These appeals filed by the revenue are directed against the separate but, identical orders of the Commissioner of Wealth tax WTA Nos.34 - 36/B/14 2 (Appeals) III, Bangalore, dated 9-1-2013 u/s 16(3) r.w.s. 17 of the Wealth Tax Act, 1957 for the A.Y. 2005-06, 2006-07 and 2007-08. 1.The assessee has raised common grounds for all the three assessment years, except for the A.Y. 2006-07, where the assessee has challenged the validity of the reassessment proceedings. The only issue evolved from the grounds of appeal is that whether the CWT(A) is right in holding that the impugned lands are urban lands within the definition of section 2(ea) of the Wealth tax act, 1957 and liable for wealth tax. For the sake of convenience, we have taken the facts from the A.Y. 2006-07.

2. Brief facts of the case are that the assessee is a HUF filed its return of net wealth for the A.Y. 2006-07 on 30-03-2007 declaring net wealth of Rs. 1,29,08,300/-.During course of income tax proceedings of the assessee for the A.Y. 2008-09, the AO noticed that the assessee has transferred certain lands and computed the capital gains and paid tax. Subsequently, the assessee has filed revised return and claimed the exemption on capital gain admitted in the original return, as the lands transferred is agricultural lands. The AO gathered information from the income tax proceedings, verified the wealth tax returns filed by the assessee and observed that the assessee has declared the WTA Nos.34 - 36/B/14 3 lands situated at Akkalenahalli- Mallenahalli Village in the return, but claimed same was not urban land as defined u/s 2(ea) of the Wealth tax Act, 1957 as exempt assets. The Assessing Officer noticed that though, the assessee owned 61 acres 21 Gunts converted lands at Akkalenahalli- mallenahalli village and the land is situated within the limits of BIAAPA, the same were claimed exempt from Wealth-tax therefore, the Assessing Officer believed that there was escapement of wealth chargeable to wealth tax for the assessment years in question. Therefore, the AO sought to reopen the assessment and issued a notice u/s 17 of the wealth tax Act, 1957. In response to notice issued u/s 17, the assessee filed a letter along with copies of wealth tax returns filed earlier for the asst. year under consideration and requested to treat the same as returns filed in response to notice issued u/s 17 of the Act. Subsequently, the case was selected for scrutiny assessment. During the course of assessment, the AO issued notice and asked the assessee to explain why the lands situated at Akkalenahalli- Mallenahalli Village should not be treated as asset chargeable to wealth tax as the lands are situated within 8 KM from the limits of BBMP and Devanahalli. The AO further stated that the lands in question were converted for non-agricultural purposes, therefore falls within the definition of assets as defined in section WTA Nos.34 - 36/B/14 4 2(ea) of the Wealth tax Act, 1957. In response to show cause notice, the assessee has filed elaborate written submissions and questioned the chargeability of wealth tax to the impugned lands. The AO after considering the explanations, held that the impugned lands are converted lands, situated within 8 KM from the local limits of BBMP and also within the local limits of BIAAPA and brought to wealth tax.

3. The assessee preferred an appeal before the CWT(A) and challenged the validity of re-assessment and also impugned additions. Before CWT(A), the assessee made elaborate written submissions and contended that the impugned lands are beyond 8 kms from the local limits of BBMP. The assessee further, contended that though, the lands are situated within local limits of BIAAPA, however, BIAAPA is only a planning authority and not a municipalityor notified area as defined in section 2(14)(iii). Further, the assessee contended that though the lands are converted for non-agricultural purpose, he is continued to carry on the agricultural operations and derived agricultural income from the said land. In support of his contention, the assessee relied upon plethora of case laws. Therefore, for the reasons stated above, he has prayed the CWT(A) to delete the impugned additions. However, the CWT(A) after considering the WTA Nos.34 - 36/B/14 5 explanations, held that the impugned lands are converted from agricultural to non-agricultural purpose, situated within the limits of BIAAPA and BIAAPA is a municipality. With this observations, the CWT(A) confirmed the assessment order. Aggrieved by the order, the assessee is in appeal before us.

4. The learned authorised representative of the assessee submitted that the issue in this appeal is covered by assessee own case in ITA. No. 262/B/2013 for the A.Y.2008-09. He further, submitted that the ITAT in the assessee own case, for the A.Y. 2008-09 in income tax proceedings, while deciding the issue of capital gains has held the impugned lands are agricultural lands and not capital assets under section 2(14) of the Act. The AR further, submitted that the issue is also covered in favour of assessee by the decision of ITAT orders in assessee family members case in WTA. No. 16/B/2014 to 29/B/2014. The ITAT, under similar facts and circumstances held that the impugned lands are not urban lands exigible to wealth-tax. Copies of relevant orders are furnished in paper book page No. 1 to 73. WTA Nos.34 - 36/B/14 6

5. The Departmental representative on the other hand, strongly supported the orders of Assessing Officer and CWT(A) and urged to confirm the CWT(A) order.

