH TAX APPEAL NO: 6 OF 2006 Appeal Under Section 27 A ol the Wealth Tax Act, 1957 against order of the lncome Tax Appellate Tribunal Hyderabad, Bench 'A' W.T.A.No. 161 Hydl2002 dated 31-08-2005 for the Assessment Year 1 997-98 Between: BirlaNu Limitec, ( Formerly known as Hyderabad lndustries Limited )Office No. 1 & 2,L7 Floor, S[.N Terminus, Near Botanical Garden Gachibowli, Hyderabad -500032, rep. by its Senicr Manager - Legal, Mr. Vasanth Bharani ( Appellant Narie is amended vide C.O. dt. 13-11-2025 in l.A.No. 1 of 2025 ) AND The Assistant C:ommissioner of Wealth Tax, Central Circle-1(4), Hyderabad. ...APPELLANT ...RESPONDENT l.A. NO: 2 OF 2006(WTAMP . NO: 24 OF 2006) Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased suspend the orler dated 31.08.05 passed by the lncome Tax Appellate Tribunal, Hyderabad 'A' l3ench in WTA No.16/Hyd/2002 for the Assessment Year 1997-98 and direct Resrrondent not press for the payment of disputed wealth Tax Demand in a sum of Rs.-15,06,84O/-pending disposal of appeal Counsel for ther Appellant: SRl. S. RAVI Counsel for the Respondent: Ms. B. SAPNA REDDY (SENIOR SC INCOME TAX) WEALTH TAX APPEAL NO: 7 OF 2006 Appeal Llnder Section 27 A of the Wealth Tax Act, 1957 against order of the lncome Tax Appellate Tribunal Hyderabad, Bench 'A' W.T.A.No. 151 Hydl2002 dated 3't-08-2005 for the Assessment Year '1997-98 Between BirlaNu Limited, I Formerly known as Hyderabad lndustries Limited ) Office No. '1 & 2 , L7 Floor, SLN Terminus, Near Botanical Garden Gachibowli, Hyderabad -500032, rep. by its Senior Manager - Legal, Mr. Vasanth Bharani ( Appellant Name' is amended vide C.O. dl. 13-11-2025 in l.A.No. 1 ot 2O25 ) ...APPELLANT AND The Assistant Commissioner of Wealth Tax,, Central Circle-1(4), Hyderabad. ...RESPONDENT l.A. NO: 2OF 20OG(WTAMP. NO:25 oF 20061 Petition under Section 't 51 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to suspend the order dated 31.8.2005 passed by the lncome Tax Appellate Tribunal Hyderabad 'A' Bench in WTA No.15/Hyd/2002 for the assessment year 1996-97 and direct respondent not to press for the payment of disputed wealth tax demand in a sum of Rs.15,06,840/-. Counsel for the Appellant: SRl. S. RAVI Counset for the Respondent: Ms. B. SAPNA REDDY (SENIOR SG INCOME TAX) The Court made the following COMMON JUDGMENT: 1 IN THE} HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD THE HON'BLE SRI JUSTICE P.SAM KOSHY AND THE HON'BLE SRI JUSTICE SUDDALA CHALAPATHI RAO WTA.Nos.3,4,5.6&7of 20,o,6 pt. 09 .0]-.20.26 Between M/s Birlal'lu Limited (Formerly known as M/s. Hyderabad Industries Limited) Arld The Assistrlnt Commissioner of Wealth Tax "" APPellant ...Respondent COMMON JUDGMENT: per the Hon'ble Sri Justice Sudd.ata Cho,torpathi Rao) 1. The instant appeals are filecl by the appellant-assessee challenginSl the common order, dt.31.08.2005, passeci by the lncome Ta:< Appellate Tribunal, Hyderabad Bench "A", Hyderabad (for short 'the learned ITATJ in wrA Nos. 13 ro LT /HyD /2ooo, relating to the assessment years 1994-gs to 199g-99. As the assessee is one and the same in all the matters and the issues arose therein were iCentical though pertaining to different assessment years, the learned ITAT heard the appeals together and disposed of by a common order. 2

2. Though separate appeals are filed before this court, as the sarne question of law and facts arise in these appeals and the orders impugned being a common order, all these appeals were analogously hearcl and decided by this common order. The brief facts of the case:

3. The appellant/assessee namely M/s Hyderabad Industries Limited is a company doing business in manufacturing of AC sheets, and is registered on the rolls of the Additional clT(Assts) sR-2, Hyderabad. It had purchased an extent of 53,944 sq' meters of land in Road No.13, Banjara Hills, Hyderabad, way-back in the year 1962 under a registered sale deed and out of the said total land, the constr:'ucted alea was 11,913 sq. mtrs., and the remaining was vacant land admeasuring 42,013 sq. mtrs' It is contended by the appellant/assessee that an extent of 42,013 sq' mtrs has been given to Asbestos centre(recreation centre), a society registered under the A.P. (Telangana Area) Public societies Registration Act, 1315 Fasli under a registered Irrevocable Power of Attorney on 28.10. lg75 for the use of welfare activities of the employees. 1 / 3

4. Further, the object of the society was to provide a common place for the welfare of the employees and their family members. It is stated by the assessee that in view of the registered irrevocable power of attorney, the Iand was under active possession and enjoyment of the Asbestos Centre and thus, it ceased to be belong to it there a-fter.

5. It is the case of the appellant/assessee that the Assessment Officer del.ermined that the value of the said land was exigible to wealth tax u/s.2(ea) of the Wealth Tax Act, 1968 and referred the matter to the Valuation Cell to determine the value of the propert5r as on the said date. The Assessing Authority pursuant to the report of ttre Valuation Oflicer, added the value of the said land as per the valuati on report to the wealth of the assessee and passed the impugn.ed assessment order, dt.28.O3.2001.

