GIRIDHAR G. YADALAMversusCOMMISSIONER OF WEALTH TAX &ANR.

                    [2015] 15 S.C.R. 543


                  GIRIDHAR G. YADALAM                            A
                              v.
       COMMISSIONER OF WEALTH TAX &ANR.
               (Civil Appeal No. 728 of 2011)
                                                                 B
                       JULY24, 2015
          [A. K. SIKRI AND R. F. NARIMAN, JJ.]
      Wealth Tax Act, 1957: s.2(ea)(v), Explanation 1(b) -
Urban land - Exemption to wealth tax - Held: Benefit of
exemption in respect of urban land is available only when C
the building is fully constructed and not when the
construction activity has merely started - In the instant
case, asses see is not entitled to benefit of exemption under
the clause as the building was still under construction during
the assessment year.                                           D
      Interpretation of Statutes: Taxing statute - Held: In
taxing statute, it is the plain language of the provision that
has to be preferred where language is plain and is capable
of one definite meaning.
                                                                 E
     Disposing of the matters, the Court
       HELD: 1. The plain language of the prov1s1on in
question conveys that the benefit of the said clause
would be applicable only in respect of the building
'which has been constructed'. The expression 'has been F
constructed' obviously cannot include within its sweep
a building which is not fully constructed or in the
process of construction. The opening words of clause
(ii) also become important in this behalf, where it is stated
that 'the land occupied by any building'. The land G
cannot be treated to be occupied by a building where it
is still under construction. In taxing statute, it is the plain
language of the provision that has to be preferred where
language is plain and is capable of one definite meaning.
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                              543
544         SUPREME COURT REPORTS                 [2015) 15 S.C.R.


 A Strict interpretation to the exemption provision is to
   be accorded, which is the case at hand. The purposive
   interpretation can be given only when there is some
   ambiguity in the language of the statutory provision or it
   leads to absurd results. There is no ambiguity as such
 B in the present case. [Para 16] [551-G-H; 552-A-B, E-G]
           M. Nizamuden v. Chemplast Sanmar Limited and
           Ors. (2010) 4 sec 240 : 2010 (3) SCR 315 -
           referred to.

 c                         Case Law Reference
           2010· (3) SCR 315      referred to.          Para 11
            CIVILAPPELLATE JURISDICTION: Civil Appeal No. 728
      of 2011.
 o         From the Judgment and Order dated 21.03.2007 of the
      High Court of Karnataka at Bangalore in WTA No. 25 of 2006.
                                  WITH
           C.A.Nos. 729,730,731,732,733,734,735, 736, 737,
 E    738, 739, 741, 742, 743, 744, 745, 746, 747, 748, 749, 750,
      751, 752, 753, 754, 755, 756, 757, 758, 759, 760, 761, 762,
      763, 764, 765, 766, 767, 768, 769, 770, 771, 772, 773, 774,
      775, 776, 777, 778, 779, 780 OF 2011
            SLP(C) Nos. 19011 and 19012 of 2012 .
. F        Gopal Jain, Sr. Adv., Ms. Chinmayee Chandra, Ms.
      Khushboo Bari, Mrs. Nandini Gore, Kartik Bhatnagar, Ms.
      Trishula Kulkarni, Mis. Karanjawala & Co., Advs. for the
      Appellant.
 G         Rupesh Kumar, S. A. Haseeb, Mrs. Anil Katiyar, Ms.
      Sadhna Sandhu, Vikash Malhotra, Ms. Swarupama
      Chaturvedi, B. V. Balaram Das, Abhijat P. Medh, Advs., for the
      Respondents.


 H
GIRIDHAR G. YADALAM v. COMMISSIONER OF WEALTH                          545
                  TAX&ANR.