6. We have heard both the parties, perused the materials available on record and considered the orders of the authorities below. The assessee challenged the validity of re-assessment proceedings. During the course of hearing, the AR made it clear that the ground No. 2 to 5, challenging the validity of re-assessment proceedings is not pressed. Therefore, ground no. 2 to 5 is dismissed as not pressed.

7. The next is came up for our consideration, is whether the CWT(A), right in holding the impugned lands are urban lands and the BIAPPA is municipality or notified area as defined in section 2(14)(iii) of the Act. The ld. Authorised representative brought to the notice of the bench that the issue in this appeal is covered by assessee own case in ITA.No. 262/B/2013.We find that the co-ordinate bench of this tribunal in assessee own case in ITA No. 262/B/2013 for the assessment year had considered whether the impugned lands situated at Akkalenahalli- Mallenahalli Village pertaining to the assessee which are subject matter of appeal before us are urban lands as WTA Nos.34 - 36/B/14 7 defined in section 2(14)(iii) of the Income tax Act, 1961 and are capital assets and the gain from transfer of these lands are liable for capital gain tax. The ITAT had examined the issue whether the lands in question are capital assets, situated within the municipal limits of BIAPPA and the BIAPPA is a municipality or notified area. The Tribunal after considering the relevant details has come to the conclusion that the impugned lands are not capital assets within the meaning of section 2(14). The relevant portion is reproduced hereunder.

8. It is now for us to consider as to whether the order passed by the co-ordinate bench of this Tribunal in the case of M.R. Seetharam (HUF) in ITA No.16154/Bang/2012 dt.13.6.2014 is applicable to the facts of this case. The land in question, which are sold by the assessee and subjected to the charge of LTCG by the authorities below, became the properties of the assessees by virtue of a family settlement of land purchased by Late Sri M.S. Ramaiah in 1951. In the said family settlement in 1970, the assessee and other family members including M.R. Seetharam were allotted lands belonging to the said family. The lands sold by the assessee, some other family members, as well as the lands sold by M.R. Seetharam WTA Nos.34 - 36/B/14 8 are contiguous in nature and possess the same physical attributes. Admittedly these lands were converted for non-agricultural purposes, but no development was carried out by the assessee in respect of the said land. Agricultural activities were continued thereon right up to the date of sale thereof on 8.2.2008 and the same has been accepted by the Income Tax Department while determining the assessees income and computing the taxes thereon. In fact no development activities have taken place on these lands even after six years after the date of sale and this was evident from the physical inspection undertaken by the Members of the Co-ordinate bench prior to the passing of the appellate order in the case of M.R.Seetharam (HUF). Considering the fact that the assessees lands are contiguous to the lands of M.R.Seetharam (HUF) and have the same physical properties, they are identical to the lands which formed the subject matter of the order in the case of M.R. Seetharam and therefore we are in no doubt that the order passed in the case of M.R. Seetharam (HUF) in ITA No.1654/Bang/2012 dt.13.6.2014 is applicable to the appeal in the case on hand.

9.1 We now proceed to examine and take up for consideration the issues and reasons cited / raised by revenue in written submissions dt.12.9.2014 as to why the order of the co-ordinate bench of this Tribunal in the case of M.R. Seetharam (HUF) is not to be applied to the case in hand :- WTA Nos.34 - 36/B/14 9

1. Various factual and legal aspects of the order delivered in case of M R Seetharam (ITA No.1654/Bang/2012) need to be deliberated upon once again, especially in the context of the above mentioned appeals and only after such deliberation the ld. Bench may arrive at a conclusion in case of the above mentioned appeals.

The above reason being general in nature no finding or adjudication is called for thereon.

2. The issues involved in the above mentioned appeals (viz. status of land-agricultural or non-agricultural, status of BIAPPA etc.) have huge revenue implications given the fact that the sale considerations are high due to the lands being located in the vicinity of the Bangalore Airport.

Revenue must bear in mind the sacrosanct principle that the Tribunal should not concern itself with the possible implications on Revenue that the orders passed by it may have. The Tribunal is expected to pass orders which, in its opinion, are correct in law, based on facts and circumstances, irrespective of implications on the revenue or for that matter on the assessees case also.