6. Aggrir:ved thereupon, the appellant/assessee filed an appeat before the Commissioner of Income Tax (Appeals) (hereinafter referred to as "CIT(Al"l, inter alia contending that the property which was transferred to Asbestos Centre uide a registered Irrevocable Power of Attorney, dt.28.10.1975, it did not belong to the assessie and, therefore, could not be treated as an asset 4 within the meaning of Section 2(eal of the Wealth Tax Act, 1957. Further it is contended that as the said property was transferred under registered Irrevocable Power ofAttorney, dt.28.10. 1975 and dt.26.O7.L975, the Asbestos Centre is to be recognized as the holder of the property for the purposes of Urban Land Ceiling proceedings. Further, it is contended that by virtue of Irrevocable Power of Attorney, the property could not vest back with the assessee, and in view of the transfer to a Asbestos Centre for recreational and welfare purpose of the employees, it ought to have been treated as a productive asset under the provision of Section 2(ea) ofthe Act.

7. After due enquiry and hearing, the learned CIT(A) allowed the appeals of the assessee uicie order, dt. 15.O2.2OO2, holding that the dispttted property had been determined as excess larrd uncler the Urban Land (Ceiling & Regulationl Act, L976 (for short 'ULC Act') and, as it is vested with the Government, and does not belong to the assessee, the value of the said land is not exigible to rvealth tax. Further, the CIT(A) held that the value of the vacant land payable to the assessee as monetary compensation by the State Governrnent should only be taken for assessing the value of the 5 said vacax t land and further held that the excess vacant land falls under the exceptions of urban land for the purposes of wealth tax assessment and in view of the exceptions contained in Explanation I(b) to Section 2(ea) of the Act, it is not exigible to tax.

8. Assailing the said orders of CIT(A), the respondent/Revenue filed appeeils before the learned ITAT for the assessment years 1994-95 to 1998-99, and the learned ITAT after due enquiry and hearing, allowed the appeals of the Revenue and the said orders of the learned ITAT are impugned by the appellant/assessee in the instant appeals.

9. The instant appeals a-re admitted by this Court on 1O.O7.2006 on the following substantial questions of law: '1. Whether on the facts and circumstances of the case, the Income Tox Appellate Tribunal utas correct in lau in ignoring the fact that by an lrreuocable Power of AttorneA, the Appellant had transfened all its rights in respect of the propertg Asbestos Centre, and the trar,.sferee was enjoging the propertg aduerse to the interests of the Appellant, and in concluding that the Asbesfos Centre "belonged" to the Appellant?

2. Wfuitler on the facts and circumstances of the case, haut.ng regard to the fact that the substantial part of the l.and uas determined to be in excess of the timits under the Urban Land (Ceiling & Regulation) Act, 1.975, tlle Income Tax Appellate Tibunal was conect 6 in uplwlding the ualuation of the land on the foottng that it is the free'hold propertg of the Appellant? 3. Whether on the facts and ciranmstances of the case, the Income Tax Appetlate Tibunal was correct in law in holdtng that the entire land was buildable, although admittedlg as at the ualuation date, the land was declared to be surplus under the Urban Land (Ceiling & Regulation) Act, 7976 and there utas no possibilitg of the Appellant obtoining anA such permission?

4. Whetlwr on the facts and circumstances of the case, the Income Tax Appeltate Trtbunal was correct in law in holding that th.e propertg was not put to productiue use although indisputablg, the propertg was being enjoyed bA a welfare trust established solely for the beneftt of the employees of the Appellant?"

10. The core issue which falls for consideration before this Court in all these appeals is, whether the vacant land at Road No.13, Banjara Hills, Hyderabad is exigible to wealth tax in the hands of the appetlant/assessee and whether the vacant land falls under the purview of levying wealth tax by the authorities under Section 2(eal of the Act.

11. We have heard Sri S.Ravi, learned Senior Counsel appqaring for appellant/assessee, and Ms. B.Sapna Reddy, learned Senior Standing Counsel for respondent-Revenue. 7 Contenti.ons of the appellant/ assessee:

12. Learned Senior Counsel appearing for appellant/assessee contended that as the entire disputed vacant land wasl handed over to Asbestos Centre, Hyderabad uide registerecl Irrevocable Power of Attorney, dt.28.10.1975, with the object of utilizing the same for the welfare activities of the employee,s and their family members, and partly as a guest house to the visiting officials. Thus, the vacant land neither belong to it nor the p:ssession of the land is with the appellant/assessee and the Asbes.tos Centre is in possession for more than 12 years and therefore the assessee-company cannot claim title or possession under Se'ltions 64 & 65 of the Limitation Act, and also it falls outside th.e purview of the definition of "asset' under Section 2(ea) of the Act and thus, is not exigible to wealth tax.

13. It is further contended that Section 3, Section 2(rn) and Section 2(ea) make it clear that assets belonging to a company are assessabk: to wealth tax subject to certain exceptions. As per Section 2(,zal of the Act, admittedly the vacant land as well as the land occupied by the buildings, which is not used by the company for specific purposes mentioned therein, do not fall in any of 8 clauses 1 to 5 of Section 2(ea)(i), and also falls under exception to Section 2(ea)(v) read with Explanation I(b) which defines "urban land" and is not exigible to wealth tax.