      The Judgment of the Court was delivered by                       A
  .   A. K. SIKRI, J. 1. In these cases, we are concerned with
the interpretation that is to be accorded to the provisions of
Explanation 1(b) to Section 2(ea)(v) of the Wealth Tax Act, 1957
(hereinafter referred to as the 'Act'). This Explanation defines
'Urban Land'. Urban land is exigible to wealth tax under the           B
aforesaid Act. However; the definition of 'urban land' in
explanation 1 (b) excludes certain category of lands. As per
Explanation 1(b) to Section 2(ea)(v), 'urban land' to mean land
situate - but does not includes:-
      (i) land classified as 'agricultural land' in the records of
                                                                       c
the Government and used for agricultural purposes or land on
which construction of a building is not permissible under any
law for the time being in force in the area in which such land is
situated; or                  ·
                                                                       D
     (ii) the land occupied by any building which has been
constructed with the approval of the appropriate authority; or
     (iii) any unused land held by the assessee for industrial
purposes for a period of two years from the date of its
acquisition by him; or                                                 E
      (iv) any land held by the assessee as 'stock-in-trade' for
a period of ten years from the date of its acquisition.
       2. To put it pithily, what calls for interpretation is clause
(ii) above, namely, what is the meaning that is to be attributed       F
to the expression "the land occupied by any building which
has been constructed with the approval of the appropriate
authority."
      3. In the context of these appeals the question is as to
whether the land would be excluded from the 'urban land' only          G
when building is completely constructed thereupon or it would
be covered by the aforesaid clause even ifthe building activity
is started and the building is not yet complete.

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546         SUPREME COURT REPORTS                 [2015] 15 S.C.R.


A       4. Civil Appeal No.728/2011 has arisen from the
  judgment of Karnataka High Court which has been filed by
  the appellant/assessee (hereinafter referred to as the
  'assessee'). It has taken the view that from the plain language
  of the aforesaid clause, the building has to be completely
B erected on the land in order to get it covered by exclusion
  clause.
            5. In the appeals which are filed by the Revenue,
      challenge is to the orders passed by the Kerala and Madras
      High Courts which have taken a contrary view. From this
C     narration, it becomes clear that there is one common issue
      and that was the reason for hearing of these appeals together.
            6. Mr. Gopal Jain, learned senior counsel appeared for
      the assessee in the lead matter i.e. Civil Appeal No. 728/2011.
 0    For the sake of brevity we would take note of the facts from
      this appeal:
          Assessee herein is the HUF which is the co-owner of a
   land measuring 30,663.04 sq. metres, situated at Survey
   No.67/2, 67/3, 67/4 and 67/5 of Adugodi Village and a portion
 E _of.Survey No. 151 of Kornamangala Village of Segur Hobli of
   Bangalore South Taluq, Bangalore District, bearing City
   Survey No. CTS/2. The assessee entered into various
   development agreements with one M/s. Prestige Estates
   Properties Private Ltd. for construction of residential flats. The
 F development agreement was considered by the assessing
   officer in the course of assessment proceedings. Assessee
   claimed that it had retained ownership of the land until flats
   are fully constructed and possession of the assessee's share
   was handed over to it. The development agreement constituted
 G only permissive possession according to the assessee for the
   limited purpose of construction of flats. Assessee contended
   that assessee continues to be the owner of the land for the
   Financial Years 1995-96 and subsequent years till the sale of
   flats. Notice under Section 17 of the Act was issued to the
 H
 GI RI DHAR G. YADALAM v. COMMISSIONER OF WEALTH                    547
                TAX &ANR. [A. K. SIKRI, J.]