3. Apart from the above mentioned assessees, many other assessees have sold lands in this area which is arguably one of the areas with very high commercial potential due to its location being near the Bangalore WTA Nos.34 - 36/B/14 10 International Airport. Thus, the judgement in the above mentioned cases is going to affect taxation of many high value land transactions in this prime area of Banglaore.

These issues do not and should not have any bearing on the Tribunal arriving at a decision which is in accordance with law. 4. Most importantly the judgment in the above mentioned cases would decide a very important question-

what is the definition of a converted land in the state of Karnataka.

The order of this Tribunal will confine itself to deciding the taxability or otherwise of the gains arising from the sale of the lands in question in accordance with the provisions contained in the Income Tax Act, 1961. If Revenue expects this Tribunal to decide the question framed in the above cited reason, then such expectation is either borne out of ignorance or mischievous in nature. If mischievous, then Revenue would be well advised to avoid such tongue-in-check arguments.

9.2 On careful consideration of the above four reasons cited by Revenue (supra), we are of the considered view that none of them survive as they are wholly extraneous in arriving at a decision in accordance with the provisions of law.

10.0 We now proceed to carefully consider the several other issues raised by Revenue and examine these in the WTA Nos.34 - 36/B/14 11 light of the order passed by the co-ordinate bench of this Tribunal in the case of M.R. Seetharam (HUF) (supra). On a careful reading of the above, we draw the following conclusions as regards the decision rendered in the order in the case of M.R. Seetharam (HUF) :-

10.1 There is no dispute as regards the fact that the lands in question stood converted, as on the date of sale, in the records of the land revenue authorities of the State Government, as but for this fact, the sale of the lands in question to corporates could not have taken place in the State of Karnataka. Thus the fact that the lands sold are therefore non-agricultural as on the date of sale is also not in dispute.

10.2 The assessee admittedly obtained an order of conversion to put the land to use for non-agricultural purposes. One of the mandatory conditions stipulated in the conversion order was that the lands should be put to non-agricultural use before a period of two years from the date of the said order of conversion, failing which the permission granted would automatically lapse and stand cancelled. The assessee has taken this as one of the reasons to support the proposition that the land continued to be agricultural lands as the permission was not acted upon within the given time and that the lands in question continued to be used only for agricultural purposes. The co-ordinate bench of this Tribunal at para 7.2.6 of its order in the case of M.R. Seetharam (HUF) (supra), WTA Nos.34 - 36/B/14 12 citing the mandatory condition in the conversion order, observed that -

. 10. The land should be used for the said purpose within two years from the date of this order [ Refer pages 88 to 92 (including English transaction) of paper book of A.R.]

only for the limited purpose of stating that the Assessing Officer is not correct in taking a stand that once the agricultural land is converted for non- agricultural purposes, the land cannot be treated as agricultural land even though it continues to be used only for agricultural purposes. The fact that the mandatory condition was not complied with by the assessee was not the reason by the co-ordinate bench of this Tribunal held that the lands sold are agricultural lands and not capital assets u/s. 2(14) of the Act.

10.3 The co-ordinate bench of this Tribunal has proceeded to hold that the lands sold are agricultural lands and not capital assets u/s.2(14) of the Act on the basis of its findings rendered from paras 7.2.7 to 7.3.10 of its order in the case of M.R.Seetharam (HUF) (supra) and has come to the following important conclusions :- (i) The lands in question do not cease to be agricultural lands merely because it stood converted in the records of the land revenue authorities of the state government. (ii) The land continued to be agricultural land for the limited purpose of determining whether the same falls under the definition of capital asset under section 2(14) of the Act in view of the following facts :- WTA Nos.34 - 36/B/14 13 (a) The said land was put to use as agricultural land by the assessee right up to the date of sale and the assessee has also been declaring the agricultural income earned therefrom in the returns of income filed before the Department in this period; (b) The assessee did nothing to change the physical character of land from agricultural to non-agricultural even after obtaining the permission to convert; (c) The land continued to be agricultural land in actual physical condition even after a period of six years after its sale. (d) The assessee obtained permission to convert the land merely to facilitate its sale to corporate entity as the sale would otherwise not been possible.

10.4.1 The co-ordinate bench of this Tribunal only after satisfying itself that the above facts were present in the case of M.R. Seetharam (HUF) (supra) held that the lands sold are agricultural lands and not capital assets under section 2(41) of the Act. In coming to this decision, the co-ordinate bench of this Tribunal placed reliance of these earlier decisions of different co-ordinate benches of the Bangalore Tribunal, in the following cases :- (i) H.S. Vijaykumar V ACIT, Hassan (ITA No.108/Bang/2009 dt.28.11.2006). (ii) T. Suresh Gowda & Others (ITA Nos.1464 & 1465/Bang/2008; 177, 178, 262 & 305/Bang/2009 dt.30.12.2009). WTA Nos.34 - 36/B/14 14 The Tribunal also placed reliance on the decision of the Honble jurisdictional High Court of Karnataka in the case of - (iii) CIT V. Smt. K. Leelavathy reported in (2012) 21 taxmann.com 148 (Kar) dt.2.1.2012.