14. Further, it is contended that the Assessing Officer determined that out of the total land held by the assessee, the constructed area is 11,931 sq.mtrs only and the vacant land is 42,013 sq. mtrs, and as the disputed vacant laud does not belong to the assessee/company, referriug to the Valuation Cell for determination of the value and thereby passing the impugned assessment order taking the market value as on 31.03.L994, are not sustainable under law

15. Learned Senior Corrnsel further contended that the first appellate authority i.e., the CIT(A) has rightly allorved the arppeal holding that the disputed property had been de':ermined as excess land under the ULC Act and as there is prohibition of granting permission for construction as it is .rested with the Government extinguishing the title of the assessee, and only the monetar5r compensation to be paid by the Government is exigible to tax, is proper and that the impugned orders of the learned ITAT irr reversing the orders of the CIT(A) are perverse and unsustainable. 9

16. l,earned Senior Counsel also emphasizes the words "belonging to" used in the Wealth Tax Act as against "owner' used in the Inc:ome Tax Act and submitted that the vacant land already vested with the Asbestos Centre by virtue of the irrevocable Power of Attornry executed on 28.10.1975, and also as it is declared as excess ceiling land under ULC Act and as the ULC Act prohibits transfer and construction, mere non-filing rejection of application for construction is irrelevant, and therefore the excess vacant land under ULC Act cannot come within the ambit of urban vacant land, and as such contended that it would fall under Explanation I(b) to Section 2(eal of the Act, and thus, the findings of the learned ITAT were perverse and liable to be set aside. 17 . Iearned Senior Counsel has placed reliance on the judgment of the HorL'ble Supreme Court in the Case of Late Nautab Sir Mir Osman Att Khan us Commissioner Of Wealth Tax, wherein the Hon'ble Supreme Court considered the similar issue and obsenred as under: n29. Salmond's coneption of "ownership" h.as been noted. The neaning of the expression "belonging to" has also been noteai.. We haue disanssed the cases where the distinction betueen "belonging to" and "ounership" has been considered. t 1986 SCC(Supp.l 700 10 The following facts emerge lwre: (1) the assessee hc.s parted tDith tle possession uhich is one of tte essential,s of ounership. g fhe assessee was disentitled to reauer possession from thc. uendee and assessee alone until the doanment of title is executed was entitled to sue for possession against otlers i.e. other than tle uendee in possession in this case. Th.e title in rem uested in the assessee. (3) TLE uendee taizs in rightful possession against tle uendor. ft) fhe bgal title, houeuer, belonged to tte uendor. @ fhe assessee had not tte totalitg of tle rights that constihtte title but a tlere Lusk of it and a uery important element of the lrusk.

30. The position is that though all statutes including tle statute in question should be equitably interpreted, tlere is no plae of equitg as such in taxation laws. Tte concept of realitg in implementing frscal proui.sion i.s releuant and the legislature in this case has not significantly used the expressbn oowner" but used the expression 'belonging to". Tte propeftg in question legallg, howeuer, cannot be said to bebng to tte uendee. The uendee is in nghtful possession only against the uendor. Speaking for mgself, I haue deliberated long on tte question uhether in interpreting tle expression 'belongirry to' in the Act, ue slrculd not import tlrc maxim that "equitg loolcs upon a thing as done uhich ought to Lnue been done" and though tlrc conuegane had not been executed in fauour of tle uendee, and tle legal title uested with the uendor, the propertg should be treated as belonging to tle uendee and not fo the assessee. I lwd occasion fo discuss thorougtilg this aspect of the matter with my leamed Brotler and in uiew of tle position tlnt legal title still uests uith the assessee, tte authoities we haue noted are preponderantlg in fauour of tle uieut thnt tle propertA should be treated a,s belonging to the assessee. In such ciranmstances, I shall not permit mg doubts to preuail upon me to take the uiew that tle propertV belongs to the uendee and not to the ossessee. I am anscious that it u.till work some amount of injustie tn such a situation because the assessees utould be mode liable to bear the tax burden in such sihtations uithout houing the enjoyment of tlrc propertg in qtestion. But times perhaps are yet nat ripe to transmute equitg on this aspect in tlre interpretation of laut - much as I utould haue personallg liked to do that. As Benjamin Cardozo ha.s said: "Tle judge, euen when lw be free, is not wlnllg free". A judge cnnnot innouate at pleasure." 11

18. l.earned Senior Counsel further submits that the Hon,ble Supreme Court held that though the assessee had only a husk of title, as against the world still he remained the legal owner, but if a person has use and enjoymcnt of the property, he would ordinarily be liable. Learned Senior Counsel therefore submits that in the instant case it is the Asbestos Centre who is the user and therefore the user should be held liable, not the assessee. By taking a <:ue from the sa:d judgment, counsel submits that the Asbestos Centre alone is in actual enjoyment and possession, therefore the propert5r cannot be tr.eated as belonging to the assessee, as they have parted with the land way back in the year

19. Learrred Senior Counsel has also placed reliance on the judgment crf the Hon'ble High Court of Delhi in Commissioner o! Wealth Tqx a. DCM Ltd2, wherein it was held that Section 3 of the Wealth Tax Act is the charging section and that Section 2(e) defines "asriets" to mean property of every description, movable or immovable, subject to the statutory exclusions. The Honble Supreme Court further held that under Section2(eal,,,urban land" does not include land on which construction is not permissible , 2005 SCC Online Del. 124 L2 under any law in force, land occupied by a building duly approved by the competent authorit5r, or land held for industrial purposes for two years from the date of acquisition. Relying on this, learned Senior Counsel contends that the ULC .Act prohibits both construction and transfer in respect of excess land, and therefore the disputed land falls squarely within the exception and is not exigible to wealth tax.