  assessee and he filed return of wealth of Rs.8,48,000/- on A
  20.08.2003. After considering the contention to treat the
  property as urban land and brought it to tax under an order
  dated 31.03.2005, an appeal was filed before the Assistant
  Commissioner of Wealth Tax (Appeals), Bangalore. The
  appeal stood allowed in the light of an earlier order of the B
  Tribunal. Revenue thereafter filed an appeal to the Tribunal.
  The Tribunal following its decision in WTA No. 4-5/B/03 dated
  22.03.2004 dismissed the appeal filed by the Revenue. The
  Revenue took up the matter in further appeals before the High
  Court of Karnataka. The High Court has upset the order of the      c
  ITAT holding that the assessee is not entitled to the benefit of
  clause (ii) of Explanation 1(b) to Section 2(e)(a)(v) of the Act,
- as the building had not been co.nstructed and was still under
  construction during the Assessment Year.
       7. It is not in dispute that 'urban land' is to be included to D
 calculate 'net wealth' for the purpose of wealth tax under the
 Act. However, certain lands are not to be treated as 'urban
 land' which are mentioned in Explanation 1(b ). But Section
 2(e)(a) of the Act was inserted by the Finance Act 1992 (Act
 No.18/1992) w.e.f. 01.04.1993. The purpose was to exempt E
 some of the lands from wealth tax with the objective of
 stimulating investment in productive assets. It is in the context
 that the land occupied by any building which has been
 constructed with the approval of the appropriate authority is
 excluded from the definition of urban land. On a plain reading F
 of the said clause it becomes clear that in order to avail the
 benefit, following conditions have to be satisfied:
       (a) The land is occupied by any building;
       (b) Such a building has been constructed;                     G
      (c) The construction is done with the approval of the
 appropriate authority;
     8. Notwithstanding the aforesaid plain language, an
 endeavour of Mr. Gopal Jain is to impress upon us to read the       H
548         SUPREME COURT REPORTS                 [2015] 15 S.C.R.


A     said clause to include even that land where the construction of
      building activity has been started. He, thus, wants that the
      words 'has been constructed' is to be read as 'is being
      constructed'. His attempt to persuade us is predicated on the
      following premise.
B         Mr. Jain argued that the clause added purposes
  interpretation i.e. the objective for which this clause was added,
  namely, to stimulate investment in productive assets, has to
  be kept in mind. In this behalf, he argued that Explanation 1(b)
  has carved out exceptions/exemptions based on the object
C and purpose of the amendment to the Wealth Tax Act in 1992.
  These exceptions have to be construed in line with the
  legislative intent at the time which Section 2( ea) was inserted,
  which was to stimulate inve:;tment in productive and non-
  productive assets and only specified assets were subject to
D wealth tax. On that premise, he emphasised that in each of
  the aforesaid clauses this objective was kept in the forefront.
  Qua Exception (I) he stressed that where land is classified as
  'agricultural' and used for agricultural purposes, it will not fall
  within the-definition of 'urban land' and is exempted from wealth
E tax. Agricultural land, although vacant, if put to agricultural use
  (i.e. productive) is exempt from wealth-tax. He argued that
  this exception is with reference to land which is vacant for the
  reason that construction is not permissible under any law. As
  the reason for non-construction of a building cannot be
F attributed to the assessee, an exception has been made on
  account of which it will not be considered as an asset and is
  exempted from wealth tax.
          9. Mr. Jain further argued that in this very hue, exception
G (ii) also needed to be interpreted. His submission was that
  the word 'constructed' is used in the context of exempting a
  land "occupied by any building which is being constructed with
  the approval of appropriate authority". With the commencement
  of construction of a building, land ceases to be identifiable as

H
GIRIDHAR G. YADALAM v. COMMISSIONER OF WEALTH                       549
             TAX &ANR. [A. K. SIKRI, J.]

'urban land' due to constructive utilization of vacant land. When   A
a building is under construction, it is 'work-in-progress'/
construction activity is on-going but spills over. However, the
character of land has changed - it is being put to use and,
therefore, it ceases to be urban land during the period of
conversion.                                                         B
      10. According to Mr. Jain, if a building is constructed and
construction is complete, the asset will go out of the definition
of 'urban land' contained in Section 2(ea)(v) read with
Explanation 1(b) as it would fall under Section 2(ea)(i) which
covers buildings. Section 2(ea)(i) reads as follows:                C
     "(i) any building or land appurtenant thereto (hereinafter
     referred to as 'house'), whether used for residential or
     commercial purposes or for the purpose of maintaining
     a guest house or otherwise including a farm house              0
     situated with twenty-five kilometers from local limits of
     any municipality (whether known as Municipality,
     Municipal Corporation or by any other name) or a
     Cantonment Board, but does not include-
      (1) a house meant exclusively for residential purposes        E
      and which is allotted by a company to an employee or an
      officer or a director who is in whole-time employment,
      having a gross annual salary of less than ten lakh rupees;
      (2) any house for residential or commercial purposes
      which forms part of stock-in-trade;                           F
      (3) any house which the assessee may occupy for the
      purposes of any business or profession carried on by
      him;
      (4) any residential property that has been let-out for a      G
      minimum period of three hundred days in the previous
      year;
      (5) any property in the nature of commercial
      establishments or complexes;"
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550            SUPREME COURT REPORTS                 [2015] 15 S.C.R.