10.4.2 In all the above three cited cases (supra) the facts are that the respective assessees sold their agricultural lands, after getting the same converted for non-agricultural use, to persons who were not going to continue any agricultural activity. Further, in all the above three cases, the assessees therein :- (i) continued to carry on agricultural activities on the land in question up to the date of sale; (ii) did not act upon the conversion by carrying out any non-agricultural activity on the said lands; and (iii) obtained the conversion order merely to facilitate sale to non-agriculturists. In fact in the case of H.S. Vijaykumar (supra), the assessee therein sold the land to a corporate entity as in the case on hand. All the requirements which led the co- ordinate bench of this Tribunal to hold that the lands sold are agricultural lands and not capital assets under section 2(14) of the Act in the case of M.R. Seetharam (HUF) (supra) are also found in the case on hand before us.

10.4.3 The co-ordinate bench of this Tribunal in the case of M.R. Seetharam (HUF) (supra) has also placed reliance on the decision of the Honble jurisdictional WTA Nos.34 - 36/B/14 15 High Court of Karnataka in the case of CIT V Smt. K. Leelavathy (supra), ;which upheld the decision of the Tribunal in that case. The Honble Court had occasion to analyse the provisions of section 2(14) r.w. sections 45 and 48 of the Act. The two questions of law which were raised by the Revenue in the case of Smt. K. Leelavathy (supra) were as under :- 1. Whether the appellate authorities were correct in holding that the land which is the subject matter of sale is agricultural land as on the date of sale without taking into consideration the conversion of land to non- agricultural purpose and consequently recorded a perverse finding

2. Whether the appellate authorities were correct in holding that though the land is converted into non- agricultural, in view of the cultivation of the land till the date of sale, the land should be treated as agricultural land and the same is exempt from capital gains in view of section 2(14) read with sections 45 and 48 of the Act

10.5 The Honble Court after considering the averments of both parties and the orders of the authorities below held as under :-

5. We find from the record that the Appellate Commissioner as well as the Tribunal followed an earlier ruling of the Tribunal rendered on December 30, 2009, in the case of T.Suresh Gowda [ITA NO.262/Bang/2009] wherein it appears, the question was resolved by looking into the date of permission for conversion as the cut-off WTA Nos.34 - 36/B/14 16 line to decide as to whether the land was an agricultural land or otherwise.

6. It appears, the Tribunal had opined that the land retained its agricultural character till the date of order permitting non-agricultural use and, thereafter, it is not an agricultural land and, therefore, can be treated as capital asset.

7. The Appellate Commissioner as well as the Tribunal has applied this norm and while they did hold that the sale transaction in respect of the following extent of land: Conversion Notification No. and date Sy.N o. Extent of area Date of sale Sale consideration No.ALNSR/94/98-99 DT.29.4.1999 No.ALNSR/8/2004-05 DT.10.5.2004 Total 75 77 15.15 16 17 86.1 87 3A 38G 3A 00G 0A 10G 4A 14G 2A 17G 5A 31G 5A 12G 23A 22G 7.4.2004 2.6.2004 Rs. 50,00,000 Rs.1,82,50,000 Rs.2,32,50,000 In respect of the sale transaction dated June 2,2004, it was taken as a sale of capital asset as this sale was after the date of permission for non-agricultural use granted by the Asst. Commissioner, viz., after May 10,2004, whereas the earlier sale transaction dated April 7, 2004, is held to be in respect of an agricultural land. We do not find the reasoning and the principle enunciated by the Tribunal for making a distinction as to whether the land was agricultural land or otherwise in the case of T. WTA Nos.34 - 36/B/14 17 Suresh (supra) apply to the present case to be obnoxious or violating any statutory provisions and, therefore, we do not find any illegality in the finding recorded by the Appellate Commissioner and the Tribunal.