20. Learned Senior Counsel also places reliance on Gouri Prasad fuenka And Fo;mltg (Hufl a. Commissioner Of Wealth- Tax3, wherein the Division Bench of the Calcutta High Court held that once land vests in the State Government under the Land Ceiling Act, exemption under Section 20 of that Act cannot arise, ancl further held that a person holding vacant land in excess of the ceiling limit cannot dispose of srrch land and it cannot be sold in an open market. [t was noted that excess vacant land. does not automatically vest in the State burt continues to be held only until a notification under Section 1O(3) of the Land Ceiling Act is issued. Learned Senior Counsel therefore contends that since the instant land has been declared as excess under the provisions of 3 1991 SCC Online Cal. 348 13 ULC Act, it cannot be put to productive use or transferred, and hence ca:rnot be treated as an asset amenable to wealth tax. 2L. Learned Senior Counsel also placed reliance on the judgment of the Hon'ble High Court of Madras in Commissloner of Wealth Tax, Tamll Nadu-II, Madras a. K.S.Ranganatha Mudallar and. other#., wherein it was held that the proper valuation of excess land is tJre compensation payable by the State Governmt:nt under Schedule III to the Act, and not the open market velue, in view of the statutory restrictions and prohibitions under the Ceiling Act.

22. karned Senior Counsel also relied on the judgment of the Hon'ble High Court of Punjab and Haryana in Amrit Lal Jlndal cnd Soru;. a. Wealth Tax Officefi, wherein it was held that if construction on land is not permissible in law, the land cannot be considerecl "urban land" and is therefore excluded from the expression "assets". On this basis, it is contended that the disputed land, is non-buildable under the ULC Act, as such is not exigible to wealth tax. Thus, contended that the orders of the learned ITr\T are legally unsustainable and liable to be set aside. I (1984) 1l;0 ITR 619 (Mad) s 2OO9 SCrl Online P & H 8595 t4

23. Further reliance was placed on the judgment of the Bombay High Court at Goa in Prabho;kar Keshaa Kunde t), Commissloner of Income Tax and others6, wherein it was held that where part of a property is buildable and part non-buildable, the non-buildable portion must be segregated, as Section 2(ea) exclud.es non-buildable land from computation of net wealth' Learned senior counsel submits that since the disputed vacant land is rendered. non-buildable by reason of the ULC Act, it would fall outside the ambit of "urban land" and thus beyond the scope of wealth tax.

24. Learned Senior Counsel has also drawn support from the decision of the Honble High court of commissioner of wealth Tax a. M/s HP Small Industries & Export cotTtorationT, wherein it rvas held that though the language of wealth tax and income tax are may be different, inasmUch as the words 'rsed in the wealth Tax are 'belonging to'-ancl in the lncome Ta< the rvords userl are 'owner', there can be nc dispu.te that 'belonging to has to be given a much wider annotation than owner and in the instant case, the disputed land cannot be sa.id to be 'loelonged to'. 6 2oll (1) Born. CR 216 7 201 1 SCC OnLine HP 160 15 25' Learned senior counsel further relied on the judgment of the Ftonble supreme court in commtss ioner of rncome Tax, Bombag and, Others a. pod.q.r Cement put. Ltd. & Other#, a three-'Judge Bench decision, wherein the judgment in Late Nq'wab sir Mir osman Ati Khan(supra) was expressly noticed and distinguished by following the judgment in pod,qr cement,s case(sr-rpra),. The Honble supreme court herd that the expression "belonging to" must be construed in the right of the Expranation to Section 4 and that the expression "transfer,, includes any agreemt:nt or arrangement. on the strength of this judiciar pronourrcement, rearned senior counsel submits that, by virtue of the lrrevocable power of Attorney executed on 28.10. lgTS, under which possession, control and enjoyment have vested in the Asbestos centre, the disputed rand cannot be said to "belong to, the appeilant-assessee and hence cannot be brought to tax under the Wealth Tax Act. 26' Lea.ned senior counsel thus submits that in pod.ar cemenfs case (supra), the Honbre supreme court held that even where regetl ownership had not yet passed, the property does not 8 (.r 997) 226 I tR 625 (SC) 16 "belonged to" the assessee, since it was not in its domain and control, as the assessee constructed shops on the land with the permission of the State and derived income there from. Drawing support from this reasoning, learned Senior Counsel contends that in the present case, the appellant/assessee had no possession by virtue of the Irrevocable Power of Attorney executed in 1975, as they have completely parted with possession, control and enjoyment of the disputed land in favour of the Asbestos Centre, which has since been using it for welfare activities of the employees. It is therefore contended that the disputed land cannot be said to "belong to" the appellant/assessee and, consequently, cannot be brought within the ambit of wealth tax, and thus, the orders of the learned ITAT are contrary to the provisions of tJ:e Wealth Tax Act, inasmuch as the disputed land clear'ly falls within Exception(b) to Section 2(eal, and is not exigible to tax, and therefore the appeals deserve to be allorved by setting aside the orders of the learned ITAT.

27. Per contra, Ms. B. Sapna Reddy, learned Senior Standing Counsel, reiterating the strbmissions advancect in the impugned t7 order, c()ntends that notwithstanding the execution of the Irrevocable Power of Attorney in 19'75, the land continued to vest in and "t,elong to" the appellant/assessee. It is contended that power of attorney, irrespective of its nomenclature, does not convey tiile or any proprietary interest or possession in tlee property .md at the most it would constitute the Asbestos Centre as an agent of the appellant/assessee. It is further submitted that the mere cteclaration of land as excess under the ULC Act does not by itself entitle the assessee to claim exemption under the Wealth Tax Act.