A            11. Mr. Jain also submitted that the stand of the
      respondent that only c-ompletP.d buildings are to be brought
      into the ambit of the word 'has been constructed' is not tenable
      since completed buildings fall under a different clause i.e.
      clause (ea)(i). According to him, if that is accepted then in
B     such cases, Section 2 (ea)(v) read with Explanation 1(b) would
      not be required at ali since a completed building is covered
      independently in Section 2( ea )(i ). He, thus, submitted that seen
      in this context, the expression 'has been constructed' must be
      read as 'is being constructed' in order to give effect to the
c     legislative intent. He relied upon the decision of this Court in
      the case of M. Nizamuden v. Chemplast Sanmar Limited
      and Others 1 , wherein it is held that:
              "It is well settled that if exception has been added to
              remedy the mischief or defect, it should be so construed
 D            that remedies the mischief and not in a manner which
              frustrates the very purpose. Purposive construction has
              often been employed to avoid a lacuna and to suppress
              the mischief and advance the remedy. It is again a settled
              rule that if the language used is capable of bearing more
 E            than one construction and if construction is employed that
              results in absurdity or anomaly, such construction has to
              be rejected and preference should be given to such a
              construction that brings it into harmony with its purpose
              and avoids absurdity or anomaly as it may always be
 F            presumed that while employing a particular language in
              the provision absurdity or anomaly was never intended."
         12. Taking his argument further, Mr. Jain submitted that
   likewise, exception (iii) is with reference to 'unused land' held
 G by the assessee for industrial purposes. The exemption from
   wealth tax for such land is for a period of two years from the
   date of its acquisition by the assessee. After two years, such
   land, if unused is amenable to wealth tax. However, if an
   assessee starts construction of either a factory or any building
 H    1
          (2010) 4 sec 240
GIRIDHARG YADALAMv.COMMISSIONEROFWEALTH                             551
           TAX &ANR. [A. K. SIKRI, J.]

for industrial purpo~e within a period of two years and             A
construction spills over beyon:l the exempted period, the
exemption would still continue irrespective of whether the
construction is completed within two years. Similarly, land held
as 'stock-in-trade' is exempt from wealth tax for a period of
ten years since, though vacant, it is held for business purposes.   B
      13. Learned senior counsel also extensively read the
judgment of the Kerala High Court wherein the interpretation
suggested by him has been accepted and the benefit of
exemption from wealth tax in respect of such a land where the
building is still under construction has been extended.             C
       14. Mr. Rupesh Kumar, learned counsel appearing for
the Revenue emphatically countered the aforesaid submissions
of Mr. Jain. He submitted that the cardinal principle of
interpreting taxing statute was to give literal construction to 0
the language used therein. He further submitted that the
provision in question was in the nature of 'exemption provision'
where again strict interpretation is to be accorded and onus is
upon the assessee to show that he falls within the four corners
of the exempted clause. He also submitted that when the E
language of the statute was unambiguous and clear, question
of giving purposive interpretation does not arise in the matters
pertaining to taxing statutes.
       15. After giving our due consideration to the submissions
of the learned counsel for both the parties and after going         F
through the judgments of different High Courts, we are of the
opinion that the view taken by the High Court of Karnataka in
its judgment dated 21.03.2007 is the correct view in law and
the contrary view taken by the Kera la and Madras High Courts
is erroneous and is liable to be set aside.                         G
     16. We have already pointed out that on the plain
language of the provision in question, the benefit of the said
clause would be applicable only in respect of the building 'which
has been constructed'. The expression 'has been constructed'
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552          SUPREME COURT REPORTS                     [2015] 15 S.C.R.


