PREAMBLE:

1. Wealth Tax in India is levied under the provisions of the Wealth Tax Act, 1957 with effect from 01/04/1957 and the main object of this Legislation was to reduce the financial inequalities and to bridge the gap between the poor and the rich by imposing taxes on richer and wealthier people on their wealth exceeding a particular monetary limit on the net market value of the Assets held by them on the valuation date, i.e. the last date preceding the commencement of the Assessment Year. The levy of Wealth-Tax has been discontinued from the Assessment Year 2016-17, as amended by Finance Bill of 2015. The A.Y. 1999-2000 to A.Y. 2004-05 involved in the present appeals are prior to its discontinuation.

2. The definition of “Assets” underwent a drastic amendment with effect from 01/04/1993 and the word ‘Assets’ defined in Section 2 (ea) of the Act since 1st April 1993 comprises of six categories of Assets. This amendment was brought to encourage the Assets to be put to productive use and to levy tax under the said Act for the aforesaid avowed object of the enactment.

INTRODUCTION OF CASE:

3. The present batch of Appeals filed by the Department raise the following Substantial Question of law which is required to be answered in the present set of appeals for the various assessment years, viz. A.Y. 1999-2000 to A.Y. 2004-05 is as follows:-

Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the 28 Acres of ‘urban land’ comes under the ambit of the exemption clause of Section 2(ea) of the Wealth Tax Act, 1957?

4. The case pertains to urban land of the Respondent - Assessees who are sisters of Sri. Srikantadutta Narasimharaja Wodeyar, Son of the Ex- Ruler of Mysuru, and the said entire property in question known as “Bangalore Palace and its lands appurtenant” including these lands in question came to be acquired by the State Government by enacting the legislation known as “Bangalore Palace (Acquisition and Transfer) Act, 1996” (‘BPAT Act’).

5. Prior to the said enactment, the family members had partitioned the entire property in question known as “Bangalore Palace and the lands appurtenant thereto” measuring about 472 Acres in the heart of the City of Bengaluru in the year 1984 and the Respondent Assessees, the five sisters, viz. Smt. Gayathri Devi, Smt. Meenakshi Devi, Smt. Kamakshi Devi, Smt. Indrakshi Devi and Smt. Vishalakshi Devi got approximately 28 Acres of land in the hands of each one of them and the present Appeals pertain to the exigibility of Wealth Tax in respect of these parcels of ‘urban lands’ in the hands of the Respondent Assessee sisters and the said Wealth Tax liability, needless to add, is vehemently opposed by the Assessees.

6. The litigative history of this property is long and chequered but the brief of which in so far as it relates to the controversy in hand can be stated to be as under.

7. The “Bangalore Palace” was initially owned by the Maharaja of Mysuru and on a Partition in the year 1984, the children of late His Highness Jayachamarajendra Wodeyar, the six children, viz. one brother - Srikantadatta Narasimharaja Wodeyar and five sisters, Smt. M.S. Gayathri Devi, Smt. M.S. Meenakshi Devi, Smt. M.S. Kamakshi Devi, Smt. M.S. Indrakshi Devi and Smt. M.S. Vishalakshi Devi got their respective shares in such partition in the year 1984 and each of the sisters got approximately 28 Acres of land appurtenant to “Bangalore Palace”, while the remaining land and the Building of the Palace itself fell in the share of the brother, Shri. Shrikantadatta Narasimharaja Wodeyar. There is no dispute inter-se between them in regard to this partition of 1984.

8. About 45 Acres of the remaining land came to be transferred to one M/s. Chamundi Hotels Private Limited, a closely held Limited Company of the same family. While prior to enactment of “Bangalore Palace (Acquisition and Transfer) Act, 1996”, the litigation under the Urban Land Ceiling law of 1976 was going on in r