28. l,earned Senior Standing Counsel further submits that the terms of the power of attorney make it evident that the assessee- company <:ontinued to remain the owner of the property, as the liability to pay taxes and other statutory dues remained with the appellant/:rssessee being the owner and possessor of the disputed land, and that the Asbestos Centre was only permitted to utilize the land pursuant to a Board Resolution by way of an Irrevocable Power of Attorney executed on 28.10.197 5. It is emphasized that such permissive use does not divest the assessee of ownership and possession, in law. Learned Senior Standing Counsel further 18 contends that, unlike Section 22 of tl:le Income Tax Act which taxes the 'owner", the Wealth Tax Act imposes tax on assets "belonging to" a person, the disputed vacant land continued to belong to the assessee. The relevant portion of the decision of the Hon'ble Supreme Court in the case of Late Nawab Slr Mlr Osman Ali Khan's case(supra) relied upon is extracted hereunder: "24. Before concluding thb aspect of tle matter, ttere is certain a.spect which hns to be bome in mind. Relianec utas plaed as ue hnue mentioned lereinbefore on tle decision of the Gujarat High Court in the case of CWT u. H.H, Maharaja F.P. Gaekwad [(1983) 144 ITR 3O4 (Guj)] . It uas antended that if the Gujarat High Court's uieut utas correct, then tte assessee's contention on thi.s aspect in the instant appeal cannot be acepted. On behalf of the assessee it was submitted tlnt the deasion of tle Gujarat High Court in CWT u. Kum. Manna G. Sarabhai ft1972) 86 ITR 153 (Guj)l not hauing been taken into ansideration bg tle Gujarat High Court in tle later decbion, ttte Gujarat High Court judgment on which reuenue relied was not coftect. It is not neessary in the uieut we haue taken on the other aspect of the matter, namelg, tle use of tle expresston "belonging to" to disqtss this point any further. It was furtler submitted before us tlnt from the said decision of tlrc Gujarat High Court in CWT u. H.H. Malnraja F.P. Gaekuad ft1983) 144 ITR 30a puj)l , a special leaue petition utas flled bg tlrc assessee, uthich utas dismissed bg thi.s Court on January 17, 1983. (See in this connection 144 ITR Statute p. 23.) It is, houeuer, well settbd that dismissal of special leaue petition in limine does not clothe the decrsion under appeal in special leaue petition uith tlrc authoritg of the decision of this Court. See in this unnection the obseruations in Daryao u. State of U.P. IAIR 1961 SC 14571 It mag be mentioned o.s tDo.s ightlg observed bg a Full Bench of tle Allahabad High Court in Sahu Gouind Prasad u. CIr [fi983) 144 ITR 851, 863 (AlI)] special leaue is a discretionary juri.sdiction and the dismissal of a special leaue i9 peti;:ion cannot be constn:ed as alfirmation bg this Court of ttte ,lecision from u;hich special leaue uas sought for."

29. l,ear:ned Senior Standing Counsel also submits that in Poddar riements' case(supra), the distinction between oowner,, and "belonging to" was expressly considered, and it is asserted that in ttre instant case the rights in the disputed vacant land remained vested in the assessee, as the Asbestos Centre had no authority to alienate or transfer the laud, and in other words, the power of attorney did not amount to an irrevocable transfer of title, and that the property does not cease to be an asset of the assessee rnerely because proceedings under the ULC Act were initiated.

30. It is further contended by the learned Senior Standing Counsel that there has been no finality to the ULC proceedings, as the appella.te authority has only remanded the matter to the Urban Larrd Authority for fresh consideration, and the stage contemplated under Section 10(3) of the ULC Act i.e., publication of a notification specifying particulars of the excess land, has not been reached and, until and unless, such a notification is issued, the vacant land cannot vest with the Government. Learned Senior Standing C)ounsel therefore submits that the land cannot be 20 treated aS excess land vested in the Government, nor Can wealth tax can be restricted to notional compensation to be granted by the Government. It is also pointed out that the assessee itself preferred an appeal under Section 33, and by order, dt.O4.O2.2OO4, it resulted in remanding the matter to the competent authority for fresh consideration. Thus, it is contended that this is not the case of voluntary handing over of possession of the disputed land to the Government, nor the proceedings before the competent authority under IJL,C Act have attained linality.

31. Learned Senior Standing Counsel also controverts the contention of the learnecl Senior Counsel for the appellant/assessee that the Asbestos Centre has perfected adverse possession by virtue of Sections 64 and 65 of the Lirnitatic,n Act, 1908, a.s they exti.nguished t-heir right. It is further contended that under Sections 10 and 14 of the ULC Act, restrictions on transfer of excess land would only be effective after issuance of the notification under Section 1O(3) of the ULC Act, and as the proceedings have not yet reached that Stage, such contentions are misconceived and untenable. / 21

32. It is finally submitted by the learned Senior Standing counsel that no grounds have been made out for interference witrr the well-reasoned findings of the learned ITAT, and that the authorit:.es/judgments relied upon by the appellant/assessee have no application and are distinguishable, on facts in the present case, and thus asserts that the appeals are devoid of merit and prays its dismissal.

