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The Madras high court ruled that urban land tax does not apply for agricultural land. In a case between S.Sarangapani Iyengar vs The Asst. Commissioner, Urban Land Tax Tribunal, the inclusion and exclusion norms for urban land tax were put to test.

Sarangapani is the owner of agricultural land in Sithalapakkam and had been assessed with urban land tax. The tribunal had assessed the land with Urban Land Tax (ULT) as the land was kept vacant and hence it was argued that the land cannot be categorized as agricultural land. The representative from the Government pleaded that only wet lands are exempted from ULT.

However, the High Court decided to use the inclusion parameters which would designate a land as urban land. Section 2(13) of the Urban Land Tax Act states that any land which is used or is capable of being used as a building site (including garden or grounds pertinent to a building) will be termed as 'Urban land'.

The Urban Land Tax act states that

'Urban land' means any land which is used or is capable of being used as a building site and includes garden or grounds, if any, appurtenant to a building but does not include any land which is registered as wet in the revenue accounts of the Government and used for the cultivation of wet crops.”

Since the taxing authority did not clearly prove that a dry land is an urban land, it was impossible to tax the land. If the dry land had not been classified as agricultural land in adangal records and if the land could be proved to be a site used for constructing buildings, it would have become possible to tax the land with ULT. The court stressed that the inclusion parameter (land to be used for building) is more important for the classification of land under ULT.


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