The Honble High Court has answered both the substantial questions before it (supra) in favour of the assessee and against Revenue. An analysis of the above two substantial questions of law and the conclusion / finding of the Honble High Court would, in our considered view, go to mean that land which was converted from agricultural to non-agricultural and continued to be used as agricultural land till the date of sale, should be treated as agricultural land and the same is exempt and not exigible to tax from capital gains in view of section 2(14) r.w. sections 45 and 48 of the Act despite the fact that the land in question was a converted land as on the date of sale. The co-ordinate bench of this Tribunal in its order in the case of M.R. Seetharam (HUF) (supra) has only followed this proposition of law laid down by the Honble jurisdictional High Court of Karnataka, vindicating the stand of the Tribunal in the cases of H.S. Vijaykumar V ACIT, Hassan (supra), T. Suresh Gowda & Others (supra) and Smt. K. Leelavathy.

10.6 It is important to take note of the fact that the decisions rendered by the various co-ordinate benches of this Tribunal in the cases of H.S. Vijayshankar (supra), T. Suresh Gowda & Others (supra) and M.R. Seetharam (HUF) (supra) and that of the Honble jurisdictional High WTA Nos.34 - 36/B/14 18 Court in the case of Smt. K. Leelavathy (supra) is only for the limited purpose of determining whether a land is agricultural land or a capital asset u/s.2 (14) of the Act and not to determine the definition of converted land in the state of Karnataka and other issues pertaining to the status of land as sought for by the Revenue in its written submissions. We also find that the decision in the case of Madhav Bhandhopanth Kulkarni 2003(5 Kar. LJ 13, relied on by Revenue, is not germane to decide the issue before us.

10.7 In the order of the co-ordinate bench in the case of M.R. Seetharam (HUF) (supra), the co-ordinate bench of this Tribunal at paras 7.3.8 to 7.3.10 of its order has also found merit in the arguments put forth by the learned Authorised Representative therein that owing to the peculiar features of the law prevailing in the state, an agriculturist in the state of Karnataka has to necessarily get his agricultural land converted if he has to sell the same to a non-agriculturist and hence is placed at a disadvantage as compared to an agriculturist in Tamil Nadu, Andhra Pradesh, etc. who can directly sell their agricultural lands to non-agriculturists without getting the same converted. In this regard the co-ordinate bench of the Tribunal at paras 7.3.8 to 7.3.10 of its order has observed and held :-

7.3.8. Finally, the most important aspect which requires to be considered is that agriculture is a State subject and different States have different reforms (laws) WTA Nos.34 - 36/B/14 19 as to who can purchase/own agricultural lands in the respective States. To illustrate further, in Karnataka, non-agriculturists and industrial companies are prohibited from purchasing of lands which are classified as agricultural in the revenue records. If an agriculturist intends to sell his agricultural lands to a company/non-agriculturist for the use of non-agricultural purposes, he must possess a conversion order obtained from the revenue authorities to utilise the subject land for non-agricultural purposes. However, the same law/rule is not prevalent in the neighbouring States of Tamil Nadu, Andhra Pradesh or in Maharashtra, Delhi etc. In other words, the agriculturists of the said States are free to sell their lands as shown in the revenue records to non- agriculturists/Corporates without obtaining a conversion order.

7.3.9. Thus, it is evident from the fact that the agriculturists in other States can sell their agricultural lands without getting the same converted whereas the agriculturists in Karnataka cannot do so due to the Land Reforms Act prevailing in the State. As such, an agriculturist in Karnataka is on a different footing from his counterparts in other States. If one were to conclude that since the present assessee had obtained a conversion order to enable it to sell its lands to a non-agriculturist (a Corporate), the subject land ceased to be a non- agricultural and, thus, become a Capital asset, though the subject land remains an agricultural land, the WTA Nos.34 - 36/B/14 20 assessee then stands discriminated in the eyes of law vis- -vis its counter-parts in other States. Had the State Reforms Act permitted the assessee to sell its agricultural lands without conversion to a Corporate as in the case of other States (supra), the assessee would not then be required to get the land converted merely to facilitate its sale to a corporate and the gains arising from such sale would not have been exigible to Capital Gains tax which is the subject of a Central Act (Income-tax Act).In the instant case as mentioned earlier even after conversion, assessee was carrying on agricultural operation and conversion was done only to facilitate sale of subject property to a corporate entity/ non agriculturist. In substance, the Income-tax Act a Central Act is to be administered in such a manner to ensure that an assessee is not subjected to suffer due to different State laws.

7.3.10. Taking into account all the aspects as discussed in the fore-going paragraphs and also in conformity with the judicial pronouncements on the issue (supra), we are of the view that though the subject land was converted into non-agricultural purposes, cultivation of the land for agricultural purposes till the date of sale was continued unabated and as such, the land should have been treated as agricultural land and, thus, exempt from capital gains in view of s. 2 (14) of the Act. It is ordered accordingly.