33. we have given earnest consideration to the submissions made by the learned Senior Counsel appearing for appellant/assessee and Iearned Senior Standing counsel appearing for respondent/Revenue, perused the material on record arLd also the judgments relied upon by both the rearned counsel. OBSERVATIONS AND FINDINGS:

34. The submissions of learned Senior Counsel appearing for the appellantl assessee are of two-fold: 1) Since the disputed vacant land stood transferred in favour of Asbestos Centre on2g.lO.l9Z5 by virtue of a registered lrreuocable pouter of Attorneg. the appellant/ assessee divested itself of all rights, titte, ana interest in the property, as a result, the-land "..".J lo vest in the appellant/assessee from that date, and thus, question of appellant/assessee exigible to wealth tax 22 does not arise as no liability could be fastened upon the appellant/assessee in respect of the said disputed vacant land, as the disputed vacant land no more belongs to the appellant/assessee; and 2l As the subject land has been declared as excess uacant land under Section 10 of the Urban Land (Ceiling and Regulation) Act, 1956, and that, by reason of such declaration, construction upon the said land is statutorily prohibited, and therefore, the disputed land squarely falls within the exception contemplated under Explanation I(b) to Section 2(ea) of the Wealth Tax Act, which excludes from the definition of "urban land" any land on which the construction of a building is not permissible under any law, and thus, the disputed vacant land is not eigible to wea-lth tax basing upon the valuation report.

35. Before going into the merits of the case, we deem it appropriate to extract Explanation I(b) to Section 2(eal of the Act, which are the exceptions, and it reads as under: " Explanation I: (a) 'jeuellery' includes - (b) xxxxxx *urban land" means land situate- xxxxxxx but does not include land classifted as agiatltural land in the records of tlrc Gouernment and used for agianltural purposes or land on uhich construdion of a building is not permissible under ang laut for the time being in force in tLe area in uthich such land is situated or tte land occupied by ang buildittg which lws been mnstructed with tlw approual of tle oppropiate authoritg or anV unused land held bg ttte assessee for industial purposes for a period of tr.rto gears from tle date of its aquisition bg him or anA land heLd bg the assessee as stock-in-trade for a period of ten gears from the date of its acquisition." 23

36. Insofar as the first contention of the learned Senior Counsel for the a1:pellant/assessee that the land had already been handed over to lr.sbestos Centre under a registered lrreuocable pouter of Artorneg, dt.2a.L0.l975, and thereby ceased to belong to the appellant/assessee, a thorough exarnination of the record makes it abundrmtly clear that the said document merely appointed Asbestos Centre as an agent of the appellant/assessee. The authority conferred under the instrument was only in the nature of an agency and did not convey any transfer of title, interest, ownership or possession in the immovable property. It is settled principle c'f law that an agent, even under an irrevocable power of mandate, Coes not acquire ownership rights or possessory rights and at all r-imes, the principal remains the owner and possessor of the propert5r. In such view of the matter, we are of the considered opinion tttat the disputed land continued to vest in the appellant/assessee, and the expression "belonging to,, employed in the Wealth Tax Act squarely applies to the facts of the present case. Consr:quently, the submission of the learned counsel for the appellant that the appellant/assessee had ceased to be the owner and no mc,re belonged to the appellant/assessee by virtue of alleged Irre'ocable Power of Attorney in favour of Asbestos centre, 24 is not tenabre and hence, rejected. More so, permission to use or deal with the property does not, in [aw, extinguish or divest the ownership or transfer possession of the appeuant/assessee. 37 ' In this regard, the Hon'ble Supreme court in suraj Lamp & Industries (p) Ld..Tr.Dir us sta te of Haryana & Anp reinforced the principle by holding that a power of attorney does not, by its execution, create or transfer any right in immovabre property. In the present case as wer, the ownership, title, and proprietary interest in the disputed land continued to vest in the appellant/assessee and the Asbestos centre had no independent right to retain the property, except being an agent of the principar and at the best can convey the property to the prospective buyer under the instructions of the principal. Accordingry, in our considered vielv, the land continued to ..belong to,, the appellant/assessee within the meaning of the wealth Tax Act, and the first contention, therefore, does not merit to be acceptecr and accordingly rejected.

38. coming to the second rimb of the argument that the tand. hauing been d.ecrared. as exces s und.er the prouisions of the [Jrban e QOt2) I SCC 6s6 25 Land (Cetiling and Regalation) Act, 1956, no construction could. be mad.e thereon and. thus the disputed uacant land. falts utithin the exceptior,. carued out in Explanation I(b) to Section 2(ea) of tle Wealth T'ax Act, for better under.standing, we deem it appropriate to extrac': the relevant provisions of ULC Act, 1955. "Sectlon 9. After tlre disposal of the objections, if ang, re*:iued under sub-section (4) of section 8, the competent autlnitA shall make tle necessary alteration s in the d.rafi statement in arcordance uith tfe orders passed on tie obje'ctions aforesaid and" shall determine tle iacant land held by the person concemed in exess of tlrc ceiling timit and. cau.se a copg of the draft statement as so altered to be serued in the manner referred to in sub-section (3) of section g on the per:;on concerned and uh.ere such uacant land i.s, held under a lease, or a mortgage, or a hire-purchase agreement, or an ineuocable pouer of aftomeA, also on tlrc owner of such uacont land.. Sectlon 10 (1) As soon as mag be after the service of the stat?ment under section 9 on tle person concemed, the conyoetent autlaitg shall cause a notiftcation giuing tle partianlars of the uacant land held by such person ii excess of the eiling limit and stating that- (i) such uacant land is to be aquired by the concemed. State Gouemment ; and (ii) the claims of all persons interested in such uacant land mag be made bg them personallg or bg their agents giuing partiatlars of tlLe nature of their interests in such land, to bct published for tle information of the general public in tle Offrcial Gazette of tlle State concerned and ii such otter manner as mag be prescribed. (2) After consideing the claims of tle persons interested. in dte uacant land, mad.e to the compitent authoritg in pursuance of tLrc notification publi.shed under sub-section (1), th.e competent authoitg shalt determine tle nature and ertent of such claim.s and pass such orders as tt deems fit. - (3) 4t anu fime after tLe publication of tLe notiftcation under sub-section (1) the competent authoitg mag, bg notif;cation publisled in tle Olficial Gozette i7 tn"- St"i 26 con@rraed, declare that the excess uacant land referred to in th.e notiftcation publislled under sub-section (1) shall, with effect from such date as mag be specifted in tle declaration, be deemed to haue been aquired by tlrc State Gouernment and upon tle publication of such declaration, such land shall be deemed to haue uested absolutely in the State Gouentment free from all enanmbranes with effect from tle date so specified. (4) Durtng the peiod commencing on the date of publication of tte notification under sub-section (1) and ending with the date specified in the declaration made under sub- section (3): (i) no person shall transfer by way of sale, mortgage, gift, lease or otherwise anA excess uacant land (including any part thereofl specifted in th.e notifrcation aforesaid and any such transfer made in contrauention of this prouision shall be deemed to be null and uoid; (ii) no person shall alter or cause to be altered th.e use of such excess uacant land. (5) Where anA uacant land is uested tn the State Gouernment under sub-section (3), the competent authoitg maA, bg notice in writing, order anA person who may be in possession of it to surrender or deliuer possession thereof to the State Gouemment or to ang person dulg authorised bg the State Gouernment in this behalf within thirtg days of the seruie of the notire. (6) If any person refuses or fails to comply utith an order made under sub-section (5), the competent authoritg may talcepossessfon of tLe uacant land or cause it to be giuen to the conerned State Gouemment or to any person duly authorised ba such State Gouernment in this behalf and mag for that purpose use suchforce as may be necessary. Explanation : In this section, in sub-section (1) of section 11 and in sections 14 and 23, "State Gouerrtment", in relation to- (a) any uacant land owned by tle Central Gouernment, means tlrc Central Gouemment; (b) ang uacant land ouned by ang State Gouernment and situated in a Union territory or uithin tle local limits of a cantonment declared as such under section 3 of tle Cantonments Act, 1924 (2 of 1924), means that State Gouerttment." 27

