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2016 (4) TMI 731 - AT - Wealth-tax


Issues Involved:
1. Condonation of delay in filing the appeals.
2. Estimation of fair market value of land for wealth tax assessment.
3. Calculation mistake in the area of land assessed.
4. Exclusion of land held as stock-in-trade from wealth tax.

Detailed Analysis:

Condonation of Delay:
The appeals were filed 9 days late. The assessee explained the delay due to a change in management and ongoing litigation, which disrupted the functioning of the directors' office. Additionally, a procedural error occurred where a common appeal was filed for three assessment years using the wrong form. Upon rectification, the delay was noted as 309 days, but the actual delay was only 9 days. The Tribunal found no deliberate intention to delay and condoned the delay, allowing the appeals to proceed.

Estimation of Fair Market Value:
The Wealth Tax Officer (AO) initially estimated the fair market value of the land on an ad hoc basis. The Commissioner of Wealth Tax (Appeals) [CWT(A)] used a formula based on a 10% annual appreciation rate, derived from the sale price of the land in the financial year 2007-08. The assessee contested this method, arguing that various factors could affect land value and that the AO should have referred the matter to a valuation officer as per instruction No.1905 dated 09.12.1992. The Tribunal agreed and directed the AO to refer the matter to the Government Valuation Officer to determine the fair market value for the relevant assessment years.

Calculation Mistake in Land Area:
The assessee claimed that the CWT(A) made a calculation error in the area of land assessed, stating it should be 55,500 sq. yds. instead of 56,400 sq. yds. The Tribunal found a prima facie calculation mistake and directed the AO to verify and correct the area for accurate wealth tax liability assessment.

Exclusion of Land Held as Stock-in-Trade:
For the assessment year 2007-08, the assessee argued that 29,000 sq. yds. of land converted into stock-in-trade should be exempt from wealth tax. The Tribunal referred to section 2(2)(ea) of the Wealth Tax Act, which excludes urban land held as stock-in-trade for up to 10 years from wealth tax. The Tribunal agreed with the assessee, noting that the land converted to stock-in-trade on 31.05.2006 should not be considered a non-productive capital asset for A.Y. 2007-08. The Tribunal directed the CWT(A) to exclude the 29,000 sq. yds. from wealth tax for that year.

Conclusion:
The Tribunal partly allowed the appeals, condoning the delay, directing the AO to refer the valuation to the Government Valuation Officer, correcting the calculation mistake in land area, and excluding the 29,000 sq. yds. of land held as stock-in-trade from wealth tax for A.Y. 2007-08. The order was pronounced in the open court on 15.04.2016.

 

 

 

 

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