The extracted portion at paras 7.3.8 to 7.3.10 of the order in the case of M.R. Seetharam (HUF) (supra) WTA Nos.34 - 36/B/14 21 indicates that the co-ordinate bench of this Tribunal came to the conclusion that mere conversion of land from agriculture to non-agriculture could not be taken as the sole criteria to hold it as a capital asset under section 2(14) of the Act and that if that land is used for agricultural purposes till the date of sale, despite the fact that it is converted to non-agricultural use are agricultural lands and not capital assets under section 2(14) of the Act. Whether BIAPPA can be treated as a Municipality and consequently the issue falls within the purview of section 2(14)(iii)(a) of the Act.

11. Another issue that requires to be addressed is whether BIAPPA is to be treated as a municipality as contemplated by the provisions of section 2(14) of the Act. The co-ordinate bench of this Tribunal in its order in the case of M.R. Seetharam (HUF) (supra), agreeing with the view taken by the Honble High Court of Kerala in the case of CIT V Murali Lodge reported in (1992) 194 ITR 125 (Ker), has held that BIAPPA is not a Municipality, but a mere planning body. The relevant portion of its order at paras 8.3 to 8.3.5 is extracted hereunder :- 8.3. We have carefully considered the reasoning of the authorities below and also the divergent contentions of either of the party on the issue. Indeed, BIAAPA performs only planning and zoning functions, but, does not perform any other municipal functions as canvassed by the Revenue. Other major municipal/panchayat WTA Nos.34 - 36/B/14 22 functions are required to be performed only by an elected body, namely, the respective municipality/panchayat within the ambit of the area covered by BIAAPA, but, not BIAAPA which is, admittedly, a mere planning authority. We are also differ with the interpretation of the CIT (A) that municipality need not necessarily be an elected body. In this context, we refer to the Article 243P(e) of the Constitution of India which explicitly defines Municipality means an Institution of self-Government constituted under Article 243Q and Article 243R requires that all the seats in a Municipality shall be filled by persons chosen by direct election from the territorial constituencies in the Municipal area and, thus, clear that a municipality has to necessarily be an elected body whereas BIAAPA was not an elected body, but, an appointed body and, therefore, BIAAPA does not qualify to be considered as a Municipality.

8.3.1. To strengthen the above view, it is appropriate to refer to the judgment of the Honble Kerala High court in the case of CIT v. Murali Lodge reported in (1992) 194 ITR 125 (Ker). The issue before the Honble Court was Whether the land in question situated within Guruvayur Township can be treated as a capital asset within the definition of section 2(14) of the I.T. Act After having considered the facts of the issue and also in conformity with the judgment of the Honble Supreme Court in the case of Garden silk Weaving Factory v. CIT [(1991) 189 ITR 512 (SC)], the Honble Kerala High Court had, WTA Nos.34 - 36/B/14 23 comprehensively, dealt with the issue of Whether the local authority is a Municipality as under:

(On page 127) ...... From the plain and unambiguous language employed in the section [2(14)(iii)(a)], it is clear that, if the agricultural land is situated outside the jurisdiction of a municipality then no tax on any profits or gains arising from the transfer of such land will be chargeable under the head capital gains. The question, therefore, is: Whether the agricultural land of the assessee sold in public auction can be said to be situated in an area which is comprised within the jurisdiction of a municipality. The case of the Revenue is that it is, because the GuruvayurTownship is a municipality within the meaning of that word in the section. On the other hand, counsel for the assesssee submits that the GuruvayurTownship, though a local authority cannot be said to be a municipality and, therefore, the agricultural land in dispute cannot be said to be situated in an area which is comprised within the jurisdiction of a municipality. The word municipality used in the section considered in the light of the various expressions used in the brackets, namely, whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee, or by any other name must be held to take in its fold a township also, counsel for the WTA Nos.34 - 36/B/14 24 Revenue submits. Of the various words included in the brackets, learned counsel for the Revenue laid emphasis on the words by any other name. These words, counsel argues, take colour from the preceding words, and, if that be the position, the GuruvayurTownship also can be called a municipality. May be that the Guruvayur township can be called a local authority. But all local authorities cannot be called municipalities. Only those local authorities which have all the trappings of a municipality can be treated as a municipality within the meaning of the section. Therefore, to find a solution to the problematic dispute, we have to give a meaning to the word municipality which stands undefined in the Act. Generally understood, municipality means a legally incorporated or duly authorised association of inhabitants of a limited area for local governmental or other public purposes [Blacks Law dictionary]. The above definition more or less is reflected in the provisions contained in Chapter III of the Kerala Municipalities Act,