39. Frorn a perusal of the record, it is clear that though the land was declared as excess land, the proceedings did not reach concludin.g stage, as the statutory requirements under Sections 9, i0(1), 1O(3), and 1O(6) of the ULC Act had not been completed. No notificaticn under Section 10(3) had been issued to vest the land in the State Government, and no document is produced to show that possession had been taken under Section 10(6). Till these steps are fulfilled, vesting of the land in favour of the Government does not arise and the land cannot be treated as one where construction is prohibited under the provisions of the ULC Act. Consequerrtly, the mere pendency of ULC proceedings cannot bring the land within the exclusion under Explanation I(b], thus, the second contention of the learned Senior Counsel for the appellant/assessee is also untenable and hence, rejected.

40. Further as seen from the record, the appellant/assessee had preferred en appeal under Section 33 of the ULC Act, and by order dt.O4.O2.2t)O4, the matter was remanded to the competent authority for fresh consideration as on that date and it is not the case of th,: appellant/assessee that they themselves voluntarily surrendered the excess land to the Government, so as to result in 28 its automatic vesting in the State, and more So, even as on the date of filing of the appeal either before the learned ITAT or before this Court, no proceeding/notification issued under Section 1O(3) or 1O(6) of the Act is filed, and the said act stood repealed by the Urban Land(Ceiling and Regulation) Repeal Act, 1999 and the erstwhile State of Andhra Pradesh adopted the Repeal Act with effect from 27.O3.2OO8. In such circumsta.nces, the question of the land vesting in favour of the Government and adopting the value of any compensation that might eventually be sanctioned by the Government for the purpose of computation or levy under the Wealth Tax Act, are misconceived and untenable.

41. It is rightly contended by the learned Senior Standing Counsel for the Revenue that the land is not falling under Explanation I(b) of Section 2(ea) of the Act, in the light of the judgment in Late Nqutqb Sir Mir Osman Ali Kho,n's case( supra), wherein the distinction between 'belonging to' and 'ownership'has been considered which determine whether the land belonged to the assessee, i.e., (1) the assessee has parted with the possession which is one of the essentials of ownership; (2) the assessee was disentitled to recover possession from the vendee and until 29 documetrt of title is executed, assessee alone was entitled to sue for possr:ssion against others i.e., if the land was in possession of other them the vendee. The title in rem vested in the assessee; (3) the vend,:e was in rightful possession against the vendor; (4) the legal title, however, belonged to the vendor; and (5) the assessee had not t"he totality of the rights that constitute title but a mere husk of it and a very important element of the husk.

42. Fur':her, in the instant case on hand, the assessee had not parted wrth possession and legal ownership, and the Asbestos Centre \^,as in permissive possession as agent and actual possessiort remained with the assessee, and such residual rights are sufficient for the property to be treated as .,belonging to,, the assessee lor wealth tax purposes and more so, the ownership rights also vested with the appellant/assessee.

43. The rstatutory use of the expression "belonging to" in Section 2(ea) of the Wealth Tax Act, instead of ,,owner", is deliberate and significant. As such, in the present case, the legal title admittedly continues with the appellant/assessee, as there has been no transfer of title or interest to Asbestos Centre, and the disputed vacant lanrl has not vested in State, thus the proceedings under 30 ULC Act have not attained finality. Therefore, the land, on law as well as in factual matrix, continued to belong to the appellant/assessee, and thus, the contentions of the learned Senior Standing Counsel for the respondent/Revenue, appear to be germane and valid.

44. Insofar as the finding of the learned ITAT that there was no proceeding filed by the appellant/assessee showing rejection of construction application for construction of a building on the disputed land, though not well founded, is of limited relevance rn the light of the aforesaid findings. Further, it is also not the case of the assessee that the lan<l is used for industrial purposes, nor does it fall within any statutory exceptions, including the two-year limit showing the disputed land held as stock-in-trade.