A     obviously cannot include within its sweep a building which is
      not fully constructed or in the process of construction. The
      opening words of clause (ii) also become important in this
      behalf, where it is stated that 'the land occupied by any building'.
      The land cannot be treated to be occupied by a building where
B     it is still under construction. If the contention of Mr. Jain is
      accepted, an assessee would become entitled to the benefit
      of the said clause, at that very moment, the commencement of
      construction even with construction the moment one brick is
      laid. It would be too far fetch, in such a situation, to say thatthe
c     land stands occupied by a building that has been constructed
      thereon. Even Mr. Jain was candid in accepting that when the
      construction of building is still going on and is not completed,
      literally speaking, it cannot be said that the building 'has been
      constructed'. It is for this reason that he wanted us to give the
D     benefit of this provision even in such cases by reading the
      expression to mean the same as 'is being constructed'. His
      submission was that the moment construction starts the urban
      land is put to 'productive use' and that entitles the land from
      exemption of wealth-tax. This argument of giving so called
E     purposive interpretation has to be rejected for more than one
      reasons. These are:
            (i) In taxing statute, it is the plain language of the provision
      that has to be preferred where language is plain and is capable
      of one definite meaning.
F
           (ii) Strict interpretation to the exemption provision is to
      be accorded, which is the case at hand.
         (iii) The purposive interpretation can be given only when
  there is some ambiguity in the language of the statutory
G provision or it leads to absurd results. We do not find it to be
  so in the present case.
           17. No doubt, the purpose and objective of introducing
      Section 2(e)(a) in the Act was to stimulate productive assets.

H
GIRIDHAR G. YADALAM v. COMMISSIONER OF WEALTH                       553
             TAX &ANR. [A. K. SIKRI, J.]

However, the event when such a provision is to be attracted is A
also mentioned in Explanation 1(b) itself carving out those
situations when the land is not .v be treated urban land. The
Legislature in its wisdom conferred the benefit of exemption
in respect of urban vacant land only when the building is fully
constructed and not when the construction activity has merely B
started. On the contrary, if the argument of the asses see is
accepted, that would lead to absurd results in certain cases.
For example, what would be the position if the construction of
the building starts but the said construction is abandoned mid
way? If we accept the argument of the assessee, in such a            c
case, assessee would be given the exemption from payment
of wealth tax in the initial years and the same benefit would be
denied in the year when it is found that construction was
abandoned and, therefore, not complete. It would result in
granting of benefit in the previous year(s), though that was not     o
admissible. Such a situation cannot be countenanced.
 Presumably, because of this reason, the Legislature wanted
 to treat only that land to be excluded from the definition of 'urban
 land' at the stage when the building has been fu.lly constructed
on the said land.                                                     E
       18. We do not agree with the submission of Mr. Jain that
the situation when building is fully constructed has been covered
by Section 2(e)(a)(v) read with Explanation 1(b) as it would fall
under Section 2(e)(a)(i). We have already reproduced. the
aforesaid Section and find that it deals with altogether different F
situations. As pointed out above, Explanation (1) thereof
excludes certain categories of 'Urban Land' and we are
concerned herewith clause (ii) of this Explanation. By 1992
amendment, Section 2(e)(a) was added which contains the
definition of 'asset'. Clause (v) thereof includes urban land. G
Thus, urban land is to be included as an 'asset' for the purpose
of giving extended meaning to it. Urban Land is defined in
Explanation 1 Clause (b) to Section 2(e)(a).
      19. The Kerala High Court as well as Madras High Court         H
554          SUPREME COURT REPORTS               [2015] 15 S.C.R.


A     have been influenced by the arguments premised on
      purposeful construction which was the argument of Mr. Jain
      and has not been accepted by us.
             20. The appeals of the assessee are accordingly
      dismissed and those appeals which are preferred by the
B     Department against the judgments of the High Court of Kera la
      and Madras are hereby allowed. SLPs also stand disposed
      of, likewise. The parties are left to bear their own costs.


      Devika Gujral                               Matters disposed of.