1960. The council constituted under section 7 with the assistance of the standing committee of the council, chairman, commissioner, etc., will administer the provisions of the Act. The council consists of such number of members as are prescribed. They are called councillors. They are elected by the residents of the area coming within the jurisdiction of the municipality. The chairman and vice-chairman of the WTA Nos.34 - 36/B/14 25 municipality are elected by the members of the council. The commissioner is appointed by the Government in consultation with the council. It is the duty of the commissioner to carry into effect the resolutions of the council unless it be that the said resolution is suspended or cancelled by the Government. The municipality contemplated under section 2(14)(iii)(a) must be one which satisfied the above requirements. All the local authorities included in the brackets must satisfy the above requirements to be known as a municipality. The position, however, would have been different had the section contained a definition which takes in its fold the local authorities included in the brackets, namely, municipal corporation notified area committee, town area committee, town committee or such other similar local authority. In that event, the Guruvayur Township can be said to be a municipality. The plan language employed in the section, however, makes it clear that the intention of the Legislature is not to treat every local authority as a municipality; but, on the other hand, only those local authorities which have all the trappings of a municipality as stated above can be said to be municipalities within the meaning of the section. The Guruvayur Township, constituted under the Guruvayur Township Act, considered in this backdrop, cannot be said to be a municipality. The Guruvayur Township is not an autonomous body like a municipality. WTA Nos.34 - 36/B/14 26 It is constituted by the Government by a Notification issued under the Guruvayur Township Act. To put it differently, the members of township committee are not elected representatives of the residents of the area. That the Central Government also has understood the position thus is obvious from the draft notification dated February 8, 1991, published in the Gazette issued under section 2 (14)(iii)(b) of the Income-tax Act

8.3.2. We have, with due regards, perused the judgment of the Honble P & H High Court in the case of CIT v. Smt. Rani Tara Devi (supra) as relied on by the learned DR. The only issue before the Honble Court was: Whether the land owned by the assessee which was acquired under the provisions of the Land Acquisition Act, was an agricultural land or a capital asset within the meaning of s. 2 (14) of the Act in order to determine the taxability of amount of compensation received by the assessee After taking into account the relevant facts of the case, the Honble Court was of the view that it was to be regarded as a capital asset within the meaning of s. 2 (14) of the Act for the following reasons: (i) that the acquired land was situated between the developed sectors of Panchkula on one side and on the other side, it was 1 KM from the district headquarters; (ii) that the land was extensively developed area and nearer to colleges, hospitals, district headquarters etc., (iii) with regard to the assessees claim that in terms of s 2(14) an agricultural land was excluded from the capital WTA Nos.34 - 36/B/14 27 asset, if it was not a land situated in an area which was comprised within the jurisdiction of municipality etc., it was held by the Court that Haryana Urban Development Authority was a local authority in terms of s. 3 of the Haryana Urban Development Authority Act, 1977 and, thus the local authority in terms of s. 3(31) of the General Clauses Act means a Municipality. Therefore, conversely, the expression Municipality in s. 2 (14) of the Act would include a local authority; & (iv) in view of the above, it was held the land, subject matter of acquisition, was a capital asset falling within the scope of clause (iii) of s. 2 (14).

8.3.3. In this connection, we would like to point out that the said land was situated between the developed sectors of Panchkula on one side and on the other-side it was within a radius of 1 KM from the District headquarters, colleges, hospitals etc., whereas in the present case, the subject property was surrounded by lush green agricultural lands. Therefore, we are of the view that the case law relied on by the Revenue is not directly applicable to the issue on hand.

8.3.4. Further, while deciding the issue against the assessee, the Honble Court had distinguished the judgment of Honble Kerala High Court in Murali Lodges case (supra) in an identical issue, with the following observations:

29. With respect, we are unable to agree with the view expressed by the Kerala High Court in the aforesaid WTA Nos.34 - 36/B/14 28 judgment. The expression by any other name appearing in item (a) of clause (iii) of section 2(14) has to be read ejusdem generis with the earlier expressions i.e., municipal corporation, notified area committee, town area committee, town committee. The Court has also not considered the scope and ambit of section 3 (31) of the General Clauses Act defining local authority.