45. Having gone into the rival contentions of both sides in the foremost paras, we have appreciated the judgments placed by the both the learned counsel and opine as follows:

46. So far as the judgment relied by the learned senior counsel for appellant in the case of Commtssioner of Wealth Tosc, a. DCM Limited\supra) the Honble High Court of Delhi dealt with circumstances s,here construction was legally impermissible, 31 thereby excluding the land from the definition of "urban land." In the presr:nt case, although the land was declared excess, the proceedings had not attained finality. Hence, the said precedent is factually distinguishable with the instant case. Likewise, the decision of the Madras High Court in K.S.Ranganatha Mudaliar's case(supra), relied upon by the assessee, only clarifies that for wealth-tax purpose s, valuation must be based on compensa'ion payable by the State and not on market value. However, the facts in the instant case do not attract that principle, as the ULt3 proceedings are not concluded and the land did not vest with the Government, ar-rd thus, the said judgments are distinguishable on facts.

47. Further, the Hon'ble High Court of Calcutta in Prasa,d Goenlca's case(supra) categorically held that vacant land does not vest in the State unless a notification under Section lO(3) of the Act is issued and the owner will hold it subject to certain conditions until a notification is issued under Section l0(3). Once the land is vested with the State, no exemption under Section 20 can be sought. In that case, such a notification under Section 32 10(3) of the Act has been issued.. As such, the factual matrix is materially different.

48. In the case cited on the fiLe of the Honble High Cotrrt of Punjab and Haryana in Amrit l,al'Ji.ndq-l and Sons's case(supra) it was held that the land on which construction is completely prohibite,J or impermissible in lalv, su.ch land rvould not be treated as "urban land" or an asset for rvealth ta< purposes. In the instant case, as already stated supra, there is no complete prohibition, as the urban land proceediu.gs are not yet completed and ttre proceedings under sectio n 20 of the Act rvere not yet isstred, and thus, apparently there is no prohibition in totality. As strch, said ruling is distinguishable and is of no assistance to appellant/assessee.

49. So also the Hon'ble High Court of Himachal Pradesh in M/s HP Sma;ll Industries' case(surpra), only interpreted the expression 'belonging to' to read with the explanation to Section (41, and the expression 'transfer' was held to include any agreement or arrangement. In the saict case, the land was allotted by the state government to the assessee, rvhich thtrs held to be falling under 'belonging to'the assessee' and b}r interpreting the / 33 judgments of the Honble supreme court in pod.ar cement put. Ltd.'s c€rse and Late Ndutab sir Mir osman Ari Rhans case( supra), t'ee Honble High Court held that as the assets were under the domrfn and control of the assessee, even if tegal ownership has not passed on to the assessee, the property in question belonged to it. In the instant case, neither there was any transfer of properry or vacant rand in favour of Absenters center nor the appellant,/assessee extinguished'its possession on the rand and as such the land continues to vest with the appeilant/assessee.

50. Insolar as the judgment of the Division Bench of the Honble High court of Bombay at Goa in the case of prabhakar Kesh..a Kunde's cia.se(supra), the only principre herd was that the price of the property which was not buildable was required to be segregated from the price of the property which is buildable because u.rder section 2(eal of the wealth Tax Act, the non buildable property was not riabre to be included while computing the wealth/assets under the wealth tax act and that in the present case, the land is vacant land as such, the question of segregation of buildable area is not appricabre in the present case. I I \ 34

51. Insofar as the judgment relied by the learned senior Standing Counsel in Late Nautab Sir Mlr Osman Ali Khrln's case( supra), in the said judgment it is categorically stated that in of taxing laws, the interpretation should be strictly done and it is also held that the words 'belonging to' used in the wealth tax d.enotes domain or lawful control over the property, which is sufficient to hold that it is exigible to wealth tax and the said case is squarely applicable to the facts bf the present case.

52. In view of the above analysis and findings, we are of the considered view that neither ownership nor any interest in the property was transferred to the Asbestos Centre and the appellant/assessee has neither parted with the ownership or possession and the disputed vacant land still belong to it, and also as no notification und.er Section 10(3) of the ULC Act was issued, the proceedings under ULC Act have not attained finality and the lanrl has not vested in the Government. Thus, the findings arrived by the learned ITAT afe proper, legal, and justified and there is no perversity in the said findings of the learned ITAT'

53. In vie,*' of the above finclings, we are of the considered vie',r" that the appellant/assessee has not made out any grounds for 35 interfere:ece of this court with the well-considered orders of the learned ITAT. Accordingly, the substantial questions of law are answerecl against the appellant/assessee and in favour of the respondent/ Revenue. The appeals are therefore liable to be rejected.

54. Acc,trdingly, all the appeals are dismissed. No order as to costs. As :r sequel thereto, miscellaneous applications pending, if any, shall stand closed. SD/. K.SRINIVASA RAO JOINT REGISTRAR //TRUE COPY// SECTION OFFICER To, '1. The lncome Tax Appellate Tribunal Hyderabad, Bench ,A, Hyderabad 2. One CC to SRl. S. RAVI, Advocate tOpUCI 3. One CC to SRI BOKARO SAPNA REDDY (SEN|OR SC TNCOME TAX) Advocate [OPUCI

4. Two CD 3opies kul/PSL \ HIGH COURT DATED:09101t2026 COMMON JUDGMENT WEALTH TAX APPEAL Nos 3,4,5,6&7 0F2006 lHE S ( ,o rJ t- * 2 t r[8 2029 * DISMISSING 1-I{E ALL TI{E APPEALS WITHOUT COSTS b (, a &