8.3.5. At this juncture, we would like to point out that there are two views on the issue, one in favour of the assessee as held by the Honble Kerala High Court [in Murali Lodges case] and other against the assessee as ruled by the Honble P & H High Court (supra). Apparently, there is no judgment rendered by the Honble jurisdictional High Court on this issue. In the given circumstances, following the judgment of the Honble Supreme Court in the case of CIT v. Vegetable Products Limited reported in 88 ITR 192 (SC), we hold that where two views are possible on an issue, the view in favour of the assessee has to prevail. Accordingly, in conformity with the judgment of the Honble Kerala High Court in Murali Lodges case (supra) which is directly applicable to the present case, we hold that the authorities below were not justified in holding that the subject land could not be treated as agricultural lands and that the proceeds received from its sale was exigible to tax under the head capital gains. It is ordered accordingly. WTA Nos.34 - 36/B/14 29 We are also in agreement with the view taken by the co-ordinate bench in the case of M.R. Seetharam (HUF) (supra) that BIAPPA is not a Municipality but a mere planning body.

12. With respect to the issue raised by the learned Departmental Representative on the acceptance of additional evidences filed in the case of M.R. Seetharam (HUF) (supra), it is clear from the records of that case that these evidences were not filed by the assessee, suo moto but were filed at the instance of the bench.

13. As regards the issue raised by the learned Departmental Representative with reference to the physical inspection of the lands in question by the Members of the co-ordinate bench, the inspection, carried out in the presence of the learned Departmental Representative of revenue and the learned Authorised Representative of the assessee, was done to satisfy themselves about the physical characteristics of the lands in question. On inspection thereof, having been satisfied that no non-agricultural activity had taken place even after six years of its sale, the Members of the co-ordinate bench were convinced that the lands were agricultural in nature (i.e. having orchards, etc.) as on the date of sale. The presence or absence of the present owners at the time of the inspection, in our view, is immaterial in coming to a satisfaction about the physical characteristics of the land in question. It was apparent from the physical inspection that there were mango orchards and coconut WTA Nos.34 - 36/B/14 30 groves with thousands of fruit/nut bearing trees and not . some fruit bearing trees as mentioned by Revenue in its written submissions.

14. In the light of the above discussion of the facts and circumstances of the case at paras 2.1 to 13 of this order (supra), we are of the considered view that the conclusions reached by the co-ordinate bench of this Tribunal in the case of M.R. Seetharam (HUF) (supra) squarely applies to the facts of the case on hand. We, therefore, following the decisions of the co-ordinate benches of this Tribunal in the cases of H.S. Vijayakumar (supra), T. Suresh Gowda and Others (supra), M.R. Seetharam (HUF) (supra) and the Honble Karnataka High Court in the case of Smt. K. Leelavathy (supra) hold as under :- (i) The lands in question, which were sold in the case on hand, are agricultural lands and not capital assets under section 2(14) of the Act, and (ii) BIAPPA is not a Municipality as contemplated in section 2 (14) of the Act. We, accordingly, direct the Assessing Officer to delete the addition made to the income of the assessee under the head Capital Gains on sale of the said agricultural lands in question, in the order of assessment for Assessment Year 2008-09. WTA Nos.34 - 36/B/14 31

8. A similar issue came up for consideration before the co- ordinate bench of this tribunal in bunch of Wealth-tax cases in WTA No. 16/B/2014 to 29/B/2014, wherein the ITAT under similar set of facts held that the impugned lands are not urban lands exigible for wealth tax. The relevant portion is reproduced below. Since the Tribunal, in the assesses own case in income tax proceedings with regard to the same subject matter, has taken the stand and held the land to be agricultural land and definition of capital asset in the Income-tax Act is similar to the definition of urban land under wealth- tax Act, we respectfully follow the order of the co- ordinate bench of the Tribunal and hold the said land to be not urban land exigible to wealth tax.

9. Therefore, respectfully following the co-ordinate bench decisions in assessee own case in ITA.No. 262/B/2013 and also co- ordinate bench decision in WTA.No. 16/B/2014 to 29/B/2014, we hold that the impugned lands are not urban lands within the meaning of section 2(ea) of the Wealth tax Act, 1957 and not exigible to wealth-tax. Accordingly, we set aside the CWT(A) order and delete the additions made by the assessing Officer. WTA Nos.34 - 36/B/14 32

10. The next issue came up for our consideration is whether AO is right in charging interest u/s 17B of the Wealth tax act. We have considered the issue and hold that charging of interest is mandatory and consequential, wherever there is a incidence of tax. Accordingly, we dismiss the ground raised by the assessee.

11. In the result, the appeals filed by the assessee in WTA Nos.34, 35 & 36/B/14 are partly allowed. Order pronounced in the open court on 16 th Oct, 2015. Sd/- Sd/- (VIJAYPAL RAO) (G MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER Vms. Bangalore Dated : 16/10/2015 Copy to :

1. The Assessee

2. The Revenue 3.The CIT concerned. 4.The CIT(A) concerned. 5.DR 6.GF By order Asst. Registrar, ITAT, Bangalore.